Allowed

K. Rajagopalan v. M/s Uttam Nirman

Telangana HC4 Oct 2013CCCA/129/2004

Case brief

AI extract

What is this about?

This court allowed an appeal against a decree for specific performance. The court set aside the trial court's order, holding the plaintiff was not ready and willing. The agreement was declared rescinded, and the plaintiff was granted a refund of advance payments with interest.

What did the court decide?

The appeal allowed. Impugned decree set aside. Agreement rescinded. Respondent to be refunded Rs.1,90,000/- with interest at 6% p.a. from decree date till realisation.

K. Rajagopalan Vs M/s Uttam Nirman — Specific Performance | Telangana HC (2013)

¶1

HONOURABLE SRI JUSTICE VILAS V. AFZULPURKAR

¶2

C.C.C.A. No. 129 of 2004

¶3

Dt: 04.10.2013

¶4

Between:-

¶5

K.Rajagopalan and others M/s.Uttam Nirman

¶6

… Appellants and … Respondent

¶7

This Court made the following:-

¶8

HONOURABLE SRI JUSTICE VILAS V. AFZULPURKAR

¶9

C.C.C.A. No. 129 of 2004

¶10

JUDGMENT:

¶11

This is an appeal filed by the defendants questioning the decree, dated 14.10.2003, in O.S.No.363 of 1994, passed by the III Senior Civil Judge, City Civil Courts, Secunderabad, in decreeing the suit for specific performance filed by the respondent/plaintiff.

¶12

2. The parties hereinafter are referred to as arrayed in the suit. The facts of the case, in nutshell, are as follows:-

¶13

(a) Defendant No.1 is the admitted owner of the suit schedule land admeasuring 419.04 sq.yds., forming part of plot No.14, Wahabnagar Co-op. Housing Society Ltd., Thokatta, Secunderabad. The plaintiff states that he offered to purchase the suit land for a total consideration of Rs.6,30,000/- and paid advance amount of Rs.50,000/- and obtained agreement of sale, dated 06.08.1991. The agreement mentions that the transaction is to be completed within eight months from the date of agreement by paying balance consideration and obtaining registered sale deed. Plaintiff alleges that the time was the essence of contract and that defendant No.1 agreed to obtain

¶14

ULC Certificate and Income Tax Clearance certificate to enable execution of registration of sale deed, but defendant No.1 did not comply with the said requirement in spite of several promises. It is further alleged that though the balance sale consideration was payable only at the time of registration of the sale deed, on the request of defendant No.1 plaintiff paid Rs.40,000/- through account payee demand draft on 27.02.1993 and also another Rs.1,00,000/on 14.08.1993, through another demand draft for which defendant No.1 issued receipts. Since defendant No.1 failed to obtain the requisite clearances the plaintiff ultimately filed suit for specific performance. It was also stated that defendant Nos.2 and 3, who are patients of Dr. M.B. Raghavan, partner of the plaintiff firm, through whom the sale transaction was arranged, were also impleaded. It is further stated that defendant No.1 himself got prepared agreement seeking extension of time and requested the plaintiff to complete the transaction before 31.08.1992. On defendant No.1’s request the plaintiff arranged a further sum of Rs.3,00,000/on 21.09.1994, but defendant No.1 refused to accept the same. Since defendant Nos.2 and 3 were allegedly planning to erect a compound wall around the suit property, plaintiff made enquiries and found that the registered sale deed vide Doc.No.814/1994, dated 08.04.1994, was already executed in favour of defendant Nos.2 and 3 for the same plot. In view of that, the plaintiff filed the suit for specific performance or for the alternative for recovery of Rs.1,90,000/- paid as advance together with interest.

¶15

(b) Defendant No.1 filed a written statement admitting the suit agreement, Ex.A2, and receipt of further amounts of Rs.40,000/- on 27.02.1993, Rs.1,00,000/- during August, 1993. It was further stated that as per the contract time was the essence of the contract and the extension of time was made only at the request of the plaintiff. It was also denied that defendant No.1 was ever asked to obtain clearances from U.L.C. and I.T. Departments. On the contrary, it is stated that plaintiff himself was unable to mobilize the funds. Hence, defendant No.1 is entitled to repay the advance sale consideration and terminate the contract and thereafter sold it to

¶16

defendant Nos.2 and 3 for the same price.

¶17

(c) Defendant Nos.2 and 3 also denied the averments made in the plaint and filed the written statement accepting that they are patients of Dr.M.B.Rghavan, but they were neither mediators in the deal between plaintiff and defendant No.1 nor they had entered into the picture while the alleged suit transaction was pending. They stated that when the plaintiff was unable to perform the contract even after two years and even after defendant No.1 issuing several notices and reminders, a fresh agreement of sale, dated 21.01.1994, was executed by defendant No.1 in their favour and later defendant Nos.2 and 3 obtained registered sale deed on 18.04.1994 and fenced the property with barbed wire. It was, therefore, claimed that defendant Nos.2 and 3 are bona fide purchasers. It is further alleged that they filed O.S.No.402 of 1994 on the file of I Assistant Judge, City Civil Courts, Secunderabad, to restrain the plaintiff from interfering with their possession.

¶18

3. On the aforesaid pleadings, the Court below framed following issues:-

¶19

1. Whether the plaintiff is entitled to the relief of specific performance of agreement of sale, dated 06.08.1991, against defendants as prayed for?

¶20

2. Whether the plaintiff is entitled to the relief of possession as prayed for?

¶21

3. Whether the plaintiff is entitled to the alternative relief of refund of Rs.1,90,000/- with interest if the court finds that the plaintiff is not entitled for the relief of specific performance of agreement of sale as prayed for?

¶22

4. Whether the time is essence of contract, as such plaintiff is not entitled for relief of specific performance of agreement of sale as contended by the defendants?

¶23

5. Whether the plaintiff has committed breach of agreement as contended by defendants?

¶24

6. To what relief?

¶25

5. On behalf of the plaintiff, the plaintiff was examined as P.W.1, and marked Exs.A1 to A7, whereas D.Ws.1 to 3 were examined on behalf of the defendants and Exs.B1 to B39 were marked, apart from marking Exs.X1 to X5 through D.W.2.

¶26

6. On appreciation of oral and documentary evidence as above, the court below on issue Nos.1 to 5 came to the conclusion that defendant No.1 failed to obtain clearances of U.L.C. and Income Tax Department to enable the execution and registration of sale deed and that defendant No.1 has failed to discharge his obligation and there was no fault on the part of the plaintiff. With reference to several notices said to have been sent by defendant No.1 to plaintiff, it was found that none of those letters were served on the plaintiff and its partners as evident from returned postal covers Exs.A18 to A24. Hence based upon the admission of D.W.1 in the cross-examination that agreement between him and the plaintiff was not cancelled till 15.11.1993, the trial court held that Ex.A2 agreement is enforceable. The trial court also found that defendant Nos.2 and 3 are not bona fide purchasers and they were aware of the existence of the agreement between the plaintiff and defendant No.1. Hence, that issue was also decided against them and the relief of specific performance was granted directing the plaintiff to deposit the balance sale consideration of Rs.4,40,000/- to the credit of the suit within two months. This appeal is preferred against the said decree.

¶27

7. The respondent/plaintiff, however, was not served in this appeal as all the notices taken out by appellants came back unserved. The appellants, therefore, sought permission to serve the respondent/plaintiff by substituted service, which was permitted vide orders, dated 05.11.2007, in C.M.P.No.825 of 2005. The proof of publication was, accordingly, filed vide U.S.R.No.1347, dated 30.11.2007.

¶28

8. The appeal has since been coming up for final hearing with the name of the respondent printed in the cause list, but nobody has appeared on behalf of the respondent. I have heard, learned counsel for the appellants on 30.09.2013 and today also. Even now, there is no appearance or any representation on behalf of the respondent.

¶29

9. Learned counsel for the appellants has primarily contended that the findings of the trial court are contrary to Ex.A2 and, particularly, the finding

¶30

with regard to the responsibility of obtaining clearances under U.L.C. and I.T.Act was wrongly placed upon defendant No.1, whereas the responsibility in that regard lay on the plaintiff in terms of Ex.A2. He also pointed out that the terms of the agreement make the time as the essence of the contract and though the conduct as well as the lack of readiness and willingness on the part of the plaintiff are evident from the record, the court below has not taken that into consideration while granting specific relief in his favour. In addition to the above aspect, learned counsel categorically mentioned a crucial aspect that though the trial court while decreeing the suit had granted two months time to the respondent/plaintiff to pay the balance amount of Rs.4,40,000/-, the respondent/plaintiff failed to deposit the amount. On the contrary, the respondent/plaintiff came up with an application viz., I.A.No.92 of 2004 before the trial court seeking extension of time upto the end of February, 2004 for depositing balance sale consideration. The said application was contested by appellant No.1/defendant No.1, who filed a detailed counter pointing out that the aforesaid application itself was filed on 21.01.2004 i.e., after expiry of the time granted and no explanation was forthcoming for the delay though copies of the judgments were made available on 30.12.2003 itself. He has brought to the notice of this court a copy of the order passed by the trial court dismissing the said application holding that petitioner therein has not shown any

¶31

bona fides in seeking enlargement of time and there were no reasons in granting extension of time as sought for. Learned counsel submits that the said order has attained finality and, therefore, on the said subsequent event and additional ground of the suit agreement having been affected by the inability of the respondent/plaintiff to discharge his obligation under decree, the agreement even otherwise is required to be declared as rescinded by the respondent/plaintiff. Learned counsel also placed reliance upon decision of the Supreme Court in support of the said proposition Chanda (Dead)

¶32

through L.Rs. v. Rattni and Another^[1] .

¶33

10. In the light of the above submissions, the points that arise for

¶34

consideration are:

¶35

1. Whether the respondent/plaintiff is entitled to decree for specific performance on the basis of evidence on record?

¶36

2. Whether the suit agreement-Ex.A2 stands rescinded by conduct of the respondent/plaintiff?

¶37

POINT No.1:

¶38

11. The original agreement of sale-Ex.A2 provides in the preamble that the vendor (first appellant herein) is the absolute owner of entire plot of land bearing plot No.13300.63 sq.mts., and out of the above though the western half portion was disposed of by the vendor, the remaining land is 651 sq.mts (778.55 sq.yds). It is also stated that out of the said remaining land 300.63 sq.mts., (359.55 sq.yds) is declared surplus under the provisions of U.L.C.Act and to the extent of 350.37 sq.mts. (41.9.04 sq.yds.,), which is a protected land, the agreement of sale was being executed. It was, therefore, agreed that the said land would be sold to the respondent/plaintiff at the rate of Rs.1,500/- per square yard, for a total consideration of Rs.6,30,000/- and that the plaintiff had paid Rs.50,000/- on the date of agreement agreeing to pay Rs.5,80,000/- within eight months. The agreement further provides that the sale transaction is to be completed within eight months and it is the vendee who shall bear the expenditure of stamp duty and registration. Clause 5 specifically provides that the vendor has given a General Power of Attorney to Dr. M.V.Raghaan for the purpose of obtaining exemption, permission and clearance from the competent authority with regard to the surplus land and for processing other formalities. The agreement provides for the default clause in the event of the vendor or vendee failing to discharge respective obligations within the eight months period.

¶39

12. It would thus be evident from the said agreement that there is no clause imposing any obligation on the first appellant/first defendant to obtain any clearances and it is the duty placed on the plaintiff to pay balance sale consideration and obtain registered sale deed. Ex.A3 is the further

¶40

agreement, dated 06.07.1992, which recites that within the eight months fixed under the agreement Ex.A2, the vendees could not complete the transaction due to certain difficulties and requested the vendor for extension of time till 31.08.1992 and the vendor having agreed, the time for payment of balance sale consideration stood extended up to 31.08.1992 and it was reiterated that “other terms and conditions in the original agreement of sale will remain unchanged”. It is thus clear that it is the plaintiff who failed to complete the transaction even within the extended time i.e., on or before 31.08.1992. Plaintiff, however, made two payments viz., a sum of Rs.40,000/- through a demand draft, dated 27.02.1993, evidenced by a receipt Ex.A4 and a further sum of Rs.1,00,000/- under another receipt, dated 04.08.1993, under Ex.A5, apart from Rs.50,000/- paid along with the suit agreement Ex.A2. The Court below has therefore, clearly misconstrued Ex.A2 agreement with respect to respective obligations of the parties and the finding of the trial court that it is the vendor/defendant No.1, who has failed to discharge his obligation, is clearly contrary to the record. The documentary evidence and particularly the documents filed by the respondent/plaintiff himself, therefore, does not support the case of the plaintiff. But surprisingly, the Court below had decreed the suit.

¶41

13. Secondly, it is also to be appreciated that defendant No.1 has at all the times notified the plaintiff to discharge his obligations even by giving notice, dated 25.10.1993-Ex.B35 and 28.02.1994-Ex.B34, but the said notices did not invoke any response. It is true that the return covers were filed as the notices could not be served on the plaintiff as shown in the plaint. But defendant No.1 cannot be blamed as the said notices were sent to the plaintiff and all the partners at more than one available address. Moreover, it was the obligation of the plaintiff to have followed up the matter in terms of the agreement. Defendant No.1 has even issued notice to the plaintiff about defendant No.1 intending to cancel the suit agreement and execute the conveyance in favour of defendant Nos.2 and 3 but all the opportunities offered by defendant No.1 were not availed by the plaintiff to complete the transaction. But unfortunately the trial court has not considered these

¶42

aspects and has proceeded to decree the suit in ignorance of all the aforesaid evidence on record.

¶43

14. The lack of readiness and willingness on the part of the plaintiff is thus evident and is demonstrated by his conduct and established by the evidence on record, as discussed above. The Court below has, thus, erred in exercising discretion in favour of the respondent/plaintiff contrary to Section 16(c) as well as Section 20 of the Specific Relief Act, 1963. Point No.1 is, therefore, answered in favour of appellant No.1/defendant No.1.

¶44

POINT No.2:

¶45

15. So far as point No.2 is concerned, the order of the court below in I.A.No.92 of 2004, dated 26.02.2004, declining to extend the time for payment of balance consideration, as stipulated in the decree, clearly amounts to resulting in recession of the suit agreement. The said order having attained finality, it is evident that the respondent/plaintiff is neither ready nor willing and Ex.A2-agreement has to be declared as rescinded as provided under Section 28 of the Specific Relief Act.

¶46

16. The decision of the Supreme Court in Chanda’s case (supra), relied upon by the learned counsel for the appellants, in para 10 held as follows:

¶47

“10. The decree for specific performance has been described as a preliminary decree. The power under Section 28 of the Act is discretionary and the Court cannot ordinarily annul the decree once passed by it. Although the power to annul the decree exists yet Section 28 of the Act provides for complete relief to both the parties in terms of the decree. The court does not cease to have the power to extend the time even though the trial court had earlier directed in the decree that payment of balance price to be made by certain date and on failure suit to stand dismissed. The power exercisable under this Section is discretionary.”

¶48

17. I had also an occasion to consider the same question in Susheela Devi v. Maharshi Commerce Limite d^[2] , wherein two other decisions of the Supreme Court were also noticed

¶49

viz., 1) V.S.Palanichamy Chettiarfirm v. C.Alagapan and another {(1999) 4 SCC 702} and 2) Jai Narain Ram Lundia v. Kedar Nath Khetan and others {AIR 1956 SC 359}.

¶50

18. In view of the settled legal proposition, which does not admit of any doubt, Ex.A2 suit agreement is liable to be declared as liable to be rescinded for failure of the respondent/plaintiff to comply with the terms of the decree. Accordingly, point No.2 is also answered in favour of the appellants.

¶51

19. The Appeal, therefore, deserves to succeed even on the said subsequent event. Consequently, therefore, once the relief of specific performance is denied, the respondent/plaintiff is alternatively entitled to the relief with regard to refund of the advance consideration paid by the plaintiff. Defendant No.1 in the written statement has admitted that apart from Rs.50,000/- paid at the time of execution of Ex.A2-agreement, plaintiff also paid further amounts of Rs.40,000/- on 27.02.1993 and Rs.1,00,000/- in the month of August, 1993 and the said further payments are evidenced by receipts Exs.A4 and A5. Hence, the said amount of Rs.1,90,000/- is refundable to the respondent/plaintiff in view of denial of relief of specific performance. The appellants, therefore, shall refund the said amount of Rs.1,90,000/- to the respondent/plaintiff together with interest at 6% per annum from the date of decree of the trial court till realization.

¶52

The C.C.C.A. is accordingly allowed by setting aside the impugned decree of the trial court and the decree for refund of Rs.1,90,000/- is passed in favour of the respondent together with interest at 6% p.a. from the date of decree of the trial court i.e., 14.10.2003 till realisation. There shall be no order as to costs. Miscellaneous petitions pending, if any, shall stand dismissed.

¶53

_____________________ VILAS V. AFZULPURKAR, J

¶54

October 4, 2013 LMV

¶55

HONOURABLE SRI JUSTICE VILAS V. AFZULPURKAR

¶56

C.C.C.A. No.129 of 2004

¶57

Dt: 04.10.2013

¶58

LMV