Shri Raman Puri vs Sh. K.L. Seth & Anr.
2013 Latest Caselaw 4158 Del

*                    THE HIGH COURT OF DELHI AT NEW DELHI

+                            CS (OS) 59/2004

                                              Date of Decision:13.09.2013

SHRI RAMAN PURI                                            ..... Plaintiff
                             Through:     Mr. Rajeev Chibber with
                                          Ms.Suruchi Dawar, Advocates.

                             Versus

SH. K.L. SETH & ANR. B+                                 ..... Defendant
                   Through:               Ms Harita Agarwal, Adv.


CORAM:
HON'BLE MR. JUSTICE M.L. MEHTA


M.L. MEHTA, J.

1. This is a suit for specific performance. It is plaintiff‟s case that defendant No. 1 entered into an agreement dated 11.11.2000 with him for the sale of Flat No. 106, Neelgiri, 9, Barakhamba Road, New Delhi-110 001 for a total sale consideration of Rs.68,50,000/-. A sum of Rs.7,00,000/- was paid as advance/earnest money on the same day and the balance full and final payment was agreed to be payable by 10 th January 2001. The plaintiff‟s case is that he visited the defendant No. 1 along with the balance payment of Rs.61,50,000/- on 10.01.2001 and asked him to transfer the said flat in his favour, but the defendant No. 1 made lame excuses and asked the plaintiff to wait for some time. He submits that thereafter, he contacted defendant No. 1 many times on

telephone as also personally, but the latter always made lame excuses and did not transfer the flat and continued to keep with him the advance payment of Rs.7,00,000/-. He submits that he was always ready and willing to pay the balance sale consideration. He further submits that the legal notice dated 19.11.2003 was got send by registered AD and UPC to the defendant No. 1 with the direction to him to attend the office of defendant No. 2 on 24.12.2003 between 10 am and 4 pm for collecting the balance amount and to transfer the said flat and give possession thereof to him, but the defendant No. 1 did not turn up. The legal notice was replied by the defendant No. 1 on 02.12.2003 alleging therein that since the agreement in question stood already cancelled and the advance money paid by the plaintiff forfeited, the defendant No. 1 was under no obligation to attend the office of defendant No. 2 on 24.12.2003. The plaintiff alleges that on account of steep rise in prices of the flat, the defendant No. 1 has become dishonest.

2. Defendant No. 2 was proceeded ex-parte on 23.01.2006. Defendant No. 1 contested the suit on various grounds. It is his case that the agreement in question was already revoked even when the plaintiff served legal notice dated 19.11.2003. The defendant submits that the plaintiff was required to pay the balance sale consideration of Rs.61,50,000/- uptill 10.01.2001, and he was also required to obtain the required permission in Form 37-I from the income tax authorities prior to the last date of payment of sale consideration i.e. 10.01.2001,

about which the plaintiff was fully aware and was also notified vide legal notice dated 15.10.2001. The defendant states that the plaintiff failed in making payment of the balance amount on 10.01.2001 as also to obtain the permission in Form 37-I. He, however, instead of revoking the agreement, gave him one month time, vide notice dated 15.10.2001, to obtain the requisite permission from the income tax authorities and pay the balance amount.

3. The defendant No. 1 further states that despite legal notice dated 15.10.2001, the plaintiff failed to perform his part of obligation, as he neither took any step for obtaining the requisite permission from the income tax department in form 37-I, nor made the balance payment within one month from the date of service of notice. The defendant maintains that obtaining of the requisite permission in form 37-I was the plaintiff‟s obligation and this permission being a pre-requisite for registration of a sale deed, there was no question of the plaintiff making the balance payment.

4. In his replication, the plaintiff reiterates his averments made in the plaint and controverts that of the written statement of the defendant.

5. On the pleadings of the parties, followings issues were framed:

(i) Whether the parties entered into an agreement dated 11th November, 2000 for sale of flat bearing

No. 106, Neelgiri, 9, Barakhamba Road, New Delhi? OPP.

(ii) Whether the plaintiff has been ready and willing to perform his part of the agreement dated 11th November, 2000 in respect of the suit property? OPP.

(iii) Relief.

6. Thereafter, on 05.09.2006 following preliminary issue was framed:

(i) Whether the suit is liable to be dismissed on the ground that it has been filed after the prescribed period of limitation? OPP.

7. Vide order dated 31.03.2008, this preliminary issue was decided in favour of the plaintiff and against the defendant and thus, it can be held that the suit was filed within time and the same is not barred by limitation.

8. My findings on the issues are these:

9. This is the case of both the parties that they entered into an agreement dated 11.11.2000 for the sale of flat No. 106, Neelgiri, 9, Barakhamba Road, New Delhi-110 001.

10. The plaintiff has placed on record a piece of paper Ex.P1, which is titled as "RECEIPT" and termed as agreement to sell by the parties. It reads like this:

"RECEIPT Received with thanks a sum of Rupees Seven Lakhs only (Rupees Three Lakh as Cash and Rupees Four Lakhs vide cheque No. 191828, Bank of India, C.R. Park, New Delhi dated 11.11.2000) for the sale of Flat No.106, Nilgiri, 9, B.K. Road, New Delhi from Shri Raman Puri, Proprietor Sunrise Properties, 102, Antriksh, 22, K.G. Marg, New Delhi. Total sale consideration is settled at Rupees Sixty Eight Lakhs fifty thousand only (Rs.68,50,000/-). Last date of balance, full and final payment is 10th January, 2001.

Sd/-

Mr.K.L. Seth 11/11/2000"

11. Though, there is no requirement of any specific form of agreement, but, since the above document contains all the essentials of an agreement to sell and is also treated by both the parties as agreement to sell, though it is titled as „receipt‟, it would be dealt with as an „agreement to sell‟. The issue is decided accordingly.

12. The case of the plaintiff in short is that he had gone to pay the balance of Rs.61,50,000/- to the defendant No. 1 on 10.01.2001, but the latter asked him to wait for some time and thereafter when he

contacted him personally as also on telephone, he avoided on lame excuses.

13. On the other hand, the case of the defendant No. 1 is that obtaining of permission under form 37-I of the Income Tax Act was the responsibility of the plaintiff and which the plaintiff knew that the same was a pre-requisite before the registration of the sale deed on 10.01.2001. It is also his case that the plaintiff did not take any steps in this regard and did not contact him at any point of time after the agreement was entered into between the parties and also did not come forward to make the balance payment on 10.01.2001 or on any other date. This defendant has also stated that vide his notice dated 15.10.2001 the plaintiff was called upon to take the steps for obtaining the requisite permission in form 37-I and was given further one month time to complete the transaction by making payment of the balance amount, but, the plaintiff still did not take any action and thus committed breach of his obligations and ultimately, in terms of the said notice dated 15.10.2001, he revoked the agreement and forfeited the earnest money.

14. Here, it is pertinent to note that defendant No. 1 vide order dated 04.12.2007 of the Division Bench in FAO(OS) 213/2007 was permitted to place on record and prove two notices dated 08.10.2001 and 18.10.2001 along with their proof of service, envelopes as additional documents. Based on this, the defendant submits that the

above said notices dated 08.10.2001 and 18.10.2001 were also issued to the plaintiff on similar lines as notice dated 15.10.2001, but, without any response from the plaintiff.

15. The plea of the defendant attributing breach on the part of the plaintiff is two-fold. One, that as per the agreement, the plaintiff was under an obligation to obtain permission in form 37-I from the Income Tax Authorities, and which being a pre-requisite for the execution of the sale deed and the same having not been obtained, the defendant revoked the agreement and forfeited the earnest money; and second, that the plaintiff was not only never ready and willing to make payment of the balance amount of Rs.61,50,000/-, but, he did not contact the defendant on any date after 11.11.2000 or on 10.01.2001.

16. I have already reproduced above, the agreement-cum-receipt that was entered into between the parties. From the mere look at the said agreement, I do not see any logic in the submission of defendant No. 1 that obtaining of permission in form 37-I was the responsibility of the plaintiff or that it was a pre-requisite for completion of the transaction. The defendant has repeatedly asserted and maintained the permission to be the obligation/responsibility of the plaintiff as per the agreement and then has tried to assert the same based on the notice dated 15.10.2001 and other notices. Though, the plaintiff has admitted the receipt of only notice dated 18.10.2001 and denied the others, but, in any case, the period extended by the defendant No. 1 to the plaintiff

to obtain permission under form 37-I was of no consequence. It is a known fact that permission under form 37-I is only granted to the seller and not to the buyer and further there being no stipulation in the agreement casting obligation on the plaintiff, the latter was neither under any obligation nor any responsibility to apply for the permission. Thus, the plea which has been strongly urged by the defendant attributing breach on the part of the plaintiff in this regard, is of no consequences.

17. The plea of the plaintiff that he was ready and willing to perform his part of the agreement and had contacted the defendant on 10.01.2001 along with balance payment of Rs.61,50,000/- is also untenable. As per the agreement, time was the essence of the contract for the payment of balance consideration amount of Rs.61,50,000/- uptill 10.01.2001. The payment of balance amount is nowhere linked with the execution of the sale deed. In fact, there is no stipulation as regards the execution of the sale deed at all. It does not mean that the parties did not intend to execute the sale deed, but, from what is stipulated it is gathered that time was essence for the balance payment. It is settled law that in the case of agreement related to sale of immovable properties, time is ordinarily not to be taken as the essence of transaction, but, nevertheless it is not that even if the parties have stipulated the specific time for a particular obligation, which in this case is the time of payment, that the person on whom the obligation

rested, would sleep over the matter and wake up as and when he so desires.

18. In the case of Mrs. Saradamani Kandappan Vs. Mrs. S. Rajalakshmi and Ors. AIR 2011 SC 3234 the Supreme Court while dealing with Section 55 of the Indian Contract Act relating to effect of failure to perform at a fixed time, in contract in which time is essential, observed thus:

"The above section deals with the effect of failure to perform at a fixed time, in contracts in which time is essential. The question whether time is the essence of the contract, with reference to the performance of a contract, what generally may arise for consideration either with reference to the contract as a whole or with reference to a particular term or condition of the contract which is breached. In a contract relating to sale of immovable property if time is specified for payment of the sale price but not in regard to the execution of the sale deed, time will become the essence only with reference to payment of sale price but not in regard to execution of the sale deed. Normally in regard to contracts relating to sale of immovable properties, time is not considered to be the essence of the contract unless such an intention can be gathered either from the express terms of the contract or impliedly from the intention of the parties as expressed by the terms of the contract."

19. In the aforesaid case, the Supreme Court also relied upon its earlier observations in N. Srinivasa Vs. Kuttukaran Machine Tools Ltd. 2009 (5) SCC 182 which are as under:

"27. In a contract for sale of immoveable property, normally it is presumed that time is not the essence of the contract. Even if there is an express stipulation to that effect, the said presumption can be rebutted. It is well settled that to find out whether time was the essence of the contract, it is better to refer to the terms and conditions of the contract itself."

20. In the aforesaid case, the Supreme Court also endorsed its decision rendered in K.S.Vidyanadam and Ors. Vs. Vairavan (1997) 3 SCC 1 wherein it was observed thus:

"(i) Courts, while exercising discretion in suits for specific performance, should bear in mind that when the parties prescribe a time/period, for taking certain steps or for completion of the transaction, that must have some significance and therefore time/period prescribed cannot be ignored.

(ii) Courts will apply greater scrutiny and strictness when considering whether the purchaser was 'ready and willing' to perform his part of the contract.

(iii) Every suit for specific performance need not be decreed merely because it is filed within the period of limitation by ignoring the time-limits stipulated in the agreement. Courts will also

'frown' upon suits which are not filed immediately after the breach/refusal. The fact that limitation is three years does not mean a purchaser can wait for 1 or 2 years to file a suit and obtain specific performance. The three year period is intended to assist purchasers in special cases, as for example, where the major part of the consideration has been paid to the vendor and possession has been delivered in part performance, where equity shifts in favour of the purchaser."

21. Even for the sake of arguments if it is taken that the time of payment was not the essence of the contract, it also no way helps the plaintiff. In a case where time is taken to be not the essence of the contract, it is understood to be performed within a reasonable time. This is so inferred from the terms of the contract, the nature of the property and the surrounding circumstances including the conduct of the plaintiff, age and health of the sellers etc.

22. In N.P. Thirugnanam (Dead) by LRs vs. Dr. R. Jagan Mohan Rao and Others, (1995) 5 SCC 115, the Hon'ble Supreme Court held that ;

"the amount of consideration which he (the plaintiff) has to pay to the defendant must of necessity be proved to be available. Right from the date of the execution till date of the decree he must prove that he is ready and has always been willing to perform his part of the contract..............The court may infer from the facts and circumstances whether the plaintiff was ready and was always ready and willing to perform his part of the contract."

23. Learned counsel for the plaintiff has relied upon the case of Ishwar Dayal Kansal & Anr. Vs. RKBK Fiscal Services Pvt. Ltd., 197 (2013) Delhi Law Times 41 to advance his argument regarding the plaintiff being ready and willing to make payment of the balance sale consideration, wherein it was held thus:

"Availability of funds in hand or in bank accounts not being a sine qua non for proving that the plaintiff was capable of paying the sale consideration to the defendant at the time of the execution of the Sale Deed, the provisions of Section 16(c) of the Specific Relief Act can, in my opinion, by no means debar the plaintiff in the instant case from claiming the relief of specific performance."

24. It is the plaintiff‟s own case that he contacted the defendant No. 1 on 10.01.2001 at his residence. This is categorically denied by the defendant. The plaintiff did not disclose as to in which form he had taken the balance of Rs.61,50,000/-. It was only in his cross examination that he stated that it was by way of cheque. Except a bald averment and the statement made by the plaintiff that he had gone with the balance of Rs.61.50 lakh to the defendant, there is nothing on record to substantiate it. Nothing has been placed on record to show that he had the requisite source available with him to pay the balance consideration or that he had, in fact, taken along with him any cheque. Bald averment in the plaint and the deposition cannot supplant conclusive proof of readiness and willingness. It has to be backed with the requisite evidence; may be of his financial statement or the bank

account statement. It is settled law that it may not be necessary to show availability of funds, but what is bare minimum, is a demonstrable accessibility to funds. Such is not the situation in the instant case. There is also nothing to substantiate that he ever contacted defendant No. 1 between 11.11.2000 to 10.01.2001, if at all it is believed that he did talk to defendant No. 1 on 10.01.2011. Likewise, there is also nothing to substantiate that he repeatedly contacted defendant No. 1 after 10.01.2001 on telephone or personally. If he would have made any phone call, the same could be easily proved, for which, no iota of evidence is led by the plaintiff. The plaintiff had admitted receipt of notice dated 18.10.2001 from the defendant, which was sent much after the expiry of date of payment. The plaintiff did not choose to respond the same. Vide this, the plaintiff was given more opportunity to do the needful, but, nothing was done by the plaintiff. The matter did not end here. The plaintiff again remained silent for almost three years and it was only on 21.11.2003 that he sent a legal notice. This legal notice issued by the plaintiff would, apparently, demonstrate the lackadaisical approach of the plaintiff. In the given facts, when the payment was to be made until 10.01.2001 and the plaintiff had received a notice of revocation of the agreement and forfeiture of the earnest money in October 2001, it was entirely abnormal conduct of any human being that he would not take any action, if there was any called for. The pleas which were sought to be taken by the plaintiff that he did not take any action nor responded because he was persuading the defendant No. 1 and did not want to go

for litigation, are all unbelievable of a prudent person, more so of a person such as plaintiff, who was engaged in the business of property dealings. As regards the conduct of plaintiff, it is also noticed that though the payment of the balance amount was not linked to the execution of the sale deed, but, it is common knowledge that a person whose last date of execution of sale deed was 10.01.2001, would take care of it that he obtains copies of documents with him well in advance and gets the sale deed prepared and in the normal course before commencement of the sale deed prepares a draft sale deed well in advance. Not only this, he was also supposed to purchase the stamp papers and finalize the sale deed in consultation with the defendant/seller. The plaintiff has not bothered to talk to defendant No. 1 before 10.01.2001, much less to prepare all this. It was only when he saw that the time was running out that he contacted the defendant No. 1 and may be with the cheque of the balance amount, which was even not available in his bank account.

25. In Bharti Rani Singh vs. Rajinder Singh Bedi,: 1997 (42) DRJ (DB) 19, a Division Bench of the High Court after delving into the entire gamut of case law held that the plaintiff must show his bonafides and it cannot be left to the ipse dixit of the plaintiff and it was necessary for the plaintiff to prove his financial position or capacity to finance the purchase price right from the date of the execution till the date of the decree. It held that there was no material on record in the said case to show what estate and assets were available with the

plaintiffs to raise money or to convert into money or what arrangement had been made by them for financing and completing the sale. Thus, the learned Single Judge had rightly held that the defendants had not committed breach of the Agreement on their part.

26. In Nitin Jain vs. Murari Lal Behl, : 2008 (106) DRJ 672, though the requirements of pleadings had been fully complied with and the plaintiff had deposed about his readiness and willingness, a learned Single Judge of this Court held that the plaintiff had not proved readiness and willingness to perform his part of the contract, as he had not adduced any "objective material to show readiness or even about his capacity to perform the contract when he filed the suit, or at the stage of trial." It was further held that "though it is not necessary to deposit the amount in Court, yet some objective material such as availability of funds at the stage of the filing of the suit or at the stage when performance was offered and also at the stage when the deposition was recorded, could well be produced. In the absence of any such objective material, the court is now called upon to merely accept the plaintiff's version that he was always ready and capable of performing the contract. This course is not acceptable."

27. In Man Kaur (Dead) by LRs vs. Hartar Singh Sangha, : 2010 X AD (S.C) 304, the Hon'ble Supreme Court highlighted that in the absence of evidence as to availability of money for purchase and about the readiness and willingness of the plaintiff to perform the contract, the suit must fail for want of compliance with Section 16(c) of the

Specific Relief Act. It was held that the material on record showed that the respondent/plaintiff had committed breach."

28. Having seen that the plaintiff after making initial payment, seems to have forgotten the existence of defendant as also the agreement. He continued to remain silent even after receipt of notice in October 2001, which was sent much after the expiry of the period of payment. Sill, further, he did not take any action for another about three years after receipt of notice. Given from any point, the plaintiff has utterly committed the breach of his obligation of making payment. The conduct of the plaintiff demonstrates that he was, in fact, never ready and willing to perform his part of the contract.

The issue is decided accordingly.

Relief

29. Having regard to the contents of the agreement-cum-receipt, as noted above, it would be seen that the payment of Rs.7.00 lakhs by plaintiff was as towards part payment of the sale consideration with the balance full and final payable by 10th January, 2001, and not as "Earnest money per se". There is no clause of forfeiture of the said payment or any penalty in the aforesaid receipt-cum- agreement in case the plaintiff breaches to perform his obligation. Not only that, the defendant No. 1 nowhere averred in written statement that he suffered any loss or injury, there is also nothing on record to show that defendant suffered any injury or loss. Further, if the plaintiff had committed breach of terms of payment, the defendant No. 1 was also

under an equal obligation to call upon the plaintiff well in advance and to jointly proceed for obtaining the permission under form 37-I which if at all as per him was a pre-requisite at that time as per Section 269UC of the Income Tax Act, 1961. The form 37-I required signatures of both-the transferor and transferee and nothing has been brought on record to establish that defendant No. 1 filled the required form with the requisite information and authorized the plaintiff for obtaining permission. Both the parties seem to be either under the mistaken belief regarding the requirement of permission under Form 37-I or as regards their responsibilities or took the same without any seriousness. Be that as it may, the plaintiff alone could not be said to have defaulted on that count. Thus, the defendant no. 1, on the ground of equity also cannot forfeit the said advance amount.

30. In view of the above, the defendant will refund the advance money of Rs.7.00 lakh to the plaintiff within a month from today. The suit stands dismissed with the above direction of refund of advance money of Rs.7,00,000/- by defendant No. 1 to the plaintiff within a month from today. The decree be drawn accordingly.

M.L. MEHTA, J.

SEPTEMBER 13, 2013 acm