Sh. Mahendera Verma vs Sh. Suresh T. Kilachand
2013 Latest Caselaw 4049 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI
                           Reserved on   : 17.07.2013
                           Pronounced on : 10.09.2013


+      CS(OS) 2220/2007 & IA Nos.5576/2012 & 15907/2012
       SH. MAHENDERA VERMA                    ..... Plaintiff
                          Through      Mr.Sumesh Dhawan and Ms.Vatsala
                                       Kak Panda, Advocates
                versus
       SH. SURESH T. KILACHAND      ..... Defendant
                       Through None

       CORAM:
       HON'BLE MR. JUSTICE JAYANT NATH

JAYANT NATH, J.

1. The present suit is filed for recovery of Rs. 40 lacs. The defendant had entered appearance and filed his written statement. The plaintiff led his evidence PW1 and PW2 and the witnesses were cross-examined by the defendant. However, before the defendant could lead his evidence, he has expired. His legal heirs have been impleaded. The legal heirs were served through publication. None had appeared for them and hence, they had been proceeded ex parte.

2. Arguments were heard and judgment was reserved. The plaintiff was given an opportunity to file his written submissions. No written submissions have been filed.

3. It is the contention of the plaintiff that on 6 th February, 2007, he

entered into an oral agreement to sell with the defendant for the property known as Snow View Estate with the buildings constructed thereon situated in Almora. It is further stated that as earnest money, the plaintiff paid a sum of Rs. 20 lacs to the defendant vide bank draft dated 06.02.2007. The total sale consideration was Rs. 4 crores. As per the terms of the oral agreement to sell, it is stated that the balance sum of Rs. 3.80 crores was payable by the plaintiff on or before 06.08.2007 i.e. within a period of six months at the time of execution of the sale deed by the defendant. It is stated that the terms further stipulated that if the plaintiff fails to pay the balance sale consideration within the said time, the earnest money of Rs. 20 lacs was to be forfeited. It is further stated that the another term of the agreement was that in case the defendant fails to execute the sale deed in favour of the plaintiff then in that eventuality the defendant would be liable to refund double the amount of earnest money i.e. Rs. 40 lacs. It is stated that in July, 2007, the plaintiff learnt that the defendant with a fraudulent and malafide intention with a view to cheat the plaintiff, was entering into an agreement to sell the suit premises in favour of some third party. On subsequent visit to the concerned Registrar's office, the plaintiff learnt that the defendant had already sold the suit premises in favour of a third party.

4. Thereafter, the plaintiff through his counsel sent a legal notice dated 13.07.2007 to the defendant calling upon him to complete the process of registration of the sale deed in favour of the plaintiff or to refund the earnest money of Rs. 20 lacs. The defendant through his counsel sent a reply on 30.07.2007 stating that the balance sale consideration was payable by the plaintiff within a period of three months and upon failure of the plaintiff to

pay the balance sale consideration, the defendant had forfeited the earnest money and in June 2007 had sold the suit premises in favour of a third party. The plaintiff claims that the defence of the defendant as stated in the reply to the legal notice is fraudulent and hence, has filed the present suit seeking recovery of Rs. 40 lacs inasmuch as per the terms and conditions of the oral agreement to sell, if the defendant failed to execute the sale deed, he was liable to pay a sum of Rs. 40 lacs to the plaintiff.

5. The defendant has filed the written statement. In the written statement, the defendant admits the oral agreement to sell and the receipt of sum of Rs. 20 lacs from the plaintiff by way of initial earnest money. However, it is the contention of the defendant that the plaintiff was to pay another instalment of Rs. 30 lacs to the defendant towards earnest money by the end of February 2007. It is further stated that the plaintiff was to pay balance sum of Rs. 3.50 crores by 06.05.2007 and in case of failure of the plaintiff, the entire earnest money was to be forfeited. It is further stated that in case, the plaintiff failed to pay the balance earnest money of Rs. 30 lacs, the defendant was free to negotiate sale of the property and to forfeit the earnest deposit.

6. On 11.05.2010, the following issues were framed :-

(i) What are the terms and conditions of the oral agreement dated 6th February, 2007? OPP

(ii) Whether the defendant has committed breach of the oral agreement? OPP

(iii) Whether the plaintiff has committed the breach of the oral agreement? OPD.

(iv) Whether the plaintiff is entitled to refund of earnest

money of Rs. 20,00,000/- from the defendant? OPP

(v) Whether the plaintiff is entitled to damages from the defendant? If so, how much? OPP.

7. The plaintiff has filed evidence of two witnesses, namely, PW 1 i.e. the plaintiff himself and PW 2 Mr. Kevin Godinho. Both have been cross- examined by the defendant.

8. I will first deal with issue No. 1 which reads as follows:-

"(i) What are the terms and conditions of the oral agreement dated 6th February, 2007? OPP"

9. In view of the averments made in the plaint and the evidence by way of affidavit filed by the plaintiff it is clear that the plaintiff entered into an oral agreement to sell with the defendant for the property known as Snow View Estate for a sale consideration of Rs. 4 crores. The plaintiff has also proved that he made the payment of earnest money in furtherance of the said agreement of Rs. 20 lacs to the defendant by way of drafts. The copy of the said drafts have been placed on record and marked as Exhibit P 1/1. The same has been admitted by the defendant in his written statement as well.

10. There is no consensus between the two parties on the terms of the agreement. However, the defendant has admitted two things, namely, that there was an agreement to sell between the parties for the said property and the sale consideration was Rs. 4 crores. The defendant has admitted receipt of Rs. 20 lacs as earnest deposit. As per the plaintiff, the plaintiff had six months time to pay the balance sum of Rs. 3.80 crores. The defendant claims that the balance had to be paid within three months. I am inclined to

accept the version of the plaintiff inasmuch as the defendant has failed to place on record any document to show that on expiry of the three months, he issued any communication to the plaintiff demanding the balance sale consideration or forfeiting the earnest deposit. The issue of forfeiture of the earnest deposit has been mentioned by the defendant only for the first time when he sent his reply dated 30.07.2007 in response to the legal notice sent by the plaintiff. Earlier thereto, no steps have been taken by the defendant to communicate to the plaintiff about the forfeiture of the earnest deposit.

11. However, there is no credible evidence to support the version of the plaintiff regarding the term of the Agreement to Sell that in case of failure of the defendant to register the sale deed after six months defendant was liable to pay the plaintiff a sum of Rs. 40 lacs i.e. Rs. 20 lacs as refund of earnest deposit and Rs. 20 lacs as damages.

12. Hence, on the basis of the evidence placed on record I hold that the oral agreement to sell was for a consideration of Rs. 4 crores payable by six months.

13. Coming now to issues No. 2 to 4, which read as follows-

"(ii) Whether the defendant has committed breach of the oral agreement? OPP

(iii) Whether the plaintiff has committed the breach of the oral agreement? OPD.

(iv) Whether the plaintiff is entitled to refund of earnest money of Rs.20,00,000/- from the defendant? OPP"

14. In view of what I have stated above, it would follow that the

defendant has committed breach of the agreement to sell. In case the defendant had forfeited the earnest deposit, a communication of the same would normally have been sent to the plaintiff. There is nothing to show that the defendant in any way sought to contact the plaintiff on the expiry of the period as claimed by the defendant i.e. three months. The defendant sold the property before expiry of six months. to pay the money. It is hence held that the defendant committed breach of the oral agreement to sell. In view of the same, the plaintiff would be entitled to refund of earnest money paid to the defendant.

15. Issue No. 5 reads as follows:-

"(v) Whether the plaintiff is entitled to damages from the defendant? If so, how much? OPP."

As far as issue No. 5 is concerned, he would not be entitled to damages as claimed in the plaint inasmuch as he has failed to prove existence of any term in the oral agreement which has permitted him to claim Rs. 20 lacs as damages. Correct quantification of the damages would be to compensate the plaintiff by means of interest. The plaintiff would be entitled to interest at the rate of 9% per annum simple interest with effect from the date the defendant has received the payment i.e. 06.02.2007.

16. Hence the plaintiff is entitled to a decree in his favour and against the defendants for a sum of Rs. 20 lacs along with interest @ 9% per annum w.e.f. 06.02.2007.

17. Similarly, the plaintiff would also be entitled to pendente lite interest at the same rate of interest w.e.f the date of filing of the suit till recovery. The plaintiff would also be entitled to costs. The suit is decreed accordingly. All pending applications stand disposed of.

JAYANT NATH, J SEPTEMBER 10, 2013 Rb/sh