Dattatray v. Bhide VS Vithal R. Karandikar and others
1977-07-15
V.S.DESHPANDE
body1977
DigiLaw.ai
JUDGMENT - V.C. DESHPANDE, J.:---The defendant is the appellant in this second appeal. The plaintiffs respondents intended to form a Co-operative Housing Society. They styled themselves as the promoters of the proposed Sahakar Mitra Mandal Housing Sangh and entered into an agreement to purchase a plot, bearing Final Plot No. 394/N situate in Navi Peth at Poona, for a sum of about Rs. 1,35,000/-. The agreement with the owners was entered into on 26th March ,1964 and a sum of Rs. 10,000/- was paid by them by way of earnest money. The plot at the relevant time was under requisition to the Government. The owners undertook to set the same derequisitioned and the sale was to be effected within six months from the date of that agreement. The owners also indicated their readiness to extend the time for the benefit of the defendant if for some reason or the other the Society could not be formed within that period or they required some time for technical reasons. Clause (8) of the Agreement contemplated cancellation of the agreement and refund of Rs. 10,000/- in case the plot was not derequisitioned. The plaintiff then executed an agreement in favour of the present defendant on 2-4-1964. The agreement recited how the defendant, a house agent, was instrumental in tracing this plot and finalising the terms of the sale and getting that transaction fructified. The owner agreed to pay remuneration to the defendant, as such agent and broker, at the rate of 0.50p. per sq.ft., the price of the land as agreed with the owners being at Rs. 1/- per sq.ft. This agreement also stipulated that in the event of there being no derequisition, the defendant would be liable to refund the amount of Rs. 5,000/-. 2. It is common ground that the plot ultimately was not only not derequisition but acquisition proceedings were resorted to by the Government, the plot was acquired and a sum of Rs. 2,74,507.07 was paid to the owners by way of compensation. It is also common ground that the plaintiffs were driven to institute the suit against the defendant in the year 1964 itself, when they discovered that the owners were trying to sell the property to others. This suit was ultimately dismissed. Then another suit was filed in the year 1966, being suit No. 167 of 1966 against the owners for specific performance of the contract.
This suit was ultimately dismissed. Then another suit was filed in the year 1966, being suit No. 167 of 1966 against the owners for specific performance of the contract. It is true that during the pendency of the said suit acquisition proceedings were commenced and finalised. It is also common ground that the compromise was entered into between the plaintiffs and the owners in the said suit No. 167 of 1966, under which the owners paid a sum of Rs. 75,000/- to the plaintiffs in full settlement in consideration of their agreeing not to press their suit for specific performance of the contract. 3. Even before the above suit for specific performance of the contract was filed by the plaintiffs against the owners, the plaintiffs instituted the present suit against the defendant estate agent, i.e. for refund of Rs. 5,000/- with interest on the ground that the property was not derequisitioned and, therefore, the purchase transaction with the owners effected through him could not be finalised and the defendant was liable to refund the same. 4. The learned trial Judge decreed the suit to the extent of Rs. 5,020/- with costs and interest at the rate of 6 per cent from the date of the suit till its recovery. The same has been affirmed in appeal, hence this second appeal. 5. Mr. Agarwal, the learned Advocate appearing for the defendant, raised three contentions for my consideration. His first contention is that the suit of 8th September, 1965 for refund of Rs. 5,000/- was premature inasmuch as the negotiations for derequisitioning were going on, and the plaintiffs themselves had not given up hopes for derequisition at any rate before 1969, as admitted by one of the plaintiffs. The defendant was liable to pay only if derequisition could not take place. The derequisition, so contends Mr. Agarwal, cannot be said not to have taken place on 8-9-1965, when the efforts for derequisition continued to be made till the year 1969. Apparently, the contention is attractive. However, there are several circumstances that militate against the soundness of the same. I have referred to the fact that the plaintiffs were driven to institute the suit against the owners in 1964 itself to restrain them from selling the property to strangers.
Apparently, the contention is attractive. However, there are several circumstances that militate against the soundness of the same. I have referred to the fact that the plaintiffs were driven to institute the suit against the owners in 1964 itself to restrain them from selling the property to strangers. This is obviously necessitated by the conduct of the owner who was trying to opt out from the agreement to sell and trying to sell the property at a higher price. The correspondence also indicates that the owners offered to return the amount even before the suit was instituted. They had in fact issued such a cheque to the plaintiff for Rs. 10,000/-. The attention of the defendant was drawn towards this by the plaintiff by a notice dated 6th November 1964. The owners obviously were relying on the six months period mentioned in the agreement and the fact that the derequisition could not be achieved within that period. 6. Secondly, it is pertinent to bear in mind the terms within six months was a condition on which the owners could have relied on in support of their case and that is what the owners were trying to do but the defendant, as the estate agent, seems to have failed to ensure the effective conveyance of the plot and successful finalisation thereof.. It is not possible to ignore that brokerage almost half of the sale price appears to have been agreed in consideration for the services for ensuring and finalising of the transaction of sale. If in these circumstances, the plaintiff was driven to file a suit against the defendant, it cannot be said to be premature. 7. Mr. Agrawal, however, contended that though under an agreement between the plaintiff and the defendant, the derequisition afforded a right to the plaintiff to claim refund of the amount, but no time limit for such derequisition was mentioned in the agreement nor the defendant had undertaken any liability to effect such derequisition. 8. He also contends that he cannot be said to be bound by the time limit prescribed in the agreement between the plaintiffs and the owners to which he was not a party. To my mind, the entire approach is misconceived. In the first instance, the agreement between the owners and the plaintiffs was the foundation and in fact furnishes the basis for enabling the defendant to claim brokerage.
To my mind, the entire approach is misconceived. In the first instance, the agreement between the owners and the plaintiffs was the foundation and in fact furnishes the basis for enabling the defendant to claim brokerage. In fact, almost one-half of the recitals in the agreement with the defendant, referred to how he was instrumental in bringing about the agreement between the owners and the plaintiffs. It is obvious that when the agreement contemplates refund of the amount on failure to get the property derequisitioned, both the owners and the defendant had six months time in their hands within which they were to complete the transaction. The defendant may or may not be under any obligation to ensure the process of derequisitioning, but the brokerage was payable to him only his services in getting the transaction finalised, derequisition of the property being one of the indispensable condition for the finalisation thereof. Merely because the defendant was not a party to the earlier agreement it does not furnish any basis for holding that the time limit prescribed therein has no hearing whatsoever on the time or the period within which the liability to refund the brokerage paid arose. 9. Mr. Agrawal then contended that in either case, the amount was paid on behalf of the Society or all the persons, who have contributed the amount could have filed the suit and not the plaintiffs alone. 10. Now, as rightly held by the Assistant Judge, the Co-operative Housing Society not having been registered, the persons whose hands actually paid the money alone can be said to be entitled to claim refund. It is essentially a matter of mutuality and the privity of contract. Even on the date when the contract was entered into, the Society was not in existence. It is true that the plaintiff could have paid the money out of the sum collected by them from the proposed members of the Society. But that cannot prevent the plaintiffs, in the absence of a registered Society, to claim the refund by filing the suit in their own names as the contract was entered into with them and not with those who had contributed the money. The plaintiffs cannot be disentitled in the same manner in which they could not have avoided the liability for breach of the agreement, had the Society not been registered or refused to honour it on registration.
The plaintiffs cannot be disentitled in the same manner in which they could not have avoided the liability for breach of the agreement, had the Society not been registered or refused to honour it on registration. 11. There is no merit in the appeal and it is accordingly dismissed. As the respondents have not entered appearance, there will be no order as to costs. -----