Shree Aadhiya Build Well Pvt. Ltd. vs Sh. Kartar Singh & Ors.
2016 Latest Caselaw 995 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI

+                           CS(OS) No. 325/2007
%                                                    9th February, 2016

SHREE AADHIYA BUILD WELL PVT. LTD.                                ..... Plaintiff

                            Through:     Mr. B.S.Maan, Mr. Vishal Maan and
                                         Mr. Paritosh Tomar, Advocates.

                            versus

SH. KARTAR SINGH & ORS.                                    ..... Defendants

                            Through:     Mr. Jagat Rana and Mr. Yashvardhan
                                         Singh Rathore, Advocates for D-1.

CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA

To be referred to the Reporter or not?         YES


VALMIKI J. MEHTA, J (ORAL)

1.            This   suit   for   specific   performance   is   filed   by    the

plaintiff/Company Shree Aadhiya Build Well Pvt. Ltd. Plaintiff is the

proposed purchaser under the Agreement to Sell dated 4.11.2006. Four

defendants to the suit are the proposed sellers under the Agreement to Sell

dated 4.11.2006 (defendant no.4 is the mother who had 50% share and who

expired during the pendency of the suit and is now represented by defendant

nos. 1 to 3 who are three sons). The land which is the subject matter of the

Agreement to Sell dated 4.11.2006 comprises of 41 bighas and 16 biswas of

CS(OS) No.325/2007                                                  Page 1 of 20
 land bearing Khasra no. 19//19 (6-16) (wrongly recorded as 0-16 in the

agreement), 22 (4-16), 23 (6-16), 24(2-1), 21//11 (4-16), 19/3 (2-6), 20 (4-

16), 21 (4-16) and 22 (4-13) situated in the Revenue Estate of Village

Baprola, New Delhi-110043.


2.            The total sale consideration as per the agreement to sell was

Rs.7 crores. A sum of Rs.72 lacs was paid in terms of the Agreement to Sell

dated 4.11.2006. Whereas defendant nos. 1 to 3 were paid a sum of Rs.12

lacs each, defendant no.4 was paid a sum of Rs. 36 lacs. These payments

were made by means of cheques drawn on ABN Amro Bank and as stated in

para 2 of the agreement to sell.


3.            The case of the plaintiff is that defendants became dishonest

after entering into of the agreement to sell and they did not apply and take

the necessary NOC under the Delhi Land (Restrictions on Transfer) Act,

1972 (in short the Act of 1972), and which was the duty of the respondents

in terms of para 10 of the agreement to sell. Plaintiff has further pleaded that

plaintiff regularly contacted the defendants, who either dilly-dallied or

avoided to give details of applying of the NOC. Plaintiff further pleads in

the plaint that suddenly the plaintiff received a legal notice from the

defendants dated 6.2.2007 alleging that the last date of payment under the

agreement to sell was 3.2.2007 and since the plaintiff did not make the

payment of the balance amount by 3.2.2007, the amount of Rs. 72 lacs

already paid by the petitioner stands forfeited by cancelling the agreement to

sell. The legal notice dated 6.2.2007 also asserted that there was no final

agreement to sell, inasmuch as, the name of the proposed buyer in the

Agreement to Sell dated 4.11.2006 was left blank and thus the defendants

did not know that as to in whose name the NOC was to be applied for.

Plaintiff pleads that it is the defendants who are guilty of breach of contract

as they want to back out of the agreement to sell. The subject suit for

specific performance accordingly came to be filed on 17.2.2007.

4. The defendants in their joint written statement have essentially

taken up three defences. First is that there is no final agreement to sell as the

name of the proposed purchaser was never mentioned in the agreement to

sell and which name was never informed to the defendants till 3.2.2007, and

which was the last date for making payment under the agreement to sell.

The second defence is that on account of the defendants not knowing the

name of the proposed purchaser, and which was to be told to them by the

property brokers who had brokered the transactions namely Sh. Kuldeep, Sh.

Bharthu and Sh. Joginder Singh, NOC could not be applied for and obtained

by the defendants. The defendants have also denied that the plaintiff has

been and continues to be ready and willing to perform its part of the

contract.

5. In the suit following issues were framed on 18.9.2007:-

"1. Whether the plaintiff is entitled for a decree of specific performance of agreement to sell dated 4th November, 2007 in respect of total land measuring 41 bighas 16 biswas situated in the Revenue Estate of village Baprola, New Delhi, if so, on what terms and conditions? OPP

2. Whether the plaintiff is entitled for a decree of permanent injunction as prayed by the plaintiff? OPP

3. In case, the plaintiff is not entitled for a decree of specific performance, whether the plaintiff is entitled for recovery of damages, if so, how much and from which of the defendants? OPP

4. Whether the plaintiff has always been ready and willing to perform his part of agreement dated 4th November, 2006? OPP

5. Whether the name of the purchaser (plaintiff) was not disclosed to the defendants while agreement to sell dated 4th November, 2006 was executed, as alleged by the defendants, if so, to what effect? OPD

6. Whether there was no legal and binding agreement between the parties, as alleged by the defendants? OPD

7. Relief."

6. The following documents have been proved by the plaintiff:-

              (i)    The Agreement to Sell dated 4.11.2006, Ex.P-1

               (ii)    Receipt dated 4.11.2006, Ex.P-2;

(iii) Photocopies of the four cheques bearing the original signatures of each of the defendants qua each separate cheque given to each of the defendants, Ex.PW1/3 to Ex.PW1/6;

(iv) Certificate of ABN Amro Bank showing clearing of cheques issued by the plaintiff company given at the time of agreement to sell totaling to Rs.72 lacs, Ex. PW1/7;

(v) Legal Notice sent by the defendants to the plaintiff dated 6.2.2007 as Ex. PW1/8.

(vi) Certificate of the bank of the plaintiff ABN Amro Bank showing that plaintiff had in the bank account a sum of Rs.6,45,37,122/- on 6.2.2007 as Ex.PW1/9.

Other documents have not been proved and exhibited and I

therefore need not refer to the same.

7. Issue nos.5 and 6 are the issues which are required to be firstly

considered by this Court, inasmuch as, only if there exists a complete

Agreement to Sell dated 4.11.2006, would then arise the necessity of

deciding other issues as to whether the plaintiff is entitled to specific

performance and as to whether the plaintiff was and has been ready and

willing to perform its part of the Agreement to Sell dated 4.11.2006.

8. Though the stand of the defendants is that space containing the

name of the proposed purchaser was blank in the Agreement to Sell dated

4.11.2006 and that the defendants never knew who was the proposed

purchaser, I find the defence of the defendants not believable and acceptable

by this Court inasmuch as defendants admit that they received the four

cheques exhibited as Ex.PW1/3 to Ex.PW1/6 for a sum of Rs.12 lacs each

(three cheques) and one for a sum of Rs.36 lacs, and these cheques were

issued by the plaintiff/Company. Therefore, I cannot believe the defendants

that space where the name of the proposed purchaser was to be stated in the

agreement to sell was left blank. No doubt, space as originally typed was

blank, however, in the blank space by handwriting, the name of the plaintiff

is stated, and which aspect is to be taken alongwith the fact that the

photocopies of the four cheques issued by the plaintiff have been exhibited

as Ex.PW1/3 to Ex.PW1/6 (bearing the original signatures of the four

defendants) and their clearance proved by the bank certificate Ex.PW1/7. It

is therefore held that issue nos.5 and 6 have to be decided in favour of the

plaintiff and against the defendants holding that the Agreement to Sell dated

4.11.2006 is not invalid or unenforceable allegedly on account of the name

of the proposed purchaser, viz the plaintiff, being not stated in the agreement

to sell.

Issue nos.1, 3 and 4.

9. The next issues which are required to be discussed are issue

nos.1, 3 and 4 as to whether the plaintiff has always been ready and willing

to perform its part of the Agreement to Sell dated 4.11.2006. Onus of this

issue was on the plaintiff on account of the provision of Section 16(c) of the

Specific Relief Act, 1963. This provision requires that a proposed purchaser

has always to be and continues to be ready and willing to perform its part of

the agreement to sell. It is settled law that the expressions 'readiness' and

'willingness' refer to the capacity to pay so far as the expression 'readiness'

is concerned and the intention to go through with the transaction as reflected

in the expression 'willingness'. These are the meanings of the expressions

'readiness' and 'willingness' as held in various judgments of the Supreme

Court and one such judgment of the Supreme Court in this regard is in the

case of J.P. Builders and Another Vs. A. Ramadas Rao and Another

(2011) 1 SCC 429. We will therefore have to examine as to whether the

plaintiff was always ready and willing to enter into the sale deed till the time

of the present final arguments and from the date of entering into the

agreement to sell. At the time of considering this issue, no doubt, it is borne

in mind that the plaintiff has to be willing to perform its part of the contract

only when the defendants have obtained the NOC, however, Section 16(c) of

the Specific Relief Act requires not one but two aspects to be proved by the

plaintiff ie both readiness and willingness. In law the aspect of willingness

being there is one which is to be acted upon by making the payment when

the defendants make themselves capable of performing the agreement to sell

by taking the necessary NOC, however, as contrasted from willingness,

readiness is an aspect which has to be independently proved. Readiness

pertains to the financial capacity of a proposed purchaser to make payment

of the balance consideration under the agreement to sell. The issue with

respect to readiness and willingness is overlapping with the issue of

defendants being guilty of breach of contract, but, the expression "has

always been ready and willing" is an expansive expression not only

encompassing therein that it has to be shown that the defendants are guilty of

breach of contract, but also that it has to be shown that plaintiff had

necessary financial capacity to pay the balance sale consideration at all

points of time after the agreement to sell was entered into. The aspect of a

plaintiff/proposed purchaser always being ready to perform its part of the

contract i.e having the necessary capacity to pay the sale consideration is

because specific performance is a discretionary relief and an alternative to

the relief of grant of damages. A suit for specific performance is filed

because the plaintiff/proposed purchaser alleges breach of contract by

defendants/proposed sellers and ordinarily a breach of contract gives right to

remedy and relief of damages under Section 73 of the Indian Contract Act,

1872. Specific performance is the alternative to the relief of damages and

courts have in view of Section 20 of the Specific Relief Act held that even if

the proposed sellers are guilty of breach of contract, it is not necessary that a

suit for specific performance has to be decreed, and that a proposed

purchaser can always be granted an alternative relief of damages, of course

depending upon the facts and circumstances of each case and the evidence

which is led in the case on relevant aspects.

10. Therefore, even after deciding the issue as to whether the

defendants are guilty of breach of contract in not taking NOC as required of

the defendants in para 10 of the agreement to sell, yet, plaintiff cannot claim

specific performance unless and until plaintiff has proved its capacity to pay

right from the time of entering into an agreement to sell till the time of the

present final arguments.

11. So far as the fact of breach of contract is concerned,

undoubtedly, para 10 of the agreement to sell does state that it is the

obligation of the defendants to obtain the necessary NOC and thus as per

Sections 91 and 92 of the Indian Evidence Act, 1872 once the agreement to

sell is proved; and it has been proved in this case; defendants cannot in any

manner argue anything to the contrary or in violation of the terms contained

in the written agreement to sell being para 10 which requires the defendants

to obtain the NOC. It is not the case of the defendants that after entering

into the agreement to sell there was a subsequent oral agreement to shift the

obligation of obtaining the NOC upon the plaintiff. Therefore, it is held that

since the defendants did not obtain the necessary NOC under the Act of

1972, hence the defendants are guilty of breach of contract.

12. As already stated above, however, the issue of breach of

contract by the defendants is not determinative of the entitlement of the

plaintiff to the grant of specific performance in its favour because grant of

specific performance is not an automatic consequence on proving breach of

agreement to sell by the defendants, but, grant of specific performance is an

alternative benefit to the proposed purchaser on the proposed purchaser

proving that the defendants/proposed sellers are guilty of breach of contract.

As already stated above, plaintiff has to prove to the satisfaction of the Court

his readiness ie capacity to pay at all points of time and which is implicit in

the expression "has always been ready and willing" as found in Section

16(c) of the Specific Relief Act and therefore, plaintiff has to prove his

capacity from 4.11.2006 till date in the year 2016. Has the plaintiff proved

so? The answer to this has to be in an emphatic no, and the reasons for the

same are given hereinafter.

13. The only document sought to be relied upon and proved by the

plaintiff as regards plaintiff's financial capacity to be always ready and

willing is the statement of account of the plaintiff/Company in ABN Amro

Bank showing an entry of an amount of Rs.6,45,37,122/- as on 6.2.2007.

This document is alleged to be proved and exhibited as Ex.PW1/9, however,

it is noted that exhibition of this document was objected to by the defendants

at the time of leading of evidence by the plaintiff. In my opinion, the

defendants rightly raised this objection and it cannot be held that this

document is proved because this bank account is not certified under the

Bankers' Books Evidence Act, 1891. Once the certificate is not certified

under the Bankers' Books Evidence Act, it was necessary for the plaintiff to

summon the record of the bank to prove the balance lying in the account of

the plaintiff on 6.2.2007 as Rs.6,45,37,122/- but the plaintiff has failed to do

so. Therefore, there is absolutely no credible evidence whatsoever led by the

plaintiff of plaintiff's financial capacity except a self serving statement of

the plaintiff and which cannot be believed by the Court as proof that the

plaintiff had with it the necessary funds.

14. Even for the sake of arguments, if we take the certificate

Ex.PW1/9 as proved, this certificate still will not help the plaintiff to prove

that the plaintiff has always been and continues to be ready and willing to

perform its part of the contract ie plaintiff always right from entering into of

the agreement to sell till date had the financial capacity to pay to the

proposed sellers/defendants. This I say so because there is no evidence led

by the plaintiff as to the amounts available with the plaintiff/Company to

pay the balance sale consideration finally between 4.11.2006 and 6.2.2007,

inasmuch as, even as per the statement of account Ex.PW1/9, the first entry

in this account of 1.2.2007 only shows a balance of Rs.19,37,122/-.

Therefore between the date of entering into of the agreement to sell on

4.11.2006 and till the last date fixed for balance payment on 3.2.2007,

plaintiff did not have and has failed to prove its necessary financial capacity

to pay the balance sale consideration of Rs.6,28,00,000/-. Therefore, once

the plaintiff has failed to prove that the plaintiff had the necessary financial

capacity from 4.11.2006 till 6.2.2007, plaintiff cannot be said to have proved

its capacity to pay and hence readiness from 4.11.2006 to 6.2.2007.

15. At this stage it is required to be noted that the bank account

Ex.PW1/9 filed by the plaintiff is very curious because it has just two entries

one of 1.2.2007 of Rs.19,37,122/- and second of 6.2.2007 of Rs.

Rs.6,45,37,122/-. This statement of account is curious because obviously

the entry of 6.2.2007 has been made to show its coming into existence only

for the plaintiff's capacity just before the filing of the suit. Also, the

statement of account entry on 6.2.2007 obviously conceals more than it

reveals because it shows that the plaintiff is guilty of concealment of

material facts because this amount of Rs.6,45,37,122/- has not been shown

to be continued to remain existing in the credit of the plaintiff/Company

after 6.2.2007 for most or almost the entire period from 6.2.2007 till date in

the year 2016. The above facts obviously show that the plaintiff is

speculating in litigation and plaintiff is therefore not entitled to the

discretionary relief of specific performance. Therefore and in any case even

if the issue has to be looked dehors the aspect of discretionary nature of the

relief of specific performance, yet the plaintiff has miserably failed to prove

the plaintiff's capacity to pay even from February, 2007 till the present date

in February, 2016, as required from the word 'always' in Section 16(c) of

the Specific Relief Act, and onus to discharge which was a sine qua non

upon the plaintiff in terms of Section 16(c) of the Specific Relief Act, hence

I hold that the plaintiff has miserably failed to prove issue no.4 that plaintiff

has always been ready and willing to perform its part of the Agreement to

Sell dated 4.11.2006. This discussion with respect to issue no.4 will also

have to overlap with the decision of issue nos.1 and 2 with respect to

whether the plaintiff is entitled to the discretionary relief for specific

performance.

16. There is another reason for deciding issue no.1 against the

plaintiff and in favour of the defendants in the facts of the present case

where it is found that the plaintiff has just paid 10% of the total sale

consideration initially.

17. There is also an aspect of what the additional amount is paid

and yet to be paid to the defendant nos.2 and 3, inasmuch as, there is an

Order of this Court dated 21.3.2007 which shows that defendant nos. 2 and 3

have received the entire amounts payable to them under the agreement to

sell (and which defendant nos.2 and 3 have thereafter not appeared and

contested the suit and not filed their written statements), but, the same order

also notes the statements of the defendant nos.2 and 3 that further amounts

have to be recovered by them, and which obviously must be for the

defendant nos.2 and 3 to compromise the suit with the plaintiff. The plaintiff

however has led no evidence as to what was this additional amount and how

it stands paid to the defendant nos. 2 and 3.

18. It is also noted that on a specific query being put to the counsel

for the plaintiff, counsel for the plaintiff on instructions states that plaintiff is

not interested in receiving the amounts which are paid under the agreement

to sell to the defendant nos. 2 and 3 and plaintiff in fact wants specific

performance against defendant nos. 2 and 3 with respect to their shares in

the land. At this stage, therefore, attention of the counsel for the plaintiff

was drawn to the provision of Section 12 of the Specific Relief Act which

disentitles a proposed purchaser to seek specific performance of part of the

contract; part of the contract being of the defendant nos. 2 and 3 not only for

the reason that defendant no. 1 is opposing the grant of specific performance

but also that the original share of the defendant nos. 1 to 3 has undergone a

change on account of the death of the mother being defendant no. 4, and thus

the shares of the defendant nos. 1 to 3 which were originally jointly 50%

have, on account of the death of the defendant no. 4 during the pendency of

the suit, got transformed to 1/3rd share each in the suit land. Section 12 of

the Specific Relief Act, 1963 reads as under:

"12. Specific performance of part of contract.- (1) Except as otherwise hereinafter provided in this section, the court shall not direct the specific performance of a part of a contract.

(2) Where a party to a contract is unable to perform the whole of his part of it, but the part which must be left unperformed bears only a small proportion to the whole in value and admits of compensation in money, the court may, at the suit of either party, direct the specific performance of so much of the contract as can be performed, and award compensation in money for the deficiency.

(3) Where a party to a contract is unable to perform the whole of his part of it, and the part which must be left unperformed either-

(a) forms a considerable part of the whole, though admiting of compensation in money; or

(b) does not admit of compensation in money;

he is not entitled to obtain a decree for specific performance; but the court may, at the suit of the other party, direct the party in default to perform specifically so much of his part of the contract as he can perform, if the other party-

(i) in a case falling under clause (a), pays or has paid the agreed consideration for the whole of the contract reduced by the consideration for the part which must be left unperformed and in a case falling under clause (b), 1*[pays or has paid] the consideration for the whole of the contract without any abatement; and

(ii) in either case, relinquishes all claims to the performance of the remaining part of the contract and all right to compensation, either for the deficiency or for the loss or damage sustained by him through the default of the defendant.

(4) When a part of a contract which, taken by itself, can and ought to be specifically performed, stands on a separate and independent footing from another part of the same contract which cannot or ought not to be specifically performed, the court may direct specific performance of the former part.

Explanation.-For the purposes of this section, a party to a contract shall be deemed to be unable to perform the whole of his part of it if a portion of its subject-matter existing at the date of the contract has ceased to exist at the time of its performance."

19. It is clear from a reading of different sub-Sections of Section 12

of the Specific Relief Act that court cannot enforce specific performance of

part of the contract. Of course, court can enforce specific performance in

part in the sense that an entire share of a particular person can be ordered to

be sold by means of decreeing of the suit for specific performance, however,

that can be done if the agreement to sell in question (i.e Agreement to Sell

dated 4.11.2006) treated the agreement to sell as agreement to sell of

individual specific share and ownership interest of a particular percentage of

each of the defendants in the suit property. Putting it differently, the

Agreement to Sell dated 4.11.2006 if it has stated that each of the defendants

is selling his specific undivided interest and effectively each defendant

individually has entered into a separate agreement of his share, then in such

circumstances, the agreement to sell could have been enforced with respect

to the share of any one of the defendants, but, reference to the agreement to

sell shows that all the four original defendants are jointly shown as one seller

and there is no demarcation or bifurcation in the agreement to sell with

respect to selling by each of the defendants of his specific percentage share

in the suit land to the plaintiff. Therefore, considering the language of the

agreement to sell, the agreement to sell cannot be interpreted as sale by each

of the defendants of his each specific percentage share in the suit land.

Since the specific performance cannot be granted of part of the agreement to

sell, even if defendant nos. 2 and 3 have received the entire sale

consideration as noted in the Order dated 21.3.2007, this Court cannot grant

specific performance with respect to shares of defendant nos. 2 and 3 while

simultaneously noting that counsel for the plaintiff concedes that plaintiff is

not asking for the relief of recovery of moneys paid by the plaintiff to the

defendant nos. 1 to 3 of the entire consideration under the Agreement to Sell

dated 4.11.2006. I have already noted above that while defendant nos. 2 and

3 in their statement recorded on 21.3.2007 stated that they have received the

entire amounts under the agreement to sell, however, the Order dated

21.3.2007 also records that they had to receive additional consideration from

the plaintiff and which is an indication that possibly the original agreement

to sell so far as the amounts of consideration are concerned underwent a

change. On that aspect however I need not finally pronounce one way or the

other on account of the fact that even if we take that complete consideration

has been received by defendant nos. 2 and 3, but by virtue of the Section 12

of the Specific Relief Act, plaintiff is legally not entitled to specific

performance of part of the agreement to sell. Accordingly issue nos.1, 3 & 4

are decided in favour of the defendants holding that plaintiff is not entitled to

the specific performance of the Agreement to Sell dated 4.11.2007 and no

money decree for amounts paid by plaintiff is passed as plaintiff is not

seeking through this Court the recovery of moneys paid by the plaintiff as

consideration to either of the defendants under the agreement to sell.

Issue No.2

20. In view of the decision of issue nos.1, 3 and 4 against the

plaintiff, issue no.2 will stand decided against the plaintiff.

General

21. In view of the decision of the issues no.1 to 4 in favour of

defendants and against the plaintiff, it is held that the plaintiff is not entitled

to the specific performance of the Agreement to Sell dated 4.11.2006.

Plaintiff as already stated above does not seek any relief of money decree

being the consideration paid by the plaintiff to the defendants under the

agreement to sell. Also plaintiff has not led any evidence to show what are

the amount of damages which the plaintiff will be entitled to, inasmuch as,

plaintiff had to prove damages by leading evidence as to how there was an

increase in the prices of the property for the difference in the prices of

property on the date of breach being the amount which the plaintiff would be

entitled to as damages.

Relief

22. Accordingly, the suit for specific performance and/or damages

of the plaintiff is dismissed with actual costs. Defendant no.1 will file

certificate of fees of his lawyers within a period of one month from today

with respect to the entire costs actually incurred by the defendant no.1 being

the fees paid by the defendant no.1 to his lawyers, and such fees paid by the

defendant no.1 will be the costs in favour of the defendant no.1 and against

the plaintiff. Decree sheet be drawn accordingly. Suit is dismissed and

disposed of accordingly.

FEBRUARY 09, 2016                                VALMIKI J. MEHTA, J.
ib