Asha Verma & Anr. vs Monika Singla
2019 Latest Caselaw 542 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI

+                        RFA No. 108/2017

%                                                    29th January, 2019


ASHA VERMA & ANR.                                         ..... Appellants
                    Through:       Mr. Nalin Tripathi and Ms. Chanchal
                                   Sharma, Advocates (Mobile No.
                                   9810036122).
                          versus

MONIKA SINGLA                                            ..... Respondent

                    Through:       Mr. Gagan Gupta and Mr. Ravish
                                   Bansal, Advocates (Mobile No.
                                   9811212776).

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

To be referred to the Reporter or not?

VALMIKI J. MEHTA, J (ORAL)

RFA No. 108/2017 and C.M. Appl. No. 3619/2017 (for stay)

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

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

impugning the Judgment of the trial court dated 05.11.2016 by which

the trial court has decreed the suit for specific performance filed by the

respondent/plaintiff pertaining to the Agreement to Sell dated

26/27.05.2005 for the property being Flat no. 37, Second Floor,

Cooperative Group Housing Society, Ankur Apartments, I.P.

Extension, Plot no. 7, Patparganj, Delhi-110092. Trial court has held

that it was the appellants/defendants who were guilty of breach of

contract and that the respondent/plaintiff had proved her readiness and

willingness for grant of the decree for specific performance. Trial

court has also held that the appellants/defendants cannot succeed in

displacing the respondent/plaintiff for the grant of relief of specific

performance on the ground that the relief of specific performance is a

discretionary relief and which ought not to be granted in favour of the

respondent/plaintiff in the facts of the present case.

2. I need not narrate the facts of the case in detail, and the

limited facts required for the decision of the present appeal are that an

Agreement to Sell was admittedly entered into between the parties on

26/27.05.2005 with respect to the suit property. That the total sale

consideration was Rs. 36,37,500/- is also not disputed. Out of the

total sale consideration, only an amount of Rs. 2,00,000/- was paid as

earnest money and this is also not disputed and also that the balance

sale consideration of Rs. 34,37,500/- was payable in terms of the

Agreement to Sell by 10.08.2005. It is also an undisputed position that

at the time of payment of the balance sale consideration on or before

10.08.2005, the sale deed was to be executed and possession of the

suit property was to be delivered by the appellants/defendants to the

respondent/plaintiff.

3. There are two issues which are argued on behalf of the

appellants/defendants for allowing of the present appeal and

dismissing the suit for specific performance filed by the

respondent/plaintiff. Firstly, it is argued that every plaintiff in a suit

for specific performance must strictly prove the existence of financial

capacity, and the same is a sine qua non as per Section 16(c) of the

Specific Relief Act, 1963. It is argued that the respondent/plaintiff has

miserably failed to prove her financial capacity of having the balance

sale consideration of Rs. 34,37,500/-, and especially that the financial

capacity to prove the balance sale consideration, even if the same is

proved as on 10.08.2005, the same has definitely not been proved for

the period from 10.08.2005 till the suit was decreed, and this is the

requirement of law in view of the ratio of the judgment of the Hon'ble

Supreme Court in the case of N.P. Thirugnanam (D) through LRs v.

Dr. R. Jagan Mohan Rao & Ors, 1995 (5) SCC 115.

4. The following issues were framed in the suit:-

(i) Whether the plaintiff is entitled to specific performance of an agreement to sell dated 26/27.05.2005 in respect of the suit property agreed to be sold by the defendants to her? OPP

(ii) Which party to the suit was guilty of breach of the agreement to sell dated 26/27.05.2005 and to what effect? OP Parties.

(iii) Whether the plaintiff was ready and willing to perform his part of the contract as contained in the agreement to sell dated 26/27.05.2005? OPP.

(iv) In case the plaintiff is found not entitled to specific performance, to what amount the plaintiff shall be entitled to get as damages or otherwise from the defendants in terms of agreement to sell dated 26/27.05.2005? OPP

(v) Relief."

5. On the aspect of financial capacity, the trial court has

held that the respondent/plaintiff has proved her financial capacity.

For this purpose, besides the oral averments of the husband of the

respondent/plaintiff who appeared in the witness box as PW-2, who

deposed with respect to the readiness of the respondent/plaintiff, the

documentary evidence proved by PW-2 to show the financial capacity

of the respondent/plaintiff to complete the sale transaction are two

documents being Ex.PW2/1 and Ex.PW2/2. In the cash book proved

as Ex.PW2/1, on 10.08.2005 being the last date of performance, the

cash balance is shown as Rs. 9,46,917/-. This cash book shows a cash

balance as on 31.08.2005 of Rs. 72,279/-. Ex.PW2/2 is a cash credit

loan facility granted for the business of the husband of the

respondent/plaintiff by Oriental Bank of Commerce with a limit of Rs.

15,00,000/-. It is also noted that the respondent/plaintiff through the

deposition of other witnesses had proved pay orders issued by the

Oriental Bank of Commerce for a total sum of Rs. 8,00,000/-,

Ex.PW1/5 and Ex.PW1/6, and these pay orders of Rs. 4,00,000/- each

were dated 08.08.2005. The respondent/plaintiff had also proved as

Ex.PW4/1 a pay order for a sum of Rs. 8,50,000/- dated 09.08.2005 in

the name of the appellant no. 2/defendant no. 2. The

respondent/plaintiff also proved as Ex.PW4/2 a copy of Demand Draft

dated 09.08.2005 for a sum of Rs. 3,50,000/- in the name of the

appellant no. 1/defendant no. 1 of Punjab National Bank, Delhi.

Another demand draft for a sum of Rs. 5,00,000/- of Delhi State Co-

operative Bank Ltd. Darya Ganj, Delhi was proved as Ex.PW10/6 in

the name of appellant no.1/defendant no.1.

6. Before I turn to this aforesaid documentary evidence led

on behalf of the respondent/plaintiff to show her financial capacity, it

would be apposite to refer to the ratio of the judgment of the Hon'ble

Supreme Court in the case of N.P. Thirugnanam (D) through LRs

(supra). Para 5 of the judgment in the case of N.P. Thirugnanam (D)

through LRs (supra) clearly requires that the amount of consideration

which a buyer has to pay must necessarily be proved to be available

right from the date of execution of the Agreement to Sell till the date

of the decree. This para 5 of the judgment in the case of N.P.

Thirugnanam (D) through LRs (supra) reads as under:-

"5. It is settled law that remedy for specific performance is an equitable remedy and is in the discretion of the court, which discretion requires to be exercised according to settled principles of law and not arbitrarily as adumbrated under s.20 of the Specific Relief Act 1963 (for short, 'the Act'). Under s.20, the court is not bound to grant the relief just because there was valid agreement of sale. Section 16(c)of the Act envisages that plaintiff must plead and prove that he had performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than those terms the performance of which has been prevented or waived by the defendant. The continuous readiness and willingness on the part of the plaintiff is a condition precedent to grant the relief of specific performance. This circumstance is material and relevant and is required to be be considered by the court while granting or refusing to grant the relief. If the plaintiff fails to either aver or prove the same, he must fail. To adjudge whether the plaintiff is ready and willing to perform his part of the contract, the court must take into consideration the conduct of the plaintiff prior and subsequent to the filing of the suit alongwith other attending circumstances. The amount of consideration which he has to pay to the defendant must

of necessity be proved to be available. Right from the date of the execution till date of the decree he must prove that he is ready and has always been willing to perform his part of the contract. As stated, the factum of his readiness and willingness to perform his part of the contract is to be adjudged with reference to the conduct of the party and the attending circumstances. The court may infer from the facts and circumstances whether the plaintiff was ready and was always ready and willing to perform his part of contract."

(emphasis supplied)

7. Therefore, we have to examine as to whether the

respondent/plaintiff has proved financial capacity to pay the balance

sale consideration of Rs. 34,37,500/- from 10.08.2005 and till the

evidence of the respondent/plaintiff was completed on 25.11.2011 i.e.

the date when respondent/plaintiff closed her evidence. It is noted that

the requirement of financial capacity continues to exist as stated in the

case of N.P. Thirugnanam (D) through LRs (supra) because Section

16(c) of the Specific Relief Act requires that the buyer has been

'always ready' (and willing) to perform the agreement to sell.

8. First of all, it is an undisputed fact on record that there is

no documentary evidence led and proved by the respondent/plaintiff to

show financial capacity except of August 2005. Each of the banking

instruments stated above, which have been proved on behalf of the

respondent/plaintiff, are only of August 2005. No financial capacity

to pay the balance sale consideration of Rs. 34,37,500/- has been

proved from 2005 till the evidence of the respondent/plaintiff was

closed in November 2011. As already stated, the observations which

have been made by the Hon'ble Supreme Court in the case of N.P.

Thirugnanam (D) through LRs (supra) with respect to financial

capacity continuing till the decree of the suit have been made because

Section 16(c) of the Specific Relief Act states that a buyer has always

been and continues to be ready to perform his part of the contract, and

readiness admittedly means financial capacity. Therefore, financial

capacity has to be shown to exist right from the date of the execution

of the agreement to sell till the decree of the suit, and till the date of

decree which in one way can be equated to completion of evidence by

the plaintiff/buyer in the suit. Therefore, at best since financial

capacity to pay the balance sale consideration is proved by the

respondent/plaintiff only as on August 2005, i.e. the

respondent/plaintiff has miserably failed to prove financial capacity

from August 2005 till November 2011, thus/hence it has to be held

that the respondent/plaintiff has failed to prove financial capacity as

required by Section 16(c) of the Specific Relief Act read with the ratio

of the judgment in the case of N.P. Thirugnanam (D) through LRs

(supra).

9. I would also like to note that even the evidence which is

led on behalf of the respondent/plaintiff with respect to banking

instruments, only totals to an amount of Rs. 25,00,000/- i.e. no

documentary evidence has been led to show the availability of finance

for the payment of the balance sale consideration of Rs. 9,37,500/-.

Though it is argued by the ld. counsel for the respondent/plaintiff that

her husband deposed to the availability of Rs. 11,00,000/- in cash on

the date of 10.08.2005 which was fixed for execution of the sale deed,

but there is no documentary evidence to support any availability of

cash of Rs. 11,00,000/- with the respondent/plaintiff. I may also note

that no oral deposition of the brother of the respondent/plaintiff of

having cash amount of Rs.11,00,000/- is found in the record, and even

if the same has been made, it is only a self-serving statement, not

backed by any documentary evidence as to the availability of amount

of Rs.11,00,000/- with PW5 namely Sh. Ashok Singla.

10. It has been held by the Hon'ble Supreme Court in the

judgment in the case of Saradamani Kandappan v. Mrs. S.

Rajalakshmi, 2011 (12) SCC 18, that in these times of rising prices,

especially in cities, financial capacity has to be very strictly proved by

a buyer. „Strictly proved‟ must mean that there is such evidence which

the court would believe, and evidence, therefore, necessarily has to be

clinching documentary evidence. In this regard, I have also held so in

the judgment in the case of Baldev Behl & Ors. v. Bhule & Ors., 2012

SCC OnLine Del 4730 that mere self-serving averments of financial

capacity will not prove financial capacity. The relevant paras of the

judgment in the case of Baldev Behl & Ors. (supra) are paras 26(i)

and 26(ii), and these paras read as under:-

"26(i). This issue pertains to plaintiff No.1 being ready and willing to perform his part of the agreement to sell. As per Section 16(c) of the Act, every plaintiff in a suit for specific performance must aver and prove that the plaintiff has always been and continues to be ready and willing to perform his part of the contract/agreement to sell. Readiness is financial capacity to go ahead with the agreement to sell and willingness is the intention. I may, at this stage, specifically invite attention to the observations of the Supreme Court in the case of Balraj Taneja and Anr. (supra), and relevant paras have been reproduced above, and which show that in a suit for specific performance even if there is no defence of the defendant, yet, the aspect of readiness and willingness has to be specifically proved by the plaintiff. This is stated by the Supreme Court in para 30 of the said judgment. The question is whether the plaintiff No.1 has proved his readiness and willingness at the relevant time and also continues to be ready and willing to perform his part of the contract/agreement to sell.

(ii) Readiness to perform the obligations by a proposed purchaser is a very important aspect and it has to be proved by categorical evidence. Mere oral evidence and self-serving

depositions cannot be a substitute for categorical evidence on the specific statutory requirement of Section 16(c). It is not disputed on behalf of the plaintiff No.1 that plaintiff No.1 has not filed any income tax returns or any bank account or proof of any other assets/properties or any other evidence to show the financial capacity of the plaintiff No.1 to pay the balance sale consideration. As per the case of the plaintiff No.1, the balance sale consideration would be approximately Rs.19.5 lacs and there is no evidence worth the name in the record to show the plaintiff No.1‟s financial capacity for this amount. Of course, while on this argument, I am assuming that there is a certainty as to consideration because in reality there is no certainty as to balance sale consideration inasmuch as the plaintiff No.1 has failed to exercise the option in terms of the agreement to sell as to which area of the balance land less the hutment/portion the plaintiff No.1 seeks specific performance of. Also, as already stated above, this area claimed by the plaintiff No.1 has to be further conditioned by an area of 12 bighas which has already been sold to be defendant No.3 under the sale deed dated 8.4.1988. In any case, I need not state anything further inasmuch as there is not a single piece of paper on record or any credible evidence which proves the financial capacity of the plaintiff No.1. I accordingly hold that plaintiff No.1 has miserably failed to prove his readiness to perform his obligations under the agreement to sell dated 27.8.1988. In fact, even willingness on the part of the plaintiff No.1 is absent inasmuch as there is no certainty of any option exercised by the plaintiff No.1 as to specific area which the plaintiff No.1 seeks to purchase, and which specific area had necessarily to be clear inasmuch as there is the issue of lessening the area whether on account of hutments or on account of 12 bighas of land already purchased by the defendant No.3 vide sale deed dated 8.4.1988 and hence of clarity as to for what area and for what price the agreement to sell has to go ahead."

(emphasis is mine)

11(i). At this stage, I may also note that the respondent/plaintiff

had led evidence of ICICI bank that the ICICI bank had sanctioned a

loan of Rs. 16,00,000/- in favour of the respondent/plaintiff vide

Ex.PW14/1 dated 26.07.2005, however, in my opinion, the trial court

has rightly rejected this document by observing that this sanction of

Loan Letter Ex.PW14/1 pertains to the loan application Ex. PW14/D1,

and this loan application was not for the suit property but was for a

different property bearing no. C-303, Mayurdhwaj Apartments,

Patparganj, Delhi. I must also note that a loan is granted qua a

specific property because the bank will have to be convinced as to the

title of the property vesting with the loanee, and therefore, a loan

application and sanction is 'property-specific' and not general.

11(ii). I reject the argument urged on behalf of the

respondent/plaintiff by placing reliance upon the deposition of the

witness from the ICICI bank who deposed as PW-14, namely Sh.

Gaurav Kala, that loan is not 'property-specific' inasmuch as oral

statements of officers of the bank cannot be help to prove that the loan

is sanctioned not for the property which is specifically written in the

sanction of loan letter but for another property. Of course, I would

hasten to add that the witness, PW-14/Sh. Gaurav Kala, when

specifically put a question if the loan was sanctioned not for the suit

property but for another property no. C-303, Mayurdhwaj Apartment,

Patparganj, Delhi, he tried to help the respondent/plaintiff by stating

that "I am not aware" and obviously this was not expected from a

witness from a bank, and in any case, and as stated above, oral

statements cannot change the factual position which is found in the

documentary evidence.

12. As regards the cash book/ExPW2/1 showing cash balance

of Rs. 9,46,917/-, besides the amount being allegedly available only in

August 2005, even this cash book bank balance is only an entry

without supporting evidence of actual cash availability of Rs.

9,46,917/-. So far as the cash credit loan facility of Rs. 15,00,000/-

proved as Ex.PW2/2 (and only in August 2005), this is a loan facility

for the business of the husband of the respondent/plaintiff and will not

be available from the bank for purchase of an immovable property and

that too of a property which is not being purchased by the person to

whom the cash credit loan facility is granted.

13. Therefore, it is clear that at best the respondent/plaintiff

has proved financial capacity of Rs. 25,00,000/- by documentary

evidence, and that too only in August, 2005 and not from August,

2005 till November, 2011, when the evidence of the

respondent/plaintiff was completed and thus it is held that the

respondent/plaintiff has failed to show continuous readiness/financial

capacity as required by Section 16(c) of the Specific Relief Act read

with the ratio of the judgment of the Hon'ble Supreme Court in the

case of N.P. Thirugnanam (D) through LRs (supra). Once the

respondent/plaintiff has failed to prove the financial capacity to pay

the balance sale consideration for the period from the year 2005 till the

year 2011, the trial court, in my opinion, has gravely erred in holding

that the respondent/plaintiff continued to be ready, i.e. had financial

capacity to pay the balance sale consideration.

14(i). In my opinion, no further discussion is required for

allowing the present appeal, and therefore this Court is not deciding

the second issue which has been urged on behalf of the

appellants/defendants that the respondent/plaintiff is not entitled to the

discretionary relief of specific performance, and for this argument

reliance was placed upon the judgment passed by this Court in the

case of M/s Hotz Industries Pvt. Ltd. v. Dr. Ravi Singh (Since

deceased through L.Rs) & Ors., CS(OS) No. 1261/1995. Since this

Court is not adverting to this argument of the relief of specific

performance being a discretionary relief for being declined as such to

the respondent/plaintiff, hence, I also need not examine the argument

urged on behalf of the respondent/plaintiff that Section 20 of the

Specific Relief Act now stands repealed from the statute book as it

existed when the suit was filed being now substituted by a different

Section 20, and the new Section 20 has the effect of taking away the

powers of the Court for declining the specific performance as a

discretionary relief.

14(ii). I further note that it was also argued by the

respondent/plaintiff by placing reliance upon Section 10 of the

Specific Relief Act as existing today that specific performance "shall"

be granted, and though prima facie, I doubt this argument because no

doubt the word "shall" is used in Section 10, however, the said Section

10 itself specifically states that it is subject to the provisions of

Sections 11, 14 and 16 of the Specific Relief Act, but once again this

argument need not be considered as this appeal is being disposed of on

the aspect of lack of readiness of the respondent/plaintiff.

15. I may note that appellants/defendants during the course of

final arguments in this appeal had offered to pay to the

respondent/plaintiff a sum of Rs. 10,00,000/-, this amount being as a

return on investment of a sum of Rs. 2,00,000/- which was paid by the

respondent/plaintiff to the appellants/defendants as advance earnest

money, but the ld. counsel for the respondent/plaintiff on taking

instructions from the respondent/plaintiff has rejected the offer. In

my opinion, if a sum of Rs. 2,00,000/- was invested by the

respondent/plaintiff in the year 2005, as on date even the best security

and the best investment would not have in a period of 15 years

brought the investment to five times i.e. Rs. 10,00,000/-, and

therefore, I did find that the offer made on behalf of the

appellants/defendants to pay an amount of Rs.10,00,000/- to the

respondent/plaintiff as a reasonable figure to finish the litigation but

unfortunately the respondent/plaintiff has rejected the offer and insists

for disposal of this appeal on merits by a judgment.

16(i). The ld. counsel for the respondent/plaintiff then argued

that respondent/plaintiff is entitled to a money decree for damages as

prayed for in the suit being a sum of Rs. 36,37,500/-, as it is argued

that the appellants/defendants are indeed guilty of breach of contract,

and so confirmed by this Court.

16(ii). In my opinion, however, even the relief of grant of

damages of Rs. 36,37,500/- cannot be granted to the respondent/

plaintiff because damages are granted of a specific amount on the

principles contained under Section 73 of the Indian Contract Act,

1872. The requirement of Section 73 of the Contract Act is to prove

the loss of a specific amount. It is a loss of a specific amount which is

awarded as damages as a money decree. Ordinarily in a suit seeking

specific performance with the alternative relief of damages, damages

are granted on account of increase of the price of the suit property

from the date of the agreement to the date fixed for performance, and

this is because the reason is that if a buyer would go to purchase a

similar property in the market, a higher price would have to be paid,

and therefore the difference between the contract price and the higher

price as on the date of the performance are granted as damages. There

is no documentary evidence in this case led on behalf of the

respondent/plaintiff of any sale deed of a sale of a similar property at a

higher price totaling to Rs. 72,75,000/- for the respondent/plaintiff be

awarded damages of Rs. 36,37,500/-. Though the ld. counsel for the

respondent/plaintiff did seek to argue that the appellants/defendants

have admitted in the written statement that prices of the property have

gone up to between Rs.40,00,000/- to Rs. 45,00,000/-, however the

figure of "between Rs. 40,00,000/- to Rs. 45,00,000/-" is a vague

statement inasmuch as in law when damages are awarded, the

damages are awarded of a specific amount as claimed and this specific

amount which is claimed by the respondent/plaintiff is a sum of Rs.

36,37,500/-. As already stated in para 15 above that appellants/

defendants did make an offer to pay a sum of Rs. 10,00,000/- to the

respondent/plaintiff, but the respondent/plaintiff has refused to receive

the amount.

17. In view of the aforesaid discussion, the appeal of the

appellants/defendants is allowed. Impugned judgment of the trial

court dated 05.11.2016 is set aside. The suit of the respondent/plaintiff

will stand dismissed. All pending applications are also disposed of.

Parties are left to bear their own costs.

JANUARY 29, 2019                             VALMIKI J. MEHTA, J
AK