SYSCON CONSULTANTS P.LTD. Vs. M/S PRIMELLA SANITARY PROD.P.LTD.& ORS

Supreme Court of India (Division Bench (DB)- Two Judge)

Appeal (Civil), 2910 of 2013, Judgment Date: Sep 19, 2016

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 2910 OF 2013

SYSCON CONSULTANTS P. LTD. … APPELLANTS (S)

VERSUS

M/S PRIMELLA SANITARY PROD. P. LTD.
AND OTHERS … RESPONDENT(S)

WITH

CIVIL APPEAL NO. 2909 OF 2013
WITH

CIVIL APPEAL NO. 2911 OF 2013
WITH

CIVIL APPEAL NO. 2912 OF 2013
AND

CONTEMPT PETITION (CIVIL) NO. 89 OF 2016
IN

CIVIL APPEAL NO.2910 OF 2013

J U D G M E N T

KURIAN, J.:

These appeals essentially deal with a dispute on the validity and
executability of an agreement for sale and once that issue is tackled, the
rest are practically not of much significance. The parties are described as
they are in the suit for specific performance No. 88/1987 on the file of
the Civil Judge Senior Division at Margao. The Plaintiff is the first
respondent herein. The Plaintiff had sought for specific performance of
the agreement dated 04.09.1985 made with Defendants 1 to 6 for conveyance
of the suit property known as Conco situated at village Palolem in Canacona
Taluka in the State of Goa. The 7th Defendant was the Bank where the
Defendants had mortgaged the suit property.

In the agreement dated 04.09.1985, the Defendants 1 to 6 claimed that they
were the absolute owners of the suit property and that the property was
free from all attachments, charges, etc. The agreed consideration was
Rs.6.5 lakhs and, on the date of agreement, Rs.50, 000 was given as
advance. The relevant portions of the agreement for sale dated 04.09.1985,
are extracted below:

“3.The Vendor hereby declares that the said land agreed to be sold is free
from any encumbrance, attachment, charge or other claims, rights and
demands, and is not affected by any notice or scheme of acquisition or
requisition and that the Vendors have among themselves the full power and
absolute authority to sell and deal with the said land. The Vendor shall at
his own expense effectually indemnify and keep indemnified the purchasers
from and against all claims, demands, losses, damages, cost and expenses,
if any and whatsoever, sustained, incurred or suffer by the Purchaser, on
account of any defect in the title of the Vendor or any change or
encumbrance or any scheme of acquisition or requisition affecting the land
hereby contracted to be sold.

4. The Purchaser has this day paid to the Vendor the sum of Rs.50,000/-
(Rupees fifty thousand only) as and by way of earnest money (the payment
and receipt whereof the Vendor does hereby admit and acknowledges) and the
balance of the purchase money amounting to Rs.6 lacs (Rupees six lacs only)
shall be paid at the time of the completion of the sale. Simultaneously
with the execution of this agreement the Vendor shall at his own cost
furnish to the Purchasers an abstract of all title deeds and other papers
and writings including copies or extracts from records of the Talati or
Circle Inspector relating to the said land. The sale shall be completed
within one month from the date of establishment of a good and marketable
title of the Vendor.”

xxx xxx xxx xxx

“6. The Vendor hereby agrees to answer all reasonable requisitions
and satisfy all objections on title to be made by the Purchasers or their
Solicitor or Representatives. If a good and marketable title is made out
and the said land is found to be free from all encumbrance, attachments and
charges and other rights, demands and claims and not effected by any notice
or scheme of acquisition or requisition AND permission and no objection
from any Authority or Authorities, if any, is obtained by the Vendor, the
Vendor will execute a proper conveyance or conveyance in favour of the
Purchasers or their nominee or nominees or assigns in which the Vendor
shall make the other person or persons, if any, join, if necessary, to pass
and convey an absolute title unto the Purchaser or his nominee or nominees
or assigns or to redeem any charge or encumbrances. The Vendor shall bear
and pay all outgoings, expenses and liabilities in respect of the said land
upto and inclusive of the day of the completion of the sale. The Vendor
shall hand over vacant and peaceful possession to the Purchaser of the said
land at the time of completion of the sale.”
xxx xxx xxx xxx

“8. If a good and marketable title is not made out or the said land is
found to be subject to any encumbrances charges or attachments or other
claims, rights or demands the Purchaser shall be at liberty to rescind this
Agreement and the Vendor shall in the event forthwith refund the said
earnest money with interest at 21% per annum.

9. If the Vendor fails and or neglects to complete the sale after the
title being made out as aforesaid or otherwise to carry out any one or more
of the obligations on his part as herein contained or enjoyed upon by any
law for the time being in force the Purchaser shall be at liberty to
enforce specific performance of this Agreement or recover the earnest money
with interest at 21 % per annum.”

(Emphasis supplied)

It may be relevant to note that the sale was to be completed within one
month from the date of establishment of a good and marketable title of the
vendor and, if the title was not made out or in case the said land was
found to be subject to any encumbrance or charges or attachments or other
claims, rights or demands, the Plaintiff was at liberty to rescind the
agreement and, in that event, the Defendants 1 to 6 would refund the
earnest money with interest @ 21 per cent per annum. It was also agreed
between the parties that in case the Defendants 1 to 6 fail to complete the
sale after a good and marketable title is made out, the Plaintiff was at
liberty to enforce the specific performance of the agreement or recover the
earnest money with interest @ 21 per cent per annum. It is also significant
to note that the Defendants 1 to 6 had clearly agreed to give a clear title
to the property, if necessary by joining any other person or persons or
even to redeem any charge or encumbrance.

Defendants 1 to 6 traced their authority to transfer the property to a deed
of declaration of succession executed by them on 03.11.1981 before a Notary
Public as provided under the Portuguese Law. It was declared that
Vishwanata Purshotam Sinai Gaitonde and his wife Anandibai Viswanata
Gaitonde died intestate … “leaving their sole and only heirs their three
children …” and “… there does not exist persons, who, according to law, may
have preferential right over the said legal heirs or may concur with them
to the estate.” It was further declared that their parents … “left no
movable properties but only an immovable property situated at Palolem
Canacona known as Conco” (the suit property).

On account of the Portuguese personal law applicable in Goa, their wives
also became heirs and thus the agreement for sale with the Plaintiff was
executed by Defendants 1 to 6.

While the steps for the sale were in progress, Smt. Kishori Nayak daughter
of Vishwanata Purshotam Sinai Gaitonde and Anandibai Viswanata Gaitonde,
real sister of Defendants 1, 3 and 5 raised an objection that she was also
entitled to succeed to the estate of her parents and, in particular, she
was interested in the suit property, and therefore, they should not proceed
with the sale.

Smt. Kishori Nayak was later impleaded as 7th Defendant in the suit and her
husband as the 8th. According to the 7th Defendant, she had informed the
Plaintiff of her objection. But in any case, it has come in the evidence of
Plaintiff that the 1st Defendant- Shri Gurudas Gaitonde had informed the
Plaintiff about the objection, by his letter dated 03.04.1987.

In the Special Civil Suit No. 88/87/A filed by the Plaintiff in the court
of Civil Judge Senior Division, Margao, the Plaintiff claimed that the
agreement was enforceable at the option of the Plaintiff-purchaser. To
quote paragraph-7 of the plaint:

“7. The Plaintiff submits that the said Agreement dated 4th September,
1985 is specifically enforceable at the option of the plaintiff, and the
plaintiff is entitled to purchase of the suit property on the terms and
conditions contained in the said Agreement. In terms of the said Agreement,
the Defendants no. 1 to 6 are liable to make out a good and marketable
title of the suit property free from all encumbrances, restrictions,
charges, claims and demands and execute a proper conveyance by joining
other person or persons thereto, if necessary, to convey an absolute title
thereof to the plaintiff.”

At paragraph-14, the Plaintiff has acknowledged the receipt of letter dated
03.04.1987 from Defendant 1, to treat the agreement as cancelled. Paragraph-
14 reads as follows:
“14. In the meantime, the plaintiff received a demand draft bearing No.
OL/A/85 016341 dated 3-4-1987 drawn on State Bank of India for a sum of Rs
20,000/- the defendant no. 1 alongwith a letter expressing the intention of
the defendants no. 1 to 6 to treat the agreement dated 4th September, 1985
as cancelled.”

Contextually, we may refer to the letter dated 03.04.1987 which is Exhibit-
PW1/C in the suit. To the extent relevant, the letter reads as follows:

“Dear Shri Malhotra,
In my letter dated 5.3.87, I have informed regarding my inability to
sale of land at Canacona.
Mr. Bhatnagar called on to me last Thursday. I have to explain also
the position to him. He advised me to sell the property and forget about
the notice of my sister. He said you are able to face any action from my
sister’s side, to be frank I am helpless.
I discussed the issue with lawyer I am told that in any case sale
would invite serious litigation and I would not be left out even if you
take over this responsibility particularly if my sister exercises her right
of preemption.
As you know that I am not keeping well due to my heart problem and
family litigation will aggravate my health.
I have thought over this aspect seriously and only you can relieve me
from this agony.
As promised in my above letter 5.3.87 I am sending with this letter a
bank draft for Rs.20,000/-. The balance I shall remit as early as possible
kindly bear with me some time. …”

The Plaintiff, however, did not accept the amount but insisted on specific
performance.

The suit originally maintained only the following reliefs:
“
That Your Honour may be pleased to pass a decree for specific performance
of contract dated 4th September, 1985 made between the defendants no. 1 to
6 and the plaintiff and direct the said defendants to execute a proper deed
of Conveyance of the suit property viz., the property known as “CONCO”
situated at Village Palolem in Canacona Taluka, registered under No. 14858
and 14859 of Book B-41, F1. 64 (overleaf) in the Land Registration Office
at Margao, Goa surveyed under Survey No. 119, Sub-Division no. 1 of
Nagarsem-Palolem Village and may further be pleased to direct the said
defendants to do all acts, deeds and things for registration of the said
Deed of Conveyance;

That Your Honour may be pleased to direct defendants no. 1 to 6 to join the
defendant no. 7 as a confirming party to the said Deed of Conveyance and
arrange for execution of the said deed by the defendant no. 7 as a
confirming party;

For a decree of permanent injunction restraining the defendants from
selling, transferring and/or creating any encumbrance, interest, charge,
restriction, claim or demand on the said property in favour of any person
or persons other than the plaintiff in any manner whatsoever;

For interim injunction in terms of prayer (c);

For such other further reliefs as Your Honour may deem fit and proper;

For costs as Your Honour may deem fit and proper in the circumstances of
the case.”

In the written statement filed on 10.02.1988, Defendants 1 to 6 took the
stand that the sale as per agreement could be performed only “if a good and
marketable title is made out” and if not, the agreement was rescindable.

The objections on the part of the sister of Defendants 1, 3 and 5 and her
husband were also brought out in the written statement. To quote:

13. “Sometime in the month of Feb. ’87, sister of defendant No. 1, 3 & 5
and her husband set up a claim to the ancestral property as a whole
including the suit property. On account of this the defendants were in a
tight corner on the subject of sale of the suit property. Defendant No. 1
accordingly wrote two letters one after the other to the plaintiffs
informing them of the defendants’ inability to convey title as per the
agreement. A copy of the defendants letter dated 05.03.87 is annexed hereto
marked as Exhibit 5. Thereafter on 03.04.87 defendant No. 1 sent a Bank
draft of Rs 20,000/- alongwith a covering letter which is self explanatory.
Annexed hereto and marked exhibit 6 is a copy of the said letter.

Plaintiffs have suppressed these material facts and as such are disentitled
for equitable relief of specific performance. Plaintiffs have not
approached this Court with clean hands and this suit therefore has to be
dismissed on this ground alone.”

At paragraph-16 of the written statement, it was also disclosed that the
attempt on the part of the Defendants 1, 3 and 5 to purchase peace with
their sister did not fructify and that she had filed a civil suit for
injunction. To quote paragraph-16:

“16. Defendants did write to the plaintiff’s lawyer that detailed reply
would be sent as there was attempt from the defendant’s side to close the
issue with the disputant sister and her husband to enable the defendants to
complete the sale. But unfortunately, the sister Smt. Kishori P. Nayak and
her husband, Shri Prabhakant R. Nayak did not settle the issue amicably and
filed a civil suit in the court of the Civil Judge Senior Division at
Margao. The said suit is registered as special civil suit no. 105/87/A and
a civil application filed in the same is registered as Misc. Application
No. 212/87/A. The Honourable Court has passed a temporary injunction order
restraining the defendants from executing sale deed in respect of the suit
property in favour of the plaintiffs who are impleaded as Defendant no. 7
in the said suit. The plaintiffs in the said suit have inter alia
challenged the enforceability and legality of the agreement dated 4.09.85
which is the subject matter of this suit also.

Defendants 1 to 6 herein state and submit that for proper and effective
adjudication of this suit Smt. Kishori Prabhakant Nayak and Shri Prabhakant
R. Nayak should be added in this suit as defendants as they have leveled a
challenge to the enforceability of the agreement sought to be specifically
enforced in this suit by the plaintiff herein.”

In short, Defendants 1 to 6 wanted the suit to be dismissed in view of the
objection of Smt. Kishori Nayak.

It may be noted that Defendant 7 originally was the Cooperative Bank with
whom the suit property had been mortgaged; but it appears on clearing the
loan, the Bank was deleted and thereafter Smt. Kishori Nayak was impleaded
as Defendant 7 and her husband Shri Prabhakant Ramrai Nayak as Defendant 8.

Special Civil Suit No. 105/1987/A was filed by Smt. Kishori Nayak, real
sister of Defendants 1, 3 and 5 and her husband Shri Prabhakant R. Nayak
before the Civil Judge Senior Division, Margao against Defendants 1 to 6
and the Plaintiff. It was a suit for declaration, permanent and temporary
injunction. It was stated in the plaint that apart from the suit property
of Civil Suit No. 88/1987, five other items of property were also left
intestate. It was averred that the agreement of sale of any property
without the sister and her husband is null and void. To quote from
paragraph-7:

“7. Plaintiffs state that the defendants no. 7 is a company which has
entered into an agreement to sell the suit property with defendant nos. 1
to 6 on the 4th of September, 1985, which agreement is impugned herein,
ignoring the legal rights of the plaintiffs to the suit property, in
collusion with one another and are about to execute the deed of conveyance
and as such the plaintiffs are compelled to file the suit to seek the
assistance of this Hon’ble Court by an appropriate order of declaration and
permanent injunction restraining the defendant number 1 to 6 from in any
manner alienating and/or executing any deed of conveyance or any other
instrument of transfer of possession of the suit property to the name of
the defendant no. 7 in pursuance of the impugned agreement to sell
allegedly entered into on 4th September 1985 declaring that the said
agreement is ab-initio null and void ad hence unforceable specifically.”

Again, at paragraph-9, it has been averred that:

“9. Plaintiffs state that they being co-sharers and co-owners of the suit
property as aforesaid the defendant nos. 1 to 6 had no authority in law to
negotiate the said deal without their consent and knowledge with defendant
no. 7 and on this count alone the alleged agreement to sell and/or the
alleged deed of sale dated 4th December 1985 is ab-initio void and the
plaintiff’s are entitled in law for such a declaration.”

At paragraph-14, it was averred that the entire properties, left intestate
being ancestral, the same are to be divided only as per Portuguese Law of
Succession through inventory proceedings. To quote from paragraph-14:

“14. Plaintiffs state that their share in the ancestral suit property is
undivided and indivisible till the suit property as well as other ancestral
properties are auctioned in appropriate inventory proceedings to be
initiated under the Portuguese Law of Succession and till the shares of the
heirs are ascertained and as such the suit property or any part of the same
cannot be sold as contemplated under the agreement of sale dated 4th
September 1985 in exclusion to them. Plaintiffs state that even if the
inventory proceedings are initiated and the properties are auctioned
amongst the members of the family, they are entitled to exercise their
right of preemption and under the prevailing law of succession governing
this land.”

Though there had been several other developments in between, it is not
necessary to refer to those aspects. Suffice to note that in the meantime,
inventory proceedings were initiated before the same court of Civil Judge
Senior Division at Margao at the instance of Defendants 7 and 8 namely,
Smt. Kishori P. Nayak and her husband Shri Prabhakant R. Nayak. Paragraphs-
1 to 4 of the petition being relevant are extracted herein:

“1. The applicants are the daughter and son-in-law of the Late Visvonata
Purxotoma Sinai Gaitonde and the late Anandibai V. Gaitonde who died on
26.10.1966 and 25.06.1976 respectively. Hereto annexed are the death
certificates.

2. The deceased left behind their heirs, their three sons and their
daughter, the applicant no. 1 herein.

3. The estate of the deceased has not yet been partitioned and continues
undivided.

4. The son of the deceased, Mr. Ratnakar Vishwanath Gaitonde, resident
of Vishwanath Sunirti, Super Market, Ponda, Goa is competent to be
appointed as Cabeca de casal, he being the eldest son of the deceased.”

In the inventory proceedings, the auction took place on 01.12.1990. The
suit property was auctioned by the 7th Defendant- Smt. Kishori Nayak and
the remaining estate was also divided amongst the other heirs and the final
orders in the inventory proceedings was passed by the Civil Judge Senior
Division, Margao on 30.01.1991.

The Plaintiff, thereafter, filed Civil Suit No. 329/1992 seeking a
declaration that inventory proceedings were vitiated by fraud to the extent
of allocation of suit property to the 7th Defendant Smt. Kishori Nayak and
her husband and for setting aside the inventory proceedings.

In the meantime, the Cooperative Bank initiated recovery proceedings by
putting the suit property to public auction. The Bank obtained an award and
published the proclamation for the sale of the suit property by public
auction. On 10.01.1989, the Defendants 7 and 8, hence, filed a Regular
Civil Suit No. 3/1989/B for injunction restraining the bank from proceeding
with the sale. That suit was decreed as compromised on 23.04.1992. The
relevant paragraphs from the decree read as follows:

“5. In such circumstances, the plaintiff was though legally not bound,
morally feels her obligation not to put in jeopardy the interest of the
Bank, therefore she guarantees the payment of the debt to the Bank
(defendant no. 2) reserving her right to recover the amount from defendant
no. 1 (Smt. Sunita Gaitonde)”

xxx xxx xxx xxx

“9. The plaintiff further agrees that in the event the plaintiff fails to
pay the entire liability within a period of 15 (fifteen) days, the
defendant no. 2 is free to sell the suit property in auction and realize
from the proceeds of the auction sale the amount of loans, interest and
other charges with clear understanding that the asset value shall not be
less than the amount of principal and interest and other charges.”

(Emphasis supplied)

The Defendants 7 and 8 did not make any payment to the Bank so as to avert
the distress sale of the suit property and neither did Defendants 1 to 6.
The Defendants 7 and 8 in the compromise decree had gone to the extent of
giving up all hopes by agreeing that in case, they failed to pay the dues,
the suit property could be sold but the only condition was that the sale
amount should cover the entire liability arising out of the loan including
interest and other charges meaning thereby that they were worried only
about saving other assets. It is at that juncture that the Plaintiff
cleared the entire liability on payment of Rs. 17 lakh on 12.05.1993. Thus,
the distress sale was averted, the mortgage was redeemed and the charge on
the property was released

The Defendants 7 and 8 filed a writ petition before the High Court
challenging the proceedings of the Assistant Registrar culminating in
redemption of mortgage. The Writ Petition was disposed of by judgment dated
10.10 1994, stating :

“Respondents Nos. 4 to 10 mortgaged a property to respondent No.2, Bank and
took certain loan. The amount was not paid by them. Respondent No.2, Bank,
obtained the said certificate and started recovery proceedings in which the
property was put to sale. At the time of the sale, respondent no.1,
claiming interest in the property on the basis of some Agreement of Sale,
allegedly executed by respondents Nos. 4 to 10 in their favour paid Rs.
17,00,000/- to the Recovery Officer, as a result of which the Recovery
Officer stopped the sale and directed the redemption of the mortgage in
favour of Respondent Nos. 4 to 10.

2. The present petitioners claimed some title to the property under
inventory proceedings in 53/90/A. They were not parties to the mortgage,
nor they are members of respondent Nos. 2 Bank. They challenged the order
passed by the Recovery Officer on the ground that the amount tendered by
the respondent No.1 could not have been accepted by the Recovery Officer
for the purpose of passing an order of redemption in favour of the
mortgagors. If at all such an order was wrongly passed by the Recovery
Officer the person to be prejudiced would have been the Bank. The
mortgagors as well as the Bank did not have any grievance on the point.

3. Grievance is sought to be raised by a third party, who has hardly
any locus standi in a proceeding under Rule 104 because the petitioners had
never offered to pay any amount, nor had they ever paid anything, either to
the Bank, or to the Recovery Officer. Under such circumstances, we do not
think that the impugned order is against justice, equity and good
conscience.

4. Needless to say that if the petitioners claiming mere title to the
property have some rights to the property in question. They would be at
liberty to pursue their rights according to law. Petition is therefore
disposed of.”

(Emphasis supplied)

Meanwhile, the Plaintiff’s suit was dismissed for default on 18.09.1990 and
was ultimately restored only on 05.02.1994. Thereafter the suit was amended
and Smt. Kishori Nayak and her husband were impleaded as additional
Defendants, in 1998.

Additional reliefs for compensation to the tune of Rs.12,29,030.80 and
Rs.2,68,29,038.80 were added. The challenge to the inventory proceedings
was also incorporated by way of the amendment.

On 14.11.1995, the 7th and 8th Defendants, viz., the sister
Smt. Kishori and her husband, who had obtained the suit property in
the inventory proceedings, sold the same to the 9th Defendant-Syscon
Consultants Pvt. Ltd. Thereafter, the Plaintiff sought amendment for
cancelling that sale also. It may be stated that the 9th Defendant
purchased the suit property for a sum of Rs. 34,00,000/- knowing fully well
that the said property was in litigation and the fate of some of the
litigations.

Though, there were certain other factual aspects as well, it is not
necessary to refer to the same. Suffice it to note that Civil Suit Nos.
88/1987 and 105/1987 were tried together as per orders of High Court of
Bombay dated 19.04.1990 in Appeal from Order No. 54/89 with Civil
Application No. 192/89.

By common judgment dated 31.12.2001, the Trial Court disposed of both suits
upholding the right of 7th and 8th Defendants (the sister and her husband).
The Defendants 1 to 6 were directed to refund the advance of Rs. 50
thousand with interest @ 21 per cent per annum from the date of institution
of the suit to the Plaintiff and further Defendants 1 to 8 were directed to
refund an amount of Rs.17 lakhs to the Plaintiff with interest @ 6 per cent
per annum from 12.05.1993.

Aggrieved, the Plaintiff filed First Appeal No. 179/2003 before the High
Court of Judicature at Bombay, Panaji Bench, Goa. During the pendency of
the appeal, on 08.10.2003, the entire decree amount was deposited before
the High Court.

As per the impugned judgment, the High Court allowed the appeal in part,
and partly reversed the trial court judgment therein. To the extent of the
share of Defendants 1 to 6, in the suit property, the suit was decreed.
Defendants 1 to 6 were permitted to withdraw the amount deposited in court
after the decree was being fully satisfied. Thus, the appeals at the
instance of the Defendants and one by the Plaintiff for the 1/4th share of
Defendants 7 and 8 and another at the instance of Defendant 9, the
purchaser.

On issue no.1, the High Court took the view:

“107. … Respondent Nos. 1 to 6 never objected per se to perform the
agreement. They, to put it mildly, expressed their inability to perform
even their part of the agreement on the ground that Respondent No.7 had
raised a claim as regards her one-fourth share in the property. Their bona
fides are, therefore, put to the test when the Appellant submitted that it
was willing to accept at least or even the share of the Respondent Nos. 1
to 6 in the suit property without claiming any reduction in the price.
Surely, Respondent Nos. 1 to 6 then cannot have any objection whatsoever to
a decree to the extent of their share in the suit property.”

Regarding sale of the suit property by Defendants 7 and 8 to Defendant 9,
it was held that Defendant 9 admittedly bought the property with the full
knowledge of the litigations, and hence, Defendant 9 was not entitled to
any equities. Thus, issue no. 1 was answered in the affirmative in favour
of the Plaintiff, limited to the extent of share of Defendants 1 to 6.

On issue no.2, the High Court was of the view that the Plaintiff was
deliberately kept in the dark about the inventory proceedings. It was also
noted by the High Court that despite granting time to produce evidence on
the relinquishment of their rights by Defendants 7 and 8, nothing was done.
It was further noted that the Inventory Court was not informed of the deed
of declaration or about the agreement in litigation or about the mortgage
of the suit property to the Cooperative Bank. None of Defendants led any
evidence. The Plaintiff was denied an opportunity in the inventory
proceedings to protect their interest. The High Court further held that
even assuming that the inventory proceedings were not conducted
fraudulently, the orders passed therein could not bind the Plaintiff as it
was not a party thereto.

On issue no.3, it was held that since Defendants 7 and 8 did not exercise
their right of preemption, they lost their right. And, on issue no. 6, it
was held that the suit agreement dated 04.09.1985, between the Plaintiff
and Defendants 1 to 6 was legally valid and not void.

On issue no.4, regarding compensation, the Court though held that the
Plaintiff was entitled to damages, but no decree was granted since the
Plaintiff made a statement that in case specific performance was granted it
would not insist on a decree for compensation.

On issue no.7, it was held that Defendants 7 and 8 were entitled to sell
only one quarter interest in the suit property and not the three quarter
interest of Defendants 1 to 6 and the suit was decreed accordingly. There
was no separate decree in the suit filed by Defendants 7 and 8.

A suit for specific performance, being a suit for equitable relief, this
Court has the duty to see what ultimately is the justice of the case. The
suit property, no doubt is jointly owned by Defendants 1 to 8. But the
agreement for sale was only by the Defendants 1 to 6. They not only
excluded the sister and her husband but made two deliberate and wrong
representations: that Defendants 1, 3 and 5 are the only children of Late
Vishwanta Purshotam Sinai Gaitonde and that the suit property was the only
estate left by their parents. The agreement for specific performance, no
doubt, contained a clause that the sellers would make a good and marketable
title of the property. Fully conscious of the fact that there was another
heir namely the sister and that the property had already been mortgaged to
the Cooperative Bank, a very significant clause was incorporated in the
agreement to the effect that the vendors could execute a proper conveyance
in favour of the purchasers and in that regard, the vendors would make any
other person or persons to join them so as to convey an absolute title to
the purchaser or to redeem any charge or encumbrance. This clause clearly
shows that the Defendants 1 to 6, though acted ill-advisedly by not joining
the sister and her husband in the agreement and by not disclosing the
mortgage, had still genuinely intended to execute the sale covering both
the eventualities namely, joining the sister and her husband and redeeming
the mortgage (see Clause 6 of the Agreement of Sale extracted at
pages 3-4).

At one stage, Defendants 1 to 8 apparently were sailing together, faced
with the distress sale of the suit property by the bank. It was in that
context that the Defendants 1 to 6 made a request to the Plaintiff that in
case the Plaintiff cleared the loan liability, they would get in the sister
also for the conveyance of the property and settle the whole dispute. The
letter which is Exhibit- PW1/F in the suit, which is dated 14/11/1991
reads as follows:
“Sale of Property at Canacona.
Further to the discussion of the undersigned with your Shri A.A. Tandale,
this is to confirm that the undersigned and all his brothers and sister are
agreeable to settle the dispute with you amicably on the following terms:

You should pay off the entire loan outstanding with the Madgaon Urban Co-
op. Bank.

All the parties jointly including the bank shall take a consent decree from
the Court and put an end to litigation.

Upon completion of the above steps, we shall execute deed of conveyance in
your favour.

We expect your co-operation in implementing this compromise with
maximum expedition.

This is however without prejudice to our rights and contentions in
the pending suits.”

Thereafter, Defendants 1 to 6 left the Plaintiff to their fate by
permitting the auction sale to take place and consequently wanted the
agreement to get frustrated.

As far as Defendants 7 and 8 are concerned, they not only went back on
their undertaking in Court to pay the dues to the bank so as to avert the
auction sale, they have not pursued their claim if any, to the title to the
property as per the liberty granted to them by judgment dated 10th October,
1994 of the High Court in Writ Petition No. 277 of 1994. The High Court
apparently was clear in its mind, that if at all Defendants 7 and 8 wanted
to save the situation by exercising their right to preemption under the
Portuguese Laws, they could still do that within six months. Yet, nothing
was done. In any case, more than six months after the judgment dated
10.10.1994, they sold the suit property on 14.11.1995 when as a matter of
fact Defendants 1 to 8 had by their conduct forfeited all rights and
interests in respect of the suit property. Thus, there is no question of
right of preemption available to Defendants 7 and 8.

It may not also be wholly out of context to take note of the fact that the
Defendants 7 and 8 chose, with the assent of Defendants 1 to 6 in the
inventory proceedings, the suit property, fully knowing that the property
was disputed. Normally, one would avoid a disputed property or leave a
disputed property to the authors of the dispute, i.e., the brothers in this
case. It would also be relevant to note that none of the Defendants 1-8
told the District Judge in the inventory proceedings that the property was
already in dispute, and that two civil suits were pending, in which case
the District Judge would have certainly taken note of the litigation.

Under the agreement, the time for performance starts within one month from
the date of the vendors making out a marketable title to the property. The
agreement also contained a provision to join any other person or persons to
convey an absolute title to the purchasers or for redeeming any mortgage.
And thus, the suit by the Plaintiffs originally had the Bank as a party
Defendant, and, after clearing the loan, the Bank was deleted from the
array of parties and Smt. Kishori and her husband were joined as Defendants
7 and 8.

It was vehemently contended by learned Senior Counsel
Shri Dhruv Mehta that it was not necessary to give notice of inventory
proceedings to anybody other than the members of the family who are
entitled to succeed to the estate or disclose any charge on the property.
We are afraid that this submission cannot be appreciated. So long as there
is no bar for transferring the undivided interest in the estate by any of
the legal heirs, any charge or liability to the estate was also to be
disclosed in the inventory proceedings so that the estate could be
partitioned taking note of such charges, and in case of litigation, the
proceedings would have awaited the outcome thereof.

Defendants 7 and 8, viz., Smt. Kishori and her husband knew very well when
they instituted the inventory proceedings that there was an agreement for
sale of one of the items in the estate executed by her brothers and their
wives and that a suit for specific performance of that agreement had
already been pending in Court. And yet, it was not disclosed.
Interestingly, and if not shockingly, the Defendants 1 to 6 also did not
disclose before the court in the inventory proceedings anything about the
mortgage to the bank. Thus, in any case, Defendants 7 and 8 had full
knowledge of the suit for specific performance and also the liability to
the Cooperative Bank when they chose the disputed property as their share
in the inventory proceedings and yet, they were not prepared to even clear
the liability to the Cooperative Bank. It was the Plaintiff who paid the
money and averted the auction sale and redeemed the property. Had the
Plaintiff not cleared the dues to the Bank, the property would have been
auctioned, divesting Defendants 7 and 8 of their rights and interests in
the property.

The issue of lis pendens, in any case, on facts, is clear in the sense that
even assuming for argument’s sake that Civil Suit No. 88 of 1987 stood
dismissed at the time of the order in the inventory proceedings, Civil Suit
No. 105 of 1987 in respect of the same property, wherein a declaration and
injunction had been sought by Defendants 7 and 8 (Plaintiffs in Suit No.
105 of 1987), was pending. Both suits were directed to be tried together as
well. It is significant to note that there was only one set of issues
framed for the purpose of trial of both suits. It is also significant to
note that even according to Defendants 1 to 6 in their written statement,
their stand was:

“….The plaintiffs in the said suit have inter alia challenged the
enforceability and legality of the agreement dated 4.09.85 which is the
subject matter of this suit also…”

The inventory proceedings, thus, would have been subject to the
result of the suits. As far as the transfer of property to Defendant 9 is
concerned, the Plaintiff’s Suit for Specific Performance No. 88 of 1987
stood restored and its Suit No. 329 of 1992 stood pending on the date
(14.11.1995) when Defendant 9 purchased the suit property which would also
be subject to the result of the pending suits.

In view of the conduct of the parties, which we have explained above, we do
not think that this is a fit case to exercise our discretionary
jurisdiction under Article 136 of the Constitution of India. Three
prominent features of this case stare us in the face. First and foremost,
on reading the correspondence between the parties, we are satisfied that
the Plaintiff has throughout been ready and willing to perform its
obligations under the Agreement to Sell. In particular, a reference may be
made to the letters dated 08.04.1986 and 15.04.1987 and the legal notice
dated 08.04.1987. The other unique feature of this case is that the suit
property is an island off the coast of Goa which is not readily capable of
valuation – indeed when asked to give us the present market value, both
sides were unable to do so. This fact also shows that monetary compensation
would not suffice and be an adequate alternative to specific performance.

The third unique feature of this case is that, as has been pointed out
hereinabove, the Plaintiff went to the extent of discharging the mortgage
with the Bank by paying a sum of Rs. 17 lakhs which was almost three times
the amount of the consideration mentioned in the agreement, i.e., Rs.
6,50,000/-. Clause 9 of the Agreement to Sell is set out hereunder:-

“If the Vendor fails and or neglects to complete the sale after the title
being made out as aforesaid or otherwise to carry out any one or more of
the obligations on his part as herein contained or enjoyed upon by any law
for the time being in force the Purchaser shall be at liberty to enforce
specific performance of this Agreement or recover the earnest money with
interest at 21% per annum.”

It is clear that Defendants 1 to 6 failed or neglected to complete the sale
even after clear title was made out when the obstacle of the mortgage was
removed. Clause 9 specifically states that if after the title is made out,
the vendor fails and neglects to complete the sale, and/or to carry out any
of the obligations on his part as contained in the Agreement, the purchaser
shall be at liberty to enforce specific performance of the Agreement or
recover the earnest money with interest at 21 per cent per annum at their
option. Having clearly opted throughout to enforce specific performance, we
are of the view that justice of the case requires that Clause 9 must be
applied in favour of the Plaintiff. After inducing the plaintiff as per PW-
1/F letter to pay Rs.17 lakhs to the cooperative bank to clear the dues on
the clear understanding that the defendants 1 to 8 would thereafter execute
the sale deed, they cannot go back. The clear title stood made out at that
stage and the agreement was enforceable thereafter.

There is also a long line of judgments based on the equitable principle
which states that even if the undivided share of one of the other heirs of
the property cannot be transferred, the remaining share of the other heirs
certainly can be transferred.

In Kartar Singh v. Harjinder Singh and others[1], at paragraph-6, it has
been held that :

“6. As regards the difficulty pointed out by the High Court, namely, that
the decree of specific performance cannot be granted since the property
will have to be partitioned, we are of the view that this is not a legal
difficulty. Whenever a share in the property is sold the vendee has a right
to apply for the partition of the property and get the share demarcated. We
also do not see any difficulty in granting specific performance merely
because the properties are scattered at different places. There is no law
that the properties to be sold must be situated at one place. As regards
the apportionment of consideration, since admittedly the appellant and
respondent's sister each have half share in the properties, the
consideration can easily be reduced by 50% which is what the First
Appellate Court has rightly done.”

In Sardar Singh v. Krishna Devi (Smt) and another[2], at paragraph-17, it
has been held that:

“17. In view of the finding that the appellant had half share in the
property contracted to be sold by Kartar Lal, his brother, the agreement of
sale does not bind the appellant. The decree for specific performance as
against Kartar Lal became final. Admittedly the respondent and her husband
are neighbours. The appellant and his brother being coparceners or co-
owners and the appellant after getting the tenant ejected both the brothers
started living in the house. As a prudent purchaser Joginder Nath ought to
have made enquiries whether Kartar Lal had exclusive title to the property.
Evidence of mutation of names in the Municipal Register establishes that
the property was mutated in the joint names of the appellant and Kartar Lal
and was in joint possession and enjoyment. The courts below, therefore,
have committed manifest error of law in exercising their discretion
directing specific performance of the contract of the entire property. The
house being divisible and the appellant being not a consenting party to the
contract, equity and justice demand partial enforcement of the contract,
instead of refusing specific performance in its entirety, which would meet
the ends of justice. Accordingly we hold that Joginder Nath having
contracted to purchase the property, it must be referable only in respect
of half the right, title and interest held by Kartar Lal, his vendor. The
first respondent being successor in interest, becomes entitled to the
enforcement of the contract of the half share by specific performance. The
decree of the trial court is confirmed only to the extent of half share in
the aforestated property. The appeal is accordingly allowed and the decree
of the High Court is set aside and that of the trial court is modified to
the above extent. The parties are directed to bear their own costs
throughout.”

In A. Abdul Rashid Khan (Dead) and others v. P.A.K.A. Shahul Hamid and
others.[3], at paragraph-14, it has been held that:

“14. Thus we have no hesitation to hold, even where any property is
held jointly, and once any party to the contract has agreed to sell such
joint property agreement, then, even if other co-sharer has not joined at
least to the extent of his share, he is bound to execute, the sale deed.
However, in the absence of other co-sharer there could not be any decree of
any specified part of the property to be partitioned and possession given.
The decree could only be to the extent of transferring the share of the
Appellants in such property to other such contracting party. In the present
case, it is not in dispute that the Appellants have 5/6 share in the
property. So, the Plaintiffs suit for specific performance to the extent of
this 5/6th share was rightly decreed by the High Court which requires no
interference.”

In Surinder Singh v. Kapoor Singh (Dead) Through Lrs. and others[4], at
paragraphs- 3 and 20, it has been held that:

“3. A Letters Patent Appeal filed by the Plaintiffs-Respondents herein
against the said judgment and decree came to be allowed by a Division Bench
of the High Court by reason of the impugned judgment holding that as the
property was owned by the Appellant and the said Tajinder Kaur in equal
share, in view of Kartar Singh (supra), a decree for specific performance
could be granted in favour of the Plaintiffs-Respondents herein in respect
of the share of the Appellant subject to his right to apply for partition
of the property for getting his share demarcated. As regard apportionment
of the sale consideration, it was directed that the same would be reduced
by 50% as the Appellant would only be entitled thereto. As regard the
objection of the Appellant herein that no relief could be granted as the
plaintiffs-Respondents failed to mention Khasra Nos. 39/4 and 39/3/2 in the
plaint, the Division Bench held that such omission was inadvertent. It was
pointed out that such an objection was raised only at the time of argument
whereupon the plaintiffs filed an application for amendment of plaint. It
was held:

"...We are of the view that the trial court was not justified in dismissing
the application on technical grounds. Decree was sought for the entire land
i.e. 153 K 19M. Copies of the agreement as well as jamabandi for the
relevant year were also attached with the plaint. Agreement as well as
jamabandi clearly indicate that relief sought was with regard to the land
measuring 153 K 19M which also includes Khasra Nos. 39/4 and 39/3/2. In
this view of the matter, prayer of the plaintiffs for amendment of the
plaintiff is allowed. Plaint would be deemed to have included Khasra Nos.
39/4 and 39/3/2 apart from other Khasra numbers mentioned in the plaint."

xxx xxx xxx xxx

20. The Appellant furthermore misled the plaintiffs-respondents by
representing that he had the requisite authority to enter into an agreement
for sale on behalf of his sister, which was found to be incorrect. In this
situation, we are of the view that the equity lies in favour of grant of
decree for specific performance of the contract in respect of the share of
the Appellant rather than refusing the same. In any event if the Appellant
and/or his sister have claim as regard the arrears of rent, the same can be
adjudicated upon by the appropriate court in an appropriate proceeding. We
are, therefore, unable to accept the said contention of Mr Talwar.”

In Gajara Vishnu Gosavi v. Prakash Nanasaheb Kamble and others.[5], at
paragraphs- 9 to 13, it has been held that:
“9. Be that as it may, three courts have recorded the concurrent findings
of fact that partition had never been given effect to in respect of the
suit property. Therefore, Housabai could transfer her share. But the
question does arise as to whether without partition by metes and bounds,
she could put her vendee Anjirabai in possession.

10. In Kartar Singh v. Harjinder Singh (1990) 3 SCC 517 : AIR 1990 SC 854,
this Court held that where the shares are separable and a party enters into
an agreement even for sale of share belonging to other co-sharer, a suit
for specific performance was maintainable at least for the share of the
executor of the agreement, if not for the share of other co-sharers. It was
further observed:

11. In a recent judgment in Ramdas v. Sitabai and Ors. (2009) 7 SCC 444 :
JT (2009) 8 SC 224 to which one of us (Dr. B.S. Chauhan J.) was a party
placing reliance upon two earlier judgments of this Court in M.V.S.
Manikayala Rao v. M. Narasimhaswami and Ors. AIR 1966 SC 470; and
Sidheshwar Mukherjee v. Bhubneshwar Prasad Narain Singh and Ors. AIR 1953
SC 487 this Court came to the conclusion that a purchaser of a coparcener's
undivided interest in the joint family property is not entitled to
possession of what he had purchased. He has a right only to sue for
partition of the property and ask for allotment of his share in the suit
property.

12. There is another aspect of the matter. An agricultural land belonging
to the coparceners/co-sharers may be in their joint possession. The sale of
undivided share by one co-sharer may be unlawful/ illegal as various
statutes put an embargo on fragmentation of holdings below the prescribed
extent.

13. Thus, in view of the above, the law emerges to the effect that in a
given case an undivided share of a coparcener can be a subject matter of
sale/transfer, but possession cannot be handed over to the vendee unless
the property is partitioned by metes and bounds, either by the decree of a
Court in a partition suit, or by settlement among the co-sharers.”

The vehement contention, advanced by learned Senior Counsel Shri Dhruv
Mehta, based on Article 2177 of the Portuguese Civil Code, 1867 that there
was an absolute bar for transfer of any portion of the estate or a specific
item of the estate, need not detain us both on account of factual matrix
and on law. As we have already noted hereinabove, Defendants 1-8 had
already given up on their right in the suit property by not taking steps to
avoid the distress sale at the instance of the Bank. Though, there are
different translated versions of the provision, we may extract Article 2177
as provided by Defendants 7 and 8 in their Appeal:

“It is not lawful to a co-owner, however, to dispose a specific part of the
thing held indivisibly, without the same being allotted to him in
partition; and a transfer of the right, which he has to the share belonging
to him, may be restricted in accordance with the law.”

Suffice it to say, Article 2177 does not prohibit alienation of undivided
interest, which is in tune with the principle underlying Section 44 of the
Transfer of Property Act, 1882.

The conduct of the Defendants 7 and 8 also needs to be specifically
commented on. Despite specifically getting reserved a liberty to proceed
further after the redemption of the property by the Plaintiff, nothing was
done by them. They also did not exercise their right of preemption
available under the Portuguese Law. Conspicuously, none of the defendants
entered the witness box despite the voluminous and clinching evidence
tendered by the Plaintiff, obviously to avoid inconvenient questions,
particularly, based on PW-1/F extracted hereinabove. In that view of the
matter, it is also not necessary to deal with the various other contentions
advanced by learned Senior Counsel on both sides since they have no bearing
on the ultimate conclusion.

In our view, no substantial or grave injustice is caused to the Defendants:
on the contrary, the justice of the case, on facts, is in favour of the
Plaintiff, and therefore, no interference under Article 136 of the
Constitution of India is required. Once, it is found that justice of the
case on facts does not require interference, this Court, even at the
appellate stage, is well within its discretion to stay its hands off, as
held in Taherakhatoon (D) by Lrs. v. Salambin Mohammad[6].

Thus, viewed from any angle, justice was done to the Plaintiff as per the
decree granted to them by the High Court and no injustice is caused to the
Defendants, in particular, Defendant No. 9, who, with open eyes, purchased
litigation. As we have decided not to interfere with the judgment of the
High Court in favour of the Plaintiff, we also dismiss the Plaintiff’s
appeal against the impugned judgment seeking the entire property.
We, however, find it difficult to agree with the reasoning of the impugned
judgment on many aspects, and hence, while dismissing all the appeals,
including the appeal of M/s Primella Sanitary Products Private Limited, we
leave the questions of law open. The Contempt Petition (Civil) No. 89 of
2016 also stands dismissed as we see no contemptuous conduct on part of the
alleged contemnors.

There shall be no order as to costs.

....….…………………………….J.
(KURIAN JOSEPH)

….….…………………………….J.
(ROHINTON FALI NARIMAN)

NEW DELHI;
SEPTEMBER 19, 2016.
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[1]

(1990) 3 SCC 517
[2] (1994) 4 SCC 18
[3] (2000) 10 SCC 636

[4] (2005) 5 SCC 142

[5] (2009) 10 SCC 654

[6] (1999) 2 SCC 635

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