Kerala High Court
Muhammed Kutty vs Dhanya on 15 February, 2022
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE P.B.SURESH KUMAR
&
THE HONOURABLE MRS. JUSTICE C.S. SUDHA
TUESDAY, THE 15TH DAY OF FEBRUARY 2022 / 26TH MAGHA, 1943
RFA NO. 62 OF 2014
AGAINST THE DECREE AND JUDGMENT IN OS 507/2012 DATED
11.09.2013 OF SUB COURT, KARUNAGAPPALLY
APPELLANT/PLAINTIFF:
1 MUHAMMEDKUTTY
AGED 74 YEARS
S/O.IBRAHIMKUTTY, NAVAS MANZIL, VENGA
MURI,MYNAGAPPALLY VILLAGE, KUNNATHOOR TALUK.
(DIED LRS IMPLEADED)
ADDITIONAL APPELLANTS 2 TO 5 IMPLEADED
2 MUTHU BEEVI
AGED 70 YEARS
W/O.LATE MUHAMMEDKUTTY, NAVAS MANZIL (KUTTIYIL
VADAKATHIL) VENGA P.O., SATHAMCOTTA, KOLLAM-
690521
3 SHANAVAS.M.,
AGED 51 YEARS
S/O.LATE MUHAMMEDKUTTY, AL.NOOR (KUTTIYIL
VADAKATHIL) EDAVANASSERY, MYNAGAPPALLY P.O.
KOLLAM 690 521
4 NOUPHAL .M.,
AGED 50 YEARS
S/O.LATE MUHAMMEDKUTTY, NAVAS MANZIL (KUTTIYIL
VADAKATHIL) VENGA P.O., SATHAMCOTTA, KOLLAM-
690521
5 NOUSHAD.M.,
AGED 46 YEARS
S/O.LATE MUHAMMEDKUTTY, NAVAS MANZIL (KUTTIYIL
VADAKATHIL) VENGA P.O., SATHAMCOTTA, KOLLAM-
690521
LEGAL HEIRS OF DECEASED SOLE APPELLANT ARE
IMPLEADED AS ADDITIONAL APPELLANTS A2 TO A5
VIDE ORDER DATED 12.03.19 IN IA 3/19
R.F.A Nos.62 and 138 of 2014 -: 2 :-
BY ADVS.
SRI.T.KRISHNAN UNNI (SR.)
SRI.T.SIVADASAN
SRI.VINOD RAVINDRANATH
SMT.MEENA.A.
SRI.SAJU.S.A
SMT.P.A.SHEEJA
RESPONDENTS/DEFENDANTS:
1 DHANYA
AGED 31 YEARS
D/O.SUDHARMMA, RESMIYIL VEEDU, MAROOR
P.O.,MAROOR MURI, ENADI MANGALAM
VILLAGE,PATHANAMTHITTA DISTRICT - 691 524.
2 SUDHARMMA
AGED 57 YEARS
W/O.GOPINATHAN, RESMIYIL VEEDU, MAROOR
P.O.,MAROOR MURI, ENADI MANGALAM
VILLAGE,PATHANAMTHITTA DISTRICT - 691 524.
ADDL R3 DR.SABU MUHAMMED, S/O.LATE MUHAMMED KUTTY, AGED
41, KUTTIYIL VADAKATHIL (MAHASIL), VENGA P.O,
MYNAGAPPALLY, KOLLAM - 690521
ADDL R4 SHIBU MUHAMMED, S/O.LATE MUHAMMEDKUTTY, AGED
39, NAVAS MANZIL (KUTTIYIL VADAKATHIL) VENGA P
O, SATHAMCOTTA, KOLLAM - 690521
ADDL RESPONDENTS 3 & 4 ARE IMPLEADED AS LEGAL
REPRESENTATIVES OF DECEASED APPELLANTS AS PER
ORDER DATED 12.03.2019 IN IA 3/19
BY ADV SRI.B.RAGUNATHAN
THIS REGULAR FIRST APPEAL HAVING COME UP FOR
ADMISSION ON 15.02.2022, ALONG WITH RFA.138/2014, THE
COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
R.F.A Nos.62 and 138 of 2014 -: 3 :-
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE P.B.SURESH KUMAR
&
THE HONOURABLE MRS. JUSTICE C.S. SUDHA
TUESDAY, THE 15TH DAY OF FEBRUARY 2022 / 26TH MAGHA, 1943
RFA NO. 138 OF 2014
AGAINST THE JUDGMENT AND DECREE IN OS 507/2012 DATED
11.09.2013 OF SUB COURT, KARUNAGAPPALLY
APPELLANTS/DEFENDANTS:
1 DHANYA
AGED 32 YEARS
D/O.R.SUDHARMA,RESMIYIL VEEDU,MAROOR.P.O,MAROOR
MURI,ENADI MANGALAM VILLAGE,PATHANAMTHITTA
DISTRICT.
2 R.SUDHARMA
AGED 60
W/O.GOPINATHAN,-DO-
BY ADVS.
SRI.B.RAGHUNATHAN
SRI.G.GOPALAKRISHNA PILLAI
SRI.V.M.JACOB
SRI.M.SALIM
SRI.R.SRINATH
RESPONDENT/PLAINTIFF:
1 MUHAMMAD KUTTY
AGED 75 YEARS
S/O.IBRAHIMKUTTY, NAVAS MANZIL, VENGA
MURI,MYNAGAPPALLY VILLAGE,KUNNATHOOR
TALUK,KOLLAM DISTRICT-690540.
(DIED LRS IMPLEADED)
ADDITIONAL R2 TO R7 ARE IMPLEADED
R.F.A Nos.62 and 138 of 2014 -: 4 :-
ADDL.R2 SMT.MUTHU BEEVI,
W/O.LATE MUHAMMEDKUTTY, NAVAS MANZIL, (KUTTIYIL
VADAKATHIL), VENGA P.O., SASTHAMCOTTA, KOLLAM-
690 521.
ADDL.R3 SHRI.SHANAVAS.M.,
S/O.LATE MUHAMMEDKUTTY, AL.NOOR, (KUTTIYIL
VADAKATHIL), EDAVANASSERY, MYNAGAPPALLY P.O.,
KOLLAM- 690 521.
ADDL.R4 SHRI.NOUPHAL M.,
S/O.LATE MUHAMMEDKUTTY, NAVAS MANZIL, (KUTTIYIL
VADAKATHIL), VENGA P.O., SASTHAMCOTTA, KOLLAM-
690 521.
ADDL.R5 SHRI.NOUSHAD.M
W/O.LATE MUHAMMEDKUTTY, NAVAS MANZIL, (KUTTIYIL
VADAKATHIL), VENGA P.O., SASTHAMCOTTA, KOLLAM-
690 521.
ADDL.R6 SHRI DR.SABU MUHAMMED,
S/O.LATE MUHAMMEDKUTTY, KUTTIYIL
VADAKATHIL(MAHASIL), VENGA P.O., MYNAGAPPALLY,
KOLLAM-690 521.
ADDL.R7 SHRI.SHIBU MUHAMMED,
W/O.LATE MUHAMMEDKUTTY, NAVAS MANZIL, (KUTTIYIL
VADAKATHIL), VENGA P.O., SASTHAMCOTTA, KOLLAM-
690 521.
LRS OF THE DECEASED SOLE RESPONDENT ARE
IMPLEADED AS ADDITIONAL R2 TO ADDITIONAL R7
VIDE ORDER DATED 9/7/19 IN IA 3/19.
BY ADVS.
SRI.T.KRISHNAN UNNI (SR.)
SRI.T.KRISHNAN UNNI SR.
SRI.K.C.KIRAN
SMT.MEENA.A.
SRI.SAJU.S.A
SMT.P.A.SHEEJA
THIS REGULAR FIRST APPEAL HAVING COME UP FOR
ADMISSION ON 15.02.2022, ALONG WITH RFA.62/2014, THE
COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
R.F.A Nos.62 and 138 of 2014 -: 5 :-
P.B.SURESH KUMAR & C.S.SUDHA, JJ.
-----------------------------------------------
R.F.A Nos.62 and 138 of 2014
-----------------------------------------------
Dated this the 15th day of February, 2022
JUDGMENT
P.B.Suresh Kumar, J.
These appeals arise from O.S.No.507 of 2012 on the
files of the Sub Court, Karunagappally. The said suit was one
for specific performance of an agreement for sale. R.F.A.No.62
of 2014 is by the plaintiff and R.F.A.No.138 of 2014 is by the
defendants in the suit.
2. The first defendant owns an item of property in
Sy. No.556/09 of Sooranad South Village and she is running an
aided school therein. The second defendant is the mother and
power of attorney holder of the first defendant. On 17.01.2009,
the first defendant agreed to sell 91 cents out of the said
property with the right to run the school to the plaintiff for a
consideration of Rs.55 lakhs and received a sum of Rs.10 lakhs
from him on that day by way of advance sale consideration. As
per the terms of the agreement, the plaintiff ought to have
purchased the land after paying the balance sale consideration
on or before 30.04.2009. It is provided in the agreement that
the first defendant will measure the property and prepare a
sketch carving out the 91 cents of property and the school
building to be transferred to the plaintiff for appending the
same to the document to be executed in terms of the
agreement. The suit was instituted alleging that though the
plaintiff was ready and willing to pay the balance sale
consideration and obtain sale deed in respect of the property
covered by the agreement, the defendants refused to execute
the document in respect of the property for one or other
reason. The prayer in the suit, therefore, was for specific
performance of the agreement for sale in respect of the plaint
schedule property covered by the agreement. There was an
alternative prayer in the suit for return of the advance sale
consideration.
3. The second defendant filed a written statement
on her behalf and also on behalf of the first defendant
contending mainly that although the property was measured
and a plan of the plaint schedule property was prepared with
notice to the plaintiff on 25.02.2009, the plaintiff did not come
forward with the balance sale consideration within the time
stipulated or thereafter, and it is due to the said reason that the
plaint schedule property could not be transferred to the plaintiff
in terms of the agreement. The defendants therefore prayed for
dismissal of the suit. As regards the alternative prayer, the
stand taken by the defendants in the written statement was
that insofar as the plaintiff did not pay the balance sale
consideration within the time stipulated in the agreement, the
advance sale consideration is liable to be forfeited and the
plaintiff is therefore, not entitled to the alternative prayer as
well.
4. The plaintiff gave evidence as PW1. Two other
witnesses were also examined on the side of the plaintiff as
PW2 and PW3. Exts.A1 to A14 were the documents proved on
the side of the plaintiff. On the side of the defendants, the
second defendant gave evidence as DW1. DW2 is a witness
examined on the side of the defendants. Exts.B1 to B4 were
the documents proved on the side of the defendants.
5. Among the documents proved on the side of
the plaintiff, Ext.A1 is the agreement for sale, Ext.A4 is the
lawyer notice caused to be issued by the plaintiff to the second
defendant calling upon her to accept the balance sale
consideration and transfer the plaint schedule property to the
plaintiff and Ext.A5 is the reply notice caused to be sent by the
second defendant to Ext.A4 lawyer notice. Among the
documents proved on the side of the defendants, Ext.B2(a) is
the sketch of the plaint schedule property allegedly prepared
by DW2 at the instance of the second defendant in furtherance
to the agreement for sale.
6. Although the court below found that the
defendants have not prepared the sketch of the plaint schedule
property as provided for in the agreement with notice to the
plaintiff, the suit was dismissed holding that the plaintiff was
not ready and willing to pay the balance sale consideration
within the time stipulated in the agreement inasmuch as he has
not established that he had the funds sufficient for payment
within the time stipulated. In the light of the finding rendered
by the court below that the defendants have not prepared the
sketch of the plaint schedule property as provided for in the
agreement with notice to the plaintiff, the court below has
rejected the contention of the defendants that the advance sale
consideration is liable to the forfeited also. In the
circumstances, the court below passed a decree directing the
defendants to return the advance sale consideration with
interest and costs. The plaintiff is aggrieved by the decision of
the court below inasmuch as he is denied the decree for
specific performance, and the defendants are aggrieved by the
decision of the court below inasmuch as it enables the plaintiff
to realise the advance sale consideration with interest and
costs from the defendants. Hence, these appeals.
7. Heard the learned counsel for the plaintiff as
also the learned counsel for the defendants.
8. The learned counsel for the plaintiff contended
that in a case of this nature, where there is a reciprocal promise
to be performed by the defendants for the plaintiff to be ready
and willing to perform the remaining part of his obligations
under the agreement, the court below ought not have denied
the decree for specific performance sought by the plaintiff
insofar as it is found that the defendants have not performed
the reciprocal promise in the agreement to measure and carve
out the plaint schedule property by preparing a plan with notice
to the plaintiff. It was also argued by the learned counsel that
it is not necessary for the plaintiff in a suit for specific
performance to adduce evidence to show that he had the
balance sale consideration with him and what the court needs
to see is only as to whether the plaintiff is a person who has the
ability to raise and pay the balance sale consideration. The
learned counsel has relied on the decision of this Court in
Faizal Eroth v. Venkalath Raveendran, 2013 (3) KHC 407,
in support of the said proposition. In order to show that the
plaintiff is a person who has the ability to raise and pay the
balance sale consideration, the learned counsel has brought to
our notice the evidence on record indicating that the children of
the plaintiff are all well placed and that the plaintiff and his
children have purchased a few items of immovable properties
in the recent past and argued that the court below, in the
circumstances, ought not have denied the plaintiff the decree
for specific performance sought by him on the ground that he
has not established that he had the balance sale consideration
with him. The learned counsel has also brought to our notice
the recent amendments to the Specific Relief Act, 1963 and
submitted, relying on the judgment of the Apex Court in
Sughar Singh v. Hari Singh (Dead) through Lrs., 2021 (4)
KLJ 664, that even though the amendments cannot be said to
be retrospective, the amended provisions in the Specific Relief
Act shall be a guide to the court while exercising the
discretionary jurisdiction to order specific performance. In
short, the submission of the learned counsel is that the court
below ought to have ordered specific performance of the
agreement for sale.
9. Per contra, the learned counsel for the
defendants submitted that there is absolutely no justification to
interfere with the decision of the court below to decline the
decree for specific performance sought by the plaintiff. It was
argued by the learned counsel that the demand for compliance
of the terms of the agreement came from the plaintiff in the
form of lawyer notice only after about 17 months after the
expiry of the time limit prescribed for payment of the balance
sale consideration and the said circumstance alone is sufficient
to justify the decision of the court below that the plaintiff was
not ready and willing to perform his part of the obligations
under the agreement. It was also pointed out by the learned
counsel that in Ext.A4 lawyer notice caused to be issued by the
plaintiff to the second defendant, there was no whisper about
the alleged failure on the part of the defendants to perform the
reciprocal promise highlighted by the plaintiff in the plaint
namely, the preparation of a sketch carving out the plaint
schedule property from the larger extent of property held by
the first defendant. It was argued by the learned counsel that in
the said circumstances, it could be certainly inferred that the
stand of the plaintiff in the plaint that he did not pay the
balance sale consideration for want of a sketch of the plaint
schedule property is incorrect. As regards the appeal preferred
by the defendants, the learned counsel submitted that the
court below was not justified in granting a decree directing the
defendants to return the advance sale consideration. The
learned counsel has relied on the decision of the Apex Court in
Satish Batra v. Sudhir Rawal, (2013) 1 SCC 345 as also the
decision of this Court in Susheela (Died) and Others v.
T.M.Muhammedkunhi, 2012 (1) KHC 508, in support of the
said contention. Alternatively, it was argued by the learned
counsel that at any rate, insofar as it was found that the
plaintiff was not ready and willing to perform his part of the
obligation under the agreement, the court below ought not
have directed the defendants to pay the costs of the suit to the
plaintiff. It was also argued by the learned counsel that there
was also no justification for the court to order interest at the
rate of 10% per annum on the advance sale consideration
directed to be returned to the plaintiff. To a query from the
court as to whether the defendants have offered to return the
advance sale consideration to the plaintiff at any point of time,
the answer given by the learned counsel was that the advance
sale consideration was not offered back since the plaintiff has
attached the plaint schedule property in the meanwhile.
10. We have perused the records and given a
thoughtful consideration to the submissions made by the
learned counsel for the parties on either side.
11. In the light of contentions raised by the learned
counsel for the parties, the points arising for consideration are
(1) whether the court below was justified in declining the
plaintiff the decree sought by him for specific performance of
the agreement for sale on the ground that he has not
established readiness and willingness to perform his part of the
obligations under the agreement and (2) whether the court
below was justified in granting a decree for return of the
advance sale consideration to the plaintiff within interest and
costs.
12. Point No.1: In the light of Section 16(c) of the
Specific Relief Act, it is mandatory for a person seeking a
decree for specific performance to prove that he has always
been ready and willing to perform the essential terms of the
contract which are to be performed by him, other than the
terms, the performance of which has been prevented or waived
by the defendant. It is trite that the term "readiness" in the
statutory provision, in the context of an agreement for sale of
immovable property includes, among others, the financial
capacity of the plaintiff to pay the purchase price, and the term
"willingness" therein in the said context refers to the
preparedness of the plaintiff to perform his part of the
obligations under the contract. The factum of readiness and
willingness on the part of the plaintiff is one to be judged with
reference to the conduct of the parties and the attending
circumstances.
13. As far as the present case is concerned, the
fact that the plaintiff did not pay the balance sale consideration
within the time stipulated in the agreement is not in dispute.
According to the plaintiff, he did not pay the balance sale
consideration within the time stipulated since the defendants
did not prepare the sketch of the plaint schedule property after
measuring the same in terms of the agreement, whereas,
according to the defendants, they have prepared Ext.B2(a)
sketch after measuring the plaint schedule property in terms of
the agreement and intimated the same to the plaintiff and it is
because the plaintiff did not have the amount required to pay
the balance sale consideration with him that he did not obtain
sale in respect of the property. As rightly pointed out by the
learned counsel for the plaintiff, it is not necessary for the
plaintiff in a suit for specific performance of an agreement for
sale to keep with him the full amount of the balance sale
consideration before the last date fixed for payment of the
balance sale consideration to show his readiness and what is to
be seen is the ability of the plaintiff to raise and pay the
balance sale consideration within the time stipulated. It has
come out in evidence that the children of the plaintiff are well
placed and that during the relevant period, the plaintiff and his
children were dealing with amounts similar to the amounts
agreed to be paid by them for purchasing the plaintiff schedule
property. In the light of the said materials, we are of the view
that it cannot be said that the plaintiff was not ready to perform
the obligations under the agreement for sale. But, at the same
time, from the materials on record, we are not convinced that
the plaintiff was willing to pay the balance sale consideration
and obtain sale deed in respect of the plaint schedule property
within the time stipulated in the agreement. The first and
foremost reason which prompted us to come to the said finding
is that as pointed out by the learned counsel for the
defendants, although the time prescribed in the agreement for
payment of the balance sale consideration and for obtaining
sale deed in respect of the plaint schedule property from the
defendants expired on 30.04.2009, the plaintiff demanded
compliance of the terms of the agreement for sale in terms of
Ext.A4 lawyer notice only after about seventeen months. There
is no satisfactory explanation from the plaintiff to justify the
said delay, if he was ready and willing to pay the balance sale
consideration and get the sale deed of the plaint schedule
property within the time stipulated in the agreement. That
apart, there is no mention in the lawyer notice that the plaintiff
did not pay the balance sale consideration for want of sketch in
terms of the agreement for sale. If as a matter of fact, the
reason for not paying the balance sale consideration within the
time stipulated was as pleaded by the plaintiff in the plaint, viz,
that the defendants did not take necessary steps to prepare the
sketch in terms of the agreement, the same would have been
certainly stated in the lawyer notice. It is thus clear that as
found by the court below, even though the defendants have not
complied with the term in the agreement for sale to prepare
the sketch of the plaint schedule property with notice to the
plaintiff, it is not on account of the said reason that the plaintiff
did not pay the balance sale consideration to the defendants
and obtain sale deed in respect of the plaint schedule property
within the time stipulated. We take this view also for the
reason that there were a few cases pending before this Court at
the relevant time concerning the service of a few staff of the
school which was functioning in the plaint schedule property,
and the various questions put by the learned counsel for the
plaintiff to the second defendant during her cross examination
would show that the plaintiff was in doubt as to whether
permission is required to be obtained from the Government for
the purpose of effecting the transfer of plaint schedule property
and also as to whether he could get the management of the
school transferred in his name on purchase of the property,
even if prior permission of the Government is not required for
effecting transfer of the property in the light of the pending
litigations. The relevant portion of the cross examination of the
second defendant reads thus:
"ന ങൾക എതര ഹ കക ടതയൽ ക സ ഉണ യരനക ?(Q)
ക സ ഉണ യരന, ക സ തള ക യ (A) ന ങൾ വ ദ യ
പതയമ യ എത ക സ ൾ നടതയടണ ?(Q) High Court
-ൽ ണ ക സ ഉണ യരന, ണ ക സ തള ക( യ . ർ
ല വധ ക ക,ഷവ High Court -ൽ ക സ ന ല
ന ൽക യ യരനക ?(Q) ആയരന. (A) ഒര തസ യലള
ന യമനതന ഒന ൽ കടതൽ ആള ളരട യൽ ന ന (ണ
വ ങ രക ണ (ലര യ ന യമ ച തന ന യരനക ക സ? (Q)
(ണ വ ങ ച ട , ഒര തസ യകലക ഒന ൽ കടതൽ ആള ര;
ന യമ ച ട , paper -ൽ ( സ< നൽ യ ണ ന യമന നടതയത.
ന ങളരട school കലക (=ണ യ ജ?വരനയ ജയകമ റരനയ
ഒര തസ യകലക ന യമ ചതന യരനക ക സ?(Q) ഞ ൻ
ജ?വരന എരD school ൽ ന യമ ച ട , ഞ ൻ (തതൽ ( സ<
രEയ ജയകമ റരനയ ണ ന യമ ചത. W.P.C. No. 25919 /
2007 (I) ജ?വ ന ങൾക എതര ര ടത case രD വധ
( ർ ണക ഈ ണചത ?(Q) (Plaintiff Advocate
shown a document in his custody) അരത (A) ഈ
case രല വ ദ രയ ന ങൾ High Court -രല case ളരട
വവ (റഞ ർപ വസ വലയ ധ എഴതര ടകനതന
ലത മസര ടത വന ടളത ണക ?(Q) അ (A) ഈ case
വലയ ധ നടതനതന യ രത ര തടസവമ . തടസമ ര ന
ഇക ൾ (റയ യ ണക (Q) തടസമരണന വ ദ രയ
വ,Oസ ച ണക ർ ന?ടരക ണ ക( യത ?(Q) യ രത ര
തടസവമ , വ ദ കയ ട അങരന (റഞ ടമ (A) അങരന
വ ദ കയ ട (റഞ ട എന ഇക ൾ ;വ യ (റയ യ ണക ?
(Q) അ , ;വ യ (റയ യ (A) Kerala Education
Rules അനസ ച school ഉ അതരD നടത അവ ,വ
ഹ മ റ രEയകU ൾ education Department -ൽ ന ന
മൻകട അനമത വ ങണമക ?(Q) ഇക ൾ അനമത വ ങ കകണ,
വലയ ധ ഴഞതന ക,ഷ management മ റയ ൽ മത .
വലയ ധ വ ങ യതന ക,ഷ മ റയ ൽ മത എന case രD
ആവ,<തന ;വ (റയ യ ണക ?(Q) അ (A) School
ഉ അതരD നടത അവ ,വ ഹ മ റ രEയനതന റന
ക,ഷ ന ങൾ, education Department -ൽ ന ന അനമത
വ ങ യരകന ?(Q) റന ക,ഷ വ ങ കകണ ആധ
നടനതന ക,ഷ നടന ൽ മത (A) അത റല ഞൻ
(റഞ ടണ. റൽ ന ങൾ അങരന മനWപർവ എഴത
കEർതടളത ണക ?(Q) അ , അത ണ ന യമ (A) റന
ക,ഷ വ ദ അകനOഷ ചക ൾ School ഹ മ റ രEയനതന
മൻ( യ അനമത കവണരമന അറയ യ ആ വവ ന ങര;
അറയക യ രEയടളത ണക ?(Q) എരന ഒന അറയച ട
(A)"
In the circumstances, though on different grounds, we are in
agreement with the finding rendered by the court below that
the plaintiff was not ready and willing to pay the balance sale
consideration and obtain the sale deed in respect of the plaint
schedule property from the defendants before the time limit
prescribed in the agreement. Point No.1 is answered
accordingly.
14. Point No.2: Ext.A1 agreement for sale provides
that if the plaintiff fails to pay the balance sale consideration
within the time stipulated therein, the first defendant will have
the right to utilise the plaint schedule property according to her
will and pleasure and in that event, the plaintiff will have
neither power nor right to claim the advance sale consideration
paid in terms of the agreement. The said clause in the
agreement reads thus:
"WHEREAS the purchaser agrees that if he fails to pay the
balance of the consideration, (Rupees 45 lakhs only) as
stipulated, within the period mentioned above the vendor will
have the right and power to utilise the said properties according
to her will and pleasure and in that event, the purchaser will
have neither power nor right to claim the earnest money
(advance) (Rupees 10 lakhs only) received by the vendor on this
day. It is made clear that time is an essence of this contract."
As seen from the extracted clause, Rs.10 lakhs paid by the
plaintiff to the defendants in terms of the agreement is styled
as "earnest money" also and it appears that it is on account of
the said reason that the learned counsel for the defendants
contended that since the plaintiff has failed to pay the balance
sale consideration within the time stipulated, the advance sale
consideration is liable to be forfeited.
15. Earnest money is paid or given at the time
when the contract is entered into as a pledge for its due
performance. It serves two purposes of being part payment of
purchase money and security for performance of the contract.
That apart, earnest money shall also be a reasonable and
genuine pre-estimate of the damage that may be caused to a
party in the event of breach of the agreement [see Soji Peter
v. K.B.Vijayan, 2017 SCC OnLine Ker 10150]. The words used
in the agreement alone would not be determinative of the
character of the earnest money, but its character needs to be
determined based on the intention of the parties and
surrounding circumstances [see Videocon Properties Ltd. v.
Dr. Bhalchandra Laboratories, (2004) 3 SCC 711]. In an
agreement for purchase of immovable property, the forfeiture
clause will not apply when the payment is made only towards
part payment of consideration and not intended as earnest
money [see Satish Batra]. It is now settled that if the amount
received as advance bear a sizeable proportion to the total sale
consideration, it cannot, by any stretch of imagination, be
stated as earnest money. The amount paid, in such
circumstances, can be inferred not as earnest money paid by
way of security for performance of contract, but as advance
paid as part of the sale consideration to be adjusted at the time
of execution of the sale deed.
16. Reverting to the facts of the case on hand, the
advance sale consideration paid works out to be almost 20% of
the total sale consideration agreed to be paid in terms of the
agreement for sale. There are no indications also in the
agreement for sale for the court to infer that the said payment
was intended only to be the security for performance of the
contract. In the circumstances, we are of the view that the first
defendant is not entitled to forfeit the amount paid in terms of
Ext.A1 agreement for sale. The court below is, therefore,
justified in granting a decree for return of the advance sale
consideration. The court below has ordered interest to be paid
on the advance sale consideration only if the defendants opt
not to return the advance sale consideration within two months
from the date of the decree. There is absolutely no illegality in
directing payment of interest on the advance sale
consideration, if the defendants choose to retain the same even
after two months from the date of the decree.
17. As noted, it is a case where the court, on an
appraisal of records found that the plaintiff was not ready and
willing to perform his part of the obligations under the
agreement and it is on account of the said reason that the
agreement did not fructify. As rightly contended by the learned
counsel for the defendants, the court below, in the
circumstances, was not justified in directing the defendants to
pay costs of the suit for specific performance to the plaintiff.
That part of the decree impugned in the appeal is therefore
liable to be modified.
In the result, R.F.A.No.62 of 2014 is dismissed and
R.F.A.No.138 of 2014 is allowed in part vacating the decree for
costs of the suit granted in favour of the plaintiff.
Sd/-
P.B.SURESH KUMAR, JUDGE.
Sd/-
C.S.SUDHA, JUDGE.
ds 08.02.2022
