Telangana High Court

Siri Homes vs Kasu Ram Reddy 3 Others on 7 January, 2022

Bench: P Naveen Rao, P.Sree Sudha

                HON'BLE SRI JUSTICE P.NAVEEN RAO
                               AND
                HON'BLE SMT. JUSTICE P.SREE SUDHA

     CIVIL MISCELLANEOUS APPEAL NOs.358 AND 164 OF 2013

                    COMMON JUDGMENT
                     (per Justice P.Sree Sudha)


1.     C.M.A.No.358 of 2013 is filed by M/s.Siri Homes, a partnership

firm, represented by its Managing Partner-petitioner in the A.O.P.

against the orders in A.O.P.No.325 of 2009 dated 06.11.2012 on the

file of the learned II Additional District Judge, Ranga Reddy, insofar

as denying the relief of specific performance of contract dated

26.02.2004 in confirming the order dated 06.02.2009 passed in

A.A.No.39 of 2006 on the file of the learned Arbitrator.


2.     C.M.A.No.164 of 2013 is also filed by Sri Kasu Ram Reddy,

Smt. Kasu Madhavi and M/s.Maruthi Hemanth Housing Private

Limited - respondents in A.O.P. against partial modification of

refunding of Rs.35,00,000/- in A.O.P.No.325 of 2009.

3. The parties in these appeals are hereinafter referred to as they

were arrayed in the AOP for the sake of convenience.

4. The brief facts of the case are that originally respondents

purchased agricultural lands in Sy,Nos.234, 235, 236, 240 and 241

situated at Mangalpalli Village, Patelguda Gram Panchayat,

Ibrahimpatnam Mandal, Rangareddy District, between the years

1992-98. They divided the land into plots for construction of houses

and got the layout approved by the Gram Panchayat. They sold 118

plots measuring an extent of 34,000 square yards to different persons

and the balance left out in the said land was about 72,000 square

yards. The third respondent-M/s.Maruthi Hemanth Housing Private

Limited, agreed to sell the same land measuring 72,000 square yards

to the petitioner at the rate of Rs.300/- per square yard for a total

amount of Rs.2,16,00,000/-, to which an agreement of sale was

executed on 26.05.2004 and on the date of agreement and amount of

Rs.35,00,000/- was paid and the balance amount of

Rs.1,81,00,000/- was agreed to be paid in five quarterly instalments

commencing from 25.05.2004 as indicated below.

           Instalment              Due Date            Amount

      First Instalment             25-05-2004       Rs.43,20,000/-

      Second Instalment            25-08-2004       Rs.38,20,000/-

      Third Instalment             25-11-2004       Rs.33,20,000/-

      Fourth Instalment            25-02-2005       Rs.33,20,000/-

      Fifth Instalment             25-05-2005       Rs.33,20,000/-

The petitioner did not pay the abovementioned instalments and there

was correspondence between the petitioner and the respondents

through letters and legal notices and the claimant-petitioner filed

O.P.No.182 of 2006 under Section 9 of the Arbitration and

Conciliation Act, and obtained interim orders on 28.04.2006

restraining the respondents from alienating the said property. He also

filed an application for appointment of an Arbitrator for adjudication

of the dispute and it was allowed on 13.10.2006.

5. The learned Arbitrator after considering the evidence of both

sides and documents on record, arrived at the conclusion that the

petitioner-claimant committed a breach of the agreement and held

that the amount of Rs.35,00,000/- already paid by claimant-

petitioner is liable to be forfeited.

6. Aggrieved by the said order, an Appeal is preferred by M/s. Siri

Homes-petitioner in A.O.P.No.325 of 2009 and the learned

II Additional District Judge allowed the appeal in part holding that

the petitioner is entitled for refund of the amount of Rs.35,00,000/-

which was paid by it along with interest at the rate of 6% per annum

from the date of the Agreement of Sale till the date of refund, with a

charge over the property covered under the Agreement of Sale, if any,

left unsold. C.M.A.No.358 of 2013 is filed against the said order, and

the petitioner is seeking for the relief of specific performance.

8. The C.M.A.No.164 of 2013 is preferred by the respondents

against the same order contending that the Court does not have any

grounds to interfere with, modify or set aside the well-reasoned

findings of the learned Arbitrator within the grounds mentioned in

Section 34(2) and (3) of the Arbitration and Conciliation Act; and that

there was no prayer for refund of Rs.35,00,000/- made by M/s.Siri

Homes Private Limited and hence the same cannot be granted.

9. Now the point for consideration before this Court is

(1) whether the petitioner is entitled for the relief of specific

performance of contract, (2) whether the refund of Rs.35,00,000/-

with an interest at the rate of 6% per annum granted by the

II Additional District Judge is valid or not, and (3) whether the order

of the learned Arbitrator was rightly interfered by the Court.

10. The agreement of sale for an extent of 72,000 square yards at

the rate of Rs.300/- square yards was entered on 26.02.2004. The

petitioner paid an amount of Rs.35,00,000/- in cash and by way of

cheques on the same day and agreed to pay the balance in five

instalments as indicated before. The petitioner asked for a dispute-

free vacant possession of the 72,000 square yards of land before

payment of the first instalment through letter marked as Ex.A-4, he

demanded the link documents and original approved plan of the

layout. Under Ex.A-5, the respondent stated that the original layout

was misplaced and applied to the Gram Panchayat for a copy and as

soon as it is received, they can furnish a copy of the same. PW-1 in

his evidence stated that copy of layout and copies of link document

were furnished even before the said agreement was entered into. The

petitioner also stated that the extent of land possessed by the

respondents does not exceed more than 35,000 square yards and

that they had also suppressed the sale of some plots to third parties

while entering into the agreement.

13. The petitioner would submit that in accordance with the terms

of the agreement, he cleared the debris on the land, fixed survey

stones on the basis of the plan, displayed sign boards and

advertisement boards on the sides. He also laid the roads, planted

avenue trees, erected fencing around the land, employed a watchman

and incurred an amount of Rs.40,00,000/- for the development of the

said land. He further stated, that as the respondents had transferred

portion of the property to third parties, the petitioner negotiated with

them and purchased plots from them to avoid complications, and

thus, spent a further amount of Rs.30,00,000/-. The petitioner has

not filed a statement of expenditure incurred for development of land

and did not file the report of surveyor and he has not mentioned

about the expenditure incurred by him for development and

purchase of the said lands in the notice issued to the respondents in

November 2004 through their counsel and also in Exs.A-6 and A-8

letters written by him on 21.05.2004 and 03.06.2004. Although he

stated that the respondents disturbed the signs and advertisement

boards and he gave compliant against them, the copy of complaint is

not produced before the Court or the learned Arbitrator.

16. As per the terms of the agreement, the respondents have to

execute sale deeds as and when each instalment is paid in any

portion of the land as desired by the petitioner for such extent in

proportion to the consideration paid by him and the said condition is

admitted by the petitioner in rejoinder. In spite of such a condition,

the petitioner contended that the respondents should deliver dispute

free vacant possession of 72,000 square yards of lands as a condition

precedent for payment of the first instalment. This demand for

possession of entire extent even before payment of first instalment is

contrary to the terms of the agreement.

17. The petitioner addressed a letter dated 10.05.2004 and

respondent gave reply on 12.05.2004. The petitioner wrote another

letter on 21.05.2004 and the third respondent sent a reply on

26.05.2004 in which he categorically stated that he will cancel the

agreement if the amount is not paid within the time specified in the

agreement. The respondents got issued a legal notice on 27.10.2004

and also published general notice in Eenadu on 29.10.2004, for

which the petitioner gave reply notice on 09.11.2004 requesting them

to receive the instalments, but they did not cooperate with him.

18. The petitioner stated that he was always ready and willing to

perform his part of the contract, but the respondents stated that they

wrote a letter under Ex.A-7 on 26.05.2004 giving five days time for

payment of the first instalment to the petitioner, and also stated that

if he fails to do so, it would be deemed that he has no objection for

repudiation. Subsequently in a Lawyer's notice marked Ex.A-9, the

respondents stated that the amount of Rs.35,00,000/- is liable to be

forfeited in view of cancellation of the agreement.

19. The respondents contended that after repudiating the contract

the petitioner kept quiet for more than a year and approached this

Court for appointment of an Arbitrator in the year 2006. If at all the

petitioner was really interested in the specific performance of the

contract, he would not have kept quiet for such a long time after

repudiating the contract and stating that the advance paid will be

forfeited. It is also submitted that it appears that he now came up

with this relief of specific performance only to get a refund of the

advance paid.

20. The respondents stated that they received notices from the

State Financial Corporation (SFC) for auction of the cold storage.

Ex.B14 to 17 were the notices received prior to agreement of sale. As

such the respondents entered into an agreement of sale with a view

to settle the amount due to the State Financial Corporation and

agreed to receive the consideration in instalments. In fact, they

agreed to sell, in order to discharge their liability towards State

Financial Corporation. As the petitioner committed default in paying

first instalment, they could not discharge their liability. As per Ex.B-

19, the valuation of the cold storage was Rs.1,75,00,000/-, but they

sold it for a meagre amount of Rs.76,00,000/- in order to discharge

the aforesaid loan.

21. The respondents not only cancelled the agreement but also

requested the learned Arbitrator for forfeiture of the paid-up amount

of Rs.35,00,000/- and for further damages. The learned Arbitrator

concluded that the petitioner committed breach and thereby the

respondents were forced to sell the cold storage unit for a meagre

amount for discharge of their liabilities and thereby ordered for the

forfeiture of the amount of Rs.35,00,000/- in favour of the

respondents. However, he rejected the damages as the said forfeiture

is sufficient to cover the same.

22. The petitioner preferred an appeal against the arbitration

award, in AOP No.325 of 2009 in which the learned District Judge

supported the version of the petitioner and observed that at no point

of time the respondent issued notice to the petitioner stating their

urgency and their needs and thereby demanding him to pay the

amount. The learned Judge further observed that though petitioner

was in possession of the property, the respondents have not taken

any steps for getting back the possession and he deferred with the

finding of the learned Arbitrator and held that the petitioner is

entitled to a refund of Rs.35,00,000/- with an interest at the rate of

6% per annum and also observed that the respondents have no right

to forfeit the amount without putting a notice to the petitioner.

23. Aggrieved by the said order, the petitioner approached this

Court and claimed the relief of specific performance. As per the

agreement, he has to pay the balance amount in five instalments on

the dates mentioned in the agreement but the petitioner miserably

failed to pay even the first instalment. Though he stated that he was

ready and willing to perform his part of the contract, he failed to pay

the instalment amount even after receiving notice from the third

respondent regarding the repudiation and forfeiture of the amount

paid by him on the date of agreement of sale. He kept quiet for more

than one and half years and filed O.P.No.182 of 2006 for

appointment of Arbitrator. Even after this, he has not deposited

amount before the Arbitrator to show his bona fides.

24. In the agreement, it was specifically mentioned that the first

instalment is to be paid on 25.05.2004 and the last on 25.05.2005

and it clearly reflects that time is the essence of the contract.

Moreover, respondents stated that they sold the land at the rate of

Rs.300/- per square yard only to discharge their liability to the State

Financial Corporation. In spite of having knowledge about the

requirements of the respondents, the petitioner never complied with

the conditions of the contract. Therefore, his version that he is ready

and willing to perform his part of the contract is not tenable.

25. In the arbitration award, the learned Arbitrator, on detailed

discussion, in para 26 held that the remaining extent of land is

72,000 square yards. The respondents also stated that they already

sold 118 plots prior to the agreement. Though the petitioner stated

that he spent Rs.40,00,000/- for development and Rs.30,00,000/- for

purchasing the said lands from several persons, he has not filed a

scrap of paper showing the same. Instead of paying the first

instalment, he raised an objection regarding the extent of land,

demanded for link documents and copy of the layout, though the said

documents were furnished prior to the agreement of sale. On the

date of agreement, he paid Rs.35,00,000/- and he has not paid the

first instalment on one or the other pretext and thus he violated the

terms and conditions of the contract. He has not approached the

Court with clean hands as such, he is not entitled for the equitable

relief of specific performance.

26. In C.M.A.No.164 of 2013, the respondents contended that there

is no prayer for a refund of Rs.35,00,000/- made by M/s.Siri Homes.

They further stated that the award can not be modified or set aside

except for grounds mentioned in Section 34(2) and (3) of the

Arbitration and Conciliation Act. They also stated that in

Ex.A-7 it was clearly stated that if Siri Homes Private Limited failed to

pay the first instalment in five days from 26.05.2004, the agreement

between the parties stands cancelled and the advance amount paid

by them will be forfeited. But the Court below erred in modifying the

reasoned findings of the learned Arbitrator and thus requested the

Court to set aside the order of A.O.P.No.325 of 2009, dated

06.11.2012.

27. Section 22 of Specific Relief Act, 1963 - Power to grant relief for

possession, partition, refund of earnest money, etc.--(1)

Notwithstanding anything to the contrary contained in the Code of

Civil Procedure, 1908 (5 of 1908), any person suing for the specific

performance of a contract for the transfer of immovable property

may, in an appropriate case, ask for -

(a) possession, or partition and separate possession, of the property, in addition to such performance; or

(b) any other relief to which he may be entitled, including the refund of any earnest money or deposit paid or made by him, in case his claim for specific performance is refused.

(2) No relief under clause (a) or clause (b) of sub-section (1) shall be granted by the court unless it has been specifically claimed.

As per Section 22(2) of the Specific Relief Act, refund of earnest

money cannot be granted in the absence of specific claim. Petitioner

never claimed for refund of Rs.35,00,000/- in A.O.P.No.358 of 2013,

and thus, he is not entitled for the said amount.

28. Learned counsel for the respondents relied on a case reported

in ASSOCIATE BUILDERS V/s. DELHI DEVELOPMENT

AUTHORITY1, the Apex Court held that an Arbitral award cannot be

interfered with unless it was assailed that the findings of the

arbitrator are arbitrary, capricious or perverse. The Court shall not

interfere with the arbitrary award when merely another view is

possible. The Award can be interfered only when in the following

circumstances:

i. Not in compliance with statutes or judicial precedents;

ii. Violated the principle of judicial approach;

iii. Not in compliance with the principles of natural justice;

or

iv. Violates the principle of Wednesbury reasonableness i.e., the award is perverse.

29. The counsel for the petitioner relied upon the case reported in

OIL AND NATURAL GAS CORPORATION V/s. WESTERN GECO

INTERNATIONAL LTD.2, wherein the Apex Court held that an award

can be set aside if it is contrary to the following:

           i.    Fundamental policy of Indian law;
          ii.    Interest of India;
          iii.   Justice or morality; or
          iv.    Patently illegal

30. The appellate Court cannot sit in appeal and re-appreciate the

evidence in the award of the learned Arbitrator. It can interfere with

only when it is patently illegal. But in the case on hand, the learned

Arbitrator passed a well-reasoned award. Therefore, the interference

2015 (3) SCC 49

2014 (9) SCC 263

of the appellate Court is not warranted and thus, the order of the

trial Court in A.O.P.No.325 of 2009 dated 06.11.2012 is liable to be

set aside by duly confirming the award of the learned Arbitrator.

31. Accordingly, C.M.A.No.164 of 2013 is allowed and

C.M.A.No.358 of 2018 is dismissed. There shall be no order as to

costs.