Rajesh vs Ram Babu Sharma
2018 Latest Caselaw 823 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI

+                         RFA No.91/2018

%                                                   5th February, 2018

RAJESH                                               ..... Appellant
                          Through:       Mr. Gourav Puri, Advocate
                                         with   Mr. Aditeya     Bali,
                                         Advocate.
                          versus

RAM BABU SHARMA                                        ..... Respondent

Through:

CORAM:

HON'BLE MR. JUSTICE VALMIKI J.MEHTA

To be referred to the Reporter or not?

VALMIKI J. MEHTA, J (ORAL)

C.M. No.3330/2018 (exemption)

1. Exemption allowed subject to just exceptions.

C.M. stands disposed of.

RFA No.91/2018

2. This Regular First Appeal under Section 96 of the Code

of Civil Procedure, 1908 (CPC) is filed by the defendant in the suit

impugning the judgment of the Trial Court dated 27.10.2017 by which

trial court has decreed the suit for a sum of Rs.4 lacs alongwith

interest @ 9% per annum being the advance price paid by the

respondent/plaintiff to the appellant/defendant under the agreement to

sell dated 4.5.2012 and which agreement to sell could not go through.

3. The facts of the case are that the respondent/plaintiff filed

the subject suit pleading that he and the appellant/defendant entered

into the agreement to sell on 4.5.2012 whereby the

appellant/defendant had agreed to sell to the respondent/plaintiff

property bearing no.303, admeasuring 99 sq yds out of khasra no.303,

situated at Village Kondli in the aabadi of Lal Dora Delhi-110096 for

a sum of Rs.53.50 lacs and the respondent/plaintiff had paid to the

appellant/defendant a sum of Rs.4 lacs as advance. The

respondent/plaintiff pleaded that the balance due was to be paid to the

appellant/defendant by end of 30.6.2012 at the time of execution of

the sale deed and that it subsequently transpired that the

appellant/defendant was not the owner by a sale deed but only had

with him the copy of General Power of Attorney with the fact that

certain disputes were pending between the appellant/defendant and the

relatives of previous seller as regards the suit property. After serving

the legal notice dated 12.12.2012, the subject suit for recovery of Rs.4

lacs with interest came to be filed.

4. The appellant/defendant contested the suit. It was

pleaded by the appellant/defendant that the agreement to sell was

signed in good faith because the agreement to sell was prepared in

english by the respondent/plaintiff and neither the appellant/defendant

nor her husband were well versant with the english language. The

appellant/defendant pleaded that she was the owner of the suit

property having purchased it from the earlier owner Sh. Ved Prakash

for a sum at Rs.11,80,000/- vide registered power of attorney dated

3.9.2008 registered before the concerned sub-registrar. It was pleaded

that nothing was concealed by the appellant/defendant from the

respondent/plaintiff and that it was the respondent/plaintiff who was

responsible for not going ahead with the transaction.

5. After pleading were complete the following issues were

framed:-

"1. Whether the plaintiff is entitled to recover an amount of Rs.4,00,000/- from the defendant? OPP

2. Whether the plaintiff is also entitled to recover any interest from the defendant? OPP

3. Whether the defendant has legally forfeited the amount? OPD

4. Relief."

6. Parties led evidence and which aspect are recorded in

paras 5 and 6 of the impugned judgment and which paras read as

under:-

"5. The plaintiff examined himself as PW1 and deposed the entire set of facts as contained in the plaint by way of his affidavit Ex.PW1/A and also relied upon two documents Ex.PW1/1 and PW1/2.

6. The defendant examined himself as DW1 and tendered her evidence by way of affidavit Ex.DW1/A and also registered upon registered power of attorney coupled with consideration and proved it as Ex.DW1/1. She also examined her husband as DW2 and the erstwhile owner Shri Ved Prakash Gaur as DW3. All the above witnesses were duly cross-examined by the opposite Counsels."

7. All the issues have been discussed by the trial court

together and it has been held that there is no dispute that the

appellant/defendant had received a sum of Rs.4 lacs from the

respondent/plaintiff under the agreement to sell. Trial court has relied

upon the ratios of the judgment of the Supreme Court in the case of

Kailash Nath Associates Vs. Delhi Development Authority (2015) 4

SCC 136 and that of a Single Bench judgment of this Court in

C.M(M) No.961/2017 titled as Dr. VB Roy & Anr. Vs. Ravindra

Kishore Sinha decided on 5.9.2017, and which ratios are to the effect

that there cannot be forfeiture of an earnest money or an advance price

paid unless pursuant to the breach of contract loss is caused by the

guilty party to the aggrieved person. This relevant discussion is found

in paras 15 and 16 of the impugned judgment and these paras read as

under:-

"15. The Hon'ble Supreme Court in Kailash Nath Associates Vs. Delhi Development Authority (2015) 4 SCC 136 held in para No. 21 as under :

"21. Based on the facts of this case, the Single Judge was correct in observing that the letter of cancellation dated 06.10.1993 and consequent forfeiture of earnest money was made without putting the appellant on notice that it has to deposit the balance 75% premium of the plot within a certain stated time. In the absence of such notice, there is no breach of contract on the part of the appellant and consequently, earnest money cannot be forfeited".

It was further held in para 29 as under :

"29. Based on the facts of this case, it would be arbitrary for the DDA to forfeit the earnest money on two fundamental grounds. First, there is no breach of contract on the part of the appellant as has been held above. And second, DDA not having been put to any loss, even if DDA could insist on a contractual stipulation in its favour, it would be arbitrary to allow DDA as a public authority to appropriate Rs. 78,00,000/- (Rupees Seventy Eight Lakhs) without any loss being caused. It is clear, therefore, that Article 14 would apply in the field of contract in this case and the finding of the Division Bench on this aspect is hereby reversed".

16. The observations of Hon'ble Justice Rajiv Sahai Endlaw of the Hon'ble High Court of Delhi in CM (M) No. 961/2017 titled Dr. VB Roy & anr. Vs. Ravindra Kishore Sinha dt. 05.9.2017 are also relevant to the facts of this case which are as under :

"12. I have inquired from the Counsel for the petitioners/defendants, whether in the absence of any forfeiture clause in writing, any forfeiture can be effected. Attention of the Counsels is invited to the dicta of the Supreme Court in Kailash Nath Associates Vs. Delhi Development Authority (2015) 4 SCC 136 and thereafter to the judgment of this Court dt. 31st July 2017 in CRP No. 3/2017 titled Palm Art Apparels Pvt. Ltd. Vs. Enkay Builders Pvt. Ltd. holding that forfeiture can only be of earnest money and not of part sale consideration and only when there is a specific agreement therefor and in the absence thereof, without proof of damage having been suffered, no forfeiture can be effected".

8. I may note that the judgment of the Supreme Court in the

case of Kailash Nath Associates (supra) essentially follows the

Constitution Bench judgment of the Supreme Court in the case of

Fateh Chand Vs. Balkishan Dass AIR 1963 SC 1405 and which

judgment holds that the existence of a loss being caused pursuant to

the breach of contract is a sine qua non for a claim of damages.

Forfeiture of advance money paid under an agreement to sell is

actually forfeiture on account of the loss which is presumably caused

to the seller of the property and once there is no pleading and proof of

loss by the appellant/defendant the appellant/defendant could not have

forfeited the advance price paid under the agreement to sell dated

4.5.2012.

9. In view of the above discussion, I do not find any merit in

the challenge to the impugned judgment which rightly holds that the

appellant/defendant is liable to refund a sum of Rs.4 lacs paid by the

respondent/plaintiff to the appellant/defendant as advance price paid

under the subject agreement to sell dated 4.5.2012. Dismissed.

FEBRUARY 05, 2018                          VALMIKI J. MEHTA, J
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