Allowed

Housing & Urban Development Corpn. Ltd. v. D.K. Ramesh

Karnataka HC7 Jan 2021RFA/1322/2011

Case brief

AI extract

What is this about?

The High Court allowed the Appeal filed by the 4th defendant (mortgagee) setting aside the Trial Court's order that made the attachment before judgment of the suit schedule properties absolute. The Court held the attachment unwarranted and set aside the specific portion affecting the appellant's interest, allowing execution of the decree against other defendants.

What did the court decide?

The portion of the Trial Court's order making the attachment before judgment of the schedule properties absolute is set aside.

Housing & Urban Development Corpn. Ltd… — Contract and Commercial Disputes | Karnataka HC (2021)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 7^TH DAY OF JANUARY, 2021

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PRESENT

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THE HON’BLE MRS.JUSTICE S.SUJATHA

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AND

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THE HON’BLE MR. JUSTICE M.I.ARUN

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R.F.A.No.1322/2011

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BETWEEN :

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HOUSING & URBAN DEVELOPMENT CORPN. LTD., A GOVT. OF INDIA ENTERPRISES, REGIONAL OFFICE, MANIPAL CENTER, NORTH BLOCK, UNIT NO.703 & 704, 7^TH FLOOR, NO.47, DICKENSON ROAD, BANGALORE-560042 REP. BY SENIOR LAW OFFICER SRI S.M.SRINIVAS ...APPELLANT

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(BY SRI VARADARAJ R. HAVALDAR, ADV.)

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AND :

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1 . D.K.RAMESH S/O K.DASAPPA AGED ABOUT 60 YEARS, R/AT "BELAKU", NO.42/1, 5^TH CROSS, 8^TH MAIN, RMV EXTENSION, SADASHIVANAGAR, BANGALORE-560 080

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2 . M/s AVVAA DEVELOPERS A PARTNERSHIP FIRM, NO.424, EMBASSY HERITAGE, 8^TH MAIN, MALLESHWARAM, BANGALORE, REP. BY ITS PARTNERS

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3 . SRI C.MAHESH KUMAR S/O CHIKKA, AGED ABOUT 45 YEARS, MANAGING PARTNER, M/s AVVAA DEVELOPERS, NO.1, 1^ST FLOOR, RNG PLAZA, SOUTH END STREET, KUMARA PARK EAST BANGALORE-560001

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4 . SMT.P.MAHADEVI W/O MAHESH KUMAR AGED ABOUT 35 YEARS, PARTNER, M/s AVVAA DEVELOPERS NO.1, 1^ST FLOOR, RNG PLAZA SOUTH END STREET, KUMARA PARK EAST BANGALORE-560001 …RESPONDENTS

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(BY SRI B.L.SANJEEV, ADV. FOR R-1;

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VIDE COURT ORDER DATED 10.12.2013 NOTICE TO R-2 TO R-4 ARE DISPENSED WITH.)

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THIS R.F.A. IS FILED UNDER SECTION 96 R/W ORDER 41 RULE 1 OF CPC, AGAINST THE JUDGMENT AND DECREE DATED 19.04.2011 PASSED IN O.S.No.963/2009 ON THE FILE OF THE XVI ADDITIONAL CITY CIVIL JUDGE, BANGALORE (CCH 12), DECREEING THE SUIT FOR RECOVERY OF MONEY.

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THIS APPEAL COMING ON FOR HEARING, THIS DAY, S. SUJATHA, J ., DELIVERED THE FOLLOWING:

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J U D G M E N T

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This appeal is filed by the defendant No.4

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challenging the judgment and decree dated 19.4.2011

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passed in O.S.No.963/2009 by the XVI Addl. City Civil

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Judge, Bangalore City (CCH No.12) (‘Trial Court’ for short).

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For the sake of convenience, the parties are

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referred to as per their status before the Trial Court.

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The plaintiff instituted the suit for recovery of money in a sum of Rs.40,68,750/- towards the principal and interest against the defendants and also for attachment of the schedule properties and also for the relief of injunction restraining the defendants, their men, agents, representatives etc., from alienating, encumbering or creating any charge over the suit properties and to direct the 4^th defendant not to release the documents mortgaged with it by the defendants 1 to 3 in respect of suit properties and to grant future interest.

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The plaint averments are that the 1^st defendant being the owner of the property bearing No.13, Old Nos.357 and 358, BBMP ID No.50-3-13, measuring 3984 sq. ft. situated at Shradhananda Bhavan Road, V.V.Puram, Bangalore and another

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property bearing No.13/1, Old Nos.357 and 358 PID No.50-03-13/1 measuring 1627.50 sq. ft. situated on the same road at V.V.Puram, Bangalore, the properties described in the suit schedule as item Nos.1 and 2, has executed an agreement on 10.12.2007 in favour of the plaintiff agreeing to construct an apartment and allot built up area of 1700 sq. ft. specifically agreeing to allot in the ground floor portion with all civic amenities as per the brochure supplied. The plaintiff believing the defendants, got an agreement executed in his favour by paying an advance amount of Rs.35 lakhs towards the sale consideration amount of Rs.40 lakhs, by way of an account pay order bearing No.23523 dated 10.12.2007 drawn on Canara Bank, RMV Extension Branch, Bangalore in favour of the 1^st defendant. Accordingly the 1^st defendant issued a letter of allotment dated 12.12.2007 by allotting a 3 bed room apartment in favour of the plaintiff in the ground floor portion which was called as ‘UNIT-D’ with car parking area in the stilt

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floor known as ‘Avva Gold’, V.V.Puram, Bangalore and requested the plaintiff to pay the balance amount of Rs.5 lakhs at the time of the registration of the apartment.

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It was contended that as per the terms of the agreement, the construction was required to be completed within 11 months from 10.12.2007. The 2^nd and 3^rd defendants as the partners of the 1^st defendant firm have represented to the plaintiffs that they are availing loan from HUDCO, Dickenson Road, Bangalore, for the project titled ‘Avva Gold’ and have mortgaged title deeds with them on 30.11.2007. The defendants assured to deliver possession of the apartment immediately on completion of the construction and on obtaining the completion certificate from the BBMP connected with all civic amenities. The 1^st defendant has availed loan of Rs.100 lakhs from HUDCO, the 4^th defendant. Though construction work was commenced

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by erecting some pillars, the same was not completed,

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not even one floor was raised. The defendant has committed breach of terms of the contract and even after repeated requests and demands, has not completed the construction work and accordingly a cheque bearing No.075249 dated 8.7.2008 drawn on Indian Bank, Banashankari II Stage, Bangalore, for Rs.35 lakhs was issued by the defendant No.1 towards the repayment of the amount paid by the plaintiff. The said cheque on presentation for encashment was returned by the bankers with an endorsement ‘insufficient funds’. On the proceedings initiated by the plaintiff under Section 138 of the Negotiable Instruments Act, 1881, the defendants issued another postdated cheque bearing No.075250 towards the payment of interest amount of Rs.5,68,750/-. The plaintiff came to know that the defendants are making attempt to dispose of the suit properties to defeat the rights of the plaintiff, a letter was obtained from HUDCO

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on 17.10.2008, wherein, it has come forward to release the documents of the suit schedule property. Hence, constrained to file the suit.

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On service of summons, defendants 1 to 3 appeared through their learned counsel, but no written statement was filed. The 4^th defendant appeared through its learned counsel and contested the matter filing the written statement contending that there was no privity of contract between the plaintiff and the 4^th defendant and there was no legal nexus to sue the said defendant. However it was admitted that defendant No.1 was a partnership firm represented by its partners namely, defendants 2 and 3 who had availed the loan facilities from it against the mortgaged properties described as items 1 and 2 in the plaint schedule together with the buildings to be constructed thereon.

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It was contended that defendants 1 to 3 out of sanctioned loan of Rs.275 lakhs, have availed the

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amount of Rs.100 lakhs on execution of necessary documents. Since the defendants 1 to 3 committed default in repayment of the installments of loan including the interest, the 4^th defendant is taking legal steps for recovery of its legal dues. The primary defence set up was that the suit against the 4^th defendant is misconceived and no relief of injunction as prayed could be granted against the 4^th defendant.

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On the basis of the pleadings, the following issues were framed:

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“1. Whether the plaintiff proves that he has paid Rs.35 lakhs towards the sale consideration price in respect of the suit schedule properties to the defendant 1 to 3 in pursuance of the agreement of sale dated 10.12.2007?

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2. Whether the plaintiff further proves that the defendants 1 to 3 failed to perform their part of contract though the plaintiff was ready and willing to perform his part of contract?

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3. Whether the plaintiff is entitled for the suit claim of Rs.40,68,750/- towards the principal and interest as claimed against the defendants?”

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The plaintiff got himself examined as PW-1

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and produced the documents Exs.P1 to P22. The 4^th defendant got examined its officer as DW-1 and produced the documents at Exs.D1 and D2.

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The Trial Court on appreciation of oral and documentary evidence decreed the suit for Rs.40,68,750/- together with costs and future interest on Rs.35 lakhs from the date of suit till realization @ 6% p.a. as against defendant Nos.1 to 3 only. The suit against the defendant No.4 was dismissed with costs. The attachment before judgment of the suit schedule properties was made absolute.

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Being aggrieved by the portion of the judgment and order in as much as holding “the

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attachment before judgment of the schedule properties is made absolute”, the defendant No.4 has preferred the present appeal.

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Learned counsel for the appellant/4^th

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defendant inviting the attention of the Court to para.11(b) and (c) of the impugned judgment submitted that the Trial Court though held that the plaintiff is not entitled to any relief against the 4^th defendant and unnecessarily the plaintiff has dragged the 4^th defendant to the Court, held that “the attachment before judgment of the schedule properties has been made absolute” which infringes the rights of the 4^th defendant in respect of the suit property. The defendants 1 to 3 being defaulters in not making the payment towards the loan raised, the proceedings were initiated for recovery of the same before the Debt Recovery Tribunal, Bangalore and the same has been decreed. However, by virtue of the portion of the order of

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the Trial Court as aforesaid, the appellant is not able to recover the loan amount by taking steps with respect to the property mortgaged.

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Learned counsel for the plaintiff submitted

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that the plaintiff is no way interested with the transaction of the defendant No.4 relating to the suit property. Defendants 1 to 3 in collusion with defendant No.4 made attempts to alienate the suit property to deprive the right of the plaintiff and in order to safeguard his interest, attachment before judgment of the suit property was sought and the same was rightly granted by the Trial Court. Now by virtue of the decree passed by the Trial Court, execution proceedings are initiated to recover the decretal amount and as such, he has no objection to set aside the order of the Trial Court inasmuch as “the attachment before judgment of the schedule properties is made absolute”, protecting

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the rights of the plaintiff to execute the decree in accordance with law.

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Having heard the learned counsel for the

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parties and perusing the original records, the point that arises for our consideration is:

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Whether the portion of the order of the Trial Court impugned herein inasmuch as holding “the attachment before judgment of the schedule properties is made absolute”, deserves to be set aside?

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It is borne out from the records that

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defendant No.1-the partnership firm has raised loan from the defendant No.4 for the purpose of project of ‘Avva Gold’ mortgaging the suit properties. The plaintiff having entered into an agreement with the defendant No.1 to purchase the apartment for the sale consideration of Rs.40 lakhs and after payment of Rs.35 lakhs, due to the breach of the agreement by the

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defendant Nos.1 to 3, has instituted the suit for

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recovery of Rs.40,68,750/- with costs.

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On analyzing the oral and documentary evidence, the Trial Court has rightly observed that there was no privity of contract between the plaintiff and the defendant No.4. The plaintiff has unnecessarily dragged the defendant No.4 to the Court. The evidence of DW-1 also fortifies the same. The relevant paragraph of cross examination of DW-1 reads thus:

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“The defendants 1 to 3 have availed the loan from the 4^th Defendant for the purpose of construction of the residential apartment. The team of officers of the Defendant No.4 had visited the property in respect of which, the title deeds were deposited by the Defendants 1 to 3 with the 4^th Defendant by offering as security for the loan availed by them and at that time, the construction work was completed upto columns level. I do not remember now to say the total quantity of amount of loan for advancement that was

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asked by the Defendants 1 to 3. The loan was sanctioned up to the limit of Rs.275 lakhs and out of which, Rs.100 lakhs was released.

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The Defendants 1 to 3 are not repaying the loan as per the repayment schedule and have become defaulters. We have taken steps by recalling the loan and also steps in issuing notices as contemplated under law and also filed recovery application before the D.R.T. The recovery application before the D.R.T. is still pending.”

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Learned counsel for the plaintiff has fairly submitted that the plaintiff is not coming in the way of the defendant No.4 in taking steps for the recovery of the loan amount from the defendants 1 to 3 which remained unpaid. But it was only as an abundant caution to secure the decretal amount, the Trial Court has passed such an order.

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In the background of the submissions made by the learned counsel for the parties as aforesaid, and on re-appreciation of documentary and ocular evidence, this Court is of the considered view that the portion of the order passed by the Trial Court inasmuch as “the attachment before judgment of the schedule properties is made absolute”, impugned herein, is unwarranted and the same deserves to be set aide.

Hence the following:

ORDER

Appeal is allowed.

The portion of the order of the Trial Court in O.S.No.963/2009 dated 19^th April 2011 inasmuch as holding that “the attachment before the judgment of the schedule properties is made absolute” is set aside.

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The observations of the trial Court in the decree shall not bind or affect the interest of the appellant in any manner.

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However, it is needless to observe that the plaintiff is at liberty to execute the decree passed by the Trial Court against defendant Nos.1 to 3 in accordance with

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law.

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No order as to costs.

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Sd/JUDGE

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Sd/JUDGE

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Dvr:

Housing & Urban Development Corpn. Ltd. v. D.K. Ramesh

Case brief

What is this about?

What did the court decide?

Housing & Urban Development Corpn. Ltd. v. D.K. Ramesh

Case brief

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