Banshilal Soni (Dead) Through L.Rs Vs. Kastoor Chand Begani(Dead) by L.Rs. & Ors
[2007] Insc 730 (12 July 2007)
Dr. ARIJIT PASAYAT & LOKESHWAR SINGH PANTA
Dr. ARIJIT PASAYAT, J.
1. Challenge in this appeal is to the judgment rendered by a Division Bench of
the Madhya Pradesh High Court at Jabalpur. By the impugned judgment, the High
Court held that the Trial Court had erroneously accepted the explanation given
by the appellant. It accepted the plea of the defendant- respondent that there
was abandonment of rights under the contract by the plaintiff. The plaintiff
was, therefore, held to be not entitled to claim for specific performance of
the contract.
However, directions were given for payment of rupees one lakh in view of the
wrong retention of a sum of Rs.25,000/- of the plaintiff by the defendant. The
original plaintiff Banshilal Soni is dead and his legal heirs are the
appellants.
Background facts in a nutshell are as follows:
The appellant-plaintiff instituted the Civil Suit No.8-A/92 for specific performance
of contract for sale of house no.11/198 situated at Halwai Line, Raipur as per
the agreement dated 10.10.1989. According to the plaintiff, the defendants had
agreed to sell the suit house to the plaintiff, for a consideration of Rs.5
lakhs by execution of an agreement for sale of the same on 10.10.1989. In
pursuance of the agreement dated 10.10.1989, the defendant no.1 had taken
Rs.50,000/- as an advance/earnest money by cheque no.062037 dated 11.10.1989
drawn on Central Bank of India, Raipur. The defendants had undertaken to
satisfy the plaintiff about their clear title to obtain 'No Objection
Certificate' from Income Tax Department and to complete all requisite
formalities before the registration of the sale deed. The sale deed was to be
executed on 10.4.1991 and physical possession of the house was to be given by
that date. The defendants had conveyed that the suit house was free from all
encumbrances.
It was pleaded in the plaint that the plaintiff was and is still ready to
perform his part of the contract to pay the balance consideration and get the
sale deed executed and registered in his favour. The plaintiff had given a
registered notice on 15.7.1991 through his Advocate requiring the defendants to
execute the sale deed and get the same registered and to hand over physical
possession of the suit house. However, the defendants, through their counsel,
falsely alleged that the plaintiff had no sufficient fund and thus was
responsible for breach of contract. It was put-forth that the defendants did
not take any step to obtain a clearance certificate from the Income Tax
Department and were taking steps to sell the suit house to some one else at a
higher price. With the aforesaid averments, the plaintiff sought relief for
issue of a direction to the defendants to execute the sale deed and get the
same registered in favour of the plaintiff and to put the plaintiff in actual
physical possession and on his failure to comply with the direction of the
Court, for execution of the sale deed through court. There was also a prayer
for grant of any other relief in the circumstances of the case.
The defendants resisted the relief sought in the suit.
According to them, the defendant No.2 had not signed the above agreement. In
the year 1989, the defendant No.1 had suffered loss in his business and was in
financial difficulty and, therefore, he approached the plaintiff for financial
assistance. The plaintiff had advanced Rs.50,000/- as a loan on the condition,
that the defendants shall execute an agreement to sell the suit house as a
collateral security for such loan. It is the case of the defendants that the
market value of the suit house was Rs.10 lakhs but the defendants were
compelled to execute the agreement being in a precarious financial condition.
It was also stated that they were not required to obtain any clearance
certificate from the Income Tax Department and had never agreed to hand over
the possession of the suit house after execution of sale deed. They disputed
the plaintiff's readiness and willingness. It was also the case of the
defendants before the Court below that the plaintiff had accepted Rs.25,000/-
on 3.4.1991 towards a part of the loan advanced by him and granted a receipt
thereof. It was also pleaded that the contract is not specifically enforceable
as the agreement itself stipulates that the parties had agreed that the
defendants shall pay Rs.2 lakhs to the plaintiff in case the contract was not
completed. It was further set forth that in case the court thinks it fit, it
may grant compensation to the plaintiff, instead of issuing a direction for
execution of the sale deed. It was also put-forth by the defendants that the
time was the essence of the contract and the same having not been given due
compliance, the plaintiff was not entitled to any relief under the law. Lastly,
it was contended by the defendants that the plaintiff having voluntarily
accepted the return of Rs.25,000/- he had abandoned his claim of specific
enforcement of the contract.
The High Court accepted that the Trial Court's finding regarding readiness
and willingness of the plaintiff was in order, and that time was not the
essence of the contract.
Exhibit P1 was an agreement for sale, and not for a loan amount. After
having accepted the plaintiff's case to the aforesaid extent the High Court
ultimately came to the conclusion that there was abandonment of the rights
under the contract by the plaintiff.
During the pendency of the appeal both the plaintiff and the defendant no.1
have died and their legal heirs have been brought on record.
Learned counsel for the appellants submitted that the High Court has made
out a new case which is contrary to the evidence led in the matter and the
evidence adduced.
With reference to the reply to the legal notice it is pointed out that the
execution of the agreement and receipt of the money was not disputed. Further,
there was no question of oral agreement as the agreement itself provided for
the contingency when either of the parties failed to perform his part of the
contract. There was no evidence led regarding the oral agreement. In the reply
it was not mentioned that the amount was taken as loan or as mortgage. It was
stated to be refund of the earnest money. In the written statement a different
stand has been taken from what was stated in the reply to the notice. It was
stated in the written statement that the amount represented a loan. It was
further stated that the document was one of security and there was part payment
of the loan. In the additional plea it was stated that the hardship was not
realized at the time of the agreement. Additionally, this plea is also contrary
with the plea about the loan. When the evidence of the defendants is scanned
with the specific stand there was no agreement to sale and the agreement of
security of loan.
In para 6 of the evidence it was stated that Rs.25,000/- was paid by way of
repayment. At para 7 it was indicated to suggest that plaintiff had paid
earnest money. It is, therefore, submitted that terms of the agreement were
usual and could not be treated to be one for agreement of sale. The Trial Court
recorded that stipulation for damages are unusual. The last date for execution
of sale deed was 10.4.1991. For a period of nearly 20 months nothing was done
and about 7 days before the expiry of the 20 months period the receipt of
Rs.25,000/- was issued. There was no notice or demand indicating readiness and
willingness. The notice was given three months after the date i.e. 10.4.1991,
on 15.7.1991. There was no mention about the payment of Rs.25,000/- in the
suit. Since the relief claimed is discretionary one, it would not be proper to
interfere with the conclusions of the High Court.
A bare reading of the evidence of the defendants clearly shows that the
specific case was one of loan and security and not a case regarding refund of
earnest money. That being so the High Court has made out a new case that the
sum of Rs.25,000/- was by way of refund of earnest money. That was not the case
of the defendants in the pleadings or in the evidence. Interestingly, the
stands in the reply to the notice were at variance with the written statement.
Therefore, normally we would have set aside the order of the High Court.
But some factors which were relevant for the respondent need to be noted. It
is stated that the house is only one which is possessed by the legal heirs of
the original defendant though the learned counsel for the appellants stated
that the statement is not fully correct. Both the plaintiff and the defendant
No.1 have died. We feel in the peculiar circumstances of the case interest of
justice would be best served if the respondents are directed to pay a sum of
Rs.7.5 lakhs to the appellants. It is stated that a sum of rupees one lakh has
been deposited pursuant to the order of the High Court. The same shall be
permitted to be withdrawn by the appellants. Balance amount shall be paid
within six months by the respondents to the appellants. If the payment is made,
it shall be treated as if we have not interfered with the order of the High
Court though the same is not sustainable. On the contrary, if the amount is not
paid, the appeal shall be treated as allowed and the impugned order has to be
treated to have been set aside.
The appeal is accordingly disposed of. There will be no order as to costs.
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