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IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 29TH DAY OF NOVEMBER, 2019
BEFORE:
THE HON'BLE MR. JUSTICE N.K. SUDHINDRARAO
REGULAR FIRST APPEAL NO.433/2010
BETWEEN
MRS. UMA BALAKRISHNAN, W/O. MR. P.BALAKRISHNAN, AGED ABOUT 54 YEARS, R/AT 01/10 1ST FLOOR, VASANTH VIHAR, NEW DELHI-110 005.
... APPELLANT
[BY SRI. N.KUMAR, ADVOCATE]
AND
MR. VIJAYA KUMAR HINDUJA,
S/O. DEVKISHINDAS HINDUJA,
AGED ABOUT 63 YEARS,
RESIDING AT NO.39,
K.H. ROAD,
BANGALORE-560 027.
M/S. GOKALDAS FASHIONS,
A REGISTERED PARTNERSHIP
FIRM UNDER THE INDIAN PARTNERSHIP
ACT AND HAVING ITS PRINCIPAL
PLACE OF BUSINESS AT NO.61/4/5,
MISSION ROAD,
BANGALORE-560 027.
REP. BY ITS PARTNER,
MR. DEV KISHNIDAS H. HINDUJA.
MR. DEV KISHIN DAS H. HINDUJA,
S/O. HARBHAGVANDAS HINDUJA,
AGED 84 YEARS,
R/AT NO.142/4/5,
RMV EXTENSION,
BANGALORE-560 080.
MR. JAIPRAKASH D. HINDUJA,
S/O. DEV KISHNIDAS H. HINDUJA,
AGED 61 YEARS,
R/A NO.278, RMV EXTENSION,
BANGALORE-560 080.
MR. BHIHARILAL D. HINDUJA,
S/O. DEV KISHNIDAS H. HINDUJA,
AGED 57 YEARS,
RESIDING AT NO.287,
UPPER PALACE ORCHARDS,
BANGALORE-560 080.
KIRLOSKAR ELECTRIC COMPANY,
EXECUTIVES AND OTHER
OFFICERS WELFARE TRUST,
A TRUST UNDER THE PROVISIONS
OF THE INDIAN TRUSTS ACT,
HAVING ITS OFFICE AT
KEC FACTORY PREMISES,
RAJAJINAGARA INDUSTRIAL AREA,
BANGALORE-560 055,
REP. BY ITS TRUSTEE,
... RESPONDENTS
[BY SRI. N. DINESH RAO, ADVOCATE FOR R-4; SRI. DINESH S. KADLAS, ADVOCATE FOR R6; NOTICE TO R-1 TO R-3 AND R-5 ARE DISPENSED WITH VIDE COURT ORDER DATED 26.03.2013]
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THIS RFA IS FILED UNDER SECTION 96 OF CPC., AGAINST THE JUDGMENT AND DECREE DATED 27.07.2009 PASSED IN O.S. NO.6779/2001 ON THE FILE OF THE XXXIII-ADDL. CITY CIVIL AND SESSIONS JUDGE, BANGALORE CITY, DISMISSING THE SUIT FOR RECOVERY OF MONEY.
THIS RFA COMING ON FOR ORDERS, THIS DAY THE COURT DELIVERED THE FOLLOWING:
3 JUDGMENT
Heard the learned counsel for the appellant and the learned counsel for the respondents.
This appeal is directed against the Judgment and Decree passed by the learned XXXIII Additional City Civil and Sessions Judge, Bengaluru City, CCH-33, dated 27.07.2009 in O.S. No.6779/2001, wherein the suit of the plaintiffs came to be dismissed.
In order to avoid confusion and overlapping, parties hereinafter are referred to with reference to their rankings as it stood before the trial Court.
The aforesaid suit is filed against defendants for refund of advance amount of Rs.6,50,000/- paid to the defendants under Agreement of Sale dated 23.04.1998 together with interest.
The brief facts leading to the proceedings are that;
4 Defendant Nos.1, 4 and 5 are the sons of defendant No.3. Further, defendant Nos.3, 4 and 5 are the partners of defendant No.2-registered partnership firm. Defendant No.2 firm funded the amount to purchase the suit schedule property in the name of defendant No.1. However, it belongs to defendant No.2. Defendant No.1 retired from the partnership on 31.10.1990. Even after his retirement, the suit schedule property belongs to defendant No.2, which was standing in the name of defendant No.1. The claim of the defendants is that they are the joint owners of the suit schedule property.
The defendants entered into an Agreement of Sale on 23.04.1998 agreeing to sell the suit schedule property to plaintiff No.1 for a cash consideration of Rs.65,00,000/- under which plaintiff No.2 paid an advance amount of Rs.6,50,000/- to plaintiff No.1 to pay the said amount. The parties also had agreed that the defendants have to get clearance certificate from the Income Tax Department within 45 days from the date of receipt for the purpose of sale and it was also agreed that the defendants have to convey a marketable title over
5 the suit schedule property. The terms of the Agreement of Sale were published in Deccan Herald, calling for objections.
One Venkatesh as a General Power of Attorney Holder of Narasimhaiah and Muniramappa, through his advocate by claim dated 12.06.1998 has claimed interest over the suit schedule property. The plaintiff forwarded those copies of letters to defendant No.2. Defendant No.2 through a reply dated 24.06.1998 denied the claim made by Venkatesh and admitted that the suit schedule property contain an unauthorized structure which was demolished by the Bangalore Development Authority [hereinafter referred to as ‘BDA’ for short] and further stating that the BDA has executed the registered Sale Deed in favour of the defendants on 20.03.1998 and they have got a saleable right and they are the owners of the suit schedule property.
It is also stated that said Venkatesh met plaintiff No.1 and produced copies of the documents and again sent the said documents to the defendants under a covering letter dated 25.07.1998. The defendants through a letter dated 13.08.1998 asked plaintiffs to provide draft Sale Deed as they
6 have obtained clearance certificate from the Income Tax Department. Plaintiff No.1 through her advocate issued a letter dated 25.08.1998 stating that Venkatesh had filed writ petition and he is claiming title over the property and therefore asked to refund advance amount. Defendant No.2 through a letter dated 19.12.1998 has asked to complete the transaction. Plaintiff No.1 has replied on 23.12.1998 to defendant Nos.1 and 2 that the title to the suit schedule property is not clear and the subject matter is under litigation and therefore, they are not interested to purchase the suit schedule property.
The defendants replied through a letter dated 09.01.1999 stating that they have got valid title over the suit schedule property and called plaintiff No.1 to perform her part of contract and the defendants are willing to perform their part of contract. In the said notice, it was made categorically clear that Venkatesh had filed a suit in O.S. No.2571/1991 against Vijay Kumar Hinduja and also listed out several writ petitions.
7 It is the only defendant No.4, who has filed his written statement and other defendants are set ex-parte.
Defendant No.4 admits that they are the owners of the suit schedule property and also admits that there was an Agreement of Sale executed in favour of plaintiff No.1 and also receipt of advance amount.
Defendant No.4 has contended that plaintiff No.1 who has full knowledge of the background under which the defendant herein and others acquired the title over the suit schedule property. The further contention of the said defendant is that they are not having knowledge of the allegation as contended by the plaintiffs or about the writ petitions.
Defendant No.4 also contended that the BDA had acquired the land and compensation amount has been paid and thereafter layout was formed and Lease-cum-Sale Agreement was executed in favour of the defendants. Defendant No.4, who is also stated to be one of the owners in the capacity of partners admitted the Sale Agreement and also received advance amount.
8 The contention of defendant No.4 is that plaintiff No.1 is guilty of breach of contract and has no right over the Agreement and has no right to claim refund of advance amount.
The trial Court framed issues regarding execution of the Sale Agreement dated 23.04.1998, breach of contract by the plaintiffs, dispensability of defendant No.2, entitlement of the plaintiffs for refund amount together with interest of Rs.10,73,669/-. Learned trial Judge on the basis of oral evidence of P.W.1, D.W.1 and documentary evidence of Exs.P.1 to P.17, dismissed the suit. Against which, plaintiff is in appeal before this Court.
Sri. N.Kumar, learned counsel appearing for the appellant/plaintiff No.1 would submit that plaintiff No.2- Kirloskar Electric Company had funded plaintiff No.1 to purchase the suit schedule property and at that point of time, plaintiff No.2 was made a party. However, the learned trial Judge came to the conclusion that plaintiff No.2 was not a necessary party. However, he is arrayed as respondent No.6 herein.
9 7. The learned counsel Sri. Kumar further submits that rejection of the prayer of the plaintiffs is not justifiable both in law and on facts. The learned trial Judge erred in considering the plea of the defendants and forfeited the advance amount. He would further submit that almost the entire advance amount by virtue of Judgment and Decree passed by the learned trial Judge is lost by the plaintiffs as it is forfeited in favour of the defendants as stated above.
In the overall circumstances of the case, the admitted facts that amply clear are as under:
The Sale Agreement dated 23.04.1998 is admitted by the defendants. They are stated to be the partners of the firm.
It is only defendant No.4, who is contesting the suit and the others are set ex-parte by the trial Court.
In so far as the evidence available is concerned, it is P.W.1-Trustee of plaintiff No.2 and following of the documents produced on behalf of the plaintiffs:
10 Ex.P1 : Power of attorney Ex.P2 : Copy of Agreement of Sale Ex.P3 : Publication of public notice Ex.P4 : Reply to the public notice Ex.P4(a): Postal cover Ex.P5 : Letter dated 15.06.1998 Ex.P6 : Letter to plaintiff Ex.P7 : Letter dated 24.06.1998 from D2 Ex.P8 : Letter to defendants 1 and 2 Ex.P9 : Letter dated 12.08.1998 by D2 Ex.P10: Letter dated 25.08.1998 to D1 and 2 Ex.P11: Letter dated 19.12.1998 to 1st plaintiff Ex.P12: Letter dated 23.12.1998 to defendant Nos.1 and 2
Ex.P12(a) & (b): Postal receipts Ex.P13 & P14 : Acknowledgment cards Ex.P15: Reply from defendant Nos.1 and 2 Ex.P16: Reply dated 09.01.1999 Ex.P17: Letter dated 23.02.1999 by 1st plaintiff
Further, D.W.1 is a witness from the defendants side and no document is produced on his behalf.
In a given circumstances similar to the present one, it has to be considered where an Agreement to Sell an immovable property is entered into with terms and conditions as stated in Ex.P2, more particularly Clause Nos.4 and 27.
11 Thus the Sale Agreement dated 23.04.1998 was not performed and it remained as unexecuted contract. The moot question would be, what about forfeiture of the advance amount of Rs.6,50,000/- that was admittedly paid by plaintiff No.1 to the defendants towards the sale price of the suit schedule property of Rs.65,00,000/-.
The learned trial Judge while assigning reasons states that one Venkatesh asserted his claim over the suit schedule property and also brought to the notice about the writ petitions and other litigations that were pending before the Court stating that the defendants have marketable title over the schedule property.
On the other hand, the performance of the Sale Agreement goes by principle that the extent conveying of the suit schedule property from the defendants to the plaintiffs cannot be more than the extent of title of the former. However, the parties specifically agreed and covenanted for Income Tax Clearance Certificate.
12 In this connection, except the averments made in the statement of objections, the defendants have not produced the said document.
A reading of relevant paras of the said Agreement would suggest that production of the Income Tax Clearance Certificate. However, it is not only contractual, but also statutory. Moreover, Exs.P7 and 16 suggest that the said Agreement was alive. Insofar as the purchaser is concerned, it is expected from him to make a reasonable enquiry and not supposed to be hasty in buying the property, more particularly, when it was clearly informed by a third party that the latter had a claim over the said property.
Further, the learned trial Judge in this connection observed that the objector has not been examined on behalf of the plaintiffs. Considering the legal effect on the Agreement of Sale, whether the breach of contract is actual or anticipatory. Actual breach is breach which is apparent. Anticipatory breach which provides all indication of breach though positive and unavoidable inference.
13 13. Ex.P2-Sale Agreement dated 23.04.1998 is said to have been executed by the defendants in favour of plaintiff No.1 and the suit schedule property was agreed to be sold for Rs.65,00,000/- and an amount of Rs.6,50,000/- was paid as advance amount. Having regard to the facts that the mode of assessment of damages is partly mentioned in Ex.P2, wherein insofar as refund of the advance amount will have to be made together with interest at the rate of 20% p.a., which the plaintiffs claimed as on the date of the suit that comes to Rs.6,50,000/- + interest. But, the fact of the matter is that the parties appeared to have reacted on damages for breach of the contract. Thus the conduct of issuing legal notices, reply as stated above, filing of the suit and contention of defendant No.4 would make it absolute that the plaintiffs seriously contended that the defendants had no marketable right over the suit schedule property and they are liable to refund the amount together with interest at the rate of 20% p.a.
Per contra, the defendants having admitted execution of the Sale Agreement-Ex.P2 and receipt of the advance amount and contended that being unable to perform her part
14 of contract, plaintiff No.1 is trying to make out a case for recovery of advance amount, which she is not entitled. In other words, when the Sale Agreement is not performed, the damages relied upon by plaintiff No.1 would be Rs.6,50,000/- which was received by the defendants and that plaintiffs No.1 cannot seek recovery of the said advance amount which is already adjusted by the defendants.
The paramount consideration would be whether the damages in the context of non-performance or breach or liquidated to both the parties. In other words, whether there was ascertaining of any damages. The answer would be not straight. In the wisdom of the learned trial Judge, the defendants need not pay the amount of Rs.6,50,000/- which is sought to be refunded to plaintiff No.1 together with interest. The further question would be, whether the learned trial Judge has followed yardsticks for ascertaining the quantum of damages if plaintiff No.1 was really had paid.
No oral evidence or documentary evidence is available. In case of recovery of advance amount with interest or damages by the defendants, if this principle of
15 adjusting the entire advance amount and forfeiture is recognized or supported, it may lead to a drastic and disturbing result on case where substantial amount of sale consideration is paid as advance amount and the impugned unilateral assertion or damages by the seller, which may stand to answer the principle of natural justice.
Further, no-doubt the parties have one of the remedies in the form of damages whether actual or anticipatory. But, that has to be determined.
The principle would be whenever the amount is paid by way of advance or towards sale price also come into consideration. It is to be noted that when the amount paid to the defendants as advance, the Court has to determine whether it is paid under the Agreement by way of advance or whether towards the sale price or for performance of the contract.
In other words, in the common term it is a security deposit. In this case, the evidence examined on behalf of the defendants is D.W.1 and no further documents are produced. When the learned trial Judge has completed
16 his responsibility by dismissing the suit whose legal effect is that the admitted Agreement dated 23.04.1998 failed due to breach of contract by plaintiff No.1 and whole amount of Rs.6,50,000/- in other words is forfeited in favour of the defendants.
This in principle paves the way for enriching one unjustly at the cost of another, which cannot be sustained in law. It is not a decision making that requires compliance of principles of natural justice. Even the performance of duty and acceptance of right requires the test of presence of reasoning and the terms must be considerable. In other words, the rights of the plaintiffs is nothing but the duty of the defendants. Any amount of valuation or breach of right by one definitely affect the another.
In this connection, the trial Court ought to have considered nature of the Agreement, failure of the parties, breach of contract whether actual or anticipatory, the extent of breach is to proper assessment and the relief that could be given which includes in the form of money as well and then order. In this direction there should have been a full fledged
17 enquiry, which is absent in the Judgment. In the circumstances, I find that the present Judgment and Decree have gone in favour of the defendants, in violation of principle of sound reasoning and decision. The fault on either party if any should have been assessed with a cogent evidence after giving opportunity to both the parties and then the quantum of damage should have been assessed invariably. As the same is absent, in my considered view, the Judgment and Decree in the present form are not sustainable and are liable to be set aside and matter requires reconsideration.
In the circumstances, the appeal is allowed. Consequently, the impugned Judgment and Decree are set aside.
The matter is remanded to the trial Court with a direction to comply with the observations and directions made hereinabove and dispose off the matter referring to the fact that the plaintiffs or the defendants be given an opportunity for filing their pleadings or documents and after examining the witnesses, adjudicate the matter.
18 In the light of the fact that, suit is of the year 2001, the disposal of the case be effected as early as possible, precisely on or before 30th June 2020.
Sd/- JUDGE.
Ksm*