Chattisgarh High Court
Suresh Hotwani vs Sheikh Abdul Wahid on 13 December, 2022
1
FA No.168 of 2018
NAFR
HIGH COURT OF CHHATTISGARH, BILASPUR
Judgment reserved on 31-10-2022
Judgment delivered on 13-12-2022
FA No.168 of 2018
{Arising out of judgment and decree dated 29-1-2018 passed by the Sixth
Additional District Judge, Durg, in civil suit No.35362-A/2011}
1. Suresh Hotwani S/o Late Shri Gulab Bhai Hotwani, Aged About 38
Years R/o Shop No. 84-A Market, Sector 01, Bhilai, Tehsil And
District Durg, Chhattisgarh
---- Appellant
Versus
1. Sheikh Abdul Wahid S/o Jalaluddin Aged About 54 Years R/o
70/5A, Nehru Nagar (West) Bhilai, Tehsil, District Durg,
Chhattisgarh
---- Respondent
For Appellant Mr. Manoj Paranjape, Mr. Ankit
Singhal, Mr. Arpit Agrawal & Mr.
Shreyansh Agrawal, Advocates
For Respondent Mr. Rajeev Shrivastava, Sr. Advocate
with Ms Isha Jajodiya, Advocate
Hon'ble Mr. Justice Goutam Bhaduri &
Hon'ble Mr. Justice Radhakishan Agrawal
CAV Judgment
The following judgment of the Court is delivered by Goutam
Bhaduri, J.
1. Challenge in this appeal is to the judgment and decree dated 29-1-
2018 passed by the Sixth Additional District Judge, Durg, in civil suit
No.35362-A/2011 whereby the suit for specific performance,
possession and in alternate for return of amount of Rs.12.00 lacs with
interest was dismissed. The appeal is by the plaintiff/appellant.
FA No.168 of 2018
2. The appellant/plaintiff filed the suit pleading, inter alia, that the
respondent/defendant agreed to sell his house situated at Block No.70,
Plot No.5-A, Motilal Nehru Nagar, Bhilai (West), area 15x24 mtrs.
(360 sq.mtrs.) for a sale consideration of Rs.44,51,000/- on 11-4-2008
and an amount of Rs.10.00 lacs was paid as earnest money.
Subsequently, an amount of Rs.2.00 lacs was paid on 16-4-2008.
According to the agreement, the sale deed was to be executed before
20-5-2008 and the balance amount was to be paid at the time of
registry. The plaintiff further pleaded that to execute the sale
deed in respect of the suit property, No Objection
Certificate (NOC) was to be obtained from the Municipal
Corporation, Bhilai. On 19-5-2008, the plaintiff asked the
defendant to execute the sale deed, but the defendant
sought for time on the ground that he could not obtain a
house on rent and an amount of Rs.15.00 lacs was
demanded. Accordingly, the amount of Rs.15.00 lacs was
deposited in the account of the defendant, but to extend the
time when the defendant was asked to sign another
agreement, he refused to sign the same. Despite that, on
20-5-2008 the plaintiff prepared a pay order of
Rs.32,51,000/- in the name of the defendant, but the
defendant did not appear in the registry office and hence
the sale deed could not be executed. Thereafter, the
plaintiff sent a notice to the defendant, but despite service
of notice, the defendant did not execute the sale deed.
Thus, the suit was filed.
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3. The defendant admitted to have executed the agreement to
sell the suit property for a sale consideration of
Rs.44,51,000/- and an amount of Rs.10.00 lacs was
admitted to have been received, however, he refused to
have received the subsequent amount of Rs.2.00 lacs on
16-4-2008 and Rs.15.00 lacs on 19-5-2008. It was stated
that an amount of Rs.2.00 lacs was deposited by one Sonali
Gupta in the account of the defendant without his
knowledge. Likewise, the cheque amounting to Rs.15.00
lacs deposited by one Anil Jain in his account with whom
he did not have any privity of contract. Subsequently, the
amount of Rs.15.00 lacs was stopped payment, therefore,
since the plaintiff himself was not interested to get the sale
deed executed till 20-5-2008 and he did not have financial
capacity to get the sale deed executed in his favour, he
tried to replace the original agreement by an another
agreement, which the defendant refused to sign.
Consequently, the plaintiff himself was not ready and
willing to execute the sale deed within time. It was
specifically agreed that time was essence of the contract.
The defendant also pleaded that the plaintiff, therefore, is
not entitled for any relief.
4. On the basis of pleadings, the learned trial Court has
framed as many as 11 issues. With respect to the
agreement dated 11-4-2008 the Court held that the
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agreement was executed in favour of Anil Jain and an
amount of Rs.2.00 lacs was also received by the defendant
pursuant to the agreement. With respect to the payment of
Rs.15.00 lacs and the ground that the defendant could not
procure any rented house and consequently could not shift,
the Court held in negative. The Court further held that the
plaintiff failed to prove that the defendant was asked to
sign the agreement to extend the time. Subsequently,
dismissed the suit filed by the plaintiff. Hence, this appeal.
5. Learned counsel appearing for the appellant/plaintiff would submit
that :
▪ initially the sale consideration of Rs.44,51,000/- was agreed to
be paid and admittedly an amount of Rs.10.00 lacs was given
to the defendant as advance;
▪ according to the agreement (Ex.P/1) it was a reciprocal in
nature as the seller was required to get the NOC from the
Municipal Corporation, Bhilai and then only the sale deed
could have been executed;
▪ the finding in favour of the plaintiff that additional amount of
Rs.2.00 lacs was received by the defendant against which no
cross objection has been filed;
▪ in fact the plaintiff has performed his part of contract and the
defendant has failed to do so;
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▪ referring to the statement of defendant, learned counsel would
submit that the defendant himself has admitted the fact that
the original documents were to be supplied by the defendant
and only stated that since the plaintiff has not approached,
therefore, documents could not be supplied;
▪ the defendant had not paid the dues of the Municipal
Corporation, Bhilai, to get the NOC;
▪ reference was made to a copy of account statement (Ex.P/2)
which shows that on 16-4-2008 the amount was paid from the
account of Sonali Gupta to the defendant;
▪ further referring to the document i.e. certificate of the Union
Bank of India, learned counsel would submit that cheque
bearing No.126207 of Rs.15.00 lacs was presented at the Bank
and the same was returned with the reasons 'payment stop by
the drawer'. The same would show the intention of the
parties; and
▪ learned counsel would next submit that for the aforesaid
reasons the plaintiff is entitled to get the sale deed executed in
his favour or in alternate for refund of Rs.12.00 lacs with
interest.
6. Learned counsel appearing for the respondent/defendant would submit
that :
FA No.168 of 2018
the plaintiff himself has failed to perform his part of contract;
the plaintiff did not have enough amount in his account albeit
has agreed to purchase the suit property;
'earnest money' means the earnest in the right interest with
intention to purchase whereas in the present case the plaintiff
failed to show that he has sufficient means to execute the sale
deed;
without knowledge of the defendant, an amount of Rs.2.00
lacs was deposited in his account by one Sonali Gupta after 3-
4 days of execution of the agreement;
thereafter, before the target date i.e. 20-5-2008 the plaintiff
tried to deposit the cheque amounting to Rs.15.00 lacs in the
account of the defendant through one Anil Jain, but after such
deposit it was stopped for payment, which shows that the
plaintiff did not have sufficient means;
the plaintiff failed to abide by the terms of the agreement in its
letter and spirit;
according to the defendant because of such problem created by
the plaintiff, he could not get the sale consideration and
purchased the property as agreed some where else, which
caused whopping loss to him; and
the impugned judgment & decree of the Court below is well
merited, which do not call for any interference.
FA No.168 of 2018
7. We have heard learned counsel appearing for the parties, perused the
pleadings and the evidence available on record.
8. The initial agreement dated 11-4-2008 is marked as Ex.P/1 by the
plaintiff. According to the contents of the same, the sale deed was for
Rs.44,51,000/- and out of that an amount of Rs.10.00 lacs was paid on
11-4-2008 and the rest amount was to be paid before 20-5-2008. It
was stated that if within time limit the registry is not done and
payment is not made, the agreement would stand cancelled and the
amount of earnest money would stand forfeited. It further purports
that change of mutation of name be made through the Municipal
Corporation, Bhilai and thereafter, after obtaining NOC the registry
would be done and for doing all the formalities of mutation the
original documents would be supplied by the defendant.
9. The defendant in his statement has stated that the target date was
20-5-2008 and before that date, the sale deed was required to be
executed and if the sale deed was not executed before 20-5-2008 the
agreement is deemed to be rejected. As per agreement after receipt of
Rs.10.00 lacs, the rest of the amount was to be paid by 19-5-2008 or
else the amount was to be forfeited. No agreement was there to
extend the time of contract. With respect to payment of Rs.2.00 lacs,
the defendant stated that the amount was deposited by one Sonali
Gupta in his account and that too it was deposited without his
knowledge. However, this part of the order of the trial Court that
Rs.2.00 lacs was received by the defendant in addition to Rs.10.00
lcas has not been challenged by the defendant in this appeal.
FA No.168 of 2018
Therefore, at this stage, we do not want to deliberate on such finding
of fact.
10. With respect to Ex.P/1, the defendant admitted the fact that original
documents were to be given by him to the plaintiff and volunteered
that the plaintiff never came to him to receive the documents. Further
the suggestion given to him to handover the original documents for
mutation, a notice was never received by him from the plaintiff. He
further stated that it was agreed that for mutation of name in the
Municipal Corporation the plaintiff was required to take steps and the
defendant agreed to give all support.
11. Now coming back to the statement of plaintiff, in the cross-
examination, he stated that he deals in auto parts business wherein he
is a partner wherefrom he gets an amount of Rs.3.00 to Rs.4.00 lacs
per annum and except that, he does not have any source of income.
He further stated that an amount of Rs.3.00 to Rs.4.00 lacs per annum
which he used to earn and spend it. In the sales tax and in the books
of accounts, it is shown that one Sanjay Hotwani is the owner of Auto
Stores. Consequently, income of Rs.3.00 to Rs.4.00 lacs per annum
was proved by the plaintiff. He further stated that his monetary
demands were fulfilled by his brother Sanjay Hotwani. With respect
to the specific period of time from 13-4-2008 to 20-5-2008, the
plaintiff stated that his annual income was not more than Rs.3.00 lacs
and in his bank account too by 20-5-2008, which was the last date for
execution of agreement, amount of Rs.34,51,000/- was not there. As
far as payment of Rs.10.00 lacs made on 11-4-2008, it is stated that
FA No.168 of 2018
the said amount was due to be paid to him from Hotwani Auto Stores
and, as such, it was given to him in cash. From 11-4-2008 (date of
agreement) to 20-5-2008 (target date for execution of agreement) he
did not have the rest of amount of Rs.34,51,000/-.
12. The document (Ex.P/11) shows that the cheque amounting to Rs.15.00
lacs of a saving account was presented on 20-5-2008 by UCO Bank,
Bhilai and the same was returned with the reason 'payment stop by the
drawer'. Ex.D/3 is the cheque of Rs.15.00 lacs and Ex.D/5 is the
endorsement of the Bank wherein payment was stopped by the drawer.
The plaintiff contended that he went to the house of the defendant on
19-5-2008 wherein the defendant wanted some time on the ground
that he could not procure the rented house, therefore, some time was
sought for. Under these circumstances, PW-2 Anil Jain asked the
defendant to execute a fresh agreement for extension of time, which
was denied by the defendant whereas the defendant has stated that the
plaintiff was not capable to pay rest of the sale consideration by
19-5-2008, therefore, he wanted to introduce another purchaser. The
defendant stated that the agreement to sell to Anil Jain was prepared
by plaintiff whereas this defendant did not agree to any such sale
transaction with Anil Jain. The said agreement is marked as Ex.D/1.
Anil Jain (PW-2) in his cross-examination admitted the stamp of
Ex.D/1 i.e. agreement to sell property was prepared by the plaintiff.
The said agreement did not materialise, which would be evident from
the fact that the cheque amounting to Rs.15.00 lacs was deposited by
Anil Jain in the account of the defendant, got dishonoured by stop
FA No.168 of 2018
payment. If the cheque has been deposited by some one in the
account of others that too without his consent/knowledge, it cannot be
stated that the amount was validly tendered to infer any contract.
13. Normally, in the agreement of sale, the time is not shown to be
essence of contract, but when there is a specific averment and express
terms in the contract along with the conduct of the parties that needs to
be evaluated. The intention to treat time as the essence of the contract
may be evidenced by circumstances which are sufficiently strong to
displace the normal presumption that in a contract of sale of land
stipulation as to time is not the essence of the contract. The
expression time is of the essence means that a breach of the condition
as to the time for performance will entitle the innocent party to
consider the breach as a repudiation of the contract.
14. Considering the evidence available in this case it shows that initially
Ex.P/1 was entered in between the parties on 11-4-2008 for purchase
of property for a sale consideration of Rs.44,51,000/-. Though the
agreement contains that after mutation of name in the records of the
Municipal Corporation, Bhilai, the sale deed would be executed, the
defendant maintained his stand that the plaintiff failed to turn up and
get the document to carry out necessary formalities in the Municipal
Corporation. The evidence which has come on record cannot be
ignored with the admission of the plaintiff, which shows that his
yearly income was Rs.3.00 to Rs.4.00 lacs and only earnest money of
Rs.10.00 lacs was paid to the defendant. The said amount obtained by
the plaintiff from the Auto Stores towards his dues. In fact, the
FA No.168 of 2018
plaintiff did not have the capacity to pay the remaining amount of
Rs.34,51,000/-. Under these circumstances it shows that PW-2 Anil
Jain came into picture. In the cross-examination PW-2 Anil Jain
admits the fact that Ex. D/1 which was a subsequent agreement sought
to be executed between the defendant and Anil Jain at the behest of
plaintiff. Whereas PW-1 Suresh Hotwani (Plaintiff) has stated that the
cheque (Ex.D/3) was deposited in the Bank on 20-5-2008 and it was
stopped by Anil Jain. This only demonstrates the fact that the
purchaser/plaintiff tried to substitute a new purchaser Anil Jain, which
eventually was not agreed upon.
15. The conduct of the parties, therefore, by the evidence would show that
despite the fact that the plaintiff did not have sufficient amount in his
account he tried to transfer the agreement of sale in favour of third
party, which the defendant refused whereas the plaintiff came out with
a plea that defendant sought for time to vacate the house and
demanded Rs.15.00 lacs. The question which looms large the plaintiff
is not capable to any purchase and did not have any sufficient
financial capacity how the defendant can be compelled to receive the
amount from a third party. Consequently, the readiness and
willingness on the part of the plaintiff is completely absent.
16. The Supreme Court in the matter of His Holiness Acharya Swami
Ganesh Dassji v. Sita Ram Thapar 1 observed that in order to arrive at
a decision of compliance of clause (c) of Section 16 of the Act, 1963
to demonstrate the readiness and willingness of the plaintiff to
1 (1996) 4 SCC 526
FA No.168 of 2018
perform his part of contract, it should be adjudicated on the facts as
there is a distinction between readiness to perform the contract and
willingness to perform the contract. The readiness may be meant the
capacity of the plaintiff to perform the contract which includes his
financial position to pay the purchase price. For determining his
willingness to perform his part of contract, the conduct has to be
properly scrutinized.
17. The question, therefore, arises for consideration is whether the time
was of the essence of the contract ? While looking at the initial
agreement (Ex.P/1), it shows the intention of the parties wherein the
duty of execution was up till 20-5-2008. The evidence which has
come on record would show that the plaintiff tried to substitute the
purchaser and introduced one Anil Jain who gave a cheque of
Rs.15.00 lacs, but it was not agreed upon by the defendant. The
defendant has also corroborated the same fact that till 20-5-2008 no
payment was made. By examining the conduct of the purchaser it
shows the cheque got deposited by third party got bounced by stop
payment, it shows that the plaintiff was in know of the fact that time
for performance was the essence of contract and the agreement
contains specific averment that if the amount is not paid in full up till
20-5-2008 the agreement would be deemed to be cancelled thereby a
repudiation of the contract. The agreement further contains that in case
there is a breach there would be a forfeiture of earnest money and it
has been made legal.
FA No.168 of 2018
18. While considering the case of like nature, the Supreme Court in the
matter of Satish Batra v Sudhir Rawal2 held thus at para 10 :
10) In DDA v. Grihstrapana Coop. Group Housing
Society Ltd., this Court following the judgment of
the Privy Council in Har Swarup and Shree
Hanuman Cotton Mills, held that the forfeiture of
the earnest money was legal. In V. Lakshmanan v.
B.R. Mangalgiri, this Court held as follows: (SCC
p.36, para 5)
"5. The question then is whether the
respondents are entitled to forfeit the entire
amount. It is seen that a specific covenant under
the contract was that the respondents are
entitled to forfeit the money paid under the
contract. So when the contract fell through by
the default committed by the appellant, as part
of the contract, they are entitled to forfeit the
entire amount."
19. Further more the terms of agreement would show that the vendor
made the time to be the essence of contract for payment of money by
20-5-2008 and the different evidence which has come on record shows
the purchaser, without the consent of seller got deposited an amount in
the account of seller by third party, but the amount of Rs.15.00 lacs
was not realized for stop payment. It shows that the purchaser is in
guilt of gross default and tried to commit an act which is unheard off,
entitled the vendor to rescind the contract.
20. In the matter of Shree Hanuman Cotton Mills and Others v Tata Air
Craft Limited3, the Supreme Court has interpreted the word 'earnest'
at para 21, which is quoted below :
21) From a review of the decisions cited above, the
following principles emerge regarding "earnest":
2 (2013) 1 SCC 345
3 (1969) 3 SCC 522
FA No.168 of 2018
(1) It must be given at the moment at which the
contract is concluded.
(2) It represents a guarantee that the contract
will be fulfilled or, in other words, 'earnest' is
given to bind the contract.
(3) It is part of the purchase price when the
transaction is carried out.
(4) It is forfeited when the transaction falls
through by reason of the default or failure of the
purchaser.
(5) Unless there is anything to the contrary in
the terms of the contract, on default committed
by the buyer, the seller is entitled to forfeit the
earnest.
21. The aforesaid principles laid down in the matter of Shree Hanuman
Cotton Mills (supra) have also been reiterated by the Supreme Court
in the matter of Satish Batra (supra).
22. Applying the aforesaid text to the present case, we hold that 'earnest
money' is part of the purchase price when the transaction goes
forward and here as the evidence has come to the effect that the
transaction falls through by reasons of the fault or failure of the
purchaser/appellant, thereby the sale deed could not be executed it
would amount to breach of contract on the part of the purchaser/
appellant. (Also see: Videocon Properties Ltd. v Dr. Bhalchandra
Laboratories and Others4).
23. In view of the settled principles of law and for the foregoing reasons,
we are of the view that no ground is made out to interfere with the
impugned judgment and decree passed by the learned trial Court. The
same is just and proper.
4 (2004) 3 SCC 711
FA No.168 of 2018
24. As a sequel, the present appeal, sans merit, is liable to be and is
hereby dismissed, leaving the parties to bear their own cost(s).
25. A decree be drawn accordingly.
Sd/- Sd/-
(Goutam Bhaduri) (Radhakishan Agrawal)
Judge Judge
Gowri
