Hans Kumar Gupta vs Lal Chand & Ors.
2018 Latest Caselaw 5757 Del

$~20
*    IN THE HIGH COURT OF DELHI AT NEW DELHI
                        Date of Decision: 24th September, 2018
+      CS (OS) 3844/2014, I.As. 25118/2014, 14840/2017 & 7740/2018
       HANS KUMAR GUPTA                                          ..... Plaintiff
                       Through: Mr. Vidit Gupta, Advocate with
                                    Plaintiff in person. (M:9910995511)
                       versus
       LAL CHAND & ORS.                                    ..... Defendants
                       Through: Mr. C. S. Bhandari, Advocate for D-1
                                    (M:8860346364)
                                    Mr. Abhishek Kumar, Advocate for
                                    D-2 & 3 (M:9811074290)
       CORAM:
       JUSTICE PRATHIBA M. SINGH
Prathiba M. Singh, J. (Oral)

I.A. 24025/2015 (u/O XII Rule 6 CPC) in CS (OS) 3844/2014

1. The present application has been filed by the Plaintiff seeking a decree on admissions. The Plaintiff relies on admissions by the Defendants that they have received a sum of Rs.2.40 crores as earnest money, along with Rs.13 Lakhs, which the Plaintiff incurred as expenses and charges deposited to the DDA.

2. The brief background of the present suit is that the Plaintiff and Defendants Nos.1 to 3 entered into an agreement to sell dated 1 st January, 2012 by which the Defendants agreed to sell to the Plaintiff, property bearing No.C-92, Surajmal Vihar, Delhi-110092 (`suit property'). The salient terms and conditions of the said agreement are as under:

"AND WHEREAS the First party has agreed to sell, transfer and convey his rights, title, interest and liens in the said property in the land there-under, unto the Second Party for a total consideration of Rupees

10,72,00,000/- (Rupees Ten Crore Seventy Two lakhs Only) AND WHEREAS the second Party has agreed to purchase acquire and possess the said property from the First Party free from all encumbrances on the following agreed terms and conditions of this Agreement. NOW THIS AGREEMENT WITNESSETH AS UNDER

1. That the First Party has agreed to sell and the Second party has agreed to purchase the said property, and with all rights, interests, liens and titles of the First Party for the above said consideration, being the earnest money for the sale of the said property, A sum of Rs.1,20,00,000/- (Rupees One crore and twenty lakhs only) in cash is being paid at the time of signing of this Agreement. And the Second party shall pay the balance consideration amount to the first party as under:

i. Rupees 1,20,00,000/- (Rupees One crore and twenty lakhs only) will be paid after 75 days of signing of this agreement or getting the time extension from DDA, whichever is later. ii. Balance consideration amount will be paid after 6 months of signing of this agreement or after 45 days of getting the said property freehold form concerned authority, whichever is later.

2. That the First Party on the receipt of the earnest money amount as aforesaid will simultaneously hand over the vacant physical possession of the said Property to the Second Party and that the Second party will Thereafter be fully entitled to use the same for getting the plot constructed as per the minimum requirement of DDA/MCD/concerned authority etc. etc. to get the above said property freehold.

3...4...5...

6. That all the expenses on the transfer of the said property i.e. stamp duty, court fees, registration charges etc. shall be borne and paid by the second party, along with all the dues and demand i.e. society dues, House Tax, Water and Electricity charges, Time Extension Charges and Freehold charges etc. up to the date of execution of the sale deed shall be borne by the Second

Party or his/her nominee."

As per the above agreement, the total consideration for the property was Rs. 10,72,00,000/- (Rupees ten crores and seventy two lakhs only). An amount of Rs.1.2 crores was given as earnest money at the time when the agreement was signed and another Rs.1.2 crores was to be given 75 days after signing of the agreement or till the time extension from DDA was granted. The balance consideration was to be paid 45 days after getting the property converted to freehold. The Defendant was to hand over the vacant physical possession of the property to the Plaintiff on receiving the earnest money. The Defendants have assured the Plaintiff that the property is not burdened with any mortgages, legal proceedings, etc. The Defendant was bound to execute the sale deed in favour of the Plaintiff at the time of receiving the balance consideration, all documents relating to the said property was to be handed over to the Plaintiff after full and final payment. All expenses in relation to the transfer of the property i.e stamp duty, court fee, etc. and all the dues and charges were to be borne by the Plaintiff. The Plaintiff was to become the absolute owner and the Defendant was to transfer all his rights after receiving the full sale consideration. At the time of entering the agreement to sell, the Plaintiff was also put in possession of the property.

3. In terms of the said agreement, the Plaintiffs paid and the Defendants acknowledge the payment of Rs.2.40 crores up to 30th April, 2012 and Rs.13,33,400/- as time extension charges. The original receipt dated 30th April, 2012 acknowledging the said amounts has been filed with the plaint.

4. The Defendants had, vide legal notice dated 15th January, 2013, sought to terminate the said agreement to sell and claimed that the entire amount paid by the Plaintiff as having been forfeited. The relevant portion

of the notice is set out below:

"That thus, you have intentionally violated the terms and conditions of agreement to sell and purchase in question in as much as, you have not only failed to get the time extended from the D.D.A. for minimum construction but also failed to get the property converted from leasehold to freehold besides failing to make the balance payment within the specified period by causing indefinite and inordinate delay. On account of these reasons, my clients have lost complete and full faith in you, therefore, they are left with no alternative except to cancel the agreement to sell dated 01.01.2012 due to your wilful violation of the same as you have never been ready and prepared to perform your various parts of contract and on account of such reason, the earnest money paid thereunder is liable to be forfeited. However, in order to continue to maintain business relation with you part of contract as well as to make the balance payment, otherwise, the agreement will stand finally terminated."

The Plaintiff herein challenged the said forfeiture and replied to the said notice vide letter dated 31st January, 2013. In the said reply, the Plaintiff stated as under:

"1. At the outset, it is stated that my client in pursuance of entering into the Agreement to Sell dated 01.01.2012 has performed the following obligations:

a) Sanction of Building Plan by seeking extension of time upon payment, since it had been occurred.

b) Construction of Building, connecting with amenities.

c) Submitting of application for conversion of Leasehold Rights into Freehold.

d) Paid Rs.2.40 crore to you client and incurred expenses approximately Rs.3 lac.

e) My client has paid certain amount to the Smt. Gayatri Singh at the instance of your clients.

2. Now there is a possibility of that shortly DDA will convert the Leasehold Rights in respect of Property

No.C-92, Surajmal Vihar, Delhi-92 in Freehold and therafter only remaining obligations will be performed by my client at the time of performance of obligation by your clients.

..........................."

5. Rejoinder legal notice was also sent by the Defendants on 11th February, 2013 wherein the agreement to sell was terminated. There was a stalemate between the parties and thereafter the Plaintiff filed the present suit seeking specific performance on 11th December, 2014. In the suit, on 12th December, 2014 an ex-parte injunction order was passed in the following terms.

"................. Accordingly, till the next date of hearing, defendants are restrained from dispossessing the plaintiff from the suit property bearing no.C-92, Surajmal Vihar, Delhi. Defendants are also restrained from creating any third party interest on the suit property.

Plaintiff shall comply with the provisions of Order XXXIX Rule 3 CPC within three days from today."

6. The Defendants, thereafter, filed their written statements. In the written statement of the Defendant No.1, the said Defendant pleads as under:

"... The payment of Rs.1,20,00,000/- as earnest money and the delivery of the physical possession of the plot under the aforesaid circumstances is not denied. .........................

However, the defendants have received only a sum of Rs.2,53,33,310/- and not Rs.2,53,33,400/- as alleged in para under reply."

Insofar as the Defendant No.2 is concerned, he pleads as under:

"12. That the contents of para 12 of plaint are wrong, false, highly misconceived, malafide and hence the same

are specifically denied. It is submitted that the Plaintiff paid Rs.1,20,00,000/- + Rs.1,20,00,000/- = Rs.2,40,00,000/- only. The alleged amount of Rs.13,13,400/- was not paid by Plaintiff and the same was spent by Defendants."

7. Thus, in the written statements the Defendants have admitted the receipt of the amounts. Accordingly, the Plaintiff submits that he does not wish to insist on the prayer for specific performance but only seeks recovery of Rs.2.53 crores along with interest.

8. Submissions have been made on behalf of the parties. It is submitted by learned counsel for the Plaintiff that the obligation to get the property converted from leasehold to freehold was upon the Defendants, which they did not fulfil. The Plaintiff had fulfilled his part of the obligation by carrying out the minimum construction that was required to get the property converted. The Defendants having violated the terms of agreement and having failed to get the property converted, the Plaintiff could not go ahead with the transaction.

9. On the other hand, it is submitted by learned counsel for Defendant No.1 that while his client admits the receipt of Rs.80 Lakhs, the Defendant No.1 has also suffered immense losses due to cancellation of another transaction for Rs.3.8 cores with Ms. Gayatri Singh wherein he suffered a loss of Rs.12.50 Lakhs. The Defendant No.1 also claimed that for the sale transaction with the Plaintiff, Rs.2.50 Lakhs was incurred as brokerage charges. Thus, these two losses are liable to be deducted from the amount of Rs.80 Lakhs. He further submits that his client is willing to refund the amount of Rs.65 Lakhs.

10. Learned counsel for the Defendant No.2, on the other hand, submits

that as per clause 6 of the agreement, the obligation to get the property converted from leasehold to freehold was that of the Plaintiff. He relies upon the reply to the legal notice given by the Plaintiff dated 31 st January, 2013 wherein the Plaintiff admitted that he had applied for conversion of property from leasehold to freehold. He submits that if the obligation was not on the Plaintiff, there was no reason as to why the Plaintiff filed the application with the DDA. Expenses were to be borne by the Plaintiff and the obligation was also that of the Plaintiff. He submits that the Plaintiff is the one who has defaulted and not the Defendants.

11. After hearing the parties it is clear that the agreement to sell and the sale transaction cannot go forward and that there is a complete stalemate. The possession of the suit property is with the Plaintiff. Agreement to sell is admittedly an unregistered document though it was coupled with possession. The amount having been received by all the Defendants is also not in dispute. As per the agreement, the expenses for stamp duty, court fee, registration charges and all dues and payments, society dues and charges for freehold etc. had to be borne by the Plaintiff. In fact, even from the reply to the legal notice, it appears that the Plaintiff was the person who had applied to the authorities for conversion of the property from leasehold to freehold.

12. However, the Plaintiff's submission is that the Defendants never went to the authorities despite the application having been filed and the Defendants having been notified of the same.

13. Further, insofar the total receipt of Rs.2.53 crores is concerned, the original receipt has been filed on record. Claim of Defendant No.1, that the losses suffered to him have to be deducted from the amount due and payable, does not appear to be justified, inasmuch as the Defendant No.1 has

not filed any counter claim and even in the suit for injunction filed by the Defendants, there is no prayer for any compensation or loss suffered. Even at the time when the termination of the agreement to sell was done, no amounts were specified in terms of the losses having been suffered. Thus, the plea of losses and expenses is not justified. It appears that the parties are at complete variance in terms of the obligations, which they had undertaken. The Plaintiff on the one hand made application to the authorities and on the other hand the Defendants having been informed of the said filing do not argue that they had actually gone to the authorities to take the conversion forward.

14. Be that as it may, in the present application the Plaintiff has given up the relief of specific performance and is now seeking refund of the amounts, which was paid by him. The agreement to sell does not contain a clause to forfeit the amounts, as is the case in many such agreements. This, by itself, shows that the parties never agree for advance payments and earnest money being forfeited.

15. Keeping in mind the conduct of the parties in the present suit, the present application under Order XII Rule 6 CPC is liable to be allowed decreeing the suit against all the Defendants for a sum of Rs.2,53,33,400/-. Insofar as each of the Defendants is concerned, their share would come to Rs.84,44,436/- to each Defendant. Insofar as the claim of interest is concerned, the same is not liable to be granted in view of the fact that the Plaintiff insisted on specific performance for so long and has only by way of the present application, restricted the prayer for refund. It is possible that initially if the Plaintiff had asked for refund, the Defendants may have acceded to the said request. Initially, the Plaintiff having sought the specific

performance and not refund, now under Order XII Rule 6 CPC the suit is liable to be decreed for the admitted amount claimed without any interest. The keys of the property, which are brought by the Plaintiff today, are taken on record and shall remain in safe custody. As and when the Defendants make the payment to the Plaintiff, they are permitted to file an application seeking release of the keys in their favour. The payment shall be made on or before 15th December, 2018 failing which interest @ 8% per annum would be liable to be paid. If the Defendants wish to sell the suit property to any prospective buyer, they can move an application seeking liberty from this Court insofar as the showing of the property to the proposed buyer is concerned. However, no sale transaction shall be finalized without payment to the Plaintiff. The keys are taken on record and shall be deposited with the Deputy Registrar (Original Side) of this Court. Security guard deployed by the Plaintiff at the suit property need not to be deployed from today. If the Defendants wish to ensure the safety and security of the property, they are permitted to deploy their own security guard. However, they shall not break open the locks or enter the property without seeking permission, until the payments are made to the Plaintiff. The Defendants are permitted to explore any buyer for the property but no sale deed shall be executed without permission of this Court.

16. The suit and all other pending applications are disposed of.

PRATHIBA M. SINGH JUDGE SEPTEMBER 24, 2018/dk