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Unilateral Cancellation of Agreement to Sell – Not required to be challenged separately to maintain suit for specific performance. It is not even a valid defence in a suit for specific performance: Punjab and Haryana High Court

It appeared that the defendant could not substantiate his claim. The plea of hardship itself is not sustainable in this case. The genesis of the plea of the hardship claimed by the defendant goes to his plea, whereby he claimed the agreement to be a security document for repayment of the loan. However, as held above, the defendant has not even disclosed as to what was the circumstance or the purposes for which he had to avail of this loan. Rather he admitted that the earnest money got by him was kept in a Bank account. Hence no hardship to the defendant is proved on record held by Hon’ble Justice Rajbir Sehrawat in Brahm Dutt versus Sarabjit Singh [RSA No. 2943 of 2017 (O&M)]. 

The facts leading to this case related to the suit was filed by the plaintiff claiming that the defendant had entered into an agreement dated14.02.2011 with him Click here to read the judgementfor the sale of a house, as detailed in the headnote in the plaint, measuring 23 marlas. The sale consideration was fixed at Rs.40, 50,000/-. Out of that Rs.10, 00,000/- were received by the defendant as earnest money. The target date for the execution of the sale deed was fixed as 20.04.2012. It was further claimed that on 20.04.2012 the plaintiff remained present in the office of the Sub Registrar with the balance sale consideration. But, the defendant did not reach there, to execute the sale deed. So, on the target date, the sale deed could not be executed. After that, he sent a legal notice dated 30.04.2012 informing the defendant that he could come to the office of the Sub-Registrar on 10.05.2012 for the execution of the sale deed. But, again on this date, the defendant did not turn up. Therefore, the plaintiff filed a suit. On notice, the defendant filed a written statement that he had sent a legal notice dated 17.04.2012 informing the plaintiff that the agreement in question was not intended to be an agreement to sell and that this was signed only as a security for repayment of the amount which, according to the defendant, was taken as a loan @ 2% per month. Therefore, the defendant claims that this legal notice would be tantamount to the termination of the agreement. Still, further, the defendant denied the pleading of the plaintiff that the agreement was intended to be an agreement to sell. However, the receipt of Rs.10 lac was admitted in the written statement itself. Still further, the signatures on the agreement were also admitted. Still, further, the defendant claimed the hardship to him, in case a decree of specific performance is passed in the suit.

To prove the agreement to sell, the plaintiff examined the attesting witnesses. On the other hand, the defendant examined himself and also examined Gurjeet Singh to substantiate his plea regarding the agreement; being a document of security for the repayment of the loan. After hearing the parties and appreciating the evidence, the trialCourt decreed the suit filed by the plaintiff. Hence, the trial Court held that the agreement to sell stands proved as per the requirement of law. The defendant has not been able to extract anything from any of the witnesses of the plaintiff to show that the agreement was intended to be a security document for repayment of the loan.

The learned senior counsel for the defendant/appellant has submitted that the lower Appellate Court has gone wrong in law, in so far as it has not even dealt with the evidence pertaining to the legal notice sent by the defendant on 17.04.2012, whereby he had terminated the agreement in question. Therefore, the finding recorded by the lower Appellate Court are incomplete, if not perverse. Still, further, learned counsel for the defendant has argued that once the agreement stands terminated, then unless the same is challenged by the plaintiff and a declaration of termination as illegal is sought by him and granted by the court, he cannot file a suit for specific performance.

This Court is of the considered opinion that the argument raised by the defendant does not deserve acceptance. The agreement in question has been duly proved by the plaintiff by examining the attesting witnesses as well as the scribes. The plaintiff could have done only this much to prove his claim before the Court to show that it was an agreement, intended to be as it has been recorded. This onus, he has; fully discharged. Even the counsel for the appellant/defendant could not dispute this fact that he has been able to prove the agreement by examining the attesting witness. To prove the plea that the agreement was meant to be a document of security of loan which he had taken at the rate of 2% per month the defendant has not led any evidence. He has not disclosed even the purpose for which he required this loan. On the contrary, he has admitted that the amount of Rs.10 lacs taken by him from the plaintiff was lying in the Saving Bank Account of the defendant. He has also not led any evidence to prove that he ever paid the monthly interest to the plaintiff at the rate of 2%, as claimed by him. So the defendant has miserably failed to prove his plea that the agreement in question was only a security document for repayment of loan available by him. However, a perusal of the receipt in the present case shows that it does not contain the address of the addressee. It only mentions the name of the plaintiff and the name of the city. This, in the opinion of this Court, would not be proof of a proper service upon the plaintiff. The possibility of there being so many persons of the same name in such a big city cannot be ruled out. Hence, the production of receipt in the present case is not proof of the fact that this notice has been sent by the defendant to the plaintiff. “The cancellation, of agreement, as such, is not proved on record. However, otherwise, also the defendant could not have, unilaterally, cancelled the agreement in question. Unilateral cancellation of the agreement to sell by one party is not permissible in law except where the agreement is determinable in terms of Section 14 of this Specific Relief Act. Such cancellation cannot be raised as a defence in a suit for a specific performance. If any such a plea of cancellation/termination is raised by the defendant then the Court can just ignore this and the plaintiff need not challenge such an alleged cancellation.” The defendant has not even disclosed as to what was the circumstance or the purposes for which he had to avail of this loan. Rather he admitted that the earnest money got by him was kept in a Bank account. Hence no hardship to the defendant is proved on record. Otherwise, also he has come on record that no such hardship would be caused to the defendant because it has come in his cross-examination that he is already having another house in the same city, where he can reside.

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