M/S Nribhay Estates P. Ltd. vs M/S Dlf Universal Ltd.
2010 Latest Caselaw 4528 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELH
+                        RFA NO. 262 OF 2005

                                 Date of Decision: 27th September, 2010

#      M/S NRIBHAY ESTATES P. LTD.                         ..... Appellant
                       Through:                  Mr. B. Mohan, Advocate

                                   Versus

$      M/S DLF UNIVERSAL LTD.                     ..... Respondent
^                      Through: Mr. H.L. Tikku, Sr. Advocate with
                                Ms. Mandeep & Mr. Ajay Goel,
                                Advocates

                                 AND

                         RFA NO. 263 OF 2005

#      M/S NRIBHAY ESTATES P. LTD.                         ..... Appellant
                       Through:                  Mr. B. Mohan, Advocate

                                   Versus

$      M/S DLF UNIVERSAL LTD.                     ..... Respondent
^                      Through: Mr. H.L. Tikku, Sr. Advocate with
                                Ms. Mandeep & Mr. Ajay Goel,
                                Advocates

                                 AND

                     RFA NO. 276 OF 2005

#      M/S NRIBHAY ESTATES P. LTD.                         ..... Appellant
                       Through:                  Mr. B. Mohan, Advocate

                                   Versus

$      M/S DLF UNIVERSAL LTD.                     ..... Respondent
^                      Through: Mr. H.L. Tikku, Sr. Advocate with
                                Ms. Mandeep & Mr. Ajay Goel,
                                Advocates



RFA262, 263 & 276/2005                                         Page 1 of 8
        CORAM:
*      HON'BLE MR. JUSTICE P.K.BHASIN

1. Whether Reporters of local papers may be allowed to see
   the Judgment? (No)

2. To be referred to the Reporter or not? (No)

3. Whether the judgment should be reported in the digest? (No)


                          JUDGMENT

P.K.BHASIN, J:(ORAL)

The present three appeals have been filed by the appellants against

the common judgment dated 15th January, 2005 passed by the Additional

District Judge, Delhi vide which he has dismissed their three suits for

recovery of money filed against the respondents herein.

2. The appellants/plaintiffs filed three suits against M/s DLF

Universal Ltd, respondent herein, alleging that they had booked two plots

and one Villa for purchase from the respondent-defendant by depositing

20% of the sale price. The balance sale consideration was payable in

installments. In the agreements executed between the parties there was a

clause that 20% of the sale consideration was to be 'earnest money' which

was liable to be forfeited in case of breach of the terms of the contract by

the appellant-plaintiff. The respondent-defendant claimed that the

appellant-plaintiff had committed default in payment of the due

installments and so it cancelled the contract and forfeited the amount of

20% of the sale consideration amount out of the amount paid by the

appellant-defendant from time to time and returned the balance amount to

the appellant-plaintiff. The appellant-plaintiff claimed the amount of

money forfeited by the respondent-defendant and since it did not get it,

suits for recovery were filed. The plaintiff claimed that forfeiture was

illegal as the amount forfeited was not paid to the defendant as earnest

money even though that was described in the agreement as such. It was

also claimed that the clause of forfeiture of the earnest money was in any

way oppressive, illegal, against public policy and unenforceable.

3. The respondent-defendant had filed written statements in the three

suits in which it claimed, interalia, that the plaintiff was not entitled to any

relief since the suit amount had been rightly forfeited.

4. On the pleadings of the parties following issues were framed by the

learned trial Court:

1) Whether the plaint has been signed, verified and suit instituted by an authorized person on behalf of the plaintiff?

2) Whether the defendant has validly cancelled the contract?

3) Whether the defendant could forfeit the sum of Rs. 5,11,613/- representing 20% of the consideration amount in terms of the agreement? If so, to what effect?

4) Whether by the acceptance of the balance amount, the plaintiff is stopped from filing the present suit for refund of the sum of Rs. 5,11,613/-?

5) To what amount, if any, is the plaintiff entitled?

6) Whether the plaintiff is entitled to interest? If so, at what rate and for what period?

7) Relief.

5. The learned trial Court tried the three suits together and dismissed

all the three by a common judgment holding that the plaintiff had

committed breach of contract by not making timely payments of sale

consideration to the defendant. The aggrieved plaintiff then filed these

three appeals.

6. After having heard the counsel for the parties and perused the trial

Court record I am of the view that the learned trial Court had failed to

frame and decide certain material points of dispute between the parties

which this Court feels were essential to the right decision of the suits and

therefore, the matter deserves to be remanded back to the trial Court after

framing the issues which should have been framed with a direction for

giving the findings on those issues. As noticed already, it was the case of

the plaintiff that even though in the agreements between the parties in

respect of two plots and one Villa, there was a clause that 20% of the sale

consideration was to be treated as 'earnest money' but actually the

amount paid by the plaintiff to the defendant from time to time as per the

schedule of payment annexed with the agreement was towards the sale

consideration and did not constitute any earnest money. The defendant

had in its written statements refuted this claim of the plaintiff and had

taken the stand that 20% of the sale price of the plots/Villas was to

constitute the earnest money which could be forfeited in the event of

breach of the contract by the plaintiff. There was, thus, a dispute between

the parties as to whether 20% of the sale consideration in respect of the

two plots and one Villa booked by the plaintiff was actually earnest

money or not and that dispute was required to be resolved by the trial

Court. However, the learned trial Judge did not even frame any issue in

respect of that dispute between the parties. The plaintiff had also claimed

that since time was not of essence of the contract between the parties and

the schedule of payment of installments annexed with the three

agreements executed between the parties provided for payment of interest

in case of any delay in payment of any installment the contracts could not

be cancelled by the defendant and no amount could be forfeited by it on

the ground of alleged delay in payment of installments. The defendant in

its written statement had claimed that time was of the essence of the

contract. On this disputed question also the learned trial Court did not

frame any issue and without framing any issue and giving an opportunity

to the parties to adduce evidence observed in the impugned judgment that

time was of the essence of the contract. Another plea raised by the

plaintiff was that the forfeiture clause in the agreements providing for

forfeiture of the 20% of the total sale consideration was in any case

unenforceable being oppressive, illegal and against the public policy. The

learned trial Court did not frame any issue in respect of this plea also

raised by the plaintiff.

7. When during the course of hearing of the appeal the non-framing of

these material issues was put by this Court to Mr. H.L. Tikku, the learned

senior counsel for the respondent-defendant, his response was that the

appellant-plaintiff never asked for framing of these issues before the trial

Court and even in the grounds of appeal no such prayer had been made

and so this Court should dispose of these appeals on the basis of issues

already framed by the trial Court and the evidence adduced by the parties.

Mr. Tikku also submitted that if this Court is of the view that additional

issues need to be framed then an opportunity should be given to the

respondent-defendant to adduce evidence on the fresh issues. Mr. B.

Mohan, learned counsel for the appellant also submitted that in case this

Court decides to frame additional issues even the appellant-plaintiff

would like to adduce evidence on those issues since it was not adduced

before the trial Court as issues to that effect had not been framed.

8. I am of the view that just because the appellant-plaintiff did not

insist for framing of aforesaid issues before the trial Court and even in

these appeals no grievance was made regarding the absence of these

issues the same are required to be framed by this Court in exercise of the

powers conferred upon an Appellate Court under Order XLI Rule 25 CPC

since the same are essential for a right decision of the three suits. I,

therefore, frame the following additional issues to be decided by the trial

Court:-

1. Whether the money paid by the plaintiff to the extent of 20 per cent of the total sale consideration of the property in dispute pursuant to the agreement between the parties did not constitute 'earnest money'? If so, to what effect. OPP.

2. Whether the clause of forfeiture of the amount of money paid by the plaintiff to the defendant describing in the agreements as 'earnest money' is unenforceable being oppressive, illegal, against the public policy, as is being claimed by the plaintiff? If so, to what effect. OPP.

3. Whether the time was of the essence of the contract in view of the schedule of payment of installments annexed with the agreements between the parties? If so, to what effect. OPD.

9. This matter is now remanded back to the trial Court for giving its

decision on these fresh issues after giving opportunity to both the parties

to adduce further evidence, oral and documentary, and with a direction to

return the findings to this Court. The decision should be taken within a

period of six months from 25th October, 2010, on which date, the case

shall be taken up by the trial Court at 2.00 p.m. and parties shall appear

there on that date without any further notice. The registry shall ensure that

the trial Court record goes back before that date and the same should be

returned back to this Court by the trial Court alongwith its finding on the

additional issues. Counsel for both the parties state that this case would

now fall within the jurisdiction of New Delhi Courts at Patiala House.

Therefore, the matter shall be assigned by the District Judge, Patiala

House Courts to any of the Additional District Judges posted there.

September 27, 2010                                 P.K. BHASIN,J
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