Blog

Case No: 406/2007.

Facts of the case:-

The Plaintiff commenced legal proceedings to enforce the 20.07.2006 sale agreement by specific execution of the contract. As an alternative, Rs. 11,51,000 with interest charged at a rate of 15% annually is requested damages and a return of the earnest money. According to the plaintiff, PW-1, the plaintiff’s power of attorney holder, paid Rs. 5 lakhs as advance consideration on July 20, 2006, and the remaining Rs. 6,51,000/-was supposed to be paid at the time the sale deed was registered. Six months were allotted in the agreement to finish the sale transaction. The plaintiff contended that the defendant failed to show up to sign the sale deed despite his constant readiness and willingness to fulfill his half of the bargain. The accused objected to the lawsuit. The defendant acknowledged carrying out the arrangement. Nevertheless, it was argued that the contract’s deadline was crucial. The defendant further claims that the plaintiff failed to pay the remaining consideration amount within the allotted six months. The defendant asserted that because the deal was not finalized within the allotted six months, he verbally withdrew the selling agreement dated July 20, 2006.

Appellant Contentions:-

Learned counsel Sri.K.L.Patil, appearing for the appellant, made the following submissions:

(i) The suit for specific performance is decreed for recovery of the nearest amount which overcomes the contentions of the respondent. The agreement is considered proven, and the defendant has not made a decision about returning the money. Therefore, a cannot challenge the execution of the sales contract.

(ii) In the case of sale of immovable property, time is not of the essence in a contract and this well-settled principle of properly considered by the trial court. The district court erred when it found that the content of the agreement concluded on 20.07.2006 is time.

(iii) According to the terms of the contract, the defendant must request the cancellation of the contract by refunding the outstanding fee if the remaining fee is not paid within 6 months. The defendant could not cancel the contract and did not return the advance payment. Therefore the claim that the defendant did not cancel the contract is false. The defendant admitted in cross-examination that the plaintiff is a fairly wealthy man. This showed the readiness and willingness of the plaintiff to perform the contract. Shortly after the plaintiff noticed a public notice soliciting opposition to the defendant’s proposed sale of the properties to a third-party, the plaintiff filed suit for specific performance contract. The district court erroneously found that the plaintiff was not ready and unwilling to perform his part of the contract.

(vi) Alternatively, if a specific action is not possible for any valid reason, there should have been compensation order in addition to the order to return the amount with 15% interest on the claimed amount.

The learned counsel for the Appellant has relied on the following judgments:

(a) Man Kaur (Dead) by lrs vs. Hartar Singh Sangha (2010) 10 SCC 512

(b) Swarnam Ramachandran vs. Aravacode Chakungal Jayapalan, AIR online 2004 SC 907

(c) Balasaheb Dayandeo Naik (Dead) through lrs &Ors vs. Appasaheb Dattatraya Pawar AIR 2008 SC 1205

(d) Gaddipati Divija vs. Pathuri Samrajyam AIR online 2023 SC 290

(e)M/s Greater Ashoka and Land Development Company vs. Kanti Prasad Jain (Deceased) Through lrs. SLP No.23655-56/2018

Respondent Contentions:-

Learned Elderly counsel Sri.S.P.Shankar appearing on behalf of the replier/defendant would raise the following contentions it’s demonstrated in the cross-examination of the Pw- 1. The power of attorney holder of complainant that Pw- 1 has Spentrs. 5 lakhs( quantum allegedly with him after paying 5 lakhs as advance consideration quantum) which the complainant claims to have given to buy the property. Hence, PW1 had no plutocrat to complete the trade sale. The complainant alone could have spoken about his readiness and amenability to perform his part of the contract and he nestled down from the substantiation box.

The alleged power of Attorney holder is unskillful to speak about the intention of the complainant to perform his part of the contract. It doesn’t seem like the sale agreement entered into on behalf of the principal is the one marked at Ex. P17. The purported power of attorney is not mentioned in the agreement. To have been carried out in PW-1’s favor. Not even in the complaint is there any mention of the purported attorney’s authority in PW-1’s favor. The purported power of attorney, dated 02.02.2003 (Ex.P10), is fabricated and predated.The plaintiff asked for two different remedies. 

(a) Relates to a contract’s specific performance. An alternate remedy for the reimbursement of the earnest money and compensation is relief.

 (b)The order for the return of the earnest money has been approved by the court. Because of this, the plaintiff is not a party to the dispute and cannot contest the order that returns the earnest money, which was awarded in response to the prayer included in the plaint.

Learned Senior counsel appearing for the Respondents relied upon the following judgments:

(i) Vidyadhar vs. Manikrao and another (1999)3 SCC 573

(ii) Man Kaur (Dead) by lrs. Vs. Harthar Singh Sangha (2010) 10 SCC 512

(iii) N P Thirugnanam (Dead) by lrs vs. Dr.R.jaganmohan Rao and others AIR 1996 SC 116

(iv) Loonkaran Sethia etc vs. Mr.Ivan E John & others Etc , AIR 1977 SC 336

(v) Mohinder Kaur vs. Sant Paul Singh (2019) 9 SCC 358

(vi) Janki Vashdeo Bhojwani & another vs. Indusind Bank Ltd & others AIR 2005 SC 439

(vii) Lt.Cdr. MC Kendall vs. S. Chandrashekar ILR 1991 Kar 4142

(viii) (viii)Gangabai vs Vijay kumar and others AIR 1974 sc 1126

(ix) Sharnamma vs Renuka and others (RSA No.7034/2011)

Court Analysis and Judgement:-

The court believed that the agreement for sale is in respect of land measuring 2 Acres and 27 guntas. The boundaries of the properties indicate that the land is adjacent to a national highway. This court can certainly take judicial note of the fact that there is a considerable escalation in the value of the land. It is also relevant to note from a recital in the agreement for sale, the plaintiff came forward to purchase the property from the defendant who needed money and received Rs.5,00,000/- in advance. That payment must have provided some sort of succor to the defendant who was in dire need of money. This court should also bear in mind that the trial court has awarded 6% interest on the consideration amount of Rs.5,00,000/- which if calculated comes approximately to Rs.4,87,500/-.

The defendant has not questioned the decree for refund of earnest amount and also the interest awarded on it. The plaintiff has claimed damages of Rs.6,51,000/- which according to him is the balance payable on the sale agreement. Since the court has concluded that the time was the essence of the contract and the plaintiff did not prove readiness and willingness to perform the contract, there cannot be a decree for compensation of Rs.6,51,000/- as claimed. Since this court is awarding the compensation despite the plaintiff not performing his part of the contract, and it is primarily based on the concession by the respondents who left to the discretion of the court to award a reasonable compensation, this court is of the view that interest of justice will be met if 60% of the compensation amount of Rs.6,51,000/- claimed i.e., Rs.3,90,600/- which is rounded off to Rs.4,00,000/- is awarded with 7% interest per annum from the date of the suit till realization of the amount.

Thus, the Plaintiff/appellant is entitled to Rs.5,00,000/- towards refund of earnest amount and Rs.4,00,000/- towards compensation, and with 7% interest per annum on Rs.9 lakhs from the date of the suit till realization.

“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”

Judgement Analysis Written by – K. Immey Grace

Click here to view the judgement