Anuja Sharma vs Memo Devi & Ors
2019 Latest Caselaw 1192 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI

+                         RFA No. 157/2019

%                                                 22nd February, 2019

ANUJA SHARMA                                             ..... Appellant

                   Through:        Mr. J.K. Srivastava, Advocate
                                   (Mobile No. 9891210660).

                          versus

MEMO DEVI & ORS                                       ..... Respondents

CORAM:

HON'BLE MR. JUSTICE VALMIKI J. MEHTA

To be referred to the Reporter or not? YES

VALMIKI J. MEHTA, J (ORAL)

C.M. Appl. No. 8376/2019 (for exemption)

1. Exemption allowed, subject to just exceptions.

C.M. stands disposed of.

RFA No. 157/2019 and C.M. Appl. No. 8375/2019 (for stay)

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

of Civil Procedure, 1908 (CPC) is filed by the defendant no. 1 in the

suit impugning the Judgment of the trial court dated 27.10.2018 by

which the trial court while dismissing the suit for specific performance

filed by the respondent/plaintiff, has passed a money decree in favour

of the respondent/plaintiff/buyer for a sum of Rs. 15,00,000/-, as the

appellant/defendant no. 1/seller had received this amount from the

respondent/plaintiff/buyer under the subject Agreement to Sell dated

08.12.2008. The total sale consideration under the Agreement to Sell

was Rs. 17,00,000/- out of which the respondent/plaintiff had

admittedly paid to the appellant/defendant no. 1 a sum of Rs.

15,00,000/-. In terms of the Agreement to Sell, the

respondent/plaintiff was to purchase two shops bearing nos. G-4 and

G-89 of the property bearing Municipal No. 182, Ward No. IV,

situated at Katra Mashru, Dariba Kalan, Delhi. It is noted that the

defendant no. 1/seller did not lead any evidence in the suit and

evidence was only led by defendant no. 4 as a bonafide purchaser

without notice of the subject Agreement to Sell. In terms of the

impugned judgment, the trial court while declining the relief of

specific performance held that in exercise of powers under Order VII

Rule 7 CPC, a money decree has to be passed in favour of the

respondent/plaintiff/buyer for a sum of Rs. 15,00,000/- received by the

appellant/defendant no. 1/seller and the appellant/defendant no.

1/seller cannot be allowed to forfeit the amount of Rs. 15,00,000/-.

The relevant observations of the trial court in the impugned judgment

read as under:-

"This Court does not deems fit to order Specific Performance of the Contract i.e. Agreement to Sell dated 8.12.2008 for various reasons, as adumbrated above, including the reasons that defendants No.2 to 4 are the bonafide purchasers of the suit property but the conduct of defendant No. 1 was also not above the board. The defendant No. 1 has not at all issued even the single notice/written notice to the Plaintiff that she is repudiating the contract dated 8.12.2008 as the Plaintiff has failed to adhere to the contract dated for payment of balance amount on the stipulated date i.e. 10.1.2009. The defendant No. 1 has accepted substantial consideration amount i.e. about 88% of the consideration amount yet defendant No. 1 has not even issued the single Notice before sale of the suit property to defendants No. 2 and 3. The defendant No. 1 has also not entered into the witness box. In the facts and circumstances of the present case, the defendant No. 1 cannot be allowed to forfeit the amount of Rs.15,00,000/- which was paid by Plaintiff to defendant No.1. Although, the Plaintiff has not claimed any relief for refund of money or compensation or damages as alternative relief but looking into the conduct of defendant No. 1, the defendant No. 1 cannot be allowed to forfeit the amount of Rs.15,00,000/- and this court in exercise of power under Order 7 Rule 7 CPC can always grant a lesser relief or an appropriate relief as arising from the facts and circumstances of the case. Accordingly, the Plaintiff is entitled to refund sum of Rs.15,00,000/- alongwith pendentelite and future interest @9% per annum till its realization."

2(ii). The trial court has held that the respondent/plaintiff has

not proved her financial capacity to pay the balance sale consideration

of Rs. 2,00,000/- though the FDR Ex. D4W1/P1 was proved, but the

trial court strangely held that the FDR was not proved even though the

same was admitted by D4W1. The trial court has not given a specific

or categorical finding that the respondent/plaintiff can be held guilty

of breach of contract. Specific performance was only declined to the

respondent/plaintiff by holding that defendant nos. 2 to 4 in the suit

were bonafide purchasers.

3. The Ld. counsel for the appellant/defendant no. 1 has

argued by placing reliance upon Section 22 of the Specific Relief Act,

1963, which states that the relief with respect to refund of any earnest

money or any deposit made under the agreement to sell cannot be

decreed in favour of a plaintiff/buyer unless there is a specific

pleading (and prayer) to this effect. It is argued that as per the relief

clauses in the plaint, there is no relief which has been claimed for

seeking refund of the amount of Rs. 15,00,000/- paid by the

respondent/plaintiff to the appellant/defendant no. 1 and therefore this

is a case which is squarely covered by Section 22 of the Specific

Relief Act, with the fact that the respondent/plaintiff at no point of

time sought amendment of the plaint to seek refund of the advance

price paid of Rs. 15,00,000/- out of the total sale price/consideration of

Rs. 17,00,000/-.

4. Since the interpretation of Section 22 of the Specific

Relief Act is in question, the said provision is reproduced as under:-

"22. Power to grant relief for possession, partition, refund of earnest money, etc.--

(1) Notwithstanding anything to the contrary contained in the Code of Civil Procedure, 1908 (5 of 1908), any person suing for the specific performance of a contract for the transfer of immovable property may, in an appropriate case, ask for--

(a) possession, or partition and separate possession, of the property, in addition to such performance; or

(b) any other relief to which he may be entitled, including the refund of any earnest money or deposit paid or made by him, in case his claim for specific performance is refused.

(2) No relief under clause (a) or clause (b) of sub-section (1) shall be granted by the court unless it has been specifically claimed:

Provided that where the plaintiff has not claimed any such relief in the plaint, the court shall, at any stage of the proceeding, allow him to amend the plaint on such terms as may be just for including a claim for such relief.

(3) The power of the court to grant relief under clause (b) of sub- section (1) shall be without prejudice to its powers to award compensation under section 21."

5. No doubt, the provision of Section 22 of the Specific

Relief Act does provide that where a relief is not claimed with respect

to refund of earnest money or advance price/deposit, the courts will

not grant such a relief. The provision of Section 22 of the Specific

Relief Act however allows amendment of the plaint at any stage of the

proceedings to seek refund of the amount paid under an agreement to

sell. In the facts of the present case, there was no specific prayer in

the plaint with respect to the refund of the price. The issue is that

whether non-mention in the plaint by writing and seeking refund of

the advance price paid results in a complete prohibition for the courts

to refund the price received by a seller under an agreement to sell,

once it is found that the agreement to sell does not have to go through

and the suit for specific performance is being dismissed.

6. In order to interpret the provision of Section 22, it is

necessary to note as to what is the object and requirement of a

pleading to be filed by a party. Pleading is defined under Order VI

CPC. A pleading will include a plaint and a written statement. What

is a plaint is specified under Order VII CPC, and what is a written

statement is specified under Order VIII CPC. It is now a settled law

by virtue of a catena of decisions of the Hon'ble Supreme Court that

object of a pleading is to give notice of a case to the other party. The

object of giving notice of a case to the other party is to ensure that the

other party can meet the case. On this principle, the appellate courts

have allowed issues which are pure questions of law even at the

appellate stage, even in cases till the Hon'ble Supreme Court, if the

issue of law goes to the root of the matter, and even if there is no

specific pleading, but the issue does arise from the admitted facts and

the pleadings on record. Thus, the trial court as also the appellate

courts can, depending on facts of a particular case, allow a pure issue

of law to be raised, at any stage of the legal proceedings. This is being

stated by this Court because when the object of Section 22 of the

Specific Relief Act is seen, and of the requirement of seeking a relief

with respect to the advance price paid under an agreement to sell to be

included in the plaint, it is found that the object of stating/praying in a

pleading for refund of the advance price and/or earnest moneys paid is

to allow a defendant/seller to take up a defence as to why the advance

price and/or earnest money should not be repaid. Obviously, defence

of a defendant/seller would be that the advance price and/or earnest

money is not to be re-paid because it is forfeited or liable to be

forfeited either because of a specific term of the agreement to sell or

because the defendant/seller has suffered a loss and consequently for

the loss suffered by the defendant/seller, the advance price and/or

earnest money paid under the agreement to sell has to be forfeited by

applying the provision of Section 74 of the Indian Contract Act, 1872.

7. It is settled law that unless a seller proves a loss being

caused to him on account of breach by a buyer in purchasing a

property under an agreement to sell, the advance price and/or earnest

money received under the agreement to sell cannot be forfeited

because forfeiture is in the nature of forfeiture being liquated damages

under Section 74 of the Indian Contract Act, and that Section 74 of the

Indian Contract Act cannot come into play if the nature of the contract

is such that the loss which is caused on account of the breach of

contract can be proved and assessed in a court of law. This is the law

as laid down way back by the Constitution Bench of the Hon'ble

Supreme court in the case of Fateh Chand v. Balkishan Dass, AIR

1963 SC 1405, and such ratio being elaborated and expounded in the

recent judgment of the Hon'ble Supreme Court in the case of Kailash

Nath Associates v. Delhi Development Authority and Another,

(2015) 4 SCC 136. I have had an occasion to consider the ratios of the

aforesaid judgments of the Hon'ble Supreme Court in the cases of

Fateh Chand (supra) and Kailash Nath Associates (supra) along

with a slightly divergent ratio of the judgment of the Hon'ble Supreme

Court in the case of Satish Batra v. Sudhir Rawal (2013) 1 SCC 345,

and this Court has held that it is the ratio of the judgment of the

Constitution Bench in the case of Fateh Chand (supra) which will

prevail, that a seller who has received an advance price and/or earnest

moneys under an agreement to sell cannot forfeit an advance price

and/or earnest moneys except a very nominal amount in case of a

breach by the buyer, unless and until loss is pleaded and proved. It is

trite that breach of contract is actionable not because of the breach

itself but because the breach causes loss to the aggrieved party. Once

there is no loss to the aggrieved party, and the same is a sine qua non

under Section 73 of the Indian Contract Act, and the nature of the

contract is such that the loss can be proved because the contract is one

which falls under Section 73 of the Indian Contract Act and not

Section 74 of the Indian Contract Act, in such a scenario, the advance

price and/or earnest money received by a seller surely cannot be

forfeited in the face of the ratios of the judgment of the Hon'ble

Supreme Court in the cases of Fateh Chand (supra) and Kailash

Nath Associates (supra). I may note that the ratios of the aforesaid

judgment of the Hon'ble Supreme Court were considered in detail in

the case of M.C. Luthra v. Ashok Kumar Khanna, 2018 (248) DLT

161. An SLP filed against the judgment passed by this Court in the

case of M.C. Luthra (supra), has been dismissed by the Hon'ble

Supreme Court on 15.05.2018 in SLP (C) No. 11702/2018.

8. In the facts of the present case, it is an undisputed

position that as per the pleading/written statement filed by the

appellant/defendant no. 1, it was pleaded by the appellant/defendant

no. 1/seller that appellant/defendant no. 1/seller had forfeited the

amount of Rs. 15,00,000/- received under the subject Agreement to

Sell on account of breach by the respondent/plaintiff/buyer to fulfill

her part of the bargain in not paying the balance price of Rs.

2,00,000/- under the subject Agreement to Sell, it was also pleaded by

the appellant/defendant no. 1 that monetary loss was caused to the

appellant/defendant no. 1. But, as already stated above, the

appellant/defendant no. 1 has not led any evidence by stepping into the

witness-box and thus he has failed to prove the loss. The

appellant/defendant no. 1 having had no courage to depose and stand

the test of cross-examination to establish the loss that was suffered

by him, the appellant/defendant no.1 is thus not entitled to forfeit

the advance price received. Therefore, it is held that the

appellant/defendant no. 1 had already raised his defence with

respect to the disentitlement of the respondent/plaintiff to receive

back the advance price and/or earnest money paid under the

contract, and hence the present case is not a case where the

appellant/defendant no. 1 is taken by surprise on the relief being

granted of refund of advance price and/or earnest moneys. Once

appellant/defendant no. 1 is not taken by surprise, the object of

Orders VI to VIII CPC are met, that the pleading has to give notice

of a person‟s case to the opposite party.

9. Therefore in my opinion the word 'pleading' in Section

22 cannot be strictly interpreted in the sense that the requirement

being only of a written pleading and nothing else, and in law the

expression pleading under Section 22 of the Specific Relief Act

should be read only and essentially to mean notice of a party‟s case

to the other side.

10. I am fortified in the aforesaid conclusions as regards

the interpretation of Section 22 of the Specific Relief Act on

account of the observations made by a Ld. Singe Judge of this

Court, (Avadh Behari Rohtagi, J.) in the judgment in the case of Ex-

Servicemen Enterprises (P) Ltd. v. Samey Singh, AIR 1976 Delhi

56, wherein it is held that the expression which is used in Section 22

of the Specific Relief Act that amendment is to be allowed 'at any

stage' of a 'proceeding' i.e. the words 'at any stage of the

proceedings' will mean thereby not only at any stage of the suit

proceedings or appeal proceedings, and therefore, in the case of

Samey Singh (supra), the Ld. Single Judge of this Court allowed

amendment of the plaint at the stage of execution to seek possession

in a suit for specific performance. In fact, in my opinion, para 33 is

the most relevant part of the judgment wherein the Ld. Single Judge

has very aptly and thoughtfully reproduced the words of Paul of

Tarsus that ''the letter killeth, but the spirit giveth life''. This para 33

of the judgment in the case of Samey Singh (supra) reads as under:-

"33. It is said that rules of construction do not permit such a wide interpretation. Of rules of construction Lord Reid has said:

"They are not rules in the ordinary sense of having some binding force. They are out servants not our masters. They are aids to construction, presumptions or pointers. Not infrequently one „rule points in one direction, another in a different direction. In each case we must look at all relevant circumstances and decide as a matter of judgment what weight to attach to any particular rule." [Maunsell v. Olins, (1975) All. E.R 16].

On a consideration of all relevant circumstances my conclusion is this. The power of the judge is not gone. It remains in him as an indwelling spirit. So long as anything remains to be done in the case he can exercise that power for the sake of justice. When the judge finds that a verbal interpretation of law might lead to injustice he calls to mind as a comforting thought the words of Paul of Tarsus: "the letter Killeth, but the spirit giveth life".

For these reasons I grant the application. I allow the amendment of the plaint on payment of Rs.300/- as costs.

11. Therefore, in my opinion the expression 'pleading'

which has to be interpreted with respect to Section 22 of the

Specific Relief Act, has to be interpreted only to mean that whether

the opposite party had notice of the case of the other side, and in the

present case, the appellant/defendant no. 1 did have notice of the

case of the respondent/plaintiff for seeking the refund of the

advance price and/or earnest money, inasmuch as, the

appellant/defendant no. 1 took up a specific defence of being

entitled to forfeit the amount received under the subject Agreement

to Sell.

12. Therefore, I may note that the trial court, in the facts of

the present case, has rightly applied the provision of Order VII Rule

7 CPC, as this provision entitles every court, depending on the facts

of each case, to give reliefs which otherwise arise from the position

of the facts as found on record in terms of the pleadings and

evidence in the case.

13. Before concluding, it is noted that not only there is no

clause in the subject Agreement to Sell that the advance price and/or

earnest money can be forfeited by the seller for a breach by the

buyer, and also that, in fact, the expression 'earnest money' is used

in the Agreement to Sell as part of advance price which is paid.

Also, no evidence has been led by the appellant/defendant no. 1, by

himself deposing as to how any monetary loss was suffered by him

on account of the breach by the respondent/plaintiff. Therefore, the

appellant/defendant no. 1 could not forfeit the amount of Rs.

15,00,000/- received under the subject Agreement to Sell and the

appellant/defendant no. 1 has to refund this amount of Rs.

15,00,000/- to the respondent/plaintiff.

14. In view of the aforesaid discussion, there is no merit in

the appeal and the same is hereby dismissed. C.M. Appl. No.

8375/2019 also stands disposed of accordingly.

FEBRUARY 22, 2019/ AK                     VALMIKI J. MEHTA, J