Sri Sundaresan Vs the Executive Director

THE DEPUTY DEVELOPMENT OFFICER KARNATAKA INDUSTRIAL DEVELOPMENT BOARD NO.14, 2^ND FLOOR, RASHTROHANA PARISHATH BUILDING, NRUPATHUNGA ROAD, BANGALORE-560 002.

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…RESPONDENTS

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(BY SRI. P.V. CHANDRASHEKAR, ADVOCATE)

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THIS RSA IS FILED U/S. 100 OF CPC AGAINST THE JUDGEMENT & DECREE DTD 17.10.2012 PASSED IN R.A.NO.44/2011 ON THE FILE OF PRINCIPAL SENIOR CIVIL

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JUDGE, K.G.F., ALLOWING THE APPEAL AND SETTING ASIDE THE JUDGEMENT AND DECREE DTD 30.7.2011 PASSED IN OS.NO.131/2008 ON THE FILE OF CIVIL JUDGE (JR.DN.) AND JMFC, BANGARPET.

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THIS APPEAL, COMING ON FOR FINAL HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE ASHOK S.KINAGI

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ORAL JUDGMENT

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This Regular second appeal is filed by the appellants challenging the judgment and decree dated 17.10.2012 passed in R.A.No.44/2011 by the Principal Senior civil Judge, KGF.

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For convenience, the parties are referred to as per their rankings before the trial Court. The appellant was the plaintiff and the respondents were the defendants.

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Brief facts leading rise to filing the of this appeal are as follows:

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The plaintiff filed a suit against the defendants for the specific performance of a contract, seeking direction to the defendants to receive a balance amount of

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Rs.25,361/- from the plaintiff and execute the registered sale deed in respect of Site No.27 measuring 4080 sq.mts., situated at Dasarahosahalli.

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3.1. It is the case of the plaintiff that the plaintiff approached the defendants for the allotment of the suit schedule property. Accordingly, Defendant No.3 issued a letter of intent dated 23.12.1995, allotting the suit schedule property in favour of the plaintiff on lease cum sale basis for Rs.72,624/-. In terms of the letter of intent, the plaintiff paid the first installment of Rs.7,263/-, Rs.25,000/and Rs.15,000/-, towards the second installment. Thus, in all, he has paid Rs.47,263/-. Since 1996, the plaintiff has been in possession of the suit schedule property, hence, has spent a huge amount on the construction of a compound wall and a labour shed. The plaintiff is/was always ready and willing to perform his part of the contract by paying the balance consideration amount of Rs.25,361/-; meanwhile, the period of the 11year lease came to an end. The plaintiff approached the

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defendants and sought to execute the registered sale deed in respect of the suit schedule property after receiving the balance consideration amount. On 14.12.2006, the plaintiff got issued a legal notice to the defendants calling upon the defendants to receive the balance amount and to execute the registered sale deed in favour of the plaintiff. Notice was duly served upon the defendants. Further, the plaintiff also issued one more notice on 30.01.2008. The defendants did not reply to the said legal notice and are trying to allot the suit schedule property to some other person. Hence, a cause of action arose for the plaintiff to file a suit for specific performance of the contract. Accordingly, prays to decree the suit.

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3.2. Defendants filed a written statement contending

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that the plaintiff had not paid the entire amount in terms of the letter of intent, and the plaintiff failed to pay the amount within a stipulated period, and the allotment was cancelled, and the defendant admitted the receipt of the amount of Rs.47,263/- from the plaintiff. It is also

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contended in the written statement that the defendants

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have not executed any lease cum sale in favour of the plaintiff. Hence, the plaintiff will not get any right or relief of specific performance of the contract. Hence, prays to dismiss the suit.

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3.3. The Trial Court, based on the pleadings of the

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parties, framed the following issues:

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1. Whether the plaintiff proves that the 3^rd defendant allotted the suit schedule property for a sum of Rs.72,624/- on 23.12.1995 on the lease cum sale basis?

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2. Whether the plaintiff proves that as per the sale agreement he has paid Rs.47,263/- and remaining balance amount of Rs.25,361/- is due to be paid by the plaintiff to the defendant?

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3. Whether the plaintiff proves that he is ready and willing to perform his part of contract?

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4. Whether the defendants prove that the suit is barred by law of limitation?

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5. Whether the plaintiff is entitled for the relief claimed in the suit?

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6. What order or decree?

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3.4. The plaintiff, to substantiate his case,

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examined himself as PW-1, examined one witness as PW.2 and marked 16 documents as Exs.P1 to P16. In rebuttal,

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defendant No.1, who is the cashier in KIADB office, examined himself as DW.1 and no documents have been marked. The trial Court, after hearing the learned counsel for the parties and after assessment of verbal and documentary evidence of the parties, answered issue Nos.1 to 3 in the affirmative, issue No.4 in the negative, issue No.5 entitled for specific performance of contract, issue No.6 as per the final order. The suit of the plaintiff for the relief of specific performance was decreed. The defendants are directed to execute a absolute sale deed in favour of plaintiff in respect of the suit schedule property within 3 months by accepting the balance sale consideration, failing which, the plaintiff is at liberty to approach the Court, to get the execution of the sale deed with due process of law.

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3.5. The defendants, aggrieved by the judgment and

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decree dated 30.07.2011, passed in O.S.No.131/2008, preferred an appeal in R.A.No.44/2011.

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3.6. The First Appellate Court, after hearing the

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parties, has framed the following points for consideration:

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1. Whether the appellants defendants prove that the allotment made by them to the plaintiff as per Ex.P1 had cancelled and the initial amount paid by the plaintiff has been forfeited as per the terms of letter of intent?

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2. Whether the impugned judgment and decree passed by the learned trial judge is required to be interfered with?

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3. What order?

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3.7. The First Appellate Court, after re-assessment

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of the verbal and documentary evidence answered point Nos.1 and 2 in the affirmative, point No.3 as per the final order. The appeal was allowed. The judgment and decree passed by the trial Court was set aside. Suit of the plaintiff was dismissed.

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3.8. The plaintiff, aggrieved by the judgment and

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decree passed by the first Appellate Court, has filed this Regular Second Appeal.

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Heard the arguments of Sri. T.Krishna, learned

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counsel for the plaintiff and Sri. P.V. Chandrashekar, learned counsel for the defendants.

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Learned counsel for the plaintiff submits that the defendants have allotted the suit schedule property in favour of the plaintiff for consideration of Rs.72,624/- and also issued a letter of intent in favour of the plaintiff and as per the terms and conditions of the allotment of land as per the lease cum sale agreement was for 11 years and after 11 years, lease can be converted into a sale. The plaintiff paid the first instalment of Rs.7,263/- on 17.01.1986 and paid a sum of Rs. 25,000/- on 10.09.1997 as the second instalment; and also paid Rs.15,000/- on 19.01.1998, towards another part of second installment. Thus, the plaintiff has paid a sum of Rs . 47,263/-.

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Further, the plaintiff issued a legal notice to the

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defendants to receive a balance consideration amount and to execute a sale deed. Though the defendants received a

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balance consideration amount of Rs.25,361/-, but did not execute the registered sale deed. He submits that the defendants have committed a breach of contract. Hence, he submits that the trial Court was justified in decreeing the suit of the plaintiff. He submits that the plaintiff is ready to pay the penalty imposed by the defendants. He submits that the first Appellate Court has not properly re-appreciated the evidence on record. Hence, the first Appellate Court has committed an error in passing the impugned judgment. Hence, on these grounds, he prays to allow the appeal.

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Per contra, the learned counsel for the defendants submits that the plaintiff himself has violated the terms and conditions of the letter of intent and also submits that the defendants have accepted the balance consideration amount, but the plaintiff will not have the right to seek the a relief of a specific performance of the contract. The first Appellate Court was justified in passing

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the impugned judgment. Hence, on these grounds, he prays to dismiss the appeal.

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This court vide order dated 09.02.2022, has admitted the appeal on the following substantial question of law :

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“Whether the first Appellate Court is justified in dismissing the suit holding that since the time is the essence of the contract and the appellant/plaintiff not having paid the amount in time failed to prove his readiness and willingness despite the respondents/defendants receiving the cost of the site even after expiry of the stipulated period, thereby waiving the condition of time being essence of contract?”

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Perused the records and considered the

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submissions of the learned counsel for the parties.

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10. REG. SUBSTANTIAL QUESTION OF LAW :

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The plaintiff, to substantiate his case, examined himself

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as PW.1, and he reiterated the plaint averments in the examination-in-chief. He has deposed that the defendant

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has issued a letter of intent for allotment of land in favour of the plaintiff, for consideration of Rs.72,624/-, tentative price and allotment was made on the basis of lease cum sale agreement for a period of 11 years and shall be converted into a sale. The plaintiff, to substantiate his case produced documents, Ex.P1 is the letter of intent dated 23.12.1995, which discloses that the defendant No.3 has issued a letter of intent for the allotment of site in favour of the plaintiff in Bangarpet Industrial Area on 23.12.1995 to an extent of 40 X 80 sq.ft on the application submitted by the plaintiff on 25.09.1995. As per condition, 10% of the cost of the grant shall be paid to the defendants towards the first instalment, within 30 days from the date of the letter of intent. Accordingly, the plaintiff paid a sum of Rs.7,263/- i.e., 10% of the total consideration amount within 30 days. Ex.P2 is the receipt for having paid 10% of the amount in favour of defendant No.3 on 12.01.1996. The defendants did not dispute regarding the issuance of letter of intent as per Ex.P1.

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During the cross-examination of PW.1, the defendants have suggested that the plaintiff has not paid the balance allotment price within time and it is also elicited that the plaintiff has paid a sum of Rs.47,263/towards the part allotment price and the plaintiff has submitted a representation to the defendants that the plaintiff is ready and willing to pay the balance allotment price along with penalty. The defendants did not consider the said aspect. Thus, the plaintiff has proved that the defendants have allotted the suit site in favour of the plaintiff, but they did not execute the lease cum sale agreement, only on the ground that the plaintiff has not paid the balance allotment price to the defendants within a stipulated period and the plaintiff has violated the terms and conditions of the letter of intent. As the plaintiff has proved the allotment of site in favour of the plaintiff for consideration of Rs.72,624/- and thus in all paid a sum of Rs.47,263/- and the balance to be paid is Rs.25,361/-. The trial Court has rightly held that the plaintiff has proved

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the issuance of a letter of intent, wherein the defendants have allotted the suit schedule property in favour of the plaintiff.

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Though the plaintiff was supposed to pay the balance allotment price within a stipulated period, but the plaintiff could not pay the balance allotment price. Thereafter, to prove that the plaintiff was/is always ready and willing to perform his part of the contract, a legal notice was issued on 14.12.2006, calling upon the defendants to receive the balance sale consideration amount and execute the lease cum sale agreement and the registered sale deed.

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Admittedly, the defendants have not cancelled the letter of intent till date. As per Rule 5 of the Karnataka Industrial Area Development Board Regulations, 1969, where, it provides a manner of disposal of the land, which reads as follows:

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“The Board shall decide the manner of disposal of land/shed in each industrial area or part

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thereof, i.e., whether by lease, lease-cum-sale, sale, auction sale, auction-lease, assignment or otherwise. In each case, the Board will also have the discretion to decide the detailed conditions which shall be binding on the applicant.”

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Rule 10 of the Karnataka Industrial Area

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Development Board Regulations, 1969, provides that:

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Allotment.-(a) The Board, on being satisfied that the person, firm or company who has made an application is likely to start production within a reasonable period, and is not one which is declared obnoxious under Regulation 14 may make an allotment in his/their favour:

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plots and also delegate its power to the Executive Member, if necessary;

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(b) The Board may constitute sub-committees for considering allotment of

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(c) The Executive Member shall notify such applicant to whom an allotment is made to execute the agreement in Form 3 or 4 or 5 as the case may be with such modification as may be necessary in each case on such date. time and place as may be fixed by the Executive Member and to pay the consideration for the occupancy of the land as fixed by the Board within the time fixed by the Board;

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(d) Failure to execute the agreement or to pay the sums demanded by the Executive Member as per the notice given under Regulation 10(c) will render the allottee to have deemed to have declined the allotment;

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(e) The Board or with the authority of the Board, the Executive Member will have the discretion to grant extension of time for complying with the terms of the notice issued under Regulation 10(c) with or without payment of interest at nine per cent on the sums payable in terms of the said notice for the extended period.

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Admittedly, in the instant case, the defendants have not issued notice as required under Section 10(c) of the Karnataka Industrial Area Development Board Regulations, 1969, as on today. The Board has the discretion to extend the time for complying with the terms. The plaintiff has filed a representation for extension of time, and the defendants have not passed any order on the representation submitted by the plaintiff. However, as observed above, the plaintiff has already proved the allotment of site vide Ex.P1, and also paid the part of the allotment price.

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Thus, the first Appellate Court, committed an error in dismissing the suit, without considering Regulation 10(c) of the Regulations of 1969. As of this date, the defendants have not cancelled the letter of intent. Thus,

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the defendants can be compensated by directing the plaintiff to pay the penalty with interest on the balance allotment price. The plaintiff has shown that the first Appellate Court has committed an error in reversing the judgment and decree passed by the trial Court. Thus, I have perused the judgment passed by the first Appellate Court. The judgment and decree passed by the first Appellate Court, is arbitrary, perverse and erroneous and the same is liable to be set aside. In view of the above discussion, I answer the substantial question of law in the negative.

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Accordingly, I proceed to pass the following

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order:

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ORDER

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i. The Regular Second Appeal is allowed.

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ii. The judgment and decree passed in R.A.No.44/2011 dated 17.10.2012, passed by

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the learned Principal Senior Civil Judge, K.G.F, is hereby set aside.

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iii. The judgment and decree passed in O.S.No.131/2008 dated 30.07.2011 by the learned Civil Judge (Jr.Dn.) and JMFC, Bangarpet, is modified.

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iv. The plaintiff is directed to pay the balance allotment price along with interest and penalty within a period of one month from the date of receipt of copy of this judgment and thereafter, the defendants are directed to

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execute the lease cum sale agreement and issue an allotment letter in respect of the suit schedule property in favour of the plaintiff in terms of Rule 10 of the Karnataka Industrial Areas Development Board Regulations, 1969, and in accordance with law, within a period of one month from the date of payment of balance sale consideration by the plaintiff.

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