Punjab-Haryana High Court
Rajinder Singh And Others vs Ranjeet Singh on 5 January, 2024
Neutral Citation No:=2024:PHHC:001962
2024:PHHC:001962
RSA-1771-2023 (O&M)
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
RSA-1771-2023 (O&M)
Reserved on: 15.11.2023
Date of Pronouncement: January 05, 2024
RAJINDER SINGH AND OTHERS
...APPELLANTS
V/S
RANJEET SINGH
...RESPONDENT
CORAM: HON'BLE MR. JUSTICE HARKESH MANUJA
Present: Mr. Ashish Chopra, Senior Advocate with
Ms. Nitika Sharma, Advocate and
Mr. Khushdeep Singh Maan, Advocate for the appellants.
Mr. S.S. Rangi, Advocate for the respondent.
****
HARKESH MANUJA J. (ORAL)
By way of present appeal, challenge has been made to the
judgments and decrees dated 07.08.2019 and 25.01.2023 passed by
the Courts below, whereby a decree of recovery for a sum of
Rs.4,50,01,000/- along with interest at the rate of 9 % per annum from
the date of payment of the individual amounts to the appellants/
vendors till the date of decree besides interest at the rate of 6 % per
annum from the date of decree till actual realization of the decretal
amount was passed in favour of respondent/plaintiff.
2. Briefly stated, based upon an agreement to sell dated
11.04.2012, the respondent/plaintiff filed a suit for possession by way of
specific performance regarding 209 kanal and 3 marla of land situated
at village Kikkar Kheda, Tehsil Abohar, District Fazilka against
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appellants/ defendants/ vendors.
As per the plaint, the total sale consideration was of
Rs.6,46,01,206.25/- with 15th of April, 2013 being the target date. It was
further pleaded that a sum of Rs.30,01,000/- was paid as earnest
money/advance money followed by part payments made on different
dates with the following details:-
"a) Rs.30,01000/- (Thirty Lakhs One thousand) on
11.04.2012
b) Rs.70,00000 (Seventy Lakhs) on 17.04.2012
c) Rs.30,00000 (Thirty Lakhs) on 18.06.2012
d) Rs.70,00000 (Seventy Lakhs) on 22.12.2012
e) Rs.150,00,000 (One Crore Fifty lakhs) on
5.4.2013;
e) Rs.1,00,00000 (One Crore) on 15.04.2013."
The respondent/plaintiff further pleaded that despite he
being ready and willing to perform his part of the agreement, the
appellants/ defendants did not execute the sale deed on 15.04.2013
thereby compelling him to file the present suit for grant of decree for
possession by way of specific performance qua agreement to sell dated
11.04.2012, besides praying for mandatory injunction for issuance of
directions to the appellants/defendants to clear the loan amount due
against the suit land as an encumbrances as well as seeking relief of
permanent injunction, restraining the appellants/defendants from
alienating the suit property. In alternate, prayer was made for recovery
of Rs.6,46,01,206.25/- i.e. Rs.4,50,01,000/- against refund of amount
paid and Rs.1,96,00,206.25/- towards damages with future interest at
the rate of 18% yearly from the date of filing the suit till recovery.
3. On notice, the appellants/defendants appeared and filed
detailed written statements admitting the factum of execution of the
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agreement to sell dated 11.04.2012 besides no serious rebuttal being
made towards the payment of Rs.4,50,01,000/- under the agreement.
The suit was mainly contested on the ground that the
respondent/plaintiff was not ready and willing to perform his part of the
agreement. It was pleaded that the respondent- plaintiff having failed to
appear before the sub-Registrar on the target date i.e. 15.04.2013
along with the balance sale consideration was thus required to be non-
suited.
4. The trial Court vide its judgment and decree dated
07.08.2019, though non-suited the respondent/plaintiff as regards his
prayer for grant of possession by way of specific performance, finding
him to be not ready and willing to perform his part of agreement, yet,
awarded a decree qua the alternate relief to the extent of recovery of an
amount of Rs. 4,50,01,000/-.
Aggrieved thereof, the appellants/defendants filed first
appeal i.e. Civil Appeal No.16 of 2023 dated 25.01.2023, assailing the
money decree granted in favour of respondent/plaintiff. On the other
hand, respondent/ plaintiff also filed his cross-objections being
registered as Civil Appeal No. 302 of 2019 dated 04.12.2019, praying
for interest upon the money decree awarded in his favour. The First
Appellate Court vide judgment and decree dated 25.01.2023, while
upholding the money decree passed in favour of respondent/plaintiff
awarded him interest thereupon @ 9% per annum from the date of
payment/ deposit of different amounts till the date of decree with 6% per
annum interest from the date of decree till actual realization of the
decretal amount.
5. Impugning the aforementioned judgments and decrees,
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learned Senior counsel representing the appellants/defendants
submitted that the Courts below went wrong while granting decree in
favour of respondent/plaintiff while relying upon clause (5) of the
agreement to sell dated 11.04.2012. Learned counsel also submitted
that the said clause could not be treated being contingent upon the
performance of the agreement besides the other obligations casted
upon respondent/plaintiff regarding proof of his readiness and
willingness to perform the same especially in terms of the prayer made
by respondent/plaintiff in his plaint, wherein mandatory injunction was
even prayed for against appellants/defendants to clear the loan liability
before execution of sale deed. In this regard, he placed reliance upon a
decision dated 04.07.2022 passed by this Court in RSA No.4725 of
2019 titled as Satwant Kaur and others versus Surinder Singh and
others. Paragraph No.16 thereof is reproduced hereunder:
"16. Moreover, it has been held by Hon'ble Supreme
Court in M/s J.P Builders and anothers Versus
A. Ramadas Rao and anothers 2011(1) RCR
(Civil) 604 that "where the vendors entered into
agreement to sell the property against which the
bank loan was raised by them and it was agreed
to execute the sale-deed after the discharge of
bank loans and release of original deeds to the
vendors, it could not be construed as impossible
event which would make the contract void and it
could also not be termed as a contingent contract
and would not come to an end and the plaintiff
was entitled to the specific performance of the
contract." The present matter is squarely covered
by the above-quoted observations and in view of
the same, it becomes explicit that agreement
Exhibit P-2 is not a contingent contract and
hence, the same could be legally enforced".
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Learned Senior counsel further submitted that the First
Appellate Court went wrong while awarding interest in favour of
respondent/plaintiff as no specific prayer in this regard was made in the
plaint. He went on to submit that the earnest money even as per the
agreement to sell, was Rs.4,50,01,000/-which was liable to be forfeited
in the facts and circumstances of the present case wherein the
respondent/plaintiff was never ready and willing to perform his part of
the agreement dated 11.04.2012 and was concurrently recorded in
favour of appellants/ defendants and against respondents/plaintiffs with
there being no challenge to the said finding from the side of
respondent/plaintiff besides even admitting the said amount of
Rs.4,50,01,000/- to be the earnest money during his cross-examination
while appearing as PW-10. As regards opposition to the payment of
interest granted in favour of respondent/plaintiff, learned Senior counsel
placed reliance upon a decision made by the Hon'ble Apex Court in
case of Small Industries Development Bank of India versus Sidco
Industries Private Ltd (2022) 3 SCC 56. Para 48 of the aforesaid
judgment is reproduced hereunder:-
"48. The plaintiff did pray for pendente lite interest in
the trial court but neither did the trial court frame
any issue in this regard, nor were any arguments
recorded. This shows that such claim was not
pressed by the plaintiff. Further, no ground is
urged in the appeal memo, that such an issue
ought to have been framed. Hence, it is clear that
the plaintiff is not serious on its claim for
pendente lite interest. The issue is rested
accordingly."
6. On the other hand, learned counsel representing
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respondent/ plaintiff submitted that the terms of the agreement in
question were to be read in conjunction with each other. While referring
to clauses (5) and (7) of the same, learned counsel submitted that
appellants/defendants were under an obligation to clear the loan which
was outstanding towards the land in question besides effecting an
exchange of land falling in Rectangle No.168 killa No.4, 7, 19/1 and
19/2, before the sale deed could be executed on the target date and
thus, the earnest money could not have been forfeited while relying
upon clause (3) of the agreement to sell in question. As regards the
payment of interest, learned Senior counsel submitted that a specific
prayer was made in the plaint in this regard, though the same did not
find favour with the trial Court and therefore, specific cross-objections
on this point were filed before the First Appellate Court. Learned
counsel further submitted that the judgments passed by the Courts
below regarding refund of amount were based upon proper appreciation
of terms of the agreement in question and thus, the same warrant no
interference.
7. I have heard learned counsel for the parties and gone
through the paper book as well as the records besides the law cited at
bar. I am unable to find merits in the submissions made on behalf of the
appellants/ defendants. The plaintiff/ respondent having failed to assail
the findings recorded against him qua the declining of relief of specific
performance, mandatory and permanent injunction, the only issue for
adjudication remains about refund of Rs. 4,50,01,000/- and interest
thereupon. Moreover, the judgment passed in case of Satwant Kaur's
(supra) in no way help the cause of the appellants/ defendants, but
rather support the respondent/ plaintiff to the effect that the agreement
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in question cannot be treated as a contingent contract.
8. Entire controversy in the present appeal revolves around the
enforcement of agreement to sell dated 11.04.2012 based on different
clauses thereof. Some of the relevant clauses which mainly casted
obligations on respective parties are reproduced hereunder in a
tabulated form:-
Obligations casted upon Vendors- Obligations casted upon Vendee-
defendants/ appellants. plaintiff/ respondent.
Clause That if there is any Clause That the registration of the
encumbrance on this land, it deed has to be completed
will be cleared before the by 15.04.2013, in favour of
registration of the sale the buyer or any person
deed. named by the buyer. If I
refused to execute the sale
deed then the buyer will be
entitled to recover double
the amount or get the
decree from the learned
Court to get the sale deed
executed. If the buyer does
not executed the same
within the stipulated period,
then the earnest money will
be forfeited.
Clause That the land measuring 24
kanal 17 marla, khatoni
No.634, Jamabandi for the
year 2006-07 is in the name
of Bhupinder Singh son of
S. Narain Singh and this
area be given to Bhupinder
Singh in exchange and in
lieu of this, rect. No.168,
Qilla No.4, 7, 19/1, 19/2 will
be transferred in favour of
buyer and get registered
before the execution of the
sale deed.
9. Agreement to sell being a bilateral act of the parties, has to
operate in both directions. Its implementation being based on reciprocal
promises, the order of performance of the terms has to be regulated in
accordance with Section 52 of the Indian Contract Act, 1872, which
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reads as under:-
"52. Order of performance of reciprocal promises:
Where the order in which reciprocal promises are
to be performed is expressly fixed by the contract,
they shall be performed in that order; and where
the order is not expressly fixed by the contract,
they shall be performed in that order which the
nature of the transaction requires."
10. Applying the principle of law being reflected from the
aforementioned provision and also upon a conjoint reading of the
relevant terms of the agreement to sell in question dated 11.04.2012, it
can be traced out that the vendors- defendants/ appellants were under
an obligation to first clear the outstanding loan as well as to get the
exchange effected before 15.04.2013 i.e. the date fixed for registration
of the sale deed and thereafter only, the vendee- plaintiff/ respondent
was to discharge his obligation of getting the sale deed executed on
payment of balance sale consideration or in default thereof the earnest
money could be forfeited. Thus, performance of his obligation by the
respondent/ plaintiff been dependent upon the performance of the
reciprocal obligations by the appellants/ defendants/ vendors and the
respondent / plaintiff who was prevented from performance of his part of
the agreement was required to be exonerated from the consequences
of breach of contract/ agreement in question.
In the given facts, the redemption of mortgage against
discharge of loan liability towards part of suit land was effected on
30.04.2013 and 09.05.2013; whereas the exchange as obligated was
got effected on 15.07.2013; which were all beyond the target date for
execution of sale deed i.e. 15.04.2013 and thus, having failed to
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perform their obligations before the relevant date, the appellants/
defendants had no right to enforce forfeiture of the earnest money-part
sale consideration (without going into the aspect of payment being
either earnest money or part sale consideration as the same may not be
required in the given facts). Even the first Appellate Court dealt with
this relevant aspect in detail. Relevant portion from para 23 of the
judgment passed by the First Appellate Court is reproduced hereunder:-
"23. The said arguments so advanced by counsel for
the defendants/ appellants is not at all convincing.
Perusal of the agreement Ex.P2 goes to show
that there is a specific stipulation at serial No.5
whereby it was required on behalf of defendants
to clear all the loan amount of the banks on the
suit land prior to the execution of the sale deed.
The arguments of the counsel for the
defendants/appellants that the suit land was free
from all the encumbrance pales into insignificance
in the light of testimony of PW-1 Chander Kumar
Patwari, who has categorically stated that out of
the suit land, 40 kanals 08 marlas land was
mortgaged with P.N.B. Gaushala Road, Abohar
against amount of Rs. 15 Lacs which was only
redeemed on 09.05.2013 i.e. after the date fixed
for execution of the sale deed. Similarly, he has
stated that land measuring 20 Kanals 18 Marlas
out of the suit land was mortgaged with Harbans
Finance Company for an amount of Rs.
1,00,000/- which was redeemed on 30.04.2013,
which is also after the date fixed for execution of
sale deed. Furthermore, he stated that 24 Kanals
17 Marlas of land out of the suit land was
exchanged by defendants with Bhupinder Singh
on 15.07.2013 whereas they were required to
execute the said exchange deed as per
stipulation at serial No.7 in agreement Ex.P2
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before 15.04.2013. Therefore, there is
overwhelming evidence on record that there was
default on behalf of defendants/appellants to have
not complied with the stipulation mentioned at
serial No. 5 & 7 of the agreement Ex.P2."
11. In the present case, the absence of readiness and
willingness on the part of respondent/ plaintiff to perform his part of
agreement to sell dated 11.04.2012 against which he was non-suited
qua the relief of specific performance as well as the mandatory
injunction and the permanent injunction, could not be taken to be in
favour of appellants/ defendants; those who before the target date failed
to perform the reciprocal promises/ obligations casted upon them under
the same agreement. As per clause 3 of the agreement, the forfeiture
clause was to become operative and enforceable once, the respondent/
plaintiff being purchaser, failed to get the sale deed executed from the
date of agreement till the target date i.e. between 11.04.2012 to
15.04.2013. Contrarily, the appellants/ defendants themselves having
failed to get the part of land redeemed and the exchange effected
regarding some other part, there was no opportunity for the respondent/
plaintiff to get the sale deed executed before the target date, except for
praying specific performance and mandatory injunction as well as
permanent injunction or in the alternate for refund with interest.
Moreover, as per clause (c) of Section 16 of Specific Relief Act, 1963,
the concept of readiness and willingness primarily governs and
regulates the grant of relief of specific performance and thus, its strict
application may not be as an absolute rule relevant qua the relief of
refund as prayed for in the given facts and circumstances, wherein the
appellants/ defendants did not perform their obligations within the time
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frame and thus, could not claim benefit out of their own wrongs. The
situation may be of course different in a case where there were no
counter obligations to be discharged by a vendor before the target date,
under an agreement.
12. Equally important, having failed to perform their obligations
before the target date, the appellants/ defendants could not have
resisted the claim raised by the respondent/ plaintiff qua interest upon
the refund of the amount paid under the agreement by raising the plea
of readiness and willingness on the part of respondent/ plaintiff in the
wake of Section 54 of the Indian Contract Act, 1872, for short 'the Act',
which is reproduced hereunder:-
"54. Effect of default as to that promise which
should be performed, in contract consisting of
reciprocal promises.--When a contract consists
of reciprocal promises, such that one of them
cannot be performed, or that its performance
cannot be claimed till the other has been
performed, and the promisor of the promise last
mentioned fails to perform it, such promisor
cannot claim the performance of the reciprocal
promise, and must make compensation to the
other party to the contract for any loss which such
other party may sustain by the non-performance
of the contract."
Reference in this regard can also be drawn from the case
titled as Pushkarnarayan S. Maheshwari Vs. Kubrabai Gulamali,
reported as (1969) 71 BOMLR 769, and relevant portion of the same is
reproduced hereunder:-
"The principle that a plaintiff suing for
damages for breach of contract must prove
readiness and willingness to perform his own part
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of the contract can, however, have no application
to a contract which is not of the nature specified
in Section 51 of the Contract Act, but is one which
expressly fixes the order in which reciprocal
promises are to be performed so as to fall within
the terms of Section 52 of that Act. In the case of
such contracts, Section 54 of the said Act lays
down in the clearest possible terms that, if the
promisor of the promise which was to be first
performed fails to perform it, he cannot claim
performance of the reciprocal promise and is
liable in damages for breach of contract to the
other party."
13. Furthermore, the appellants/ defendants in the given facts
and circumstances having failed to discharge their obligation before the
target date were not entitled to determine the agreement entered into
between the parties so as to deny the refund to the respondent/ plaintiff.
Reference in this regard can be made to para 25 of Rattan Lal (since
deceased) through his Legal representatives Vs. S.N. Bhalla and
others, reported as 2012 (4) RCR 283, which is reproduced
hereunder:-
"25. The other point raised on behalf of the
Respondents regarding the import of
Clause 9 of the Agreement to sell is also
not of much substance. In our view Clause
9 was never meant to provide the
Respondents with an escape route if they
themselves failed to discharge their
responsibility of not only applying for sale
permission, but to also follow up the matter
with the authorities in order to obtain the
same within the stipulated period of six
months. In the absence of any material on
record to show that the Respondents had
made positive efforts for procuring the
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necessary sale permission and clearance
certificates, they were not entitled to
determine the Agreement in terms of
Clause 9."
14. Moreover, there is no merit in the contention raised on
behalf of appellants/ defendants to the effect that the respondent/
plaintiff was not entitled for interest upon refund, especially there being
no specific prayer in this regard. A perusal of prayer clause in the plaint
shows that interest was categorically claimed therein. Equally important,
the appellants/ defendants being not entitled to retain the amount,
having utilized the same for long, were rightly saddled with the liability
to refund the same with interest and thus, no interference was
warranted on this count. Even the judgment in case of Sidco
Industries Private Limited (Supra) was not applicable in the facts and
circumstances of the present case as in that case no specific ground
was raised in the appeal qua the relief of interest whereas in the case in
hand, cross-objections were filed before the First Appellate Court by the
respondent/ plaintiff only on the point of interest.
15. In view of the detailed discussion made hereinabove, finding
no illegality or perversity with the concurrent findings of fact recorded by
both the Courts below, the present appeal is hereby dismissed there
being no question of law involved.
16. Pending misc. application(s), if any, shall also stand
disposed of.
January 05, 2023 ( HARKESH MANUJA )
sanjay JUDGE
Whether speaking/reasoned Yes
Whether Reportable Yes
Neutral Citation No:=2024:PHHC:001962
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