# 15 (ADDL.) S.C.R. 538 MIS J.P. BUILDERS & ANR v. A. RAMADAS RAO & ANR

- **Citation:** [2010] 15 S.C.R. 538
- **Court:** Supreme Court of India
- **Decided:** 2010-11-22
- **Case number:** Civil Appeal Nos. 9821-9822 of 2010
- **Bench:** P. Sathasivam, Anil R. Dave
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/15-addl-s-c-r-538-mis-j-p-builders-anr-v-a-ramadas-rao-anr-26748
- **Pages:** 53

## Headnote

Specific Relief Act, 1963:
'
c
s.16(c) - Suit for specific performance of contract -
"Readiness and willingness" -
Connotation of - HELD:
Clause (c) of s.16 mandates that the person seeking specific
performance must prove that he has performed or has been
ready and willing to perform the essential terms of the contract
0 which are to be performed by him - It is a condition precedent
for obtaining the relief - The onus is on the plaintiff - In the
instant case, the plaintiff has proved his readiness and
willingness to perform his part of obligation under the contract.
E
Contract Act, 1872:
ss. 31 and 32 -
Contingent contract -
Suit land
mortgaged to Bank - Owners entering into agreement for sale
with plaintiff and undertaking to discharge their loans and to
execute sale deed in favour of plaintiff after discharge of
F mortgage - HELD: Clauses in the agreement to discharge
the loan of the Bank and handover the original title deeds to
the plaintiff cannot be construed as impossible event so as
to affect t/1e terms of the contract to become void - Nor can it
be said that the contract was a contingent contract - Doctrine
G of impossibility cannot be permitted to become a device for
destroying the sanctity of a contract - Doctrines - Doctrine
of impossibility.
Transfer of Property Act, 1882:
H
538
I
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 539
ss.56 and 81 -:- Plea of marshalling - Suit for specific A
performance of agreement for sale of suit property which was
mortgaged to Bank - Decree of specific performance granted
- Appeal before High Court - Plea of marshalling raised as
~· .-
the suit property was brought to auction by orders of ORT,
: ,;
along with other properties of vendors - HELD: Plea of B
marshalling being pure question of law based upon the
decree obtained cannot simply be thrown out merely because
the same was not specifically pleaded - In the instant case,
High Court has rightly granted the relief to the plaintiff -
Merely because proceedings are pending before ORT, it is c
not a bar for approaching civil court for relief u/s 56 of TP Act
- Recovery of Debts Due to Bank and Financial Institutions
Act, 1963.
Constitution of India, 1950:
D
Article 226 - Writ petition involving same property as in
pending appeal before High Court - HELD: There is no bar
for the Division Bench of the High Court which has jurisdiction
to hear the appeal, to hear writ petition when the same is
, connected with the main issue - Besides, in the instant case,
E
no such objection was raised before the High Court.
Article 136 - Jurisdiction of Supreme Court - HELD:
Even if leave is granted, irrespective of the nature of the
subject matter, the appellant must show the exceptional and
F
special circumstances and, if there is no interference by the
Court, substantial and great injustice would result.
Code of Civil Procedure, 1908:
s. 35 - Costs - HELD: In asmuch as the plaintiff after G
valuing the suit and paying. substantial court fee, secured a
decree for specific performance, though he could not secure
a relief in its entirety, the plaintiff is entitled to his costs.
Jurisdiction:
H
540 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A
Appeal and writ petition before High Court arising out of
decree of specific performance, and directions of ORT in
respect of same property - Direction by High Court to Bank
vis-a-vis orders of ORT - HELD: High Court after taking into
consideration various connected issues in respect of the
s same properties and several orders passed by Civil Court
and ORT and the fact that the borrower has other properties
to satisfy the claim of the Bank, issued directions/clarifications
safeguarding the interests of all parties, which do not run
counter to orders of ORT, and, therefore, need not be
c interfered with - Recovery of Debts Due to Bank and
Financial Institutions Act, 1963.
Appellants nos. 1 and 2, offered to respondent no.2Bank various properties, including the suit property (30
acres and 86 cents of lands),

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B
[2010] 15 (ADDL.) S.C.R. 538
MIS J.P. BUILDERS & ANR.
v.
A. RAMADAS RAO & ANR.
(Civil Appeal Nos. 9821-9822 of 2010)
NOVEMBER 22, 2010
[P. SATHASIVAM AND ANIL R. DAVE, JJ.]
Specific Relief Act, 1963:
'
c
s.16(c) - Suit for specific performance of contract -
"Readiness and willingness" -
Connotation of - HELD:
Clause (c) of s.16 mandates that the person seeking specific
performance must prove that he has performed or has been
ready and willing to perform the essential terms of the contract
0 which are to be performed by him - It is a condition precedent
for obtaining the relief - The onus is on the plaintiff - In the
instant case, the plaintiff has proved his readiness and
willingness to perform his part of obligation under the contract.
E
Contract Act, 1872:
ss. 31 and 32 -
Contingent contract -
Suit land
mortgaged to Bank - Owners entering into agreement for sale
with plaintiff and undertaking to discharge their loans and to
execute sale deed in favour of plaintiff after discharge of
F mortgage - HELD: Clauses in the agreement to discharge
the loan of the Bank and handover the original title deeds to
the plaintiff cannot be construed as impossible event so as
to affect t/1e terms of the contract to become void - Nor can it
be said that the contract was a contingent contract - Doctrine
G of impossibility cannot be permitted to become a device for
destroying the sanctity of a contract - Doctrines - Doctrine
of impossibility.
Transfer of Property Act, 1882:
H
538
I
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 539
ss.56 and 81 -:- Plea of marshalling - Suit for specific A
performance of agreement for sale of suit property which was
mortgaged to Bank - Decree of specific performance granted
- Appeal before High Court - Plea of marshalling raised as
~· .-
the suit property was brought to auction by orders of ORT,
: ,;
along with other properties of vendors - HELD: Plea of B
marshalling being pure question of law based upon the
decree obtained cannot simply be thrown out merely because
the same was not specifically pleaded - In the instant case,
High Court has rightly granted the relief to the plaintiff -
Merely because proceedings are pending before ORT, it is c
not a bar for approaching civil court for relief u/s 56 of TP Act
- Recovery of Debts Due to Bank and Financial Institutions
Act, 1963.
Constitution of India, 1950:
D
Article 226 - Writ petition involving same property as in
pending appeal before High Court - HELD: There is no bar
for the Division Bench of the High Court which has jurisdiction
to hear the appeal, to hear writ petition when the same is
, connected with the main issue - Besides, in the instant case,
E
no such objection was raised before the High Court.
Article 136 - Jurisdiction of Supreme Court - HELD:
Even if leave is granted, irrespective of the nature of the
subject matter, the appellant must show the exceptional and
F
special circumstances and, if there is no interference by the
Court, substantial and great injustice would result.
Code of Civil Procedure, 1908:
s. 35 - Costs - HELD: In asmuch as the plaintiff after G
valuing the suit and paying. substantial court fee, secured a
decree for specific performance, though he could not secure
a relief in its entirety, the plaintiff is entitled to his costs.
Jurisdiction:
H
540 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A
Appeal and writ petition before High Court arising out of
decree of specific performance, and directions of ORT in
respect of same property - Direction by High Court to Bank
vis-a-vis orders of ORT - HELD: High Court after taking into
consideration various connected issues in respect of the
s same properties and several orders passed by Civil Court
and ORT and the fact that the borrower has other properties
to satisfy the claim of the Bank, issued directions/clarifications
safeguarding the interests of all parties, which do not run
counter to orders of ORT, and, therefore, need not be
c interfered with - Recovery of Debts Due to Bank and
Financial Institutions Act, 1963.
Appellants nos. 1 and 2, offered to respondent no.2Bank various properties, including the suit property (30
acres and 86 cents of lands), as security for the principal
D as well as interest amount payable by MIS 'AA', a sister
concern of appellant no. 1 of which appellant no. 2 was
the sole proprietor. On 15.8.2005, the appellants entered
into a Memorandum of Understanding (MoU) (Ext. A-2)
with respondent no. 1 for sale of the suit property at the
E rate of Rs. 14 lakhs per acre and the latter paid Rs. 1 lakh
as advance. On 3.2.2006, respondent no. 1 entered into
a sale agreement (Ext. A-3) with the appellants for
purchase of the suit property at the enhanced rate of Rs.
18 lakhs per acre for a total consideration of
F Rs.5,55,48,0001- and paid a sum of Rs. 24 lakhs in
addition of Rs. 1 lakh already paid. On 18.4.2006, a
further sum of Rs. 50 lakhs was paid. On 7.8.2006,
respondent no. 1 filed O.S. No. 336 of 2006 before the
Principal District Judge against the appellants and the
G Bank. The suit was partly decreed. Relief of specific
performance was allowed directing appellants no. 1 and
2 specifically to perform their part of the obligations
arising out of the agreement for sale dated 3.2.2006 (Ext.
A-3) by executing the sale deed in favour of respondent
no. 1 on receipt of the balance sale consideration of Rs.
' .
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 541
4,80,48,000/ subject to the mortgage of the Bank.
A
Respondent no. 1 filed an appeal (A.S. No. 708 of 2009)
before the High Court challenging the rejection· of his ·
prayer of mandatory injunction b.Y the trial court for
directing the appellants to discharge the loan in respect
of ORT proceedings and claiming cos~. Applications for
B
interim relief were also filed. The appellants also filed an
·.· appeal ( A.S. No. 946 of 2009) before the High Court
challenging the decree for specific performance.
Meanwhile the Bank filed an O.A. before the Debts
C
Recovery Tribunal. The Presiding Officer, ORT, by his
order dated 15.5.200~, held the Bank entitled to recover
a sum of Rs. 11,08,41,875/- from MIS 'AA'. Consequently,
a recovery certificate and sale notification dated
23.10.2009, bringing to sale the suit property, were
issued.
D
Respondent no. 1 filed a writ petition (W.i:>. No. 23405
·of 2009) before the High Court praying for a writ of
mandamus for bearing the respondents from bringing to
auction the suit property forming the subject matter of the
E
decree in his favour in 0.5. No. 336 of 2006 on the file of
the Principal District Judge.
Ultimately, the Division Bench of the High Court
partly allowed A.S. No. 708 of 2008 filed by respondent
F
no.1 directing him to deposit the balance sale
consideration with 18% interest from the date of filing of
the suit and also directed the appellants to execute the
sale deed conveying the suit property to respondent no.
1; the Bank was directed to proceed against the various
other properties of the appellants being the subject G
matter of O.A. No. 491 of 1999 for recovering the balance·
amount. The review petitions of the appellants having
been dismissed, they filed the appeals.
'
The questions for consideration before the Court H
542
SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A were: (i) whether the plaintiff had established "readiness
and willingness" in terms of s. 16(c) of the Specific Relief
Act, 1963 and the courts below were right in granting the
decree for specific performance; (ii) whether the
agreement for sale was a contingent contract and
B impossible to fulfil and whether the courts below were
justified in granting the relief to the plaintiff; (iii) whether
the right of marshalling as provided in s. 56 of the
Transfer of Property Act, 1882 was available to the plaintiff
in the suit for specific performance and whether the High
c Court was justified in granting the relief in the absence
of any pleading and issue before the trial court; (iv)
whether the High Court was justified in hearing the writ
petition filed under Article 226 of the Constitution of India
along with the regular first appeals filed u/s 96, CPC; (v)
0 whether the High Court was justified in granting costs to
the plaintiff; and (vi) whether the High Court was justified
in issuing the directions to the Bank vis-a-vis the orders
of the Debts Recovery Tribunal.
E
Dismissing the appeals, the Court
HELD: 1.1. "Readiness and willingness" is enshrined
in clause (c) of s. 16(c) of the Specific Relief Act, 1963.
This clause provides that the person seeking specific
performance must prove that he has performed or has
F been ready and willing to perform the essential terms of
the contract which are to be performed by him. The
words "ready" and "willing" imply that the person was
prepared to carry out the terms of the contact. The
distinction between "readiness" and "willingness" is that ·
G the former refers to financial capacity and the latter to the
conduct of the plaintiff wanting performance. Generally,
readiness is backed by willingness. [para 8-9] [561-G-H;
562-A-B]
1.2. Section 16(c) of the Specific Relief Act, 1963
H mandatE!S "readiness and willingness" on the part of the
'
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 54~
'
plaintiff and it is a condition precedent for obtaining relief A
of grant of specific performance. It is also clear that in a
suit for specific performance, the plaintiff must allege and
prove a' continuous "readiness and willingness" to
perform the contract on his part from the date of the
contract. The onus is on the plaintiff.
It is settled law
B
that even in the absence of specific plea by the opposite
party, it is the mandate of the statute that plaintiff has to
comply with Section 16(c) of the Specific Relief Act and
when there is non-compliance with this statutory mandate,
the Court is not bound to grant specific performance and c
is left with no other alternative but to dismiss the suit. It
·is also clear that readiness to perform must be
established throughout the relevant points of time.
"Readiness and willingness" to perform the part of the
contract has to be determined/ascertained from the 0
conduct of the parties. [para 12] [563-E-H; 562-A]
N.P. Thirugnanam vs. Dr. R. Jagan Mohan Rao & Ors.,
1995 (2) Suppl. SCR 53 = (1995) 5 SCC 115; P.D'Souza
vs. Shondrilo Naidu, 2004 (3) Suppl.· SCR 186 = (2004) 6
sec 649 - relied on.
E
R. C. Chandiok & Anr. vs. · 'wni Lal Sabharwal & Ors.,
1971 SCR 573 = (1970) 3 SCC 140 - referred to.
1.3. Insofar as readiness and willingness on the part
of the plaintiff in the instant case is concerned, apart from
F
the specific plea in the plaint and his assertion in the
witness box at the time of trial, about the payment and
advance of substantial amount, he also placed the
relevant materials in the form of letters to show that he
was corresponding with the Bank for early settlement of G
the dues. The plaintiff has demonstrated by placing oral
and documentary evidence that on the date of execution
of Ex. A-3, he has. paid further advance of Rs. 24 lakhs
and Rs. 50 lakhs on 18.04.2006. In order to prove that he
had sufficient means of finance, the plaintiff has produced
H
544 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A documents under Exts. A-12 and A-13. In his evidence
as PW-1, he has asserted that he had ready cash and
also produced Fixed Deposit Receipt (Ex.A-11 ), proof of
Savings Bank Accounts (Exts. A-12 and A-13). Exts. A11 to A-13 coupled with assertion made in the oral
s -evidence of PW-1, would amply show that plaintiff had
suffh:ient ca.sh and financial capacity to complete the
transaction. Under Ext. A-4, he had intimated that he is
prepared to get the sale executed. The Courts below are,
therefore, right in arriving at a conclusion that the plaintiff
c has proved and complied with the mandates provided u/
s 16 (c) of the Specific Relief Act. [para 17-18) [566-A-B;
567 -A-E-G; 566-B-C]
1.4. Further, the plaintiff is required to pay the
balance amount of consideration only on the event of a
D demand made for payment of further amount by the
defendants on the basis of the confirmation letter to be
obtained from the bank as per the agreement for sale
under Ext. A-3. Absolutely, there is no evidence as to any
demand made by defendant Nos. 1 and 2 from the
E plaintiff for further payment of sale price. Defendant Nos.
1 and 2 did not lead any oral evidence in support of their
·claim. They also avoided the witness box. As rightly
pointed out by the High Court, mere withdrawal of Rs.
10,01,000/- deposited in "No-lien account" by the plaintiff
F has no significance since subsequent to the same both
parties have entered into agreement for sale (Ext.A-3) on
03.02.2006 on which date the plaintiff has also paid a
further advance of Rs. 25 lakhs, and further obtained
advance of Rs. 50 lakhs from the plaintiff on 18.04.2006
G and made endorsement in the agreement for sale (Ext.A3). These facts have been clearly explained by PW-1 in
his evidence and he also asserted that the same fact was
orally informed to defendant Nos. 1 and 2. There is no
reason to disbelieve the assertion of PW-1. [para 18) [567H F-G; 568-A-B-G-H; 569-A-C]
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 545
1.5. With the materials placed, specific assertion in the
A
plaint, oral and documentary evidence as to execution of
agreement, part-payment of sale consideration, having
sufficient cash and financial capacity to execute the sale
deed, bank statements as to the moneys in fixed deposits
and saving accounts, the plaintiff has proved his
B
"readiness" and "willingness" to perform his part of
obligation under the contract. The concurrent findings
of the trial court as well the High Court as to readiness
and willingness to perform plaintiff's part of the
obligations under the contract, in the absence of any c
acceptable contra evidence, is confirmed. [para 19] [569D-F]
2.1 . .Contingent contract has been defined in s.31 and
method of enforcement is stated in s.32 of the Contract
Act, 1872. It is clear that if the condition prescribed or D
even described in the contract is impossible,
undoubtedly, such contracts become void and not
enforceable in terms of s. 32. In the instant case, among
various clauses, Clauses 4, 6, 7 in the MoU (Ext. A-2) were
highlighted by the appellants to contend uncertain events
E
and impossible conditions at ··1e hands of the Bank. But
the agreement for sale dated 03.02.2006 is a fresh
agreement and, therefore, Clauses 4, 6 and 7 of the MoU
(Ext. A-2) would not govern the parties. It is relevant to
note that in the plaint, this aspect has been specifically
F
pleaded wherein it was highlighted that the plaintiff
sought for performance of contract strictly in accordance
with the original Memorandum of Understanding (MoU)
dated 15.08.2005 as merged with the agreement for sale
. dated 03.02.2006 entered into between the plaintiff and
G
the defendant Nos. 1 and 2 for sale and purchase of the
suit property. As per Clause 3, 4 and 6 in Ex. A-3, the
vendor and defendant Nos. 1 and 2 have undertaken to
discharge their loans and hand over title deeds. In view
of E~t. A-3, the conditions incorporated in. Ext. A-2 need
H
546
SUPREME COURT REPORTS (2010] 15 (ADDL.) S,C.R.
A not be complied with and it cannot be said that the
contract was a contingent contract and unless and until
a letter of confirmation issued by the Indian Bank, the
same is not enforceable. The vendors have agreed to
sell the property but agreed to execute the sale deed after
B discharge of the mortgage in favour of the defendants.
It was only the execution of the sale deed which was
postponed to a future date. The clauses referred in Ext.
A-3 do not insist the sale deed is to be executed only after
the acceptance of OTS proposal by the Bank. [para 21C 22) (570-C-D-F-H; 571-A-G; 572-C-E)
2.2. Clause 4 of Ext. A-3, makes it clear that to
discharge the loans of the Bank, tlie vendors are free to
make a request to the purchaser, namely, the plaintiff, to
make further advance and after getting the amount from
D the plaintiff, defendant Nos. 1 and 2 have to secure
documents from the Bank. The trial Court as well as the
High Court held that there is no material to show tha·t
defendant Nos. 1 and 2 made any attempt to comply with
Clause 4 in Ex. A-3 by requiring the plaintiff to make
E further advance. The conduct of the plaintiff in keeping
the required money, no doubt, in his SB account for the
purpose of meeting the demand of defendant Nos. 1 and
2 cannot be ignored. [para 22) (572-F-H; 573-A)
F
2.3. Even otherwise, the agreement to discharge the
loans of the Bank and handover the original title deeds
to the plaintiff cannot be construed as impossible event
so as to affect the terms of contract to become void. The
contract in question did not come to an end on this
ground and such contract is not a contingent contract
G and undoubtedly, the Court has jurisdiction to grant relief
in terms of the contract. Obtaining No Objection
Certificate (NOC) from the authority concerned, clearance
of NOC from Income Tax Department or any other State/
Central authority, securing title deeds after clearing
H
J.P. BUILDERS & ANR. v. A.. RAMADAS RAO & ANR. 547
certain loans are incidental and implied covenant on the
A
part of the vendors to do the needful to give effect to the
agreement. [para 22-23] [573-B-E]
2.~. It is also relevant to note that thoug_h defendant
·Nos. 1 and 2, at the first instance offered OTS for Rs. 148
8
· lakhs, the Bank, after taking into consideration various
aspects claimed Rs. 629.60 lakhs as their proposal. It
.was'.!~~t an impossible performance consjdering the
amount borrowed by the sister agency of defendant no.1
'and· various properties possessed by defendant Nos. 1 C
and 2 in prime localities of the city and in and around the
,,
sub-urban areas. The contract in question is capable of
perfor'mance and the plea of the appellants that it is a
contirigknt contract and incapable of performance cannot
be accepted. Besides, this was not an issue before the
frial Court and such plea was not raised in the written
statement. Further, defendant Nos. 1 and 2 did not
bother to e.xplain all salient features by entering the
wi~ess box in support of their claim. The plaintUf has
esfablished that he has parti;!lly performed his part of
obligations by paying the advance amount of Rs. 25 iaKhs
E
and another Rs. 50 lakhs in addition to the initial deposit
D
!
of Rs. 1 Lakh. The plaintiff has proved his readines.s and
willingness and financial ability to complete the sale
• transaction. [para 24-25] [573-F~H; 574-A-C]
2.5. The court will not apply the doctrine of
impossibility to assist a party which does not want to fulfil
its obligations under them contract. The said doctrine
cannot be permitted to become a device for destructing
the sanctity of contract. [para 34] [579-E]
3.1. The doctrine of marshalling rests upon the
principle that a creditor who has the means of satisfying
his debt out of several funds shall not, by the exercise
of his right, prejudice another creditor whose security
F
G
H
548 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A comprises only one of the funds. Section 56 of the
Transfer of Property Act, 1882 deals with the right of
subsequent purchaser to claim marshalling. The High
Court after noting that the plaintiff had paid substantial
amount as advance and secured decree for specific
B performance came to the conclusion that the right of
marshalling is available to the plaintiff. The concept as
in s.56 applies to sales in a manner similar to s. 81 which
applies to mortgages alone. [para 27-28) [575-A-B-E]
C
3.2. In the instant case, in view of the sale agreement
which results into decree for specific performance, the
plaintiff is entitled to insist upon defendant Nos. 1 to 3 to
have the mortgage debt satisfied out of the properties not
sold to the plaintiff and in any case if the sale proceeds
are not sufficient, then only to proceed against the said
D suit properties. It is not in dispute that the plea of
marshalling and applicability of s.56 of the T.P. Act was
not raised before the trial Court. However, if the entire
plaint is considered, the plaintiff has claimed a larger
relief. Even otherwise, the plea of marshalling being pure
E question of law based upon the decree obtained for
specific performance, cannot simply be thrown out merely
because the same was not specifically pleaded. [para 2930) [575-F-G; 577-D-E]
F
Anathula Sudhakar vs P. Buchi Reddy (Dead) By Lrs.
And Ors. 2008 (5) SCR 331 = (2008) 4 SCC 594; Bachhaj
Nahar vs. Nilima Manda/ and Anr. 2008 (14) SCR 621 =
(2008) 17 sec 491 - held inapplicable.
3.3. It is significant to note that the relief has been
G prayed in the plaint by paying substantial court fee of Rs.
41,66,326.50. In such circumstances, when a party is able
to secure substantial relief, namely, decree for specific
performance with clearance of mortgage amount, it is the
duty of the court to mould the relief so as to render
H substantial justice between the parties. In this regard, the
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 549
High Court has adopted the right course in granting relief
A
to the plaintiff. [para 32] [578-G]
3.4. Merely because for recovery of the loan secured
by banks, a special Act, namely, RecovE!ry of Debts due
to Banks and Financial Institutions Act, 1993 has been
enacted, it is not a bar for approaching the civil court to
apply for other relief such as s.56 of the T.P. Act. By
issuing the direction on the application of s. 56 of the T.P.
Act, the Division Bench has not modified or eroded the
order passed by the ORT. On the other hand, it is an
admitted fact that the Bank has accepted the impugned
C
verdict of the High Court and did not challenge the same
before this Court by filing an appeal. Further, by granting
such a relief, the Bank is not prejudiced in any way by
bringing other properties for sale first, to satisfy the
mortgage debt payable by defendant Nos. 1 and 2. In fact,
D
the High Court was conscious and safeguarding the
interests of the Bank observed that if sale proceeds of
other items of properties are not sufficient to satisfy the
debt payable to the Bank by defendant Nos. 1 and 2, in
that event, Bank can proceed against the suit properties.
(para 33] (578-H; 579-A-D]
B
E
4. As regards the High Court hearing the writ petition
along with the appeals, the writ petition was filed by the
very same plaintiff impleading defendant Nos. 1 and 2, M/
F
s 'A A', which is a sister concern of defendant No. 1, and
defendant no.3-Bank, apart from Union of India, praying
for issuance of a writ of mandamus forbearing the
respondents from bringing to auction the suit property,
forming the subject matter of the decree in his favour in
G
O.S. No 336 of 2006 on the file of the Principal District
Judge. It is not in dispute that the parties in the appeals
as well as in the writ petition are one and the same
except Union of India against whom the writ petitioner
has not sought any relief. It is also not in dispute that
H
550
SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A the subject matter of the /is and properties are one and
the same in both the appeals and the writ petition. There
is no bar for the Division Bench which has jurisdiction
to hear appeal, to hear writ petition when the same is
connected with the main issue. In fact, no serious
B objection was raised before the High Court for hearing
the writ petition along with the appeal. On the other hand,
on the earlier occasion, when the parties filed special
leave petitions against certain interim orders, this Court
requested the High Court to dispose of all the matters
C together. It is relevant to point out that no clarification
or direction was sought in respect of the said order
1 ... passed by the Supreme Court. (para 35] [579-F-H; 580A-D]
Brahm Parkash vs. Manbir Singh & Ors., (1964] 2 SCR
D 324; Sain Ditta Mal vs. Bulagi Mal & Sons and others AIR
(34) Lahore 230; and Karam Singh Sobti vs. Smt Shukla
Bedi, AIR 1962 Punjab High Court at Delhi 477 - referred
to.
E
5. Section 35 CPC speaks about costs. Though, in
the grounds raised in the appeal, no serious argument
was advanced about the award of costs, the appellants
have agitated the award of cost by the High Court in
favour of the plaintiff. Inasmuch as the plaintiff after
F valuing the suit paid a substantial court fee of Rs.
41,66,326.50 and, ultimately, secured a decree for specific
performance though he could not secure a relief in its
entirety, the plaintiff is entitled for his costs. It is not in
dispute that the court has granted the major relief,
G namely, decree for specific performance subject to
clearance of the mortgage debt. In the circumstances, the
High Court rightly ordered costs payable by the
contesting defendant Nos. 1 and 2 to the plaintiff. [para
40] (583-E-H]
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6. As regards directions to the Recovery Officer/
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 551
I
Tribunal, the High Court took into consideration various
A
connected issues in respect of the same properties and
several orders passed by the Civil Court and the ORT and
the fact that defendant Nos. 1 and 2 have sufficient other
properties in prime locations in the city and other nearby
places and also of the fact that the Bank was also party
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to both these proceedings. The Bank also accepted the
impugned order of the High Court and did not file any
appeal before this Court. The directions/clarifications
issued by the High Court do not run counter to the orders
of ORT/Recovery Officers, on the other hand, it C
safeguards the interest of all parties. Only because of the
delay on the part of defendant Nos. 1 and 2 in not settling
the dues of the Bank at the appropriate time, in the recent
times, property value has risen to some extent. On this
ground, the direction of the High Court about the sale of
the said properties cannot be interfered with: [para 41] · D
[684-A-F]
.
Allahabad Bank vs. Canara Bank & Anr., 2000 (2) -
SCR 1102 = (2000) 4 SCC 406, State Bank of India vs. Allied
Chemical Laboratories & Anr., (2006) 9 SCC 252, India
E
Household and Healthcare Ltd. vs. LG Houshold and
Healthcare Ltd. 2007 (3) SCR 726 = (2007) 5 SCC 510 -
referred to.
7. So far as interference under Article 136 of the
Constitution of India is concerned, even after issuance
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of· notice in the special leave petition and after grant of
leave, irrespective of the nature of the subject matter, the
appellants must show that exceptional and special
circumstances exists and, if there is no interference by
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this Court, substantial and grave injustice will result and
that the case has features of sufficient gravity to warrant
a decision from this Court on merits. [para 46] [589-0-E]
Balvantrai Chimanlal Trivedi, Manager Raipur Manfg.
Co. Ltd., Ahmedabad vs. M.N. Nagrashna and Others AIR
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552 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A 1960 SC 407; Balvantrai Chiman/a/ Trivedi vs. M.N.
Nagrashna and Others, AIR 1960 SC 1292; Taherakhatoon
(D) By Lrs. vs. Salambin Mohammad, 1999 (1) SCR 901 =
(1999) 2 sec 635; Chandra Singh and Ors. VS. State of
Rajasthan and Anr. 2003 (1) Suppl. SCR 674 = (2003) 6
B sec 545 - relied on.
c
Case Law Reference:
1995 (2) Suppl. SCR 53
relied on
2004 (3) Suppl. SCR 186 relied on
1971 SCR 573
referred to
para 9
para 11
para 12
2008 (5) SCR 331
2008 (14) SCR 621
D
AIR (34) Lahore 230
held inapplicable para 31
held inapplicable para 31
referred to
para 37
referred
E
F
AIR 1962 Punjab High Court at Delhi 477
to
para 37
[1964] 2 SCR 324
2000 (2) SCR 1102
(2006) 9 sec 252
2007 (3 ) SCR 726
AIR 1960 SC 407
AiR 1960 SC 1292
1999 (1) SCR 901
referred to
referred to
referred to
referred to
relied on
relied on
relied on
G
2003 (1) Suppl. SCR 674 relied on
para 38
para 41
para 41
para 41
para 43
para 44
para 45
para 46
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CIVIL APPELLATE JURISDICTION : Civil Appeal No,s.
9821-9822 of 2010.
From the Judgment & Order dated 23.2.2010 of the High
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 553
Court of Judicature at Madras in A.S. No. 708 of 2008 and
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Judgment order dated 29.4.2010 in Review Application No. 37
of 2010 in A.S. No. 708 of 2008.
WITH
C.A. Nos. 9824-9825 & 9826 of 2010.
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L. Nageshwar Rao, Nalini Chidambaram, R.F. Nariman,
K.V. Viswanathan, Bhargava V. Desai, Rahul Gupta, Nikhil
Sharma, Pallavi Mohan, K.K. Mani, R. Thiagarajan, Vasudha
Thiagarajan, Abhishek Krishna, Himanshu Munshi for the C
appearing parties.
The Judgment of the Court was delivered by
P. SATHASIVAM, J. 1. Leave granted in all the Special
Leave Petitions.
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2. These appeals seek to challenge the common judgment
and order dated 23.02.2010 passed by the Division Bench of
the High Court of Judicature at Madras in A.S. Nos. 708 of 2008
and 946 of 2009 and W.P. No. 23405 of 2009 whereby the High
· Court partly allowed A.S. No. 708 of 2008 confirming the decree
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for specific performance granted by the Principal District Court,
Chengalpet in O.S. No. 336 of 2008 and dismissed A.S. No.
946 of 2009 preferred by the appellants herein. By the same
order, the High Court disposed of W.P. No. 23405 of 2009 with
certain directions. By a subsequent order dated 29.04.2010,
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the High Court dismissed the Review Application No. 37 of
2010 in A.S. No. 708 of 2008 and Review Application No. 47
of 2010 in W.P. No. 23405 of 2009 preferred by the appellants
herein.
Brief facts:-
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3. (a) The subject matter of the suit is a total extent of 30
acres 86 cents of land in Senthamangalam Village,
Sriperumbadur Taluk, Kancheepuram District comprised in
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554
SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
38 items. Mis J.P. Builders-Appellant No. 1 and Shri J.P.
Paramanandam-Appellant No. 2 herein are the owners of
the suit property which they acquired under various sale
deeds. The sister concern of Mis J.P. Builders viz., Mis
Anand Agency has availed certain financial assistance
from the Indian Bank, (hereinafter referred to as 'the· Bank')
and for the said assistance Appellant Nos. 1 and 2 herein
offered their various properties including the suit property
as security for the principal as well as interest amount
payable by Mis Anand Agency of which Appellant No. 2
is the sole proprietor.
(b) On 15.08.2005, the appellants entered into a
Memorandum of Understanding (MoU) (Ex. A-2) with
Respondent No. 1 herein for sale of the suit property at a
sale consideration of Rs.14 lakhs per acre and a sum of
Rs. 1 _ lakh was paid as advance by way of cheque on the
same day. Balance sale consideration was to be paid
within three months from the date of obtaining confirmation
letter from the Bank.
(c) On 10.10.2005, Mis J.P. Builders, by a letter
addressed to the AGM, Indian Bank, Asset Recovery
Management Branch 11, offered a sum of Rs. 100 lakhs as
full and final settlement of the dues of its sister concern,
Mis Anand Agency, which was declined by the Bank by
letter dated 15.10.2005 advising them to .revise the offer
with substantial improvement. By letter dated 23.01.2006,
the Bank stated that Appellant No. 2 herein had not made
any improvement in his One Time Settlement (in short
'OTS') proposal of Rs. 100 lakhs and hence the Bank is
proceeding to enforce its rights under the Securitization
and Reconstruction of Financial Assets and Enforcement
of Security Interests Act, 2002 (hereinafter referred to as .
'the Act'). By letter dated 01.02.2006, Appellant No. 2
offered a sum of Rs. 148 lakhs as one time settlement of
the loans availed by Mis Anand Agency.
J.P .. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 555
[P. SATHASIVAM, J.]
(d) On 03.02.2006, Respondent No. 1 entered into a Sale
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Agreement with the appellants for purchase of the suit
property. The sale price of Rs. 14 lakhs per acre was
enhanced to Rs. 18 lakhs per acre and the total sale
consideration was fixed at Rs. 5,55,48,000/-. On the same
day, Respondent No. 1 had paid a sum of Rs. 24 lakhs
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by way of cheque as further advance to Appellant No.2 in
addition to Rs. 1 lakh already paid. On 18.04.2006, a
further payment of Rs. 50 lakhs was made by Respondent
No. 1.
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(e) On 26.04.2006, the Bank rejected the OTS offer of Rs.
148 lakhs stating that since the amount offered is very low,
the Bank has decided to pursue the recovery application
filed before the Debts Recovery Tribunal, (hereinafter
referred to as 'ORT') Chennai for the recovery of the dues
of the Bank. Again, by letter dated 15.05.2006, the Bank
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stated that out of court settlement can be done if an offer
of Rs. 629.60 lakhs by working out interest at PLR i.e. 11 %
compound on the principal outstanding as on 31.03.1993
be made. However, since the settlement amount was
more than the sale consideration for the suit property, the
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Appellant No. 2 could not agree to pay the same.
(f) On 26.07.2006, Respondent No. 1 issued a legal notice
to the appellants calling upon them to liquidate the loans
out of the amounts received from him and retrieve the
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original documents from the Bank in order to execute the
sale deed. By letter dated 27.07.2006, the Appellant No.
1 replied to the notice stating that the first respondent had
not paid the balance sale consideration in spite of
repeated requests and raised doubt that the first
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respondent is no longer interested to buy the suit property,
therefore, a legal notice was sent calling upon Respondent
No. 1 to pay a sum of Rs. 1 crore as liquidated damages.
(g) On 07.08.2006, Respondent No. 1 filed O.S. No. 336
of 2006 before the Principal District Judge, Chengalpet
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556 SUPREME COURT REPORTS (2010] 15 (ADDL.) S.C.R.
against the appellants and the Bank. By judgment and
decree dated 30.04.2008, the Principal District Judge,
Chengalpet decreed the suit partly, granting the relief of
specific performance directing appellant Nos. 1 & 2 herein
to specifically perform their part of the obligations arising
out of the agreement for sale (Ex. A-3) dated 03.02.2006
by executing the sale deed in favour of Respondent No. 1
on receipt of the balance sale consideration of Rs.
4,80,48,000/- subject to the mortgage of the Bank. Further
the relief in respect of permanent injunction restraining the
appellants from alienating or encumbering or dealing with
the subject property was granted. The prayer for mandatory
injunction for directing the appellants to discharge the loan
in respect of ORT proceedings pending on the file of DRT1, Chennai, thereby retrieve the documents and deliver the
same to Respondent No. 1 at the time of execution and
registration of sale deed was refused. Challenging the
rejection of the prayer of mandatory injunction and failure
to award costs, Respondent No. 1 filed A.S. No. 708 of
2009 before the High Court of Madras along with interim
applications being M.P. Nos. 1 and 2 of 2008. On
01.02.2009, Respondent No. 1 filed another interim
application in M.P. No. 1 of 2009 in A.S. No. 708 of 2008.
By order dated 18.04.2009, the Division Bench of the High
Court passed an order of injunction in M.P. No. 1 of 2008
and M.P. No. 1 of 2009 restraining the appellants herein
from alienating, encumbering or dealing with the suit
property pending appeal.
(h} On 06.10.2006, the Bank filed OA No. 491 of 1999
withdrawing its OTS offer of Rs. 629.60 lakhs and called
upon the appellants to pay the total amount due along with
future interest, costs and charges. By order dated
15.Q.5.2009, the Presiding Officer, ORT-I, Chennai,
disposed of O.A. No. 491 holding that the Bank is entitled
to recover a sum of Rs. 11,08,51,875/- from Mis Anand
Agency. Pursuant to the order, the Recovery Officer
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 557
[P. SATHASIVAM, J.]
issued the recovery certificate being D.R.C. No. 102 of
A
2009 and also issued the 1st sale notification dated
23.10.2009 bringing to sale the suit property. The upset
price wa~ fixed at Rs. 27 crores and the date of sale was
fixed as 25.11.2009.
(i) Challenging the decree for specific performance
B
granted by the Principal Judge, Chengalpet, the appellants
filed A.S. No. 946 of 2009 before the High Court which was
admitted by the Division Bench on 20.10.2009. On
16.11.2009, Respondent No. 1 filed a writ petition being
W.P. No. 23405 of 2009 before the High Court praying for
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a writ of mandamus for bringing the suit property in O.S.
No. 336 of 2006 on the file of the Principal District Judge,
Chengalpat in his favour and also filed Miscellaneous
Petition in the aforesaid writ petition being M.P. No. 1 of·
2009 praying to stay the auction sale of the property
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covered by the decree dated 30.04.2008 made in O.S. No.
336 of 2006. On the same day, the interim applications
bearing M.P. Nos. 2 & 3 of 2009 in A.S. 708 of 2008 were
also listed and the same were dismissed by the Division
Bench.
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0) Questioning the auction sale proposed to be conducted
by the ORT, on 19.11.2009, Respondent No. 1 filed I.A.
Nos. 1 to 3 in D.R.C. No. 102 of 2009 in O.A. No. 491 of
1991 before the Recovery Officer, ORT-I, Chennai praying
for release of the scheduled property and stay of auction
sale. On 23.11.2009, the Recovery Officer, ORT-I, Chennai
dismissed the said applications. On 24.11.2009,
Respondent No. 1 filed SLP (C) No. 31358 of 2009 before
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this Court challenging the order dated 16.11.2009 passed
by the Division Bench of the High Court in M.P. No. 1 of G
2009 in W.P. No. 23405 of 2009. Respondent No. 1 also
filed another SLP (C) Nos. 19154-55 of 2009 challenging
the order dated 18.04.2009 passed by the Division Bench
of the High Court in M.P. No. 1 of 2008 and M.P. No. 1 of
2009 in A.S. No. 708 of 2008 and order dated 16.11.2009
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558
SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C R.
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in M.P. Nos. 2 & 3 of 2009 in A.S. No. 708 of 2008. On
the very same day, i.e. on 24.11.2009, this Court passed
an order to continue auction but not to declare the result.
On 11.12.2009, this Court dismissed the SLPs filed by
Respondent No. 1.
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(k} n 23.02.2010, the Division Bench, by impugned
judgment, partly allowed A.S. No. 708 of 2008 filed by
Re1pondent No. 1 herein directing him to deposit the -
balance sale consideration of Rs.4,80,48,000/- with 18%
inttftst from the date of filing of the suit and also directed
the appellants herein to execute the sale deed conveying
the suhject property to Respondent No. 1 and the Bank was
directed to proceed against the various other properties
of the appellants being the subject matter of O.A. No. 491
of 1999 for recovering the balance amount. The
appellants preferred Review Petition No. 37 of 2010
before the High Court which was dismissed on
29.04.2010. Being aggrieved by the impugned judgment
dated 23.02.2010 and order dated 29.04.2010, the
appellants have'preferred these appeals by way of special
leave petitions before this Court.
4.
Heard Mr. L. Nageswara Rao and Mrs. Nalini
Chidambaram, learned senior counsel for the appellants and
Mr. R.F. Nariman, learned senior counsel for respondent No.1
F and Mr. Himanshu Munshi, learned counsel for respondent
No.2-Bank.
5. Mr. L.N. Rao and Mrs. Nalini Chidambaram appearing
for the appellants after taking us through the pleadings,
judgment of the trial Court as well as the impugned judgment
G of the High Court raised the following contentions:
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(i)
The plaintiff has not established "readiness and
willingness" in terms of Section 16( c) of the Specific
Relief Act, 1963, hence the Courts below ought not
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 559
[P. SATHASIVAM, J.]
to have granted discretionary relief of decree for
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specific performance.
(ii)
Inasmuch as the agreement being a contingent
contract, which is impossible to fulfil and cannot be
implemented, in such circumstance, whether the
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Courts below are justified in granting the relief in
favour of the plaintiffs.
(iii)
Whether the right of marshaling by subsequent
purchaser as provided in Section 56 of the Transfer
of Property Act, 1882 (hereinafter referred to as 'the
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T.P.