Delhi High Court

Rahul Gupta & Anr vs Ashok Biswal & Anr. on 7 January, 2013

Author: Kailash Gambhir

$~12
*IN THE HIGH COURT OF DELHI AT NEW DELHI
                               Judgment delivered on: 07.01.2013


+      CS(OS) 312/2012

       RAHUL GUPTA & ANR                                     ..... Plaintiff

                          Through:          Mr.Ujjawal Jha, Advocate

                         versus

       ASHOK BISWAL AND ANOTHER                              ..... Defendant

                   Through: Mr. Pradeep Diwan, Sr. Advocate with
                            Mr. Aditya Singh and Mr. Aman Garg,
                            Advocate For defendant no.1.
                            Mr. Rajiv Aneja, Advocate for
                            defendant no.2.

CORAM:
 HON'BLE MR. JUSTICE KAILASH GAMBHIR

     1.    By this order, I propose to decide the preliminary issue no.1. By

     an order dated 13.08.2012, the following issues were framed:-


           1) Whether the suit is barred limitation?
           2) Whether the plaintiff is entitled to seek relief of
           specific performance of the agreement to sell dated
           02.08.2006 ?
           3) Whether the plaintiff is entitled to relief of
           mandatory injunction as prayed for?
           4. whether the plaintiff is entitled to permanent
           injunction?
           5. Whether the agreement to sell dated 2nd August,
           2006 stood terminated and the amount forfeited by
           defendant No.1 on account of default in payment of the
           balance sale consideration amount by the plaintiff?
           6. Whether the plaintiff has not properly valued the
           present suit for the purposes of the Court fees therein?
           7. Relief.

Page | 1
      Considering the fact that the issue no.1 concerns the very

     maintainability of the present suit, therefore, the same was directed

     to be treated as a preliminary issue.



   3.        Addressing arguments on the said preliminary issue,          Mr.

        Ujjawal Jha, learned counsel appearing for the plaintiffs submitted

        that present suit filed by the plaintiffs is within the prescribed

        period of limitation as envisaged under Article 54 of the Limitation

        Act, 1963.   Counsel further submitted that the plaintiffs in the

        present suit are seeking specific performance of an Agreement to

        sell dated 2.8.2006 which was executed by the defendant no. 1, in

        order to sell the property bearing no. E- 929, Chittranjan Park,

        New Delhi- 110019 in favour of the plaintiffs for       a total sale

        consideration amount of Rs. 85 lacs. Counsel further submitted

        that the plaintiffs have already paid an amount of Rs. 30 lacs to the

        defendant no. 1 and the balance consideration amount was to be

        paid by the plaintiffs in terms of the Schedule of payment as set-

        out in the said Agreement to Sell. Counsel further submitted that

        an amount of Rs. 20 lacs was paid by the plaintiffs by way of three

        separate cheques of the same date i.e, 2.8.2006, while an amount

        of Rs. 10 lacs was paid in cash by the plaintiff no.1 on 14.8.2006, in

        good faith, without any receipt.



   4.      Counsel also submitted that the time period for completion of


Page | 2
        the contract was 9 months, as per the agreement, from the date of

       execution of the Agreement to Sell, but since defendant no. 1

       himself derived his strength by virtue of Agreement to Sell dated

       27.12.2005, therefore, defendant no.1 was not in a position to

       transfer the title of the property in favour of the plaintiffs before

       the execution of the sale deed of the suit property by the erstwhile

       owners in his favour. Counsel also submitted that the plaintiffs had

       approached the defendant no.1 on various occasions and every

       time; the defendant no.1 gave an assurance that he will execute the

       sale deed in favour of the plaintiffs immediately after the sale deed

       is executed in their favour by the erstwhile owners.




   5. Counsel further submitted that it is only in the 2nd week of

       November, 2011, that the plaintiff no.1 came to know that the sale

       deed in respect of the aforesaid property has been executed by the

       erstwhile owners in favour of the defendant no. 2 and immediately

       thereafter, the plaintiffs approached the defendant no.1, requesting

       them to transfer the title of the suit property in their favour and

       when no action was taken by the defendant no.1, the plaintiffs

       approached this court by way of filing the present suit. Counsel

       further stated that the defendant no.1 has perfected his title over

       the said property through his nominee, who is the wife of defendant

       no.2, therefore, the suit filed by the plaintiffs is well within the

       prescribed period of limitation. In support of his arguments,



Page | 3
         learned counsel for the plaintiff placed reliance on a judgment of

        the Punjab & Haryana High Court in the case of HARNAM SINGH

        VERSUS MANGAT SINGH, AIR 2001 PUNJAB AND HARYANA

        257.



   6. Counsel for the plaintiffs also placed reliance on Section 13 of the

        Specific Relief Act, 1963 to support his argument that where the

        vendor or lessor has subsequently acquired interest in the

        property, then the purchaser or lessee can compel it, to make good

        the contract out of such interest. Contention raised by the counsel

        was that, at the time of execution of the agreement to sell dated

        02.8.2006, the defendant no.1 didn‟t have any perfect title over the

        subject property and the said title of defendant no.1 became

        perfect when the erstwhile owners had executed the sale deed in

        favour of the wife of the defendant no.1, who is his nominee and

        therefore, the plaintiff has every right to seek enforcement of the

        said Agreement to Sell against the nominee of the defendant no.1.



   7.      Counsel further submitted that three years period under Article

        54 of the Limitation Act is to be reckoned from the date of refusal

        of performance by the vendor and in the present case, such refusal

        came from the side of defendant no. 1, only in the 2nd week of

        November, 2011 and finally on 18.1.2012, when a legal notice was

        issued by the plaintiff to the defendant no.1 thereby calling upon

        the defendant no.1 to honour his part of the obligation to execute

Page | 4
        sale deed of the subject property.



   8. On the other hand, Mr. Pradeep Diwan, Sr. Advocate appearing for

       defendant      No.1,   submitted   that        original   owners,     Sh.    B.N

       Chakrovarty, Smt. Bhatacharjee and Smt. Tapti Chakrovarty had

       sold the subject property in favour of defendant No.1, vide

       agreement to sell dated 27.12.2005, but defendant No.1 could not

       pay the total sale consideration to the original owners as named

       above within the prescribed period under agreement to sell and

       therefore, the said agreement eventually got terminated due to

       non-fulfilment     of the obligation on the part of defendant No. 1.

       Counsel      further   submitted that the defendant No.1 had entered

       into the sale      transaction of the same very property              with   the

       plaintiffs    on    2nd August, 2006      in     order    to   sell   the said

       property      for a total    sale consideration of Rs. 85 lakhs. An

       amount of Rs. 20 lakhs was paid by the plaintiffs to the defendant

       No.1, as an earnest money and in consideration thereof, defendant

       No.1 had executed agreement to sell dated 2 nd August, 2006, in

       favour of the plaintiffs. Counsel further submitted that the plaintiffs

       failed to honour his commitment in terms of the agreement to sell

       dated 2nd August, 2006 as they failed to pay the balance sale

       consideration amount within the agreed period, due to which the

       defendant No.1 could not honour their commitment under the said

       agreement dated 27.12.2005. Counsel further submitted that since

       defendant No.1 had failed to fulfil his part of the obligation,


Page | 5
        therefore, the original owners of the said property had sold the

       same in favour of     defendant No.2, who        happens to    be   the

       wife of defendant No.1 vide sale deed dated 23rd May, 2011,

       for a total sale consideration       of   Rs. 1 crore. Counsel also

       submitted that the original owner; Smt. Bhatacharjee had also

       forfeited the earnest amount of Rs. 45 lakhs, which was paid by

       defendant No. 1 at the time of the execution of the agreement to

       sell in his favour.



   9. Counsel thus stated that in the background of the facts of the

       present case Section 13 of the Specific Relief Act, 1963 will not

       apply. Counsel also submitted that it is not the case of the plaintiffs

       in the plaint, that defendant No.2 is the nominee of defendant No.

       1. Counsel also submitted that the plaintiffs have also not sought

       cancellation of the sale deed dated 23rd May, 2011. Counsel further

       submitted that case set up by the plaintiffs in the present plaint is

       that, the defendant No.2 is bound to execute the sale deed in

       favour of the plaintiffs, although without disclosing any reasons as

       to, what is the right of the plaintiffs to claim such a direction

       against defendant No.2. Counsel further submitted that the

       limitation to file a suit for specific performance began on the

       expiry   of 9   months   from the date of the      execution   of   the

       agreement to sell dated 2nd August, 2006, as stipulated in the said

       agreement and therefore, filing of this suit by the plaintiffs in

       January, 2012 is clearly barred by limitation.


Page | 6
    10.         Counsel   further   placed   reliance   on     clause 10 of the

       agreement to sell, wherein it is mentioned that on the expiry of 9

       months period, the defendant No. 1 became responsible to pay the

       penalty of Rs. 15,000/- per month to the plaintiffs for the delayed

       period beyond 9 months and, therefore, through this clause it was

       quite    clear that remedy of        the   plaintiff   to file a specific

       performance is to be reckoned from the date of expiry of 9 months

       period. Counsel also stated that under Article 54 of the Limitation

       Act, 1963, three years period got expired on 1st June, 2007. Counsel

       further submitted that second part of the Article 54 of the

       Limitation Act will not apply in the present case, as in the

       agreement to sell the period was already fixed for the completion of

       the agreement. Counsel further submitted that the judgment cited

       by the counsel for the plaintiffs, in the case of Harnam Singh (

       supra) is not applicable to the facts of the present case as in that

       case, the property was mutated in favour of the seller at a later

       date and due to this reason the Court said that limitation would

       apply from the date when the mutation of the property in favour of

       the seller   had taken place.        To support his arguments counsel

       placed reliance on the judgment of this Court in the case of

       Subhash Chander kathuria vs Umed Singh & Anr. 127 (2006)

       DLT 292.

   11.         Arguing for defendant No.2, Mr. Rajiv Aneja, submitted that

       the sale deed, which was executed by the original owner in favour

       of defendant No. 2 nowhere mentions that the same was executed

Page | 7
        in her favour as nominee of her husband defendant No. 1 herein.

       Counsel further submitted that there is no privity of contract

       between the plaintiffs and the defendant No. 2 and, therefore, the

       plaintiffs cannot seek any specific performance of the contract

       against defendant No. 2, who has become owner of the said

       property in her own independent right.

   12.         I have heard learned counsel for the parties. Before I deal

       with the rival contentions raised by the counsel for the parties, let

       me first, briefly give narration of the facts which are not in dispute

       between the parties.     The property in question is the subject

       property bearing no E- 929, Chittranjan Park, New Delhi 110019.

       Shri B. N. Chaturvedi, Smt. Tripta and Smt. Sati Bhattacharjee

       were the co-owners of the said property.       These co-owners had

       agreed to sell the entire property (basement floor and the ground

       floor) in favour of defendant no.1, Mr. Ashok Biswal vide

       Agreement to Sell dated 27.12.2005 for a total sale consideration

       amount of Rs. 90 lacs.

   13.         An amount of Rs. 45 lacs was paid by the defendant no.1 to

       the erstwhile owners at the time of the execution of the said

       Agreement to Sell dated 27.12.2005 and the balance amount of Rs.

       45 lacs was to be paid by the defendant no.1 within a period of 9

       months from the date of the execution of the said Agreement to

       Sell.   It was also agreed between the erstwhile owners and       the

       defendant no. 1, that the payment of the balance sale consideration

       of Rs. 45 lacs was to be made by the defendant no.1 on or before


Page | 8
        26.9.2006 and the said time period shall be the essence of the said

       Agreement to Sell.    Before the said time of 9 months came to

       expire, the said defendant no.1, had agreed to sell the basement

       floor and the ground floor of the suit property in favour of the

       plaintiffs vide Agreement to Sell dated 2.8.2006 for a total sale

       consideration amount of Rs. 85 lacs.

   14.        An amount of Rs. 20 lacs was paid by the plaintiffs to the

       defendant no.1 by way of three separate cheques on the date of

       execution of Agreement to Sell and the balance amount was to be

       paid by the plaintiffs to the defendant no.1, as per the Schedule of

       payment as set out in para 1 of the Agreement to sell dated

       02.08.2006

       The said para 1 of the Agreement to Sell dated 02.08.2006 reads as

under :-

                   "1. That in pursuance of this Agreement to
             Sell and in consideration of a total sum of Rs.
             85,00,000/- (Rupees eighty five lacs) out of which
             the first party receives, this day, a sum of Rs.
             20,00,000/-(Rupees twenty lacs only) in the
             following manner:

           a) Rs. 7, 00,000/- vide cheque no. 000147 dated
              02.08.2006 drawn on United Bank of India, Tansen
              marg, New Delhi
              .

b) Rs. 7,00,000/- vide cheque no. 266788 dated 02.08.2006 drawn on Canara Bank, South Extension, New Delhi

c) Rs. 6,00,000/- Vide cheque no. 416802 dated 02.08.2006 drawn on Canara Bank, South Extension, New Delhi, from the second party, as advance earnest money and part payment, at the time of signing of this Agreement to Sell. The remaining balance sum of Rs. 65,00,000/-(Sixty five

Page | 9 lacs) shall be received by the first party, from the second party in the following manner:

a) Rs. 10,00,000/- (Rupees ten lacs only) on or before 15.08.2006.

b) Rs. 20,00,000/- (Rupees twenty lacs only) on completion of structure of the building.

c) Rs. 20,00,000/- (Rupees twenty lacs only) after flooring, plastering and fixing of chawkhats.

d) Rs. 15,00,000/- (Rupees fifteen lacs only ) at the time of handing over the vacant and physical possession of the said portion, complete in all respects, to the second party, within nine months from the date of this agreement to sell."

15. As per the plaintiff no.1, he had paid an amount of Rs. 10

lacs in cash to the defendant no.1, but without any receipt and in

good faith. The defendant no.1 has vehemently denied the receipt

of the said payment of Rs. 10 lacs as alleged by the plaintiff. It is

not in dispute between the parties that further payments were not

made by the plaintiff to the defendant no.1. It will also be manifest

from the aforesaid schedule in the Agreement to Sell that a final

payment of Rs. 15 lacs was to be made by the plaintiffs to the

defendant no.1 within a period of 9 months from the date of the

Agreement to Sell when at the same time, the defendant no.1 was

to hand over the vacant and peaceful possession of the said

portions, complete in all respects.

16. Under Clause 10 of the said Agreement to Sell, it was also

Page | 10 agreed between the parties that if the vendor had failed to hand

over the possession of the said portion to the plaintiff within a

period of 9 months from the date of the Agreement to Sell, then the

seller shall become liable and responsible to bear and pay a penalty

of Rs. 15,000/- per month to the purchasers i.e, the plaintiffs for the

delayed period beyond 9 months period. Clause 10 of the said

Agreement to Sell dated 02.06.2008 reads as under :-

"10. That if the first party fails to handover the possession of the said portion to the second party within nine months from the date of this Agreement to Sell, the first party shall be liable and responsible to bear and pay a penalty of Rs. 15,000/- (Rupees fifteen thousand only) per month to the second party for the delayed period beyond nine months."

17. Another fact which is not in dispute between the

parties is that the erstwhile owners instead of executing the sale

deed of the said property in favour of the defendant no. 1 had

finally executed the sale deed dated 16.05.2011 in favour of the

wife of the defendant no.1, who has been impleaded as defendant

no. 2 in the present case. As per this sale deed, the property in

question has been sold by the erstwhile owners in favour of

defendant no.2 for a total sale consideration of Rs.1crore and the

entire sale consideration amount was received by the erstwhile

owners from the defendant no. 2. In pursuance to the said

execution of the sale deed dated 16.05.2011, an amount of Rs.

50 lacs was paid by the defendant no. 2 by way of a pay order

dated 20.4.2011, Rs. 20 lacs by way of pay order dated 19.4.2011

and another sum of Rs. 20 lacs by way of pay order on

Page | 11 16.5.2011 and the remaining amount of Rs. 10 lacs by way

of cheque dated 19.5.2011. In fact, there was no Agreement

to Sell which that was executed between the defendant no.2 and

the erstwhile owners prior to the execution of the sale deed dated

16.05.2011.

18. In the background of the aforesaid admitted facts, the

plaintiffs in the present suit seek to enforce the Agreement to sell

dated 02.08.2006 against the defendants. Although, in the plaint,

there is no averment alleging that the plaintiffs are seeking

enforcement of the Agreement to Sell through the alleged nominee

of the defendant no.1, yet in the arguments, counsel for the

plaintiffs laid strong emphasis to build a case for specific

performance against the defendant no.1 through the alleged

nominee, i.e. the defendant no.2 herein.

19. It is beyond the comprehension of this Court as to how the

wife of the defendant no. 1 can be treated as his nominee. The

defendant no.2 has an individual identity of her own and, cannot

bind herself to fulfil the obligations of her husband in terms of the

Agreement to Sell dated 02.08.06. This Court cannot appreciate the

argument advanced by the counsel for the plaintiffs that the status

of the defendant no.2 is that of a „nominee‟ because she happens to

be the wife of defendant no.1. Therefore, in order to clarify this

aspect, it would be pertinent to note the legal meaning of the term

Page | 12 „nominee‟. The definition of a nominee has been given in Black's

Law Dictionary, 1149, 72 (9th ed.2009), which reads as under :-

"[a] person designated to act in place of another, [usually] in a very limited way," or "[a] party who holds bare legal title for the benefit of others ․" and an agent as "[o]ne who is authorized to act for or in the place of another; a representative."

20. As per the afore-noted definition, this Court cannot comprehend

that unless so intended by the defendant no.1, the defendant no. 2

can be accepted as a nominee of defendant no.1. Merely because the

defendants no. 2 happens to be the wife of defendant no.1, it cannot

be assumed that because of this relationship, she automatically

becomes his nominee.

21. In my considered view, the plaintiff has no right to seek specific

performance of the contract against defendant no.2; firstly, because

there is no privity of contract between plaintiff no.1 and the

defendant no.2 and secondly, the defendant no.2 cannot be held to

be a nominee of the defendant no.1, merely because she happens to

be his wife.

22. Coming back to the issue of limitation, this Court does not find that

there is any term in the agreement to sell which envisages any time

period for the execution of sale deed in favour of the plaintiff. The

only period stipulated in the agreement to sell to complete the sale

transactions was 9 months period within which, the plaintiff was to

pay the entire balance sale consideration amount and

Page | 13 correspondingly, the defendant no.1 was to hand over the peaceful

and vacant possession of the ground and basement floor of the said

premises.

23. It is quite bizarre that at no stage, prior to the serving of a legal

notice dated 18.01.2012, the plaintiffs ever called upon the

defendant no.1 to offer payment of the balance sale consideration

amount, and did not even whined about the non-completion of the

structure of the said property. The plaintiffs also did not call upon

the defendant no.1 to pay a penalty of Rs. 15,000/- per month

because of his failure to hand over the possession of the said agreed

portions to the plaintiffs. Under the said agreement to sell, what

was to be specifically performed by the plaintiffs was to pay the

balance sale consideration amount at various stages in terms of

Clause 1 as stated in the Agreement to Sell dated 02.08.2006 and

the corresponding obligation of the defendant no.1 was to hand over

the vacant and peaceful possession of the said portion on the expiry

of 9 months period.

24. The case of the plaintiffs thus will squarely fall under Part-I of

Article 54 of the Limitation Act, 1963, which reads as under:

"a period of three years for a suit for specific performance of a contract from the date fixed for the performance or if no such date is fixed, when the plaintiff has notice that performance is refused."

In the present case, the date is already fixed between the parties,

the parties have clearly mentioned the time within which the

contract should be performed. The three years period therefore in

Page | 14 the present case, has to be reckoned from the date of expiry of the

period of 9 months which came to an end on 1.06.2007. It is only in a

case where time is not an essence of the contract and no time is

fixed for the performance of the contract, that three years period

under Article 54, will be reckoned from the date when the plaintiff

has noticed that the performance of the contract has been refused.

The plaintiffs in the present case have taken the limitation period

from the date when they came to know about the execution of the

Sale deed dated 16.05.2011 by the erstwhile owners in favour of

defendant no.2, but in my considered view in the face of the time

period of nine months stipulated in the agreement to sell dated

02.08.2006, the present suit filed by the plaintiffs is clearly barred

under Article 54 of the Limitation Act, 1963. In any event of the

matter, the plaintiff cannot arbitrarily extend the period of the

limitation stretching the same to the date when the sale deed of the

said property was executed by the erstwhile owners in favour of

defendant no.2.

25. For taking this view, I find support from the judgment of this

Court in the case of Subhash Chandra Kathuria V. Umed Singh

& Anr., 127 (2006) DLT 292, wherein in similar set of the facts,

the Court after placing reliance on the judgment of the Supreme

Court in the case of T.L. Muddukrishana Versus Smt. Lalitha

Racchandra Rao, 1997 II AD 32, in paragraph 20 held as under:

"20. In the case of T.L. Muddukrishana v. Smt. Lalitha Ramchandra Rao reported as 1997 II AD SC 32, the Supreme

Page | 15 Court held that for the purpose of limitation, what is material is that the limitation beings to run from the date the parties have stipulated for performance of the contract. The suit is required to be filed within three years from the date fixed by the parties under the contract. For this reason, in the said case, the court even rejected the application for amendment of the plaint which came to be filed after the expiry of three years on the ground that it would change the cause of action."

26. In the facts of the present case, a time period of 9 months

was the essence of the contract which as per the terms of the

agreement came to an end on 1.06.2007, and therefore, filing of

the present suit at this stage, at the very outset is clearly barred by

limitation.

27. So far as the judgment of Punjab & Haryana Court as cited by

the counsel for the plaintiffs in the case of Harnam Singh (supra)

is concerned, the ratio of the same will not help the case of the

plaintiffs as in the facts of the said case, under the agreement

itself, it was agreed between the parties that after the mutation

was sanctioned, the plaintiff will serve one month‟s notice to the

defendant for execution of the sale deed and only after notice, the