Karnataka High Court

M/S Siroya Constructions vs Mr V Srinivasa Raju on 22 February, 2024

Author: P.S. Dinesh Kumar

Bench: P.S. Dinesh Kumar

                                             R.F.A No.539/2022

                               1

      IN THE HIGH COURT OF KARNATAKA AT BENGALURU

        DATED THIS THE 22ND DAY OF FEBRUARY, 2024

                           PRESENT

     THE HON'BLE MR. P.S. DINESH KUMAR, CHIEF JUSTICE

                             AND

 THE HON'BLE MR. JUSTICE T.G. SHIVASHANKARE GOWDA

               R.F.A NO. 539 OF 2022 (MON)

BETWEEN:

1.     M/S SIROYA CONSTRUCTIONS
       A FIRM CONSTITUTED AND
       REGISTERED UNDER THE PROVISIONS
       OF THE INDIAN PARTNERSHIP ACT, 1932
       WITH ITS REGISTERED OFFICE AT
       FLAT NO. 12, 2ND FLOOR
       ROYAL PART APARTMENTS
       NO.34, PARK ROAD, TASKER TOWN
       BANGALORE-560 052.
       AND ALSO AT NO.18, 2ND CROSS
       8TH MAIN, VASANTHNAGAR
       BANGALORE-560 052.
       REPRESENTED BY ITS
       MANAGING PARTNER
       MR. SHAILESH SIROYA
       AGED ABOUT 45 YEARS
       S/O D.B. SIROYA
       PRESENTLY R/AT MAYFAIR APARTMENTS
       41/42, GROUND FLOOR, ULSOOR ROAD
       BANGALORE-560 042.

2.     MR. SHAILESH SIROYA
       S/O D.B. SIROYA
       AGED ABOUT 45 YEARS
       PRESENTLY R/AT MAYFAIR APARTMENTS
       41/42, GROUND FLOOR
                                            R.F.A No.539/2022

                               2

       ULSOOR ROAD
       BANGALORE-560 042.

       AND ALSO AT:
       NO. 7/3, CHANDRAVARKARA LAYOUT
       2ND MAIN, 1ST CROSS, PALACE ROAD
       BANGALORE-560 020.                      ...APPELLANTS

(BY SHRI. ASHOK HARANAHALLI, SENIOR ADVOCATE FOR
    SHRI. K. SHRIHARI, ADVOCATE)

AND:

1.     MR. V. SRINIVASA RAJU
       S/O LATE V. VARDA RAJU
       AGED ABOUT 54 YEARS
       PRESENTLY R/AT NO. 12
       10TH MAIN ROAD
       RAJMAHAL VILAS EXTENSION
       SADASHIVANAGAR
       BANGALORE-560 080.

2.     MRS. REVATHI RAJU
       W/O V. SRINIVAS RAJU
       AGED ABOUT 48 YEARS
       PRESENTLY R/AT NO.12
       10TH MAIN ROAD
       RAJMAHAL VILAS EXTENSION
       SADASHIVANAGAR
       BANGALORE-560 080.

3.     MR. GAUTHMA S. VARDA
       S/O SRINIVAS RAJU
       AGED ABOUT 34 YEARS
       PRESENTLY R/AT NO. 12
       10TH MAIN ROAD
       RAJMAHAL VILAS EXTENSION
       SADASHIVANAGAR
       BANGALORE-560 080.

4.     MS. SHRUTHI S. RAJU
       S/O V. SRINIVAS RAJU
       AGED ABOUT 28 YEARS
       PRESENTLY R/AT NO. 12
       10TH MAIN ROAD
                                          R.F.A No.539/2022

                               3

     RAJMAHAL VILAS EXTENSION
     SADASHIVANAGAR
     BANGALORE-560 080.

5.   M/S MICRO LAB LIMITED
     A BODY REGISTREED UNDER THE
     PROVISIONS OF THE INDIAN
     COMPANIES ACT, 1956
     HAVING ITS REGISTERED OFFICE
     AT 303, 'A' WING
     QUEENS CORNER APARTMENTS
     BANGALORE-560 052.

     REPRESENTED BY ITS DIRECTOR
     MR. DILIP SURANA
     S/O SURANA
     AGED ABOUT 50 YEARS
     PRESENTLY R/AT NO. 27
     RACE COURSE ROAD
     BANGALORE-560 009.

6.   MR. DILIP MEHTA
     FATHER NAME NOT KNOWN
     TO THE APPELLANT
     AGED ABOUT 50 YEARS
     R/AT 356, RAJDEEP
     7TH CROSS, LAKSHMI ROAD
     SHANTHINAGAR
     BANGALORE-560 027.

7.   MR. HARVINDER PAL SINGH MANCHANDA
     S/O SRI. BALWANTH SINGH MANCHANDA
     AGED ABOUT 60 YEARS
     R/AT MIRIRAM, NO.68, 3RD MAIN
     K.R. GARDENS, OFF AIRPORT ROAD
     BANGALORE-560 017.

8.   M/S DELMONICS PROPERTIES (P) LTD.
     A BODY INCORPORATED UNDER
     THE PROVISIONS OF
     INDIAN COMPANIES ACT, 1956
     WITH ITS OFFICE, NO.68
     3RD MAIN ROAD, K.R. GARDENS
     OFF AIRORT ROAD
     BANGALORE-560 017.
                                               R.F.A No.539/2022

                               4


9.   MRS. LALITHA A. SIROYA
     W/O A. SIROYA
     AGED 50 YEARS
     PRESENLTY R/AT FLAT NO.
     GAR, GARDEN VIEW APARTMENTS
     NO. 8, HARKNESS ROAD
     MUMBAI-400 006.                             ...RESPONDENTS

(BY SHRI. B.N. PRAKASH, ADVOCATE FOR R1 TO R4;
    V/O DATED 24.08.2023 SERVICE OF NOTICE TO
    R5 TO R9 IS DISPENSED WITH)

     THIS RFA IS FILED UNDER SECTION 96 R/W ORDER 41 RULE 1
OF CPC AGAINST THE JUDGMENT AND DECREE DATED 23.12.2021
PASSED IN OS.NO.25188/2012 ON THE FILE OF THE LXXIII
ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, MAYOHALL UNIT,
BANGALORE (CCH 74) PARTLY DECREEING THE SUIT FOR RECOVERY
OF MONEY.

      THIS RFA, HAVING BEEN HEARD AND RESERVED FOR JUDGMENT
ON 18.12.2023 COMING ON FOR PRONOUNCEMENT OF JUDGMENT
THIS DAY, CHIEF JUSTICE, PRONOUNCED THE FOLLOWING:-

                         JUDGMENT

This appeal by the defendants No. 1 and 2 is directed

against the judgment and decree dated December 23, 2021

in O.S. No. 25188/2012 passed by the LXXIII Addl. City Civil

& Sessions Judge, Bangalore (CCH-74), partly decreeing the

suit for recovery of money and cancelling the Sale Deeds.

2. For the sake of convenience, parties shall be

referred as per their status before the Trial Court.

3. Heard Shri. Ashok Haranahalli, learned Senior

Advocate for the appellants and Shri. B.N. Prakash, learned

Advocate for the respondents No. 1 to 4.

4. Plaintiffs' case is, they are land developers and

owners of the suit schedule property. Defendant No. 1 is a

partnership firm involved in the real estate business.

Defendant No. 2 is the Managing Partner and defendants

No.3 to 7 are the other partners.

5. Defendants No. 1 and 2 entered into a JDA1 dated

10.06.2004 for development of the suit property. As per the

JDA, the project had to be completed within four years, but

defendants failed to do so.

6. Thereafter, they entered into an MOU2 dated

18.07.2008, agreeing to purchase the suit property for

Rs.82,56,69,500/-. The defendants No.1 and 2 paid a sum of

Rs.45,45,20,613/- and plaintiffs executed five Sale Deeds all

dated 03.10.2008, in favour of the defendants No. 1 and 2.

Joint Development Agreement

Memorandum of Understanding

7. Plaintiffs issued a legal notice dated 06.04.2009

calling upon the defendants to pay Rs.38,11,37,312/-.

Defendants did not comply with the demand. Hence,

plaintiffs brought the instant suit for recovery of money.

8. Defendants No. 1 and 2 resisted the suit by filing

a common written statement, contenting inter alia that

plaintiffs had filed a suit for injunction in O.S. No. 5558/2009

against defendants No.1 and 2 and the said suit had been

dismissed. The present suit is liable to be dismissed under

Order II Rule 2 of the Civil Procedure Code, 19083. That the

MOU is of the year 2008 and suit was filed in the year 2012,

hence, it is barred by limitation. That defendants have

purchased the suit property by paying full consideration as

per the registered Sale Deeds.

'the CPC' for short

9. Based on the pleadings, the learned Trial Court

has framed following issues:

1. Whether the plaintiff proves that the defendants are due and liable to pay to the plaintiffs a sum of Rs.76,52,45,371- 00 together with interest towards unpaid sale consideration as per the memorandum of understanding dt.18.07.2008?

2. Whether the defendants prove that the memorandum of understanding dt.18.07.2008 has been novated by execution of 5(five) sale deeds all dated 03.10.2008?

3. Whether the defendants prove that the sale deed will supersede the memorandum of understanding?

4. Whether suit of the plaintiff is barred by law of limitation?

5. Whether the plaintiffs are entitled for the reliefs sought for?

6. What order or decree?

10. On behalf of plaintiffs, one witness was examined

as PW.1 and Exs. P1 to P32 marked. On behalf of

Defendants, two defendants were examined as DW.1 and

DW.2 and Exs. D1 to D14 marked. Answering issues No. 1 &

5 partly in the affirmative, issues No. 2 to 4 in the negative,

the Trial Court has partly decreed the suit directing the

defendant No.1 to pay Rs.38,11,37,312/- with 12%

interest p.a.

11. Shri. Haranahalli, for defendants No. 1 and 2,

praying to allow the appeal, mainly submitted that:

 suit is barred by limitation;

 the learned Trial Judge has erred in not framing

an issue with regard to Order II Rule 2 of the

CPC and that the suit is barred by res-judicata;

 subsequent to the MOU, registered Sale Deeds

have been executed, hence, any claim under the

MOU is not maintainable. The learned Trial

Judge has erred in holding that novation under

Section 62 of the Indian Contract Act, 1872

does not apply;

 the original MOU dated 18.07.2008 has not

been produced.

12. Opposing the appeal, Shri. Prakash, for the

plaintiffs, mainly submitted that:

 MOU has been admitted by defendants and thus

they are liable to pay as per the terms under

the MOU;

 Sale Deeds cannot substitute the MOU and

cannot take away the rights flowing from the

MOU;

 there can be no novation without executing a

fresh agreement.

13. We have carefully considered rival contentions

and perused the records.

14. Based on the materials on record and the

submissions made on behalf of both the parties, following

points arise for our consideration:

(i) Whether defendants prove that Sale deeds dated 03.10.2008 prevail over MOU dated 18.07.2008?

(ii) Whether the suit is barred under Order II Rule 2 of the CPC?

(iii) Whether the impugned judgment and decree calls for any interference?

Re. Point No. (i):

15. According to the plaintiffs, under the MOU dated

18.07.2008, defendants No. 1 and 2 had agreed to purchase

the suit property for Rs.82,56,69,500/-. Subsequently,

plaintiffs executed five registered Sale Deeds all dated

03.10.2008 for a total consideration of Rs.45,45,20,613/-

and hence, plaintiffs are entitled to recover the remaining

amount.

16. Plaintiff's specific case is, MOU has been admitted

by defendants and execution of Sale Deeds cannot take

away their right to claim the benefits flowing from the MOU.

Therefore, defendants are liable to pay the balance

consideration of Rs.38,11,37,312/- as per the MOU.

17. We have perused the MOU (Ex.26) and the Sale

Deeds (Exs. P17 to P22). As per the MOU recitals, it was

agreed between the parties to execute Sale Deed in respect

of the suit property. Subsequently, Sale Deeds have been

executed. We may record that the total consideration

mentioned in the five Sale Deeds cumulatively works out to

Rs.45,45,20,613/-.

18. Section 54 of the Transfer of Property Act, 1882

defines 'Sale' as follows:

"A transfer of ownership in exchange for price paid or promised or part paid and part promised".

19. While executing a Sale Deed, a vendor has three

options. Firstly, he may receive full consideration

simultaneously with the execution of the Sale Deed.

Secondly, he may receive a portion of consideration and

receive the balance subsequently; and thirdly, execute the

Sale Deed based on purchasers promise to pay the

consideration on future date.

20. In this case, it is not in dispute that vendors have

received a sum of Rs. 45,45,20,613/- as sale consideration

in respect of all five Sale Deeds (Ex.P17 to Ex.21). It is

relevant to note that in all Sale Deeds, it is clearly stated

thus:

"... being made before the Sub-Registrar at the time of

registration of this sale deed, which sum the vendors hereby

admit and acknowledge the receipt of the same in full

settlement and acquit and release the purchasers

forever of any further payment and in consideration

thereof the vendors......"

(Emphasis Supplied)

21. Thus, there is no ambiguity with regard to

payment of consideration. The Vendors have chosen the first

among the three options mentioned above and received the

entire sale consideration. The Sale Deeds have been

executed and registered in accordance with law.

22. It is fairly well settled that any amount of oral

evidence cannot substitute a written document. We may

usefully refer to the following passage in Kedarnath Dutt Vs.

Shamloll Khettry4, which reads thus:

"The rule with regard to writings is that oral proof cannot be substituted for the written evidence of any contract which the parties have put into writing..."

(Emphasis Supplied)

(1873) 11 Beng LR 405

23. This view has been consistently followed in

subsequent judgments. (See Roop Kumar Vs. Mohan

Thadani5 and S. Saktivel Vs. M. Venugopal Pillai6). In this

case, Sale Deeds which are written documents have higher

evidentiary value than oral evidence. Simultaneously, with

the execution and registration of Sale Deeds, the title passes

to the purchaser and the MOU which is prior to the date of

Sale Deeds will not be of any consequence.

24. Section 62 of the Indian Contract Act, 1872 reads

thus:

"If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract, need not be performed."

25. The facts in this case clearly demonstrate that

five Sale Deeds have been executed as agreed in the MOU.

According to the plaintiffs, only a portion of the consideration

was received. But, the recital in the Sale Deeds extracted in

para 18 does not even remotely indicate that there was any

2003 (6) SCC 595

2007 (7) SCC 104

promise made by the defendants agreeing to pay any further

consideration. In all the five sale deeds, plaintiffs (Vendors)

have clearly acknowledged the receipts of consideration in

full and final settlement. Though, plaintiff and defendants

had initially entered into an MOU, they have executed five

Sale Deeds and conveyed the suit property. This indicates

that it is nothing but a pure and simple novation of the MOU

by mutual consent. As per Section 62 of the Indian Contract

Act, 1872, the original document i.e, MOU need not be

performed and the Sale Deeds shall prevail over the MOU. It

is pertinent to note that there is no mention of the MOU in

the Sale Deeds. Parties may enter into several documents

before executing a Sale Deed, but sale shall be complete

once the consideration is paid, partly paid or promised to be

paid. Hence, plaintiffs' specific stand that the MOU cannot be

substituted with the Sale Deeds is untenable. Accordingly,

we answer point No. (i) in the affirmative and in favour of

defendants.

Re. Point No. (ii):

26. It was urged by Shri. Haranahalli that plaintiff had

previously filed a suit for injunction in O.S. No. 5558/2009

and the said suit has been dismissed for non-payment of

court fee. The writ petition 7 preferred by the plaintiff has

also been dismissed. It was argued by him that, the instant

suit is liable to be dismissed under Order II Rule 2 of the

CPC.

27. Order II Rule 2 of the CPC reads as follows:

"2. Suit to include the whole claim.--

(1) Every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action;

but a plaintiff may relinquish and portion of his claim in order to bring the suit within the jurisdiction of any Court.

(2) Relinquishment of part of claim.--Where a plaintiff omits to sue in respect of, or intentionally relinquishes, any portion of his claim, he shall not afterwards sue in respect of the portion so omitted or relinquished.

(3) Omission to sue for one of several reliefs.--A person entitled to more than one relief in respect of the same cause of action may sue for all or any of such reliefs; but if he omits,

except with the leave of the Court, to sue for all such reliefs, he shall not afterwards sue for any relief so omitted.

Explanation.--For the purposes of this rule an obligation and a collateral security for its performance and successive claims arising under the same obligation shall be deemed respectively to constitute but one cause of action."

28. Order II Rule 2 mandates that a plaintiff must

include the entire claim. We have perused the plaint in

O.S. No.5558/2009. In para 8 of the plaint in that suit, it is

averred thus:

"8. It is respectfully submitted that the partial amount of Rs.45,45,21,613/- was paid to take into consideration that the defendants would be able to take all the original documents for the purposes of borrowing loan for the purposes of development of the schedule property and also to discharge the balance liability of Rs.38,11,37,312/- to the plaintiffs..."

29. The above averment clearly shows that on the

date of filing O.S. No. 5558/2009, plaintiffs were aware that

the defendants were due a sum of Rs.38,11,37,312/-, but he

chose to file a suit for injunction. Plaintiffs ought to have

sought for recovery of money in O.S. No. 5558/2009.

According to the plaintiffs, the cause of action in both the

suits has arisen when the defendants had failed to pay the

balance consideration.

30. Order II Rule 2 of the CPC clearly bars a plaintiff

from bringing a second suit if he had omitted to make his

claim in the first suit. Admittedly, both suits are filed based

on the very same cause of action.