Shri Subhash Chand Aggarwal vs Shri Dharam Singh And Shri Sandeep ...
2007 Latest Caselaw 812 Del

JUDGMENT

J.M. Malik, J.

1. This order shall decide two appeals which entail the same questions of fact and law. The learned trial court vide its orders dated 15th December, 2006 in Suit Nos. 62/2005 and 63/2005 has declined to grant injunction order against the respondents herein restraining them from creating third party interest or part with possession of the respective suit properties. Aggrieved by that order, the present appeals have been preferred.

2. The parties in question entered into agreements to sell and purchase in FAO No. 61/2007 and FAO No. 62/2007 on 26th May, 2004, and on 29th May, 2004, respectively, in respect of two industrial plots measuring 6 biswas each, that is, about 300 square yards each in Khasra Nos. 81/154 and 81/155 respectively, situated in Village Bakauli, Delhi. The plaintiff/appellant agreed to purchase those plots for a consideration of Rs. 6,06,300/- each. Rs. 1 lakh each was paid as earnest money for both the plots. It was also agreed that the balance amount would be paid on or before 26th July, 2004 in FAO No. 61/2007 and on or before 28th July, 2004 in FAO No. 62/2007 at the time of execution and registration of the sale deeds by the respondents in favor of the appellant. It was also agreed that the defendants/respondents would apply and get the permission for sale of the plot from the officers of the concerned authority and thereafter, the sale deeds, would be executed within one month from the date of receipt of such permission. Till 28th July, 2004, the respondents/defendants did not communicate to the appellant/plaintiff about having obtained the requisite permission from the officers of the concerned authority for the sale of the plots to the appellant. The appellant gave separate legal notices through B.K.Sood and Associates, Advocates, on 22nd July, 2004 in FAO No. 61/2007 and on 21st July, 2004 in FAO No. 62/2007, wherein the appellant specifically, clearly and unequivocally stated that he is ready and wiling to perform his part of contract. Thereafter, the appellant in both the cases gave telegram dated 24th July, 2004, a copy of which has been placed on the record. Ultimately the appellant approached the respondents, but they gave vague answers. Since the respondents failed to perform their part of contract, the appellant filed the above-said suits for specific performance and damages on 7th April, 2005.

3. The trial court vide its impugned orders declined to grant the injunction order on the following grounds. The above-said agreements themselves stipulate in Clause 6 of the Agreement to Sell and Purchase in FAO No. 62/2007 and Clauses 6 and 7 of the Agreement to Sell and Purchase in FAO No. 61/2007, which are of similar effect. In order to understand the facts properly, it would be worthwhile to reproduce the above said stipulations. Clause 6 of the Agreement to Sell and Purchase in FAO No. 62/2007 reads:

6. That if the first party refused to sell the said property within stipulated period as mentioned above, then he/she (first party) shall be liable to pay the earnest money as double to the second party, in case if the second party denies to purchase the said property within same time, then his/her/their earnest money/bayana shall be forfeited by the first party and after it the first party shall have right to resell the said property to any person at any rate.

Paras 6 and 7 of Agreement to Sell and Purchase in FAO 61/2007 are wee bit different. These read:

6. That in case the first party fails to complete the sale bargain within the above said stipulated period then the second party will be fully entitled to get the double amount of his paid amount from the first party through court of law on the risk and cost of the first party.

7. That in case the second party fails to complete the sale bargain within the above said period then the earnest money of the second party will be forfeited by the first party.

The trial court came to the conclusion that in view of this clause, the agreement to sell, prima facie, is not specifically enforceable. Secondly, no prima facie averment had been made by the appellant that he was ever ready and willing to perform his part of the contract of the sale. It was further stated that there was no such averment except bald plea that the appellant was ready and wiling to perform his part of the the agreement by making balance payment. The trial court also held that the case law produced by the plaintiff/appellant in authorities reported in Prabhu Dayal Aggarwal v. Ram Kumar Aggarwal AIR 1955 Calcutta page 41, Shashi Malhotra v. Lakshman Kumar Aggarwal , Rakesh Kumar Sharma v. Jiwan Dass (since deceased) through Legal Representatives and Ors. Prem Grover v. Balwant Singh is of no avail to the appellant in the given facts and circumstances of the case because the plaintiff/appellant is not in possession of the suit property. The trial court also referred to an authority reported in Sewa Singh and Anr. v. R.S. Malhotra 2003 V A.D. (Delhi) 484. The trial court also placed reliance on an authority reported in Voleti Rangaiah v. Adapa Satyanarayana and Ors. AIR 2001 Andhra Pradesh 251, wherein it was held "that when the date is stipulated by the parties for payment of the balance sale consideration and if payment not made on that date, the agreement shall stand cancelled". The learned trial court held that the time was the essence of the contract and therefore, this authority is helpful to the respondents. The trial court also referred to another authority reported in Ram Awadh (dead) by LRs and Ors. v. Achhaibar Dubey and Anr. , wherein it was held that the court may not grant to a plaintiff who has failed to aver and to prove that he has performed or has always been ready and wiling to perform his part of the agreement, the specific performance whereof he seeks.

4. I have heard counsel for the parties. The learned Counsel for the respondents has drawn my attention towards Section 14 Clause 1 of the Specific Relief Act, 1963, which is reproduced as under:

14. Contracts not specifically enforceable-(1) The following contracts cannot be specifically enforced, namely:

(a) xxxxx

(b) xxxxx

(c) a contract which is in its nature determinable;

(d) xxxxx

5. In order to embolden his case counsel for the respondents has drawn my attention to the following authorities. Voleti Rangaiah v. Adapa Satyanarayana and Ors. [supra] and in Jugraj Singh and Anr. v. Labh Singh and Ors. AIR 1995 Supreme Court 945, wherein it was held that continuous readiness and willingness at all stages from date of agreement till date of hearing of suit must be proved. It is pertinent to mention here that in another authority reported in Ram Awadh (dead) by LRs and Ors. v. Achhaibar Dubey and Anr. (supra), it was held that the decision in Jugraj Singh's case AIR 1995 SC 945 is erroneous.

6. Learned Counsel for the respondents also contended that the appellant should have moved an application for amending the plaint by introducing arguments that the plaintiff/appellant was ready and willing to perform his part of agreement as was held in Ardeshir H. Mama v. Flora Sassoon AIR 1928 Privy Council 208.

7. I am unable to cotton with these ideas. An attempt was made to louse up the real issue. The order passed by the learned trial court does not appear to be coherent. The following authorities go a long way to elucidate this point. In P.D'Souza v. Shondrilo Naidu AIR 2004 SC 4472, it was observed

27. The clause as regard payment of damages as contained in Clause (7), of agreement of sale reads as under:

7. That if the vendor fails to discharge the mortgage and also commits any breach of the terms in this agreement and fails to sell the property, then in that event he shall return the advance of Rs. 10,000/- paid as aforesaid and shall also be liable to pay a further sum of Rs. 20,000/- as liquidated damages for the breach of the agreement.

xxxxx

29. Clause (7) of the Agreement of Sale would be attracted only in a case where the vendor is in breach of the term. It was for the plaintiff to file a suit for specific performance of contract despite having any option to invoke the said provision. It would not be correct to contend that only because such a clause exists, a suit for specific performance of contract would not be maintainable.

30. Section 23 of the Specific Relief Act, 1963 reads as under:

23(1) A contract, otherwise, proper to be specifically enforced, may be so enforced, though a sum be named in it as the amount to be paid in case of its breach and the party in default is willing to pay the same, if the court, having regard to the terms of the contract and other attending circumstances, is satisfied that the sum was named only for the purpose of securing performance of the contract and not for the purpose of giving to the party in default an option of paying money in lieu of specific performance.

(2) When enforcing specific performance under this section, the court shall not also decree payment of the sum so named in the contract.

8. In M.L. Devender Singh and Ors. v. Syed Khaja it was held,

9. There is no mention anywhere in the contract that a party to it will have the option to either fulfill the contract to buy or sell or to pay the liquidated damages or penalty of Rs. 20,000/-, stipulated for a breach, as an alternative to the performance of the contract to buy or to sell.

19. A reference to Section 22 of the old Act, (the corresponding provision is Section 20 of the Act of 1963), would show that the jurisdiction of the Court to decree specific relief is discretionary and must be exercised on sound and reasonable grounds "guided by judicial principles and capable of correction by a Court of appeal". This jurisdiction cannot be curtailed or taken away by merely fixing a sum even as liquidated damages. We think that this is made perfectly clear by the provisions of Section 20 of the old Act (corresponding to Section 23 of the Act of 1963) so that the Courts has to determine, on the facts and circumstances of each case before it. Whether specific performance of a contract to convey a property ought to be granted.

9. Same view was taken in Radhe Krishan Aggarwal v. Smt. Chandrawati and Ors. and Narayan Nagorao v. Amrit Haribhau .

10. Now, I advert to the question whether the plaintiff has made averments regarding the fact that he was ready and willing to perform his part of contract. Para 10 of the plaint in FAO No. 61/2007 runs as follows:

That the defendants are, however, adamant to put obstacle inspite of repeated request of the plaintiff and they have failed to perform their part of contract. On the other hand, the plaintiff is always willing and ready to perform his part of Agreement by making the balance payment of Rs. 5,06,300/-. Finding no alternative it is necessary that the defendants may be directed for the Specific Performance of the Agreement dated 26.05.2004.

Para 8 of Plaint in FAO No. 62/2007 runs as follows:

That the plaintiff kept on waiting for the sale permission/NOC/ITCC of the aforesaid plot i.e. the suit premises from the concerned department but the defendants did not send any such permission. In the meantime the prices of the suit premises have gone high and the defendants turned dishonest and started negotiating with other people for the sale of the aforesaid suit premises. On this, the plaintiff served a legal notice dated 21.07.2004 through his lawyer Shri B.K. Sood, Advocate, and called upon the defendants to supply the NOC/Sale Permission/ITCC of the suit premises and further confirmed that on payment receipt of the said permission, the plaintiff is ready and willing to pay the balance sale consideration of Rs. 5,06,300/- (Rupees Five Lacs Six Thousand and Three Hundred) within one month of the receipt of such permission for sale and NOC from the defendants. The said legal notice was sent through registered A.D. and U.P.C. and was duly received by the defendants who sent a vague and evasive reply through their lawyer Shri Gaje Singh, Advocate, dated 30.07.2004 and denied to execute the Sale Deed in favor of the plaintiff. In the meantime i.e. on 24.07.2004, the plaintiff also sent a telegram to the defendants that the balance sale payment is ready and if the defendants have obtained a sale permission, the Sale Deed can be executed and the payment can be made to them, but of no avail.

11. Moreover, notices issued by Shri B.K.Sood, Advocate and telegrams dated 24th July, 2004, have been attached with the case files. I have also perused the Clause 4 of the above-said agreements to sell and purchase. It is apparent that it was for the respondents and nobody else to obtain the sale permission/NOC/ITCC or any other kind of permission from the concerned department. There is not even an iota of evidence to show that the said sale permission was ever obtained by the respondents. Clause 8 of the agreement dated 26th May, 2004 further stipulates, "that the first party or his/her/their legal heirs will be bound to execute the sale documents/sale deed in favor of the second party or his/her their nominees."

12. All these evidence is yet to be considered by the Court. It is too early to say in which way the wind will blow. The knotty questions raised by the plaintiff/appellant cannot be dismissed out of hand in a jiffy. The court has yet to decide who had waddled out of his commitments. All these aspects require proper investigation and evidence. The statements of the witnesses are yet to be recorded. They have yet to be subjected to the test of cross-examination. Without evidence it would be difficult to decide as to whether the appellant was ready and willing to perform his part of the contract. In the light of the discussion above, I allow the appeals and restrain the respondents/defendants and their representatives to create a third party interest or part with possession of the properties in dispute in both the cases till the pendency of the suits before the trial court. FAO Nos. 61-62/2007 are accordingly allowed and disposed of. Pending applications also stand disposed of. Copy of this order be sent to the trial court forthwith along with trial court files.