Delhi High Court
M/S Versatile Commotrde Pvt Ltd vs Satpal Yadav on 13 December, 2018
$~12
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 13th December, 2018
+ CS(OS) 3912/2014 & I.As. 8657/2018, 13311/2018
M/S VERSATILE COMMOTRDE PVT LTD ..... Plaintiff
Through: Mr. Ratan K. Singh, Mr. Nikhilesh
Krishan & Mr. Ashfaq Khan,
Advocates (M-6260026908)
versus
SATPAL YADAV ..... Defendant
Through: Mr. Sunil Chauhan, Advocate (M-
9810213040)
CORAM:
JUSTICE PRATHIBA M. SINGH
Prathiba M. Singh, J. (oral)
1. The present suit has been filed by the Plaintiff under Order XXXVII
CPC seeking recovery of a sum of Rs. 2 crores along with interest @
14.25% per annum. The Plaintiff had entered into an agreement to sell dated
14th April, 2013 under which the Plaintiff agreed to purchase the suit
property being 53 Bighas and 19 Biswas in the revenue estate of Village
Ujwa, Tehsil Najafgarh, New Delhi (hereinafter „suit property‟). As per the
said agreement to sell, the agreed sale consideration was Rs.4,36,77,081/-.
The Plaintiff paid to the Defendant a sum of Rs.80 lakhs as advance/earnest
money and thereafter a sum of Rs.1.20 crores /- as part payment of
consideration. The further part payment was made in three tranches i.e. vide
cheque dated 14th June, 2013 for Rs. 50 lakhs, cheque dated 20th June, 2013
CS(OS) 3912/2014 Page 1 of 8
for Rs. 20 lakhs and cheque dated 3rd July, 2013 for Rs. 50 lakhs.
According to the Plaintiff, the Defendant was to obtain the No Objection
Certificate (hereinafter „NOC‟) in favour of the Plaintiff at least 15 days
before the date of final payment which was 60 days from 14th April, 2013
i.e. 15 days before 13th June, 2013.
2. The case of the Plaintiff is that the Defendant failed to obtain the
NOC and hence it did not make the payment of the balance sale
consideration. On this basis, the present suit came to be filed under Order
XXXVII CPC.
3. The Defendant filed its leave to defend, and in its application, the case
of the Defendant is that the Plaintiff is grossly in breach of the agreement to
sell. The Defendant pleads that the NOC was obtained under instructions
from the Plaintiff in favour of one Mr. Rishabh Gupta. It is further submitted
that in fact the first notice was issued by the Defendant calling upon the
Plaintiff to pay the balance consideration. After some correspondence, the
present suit came to be filed.
4. On 7th March, 2018, this Court had heard the arguments in part on the
leave to defend application and had adjourned the matter in order for the
Defendant to seek instructions. The operative portion of the said order is
extracted herein below:
"...
During course of the arguments, the learned counsel
for the defendant says that he would take instructions
from the defendant to secure the deposit of ₹50.00 Lac,
out of principal amount of ₹2.00 Crores, as claimed by
the plaintiff."
CS(OS) 3912/2014 Page 2 of 8
Thereafter, on 15th March, 2018, this Court passed the following
order:
"IA No.25652/2015
The learned counsel for the defendant submits that
presently the defendant do not have the finances to
deposit an amount of Rs.50,00,000/- (rupees fifty
lakhs) as was proposed vide order dated 7th March,
2018 and alternatively the defendant proposes to get
his subject property attached for six months and within
such time he shall
endeavour to deposit the amount of Rs.50,00,000/- as
stated in the order dated 7th March, 2018.
In these circumstance, as per the statement of
learned counsel for the defendant, the property to the
extent of 1/9th share of the defendant in land
admeasuring 53 bigha and 11 biswas in Village Ujwa,
Najafgarh, Delhi stands attached till further order and
that the defendant should deposit an amount of
Rs.50,00,000/- within six months from today as stated.
On the conditions above and with the consent of
both the learned counsels, the leave to defend
application under Order 37 Rule 3(6) CPC stands
disposed of and liberty is granted to the defendant to
file written statement.
CS(OS) 3912/2014
In view of above order, written statement be filed
within four weeks from today with an advance copy
thereof to the learned counsel for the plaintiff.
Replication thereto, if any, be filed within two weeks
thereafter.
List before the learned Joint Registrar on 17th May,
2018."
5. As per the above order, the leave to defend was granted to the
CS(OS) 3912/2014 Page 3 of 8
Defendant subject to two conditions:
i) Attachment of 1/9th share of the land;
ii) Deposit of Rs.50 lakhs within six months.
6. The period of six months has expired in September, 2018. The
Defendant has not made the deposit of the amount as directed. Today,
counsel for the Plaintiff thus submits that in terms of the provisions of Order
XXXVII CPC, a judgment is liable to be pronounced.
7. On the other hand, counsel for the Defendant submits that there has
been partial compliance of the condition i.e. to the extent that 1/9 th share of
the property continues to stand attached and prays that the Defendant be
given another six months to deposit the sum of Rs.50 lakhs.
8. It is further submitted that, even if the Defendant does not comply
with the condition for grant of leave to defend, the Court is also duty to
bound to examine whether the suit under Order XXXVII is maintainable and
whether the suit is liable to be decreed and if so, to what extent.
9. Learned counsel relies upon the judgment of a Learned Single Judge
of this Court in Delhi Power Supply Company. Ltd. v. Hindustan Vidyut
Products Limited, C.R.P. No.72/2012, Decided on 13th November, 2014.
10. This Court has heard the submissions of the parties. A perusal of the
agreement to sell shows that it contains the following terms and conditions:
1. That in pursuance of the said agreement and in
consideration of @ Rs.3,500000/- (Rupees Three Crore
Fifty Lacs Only) per Acre i.e. a total sum of
Rs.43677081/- (Rupees four Crore Thirty Six Lacs
Seventy Seven thousand Eighty One rupees only) out of
which Rs.8000000/- (Rupees Eighty Lakh only)
has/have been received by the first party from the
second party in the following manner:
CS(OS) 3912/2014 Page 4 of 8
CASH Rs. 2000000/- (Twenty lac only)
CHQ. Rs. 6000000/- (Sixty Lac only)
Cheque No.-885612 Dated 15/4/13
Oriental Bank of Commerce
New Mandi, Muzaffarnagar
as advance/earnest money and the receipt of the same
is hereby admitted and acknowledged and the balance
sale consideration shall be received by the first party
from the second party on or before 60 days from the
date of execution of this agreement to sell.
...
5. That the first party shall apply and obtain the No
Objection Certificate in favour of the second party or
the nominee/s at his/her/their own costs and
responsibility at least 15 (fifteen) days before the date
of final payment. In case the first party fails to obtain
the NOC then this agreement shall stands
automatically extended till the NOC is obtained.
...
7. That in case if the second party fails to pay the
balance amount within the said stipulated period, then
the advance/earnest money paid shall be forfeited by
the first party. And this agreement to sell will
automatically come to an end."
11. A perusal of the above clause shows that the NOC was to be obtained
by the Defendant 15 days before 13th June, 2013. However, it is also not in
doubt that after the expiry of the said period i.e. further sums of Rs.1.20
crores were paid in various instalments, as set out above, to the Defendant.
This is evident from the receipt dated 20th June, 2013 which is placed on
record. Thus, the obtaining of the NOC 15 days prior to the expiry of the 60
days period was not treated as an essential condition in the agreement to sell.
Further, a perusal of clause 5 also reveals that if the Defendant does not
obtain the NOC, the agreement was to be automatically be extended until the
NOC is obtained. This condition also shows that the obtaining of the NOC
was not an essential condition. However, it had to be done within a
reasonable time.
12. The first notice on record is by the Defendant which is dated 17th July,
2013. In the said notice, the Defendant informed the Plaintiff that the
requisite NOC has been obtained from the Revenue Department on 7th June,
2013. The Defendant also made an assertion that this fact was
communicated to the Representative of the Plaintiff who did not respond to
the Defendant.
13. The said notice was replied by the Plaintiff on 20 th July, 2013 wherein
the Plaintiff primarily alleged that the Defendant did not obtain the NOC as
per the terms and conditions of the contract. On 15th November, 2013,
another notice was issued by the Plaintiff to the Defendant, this time calling
upon the Defendant to refund the sum of Rs.2 crores along with interest. In
response to this notice, the Defendant informed the Plaintiff, vide letter
dated 5th December, 2013 that the Plaintiff was in breach as it had not paid
the remaining sale consideration. Insofar as the NOC is concerned, para 5 of
the reply dated 5th December, 2013 is relevant and is set out herein below:
5. Para 5 of your reminder is wrong and denied. In
fact, the time was initially extended to 05/07/2013 and
the NOC was obtained by my client on 27/06/2013 in
the name of Sh Rishabh Gupta, as per instruction of
your client. Your client was duly informed about the
issuance of the NOC and it was agreed that your client
shall pay the balance amount on 05/07/2013 but again
your client could not arrange the sufficient funds to
make the balance payment. Your client could manage
only a sum of Rs. 50 lakhs and time was further
extended to 15.7.2013. But again company did not pay
the balance amount by 15.7.2013. Thereafter, on
17/07/2013 my client sent you a notice as mentioned
above."
14. In the above letter, the Defendant claimed that the NOC was obtained
in the name of Mr. Rishabh Gupta upon instructions from the Plaintiff. This
allegation was denied by the Plaintiff vide its rejoinder dated 1st September,
2014.
15. A perusal of the correspondence exchanged between the parties
clearly shows that insofar as the issue of breach is concerned, there is a clear
dispute. The Plaintiff alleges that NOC was not obtained and the Defendant
alleges that the NOC was in fact obtained in the name of the person who was
authorized by the Plaintiff. This issue is obviously is not capable of being
adjudicated in a summary manner in an Order XXXVII suit. However,
insofar as the amount of Rs.1.2 crores is concerned, this is a part payment of
the sale consideration, which cannot be forfeited by the Defendant even as
per the terms and conditions in the agreement to sell. The Court after
perusing the correspondence on record, comes to the conclusion that the
Defendant having given the first notice and having also obtained the NOC,
the Plaintiff did not make the payment to the Defendant within the
prescribed period or within any extended period. Thus, the Defendant was
entitled to forfeit the amount of Rs.80 lakhs as per the agreement.
16. Insofar as the sum of Rs.1.2 crores is concerned, the amount clearly
did not constitute any part of the earnest money deposit and constitutes part
payment of the sale consideration. As per the settled position in law in
Satish Batra v Sudhir Rawal (2013) 1 SCC 345, the part payment, which is
in distinct from the earnest money, cannot be forfeited or retained. The
relevant portion of the judgment is set out below:
"15. The law is, therefore, clear that to justify the
forfeiture of advance money being part of "earnest
money" the terms of the contract should be clear and
explicit. Earnest money is paid or given at the time
when the contract is entered into and, as a pledge for
its due performance by the depositor to be forfeited in
case of non-performance by the depositor. There can
be converse situation also that if the seller fails to
perform the contract the purchaser can also get double
the amount, if it is so stipulated. It is also the law that
part-payment of purchase price cannot be forfeited
unless it is a guarantee for the due performance of the
contract. In other words, if the payment is made only
towards part-payment of consideration and not
intended as earnest money then the forfeiture clause
will not apply."
17. A similar view has been taken by this Court in Versatile Commotrade
Pvt. Ltd. v Angad Developers Pvt. Ltd. CS (OS) 802/2014, Decided on 20th
July, 2018.
18. In this view of the matter, the suit is liable to be decreed for a sum of
Rs.1.2 crores along with interest @ 8% from the date of institution of the
suit i.e. 12th December, 2014.
19. In respect of any other amounts or claims, the parties are left to their
respective remedies.
20. The suit is decreed in the above terms. Decree sheet be drawn
accordingly. All pending I.As are disposed of.
PRATHIBA M. SINGH
JUDGE
DECEMBER 13, 2018
Rahul
