Desein P. Ltd. vs Ansal Prop. & Ind.
1996 Latest Caselaw 751 Del

JUDGMENT

A.K. Srivastava, J.

(1) [ED. facts : Pff. Co. in Jan., 82 gave Rs 10 lakh to Deft. and booked 2 commercial flats which were to-be built by Deft. at 38, Nehru Place. By letter dt. 7.1.85, Deft. told pff. as latter had not paid instalments, his allotment was cancelled and same can be restored on payment of Rs 8.65 lakhs or Deft. could take back balance sum on or before 15.1.85. Pff. did not exercise the option offered and instead filed suit for recovery of Rs 10 lakh and interest 71/2 lakh alleging cause of action arose upon receipt of letter dt. 7.1.85 on 10.1.85. The defense was that pff. was to pay instalment on 1.2.82, 31.3.82 and 15.5.82 and as pff. did not pay these, his allotment was cancelled and 20% price of the flat was forfeited. Deft. claimed that suit was barred by time and it was entitled to forfeit Rs 10 lakh and pff. was not entitled to any interest. Deft. did not execute any agreement about the bargain. It only sent some letter, demanding instalments and threatening cancellation. Then Deft. by letter dt. 7.1.85 informed that it had paid Rs 2 crore 3 lakh to Dda on 1.1.85 and it would soon get land and then begin construction. Deft. had also made offer of 2 options noted above. Pff. could claim refund only after this. Cause of action arose from the date of offer in 1985. Issue no. 3 is about interest.] After detailing above, judgment is :

(2) Issue no. 3. The plaintiff has claimed interest on Rs. 10 lakh from the date of payment till the date of filing of the suit. On going through the pleadings of the parties and the documents filed by them and after hearing the arguments of the parties it is very apparent that interest cannot be awarded from the date of payment of Rs. 10 lakh. Reason being that there was no agreement between the parties that the amount of Rs. 10 lakh paid by the plaintiff to the defendant would earn interest at a rate of 24% from the date of payment. Admittedly this payment was made for booking flats and no stipulation was there that in case of any breach by the deft. the pff. would be entitled to interest at 24% from the date of payment. The learned counsel for the pff. also concedes that the pff. is not entitled to interest on Rs. 10 lakh from the date of payment till 15.1.85. His contention is that Rs. 10 lakh became due to the plaintiff from the deft. on 15.1.85, the date on which the deft. by its own letter dated 7.1.85 undertook to refund Rs. 10 lakh to the pff. Therefore, now only this much is to be considered whether the pff. is entitled to interest with effect from 15.1.85.

(3) When the learned counsel for the pff. was confronted with the plea that the deft. was to refund the balance amount without interest he came out with an argument that the deft. could have refunded Rs. 10 lakh to the pff. on 15.1.85 without interest but if the deft- did not do so it became liable to pay interest to the pff. on Rs. 10 lakh from 15.1.85 at 24% p.a. On this pica a question arose whether without any agreement for payment of interest the deft. was liable to pay interest. Provisions of the Interest Act were perused. [In paras 19 and 20, S. 3 & S. 2(c) of Interest Act are reproduced].

(4) Learned counsel for the pff. submitted before me that from 15.1.85 the amount of Rs. 10 lakh became a debt payable by the deft. to the pff. on the basis of its own offer and, therefore, the pff. is entitled to interest at the current rate on that debt from 15.1.85 to the date of the institution of the suit. Attention of learned counsel for the pff. was drawn to S. 3(i)(b) of Interest Act asking whether the pff. gave any written notice to the deft. making a claim that the deft. would be liable to pay interest. He submitted that though the pff. had sent telegraphically a notice to the deft. on 28.1.85 intimating that it was not accepting the deft's offer and the deft, was asked to pay the balance amount but in the record of the pff. there is no proof of the same. Therefore, if there is no notice on record as required u/S. 3 (i) (b) of the said Act the plaintiff has no case claiming interest from 15.1.85. Admittedly there is no instrument between the parties stipulating any liability of interest on the deft.

(5) Learned counsel for the pff. then relied on 1978 (48) Company Cases 277, U 0 I. vs. National Overseas and Grindlays Bank Ltd. This ruling was relied upon saying that since the deft. committed fraud on the pff. in not paying back Rs. 10 lakh to the pff. the deft. may be directed to pay interest to the pff. on that sum with effect from 15.1.85 I am not in agreement with this plea because there is no plea in the plaint alleging any fraud on the part of the deft.

(6) Though in the aforesaid ruling it has been observed that the Interest Act is not exhaustive of all claims as it is open to the courts to award interest in cases not governed strictly with the purview of the Act, on principles of equity, justice and good conscience but on coming to the facts of the case, I do not find any justification for grant of interest. Admittedly, the pff. had received the defts. letter dated 7.1.85. Therefore, the ball was in the court of the pff. to exercise of the two options given by the defts. There is nothing on record to prove that the pff. exercised any of the options No doubt, on expiry of the period given by the deft. to the pff. to exercise the option the deft. ought to have refunded the money to the pff. on or after 15.1.85 but the pff. also ought to have taken action to get back the money. It is apparent on the record that the pff. remained silent and did not take care either to communicate any exercise of options or to approach the deft. to take back its Rs. 10 lakh. Therefore, when the pff was also negligent there is no equity, justice or good conscience in its favour.

(7) Accordingly, I hold that the plaintiff is not entitled to any interest on the principal amount upto the date of the institution of the suit. Issue is decided accordingly. 25, Issue No. 7 : The pff. wants back its Rs. 10 lakh from the deft. alongwith interest at 24% from the date of payment of the same to the deft. The deft. admits in para 8 that a small sum out of Rs. 10 lakh is refundable to the pff. The plea is that the deft. is entitled to forfeit 20% of the price of the flat. The claim of the forfeiture is said to be based on certain contract between the pff. and the deft. In my findings above 1 have concluded that there was no concluded contract between the parties. Moreover. I have not been able to find any stipulation anywhere in the exchange of letters that the pff. had agreed with the deft. that in case instalments as claimed by the deft. were not paid in time the deft. would be entitled to forfeit 20% of price of the flat from the advance given by the pff. Accordingly, when there is no such stipulation between the pff. and the deft., the deft. is not entitled to any such forfeiture. Moreover, even if there had been any such stipulation the deft. had waived the same under its letter dated 7.1.85 wherein it had offered to forego the forfeiture. That letter may be construed in such manner that if the pff. did not choose to pay the balance of instalments by a particular date alongwith interest, it would be refunded its Rs. 10 lakhs. Though the aforesaid letter speaks about the refund of the balance amount but it does not say that there would be deduction of 20% of the price of the flat from Rs. 10 lakh and only a balance thereafter would be refunded. The spirit of the letter appears to be that cither to pay the balance instalments with interest for revival of the allotment of flats or take back your Rs. 10 lakh paid as advance.

(8) Therefore, in any view of the matter, in my view, the pff. is entiled to refund of Rs. 10.00.000.00 and the deft. is not entitled to forfeit the same. Suit decreed/or Rs. 10 lakh with proportionate costs and pendente interest at 24% p.a. till payment.