Srinivas Ram Kumar vs Mahabir Prasad And Others

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: 9 February 1951

Coram: B.K. Mukherjea, Mehr Chand Mahajan

In the matter titled Srinivas Ram Kumar versus Mahabir Prasad and others, decided on 9 February 1951, the Supreme Court of India rendered its judgment under the authorship of Justice B.K. Mukherjea, with Justices Mehr Chand Mahajan, Sasti M. Patanjali, and Mahajan forming the bench. The petitioner was Srinivas Ram Kumar and the respondents were Mahabir Prasad together with several other parties. The judgment is recorded as dated 09/02/1951 and appears in the law reports as 1951 AIR 177 and 1951 SCR 277, with later citations in 1964 SC 136 (pages 11 and 9) and 1978 SC 1362 (page 25). The issue arose under the Act concerning pleadings where the plaintiff sought specific performance on the ground that a sum of Rs 30,000 had been paid as part of the purchase price for a house, while the defendant contended that the same amount had been received merely as a loan. The plaintiff’s claim for specific performance was not proved, and the question before the Court was whether a decree could be granted for recovery of the money on the basis of the defendant’s loan plea. The headnote of the judgment observed that ordinarily a Court would not grant relief on a case lacking a foundation in the pleadings, especially where the opposing side had not been called upon to meet the claim. However, the Court noted that when the alternative case which the plaintiff could have raised was expressly admitted by the defendant in his written statement and was advanced as a direct answer to the plaintiff’s claim, there was no impropriety in granting a decree based on the defendant’s own case. In such circumstances, where no injustice could possibly be inflicted on the defendant, it would be improper to compel the plaintiff to commence a separate suit. The factual background disclosed that the plaintiff had instituted a suit for specific performance of an agreement to sell a house, asserting that he had paid Rs 30,000 toward the price and had been given possession in part performance of the contract. The defendant counter-claimed that the Rs 30,000 had been received as a loan and that the plaintiff’s possession was allowed only to enable payment of interest on that loan. The Court found the defendant’s plea to be true. Consequently, the Court held that a decree could be passed in favour of the plaintiff for the recovery of the sum of Rs 30,000 together with the interest remaining due under the loan agreement pleaded by the defendant, even though the plaintiff had not originally set up such a case and even though this claim was inconsistent with the allegations made in the plaint. The judgment referred to the earlier authority of Babu Raja Mohan Manucha v. Babu Manzoor (70 I.A. 1). The appeal was filed in civil appellate jurisdiction, challenging a judgment and decree of the High Court of Judicature at Patna dated 29 August 1947, which had modified a decree of the Subordinate Court of Gaya in O.S. No. 59 of 1943. The appeal was numbered Civil Appeal No. 82, with counsel representing the appellant and the respondents identified, and the decision was delivered by Justice Mukherjea. This appeal was presented on behalf of the plaintiff.

The suit arose from a claim for specific performance of a contract to sell a house situated in Gaya. The house was owned by the second defendant, who, according to the plaintiff, had initially agreed to sell the property to the plaintiff but later withdrew from the agreement and conveyed the house to the first defendant, who bought it with notice of the alleged contract. According to the plaintiff’s version, in September 1941 the second defendant entered into negotiations with a person named Jadu Ram for the sale of the Gaya house, and the title deeds were actually delivered to Jadu Ram during those negotiations. Those negotiations failed, and subsequently the second defendant approached the plaintiff’s firm. Toward the end of October 1945 the parties executed a contract under which the second defendant agreed to sell the house to the plaintiff for a total price of Rs 34,000. On 28 October 1941, the plaintiff’s firm paid Rs 30,000 on behalf of the vendors to a creditor of the second defendant as part of that consideration. In return, the vendors placed the plaintiff in possession of the house, citing part performance of the contract, and promised to execute a conveyance as soon as the title deeds were recovered from Jadu Ram. The plaintiff also paid the remaining Rs 4,000 of the purchase price. However, after the title deeds were returned by Jadu Ram, the second defendants reneged on their promise and failed to execute the conveyance in favour of the plaintiff. Instead, they sold the house to the first defendant on 13 August 1943. Consequently, the plaintiff instituted the present suit seeking specific performance of the sale agreement. Both sets of defendants contested the suit. The second defendants argued, inter alia, that they had never agreed to sell the Gaya house to the plaintiff and that the plaintiff’s claim of a sale contract was wholly fictitious. They admitted that they were short of money and had approached the plaintiff for a loan, to which the plaintiff responded by advancing Rs 30,000 at an interest rate of six per cent per annum. They contended that the plaintiff’s possession of the house was solely to enable the borrower to pay the interest on the loan and not as part performance of any sale contract. The first defendants repeated this defence and further pleaded that they were bona-fide purchasers for value without any notice of a contract between the plaintiff and the second defendants. The Subordinate Judge, after examining the evidence presented by both sides, concluded that the plaintiff had not established the existence of a contract of sale as alleged, and therefore the suit for specific performance could not be upheld.

In this case, the Subordinate Judge found that the plaintiff had not been placed in possession of the house as a result of any enforceable contract of sale. The judge concluded that the defendants’ version of events was credible and that the plaintiff had indeed given the second-party defendants a sum of Rs 30,000, but that this amount was extended as a loan rather than as part-payment of any consideration for a sale. Regarding the first-party defendants, the judge held that they were bona-fide purchasers for value who possessed no notice of any alleged contract of sale. Accordingly, the trial court dismissed the plaintiff’s claim for specific performance. However, because the second-party defendants admitted receiving the Rs 30,000 advance, the court issued a money decree in favour of the plaintiff for that amount, charging interest at six per cent per annum from the date of filing until realisation. Dissatisfied with this outcome, the plaintiff appealed to the Patna High Court, while the second-party defendants also filed cross-objections contesting the validity of the money decree. The Division Bench of the High Court, by its judgment dated 29 August 1947, rejected the plaintiff’s appeal and allowed the cross-objections. The High Court, agreeing with the trial judge, held that the evidence did not establish a concluded contract between the parties and that the plaintiff’s possession of the house could not be characterised as part performance of any such contract. It further affirmed that the Rs 30,000 had been advanced as a loan, noting that the record did not clearly demonstrate the payment of interest, and it reiterated that the first-party defendants were purchasers for value without notice. The High Court additionally observed that even if a contract existed, its terms were vague and indefinite, and because one of the vendors was a minor, equity could not grant specific performance without substantially prejudicing the minor’s interests. Consequently, the High Court concluded that the money decree against the second-party defendants was not legally justified, as the plaint did not allege a loan claim nor seek relief on that basis. The suit was therefore dismissed in its entirety and the trial court’s decree for recovery of money was set aside. The plaintiff now appeals to this Court, contending that the factual findings of the lower courts, which led them to reject the plaintiff’s narrative and dismiss the specific-performance claim, were not properly based on the evidence, and alternatively that the High Court erred in overturning the money decree granted by the trial judge.

In this appeal, the court considered the argument that the finding that specific performance could be granted was not a proper finding of fact that could be legitimately drawn from the evidence presented in the case. An alternative argument was also advanced, contending that the High Court had erred in setting aside the monetary decree that had been awarded against the second-party defendants by the trial judge. The counsel for the appellant put forward these two contentions, but the court found the first contention to be plainly unsustainable. The court explained that when lower courts have arrived at concurrent findings on pure questions of fact, this court ordinarily refrains from interfering with those findings or from re-examining the evidence for a third time, unless exceptional circumstances exist that would justify departing from the usual practice. The court noted that the situation would be different if the inference involved a question of law drawn from admitted and proved facts, or if the factual finding had been materially affected by a breach of any rule of law or procedural requirement. The court further observed that its practice aligns with the long-standing approach of the Judicial Committee, and it quoted Lord Thankerton’s words in Bibhabati v. Ramendra Narayan (1) that “it is not by any means a cast iron practice”; the court acknowledged that unusual cases might compel it to interfere with concurrent factual findings in order to avoid a miscarriage of justice. However, the present case, the court held, was not unusual and concerned a pure question of fact. There was no written document to prove the alleged agreement on which the plaintiff’s case rested, and the dispute hinged primarily on the evaluation of oral testimony presented by the parties. The trial judge, who had personally examined the witnesses, was therefore in the best position to assess their credibility, and the conclusions he reached were fully affirmed by the High Court on appeal. In view of these circumstances, the court found no reason to go beyond the factual determinations that both the trial court and the High Court had made against the appellant. Regarding the second point, the court expressed the opinion that the trial court’s decision was correct and that the High Court had adopted an unduly rigid and technical view in overturning that part of the subordinate judge’s decree. The court observed that the plaint did not expressly allege that the sum of Rs 30,000 had been advanced as a loan to the second-party defendants. Nevertheless, the court held that the plaintiff was entitled to raise an alternative claim on that basis and to pray, in the alternative, for a monetary decree even if the allegation that the money had been paid under a contract of sale could not be substantiated by evidence. The court further ruled that the inconsistency between such an alternative prayer and the primary prayer was not material, because a plaintiff may rely on different rights alternatively, and there is nothing in the Civil Procedure Code that prevents a party from making alternative prayers.

In this case, the Court observed that a plaintiff is permitted to advance two or more inconsistent sets of allegations and to seek relief on the basis of each of those allegations in the alternative. The Court then considered whether, when the plaint does not contain any such alternative pleading, the trial court may nevertheless grant relief on that foundation. The Court affirmed the well-settled rule that a court cannot award relief to a plaintiff for a cause of action that was not alleged in the pleadings, because the opposite party would not have been called upon to meet such a claim and would have been deprived of an opportunity to defend against it. However, the Court explained that an exception arises when the alternative claim, which the plaintiff could have raised, was actually admitted by the defendant in his written statement and was expressly set out as a defence to the plaintiff’s original claim. In such a circumstance, the Court held that there is nothing improper in granting the plaintiff a decree based on the very case that the defendant himself has advanced. The Court reasoned that a demand by the plaintiff that is founded on the defendant’s own pleading cannot surprise the defendant, and there would be no need for the plaintiff to adduce further evidence when the relevant facts have already been admitted by the defendant. Because no injustice could result to the defendant, the Court found that it would be unnecessary to force the plaintiff to institute a separate suit.

The Court illustrated this principle by referring to the Judicial Committee’s decision in Babu Raja Mohan Manucha v. Babu Manzoor. In that appeal, the plaintiff had instituted a suit to enforce a mortgage security, while the defendant pleaded that the mortgage was void. Both the lower courts and the Privy Council gave effect to the defendant’s plea. Nevertheless, the Privy Council held that, under those circumstances, the plaintiff was entitled to repudiate the transaction entirely and to claim restitution under section 65 of the Indian Contract Act, even though the plaint did not contain such an alternative claim. The Privy Council allowed the plaintiff to raise the restitution claim and awarded a decree, emphasizing that the respondent could not be prejudiced by that claim and that a separate suit was unnecessary. Notably, the decree was granted ex parte, in the absence of the respondent.

During the present proceedings, counsel appearing for the second defendant raised the issue of interest on the sum claimed by the plaintiff. The counsel argued that the plaintiff could not claim any interest while he remained in possession of the house, and that the plaintiff could not claim interest thereafter because the defendants had tendered the amount of Rs 30,000 by sending a hundi through registered post on 12 July 1943, a tender which the plaintiff had refused to accept. The first part of this contention—concerning the plaintiff’s possession—was not disputed, but the Court expressed difficulty in accepting the second part, noting that the plaintiff had denied receipt of the hundi both in the plaint and during evidence, and that even if the tender were factual, it might not constitute a valid legal tender. The Court therefore concluded that the defendants had used the money and that the plaintiff was entitled to interest, and it fixed the rate of interest at four percent per annum from September 1943, acknowledging that the plaintiff’s possession of the house had ended at the close of August 1943.

The Court noted that the first part of the contention advanced by counsel is unquestionably correct and that the plaintiff does not dispute it. However, the Court expressed difficulty in accepting the second part of the contention raised by the counsel for the defendants. The plaintiff denied, both in the plaint and in the evidence, having received the hundi that the defendants claim to have sent, and the Court found it doubtful that, even if the allegation were true, such a delivery could constitute a legally valid tender. The defendants, nevertheless, had enjoyed the use of the Rs 30,000 throughout the period in question, and the Court was of the opinion that the plaintiff was therefore entitled to be awarded interest on that sum. At the close of arguments, the learned counsel for both sides left the question of interest for the Court to determine. After consideration, the Court concluded that it would be just to award interest on the amount of Rs 30,000 at a rate of four per cent per annum, commencing from the first day of September 1943. It was accepted that the plaintiff’s possession of the house had terminated by the end of August 1943. Consequently, the Court allowed the appeal in part, affirmed the decree of the High Court to the extent that it dismissed the claim for specific performance, and ordered that the plaintiff receive a money decree for Rs 30,000 against the second defendant, together with interest at four per cent per annum from 1 September 1943 until the date of realization. Each party was directed to bear its own costs. The appeal was therefore allowed in part. The agent for the appellant was identified as R.C. Prasad, and the agent for the respondents as Tarachand Brij Mohan Lal.