M.Krishnam Raju vs M/S. Name Estates Private Limited
2022 Latest Caselaw 4326 Tel

       HONOURABLE SRI JUSTICE P.NAVEEN RAO
                       AND
    HONOURABLE SRI JUSTICE SAMBASIVA RAO NAIDU

                            A.S.NO.1060 of 2016

JUDGMENT :       (Per the Hon'ble Sri Justice SambasivaRao Naidu)



      This appeal has been preferred by defendants No.1 to 4 in

O.S.No.794 of 2006 on the file of Principal District Judge, Ranga

Reddy District, against the Judgment and Decree passed by the

trial Court by which the suit of the respondent/plaintiff was

decreed directing the appellants herein to execute registered sale

deed in respect of Ac.24-1/2 gts of land shown in the plaint

schedule in favour of the respondent/plaintiff and the

respondent/plaintiff was directed to deposit the balance sale

consideration in two months from the date of decree.

2. The parties are referred to as they are arrayed in the

plaint filed before the trial court. O.S.No.794 of 2006 has been

filed by the plaintiff for specific performance of contract directing

the defendants to execute a registered sale deed in respect of

Ac.25-00 gts of land forming part of Sy.Nos.148, 149/A1, 149/A2,

149/B, 151/A1, 151/A2, 152/A2, 153/A3 and 152/A4 of Athvelli

Village which herein after will be referred as suit schedule

property. According to the plaint averments, the plaintiff is a 2 PNR,J & SSRN,J A.S.No.1060 of 2016

registered real estate company and it had entered an oral

agreement with defendants to purchase suit schedule property @

Rs.17 Lakhs per acre, for a total sum of Rs. 4.25 Crores.

Defendants No.1 to 6 have got joint ownership and possession

over the suit schedule property. Originally one Smt. Shantha Rao

who was examined as PW.2 before the trial Court entered into a

contract with the defendants in respect of Ac.12.00 gts of land and

paid Rs.1 Crore in four instalments from 18-12-2003 to

08-01-2004. Subsequently, the plaintiff company entered into the

picture, agreed to purchase total land held by the defendants to an

extent of Ac.25.00 gts and made payments on different dates.

The plaintiff furnished the details of payments in a tabular form in

the plaint and further pleaded that they have obtained receipts

from the defendants.

3. The plaintiff further pleaded that it was always ready

and willing to perform its part of contract provided the defendants

procure the income tax clearance certificate and complete the

other legal formalities. A draft agreement was prepared by the

plaintiff on 14-02-2004 and was sent to the defendants for their

signatures. The defendants initially agreed that the same will be

signed by D1 and D3 but subsequently the draft agreement was 3 PNR,J & SSRN,J A.S.No.1060 of 2016

returned unsigned by the defendants. Therefore, the plaintiff

addressed a letter to the defendants on 23-09-2005 for which

defendant No.1 sent a reply on 25-09-2005 with baseless

allegations. The plaintiff further pleaded that when they addressed

another letter to the defendants on 29-10-2005 for which D1 sent

a reply on 17-12-2005 raising a new question of fact that the sale

consideration was Rs.33.00 Lakhs per acre but not Rs.17.00 Lakhs

as alleged by the plaintiff. Therefore the plaintiff filed the suit

stating that they have already paid 80% of the agreed sale

consideration and that they are ready and willing to perform their

part of contract and sought for a decree for specific performance of

contract.

4. All the defendants appeared before the trial Court. D1

to D4 filed common written statement. D5 filed a separate written

statement which was adopted by D6. D1 to D4 have claimed that

there was no such oral agreement of sale as alleged by the

plaintiff. According to them, there was no such transaction by

PW.2 as alleged in the plaint but the Chairman and Managing

Director of the plaintiff company who was examined as PW.1

before the trail court, met D1 and D2, expressed his intention to

purchase the suit schedule property @ Rs.33 Lakhs per acre. At 4 PNR,J & SSRN,J A.S.No.1060 of 2016

that time, D5 and D6 were not present, thereby, the contract was

not concluded. As per the discussion between the parties it was

agreed in principle that the entire sale consideration shall be paid

within 6 months i.e, by 18-06-2004 and all the terms should be

reduced to writing. Even though the terms were not reduced to

writing, PW.1 has opted to make payments in installments at his

convenience. The first 4 payments of Rs.25 Lakhs each were

made by him in the name of his wife. According to these

defendants, they agreed to sell the property @ Rs.8,31,60,000/-.

5. They have also pleaded that after the expiry of six

months period, PW.1 sought to make payments voluntarily,

therefore they have received the amounts. While admitting the

receipt of Rs. 4 crores from the plaintiff, these defendants have

pleaded that the plaintiff committed default in payment of

remaining amount. These defendants have stated that the plaintiff

informed them that they want to obtain bank loan and for that

purpose they would display a board at the land that he was going

to purchase the land because the bank officials will inspect the

landed property. According to these defendants, they agreed to

sell the property @ Rs.33.00 Lakhs per acre but in view of the

failure of the plaintiff, the contract could not have been completed.

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                                                                     A.S.No.1060 of 2016

The remaining defendants also made the same averments. On the

basis of the above pleadings, the Court below framed the following

6 issues:

1. Whether there is no privity of contract between the plaintiff and defendants 5 & 6?

2. Whether the schedule property was agreed to be purchased @ Rs. 17-00 lakhs per acre as contended by the plaintiff?

3. Whether the plaintiff is entitled for specific performance of the contract of sale as prayed for?

4. What is the extent of property agreed to be sold? At what rate? Among whom?

5. Whether the plaintiff is entitled to the refund of the amount claimed with interest?

6. To what relief?

6. During the trial, two witnesses are examined by the

plaintiff apart from marking Exs.A1 to A29. On behalf of the

defendants 1 to 8 they have examined DWs.1 to 3 but did not

mark any documents on their behalf. The trial Court came to a

conclusion that the plaintiff was able to prove its claim against D1

to D4 and passed a decree directing the plaintiff to deposit the

balance consideration @ Rs.17.00 Lakhs per acre within two

months from the date of judgment and further directed the

defendants 1 to 4 to execute sale deed within one month after the

plaintiff deposited the balance consideration.

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                                                        A.S.No.1060 of 2016

7. Therefore, the appellants i.e., D1 to D4 have filed the

present appeal on the ground that the trail court failed to

appreciate that there was no whisper about the consideration to be

paid for the land in the letter which is marked as Ex.A18, and

there was no concluded contract between the parties as the terms

of the contract were not reduced to writing. The trail court failed

to consider that in all the correspondence by the defendants they

have categorically stated the price for the land as Rs.33 lakhs per

acre. They find fault with the findings of the trail court on Exs.A7

and A8 for concluding the price as Rs.17 lakhs per acre. The

defendants have claimed that the trial court should have seen that

except in Ex.A7, Ex.A8 none of the other receipt contain the recital

"out of total consideration of Rs.4,25,00,000/-" and there was no

explanation from the plaintiffs as to why for the first time the said

sentence was incorporated in Exs.A7 and A8 without mentioning

the same either in the prior receipts or in the subsequent receipts.

The defendants have claimed that the trail court ignored their plea

that the above stated sentence was incorporated only to create

evidence just before filing of the suit as an afterthought. While

disputing the recitals of Exs.A7 and A8, the defendants have 7 PNR,J & SSRN,J A.S.No.1060 of 2016

claimed that the trail court committed error in discarding their

plea.

8. According to the defendants the trail court should have

seen that though the part payment of Rs. 25,00,000/- was written

in words, the total consideration of Rs.4,25,00,000/- was not

written in words, and it would substantiate the intention of the

parties herein that the consideration is Rs.33 lakhs per acre but

not Rs.17 lakhs per acre. They have also claimed that the plaintiff

did not come to the court with clean hands, the court below did

not accept the case of plaintiff about its alleged contract with D5

and D6 for purchase of Ac. 0-39 ½ gts, and in such a way it should

have rejected the case of plaintiff against the other defendants.

According to the defendants the court below ignored the positive

statements and admissions of PW.1 and failed to consider that

there was no concluded contract between plaintiff and defendants,

thereby sought for setting aside the Judgment and Decree of the

trail court.

9. The suit has been filed seeking specific performance in

respect of Ac.25.00 gts of land, but the Court below did not accept

the claim of the plaintiff about the agreement with D5 and D6 for

purchase of Ac.0.39 ½ gts and dismissed the suit to that extent.

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                                                         A.S.No.1060 of 2016

The plaintiff did not file any appeal against the said finding as

such, it has become final. As per the pleadings and evidence

through PW.1 and PW.2, it is the specific case of plaintiff that there

was an oral agreement between the parties to purchase the land of

defendants in Sy.Nos.148, 149/A1, 149/A2, 149/B, 151/A1,

151/A2, 152/A2, 153/A3 and 152/A4 of Athvelli village. The

plaintiff has pleaded that in the first instance, PW.2 approached D1

to D4 through one Rama Jyothi and there was an oral agreement

to buy their land and in pursuance of the said agreement, she paid

Rs.One Crore under four different receipts from 18-06-2003 to

08-01-2004. Thereafter the plaintiff entered and PW.1 being an

authorized representative of Plaintiff Company negotiated with

defendants and in pursuance of oral agreement between them, he

made part payments on different occasions. It is the further case

of plaintiff that they agreed to purchase the land of Ac.25.00 gts @

Rs.17,00,000/- per acre and they paid Rs.4,25,00,000/- under

Exs.P3 to P17.

10. The defendants having admitted the receipt of the

above amount, took a specific stand that PW.2 never approached

them, PW.1 himself negotiated with D1 to D4 and agreed to

purchase their land @ Rs.33 Lakhs per acre and it is their case, 9 PNR,J & SSRN,J A.S.No.1060 of 2016

there was an understanding between the parties for purchasing the

land @ Rs.33 Lakhs per acre and entire sale consideration should

be paid in six months from 18-12-2003, and the terms can be

reduced to writing.

11. In support of their respective contentions, the plaintiff

has examined PW.1 and PW.2 and marked Exs.A1 to A29. The

defendants have examined DWs.1 to 3 but no documents are

marked on their behalf. As already stated, the trial Court accepted

the case of plaintiff to the extent of oral agreement between

plaintiff and D1 to D4 and also about the sale consideration as

Rs.17 Lakhs per acre and passed a decree directing the plaintiff to

deposit the balance consideration and defendants to execute the

sale deed.

12. The defendants have filed the present appeal on the

ground that there was no concluded contract between plaintiff and

D1 to D4. They have terminated the understanding in view of the

failure of plaintiff in making payment of balance consideration

within time and as per the agreed price i.e. @ Rs.33 Lakhs per

acre but the Court below came to a wrong conclusion and passed

the decree against their favour. The learned counsel for the

defendants has submitted that the trail court did not appreciate 10 PNR,J & SSRN,J A.S.No.1060 of 2016

the evidence on record and by fixing the responsibility of proving

the case on the defendants, the court below came to a wrong

conclusion and ignored the fact that the plaintiff was not able to

prove its claim.

13. The learned counsel for the respondent/plaintiff has

submitted that the Court below having discussed the entire

evidence on record and after perusing the documents came to a

correct conclusion thereby, there is no necessity to interfere with

the findings and sought for dismissal of the appeal.

14. In view of the above, the following points arose for

consideration in this appeal:

1. Whether the findings of trial Court about the oral agreement between the parties and about the price of the land as Rs.17 Lakhs per acre and about the failure of D1 to D4 to perform their part of contract are in correct?

2. Whether there was an oral agreement of sale between plaintiff and defendants?

3. Whether the claim of D1 to D4 that there was no concluded contract between parties is correct?

4. Whether the judgment and decree of the trial Court are liable to be set aside?

5. Whether the plaintiff is entitled to the relief of specific performance?

15. There is no requirement of law that an agreement or

contract of sale of immovable property should be in writing.

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                                                        A.S.No.1060 of 2016

However, in a case based on oral agreement of sale of immovable

property, burden lies on the plaintiff and whether there was a

concluded oral contract or not is a question of fact to be

determined on the basis of oral and documentary evidence

produced by the parties. Therefore, the plaintiff has to prove that

there was an understanding between the parties about the extent

of land, price per acre and that have they paid the consideration in

pursuance of the said understanding and that there was failure on

the part of defendants in performing their part of contract.

16. In order to prove the said oral agreement for sale of

immovable property, the plaintiff is relying on the evidence of

PWs.1 and 2 and documents marked as Exs.A1 to A29. The

defendants who have admitted the receipt of Rs.4.25 Crores and

Exs.A.3 to A.17 have claimed that there was no concluded contract

and as plaintiff failed to pay the agreed consideration within the

stipulated time the oral agreement of sale was terminated. To

prove their contention, the defendant relied on the evidence of

DWs.1 and 2. They did not mark any documents but relied on the

letters/reply letters exchanged between the plaintiff and the

defendants vide Exs.A18 to A28.

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                                                      A.S.No.1060 of 2016

17. D1 to D4 in their common written statement pleaded

that PW.2 was never in the picture, she never paid any amount

and PW.1 though there was no concluded contract opted to pay

the consideration by way of installments. PW.1 himself paid

Rs.One Crore in 4 installments in the name of his wife, and he

made adhoc payment of Rs.4 Crores including the above said Rs.1

Crore. In support of its contention, the plaintiff has examined

PW.2, who filed her evidence by way of affidavit, deposed that she

negotiated with D1 to D4 through one Rama Jyoti. There was an

understanding between them for purchase of their land and that

D1 to D4 insisted for payment of Rs.One Crore out of the total sale

consideration in cash. The plaintiff company used to conduct all

the transactions through Bank transfer, therefore the Plaintiff

company transferred the said amount to the account of PW.2, and

she in turn paid the amount to the defendants under four receipts.

PW.2 categorically deposed that she and her husband who is

examined as PW.1 deliberated with the defendants and she

marked the receipts under which she paid Rs.One Crore to

defendants as Exs.A3 to A6. The defendants did not choose to

cross-examine PW.2 and reported no cross-examination thereby, it

shall be presumed that what all deposed by PW.2 is correct and D1 13 PNR,J & SSRN,J A.S.No.1060 of 2016

to D4 have accepted the evidence including the payment of

Rs.1.00 Crore by PW.2 by way of cash and the defendants offered

to sell their land @ Rs.17.00 Lakhs per acre. No suggestion was

given to PW.2 that the defendants never agreed to sell that land as

deposed by PW.2.

18. PW.1, the Chairman of Plaintiff Company who was

duly authorized to deal with the sale transaction with the

defendants deposed that they paid Rs.4.00 Crores including the

cash payments made by PW.1 during the period from 18-12-2003

to 01-06-2005. He has also deposed that the defendants have

acknowledged the receipt of above said amounts and that as per

Exs.A7 and A8, the defendants have accepted the receipt of money

under these receipts wherein, it was categorically stated that the

amount was paid out of the total agreed consideration of Rs.4.25

Crores.

19. It is true, since the plaintiff is relying on oral

agreement, the burden of proving such agreement with regard to

sale of immovable property in terms of sale is heavily on the

plaintiff. However since the defendants have accepted the

negotiations with PW.1 and as they did not choose to challenge the

evidence of PW.2, and admitted the receipt of Rs.4.00 Crores 14 PNR,J & SSRN,J A.S.No.1060 of 2016

under Ex.A3 to Ex.A17 the onus of proving their contention is

shifted to the defendants. They have accepted the receipt of

portion of sale consideration of Rs.4.00 Crores under Exs.A3 to

A17 up to 01-06-2005. Another important circumstance is the

defendants did not dispute the recitals of Exs.A7 and A8 till they

filed their additional Written Statement about 9 years subsequent

to the original written statement. The defendants took a specific

stand that they have agreed to sell their land @ Rs.33.00 Lakhs

per acre but they did not raise any objection when the plaintiff

marked Exs.A7 and A8 wherein there is a clear recital to the effect

that the amount paid under these receipts was out of the amount

of Rs.4.25 Crores agreed to be paid for the entire property which

means the defendants agreed to sell the land @ Rs.17 Lakhs per

acre only. The trail court found the evidence of PW.1 and entries

in these two receipts as true and can be relied. The defendants

could not show any reason to discard the said finding and to come

to a different conclusion.

20. The defendants have claimed that as per the

negotiations with PW.1, there was an understanding between the

parties for purchase of land @ 33.00 Lakhs per acre and plaintiff

shall pay the total consideration before 18-06-2004 subject to 15 PNR,J & SSRN,J A.S.No.1060 of 2016

execution of a written agreement. As per the recitals of Exs.A3

and A17, which was not disputed by the defendants, the plaintiff

has paid Rs.4.00 Crores. As could be seen from the recitals of

Exs.A3 to A17, the plaintiff paid Rs.One Crore under Exs.A3 to A6

from 18-12-2003 to 08-01-2004, Rs.1,55,00,000/- under Exs.A7

to A12 on different dates from 13-02-2004 to 21-04-2004. They

have also admitted the receipt of Rs.1,45,00,000/- under Exs.A13

to A17 from April, 2005 to June, 2005. Therefore as per the

contention of the defendants they have received only half of the

agreed sale consideration under different installments up to June

2005. But they did not try to issue any legal notice or letter to the

plaintiff questioning the delay in making payments or informing

the plaintiff that they have terminated the contract or they were

not willing to sell the land to the plaintiff. If the contention of

these defendants is accepted, there was failure on the part of the

plaintiff in payment of agreed sale consideration within six months,

but they did not raise any objection till the plaintiff addressed

Ex.A18 calling upon them to conclude the transaction by obtaining

necessary clearance from the Government Department.

Furthermore, they have accepted the payment of Rs.2.5 Crores

beyond the date of 18-06-2004. The defendants for the first time 16 PNR,J & SSRN,J A.S.No.1060 of 2016

addressed Exs.A19 on 25-09-2005 and stated that they agreed to

sell land @ Rs.33.00 Crores per acre and they have also claimed

that D5 and D6 also accepted to sell their AC.0.39 ½ gts of land to

the plaintiff. As per Ex.A19, it was the case of defendants that

plaintiff was due to pay huge amount but failed to pay the amount

before 18-06-2004.

21. As per the said notice, it is very clear that the plaintiff

was allowed to fix its company board, and that fencing was

arranged around the suit schedule property. By the date of

Ex.A19, the defendants have received Rs.4.00 Crores and even as

per their own version, the property was agreed to be sold to the

plaintiff thereby, there was no necessity for them to raise any

fencing around the suit schedule property. Therefore, the

contention of defendants that they have erected fencing to the suit

property is nothing but false and it is quite clear that they allowed

the plaintiff to construct fencing around the property and arrange a

display board to the effect the plaintiff purchased the property.

22. Therefore, the contention of plaintiff, it has undertaken

development activity in the property is also established. If really

the plaintiff agreed to purchase the property @ Rs.33.00 Lakhs

and failed to pay the remaining amount before 18-06-2004, the 17 PNR,J & SSRN,J A.S.No.1060 of 2016

defendants ought to have questioned the plaintiff about the

balance of Rs.4.00 Crores and may not have kept quite till the

plaintiff addressed Ex.A18 letter. They did not issue any notice

calling to pay the plaintiff the balance amount. They did not

inform the plaintiff that they have terminated the contract. It is

only when the plaintiff asked the defendants through Ex.A18 letter

to expedite the formalities and conclude the transaction, the

defendants sent the reply raising a new plea that they agreed to

sell the land @ Rs.33.00 Lakhs.

23. Soon after receiving Ex.A19 letter from D1, the

plaintiff addressed Ex.A20 letter informing the defendants that

earlier they sent a draft agreement to the defendants on 14-02-

2004, but the defendants returned the agreement without their

signature and while sending the same agreement along with

Ex.A20, the plaintiff asked the defendants to sign the documents

and return it to the plaintiff. Ex.A20 was addressed on 29-10-

2005. The defendants kept quite till 17-12-2005 and addressed

Ex.A21 letter denying the averments of Ex.A20 and informed the

plaintiff that they did not receive any agreement on 14-02-2004.

For the first time they have stated in this letter that and in view of

the failure of plaintiff in payment of the balance consideration, 18 PNR,J & SSRN,J A.S.No.1060 of 2016

they are terminating the oral understanding. Admittedly, they have

received the amount under Exs.A3 to A17 beyond that particular

period up to June, 2005.

24. The contention of the defendants that they agreed to

sell the land @ 33 Lakhs per acre and there was an understanding

to pay the consideration before 18-06-2004 is not proved by any

acceptable evidence. The fact that the defendants have accepted

the payment of balance consideration by installments proves the

claim of the plaintiff that the said payments were made in

pursuance of the said oral agreement of sale. In view of the above

stated circumstances the contention of the defendants that there

was no concluded contract cannot be accepted.

25. As could be seen from the pleadings of both parties

the above stated contract was agreed during the year 2003. The

defendants have pleaded that they agreed to sell the land at the

rate of Rs. 33 lakhs per acre. But as per the evidence placed

before the Court, the market value of the land during 2002 was

only Rs.5 Lakhs. The plaintiff has marked one sale deed executed

on 20-06-2002 as Ex A.29. The said sale deed was executed about

one year prior to the oral agreement between the plaintiff and D1

to D4. According to the said sale deed the value of the land in that 19 PNR,J & SSRN,J A.S.No.1060 of 2016

particular locality was Rs.5 lakhs during 2002. Even if it is

accepted that there was price escalation from 2002 to 2004, it

may not be 3 or 4 times and even if it is believed that Ex.A29 is

executed by showing less value, the defendants could not produce

any evidence in support of their claim as to the market value of

the land in 2003 during which they entered the oral agreement

with the plaintiff. There is no dispute about the nature of business

of Plaintiff. The plaintiff being a company dealing with the

purchase and sale of immovable land may not try to pay such a

huge price in spite of the fact that they have got knowledge of

Ex.A29 sale deed.

26. Therefore, the oral and documentary evidence placed

before the Court clearly shows that there was an oral agreement

between the parties. In the first instance, PW.1 made payments to

the defendants. The defendants have received Rs.One Crore from

PW.2 between 18-12-2003 to 08-01-2004. Subsequently, the

plaintiff paid Rs.3.00 Crores under Exs.A7 to A.17. The defendants

have acknowledged the payment and accepted the recitals of the

documents wherein, there is a clear mention that the amount was

paid out of the agreed total consideration of Rs.4.25 Crores.

Therefore, all these circumstances would prove the contention of 20 PNR,J & SSRN,J A.S.No.1060 of 2016

the plaintiff. The evidence placed before the Court probobalize the

contention of the plaintiff about the oral agreement of sale, about

the understanding with regard to price per acre, the payment of

Rs.4.00 Crores under different occasions and as to the failure of

the defendants No.1 to 4 in execution of sale deed in spite of such

a request from the plaintiff. Therefore, the plaintiff is able to

prove its claim and as such, the plaintiff is entitled to decree of

specific performance and the trial court rightly passed a decree in

favour of the plaintiff. Therefore, there are no merits in the

appeal. As such it is liable to be dismissed.

27. In the result, the appeal is dismissed with costs.

___________________ JUSTICE P.NAVEEN RAO

__________________________ JUSTICE SAMBASIVA RAO NAIDU

Date:26.08.2022 PLV