Holding

The Supreme Court upheld the High Court, holding that the essential terms of the oral sale contract were not proved and therefore specific performance could not be granted, limiting relief to a refund of the advance with interest and a decree for possession.

Summary

The case involved two related suits concerning a plot of land: one for recovery of possession and a permanent injunction, and another for specific performance of an alleged oral agreement of sale. The plaintiff claimed the defendants had constructed a compound wall on his plot, while the defendants asserted that an oral sale agreement existed with the plaintiff's grandmother, for which an advance of Rs.16,575 had been paid. The trial court granted specific performance and dismissed the possession suit, but the Andhra Pradesh High Court reversed the decision, granting possession and limiting the specific performance claim to a refund of the advance with interest. On appeal, the Supreme Court examined whether the essential terms of the oral contract—such as delivery of possession and requisite clearance under the Urban Land Ceiling Act—were proved and whether specific performance could be awarded under Section 53(A) of the Transfer of Property Act. The Court held that the essential terms were not established, that specific performance is a discretionary remedy, and therefore upheld the High Court’s order granting only the refund of the advance amount with interest and the decree for possession. Consequently, the appeals were dismissed.

Issues considered

Whether an oral agreement of sale of immovable property is enforceable in the absence of clear proof of essential terms
Whether specific performance can be granted as a discretionary relief under Section 53(A) of the Transfer of Property Act
Whether the plaintiff is entitled to possession of the plot and a permanent injunction
Whether the alternative relief of refund of the advance amount with interest is appropriate

Legislation cited

Subjects

specific performanceoral agreementtransfer of propertySection 53Adiscretionary reliefrefund of advancepossessionessential terms of contracturban land ceiling act

Judgment

A V.R SUDHAKARA RAO AND ORS.
v.
T.V. KAMESWARI

APRIL 18, 2007

B [DR. ARIJIT PASA YAT AND LOKESHWAR SINGH PANTA, JJ.]

Tran~fer of Property-Two cross suits-One for recovery ofpossession
of suit property-Other for specific performance of oral agreement of sale of
C the suit property-Alternative, relief of refund of advance amount sought by
plaintiff seeking specific performance-Suit for specific performance decreed
and other suit dismissed by trial court-High Cou.•t decreeing the suit for
recovery of possession and suit for specific performance decreed only to the
extent of refund of advance money-On appeal, held: Order of High Court
is correct-Relief of specific performance is discretionary-All the essential
D terms and conditions of a well concluded contract has not been established
in the case-Specific Performance-Relief-Nature of

Plaintiff (predecessor oft he respondent herein) filed a suit for recovery
of possession of the suit property after evicting the defendants (predecessor
of appellant herein) and for permanent injunction. He pleaded that the property
E in question (plot) was allotted to him and possession of the same was also
delivered to him. The adjacent land was allotted to the defendants. Defendants
sought permission of the plaintiff to stock their building material on his plot
as they were doing construction work on their plot. Later, he came to know
that defendants had constructed compound wall on his (llot as well.

F In the written statement, the case of the defendants vras that the plaintiff
entered into oral agreement of sale with grandmother of the appellant herein
through father of the appellant (defendant). The defendant paid an amount
towards part of sale consideration to the plaintiff on behalf of the vendee.
Plaintiff after calculating the entire amount towards cost of the plot asked
G the defendant to pay the balance amount by a demand draft. Plaintiff also
promised to execute and register necessary sale deed in favour of the vendee
within a week of the oral agreement and to obtain permission from Urban
Land Ceiling Authorities. In pursuance of the oral agreement, the draft was
made. Thereafter, the vendee purchased the adjacent plot of the suit property.

H 284
V.R.SUDHAKARARAOv. T.V.KAMESWARI 285
As per the oral agreement, since both the plots belonged to the vendee the A
common compound wall was constructed.

Appellant-grandson of vendee filed a suit against the plaintiff for the
relief of specific performance on the strength of the oral agreement for sale.
Trial Court decreed the suit for specific performance believing the oral
agreement of sale and dismissed the suit for recovery of possession. B
In appeal against the same High Court decreed the suit for specific
performance only to the extent of alternative relief of refund of the advance
amount with interest. Suit for delivery of possession was decreed. Hence the
present appeal.
c
Dismissing the appeal, the Court

HELD: The High Court has rightly concluded that there is no clear proof
relating to the other terms of condition. The relief of specific performance is
discretionary relief and except the oral evidence, there is no clear evidence D
to prove several of the essential terms which have been taken note of by the
High Court. The High Court, on analyzing the evidence, has come to hold
Y that except Exhibit 8-1 and the oral evidence of DW I and DW 2, there is no
other clear proof relating to the other terms and conditions of the contract
which can be termed as essential conditions like delivery of possession and
also the obtaining the permission from the Urban Land Ceiling Authorities E
and therefore, it cannot be said that all the essential terms and conditions of
a well concluded contract had been established in the case at hand. These
conclusions of High Court on fact do not appear to be in any way unsustainable
and on the other hand are in line with the applicable legal principles.
[Paras 19 and 201 (292-G-H; 293-A-Bl
F
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 8303-8304 of
2003.

From the Judgment and Order dated 19.07.2002 of the High Court of

.
Judicature of Andhra Pradesh at Hyderabad in Appeal Nos. 753 of 1989 &
IOI4ofl989. G
- L.N. Rao, R. Santhan Krishnan, K. Radha Rani, Praveen K. Pandey, P.
Vijay Kumar and C.S.N. Mohan Rao for the Appellants.

P. Narasimha (for Mis. P.S.N. & Co.), for the Respondent.
H
286 SUPREME COURT REPORTS [2007] 5 S.C.R.

A The Judgment of the Court was delivered by

DR. ARIJlT PASA YAT, J. I. Challenge in these appeals is to the common
judgment passed by a learned Single Judge of the Andhra Pradesh High
Court disposing of two appeals arising out of common judgment made in OS
No. 350 of 1982 on the file oflearned Second Additional Subordinate Judge-
B Vishakapatnam and in OS No. 131 of 1982 on the file of the same Court.

2. Background facts in a nutshell are as follows:

3. One Thangirala Venkata Avadhani filed O.S.No.131/82 for recovery of
possession of the plaint schedule property after evicting the defendants and
C for the relief of permanent injunction and O.S.No.350/82 was filed by one
Sudhakar Rao against Thangirala Venkata Avadhani and certain others for the
relief of specific performance of an oral agreement of sale relating to the plaint
schedule property. The said Thangirala Venkata Avadhani died during the
pendency of the said suits. T.A. Kameswari, the appellant in both appeals
D before the High Court, had been brought on record as the legal representatives
of the said Venkata Avadhani. In O.S.No.131/82 the said Venkata Avadhani
as plaintiff had pleaded that the staff of Andhra University formed a Co-
/
operative Society. The said Society purchased from her Highness Janaki
Ratnayammajee. CBE, Dowager Rani Saheba of Gangapur Ac.8.80 cents forming
part ofT.S. No.125 (part) of Waltair Ward in Visakhapatnam Municipality. The
E said Society allotted a plot to the Ist plaintiff, i.e. Plot No.30, in the said lay-
out by means of a registered sale deed dated 30.11.1967 and delivered
possession. To the South of the Plot No.30 there is Plot No.31. The I st
plaintiff came to learn that the defendants purchased this plot. In the plot
purchased by the defendants they constructed building. While constructing
F the said building, as their plot was having road on three sides, they requested
the I st plaintiff for permission to stock their sand, stone and granite and
bricks in the site of the plaintiff and as the site of the I st plaintiff was vacant
he said no objection and in utter good faith he gave the said permission.
Suddenly on the evening of 10.5.1982, the 1st plaintiff was informed that the
defendants were constructing a compound wall on the East and West of the
G !st plaintiffs plot No.30. He also four.d that the foundations were dug and
the stone was laid in the foundation both on Eastern side and Western side.
On the early morning he immediately gave a report to the III Town Police
..
Station. Along with the !st plaintiff a police constable came and the !st
plaintiff found that the Eastern compound wall was completed and in the
H Western compound wall the construction with bricks was started on the
V.R. SUDHAKARARAOv. T.V.KAMESWARI [PASAYAT,J.] 287

basement raised on 10th May, 1982. The police informed them not to do any A
construction but later they began construction even in spite of the police
warnings. The plaintiff never sold the site nor agreed to sell the same to any
body including the defendants. He is absolute owner of the property.

4. The Ist defendant filed wntten statement inter-alia stating that 1st
defendant's correct name is l.B.V. Narasimharao and not I. Narasimharao as B
mentioned in the plaint. It was stated that this defendant's mother-in-law was
,#
__.J. one Kotagiri Srivara Manga Tayaramma. She wanted to acquire two plots at
Visakhapatnam and asked this defendant to arrange the purchase of two plots
at Visakhapatnam.

5. Consequently, this defendant approached the plaintiff on behalf of
c
the mother-in-law and it was agreed that the plaintiff should sell 665 sq.yards
of the property covered by Plot No.30 to Manga Tayaramma at Rs.65/- per
sq.yard for a total consideration of Rs.42,575/-. The said oral agreement of
sale was entered into between the plaintiff and Smt. Manga Tayaramma
represented by this defendant as her agent in the last week of November, 1979 D
at the plaintiffs residence in Visakhapatnam. This defendant paid an a amount
of Rs.16.575/- towards part of the sale consideration to the plaintiff on behalf
"' of the vendee, his mother-in-law in the last week of November, 1979 and the
plaintiff delivered possession of the schedule property to this defendant
representing the vendee-his mother-in-law. The plaintiff in fact noted down
on a piece of paper and calculated the total sale consideration for 665 sq. E
yards at Rs.65/- per sq.yard and arrived at the figure of Rs.42.575/-. He wrote
the name of this defendant as 'l.Narasingarao' on the top of the said slip of
paper and he also noted the sale consideration as plaintiff delivered the slip
of paper to this defendant at that time. The 1st defendant stated that plaintiff
.,>
• required him to obtain a demand draft for Rs.26,000/- being the balance. of F
sale consideration payable to him and he also agreed to execute and register
the necessary sale deed in favour of the vendee Smt. Manga Tayaramma
within a week after the oral agreement of sale and promised to obtain the
required clearance for the sale of schedule property under the provisions of
the Urban Land Ceiling Act, 1976 (in short 'ULC Act') at the cost of the
vendee i.e. Manga Tayaramma. Further, it was agreed that the Demand Draft G
-, of Rs.26,000/- should be handed over to the plaintiff at the time of registration
of the sale deed. This defendant's mother-in-law Manga Tayaramma in
pursuance of the said oral agreement of sale obtained a draft for an amount
of Rs.26,000/- in favour of the plaintiff. This defendant thereupon approached
the plaintiff immediately after 3.12.1979 and had shown to him the Demand H
288 SUPREME COURT REPORTS [2007) 5 S.C.R.

A Draft and asked him ifhe had obtained the required clearance from the Urban r
Land Ceiling Authority. The plaintiff thereupon stated that he did not obtain
the required clearance as yet and promised to execute and register the sale
deed as soon as he obtained the clearance. The !st defendant pleaded that
it is only the plaintiff that did not perform his part of the contract and caused
B breach of the terms of the contract and ultimately choose to deny the existence
of the contract. On 10.12.1979, the !st defendant, Manga Tayaramma purchased
plot No.31. He pleaded that in fact a wall was constructed on the Eastern side
for both the plot Nos.30 and 31 and likewise another wall on the West was ,._ •
constructed to both the said plot Nos.30 and 31. As both the plots originally
belonged to the same owner Manga Tayaramma, no wall was constructed in
C between the two plots. Further the wooden material for the proposed building
was stocked in the site of Sri Gangapur Rani, which is situated to the South
of Plot No.31. It is false to state that the defendants requested the plaintiff
for permission to stock their sand and stone in the plaint schedule site.
Plaintiff is not entitled either for delivery of possession or for a permanent
or mandatory injunction.
D
6. The 2nd defendant in the said suit also filed a written statement
stating that he was unnecessarily impleaded as a party. 1

7. On the strength of the above pleadings, the following issues were
settled:
E
Whether the plaintiff is entitled to possession'?

2 Whether the plaintiff is entitled to prohibitory and mandatory
injunction as prayed for?

F 3. To what future damages, if any, and at what rate the plaintiff is
entitled to?

4. Whether the suit is bad for non-joinder of necessary parties?

5. Whether the plaintiff is estopped?

G 6. To what relief?

8. As stated supra, l.V.R. Sudhakar Ras filed O.S.No.350/82 for the relief .f •
of specific performance on the strength of an oral agreement of sale and the
plaintiff in the said suit pleaded as follows:

H 9. Plaintiffs grand mother Manga Tayaramma wanted to acquire two
V.R. SUDHAKARARAOv. T.V. KAMESWARI [PASAYAT.J.] 289
! house plots at Visakhapatnam and requested her son-in-law to arrange the A
purchase of the same for the construction of house at Visakhapatnam.
Consequently, plaintiffs father approached the !st defendant on behalf of
Manga Tayararnma. The I st defendant agreed to sell the schedule site at
Rs.651/- per sq. yard and for a total consideration ofRs.42,575/-. The said oral
agreement of sale was entered into between the lst defendant and the plaintiffs
maternal grand mother in the first week of November 1979 at the !st defendant's
B
residence in Visakhapatnam. At the time of oral agreement, Sri. I.B.V.
__...
.; Narasimharao paid an amount of Rs.16,575/- to the 1st defendant towards
portion of the sale consideration on behalf of vendee Manga Tayaramma in
the presence of Sri Rao Venkatarama Narasimharao. After the death of Manga
Tayaramma plaintiff as legatee has been in possession of the site as per the c
will executed by her on 15.4.1980. After receiving the said amount of
•. Rs.16,575/-, the !st defendant at the time of the said agreement of sale noted
down on a piece of paper and calculated the total sale consideration for 655
sq. yards at Rs.65/- per sq. yard and arrived at the figure of Rs.42,275/-. He
wrote the name of the vendees' agent and son-in-law as' 1.Narasimharao' on
the top of the said slip of paper and he also noted the sale consideration at D
the rate of Rs.40/- per sq.yard. As per the terms of the said agreement of sale,
it was also agreed that the vendee Manga Tayaramma should obtain a demand
draft for the balance of sale consideration of Rs.26,000/- in favour of the !st
defendant and the defendant should obtain the required permission from the
urban ceiling authority and execute the registered sale deed within about a E
week after the said oral agreement of sale. It was further agreed that the said
demand draft should be handed over to the defendant at the time of the
registration of the sale deed. In pursuance of the said agreement of sale,
Manga Tayaramma obtained a demand draft for an amount of Rs.25,000/- in

J .. favour of the !st defendant on 3.12.1979. The defendant stated that he did not
obtain the permission as yet L'iat it would take some time and promised to F
execute and register the sale deed as soon as the permission is obtained.
Plaintiff also pleaded that on 10.12.1979, l.B.V. Narasimharao on behalfof late
Manga Tayaramma purchased plot No.31 which is situate to the South of the
schedule plot and the said Tayaramma took possession of the same. The !st

- . defendant filed suit O.S. No. 131/82 against the plaintiff and others completely G
denying the agreement of sale. Since the !st defendant came forward with a
false case denying the agreement of sale in its entirety, the plaintiff filed this
suit.

10. The !st defendant in the said suit filed a written statement with the
following allegations. H
290 SUPREME COURT REPORTS (2007] 5 S.C.R.

A 11. The allegations that the plaintiff's father approached the 1st defendant r
for purchase of site and the I st defendant agreed to sell the site at Rs.65/-
per sq. yard, that the total sale consideration was Rs.42,575/-, that the oral
agreement was entered into between the them, are false and denied. The
allegations that at the time of oral agreement Narasimharao paid Rs.16,575/-
to this defendant towards a portion of sale consideration on behalf of Manga
B Tayaramma, that the plaintiff as a legatee was in possession of the site as per
the will executed by her on 15.4.1980, are not valid and tenable under law. The
...
c
allegations that after receiving the amount of Rs. 16,5751- at the time of
agreement of sale, this defendant noted down on a piece of paper and
calculated the total sale consideration for 655 sq yards at Rs 6?1- per sq yard
and arrived at a figure of Rs 42,575/-, that he wrote the name of the vendee's
-
agent and son-in-law was Narasimharao on the top of the slip of paper, that
he also noted the sale consideration at the rate of Rs.40/- per sq.yard, that .•
the 1st defendant delivered the slip of paper to Narasimharao at that time, are
false and invented for the purpose of the suit. The allegations that a:; per the
agreement of sale it was agreed that Tayaramma should obtain a demand draft
D for the balance of sale consideration of Rs.26,000/- in favour of the !st
defendant that the !st defendant should obtain the required permission from
the urban ceiling authority for execution and registration of the sale deed, that
the defendant promised to obtain the said permission and execute the register
sale deed, that he agreed to do so within about a week, are all invented for
E the purpose of the suit. The further allegations that Thayaramma in pursuance
of the agreement of sale obtained a demand draft for an amount ofRs.25,000/
- in favour of the 1st defendant on 3.12.1979, that she sent the same to
Narasimharao to approach the 1st defendant to complete the transaction and
execute the sale deed duly registered by this defendant, that the 1 defendant
stated that he did not obtain the permission yet, that it would take some time
F and promised to execute and register the sale deed as soon as the permission
is obtained, are utterly false. The allegation that on 10.12.1979 Narasimharao
• <..

on behalf of Thayaramma purchased Plot No.31 and took possession of the
same, that it devolved in Ramachandra Rao is denied and the plaintiff is put
to strict proof of the same. This suit is only a counter-blast to 0.S.N~.131/
G 82 on the file of llnd Additional Subordinate Judge's Court, Visakha;iatnam.
The plaintiff is not entitled for any relief whatsoever.

12. On the strength of the respective pleadings, the following issues
• •

were settled in the suit for specific performance:

I. Whether the alleged oral agreement of sale and payment of
H
V.R. SUDHAKARARAOv. T.V. KAMESWARI (PASAYAT.J.] 291

Rs.16,575/- towards portion of sale consideration to defendant No.1 A
as pleaded by plaintiff in his plaint are ttue?

2. Whether the plaintiff is entitled to sue the defendants?

3. Whether the plaintiff is entitled to the relief of specific
perfonnance of the alleged suit contract as prayed for? B
4, Whether the plaintiff is entitled to claim Rs.46,000/- towards
damages for breach of contract of sale?

5. To what relief?

13. Since the subject matter of both the suits was one and the same, C
the suits were disposed of by a common judgment after recording the evidence
of PW-I to PW-3, DW-1 to DW-3 and after making Exs.A-1 to A-3 and Exs.8-
1to 8-5 and the Court of first instance had believed the oral agreement of sale
and had decreed the suit, O.S.No.350/82 and had dismissed the other suit filed
for possession and other reliefs i.e. O.S.No. 131 /82, and as already stated D
supra, Thangirala Venkata Avadhani was examined as PW and subsequent
thereto since he died the legal representative T.A. Kameswari was brought on
record and aggrieved by the said common judgment and the decree made
therein the appellant had preferred appeals before the High Court and since
the subject matter was considered to be one and the same, both the appeals
were disposed of by the High Court by the common judgment which is E
assailed in the present appeals.

14. The High Court fonnulated the following points for consideration:

"I. Whether there was an oral agreement of sale and payment of
Rs.16,575/- towards a portion .of the sale consideration as contended F
by the 1st respondent in A.S.No.753/89?

2. Whether the appellant in A.S.No. l 014/89 is entitled to the relief
of possession and the other ancillary reliefs prayed for in the said suit
O.S.No.131/82?

3. Whether the plaintiff in O.S.No.350/82 is entitled to the G
discretionary relief of specific perfonnance?

4. Whether the plaintiff in O.S.No.350/82 is entitled to the alternative
relief of Rs.46,000/ towards damages for breach of contract of sale?
H
292 SUPREME COURT REPORTS (2007) 5 S.C.R.

A 5. If so, to what reliefs the parties are entitled to?"

I5. The High Court held that the evidence is not of a very clear proof.
The payment of advance amounting to Rs.16,575/- was established. Therefore,
the alternative relief in favour of plaintiff in OS No. 350 of 1982 i.e. refund of
Rs.16,575/- with interest at the rate of 12% p.a. from the date of payment of
B the amount till the date of realization, was granted. It was directed that there
shall be a charge over the plaint schedule for realization of the said amount.
So far as the other suit is concerned, it was held that the suit OS No. 350 of
1982 for the relief of specific performance was to be decreed to that extent.
The plaintiff in OS No. 131 of 1982 was entitled to the decree of possession
C and ancillary reliefs. Appeal was accordingly disposed of.
16. In support of the appeals, learned counsel for the appellant submitted
that the ordinary rule is that the prayer for specific performance of the
agreement is to be granted and only on equitable considerations the same can
be refused. Reliance is placed in this context on Prakash Chandra v. Angadlal
D and Ors., [1979] 4 sec 393. Though there was no direct evidence, other
evidence taken note of by the trial court should not have been lightly brushed
aside by the High Court and therefore the alternative relief should not have
been granted and the main relief prayed for should have been granted. The
effect of the Section 53(A) of the Transfer of Property Act, 1882 (in short the
'T.P. Act') has not been taken note of.
E
17. There is no appearance on behalf of the respondent though counter
affidavit has been filed.

18. First it would be necessary to deal with the effect of Section 53(A)
of the T.P. Act. It is fairly accepted that in the case of an oral agreement of
F sale the defence under Section 53(A) of the TP Act is not available to a party
who alleges to be in possession of the property.

19. The High Court has rightly concluded that there is no clear proof
relating to the other terms of condition. The relief of specific performance is
G discretionary relief and except the oral evidence, there is no clear evidence
to prove several of the essential terms which have been taken note of by the
High Court. The High Court, on analyzing the evidence, has come to hold that
except Exhibit B-1 and the oral evidence of OW I and DW2, there is no other
clear proof relating to the other terms and conditions of the contract which
can be termed as essential conditions like delivery of possession and also the
H obtaining of permission from the Urban Land Ceiling Authorities and therefore,
V.R. SUDHAKARARAOv. T.V.KAMESWARl [PASAYAT,J.] 293
.. "f"" it cannot be said that all the essential terms and conditions of a well concluded A
contract had been established in the case at hand.

20. These conclusions on fact do not appear to be in any way
unsustainable and on the other hand are in line with the applicable legal
principles. That being so, the appeals are sans merit, deserve dismissal which
we direct. No costs. B

- __, KK.T. Appeal dismissed.