Pramod Buildings
& Developers (P) Ltd. Vs. Shanta Chopra
O R D E R
1.
Leave
granted. Heard.
2.
The
respondent entered into an agreement of sale dated 26.10.1988 agreeing to sell
her property to the appellant for consideration of Rs.43,50,000/- and received
Rs.9,50,000/- as advance. The agreement required the sale to be completed by the
intending purchaser by paying the full balance consideration of Rs.34 lakhs
within 30 days from the date of issue of a letter/telegram by the intending vendor
informing the intending vendee that necessary NOC under Section 269 (UL) of the
Income Tax Act, 1961 and Income Tax Clearance Certificate had been received.
The agreement further
provided that the time was the essence of the contract and it will not be extendable
and if the intending vendee fails to pay the balance of Rs.34 lakhs, the entire
earnest money of Rs.9.5 lakhs shall stand forfeited. Clause 5 related to
property tax and is extracted below:- "That any liability whatsoever regarding
the plot including the property tax payable in respect of the aforesaid plot shall
be paid and be payable by the intending vendor till the sale deed is executed and
vacant possession is delivered to the intending vendee.
1.
2.
3.
The
respondent cancelled the said agreement by notice dated 27.2.1989. However, subsequently
the parties entered into a fresh agreement dated 2.5.1989 under which the cancellation
was treated as withdrawn and the respondent undertook to execute the sale deed
in terms of the agreement dated 26.10.1988 without any change in its terms. The
said agreement recorded that the NOC (in Form 371) from the Income Tax authorities
had been received.
The agreement dated 2.5.1989
provided that on obtaining the Income Tax Clearance Certificate, the vendor should
inform the purchaser within one week and within one month thereafter, the sale
should be completed by execution of the sale deed and the purchaser should pay the
balance amount in the presence of the Sub Registrar. On 16.5.1989, the respondent
informed the appellant that the NOC in Form No.37-I and Clearance Certificate in
Form No.34-A have been obtained and, therefore, the appellant should pay the
balance consideration of Rs. 34,00,000/- within one month from the date of
receipt of the said letter and get the sale deed registered.
It is not in dispute that
in terms of the supplemental agreement dated 2.5.1989, the sale had to be completed
by 17.6.1989. It is not disputed that as 17.6.1989 and 18.6.1989 were holidays,
the sale had to be completed by 19.6.1989. As the sale was not completed, the respondent
alleged that the appellant was in breach and terminated the agreement, by notice
dated 22.6.1989. This led to the filing of a suit for specific performance
(Suit No.1660/1989) by the appellant in the High Court of Delhi. The main
reliefs sought in the said plaint are relevant and extracted below:
a. for specific performance
of the agreement to sell dated 26.10.1988 directing the defendant to execute the
sale deed in respect of the plot bearing No.E-47, measuring 300 sq. yards, situate
in Greater Kailash, Part-I, New Delhi and deliver vacant and peaceful
possession of the said plot to the plaintiff.
b. directing the defendant
to pay and discharge all the arrears of property tax due and payable in respect
of the said plot till the date of execution of the sale deed and any other
liability or encumbrance, if any, in respect of the aforesaid plot prior to the
execution of the sale deed and or to get settled the alleged dispute with Municipal
Corporation of Delhi, if any, and pay all the property tax dues before the execution
of the sale deed.
c. for recovery of Rs. 1,02,600/-
as interest for the period from 10.1.1989 till 03.07.1989 on the amount of
Rs.9.5 lacs and Rs.45,333/- on Rs. 34 lacs from 13th June to 2nd July, 1989
together with interest pendente lite and future @ 24% per annum till the sale
deed is executed and Rs. 13.5 lacs as damages being loss of profits, general and
special, thus total amount of Rs.15 lacs."There was also alternative
prayer for return of the earnest money amount with interest.
4.
The
respondent contested the suit. She admitted the agreement and the terms
thereof. She, however, contended that the appellant committed breach by not tendering
the entire balance sale consideration of Rs.34,00,000/- and getting the sale
completed by 19.6.1989. Required issues were framed and the parties went to trial
and let in oral and documentary evidence. Issues (3) and (4), which are crucial,
are extracted below:
Issue (3) Whether the
plaintiff has been still ready and willing to perform its part of the
contract, as alleged?
Issue (4) Whether the plaintiff
is entitled to damages if so it to what extent?"After considering the pleadings,
the evidence and the arguments, a learned single Judge of the High Court, by judgment
dated 8.1.2008, dismissed the suit. He held that the plaintiff-appellant was
not ready and willing to perform the contract in terms of the agreement and had
failed to tender Rs.34,00,000/- within the stipulated date. However with reference
to the alternative prayer, the court granted a decree for refund of
Rs.9,50,000/- with interest at 10% per annum from the date of payment till the
date of repayment was granted. Feeling aggrieved, the appellant filed an intra-court
appeal and a Division Bench of the High Court, by the impugned judgment dated
2.7.2008 affirmed the decision of the learned Single Judge and dismissed the
appeal with costs of Rs.10,000/-. The said judgment is challenged in this
appeal by special leave.
5.
The
suit has been dismissed on the basis of concurrent findings of fact that the
appellant was in breach and not the respondent. We may refer to the controversy
between the parties.
5.1.
The
appellant's case is as under: It is a builder. It agreed to purchase the property
for construction of a residential apartment building. The respondent failed to furnish
the mutation certificate showing that the property was registered in her name in
the records of the Municipal Corporation and failed to produce the up to date tax
paid receipts.
Appellant therefore demanded
that the respondent should give an affidavit and bank guarantee confirming that
all municipal taxes had been paid and there were no arrears of municipal taxes.
Subsequently, it did not even insist upon the affidavit and required the
respondent to give a letter of undertaking and indemnity bond to that effect.
Respondent did not comply with the said reasonable demand and refused to clear
the tax dues. The respondent was duty bound to make out a good and satisfactory
title and that meant that she had to satisfy the appellant that all municipal
taxes had been paid in regard to the property. The respondent failed to
discharge this basic obligation and thereby committed breach.
5.2.
The
case of the respondent is as under: There was an arbitrary assessment of tax by
the Municipal authorities in regard to the property and therefore, she had filed
a suit (Suit No.712/1976 on the file of the Sub Judge, First Class, Delhi). The
Court had decreed the said suit and directed the Municipal authorities to make
a fresh assessment in the light of its observations. There was no fresh
assessment or demand by the Municipal Corporation for payment of tax.
Therefore, she could not pay the municipal taxes and produce receipts. She had
informed the appellant about the said dispute and had confirmed that in terms of
the agreement, if and when the municipal authorities made the final assessment and
made a demand in terms of such assessment, she would bear and pay the said
taxes up to the date of sale.
In this background, the
question of her giving any affidavit or other document confirming that all
taxes up to date were paid did not arise, as the sale agreement itself
contained appropriate provision in that behalf. When matters stood thus, though
the appellant had secured a demand draft towards the balance price of Rs.34,00,000/-
and she was ready to attend the Sub-Registrar's Office and execute the sale
deed by receiving the said sum, the appellant insisted that she should either
pay Rs.5,00,000/- to it towards municipal taxes or clear all municipal taxes
due before the sale, as he apprehended that his construction project was likely
to be affected. As she was not agreeable to meet the said illegal demand and pay
Rs.5,00,000/-, the appellant was not ready to proceed with the sale. As the
appellant refused to pay the entire balance consideration of Rs.34,00,000/- in
terms of the agreement and get the sale completed, she had no alternative but to
terminate the contract on 22.6.1989.
6.
The
following averments in the appellant's notice dated 24.6.1989 (Ex.P31) proves
the version put forth by the respondent : "You further stated that you would
neither make any payment of the property tax and nor you would get your dispute
with the Municipal Corporation of Delhi settled regarding the assessment, and finalization
of the liability towards the property tax as you were not in any hurry.
The company was then constrained
to say that if your dispute remained pending for ten years and you did not make
the payment and get your dispute settled, the Corporation would not effect mutation
and nor it would sanction the building plans so long as the dispute was pending
and or that the entire arrears of taxes as demanded by it (the Corporation) up to
date, were paid, which would remit into huge losses to the company and the company
in that event would be compelled to pay the entire arrears demanded by the Corporation
and only thereupon would be able to get the mutation effected and the building plans
sanctioned to compete its project, which would cause loss to the company and
the company would be unnecessarily burdened with the liability which was yours.
The appellant also
admitted in the said notice (Ex.P31) that the respondent had attended the Sub-Registrar's
Office on 14.6.1989 and 19.6.1989 and had her presence recorded. The averments in
the said notice also confirmed the version of respondent as what transpired on 19.6.1989,
that is the respondent was not willing to pay any amount until the pending dispute
with Municipal Corporation was decided and the appellant was not willing to buy
unless the respondent paid the up to date taxes or gave a bank
guarantee/security for the likely tax dues.
7.
After
considering the pleadings and the evidence in detail, the learned Single Judge recorded
the following findings on Issues (3) and (4): "The admitted correspondence
between the parties showed that the defendant had in clear cut words stated
that she would be liable for paying the property tax in respect of property as
and when determined in future for the period when the property remained under
her ownership.
If this entire correspondence
between the parties and the covenants to this effect in proposed sale deed were
not sufficient to ensure the plaintiff, no affidavit or writing by the
defendant would have secured the interest of the plaintiff but, it seems that
plaintiff was adamant in getting a writing from the defendant to the extent mentioned
above. I consider that there was no fault of the defendant. The defendant all along
was ready and willing to execute the sale deed and it was plaintiff who because
of his adamant behaviour of obtaining an extra writing from the defendant, did not
execute the sale deed.
This fact is further proved
from the fact that Defendant admittedly signed the copies of the sale deed handed
over to her. The original sale deed obviously was to be signed before the
Sub-Registrar only and she could have signed the original only if plaintiff had
accompanied her to Sub-Registrar. It is not proved from the evidence of the
plaintiff that she had refused to go to Sub-Registrar's office. Rather the
evidence abundantly shows that she had gone to Sub-Registrar's office and was prepared
to appear before the Sub-Registrar and it was plaintiff who insisted upon
additional security from the defendant qua property tax. The plaintiff could have
recovered the amount which the plaintiff was made to pay qua the property for
period before execution of the sale deed. The sale agreement and proposed sale deed
were sufficient security for the plaintiff.
The distrust between
plaintiff and defendant was result of bitterness which crept in between them due
to exchange of letters and notices before the execution of the sale deed. In view
of above premise, I therefore, decide both these issues in favour defendant and
against the plaintiff. The plaintiff is not entitled to a decree of specific performance
of agreement to sell."This finding of fact that the appellant was in breach
has been affirmed in appeal, by the Division Bench. As the judgments of the
courts below were based upon the said pure finding of fact based on appreciation
of evidence, it does not call for interference in exercise of power under
Article 136 of the Constitution of India.
8.
The
only legal issue that was urged by the appellant was that the defendant did not
step in to the witness box and evidence was given only by her husband and that was
insufficient. The said contention was considered and negatived both by the single
Judge and the Division Bench. Reliance was placed on the judgment of this Court
in Man Kaur (Dead) By Lrs. Vs. Hartar Singh Sangha (2010) 10 SCC 512. The said
decision has no bearing on the facts of this case. As rightly held by the High
Court, it was for the plaintiff who approached the Court to prove that he was
ready and willing to perform the contract.
The plaintiff in a
suit for specific performance, cannot obviously succeed unless he proved that he
was ready and willing to perform the contract. The exhaustive correspondence between
the parties clearly discloses the respective stands of the parties. Even the prayer
in the plaint shows that the appellant was not ready to pay the entire balance
of Rs.34,00,000/- as agreed under the agreement of sale but that the plaintiff insisted
upon the appellant to pay the municipal taxes before the sale, as a condition for
sale.
If appellant was not willing
to pay Rs.34 lakhs at the time of sale, as specifically agreed under the
agreement of sale, the appellant could not claim that it was ready and willing
to perform its obligations. As noticed above, after appreciating the entire
evidence, learned Single Judge and Division Bench of the High Court have recorded
a finding that the appellant was not ready and willing and consequently
dismissed the suit.
9.
We
find no reason to interfere with the decision of the High Court. The appeal is,
therefore, dismissed.
......................J.
( R.V. RAVEENDRAN )
.......................J
( A.K. PATNAIK )
New
Delhi;
February
09, 2011.
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