Ashwin Kumar Gandhi & Anr. vs Sanjay Mishra
2012 Latest Caselaw 1477 Del

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*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                              Date of Decision : 2nd March, 2012

+                        RFA(OS) 48-49/2006

       ASHWIN KUMAR GANDHI & ANR.         ..... Appellants
           Represented by: Mr.Samrat Nigam, Advocate.

                                   versus

       SANJAY MISHRA                       ....Respondent
            Represented by: Respondent in person.

        CORAM:
        HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
        HON'BLE MS. JUSTICE PRATIBHA RANI


PRADEEP NANDRAJOG, J. (Oral)

1. The instant appeal lays a challenge to the order dated May 02, 2006 disposing of IA No.11698/2002 filed by the appellants under Order 37 Rule 3(5) of the Code of Civil Procedure. Leave to defend was granted to the appellants to defend the suit with respect to the rate at which interest could be claimed on the sum of `29,22,000/- which was decreed along with interest @ 9% per annum from the date when the suit was filed till realization.

2. During the pendency of the appeal, the suit was disposed of directing that on the earnest money paid i.e. `3,21,000/- the respondent would be entitled to interest @9% per annum from December 9, 2000 till the suit was filed on August 9, 2002.

3. Lest it may sound jarring, as to how come the summary suit was decreed in sum of `29,22,000/- and interest awarded @9% per annum from December 9, 2000 till the suit

was filed on August 9, 2002 and yet leave to defend was granted on the issue of interest, we would be constrained to note a few relevant facts.

4. On December 9, 2000, the appellants received `3,21,000/- towards earnest cum sale consideration for sale of property bearing Municipal No.11/105, Subhash Nagar, New Delhi. The sale consideration agreed to was in sum of `48,21,000/-. Thereafter, on March 16, 2001, the appellants received further sum from the respondent towards sale consideration and the total amount received was `26,01,000/-. The deal fell through on a dispute pertaining to the title of the appellants and thus the respondent filed a suit under Order 37 of the Code of Civil Procedure, stating that under the agreement he had paid `26,01,000/- to the appellants and since the agreement to sell had a penalty clause, that should the appellants default, they would pay an amount equal to the earnest money received i.e. `3,21,000/- towards damages, the respondent would be entitled to `26,01,000/- + `3,21,000/- = `29,22,000/-. Interest @24% per annum was claimed and thus the suit amount was `29,22,000/- + `7,70,300/- (pre-suit interest) = `36,92,300/-.

5. The learned Single Judge, after noting as aforesaid, has returned a finding that the appellants did not dispute having received `26,01,000/- and it not being disputed that the agreement to sell had a penalty clause towards damages as pleaded in the plaint, has concluded that the respondent would be entitled to a decree in sum of `29,22,000/- and would be entitled to interest, in the least @9% per annum, from the date when the suit was filed till realization.

6. During the pendency of the appeal, as noted hereinabove, the suit has been disposed of by granting a decree awarding interest @9% per annum on the sum of `3,21,000/- from December 9, 2000 i.e. when said amount was paid till when the suit was filed on August 9, 2002. The learned Single Judge appears to have so done, keeping in view that on the sum of `29,22,000/- pendente lite and future interest had already been granted @9% per annum.

7. During the pendency of the appeal, with the permission of the Appellate Court the appellants were permitted to sell the property which was the subject matter of the agreement to sell and the reason for the said permission is, that being a money decree against them, the appellants had to deposit the decretal amount, which they could not, and rather than face execution, informed the Court that they had found a buyer who was ready to purchase the first and second floor of the property for `37,00,000/-. Thus, on April 04, 2007, it was directed that upon the appellants selling the first and second floor of the property and depositing `37,00,000/- in this Court, the execution shall remain stayed. The appellants sold the first and the second floor in May 2007 and deposited `37,00,000/- in this Court. Thereafter, the appellants prayed in the year 2008 that they be permitted to sell the ground floor of the property. Vide order dated August 12, 2008, the appellants were permitted to do so, but upon the condition that they would deposit `5,00,000/- in this Court, which they did after selling the ground floor for `12,00,000/- in August 2008. Thus, `42,00,000/- stands deposited in this Court, as per orders passed in this appeal, and as of February 13, 2012, with the interest accrued on the deposit the amount lying in

credit is `59,99,834/-; with the accrued interest being subject to tax being deducted at source.

8. Now, in view of the fact that the appellants never filed a counter claim against the respondent, and with proof of the fact that the property agreed to be sold for `48,21,000/- on December 9, 2000 was ultimately sold for `49,00,000/-, part sale being in May 2007 and the remainder being in August 2008, there is intrinsic evidence that the value of the property remained stagnant and thus the question of the respondent, if he had chosen to buy a similar property when the breach was committed, paying a higher amount is prima-facie negated. Thus, the claim for damages is highly suspect.

9. On the issue of the respondent being entitled to recover, by way of damages, sum equal to the earnest money paid by him i.e. `3,21,000/-, we are of the opinion that leave to defend ought to have been granted as a triable issue pertaining to damages arose for the reason the clause in the agreement is by way of penalty and it is settled law that a penal clause pertaining to damages cannot be enforced and that proof of damages has to be led.

10. Thus, the appellants would be entitled to leave to defend the suit qua `3,21,000/- i.e. the damages claimed by the respondent.

11. But noting that during the pendency of the instant appeal, the suit itself has been disposed of, we take guidance from the provisions of Order 41 Rule 33 of the Code of Civil Procedure, but would hasten to add that we may not be understood that we are interpreting Order 41 Rule 33; we are only taking a cue therefrom. The said Rule empowers the Appellate Court to pass any decree or make an order which

ought to have been passed or made, notwithstanding the appeal is only as to a part only of a decree, and which power may be exercised without there being any cross-appeal or cross-objections. We think that the said provision of law, rarely referred to by the Courts, is intended to do complete justice at a civil trial between the parties.

12. Since we already have intrinsic evidence that prices neither fell nor increased and hence no loss was suffered by the respondent, we dispose of the appeal holding that the appellants would ordinarily be entitled to defend the suit qua the sum of `3,21,000/- and noting that in the interregnum the suit itself has been disposed of and there is intrinsic evidence of no loss being suffered, ends of justice would require the appeal to be disposed of decreeing the claim of the respondent only in sum of `26,01,000/- and noting that out of the said sum, `3,21,000/- was paid on 9.12.2000, `22,80,000/- on 16.3.2001, we hold that the respondent would be entitled to interest @9% per annum on the said two amounts reckoned from 9.12.2000 and 16.3.2001 respectively till the respondent receives the money.

13. The appeal stands disposed of, modifying the impugned decree dated May 02, 2006 as also the subsequent decree dated October 01, 2007, and the suit filed by the respondent is decreed in sum of `26,01,000/- with interest on `3,21,000/- w.e.f. December 9, 2000 and interest on `22,80,000/- w.e.f. March 16, 2001, for both periods the interest would be @ 9% per annum till payment is made to the respondent and for which payment we direct that from out of the money lying in deposits in this Court, the necessary payment would be released to the respondent calculating

interest @9% per annum and the balance amount would be returned to the appellants. Benefit of tax deducted at source from the interest would be equally apportioned and for which the Registry would issue the necessary TDS certificates to the parties.

14. The respondent would be entitled to the costs in the suit in addition, but as regards the appeal, the parties shall bear their own costs.

15. The present decision would not be a precedent inasmuch as no law has been declared. The course chartered by us is to prevent a further useless litigation by granting leave to defend qua the sum of `3,21,000/-.

(PRADEEP NANDRAJOG) JUDGE

(PRATIBHA RANI) JUDGE MARCH 02, 2012 rk