Paramount Builders(Chennai) Ltd. , & Another v. Kamal Babbar & Another
2005-06-15
S.ASHOK KUMAR
body2005
DigiLaw.ai
Judgment :- The first plaintiff is a Public Limited Company. The second plaintiff is the Chairman and Director of the Company. The second defendant was the owner of the property at No.166, Thambu Chetty Street, Chennai-1. The plaintiff and the first defendant agreed between themselves jointly to purchase the said property. The first plaintiff and the first defendant on one side and the second defendant on the other side entered into an agreement of sale dated 13th September, 1995, under which the second defendant agreed to sell the said property to the first plaintiff and the first defendant, on the terms and conditions mentioned in the said agreement. The agreed sale price was Rs.2,95,00,000/=. A sum of Rs.1 crore was paid as advance, out of which, Rs.62,00,000/= was paid by the first plaintiff and Rs.38,00,000/= was paid by the first defendant. For the sum of Rs.38,00,000/= paid by the first defendant under the said agreement of sale, the first defendant had issued a demand draft for Rs.3 lakhs and a cheque for Rs.35,00,000/=. After execution of the agreement of sale, the first defendant was not in a position to honour his cheque for Rs.35 lakhs given in favour of the second defendant and the said cheque was returned back to the first defendant. When the plaintiff wanted to cancel the deal and get back his advance, the first defendant stated that it will not be possible to get back the advance from the second defendant and somehow persuaded the plaintiffs to pay an additional advance of Rs.33.65 lakhs. Therefore, the first plaintiff had to give another sum of Rs.33,65,000/= by way of a demand draft in favour of the second defendant. The first defendant gave a demand draft dated 22.9.1995 for Rs.1,35,000/=. Thus, the first plaintiff paid Rs.95,65,000/= and the first defendant paid Rs.4,35,000/=. The contribution of the first defendant as advance in terms of percentage was Rs.4.35 per cent and the contribution of the first plaintiff in the advance was Rs.95.65 per cent. The agreement dated 16.2.1996 was signed between the first plaintiff and the first defendant. The first defendant told the plaintiffs that unless the agreement is signed, he will not cooperate and coordinate for getting the property and even the advance amounts already paid by the first plaintiff will be lost. There being no other alternative, the plaintiff signed in the agreement.
The first defendant told the plaintiffs that unless the agreement is signed, he will not cooperate and coordinate for getting the property and even the advance amounts already paid by the first plaintiff will be lost. There being no other alternative, the plaintiff signed in the agreement. As per the agreement the first plaintiff will purchase the ground and first floor of the existing structure in the said property and the first defendant would purchase the second and third floors and that both off them shall purchase proportionate undivided shares in the land to hold their respective portions. It was further agreed that the common areas/amenities and the open terrace areas shall belong to both the parties or their nominees in equal share on obtaining due permission to build thereon. At the time when the agreement was signed between them, the entire balance consideration under the agreement of sale was paid to the second defendant except a sum of Rs.20 lakhs. In the agreement dated 16.2.1996, it was agreed between the first defendant and the plaintiffs that the said balance consideration of Rs.20 lahks shall be paid by the first defendant to the second defendant within one month from the date of agreement. The first defendant however, did not make payment of the said sum of Rs.20 lakhs to the second defendant. It was also agreed that the first plaintiff and the first defendant shall pay all taxes. It was also agreed that all expenses towards the maintenance of the said building like painting, upkeep of common areas, upkeep of security staff etc., shall be borne in the ratio of 50:50 respectively. 2. Out of the payment of Rs.2.75 crores, the plaintiffs have paid a total sum of Rs.2,10,65,000/= and the payments made by the fist defendant is Rs.65,35,000/=. In terms of percentage 76.6 per cent was paid by the plaintiffs and 23.4 per cent was paid by the first defendant. Since the second defendant failed to execute and register the sale deeds in time, the plaintiffs and the first defendant filed C.S.No.823 of 1996 before this court against the second defendant.
In terms of percentage 76.6 per cent was paid by the plaintiffs and 23.4 per cent was paid by the first defendant. Since the second defendant failed to execute and register the sale deeds in time, the plaintiffs and the first defendant filed C.S.No.823 of 1996 before this court against the second defendant. A decree dated 22.1.1997 was passed by this court directing the second defendant to execute the sale deed in favour of the plaintiffs and the first defendant herein for a total consideration of Rs.2.95 crores and entitling them for one half of the undivided share in the land and the construction area of the ground and first floors. This court also directed that the balance sale consideration of Rs.20 lakhs shall be adjusted towards interest for the sale consideration of Rs.2.75 crores utlised by the second defendant for not conveying the property till then. Since the second did not execute and register the sale deeds as per the decree in the said suit, the first plaintiff and the first defendant filed E.P.No.9 of 1997 before this court and after due service of notice, this court directed the Assistant Registrar-I, Original Side of this court to execute the sale deed for and on behalf of the second defendant. Accordingly, he executed the sale deed on 30th July 1997 conveying the entire ground floor and first floor and proportionate undivided shares of the land in the said property. 3. Before filing of the suit, there were discussions between the first plaintiff and the first defendant on the one hand and the second defendant on the other hand pertaining to the second defendant having received a huge consideration of Rs.2.75 crores and retaining the same without executing the sale deeds and the necessity of the second defendant for compensating till the sale deeds are executed. The second defendant also gave a letter on 3.5.1996 to the first plaintiff agreeing to pay compensation for the amount advance at the rate of Rs.4.80 lakhs per month beginning from April 1996 and further agreed that out of that, a sum of Rs.2.50 lakhs would be disbursed on monthly basis and the balance of Rs.2.30 lakhs per month would be accrued and settled at the time of transfer of the property. The letter further stated that "this has been discussed and agreed to with Mr. Kamal Babbar".
The letter further stated that "this has been discussed and agreed to with Mr. Kamal Babbar". The compensation agreed to be paid by the second defendant was in effect at the rate of 21 per cent per annum on the sum of Rs.2.75 Crores paid. That is how it works out to Rs.4.80 lakhs per month. In pursuance of the aforesaid agreement wherein the second defendant herein promised to pay compensation, the second defendant herein gave to the first defendant in May 1996 two cheques for Rs.1.25 lakhs each, one favouring the first plaintiff and the other favouring the first defendant. On receipt of the said cheque, the first plaintiff wrote a strong letter to the Head Office of the second defendant herein protesting against the same and further called upon the second defendant herein to remit the balance compensation in proportion to the amount paid by the first plaintiff. 4. There was an understanding between the first plaintiff and the first defendant that subject to final adjustment on pro-rata basis i.e. on the proportionate basis of contribution of the sale consideration, the interest/compensation that may be paid by the second defendant herein will be at the rate of Rs.1.5 lakhs for the first plaintiff and Rs.1.00 lakh for the first defendant. In this regard, the first plaintiff wrote letters on 23.5.1996 and 22.5.1996 to the second defendant and also another letter dated 27.5.1998 to the second defendant's office. As per the said agreement, the total compensation payable by the second defendant works out to Rs.74,38,686/- upto 28.2.1997 as follows: 5. The correctness of the above working is vouched by way of a statement signed jointly by two officers of the second defendant with the first defendant and the same was adjusted with the first defendant towards the amount payable by him for another property viz., No.154, Thambu Chetty Street, Chennai - 1, which the first defendant purchased from the second defendant in a separate transaction. The first defendant and the officers of the second defendant colluded together, with the result, the first defendant received substantial compensation from the second defendant either by way of cheques from the second defendant or by way of adjustment towards the sale consideration in respect of the transaction of the property at No.151, Thambu Chetty Street, Chennai.
The first defendant and the officers of the second defendant colluded together, with the result, the first defendant received substantial compensation from the second defendant either by way of cheques from the second defendant or by way of adjustment towards the sale consideration in respect of the transaction of the property at No.151, Thambu Chetty Street, Chennai. The first defendant has also received from the second defendant rent, which was actually payable to the first plaintiff in respect of tenants viz., Karur Vysya Bank and United India Insurance Company and also the rental deposit of the latter, since both of them were and are tenants in the portions purchased by the first plaintiff. This is proved by the letter dated 16.12.1997 written by the second defendant to the United India Insurance Company Limited with a copy to the first plaintiff. As on date, a sum of Rs.74,02,675/- is due to the first plaintiff as detailed below: 6. The second defendant is an old man aged more than 70 years and keeps travelling out of India quite often for business. Whenever the second plaintiff was in Chennai, he would request the first defendant to settle the accounts and pay the amount due as stated above. The first defendant was going on promising to pay the amount and settle the accounts as he has borrowed the money for purchase of the said properties, and he did not have the money to pay to the plaintiffs and requested the plaintiffs to bear with him. The first defendant also promised that he would pay interest at the rate of 24% per annum on the amounts due for the delay in payment. Therefore, the plaintiffs were keeping quiet that the first defendant would fulfill his promise by making payment of the amounts due with interest. When the first defendant failed and neglected to pay the amounts due for a long time and did not respond properly to the plaintiffs, the plaintiffs sent a registered letter dated 7.12.1998 demanding payment of Rs.50,75,263/- towards the balance of principal and Rs.22,33,115/- towards the interest as on date in all Rs.74,02,675/- and interest thereon 24% thereon till date of payment. A statement of account giving the calculation and details was annexed to the said letter. The first defendant sent a reply dated 12.1.2996 making false and frivolous allegations and denying the liability.
A statement of account giving the calculation and details was annexed to the said letter. The first defendant sent a reply dated 12.1.2996 making false and frivolous allegations and denying the liability. The claim of the first defendant for 50% ownership in the property is absolutely untenable, because he has invested only 23.4% of the sale consideration and the balance of 76.6% of the sale consideration was paid by the first plaintiff. The first defendant has also alleged that the plaintiffs have not allowed to sell the ground floor to a prospective purchaser, which is false. The first defendant also stated that he has promised a lumpsum profit as and when the property is sold, is also false. The first defendant has succeeded in executing a well planned cheating operation. He has misused his relationship with the officers of the second defendant and that he has also enabled him to cheat the plaintiffs. He actually made the plaintiffs to invest 76.6 % and the first defendant, for an investment of 23.4%, wants to become the owner of 50% of the property. He had made lot of manipulations and adjustments in accounts with the second defendant and took all the benefits for himself by not paying what he was supposed to pay and has put the plaintiffs to loss and suffering. The second and third floors which he has taken are equivalent to 4 floors because each of the 2nd and 3rd floors are having a 20 feet height and have been converted into two floors each. Thus in effect, the first defendant has become owner of 4 floors by paying 23.4% of price and the first plaintiff has become owner of only two floors by paying 76.6% of the price. Both the defendants are jointly and severally liable to pay the amounts due to the plaintiffs. The cause of action for the suit arose at Chennai where both the defendants are having their offices and on the agreements entered between the parties on various dates. Therefore, the plaintiffs pray for a judgment and decree against the defendants to pay a sum of Rs.74,02,675/= with interest thereon at 24% per annum from the date of plaint till date of realisation and to pay the costs. 7.
Therefore, the plaintiffs pray for a judgment and decree against the defendants to pay a sum of Rs.74,02,675/= with interest thereon at 24% per annum from the date of plaint till date of realisation and to pay the costs. 7. The first defendant filed a written statement, gist of which is as follows:- The second plaintiff is a non resident Indian who lives in Hong Kong and is known to the first defendant for the past 20 years. The second plaintiff requested the first defendant to negotiate with the second defendant on his behalf for purchasing the property. At the request of the first plaintiff and as per the resolution dated 7.9.1995, the first defendant should be a co purchaser for the purchase of the suit mentioned property. Though as admitted by the plaintiff the investment made by both parties were unequal, they had agreed to share all the right and liabilities on 50:50 ratio. The property was purchased by both the parties on a 50:50 ratio for a total sale consideration of Rs.2,95,00,000/= of which the first defendant had invested Rs.84,85,000/=. The second defendant had informed that a total advance of Rs.1 Crore should be given to them and further informed that the suit mentioned property was under mortgage for Rs.1 Crore with M/s.Peerless Finance Corporation and the same will be released as early as possible. The second plaintiff agreed to pay the advance amount of Rs.62,00,000/= and Rs.3,00,000/= by Demand Draft dated 13.9.1995 was paid by the first defendant and for the remaining amount, the plaintiff had requested the first defendant to issue a cheque in favour of the second defendant. The plaintiff had further stated that after reaching Hong Kong he would transfer the amount to Madras and requested the second defendant not to deposit the cheque. On the request made by the 2nd plaintiff, the first defendant had issued a cheque for an amount of Rs.35,00,000/= in favour of the second defendant only on the assurance given by the plaintiff and a sale deed was entered into between the plaintiff and the first defendant with the second defendant on 13.9.1995. The cheque dated 13.9.1995 for an amount of Rs.35 lakhs was returned to the first defendant by the second defendant when the plaintiff had given a cheque dated 21.9.1995 for Rs.33,65,000/= to the second defendant.
The cheque dated 13.9.1995 for an amount of Rs.35 lakhs was returned to the first defendant by the second defendant when the plaintiff had given a cheque dated 21.9.1995 for Rs.33,65,000/= to the second defendant. The balance of Rs.1,35,000/= being the shortfall was paid by the first defendant through a Demand Draft to the second defendant on the request made by the plaintiffs. After paying the fist installment, they got an offer for the purchase of the ground floor measuring about 9,200 sq.ft., at the rate of Rs.4000/= per sq.ft., aggregating to Rs.3,68,00,000/=. But the plaintiffs stated that they are not interested in disposing of the property and suggested that the property shall be owned in 50:50 ratio. The total cost of the building purchased is Rs.2,95 crores for 36,000 sq.ft., and the average cost comes to Rs.800 per sq.ft., At the time, the market value for the ground floor was Rs.4,500/= sq.ft., the first floor was at Rs.2,000/= per sq.ft., and the second and third floors at Rs.1,500/= per sq.ft., It was agreed by both the parties that the property will be divided and owned in a 50:50 ratio subject to the floors retained by each partner and based on the calculation of the market value where the ground floor and the first floor have greater commercial value over the second and third floor of the property. 8. The investments made by both parties vary with regard to the market value of the floors owned by them in the property and this is evident from the sale deed of the first defendant. Accordingly, it was suggested that the second plaintiff would retain the ground and the first floors valued at Rs.2,10,65,000/= and the second and third floors valued at Rs.84,35,000/= would be given to the fist defendant according to the proportionate investments made by them. The plaintiffs have also agreed to give the first defendant an amount of Rs.25,00,000/= for acquiring the property after selling the ground floor. The first defendant was not interested in taking the second and third floor as the ground floor alone is estimated to fetch an amount of Rs.4 crores approximately. The plaintiffs pressurised the first defendant to accept the unjustified offer and also threatened that they will acquire the property by any means.
The first defendant was not interested in taking the second and third floor as the ground floor alone is estimated to fetch an amount of Rs.4 crores approximately. The plaintiffs pressurised the first defendant to accept the unjustified offer and also threatened that they will acquire the property by any means. Having not other alternative the first defendant succumbed to the unjustified and irrational offer taking into account that the second plaintiff is his friend and had also paid an advance amount of Rs.95,65,000/- at the time of purchase of the property. Due to the pressure and to avoid misunderstanding between themselves, the first defendant agreed to the proposal and a Memorandum Of Understanding was entered on 16.2.1999 prepared by his Manager Mr.S.Rajagopal, Chartered Accountant and Mr.S.A.Rajan, Advocate for the plaintiff and witnessed by the plaintiff's General Accountant Mr.S.Abdul Rawoof. As per the agreement, the expenses towards the maintenance of the said property like painting etc., shall be equally borne by both the parties. Even though the major amount of Rs.2,75,00,000/= was paid to the second defendant except the balance of Rs.20 lakhs to be paid by the first defendant, the second defendant was unable to execute the sale deed due to some internal problems, the said balance of 20 lakhs was not paid to them. Subsequently, the second defendant agreed to sign a mutual consent memo and accordingly a decree was passed in favour of the plaintiffs and the first defendant and Rs.20 lakhs was adjusted towards the interest agreed to be paid by the second defendant. 9. The second defendant by their letter dated 3.5.1996, confirmed to pay a compensation of Rs.4.8 lakhs every month for the delay in executing the sale deed, out of which Rs.2.5 lakhs was to be shared equally between the petitioner and the first defendant. The balance amount of Rs.2,30,000/= will be accrued by the second defendant and paid to the plaintiffs and the first defendant at the time of transfer of the property. As per the sale deed dated 30.7.1997, the plaintiffs had agreed to share the profits and losses equally though the investments was made in an unequal proportion due to higher value of the ground and the first floor over the second and third floor. The total compensation given by the 2nd defendant was only Rs.39,98,686 and Rs.20 lakhs adjusted as per the decree.
The total compensation given by the 2nd defendant was only Rs.39,98,686 and Rs.20 lakhs adjusted as per the decree. After deducting Rs.2,89,584/= as taxes paid by the second defendant, the total amount due was only Rs.57,09,102/=. The plaintiff being 50% partner, was to receive Rs.28,54,551/= has already received Rs.8.75 lakhs from the second defendant. The balance of Rs.19,79,551/= was transferred to the first defendant on the advise of the plaintiffs for taking care of the expenses for the renovation of the property as the building is 80 years old and it was kept closed for the past 15 years. 10. It was also agreed that the expenses arose out of renovating, painting, repairing the lift and water proofing the terrace of the property will be taken care of by the first defendant by adjusting the same from Rs.19,79,551/=, for which, a detailed statement of accounts was given to the plaintiffs. The second plaintiff also assured to give Rs.50,000/= per month as service charges for taking care of the property from the month of March, as physical possession was taken from the month of February. The expenses incurred are: 11. Due to some internal problems, the second defendant company did not execute the sale deeds in favour of the plaintiffs and the first defendant and for the delay, the second defendant had agreed to pay a compensation of Rs.4.8 lakhs per month out of which, Rs.2.5 lakhs was to be shared by the plaintiff and the first defendant equally and the remaining Rs.2.3 lakhs was to be paid by the second defendant at the time of final settlement. There is no question of rents to be paid proportionately because the physical possession of the property was handed over to the plaintiff and the first defendant in the month of February 1996 and the renovation work of the terrace was started from March 1996. It is false to state that the rents were received by the first defendant from the second defendant and the balance amount due to the plaintiff was given to the first defendant since the first defendant was taking care of the plaintiff's share as he had no money at that time to take care of the expenses. 12. It is false, frivolous and malicious on the part of the plaintiffs to claim Rs.74,02,675/= with interest.
12. It is false, frivolous and malicious on the part of the plaintiffs to claim Rs.74,02,675/= with interest. It is false to state that the first defendant has misused the relationship with the second defendant's officers and colluded with them and made the plaintiffs to suffer loss. In the MOU signed by the plaintiff and the first defendant, nowhere it is mentioned that the parties shall enjoy the property in the ratio of investments made by them and they shall bear the expenses of reconstruction in a 50:50 ratio. Due to the great commercial value and importance, the ground and first floors are valued at Rs.2,10,65,000/= and the property at second and third floors are valued at Rs.84,35,000/=. The plaintiffs are not entitled to any of the reliefs prayed for in the Plaint. 13. The second defendant in his written statement and additional written statement have stated as follows:- The second defendant has been unnecessarily impleaded as party to the present suit in a dispute which is primarily between the plaintiffs and the first defendant. There is no cause of action for the plaintiffs as against this defendant, but on the contrary the plaintiffs for reasons best known to them, entered into such a dispute with the first defendant, and have chosen to unnecessarily drag this defendant into this litigation of which they are in no way connected with. The sale consideration was agreed as Rs.2,95,00,000/=. The terms under which it was agreed to be paid between the plaintiffs and the first defendant is not the concern of this defendant. The entire agreement for purchase of the property was negotiated by the first defendant on behalf of the plaintiffs. Due to other pending litigations the sale deed could not be executed in time. Since the sale deeds of the property was under mortgage with Union Bank of India and M/s.Peerless General Finance Ltd., there was substantial delay in releasing the title deeds. Consequently, this defendant agreed to pay a total compensation of Rs.4.8 lakhs per month beginning from April 1986 of which, an amount of Rs.2.5 lakhs would be disbursed on a monthly basis and the balance of Rs.2.3 lakhs per month would be accrued and settled at the time of transfer of property. This payment of compensation was arrived at after discussions with the plaintiffs and the first defendant.
This payment of compensation was arrived at after discussions with the plaintiffs and the first defendant. It is denied that the total compensation payable to the plaintiffs works out to Rs.74,34,686/=. The allegation that the first defendant and the officers of this defendant colluded together to pay substantially major portion of compensation to the first defendant and to cheat the plaintiffs is denied. The plaintiffs were clearly informed that it was an internal dispute between the plaintiffs and the first defendant and this defendant was in no way responsible. The first defendant was acting as the authorised agent of the plaintiffs. This defendant along with the first defendant are jointly and severally liable for the suit claim is denied. If at all, there is a dispute between the plaintiffs and the first defendant about the sharing of money, it is for them to work out their remedies with which, this defendant is no way concerned. There is no cause of action against this defendant as this defendant has paid the entire compensation as agreed upon and the possession of the property was also handed over to them. In view of the fancy claims made by the plaintiffs, this defendant having discharged the entire liability took up this matter with the first defendant and the first defendant agreed to indemnify this defendant against any claims or losses that may be suffered by this defendant in view of the litigations initiated by the plaintiffs and the claim made by them. Hence this defendant is in no way responsible for the claim made by the plaintiffs. Hence the plaint ought to be dismissed with cost. 14. The suit is liable to be dismissed in limini on the ground of res judicata. The cause of action for the present suit is based on the agreement of sale dated 13.9.1995 entered into between the first plaintiff and the defendants in and whereby this defendant has agreed to convey the property at No.166, Thambu Chetty Stret, Chennai in favour of the plaintiffs and the first defendant.
The cause of action for the present suit is based on the agreement of sale dated 13.9.1995 entered into between the first plaintiff and the defendants in and whereby this defendant has agreed to convey the property at No.166, Thambu Chetty Stret, Chennai in favour of the plaintiffs and the first defendant. Since there was a delay in execution of the sale deed, this defendant by letter dated 3.5.1996, agreed to pay compensation to the first plaintiff and the second defendant at the rate of Rs.4.80 lakhs per month beginning from April 1996 and for the past period prior to 31.3.1996 an amount of Rs.31.80 lakhs as consolidated compensation to be adjusted against the balance money due from the first plaintiff and the first defendant on the transfer of the said property. The plaintiffs and the first defendant jointly field C.S.823 of 1996 for directing this defendant to convey the property in favour of them as per the agreement of sale dated 13.9.1995. In the said suit, the first plaintiff and the first defendant also prayed for a direction as against this defendant to pay as per this defendant's letter dated 3.5.1996 balance compensation till 1.12.1996 amounting to Rs.54.20 lakhs and future compensation from 1.1.1997 at the rate of Rs.4.80 lakhs till the sale deed in favour of the plaintiffs or their nominees in respect of the said property. It is clear from prayer (C) in C.S.No.823 of 1996 that it pertains to the very same relief prayed for by the first plaintiff herein in this suit. C.S.No.823 of 1996 ended in a compromise decree between the first plaintiff and the defendants herein. The said compromise decree dated 22.1.1997 would operate as a res judicata between the plaintiffs and the defendants and consequently the plaintiffs are estopped from filing the present suit as against this defendant for the very same reliefs which were prayed for in C.S.No.823 of 1996. 15. On the above pleadings, the following Issues were framed by this court:- i) Whether the defendants are due and owe a sum of Rs.74,02,675/= as claimed in the plaint? ii) Whether the first defendant has proved that the compensation payable had been adjusted by him? iii) To what relief is the plaintiff entitled to ? Additional Issue: Whether the suit is barred by res judicata? 16.
ii) Whether the first defendant has proved that the compensation payable had been adjusted by him? iii) To what relief is the plaintiff entitled to ? Additional Issue: Whether the suit is barred by res judicata? 16. On behalf of the plaintiffs, the second plaintiff has been examined as P.W.1 and Exs.P.1 to P.29 were marked. On behalf of the defendants, the first defendant has been examined as D.W.1 and Exs.D.1 to D.6 were marked. Additional Issue: Whether the suit is barred by res judicata? 17. The first plaintiff and the first defendant purchased the property bearing Door No.166, Thambu Chetty Street, Chennai-1 from the second defendant, for which purpose, they entered into a sale agreement Ex.P.1 on 13.9.1995. The sale price was Rs.2,95,00,000/=. For the advance of Rs.1 crore, the first plaintiff paid Rs.62 lakhs and the first defendant should have paid Rs.38 lakhs. Out of Rs.38 lakhs payable, the first defendant issued a Demand Draft for Rs.3 lakhs and a cheque for Rs.35 lakhs. The cheque for Rs.35 lakhs was not honoured and therefore according to the second plaintiff, he was made to pay another sum of Rs.33,65,000/= and the first defendant paid Rs.1,35,000/= towards the advance and thus a total sum of Rs.1 crore was paid. Thus the plaintiffs have totally paid Rs.95,65,000/= and the first defendant has paid Rs.4,35,000/=. By 16.2.1996, except a balance sum of Rs.20 lakhs which was agreed to be paid by the first defendant, the balance sale consideration of Rs.2,75,00,000/= was paid to the second defendant. But the second defendant failed to execute the sale deed which resulted in filing of C.S.No.823 of 1996 by the first plaintiff and the first defendant against the second defendant for execution of the sale deed. In the suit, a memo of compromise was filed and the suit was decreed on 22.1.1997 in terms of the memo of compromise. In the said suit in C.S.No.823 of 1996, the prayer (C) is for compensation amounting to Rs.54,20,000/= and future compensation at the rate of 4.80 lakhs from 1.1.997 till execution of the sale deeds. But in the compromise memo, nothing was mentioned about this prayer for payment of compensation and the decree is silent with regard to payment of compensation payable by the second defendant to the first plaintiff and the first defendant.
But in the compromise memo, nothing was mentioned about this prayer for payment of compensation and the decree is silent with regard to payment of compensation payable by the second defendant to the first plaintiff and the first defendant. The conduct of the parties would show that the claim for compensation under Ex.P.9, a letter dated 3.5.1996 sent by the second defendant to the plaintiffs undertaking to pay compensation for the amount advanced to second defendant at Rs.4.80 lakhs per month beginning from April 1996. In the compromise memo, there is no clause that the plaintiffs did not make any claim for compensation or any clause to the effect that neither party will have a claim against the other, except conveyance of the property. The compromise decree is dated 22.1.1997. Ex.P.27 is an affidavit filed by the first defendant in E.P.No.834 of 1996 in the month of June 1997 wherein at page 5 of the said affidavit under the caption "statement of account as on 31.3.1997", the interest due as on 3.5.1996 on account of the second plaintiff and the first defendant at the rate of 21%-4.80 lakhs per month has been shown as Rs.31,80,000/=. For the period from 31.3.1996 to 31.3.1997, it has been shown as Rs.57,60,000/=. Thus, it could be seen that under Ex.P.27, the first defendant in his affidavit has admitted that interest payable by the second defendant to the plaintiffs and himself was at the rate of Rs.4.80 lakhs per month. Ex.P.25 is the statement of final settlement dated 22.9.1997. The statement itself begins with the words "Compensation-166, Thambu Chetty Street Rs.39,98,686/=". At page 5 of the statement (page 75 of the typed set of papers) it is stated "Amount due as per your letter dated 3.5.1996 upto 31.3.1996 is Rs.31.80 lakhs. From 1.4.1996 to 28.2.1997 for 11 months, it is Rs.52.80 lakhs. This statement has been signed by the first defendant as well as officers of the second defendant. On 22.9.1997, the second defendant has signed Ex.D.4 letter wherein he has stated that the second defendant has credited to the account a sum of Rs.59,98,686/= in full and final settlement of the compensation. The above letter is addressed to the first plaintiff and first plaintiff has been represented by the first defendant and the letter has been accepted by the first defendant and signed by the first defendant.
The above letter is addressed to the first plaintiff and first plaintiff has been represented by the first defendant and the letter has been accepted by the first defendant and signed by the first defendant. Ex.P.29 is the sale deed copy in respect of Door No.154, Thambu Chetty Street, Chennai-1, executed by the second defendant in favour of the first defendant wherein at page 4 of the sale deed it is categorically mentioned that a sum of Rs.82.34 lakhs is due by the second defendant to the plaintiffs as per their own letter dated 8.7.1997 which has to be necessarily adjusted against the balance sale consideration of Rs.4.75 crores. Therefore, Exs.P.27, P.27, P.29 and Ex.D.4 would clearly support the case of the plaintiffs that the claim under Ex.P.9 was kept alive even after the compromise decree. If really all the disputes were compromised and ended in a compromise decree dated 22.1.1997, there is no necessity for Exs.P.25,27,29 and D.4, which were subsequent to the compromise decree. 18. In AIR 1971 S.C., 2355 (Mathura Prasad Sarjoo Jaiswal and others Vs. V.Dossibai N.B.Jeejeebhoy), the Hon'ble Supreme Court has held as follows:- 9. A question of jurisdiction of the court, or of procedure, or a pure questino of law unrelated to the right of the parties to a previous suit, is not res judicata in the subsequent suit. Rankin, C.JU., observed in Tarini Charan Bhattacharjee's case ILR 56 Cal 723" "The object of the doctrine of res judicata is not to fasten upon parties special principles of law as applicable to them inter se, but to ascertain their rights and the facts upon which these rights directly and substantially depend; and to prevent this ascertainment from becoming nugatory by precluding the parties from reopening or recontesting that which has been finally decided". A question relating to the jurisdiction of a court cannot be deemed to have been finally determined by an erroneous decision of the court. If by an erroneous interpretation of the statute the court holds that it has no jurisdiction, the question would not, in our judgment operate as res judicata. Similarly by an erroneous decision if the court assumes jurisdiction which it does not possess under the statute the question cannot operate as res judciata between the same parties, whether the cause of action in the subsequent litigation is the same or otherwise. 10.
Similarly by an erroneous decision if the court assumes jurisdiction which it does not possess under the statute the question cannot operate as res judciata between the same parties, whether the cause of action in the subsequent litigation is the same or otherwise. 10. It is true that in determining the application of the rule of res judicata the court is not concerned with the correctness or otherwise of the earlier judgment. The matter in issue, if it is one purely of fact, decided in he earlier proceeding by a competent court must in a subsequent litigation between the same parties be regarded as finally decided and cannot be reopened. A mixed question of law and fact determined in the earlier, proceeding between the same parties may not, for the same reason, be questioned in a subsequent proceeding between the same parties. But, where the decision is on a question of law, i.e., the interpretation of a statute, it will be res judicataa in a subsequent proceeding between the same parties where the cause of action is the same, for the expression "the matter in issue" in S.11, Code of Civil procedure, means the right litigated between the parties, i.e,. the facts on which the right is claimed or denied and the law applicable to the determination of that issue. Where, however, the question is one purely of law and it relates to the jurisdiction of the court or a decision of the court, sanctioning something which is illegal, by resort to the rule of res judciata a party affected by the decision will not be precluded from challenging the validity of the order under the rule of res jduciata, for a rule of procedure cannot supersede the law of the land." 19. In AIR 2000 S.C., 2301, (Madhvi Ama Bhawani Amma Vs.Kunjikutty Pillai Meenakshi Pillai), their Lordships of the Supreme Court have held as follows:- 7. Within the said parameter now we proceed to examine the question raised in this appeal. The principle of res judicata as enshrined in Section 11, is evolved from the maxim "memo debet bis vexari pro una et eadem causa". This principle enunciates that no man should be vexed twice over for the same cause. This principle gradually developed further by bringing within its compass more such litigations. Thus with the passage of time this principle gradually expanded.
This principle enunciates that no man should be vexed twice over for the same cause. This principle gradually developed further by bringing within its compass more such litigations. Thus with the passage of time this principle gradually expanded. This shows that the sphere of res judciata as enshrined in Section 11, CPC is not exhaustive, it is ever growing. One such example of its growth is exhibited by the incorporation of Explanation VIII in Section 11 by means of Amending Act in 1976.The submission made are broadly under two heads. Firstly under the broad and general principle of res judicata in view of Explanation VII and Secondly, whether in a proceeding for the grant of Succession Certificate, any adjudication or issue decixded therein would operate as res judciata to a suit proceeding. In order to apply the general principle of res jduciata court must first find, whether an issue ina subs4equent suit, was directly and substantially in issue in the earlier suit or proceeding, was it between same parties, and was it decided by such court. Thus there should be an issue raised and decided, not merely any finding on any incidental question for reaching such a decision. So if no such issue is raised and if on any other issue,if incidentally and finding is recorded it would not come within the periphery of the principle of res jduciata". 20. Though a memo of compromise was filed and a decree was obtained in C.S.No.823 of 1996 on the basis of the memo of compromise, i.e., Ex.P.5 and P.6, the question of payment of compensation was not decided in the said suit and the same was left open which has been subsequently acted upon by the parties as seen from Ex.P.23, P.25, P.27 and Ex.D.4. In the compromise decree, nothing is mentioned about the compensation payable by the second defendant to the plaintiffs and the first defendant. The issue of payment of compensation has not been decided in the decree in C.S.No.823 of 1996 and therefore the contention of the second defendant at this belated stage raising as an additional issue at the time of trial of the suit that the suit is barred by res judicata is not sustainable. Additional Issue is answered accordingly. 21.
The issue of payment of compensation has not been decided in the decree in C.S.No.823 of 1996 and therefore the contention of the second defendant at this belated stage raising as an additional issue at the time of trial of the suit that the suit is barred by res judicata is not sustainable. Additional Issue is answered accordingly. 21. Issues 1 to 3: The fact that the first plaintiff and the first defendant entered into Ex.P.1 agreement with the second defendant for purchase of the property at No.166, Thambu Chetty Street, Chennai-1 or a sum of Rs.2,95,00,000/= is not in dispute. At the time of payment of advance of Rs.1 crore, the cheque issued by the first defendant for Rs.35 lakhs bounced and therefore the plaintiff himself had paid Rs.33.65 lakhs on behalf of the first defendant along with his own contribution of Rs.62 lakhs. Out of the advance of of Rs.1 crore, the plaintiff has paid Rs.95,65,000/= and the first defendant has paid Rs.4,35,000/=. Out of the total sum of Rs.2.95 lakhs, except Rs.20 lakhs which was bound to be paid by the first defendant, the entire balance amount of Rs.2.75 has been paid. Thus the plaintiff has paid 76.6 percent and the first defendant has paid only 23.4 percent towards purchase of the property at No.166, Thambu Chetty Street, Chennai-1. On the above aspects, there is no dispute at all. 22. As per the agreement, the first plaintiff has to enjoy the ground and first floors of the superstructure and the first defendant has to enjoy the second and third floors of the said building. According to the first defendant, the ground and first floors of the building are more valuable than the second and third floors and that is why the first plaintiff has paid more money. But, according to the plaintiffs, the height of the second and third floors of the building is 20 feet each which were made as two floors each and thus, though the plaintiff has purchased ground and first floors, the first defendant has in fact purchased 4 floors by converting second and third floors each two floors.
But, according to the plaintiffs, the height of the second and third floors of the building is 20 feet each which were made as two floors each and thus, though the plaintiff has purchased ground and first floors, the first defendant has in fact purchased 4 floors by converting second and third floors each two floors. Though it is true that the ground and first floors will be more valuable than the second and third floors, the fact that the first defendant has converted these two floors into four floors because of the height available in these floors would clearly prove that the intention of the parties was to pay equally for the purchase of the property. But, on the other hand the first defendant has paid only Rs.23.4 per cent of the sale consideration. 23. Since the original title deeds could not be procured by the second defendant for some reason or other, the second defendant was not able to execute the sale deed and therefore the first plaintiff and the first defendant filed C.S.No.823 of 1996 for specific performance of the agreement before this court against the second defendant and a compromise memo was filed on 20.1.1997, on which a decree was passed on 22.1.1997. Even thereafter, the second defendant did not execute the sale deed and therefore the Assistant Registrar of this Court executed the sale deed in favour of the first plaintiff and the first defendant. It is also pertinent to note that on 3.5.1996, the second defendant wrote a letter Ex.P.9 to the plaintiff wherein he has mentioned as follows:- "Kindly refer to our letter dated 28th March 1996. The matter has been discussed at length with Peerless General Finance/United bank of India with whom the title deeds of the subject property have been presently mortgaged. We are organising to get the title deeds released shortly, pending which we are agreeable to pay compensation for the Amount advanced to us @ of Rs.4.80 lakhs per month beginning from April 1996. Of this, an amount of Rs.2.50 lkahs would be disbursed on a monthly basis and the balance of Rs.2.30 lakhs per month would be accrued and settled at the time of transfer of property.
Of this, an amount of Rs.2.50 lkahs would be disbursed on a monthly basis and the balance of Rs.2.30 lakhs per month would be accrued and settled at the time of transfer of property. As regards the compensation for the earlier period beginning 13th September, 1995 and ending 31st March 1996 which amounts to about Rs.31.0 lakhs will be accrued and would be adjusted against the balance monies due from you on the transfer of the said property. This has been discussed and agreed to with Mr.Kamal Babbar." 24. Though the suit ended in a compromise, the compensation payable though claimed in the suit was not recorded and settled in the suit and the same was kept alive as found by the conduct of the parties as mentioned while answering the earlier issue of res judicata. Ex.P.25 dated 22.1.1997, final settlement has been signed by the first defendant and the officers of the second defendant and the first line itself begins with the words "Compensation for 166 Thambu Chetty Street" and at page 4 of the said statement also, compensation payable in respect of No.166, Thambu Chetty Street, is mentioned as Rs.91.58 lakhs. But the compensation payable in respect of No.166, Thambu Chetty Street, a property purchased jointly by the first plaintiff and the first defendant has been adjusted towards the money payable by the first defendant in respect of another property at No.154, Thambu Chetty Street, as seen from Ex.P.25. The sale deed Ex.P.29 in respect of the property at Door No.154, Thambu Chetty Street, executed in favour of the first defendant would show that a total sum of Rs.82.34 lakhs has been adjusted towards the compensation payable by the second defendant to the plaintiffs as per their own letter dated 8.7.1997. Though in Ex.P.25, it is concluded that 91.58 lakhs is due from the fist defendant, there is no explanation as to why 82 lakhs was adjusted in the sale deed in Ex.P.29 sale deed being the money payable as compensation. There is no explanation at all either by D.1 or by D.2 as to how the total amount of Rs.7 crores payable by the first defendant for purchase of the property in Door No.154, Thambu Chetty Street has been adjusted. The sale consideration for door No.154, Thambu Chetty Street property was Rs.7 crores.
There is no explanation at all either by D.1 or by D.2 as to how the total amount of Rs.7 crores payable by the first defendant for purchase of the property in Door No.154, Thambu Chetty Street has been adjusted. The sale consideration for door No.154, Thambu Chetty Street property was Rs.7 crores. The first defendant and one Sadanandan have paid Rs.2 crores by cash and the balance payable was Rs.5 crores. Out of the balance of Rs.5 crores, Rs.3,92,66,000/= was paid to M/s.Peerless Finance Co., by the first defendant. After deducting this amount, the balance receivable would be Rs.1,07,34,000. But an amount of Rs.82.34 lakhs was adjusted on the head of "compensation payable to the first defendant". What happened to the balance of Rs.25 lakhs is not explained either by D.1 or by D.2. Rs.25 lakhs is not an ordinary amount. Ex.P.25 would clearly indicate that such statement of final settlement in terms of the discussion between the officers of D.1 and D.2 was prepared in collusion among themselves to cheat the plaintiffs. The amount payable to the first plaintiff towards compensation with regard to property No.166, Thambu Chetty Street was adjusted in the account of the first defendant who purchased a separate property in No.154, Thambu Chetty Street, and thus D.1 and D.2 have cheated the first plaintiff in a very calculated manner by creating accounts by themselves as seen from Ex.P.25. Even in the affidavit filed by the first defendant in E.P.No.834 of 1996 filed against the second defendant, in the statement of account as on 31.3.1997, it is stated that the total interest payable as on 3.5.1996 at the rate of 21%-4.80 lakhs per month is Rs.31,80,000/= and for the period from 31.3.1996 to 31.3.1997 it is Rs.57,60,000/=. But actually, the first plaintiff has been paid only Rs.8.75 lakhs as compensation by the second defendant as admitted by him in the written statement. 25. Ex.D.6 is the Minutes of the meeting held on 22.9.1997 among the representatives of the second defendant and the first defendant. In the said Minutes, except first two pages, the other pages are nothing but repetition of Ex.P.25.
25. Ex.D.6 is the Minutes of the meeting held on 22.9.1997 among the representatives of the second defendant and the first defendant. In the said Minutes, except first two pages, the other pages are nothing but repetition of Ex.P.25. As per Ex.P.9, the second defendant has undertaken to pay compensation for the amount advanced to it at the rate of Rs.4.80 lakhs per month beginning from April 16 out of which, a sum of Rs.2.5 lakhs will be disbursed monthly and the balance of Rs.2.30 lakhs will be accrued and settled at the time of transfer of the property. As regards the compensation for the earlier period beginning from 13.9.1995 and ending with 31.3.1996, which amounts to Rs.31.80 lakhs will be accrued and adjusted against the balance money due from the plaintiffs on the transfer of the said property and this letter has been addressed by the second defendant to the first plaintiff after discussion with the first defendant. 26. In the letter dated 23.5.1996 Ex.P.11, the second defendant has informed the first plaintiff that it has been agreed between the second defendant and the first defendant on 22.5.1996 that for the time being, the portion of interest amount of RS.2.5 lakhs will be shared at 1.50 lakhs to the first plaintiff and Rs.1 lakh to the first defendant, subject to final adjustment on pro rata basis of accrued interest payable at the time of transfer of the property. By a letter dated 20.5.1996, Ex.P.12, the first plaintiff has claimed from the second defendant interest at the rate of 21% on the Amount advanced and has also informed the second defendant that out of the total payment of Rs.2.75 Crores, the first plaintiff itself has paid Rs.2,10,65,000/= and has questioned the second defendant as to how 50% of the interest can be paid to the first defendant and has demanded to remit the balance interest in proportion to the amount paid by it. 27. The compensation claimed by the first plaintiff is nothing but interest at the rate of 21% on the amount advanced by it and the first defendant to the second defendant. Due to some internal problems, the second defendant could not execute the sale deed and that is why he has undertaken to pay compensation as seen from Ex.P.9 letter dated 3.5.1996. This payment of compensation was kept alive even after the compromise decree as held earlier.
Due to some internal problems, the second defendant could not execute the sale deed and that is why he has undertaken to pay compensation as seen from Ex.P.9 letter dated 3.5.1996. This payment of compensation was kept alive even after the compromise decree as held earlier. The total sale consideration for purchase of the property at No.166, Thambu Chetty Street, Chennai-1 is Rs.2,95,00,000/= of which, the first plaintiff and the first defendant have paid Rs.2.75 crores. Of this 2.75 crores, the first plaintiff alone has paid Rs.2,10,65,000/= and the first defendant had paid only Rs.64.35 lakhs. But the compensation payable in respect of this property, a total amount of Rs.82.34 lakhs has been adjusted when the first defendant has purchased a separate property in Door No.154, Thambu Chetty Street, Chennai-1. What the first plaintiff was entitled to has been adjusted with regard to the amount payable by the first defendant while purchasing a separate property. The compensation payable for an amount advanced in respect of the property in Door No.166, Thambu Chetty Street, has been adjusted towards the sale consideration for a separate property in Door No.154, Thambu Chetty Street, which was purchased by the first defendant. What was entitled to by the plaintiffs has been adjusted to the first defendant in collusion between the second defendant and the first defendant. 28. The first defendant in Paragraph 8 of the written statement has admitted the compensation of Rs.4,80,000/= lakhs payable every month for the delay in executing the sale deed in favour of the first defendant and the first plaintiff. In paragarph 9 of the written statement, the first defendant has also admitted that Rs.20 lakhs was adjusted in the decree dated 22.9.1997. This 20 lakhs is an amount payable by the first defendant which he failed to pay. The claim of the first defendant that he has incurred expenditure in renovating the building to the tune of Rs.7,93,257.75 and service charges of Rs.8 lakhs is not proved by appropriate documentary evidence. The Ledger, Ex.D.2 produced by the first defendant would show that a sum of Rs.7,00,093/= has been spent by the first defendant for renovation of the building in 163, Thambu Chetty Street, Chennai-1. The accounts would show as if they were written on one and and the same day.
The Ledger, Ex.D.2 produced by the first defendant would show that a sum of Rs.7,00,093/= has been spent by the first defendant for renovation of the building in 163, Thambu Chetty Street, Chennai-1. The accounts would show as if they were written on one and and the same day. Even if it is assumed that these accounts pertain to renovation of the building, there is no proof that it is for renovation of the entire building. It may be for the portion of the building which was purchased by the first defendant, i.e., second and third floors, which were converted as two floors by the first defendant. In the absence of any other evidence, it is highly unbelievable that for renovation of the building Rs.7,93,257.95 was spent by the first defendant, whereas the Ledger accounts itself would show entries only for Rs.7,00,193/=. There is no document to support the service charges of Rs.50,000/= per month from March 1996 to June 1997. Once the first defendant admitted that the compensation of Rs.4.80 lakhs is payable every month by the second defendant towards the first plaintiff and the first defendant, it is natural that the compensation should be shared pro-rata on the basis of payments made by the first plaintiff and the first defendant. Therefore, the contention of the first defendant that he has spent a total sum of Rs.19,93,257.75 towards expenses on behalf of the plaintiffs by way of payment of legal fees, renovation of the building and service charges is not acceptable and the claim of the first defendant is liable to be rejected. 29. The amount of compensation payable by the second defendant for the delay in executing the sale deed ought to have been distributed on pro-rata basis between the plaintiffs and the first defendant. On the other hand, the first plaintiff was paid only Rs.8.75 lakhs. Thus as seen from page 14 of the plaint, the total compensation payable by the defendants as on 31.1.1999 is Rs.74,02,675/=. This amount which is payable in respect of property No.166, Thambu Chetty Street, Chennai-1 purchased by the first plaintiff and the first defendant has been adjusted to another property in Door No.154, Thambu Chetty Street, Chennai-1 purchased by the first defendant and thus the plaintiffs have been cheated of their right to claim compensation as undertaken by the second defendant.
This amount which is payable in respect of property No.166, Thambu Chetty Street, Chennai-1 purchased by the first plaintiff and the first defendant has been adjusted to another property in Door No.154, Thambu Chetty Street, Chennai-1 purchased by the first defendant and thus the plaintiffs have been cheated of their right to claim compensation as undertaken by the second defendant. The second defendant and the first defendant have colluded and cheated the plaintiffs as seen from Ex.D.6, Minutes of the Meeting held in which the plaintiff is not a party. Therefore, it is clear that the defendants 1 and 2 are liable to pay the suit claim of Rs.74,02,675/=. 30. In the result, the suit is decreed as prayed for with costs.