Usha Devi Chokhani & Anr vs Kusum Surekha & Anr
2022 Latest Caselaw 2814 Cal/2

                    IN THE HIGH COURT AT CALCUTTA
               ORDINARY ORIGINAL CIVIL JURISDICTION
                       COMMERCIAL DIVISION
BEFORE:
The Hon'ble Justice Ravi Krishan Kapur

                            IA NO. GA/1/2021
                             In CS/263/2021

                      USHA DEVI CHOKHANI & ANR.
                                  Vs
                         KUSUM SUREKHA & ANR.

For the petitioners            : Mr. Chayan Gupta, Advocate,
                                 Mr. S. Nayak, Advocate,
                                 Mr. Dwip Raj Basu, Advocate.

For the respondents            : Mr. Rudraman Bhattacharyya, Advocate,
                                 Mr. Lalit Baid, Advocate,
                                 Mr. S. Mukherjee, Advocate,
                                 Mr. T. Saha, Adv.


Reserved on                     : 25.08.2022

Judgment on                     : 22.11.2022

Ravi Krishan Kapur, J.

1. This suit is for recovery of money. The petitioners seek refund of

earnest money deposited alongwith interest.

2. Briefly, the petitioners were desirous of purchasing a commercial

premises alongwith car parking spaces belonging to the respondents.

Pursuant to the negotiations by and between the parties, the

petitioners agreed to purchase (i) one shop room, measuring more or

less 334 sq. ft., (ii) one self-contained residential flat, measuring more

or less 981 sq. ft. along with a single car parking space of 100 sq. ft.

and (iii) nine car parking spaces, measuring more or less 1085 sq. ft.

all on the ground floor of the premises situated at 209, Block-A,

Bangur Avenue, P.S.- Lake Town, Kolkata-700 055 ("the premises").

The respondents also agreed to convert the entirety of the premises

into a single commercial unit. The purchase consideration was agreed

at Rs. 1,26,40,000/-. The respondents were obliged to furnish the title

documents of the premises to the petitioners who would cause a title

search in respect of the premises. The petitioners also agreed to make

payment of earnest money of Rs. 25,00,000/- to the respondents. The

respondents upon receipt of the earnest money were to hand over

additional papers relating to the regularization of different portions of

the premises as a single commercial unit to the petitioners.

3. Pursuant to the aforesaid, the petitioner paid a sum of Rs.

25,00,000/- as earnest money to the respondents. It is alleged that

after receipt of the earnest money, the respondents failed to handover

the documents to the petitioners for regularisation of the premises to

one single commercial unit. Neither did the respondents handover

symbolic possession of the premises. In fact, the respondents

demanded a sum of Rs.30 lacs out of the total sale consideration in

cash. The respondents had also given counter proposals and

alternative sites which were rejected by the petitioners. In view of the

aforesaid, the petitioners allege total failure of consideration and seek

recovery of the entire amount paid as earnest deposit alongwith

interest.

4. On behalf of the respondents, it is contended that, the petitioners

have failed to make payment of the entire sale consideration. It is also

alleged that the respondents were ready and willing to execute the

Deed of Conveyance in respect of the premises if the entire sale

consideration had been paid. The respondents further allege that the

sale consideration of the premises, was agreed at Rs. 1.75 crores and

not Rs. 1,26,40,000/-. The respondents also seek specific

performance of the agreement between the parties. In this connection,

the respondents rely on B. Santoshamma & Anr. Vs. D. Sarala & Anr.

(2020) 19 SCC 80 to contend that specific performance is no longer a

discretionary remedy. In the alternative, the respondents submit that,

in view of failure of the petitioners to honour their obligations, the

respondents are entitled to forfeit the entire earnest money deposit.

The respondents also contend that they have suffered loss and

damages in view of the default committed by the petitioners. The

damages suffered by the respondents are on account of ill health of

the respondent no.1 and the medical expenses incurred in respect

thereof.

5. Ordinarily, forfeiture of the right to earnest money is available only if

the contract contains a stipulation in that regard. To justify forfeiture

of earnest deposit the contract between the parties should also be

sufficiently explicit. Smaller payments are likely to be treated as

deposits and are liable to be forfeited. Larger payments are more likely

to be treated as part payments towards consideration.

6. Admittedly, the respondents have received and appropriated the

entirety of Rs. 25,00000/- paid by the petitioners as security deposit.

I also find that there has been total failure of consideration insofar as

the petitioners are concerned. The respondents have been unable to

honour their obligations and have been unable to convert the

premises as a single commercial unit. The transaction between the

parties has failed. The petitioners are no longer interested in the

premises nor in the alternative sites offered by the respondents.

7. The entire case of loss and damages on account of the purported

medical expenses suffered by the respondents is also unreasonable

and unforeseeable. The general aim of the law of damages is to protect

the innocent party's defeated financial expectation and compensate

him for his loss of bargain, subject to the rules of causation and

remoteness. There must be a causal connection between the breach of

contract and the loss sustained by the party who suffers the breach.

The important issue is whether a particular loss was within the

reasonable compensation of the parties. In my view, the damages

suffered as alleged by the respondents are indirect and remote.

Expenses incurred for medical expenditure of the respondent no.1 is

not a foreseeable event when the underlying transaction is one for

sale of land. Considering the nature of the contract, the absence of a

clause for forfeiture, and the quantum of money advanced, I find the

claim of the respondents to be unsustainable. There is no

corresponding loss or damage suffered which the respondents have

been able to substantiate. In fact, permitting the respondents to forfeit

the earnest money paid by the petitioners would tantamount to

punitive or extortionist measures being imposed on the petitioners.

(Fateh Chand vs. Balkishan Dass AIR 1963 SC 1405, Maula Bux vs.

Union of India AIR 1970 SC 1955, Kailash Nath Associates vs. Delhi

Development Authority (2015) 4 SCC 136, MBL Infrastructure Limited v.

Rites Limited and Ors. AIR 2020 Cal 155 and Kanchan Udyog Ltd. vs. United

Spirits Ltd. (2017) 8 SCC 237).

8. I find that the petitioners are not in breach of their obligations. In

fact, it is the respondents have failed to fulfil their obligations. of

converting the premises to a single unit as assured by them. This is

further evident from the offer of the respondents for alternative sites

and options. I also do not find any merit in the defence of specific

performance.

9. Hence, I find the claim of the petitioners to be unimpeachable. The

petitioners have a strong prima facie case on merits and deserve to be

protected and secured. In Harleen Jairath vs. Prabha Surana and

Another reported in (2019) 4 CHN 412, the Hon'ble Division Bench had

held that, a Court faced with an unimpeachable claim should not wait

for an unscrupulous litigant to deliver its defence and the luxury of a

trial by which time the chance of recovery would be lost forever. Thus,

it is necessary to preserve and protect any future money judgment in

favour of the petitioners. (Rahul S. Shah vs. Jinendra Kumar Gandhi &

Ors. (2021) 6 SCC 418).

10. The final outcome of suits takes years if not decades. Even without

an intention to defraud creditors, the vicissitudes of the market, cycle

changes of any business,the overall financial condition of any

respondent is such that may with the passage of time make any

plaintiff disinterested and the claim irrelevant. (Abheya Realtors

Private Limited Vs. SSIPL Retail Limited & Anr. (2010) 2 CHN 203)

11. Notwithstanding repeated adjournments the parties were unable to

arrive at any kind of settlement. The balance of convenience and

irreparable injury is also in favour of the orders being passed, as

prayed for herein. The petitioners are out of pocket and are being

made to run from pillar to post when the underlying transaction

between the parties has failed.

12. Insofar as the prayer for an injunction in respect of the bank

accounts of the respondents is concerned, there are no pleadings

justifying any such drastic order. The petitioners have not even

pleaded that the respondents are about to remove or dispose of the

whole or part of the premises with the intention of obstructing or

delaying the execution of any decree which may be passed in its

favour. There are no materials warranting any such order. (Raman

Tech. and Process Engineering Co. & Anr. vs. Solanki Traders (2008) 2

SCC 302).

13. Accordingly, there shall be an order of injunction in terms of prayer

(b) of the Notice of Motion. With the aforesaid directions, GA 1 of 2021

stands disposed off.

(Ravi Krishan Kapur, J.)