Karnataka High Court

Housing And Urban Development ... vs D.K. Ramesh on 7 January, 2021

Author: S.Sujatha And M.I.Arun

     IN THE HIGH COURT OF KARNATAKA AT BENGALURU

        DATED THIS THE 7TH DAY OF JANUARY, 2021

                         PRESENT

           THE HON'BLE MRS.JUSTICE S.SUJATHA

                           AND

            THE HON'BLE MR. JUSTICE M.I.ARUN

                   R.F.A.No.1322/2011

BETWEEN :

HOUSING & URBAN
DEVELOPMENT CORPN. LTD.,
A GOVT. OF INDIA ENTERPRISES,
REGIONAL OFFICE, MANIPAL CENTER,
NORTH BLOCK, UNIT NO.703 & 704,
7TH FLOOR, NO.47, DICKENSON ROAD,
BANGALORE-560042
REP. BY SENIOR LAW OFFICER
SRI S.M.SRINIVAS                              ...APPELLANT

            (BY SRI VARADARAJ R. HAVALDAR, ADV.)

AND :

1.      D.K.RAMESH
        S/O K.DASAPPA
        AGED ABOUT 60 YEARS,
        R/AT "BELAKU", NO.42/1, 5TH CROSS,
        8TH MAIN, RMV EXTENSION,
        SADASHIVANAGAR, BANGALORE-560 080

2.      M/s AVVAA DEVELOPERS
        A PARTNERSHIP FIRM, NO.424,
        EMBASSY HERITAGE, 8TH MAIN,
        MALLESHWARAM, BANGALORE,
        REP. BY ITS PARTNERS
                        -2-

3.    SRI C.MAHESH KUMAR
      S/O CHIKKA, AGED ABOUT 45 YEARS,
      MANAGING PARTNER,
      M/s AVVAA DEVELOPERS,
      NO.1, 1ST FLOOR, RNG PLAZA,
      SOUTH END STREET,
      KUMARA PARK EAST
      BANGALORE-560001

4.    SMT.P.MAHADEVI
      W/O MAHESH KUMAR
      AGED ABOUT 35 YEARS, PARTNER,
      M/s AVVAA DEVELOPERS
      NO.1, 1ST FLOOR, RNG PLAZA
      SOUTH END STREET,
      KUMARA PARK EAST
      BANGALORE-560001                    ...RESPONDENTS

           (BY SRI B.L.SANJEEV, ADV. FOR R-1;
VIDE COURT ORDER DATED 10.12.2013 NOTICE TO R-2 TO R-4
                 ARE DISPENSED WITH.)

      THIS R.F.A. IS FILED UNDER SECTION 96 R/W ORDER 41
RULE 1 OF CPC, AGAINST THE JUDGMENT AND DECREE
DATED 19.04.2011 PASSED IN O.S.No.963/2009 ON THE FILE
OF THE XVI ADDITIONAL CITY CIVIL JUDGE, BANGALORE
(CCH 12), DECREEING THE SUIT FOR RECOVERY OF MONEY.

      THIS APPEAL COMING ON FOR HEARING, THIS DAY,
S. SUJATHA, J., DELIVERED THE FOLLOWING:

                   JUDGMENT

This appeal is filed by the defendant No.4

challenging the judgment and decree dated 19.4.2011

passed in O.S.No.963/2009 by the XVI Addl. City Civil

Judge, Bangalore City (CCH No.12) ('Trial Court' for

short).

2. For the sake of convenience, the parties are

referred to as per their status before the Trial Court.

3. The plaintiff instituted the suit for recovery

of money in a sum of Rs.40,68,750/- towards the

principal and interest against the defendants and also

for attachment of the schedule properties and also for

the relief of injunction restraining the defendants, their

men, agents, representatives etc., from alienating,

encumbering or creating any charge over the suit

properties and to direct the 4th defendant not to release

the documents mortgaged with it by the defendants 1 to

3 in respect of suit properties and to grant future

interest.

4. The plaint averments are that the 1st

defendant being the owner of the property bearing

No.13, Old Nos.357 and 358, BBMP ID No.50-3-13,

measuring 3984 sq. ft. situated at Shradhananda

Bhavan Road, V.V.Puram, Bangalore and another

property bearing No.13/1, Old Nos.357 and 358 PID

No.50-03-13/1 measuring 1627.50 sq. ft. situated on

the same road at V.V.Puram, Bangalore, the properties

described in the suit schedule as item Nos.1 and 2, has

executed an agreement on 10.12.2007 in favour of the

plaintiff agreeing to construct an apartment and allot

built up area of 1700 sq. ft. specifically agreeing to allot

in the ground floor portion with all civic amenities as

per the brochure supplied. The plaintiff believing the

defendants, got an agreement executed in his favour by

paying an advance amount of Rs.35 lakhs towards the

sale consideration amount of Rs.40 lakhs, by way of an

account pay order bearing No.23523 dated 10.12.2007

drawn on Canara Bank, RMV Extension Branch,

Bangalore in favour of the 1st defendant. Accordingly the

1st defendant issued a letter of allotment dated

12.12.2007 by allotting a 3 bed room apartment in

favour of the plaintiff in the ground floor portion which

was called as 'UNIT-D' with car parking area in the stilt

floor known as 'Avva Gold', V.V.Puram, Bangalore and

requested the plaintiff to pay the balance amount of

Rs.5 lakhs at the time of the registration of the

apartment.

5. It was contended that as per the terms of the

agreement, the construction was required to be

completed within 11 months from 10.12.2007. The 2nd

and 3rd defendants as the partners of the 1st defendant

firm have represented to the plaintiffs that they are

availing loan from HUDCO, Dickenson Road, Bangalore,

for the project titled 'Avva Gold' and have mortgaged

title deeds with them on 30.11.2007. The defendants

assured to deliver possession of the apartment

immediately on completion of the construction and on

obtaining the completion certificate from the BBMP

connected with all civic amenities. The 1st defendant

has availed loan of Rs.100 lakhs from HUDCO, the 4th

defendant. Though construction work was commenced

by erecting some pillars, the same was not completed,

not even one floor was raised. The defendant has

committed breach of terms of the contract and even

after repeated requests and demands, has not

completed the construction work and accordingly a

cheque bearing No.075249 dated 8.7.2008 drawn on

Indian Bank, Banashankari II Stage, Bangalore, for

Rs.35 lakhs was issued by the defendant No.1 towards

the repayment of the amount paid by the plaintiff. The

said cheque on presentation for encashment was

returned by the bankers with an endorsement

'insufficient funds'. On the proceedings initiated by the

plaintiff under Section 138 of the Negotiable

Instruments Act, 1881, the defendants issued another

postdated cheque bearing No.075250 towards the

payment of interest amount of Rs.5,68,750/-. The

plaintiff came to know that the defendants are making

attempt to dispose of the suit properties to defeat the

rights of the plaintiff, a letter was obtained from HUDCO

on 17.10.2008, wherein, it has come forward to release

the documents of the suit schedule property. Hence,

constrained to file the suit.

6. On service of summons, defendants 1 to 3

appeared through their learned counsel, but no written

statement was filed. The 4th defendant appeared

through its learned counsel and contested the matter

filing the written statement contending that there was

no privity of contract between the plaintiff and the 4th

defendant and there was no legal nexus to sue the said

defendant. However it was admitted that defendant No.1

was a partnership firm represented by its partners

namely, defendants 2 and 3 who had availed the loan

facilities from it against the mortgaged properties

described as items 1 and 2 in the plaint schedule

together with the buildings to be constructed thereon.

7. It was contended that defendants 1 to 3 out

of sanctioned loan of Rs.275 lakhs, have availed the

amount of Rs.100 lakhs on execution of necessary

documents. Since the defendants 1 to 3 committed

default in repayment of the installments of loan

including the interest, the 4th defendant is taking legal

steps for recovery of its legal dues. The primary defence

set up was that the suit against the 4th defendant is

misconceived and no relief of injunction as prayed could

be granted against the 4th defendant.

8. On the basis of the pleadings, the following

issues were framed:

"1. Whether the plaintiff proves that he has paid Rs.35 lakhs towards the sale consideration price in respect of the suit schedule properties to the defendant 1 to 3 in pursuance of the agreement of sale dated 10.12.2007?

2. Whether the plaintiff further proves that the defendants 1 to 3 failed to perform their part of contract though the plaintiff was ready and willing to perform his part of contract?

3. Whether the plaintiff is entitled for the suit claim of Rs.40,68,750/- towards the principal and interest as claimed against the defendants?"

9. The plaintiff got himself examined as PW-1

and produced the documents Exs.P1 to P22. The 4th

defendant got examined its officer as DW-1 and

produced the documents at Exs.D1 and D2.

10. The Trial Court on appreciation of oral and

documentary evidence decreed the suit for

Rs.40,68,750/- together with costs and future interest

on Rs.35 lakhs from the date of suit till realization @ 6%

p.a. as against defendant Nos.1 to 3 only. The suit

against the defendant No.4 was dismissed with costs.

The attachment before judgment of the suit schedule

properties was made absolute.

11. Being aggrieved by the portion of the

judgment and order in as much as holding "the

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attachment before judgment of the schedule properties

is made absolute", the defendant No.4 has preferred the

present appeal.

12. Learned counsel for the appellant/4th

defendant inviting the attention of the Court to

para.11(b) and (c) of the impugned judgment submitted

that the Trial Court though held that the plaintiff is not

entitled to any relief against the 4th defendant and

unnecessarily the plaintiff has dragged the 4th

defendant to the Court, held that "the attachment

before judgment of the schedule properties has been

made absolute" which infringes the rights of the 4th

defendant in respect of the suit property. The

defendants 1 to 3 being defaulters in not making the

payment towards the loan raised, the proceedings were

initiated for recovery of the same before the Debt

Recovery Tribunal, Bangalore and the same has been

decreed. However, by virtue of the portion of the order of

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the Trial Court as aforesaid, the appellant is not able to

recover the loan amount by taking steps with respect to

the property mortgaged.

13. Learned counsel for the plaintiff submitted

that the plaintiff is no way interested with the

transaction of the defendant No.4 relating to the suit

property. Defendants 1 to 3 in collusion with defendant

No.4 made attempts to alienate the suit property to

deprive the right of the plaintiff and in order to

safeguard his interest, attachment before judgment of

the suit property was sought and the same was rightly

granted by the Trial Court. Now by virtue of the decree

passed by the Trial Court, execution proceedings are

initiated to recover the decretal amount and as such, he

has no objection to set aside the order of the Trial Court

inasmuch as "the attachment before judgment of

the schedule properties is made absolute", protecting

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the rights of the plaintiff to execute the decree in

accordance with law.

14. Having heard the learned counsel for the

parties and perusing the original records, the point that

arises for our consideration is:

Whether the portion of the order of the Trial Court impugned herein inasmuch as holding "the attachment before judgment of the schedule properties is made absolute", deserves to be set aside?

15. It is borne out from the records that

defendant No.1-the partnership firm has raised loan

from the defendant No.4 for the purpose of project of

'Avva Gold' mortgaging the suit properties. The plaintiff

having entered into an agreement with the defendant

No.1 to purchase the apartment for the sale

consideration of Rs.40 lakhs and after payment of Rs.35

lakhs, due to the breach of the agreement by the

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defendant Nos.1 to 3, has instituted the suit for

recovery of Rs.40,68,750/- with costs.

16. On analyzing the oral and documentary

evidence, the Trial Court has rightly observed that there

was no privity of contract between the plaintiff and

the defendant No.4. The plaintiff has unnecessarily

dragged the defendant No.4 to the Court. The evidence

of DW-1 also fortifies the same. The relevant paragraph

of cross examination of DW-1 reads thus:

"The defendants 1 to 3 have availed the loan from the 4th Defendant for the purpose of construction of the residential apartment. The team of officers of the Defendant No.4 had visited the property in respect of which, the title deeds were deposited by the Defendants 1 to 3 with the 4th Defendant by offering as security for the loan availed by them and at that time, the construction work was completed upto columns level. I do not remember now to say the total quantity of amount of loan for advancement that was

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asked by the Defendants 1 to 3. The loan was sanctioned up to the limit of Rs.275 lakhs and out of which, Rs.100 lakhs was released.

The Defendants 1 to 3 are not repaying the loan as per the repayment schedule and have become defaulters. We have taken steps by recalling the loan and also steps in issuing notices as contemplated under law and also filed recovery application before the D.R.T. The recovery application before the D.R.T. is still pending."

17. Learned counsel for the plaintiff has fairly

submitted that the plaintiff is not coming in the way of

the defendant No.4 in taking steps for the recovery of

the loan amount from the defendants 1 to 3 which

remained unpaid. But it was only as an abundant

caution to secure the decretal amount, the Trial Court

has passed such an order.

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18. In the background of the submissions made

by the learned counsel for the parties as aforesaid, and

on re-appreciation of documentary and ocular evidence,

this Court is of the considered view that the portion of