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2005 DIGILAW 962 (AP)

Ratanlal Jain v. Missu Kutubuddin Naseem

2005-10-18

B.PRAKASH RAO, G.YETHIRAJULU

body2005
G. YETHIRAJULU, J, J. ( 1 ) A. S. NO. 3070 of 1999 was preferred by the plaintiffs in O. S. No. l of 1994 on the file of the III Additional Senior Civil Judge s Court, visakhapatnam. The respondents herein are the defendants in the suit. ( 2 ) THE brief averments of the plaint are as follows : ( 3 ) THE first defendant in this suit and the first defendants in O. S. Nos. 2, 3 and 4 of 1994 are the daughters of the second defendant. All the first defendants jointly owned undivided 1/4th share in the suit scheduled property and they agreed to sell their share at Rs. 1,150/- per square yard. Accordingly, each of them executed agreements of sale in favour of the first plaintiffs in each suit on 28-12-1988, after taking advance of Rs. 25,250/- towards part of sale consideration. The entire property is a contiguous single piece of land. It was agreed between the parties that the plaintiffs would obtain sale deeds after the first defendant obtaining no encumbrance certificate, no objection certificate from income tax department and clearance certificate from urban land ceiling authorities and approval of the building plan by the local Authority. While so, on 29-9-1990, the agreement of sale was assigned in favour of the second plaintiff. The first plaintiff, the first defendant and the second plaintiff entered into a deed of nomination in favour of the second plaintiff. A similar nomination deed was executed by the other three sisters also in favour of the respective second plaintiffs. As per the terms and conditions, the first plaintiff has to prepare a plan and submit the same to the first defendant who in turn has to get it approved by the municipal authorities for the construction of a multi-storeyed building. While so, before approval of the plan, the second defendant on 17-8-1991 sought for revision of the rate to which the plaintiffs did not agree. While the plaintiffs were eagerly waiting for compliance of other conditions, they noticed a paper publication issued by the defendants that the agreements stand cancelled. The plan submitted by the defendants was returned. The plaintiffs addressed several letters to the defendants intimating that the contract cannot be terminated without complying the terms and conditions of the agreement and the plaintiffs were always ready and willing to perform their part of contract. The plan submitted by the defendants was returned. The plaintiffs addressed several letters to the defendants intimating that the contract cannot be terminated without complying the terms and conditions of the agreement and the plaintiffs were always ready and willing to perform their part of contract. But, there was no response from the defendants, therefore, the plaintiffs were constrained to file the present suits directing the first defendants in each suit to execute regular sale deeds in furtherance of agreements of sale dated 28-12-1988 and nomination deeds dated 29-9-1990 after receiving the balance of sale consideration as fixed by the Court and in the alternative, damages at Rs. 12,53,550/- and refund of the advance amount in the event of the Court holding that specific performance cannot be ordered. ( 4 ) THE first defendant filed a written statement and it was adopted by the second defendant. The defendants in the written statement did not dispute the agreement of sale dated 28-12-1988 and the nomination of agreement dated 29-9-1990 in favour of second plaintiff, but denied the rest of the allegations. They contended that as per the terms and conditions of the contract, the plaintiffs have to prepare a plan in conformity with the Building Rules of Visakhapatnam Municipal Corporation which should be acceptable and sanctionable and in the event of plan being returned, the plaintiffs have to take necessary steps and resubmit the same by meeting all the expenses. After return of the plan, the plaintiffs were informed, but they did not take any action to get the plan resubmitted which led to issue of a notice by the second defendant on 17-8-1991. It is the plaintiffs who have to perform their part of contract at the first instance and then only the plaintiffs would seek clearance from the urban land ceiling authorities and the income tax authorities. As per the terms of agreement, the plan has to be submitted to the municipal authorities on or before 31-1-1989 and if there is any delay on the part of the plaintiffs, the defendants would be entitled to additional cost of Rs. 20/- per square yard per month or part thereof. The plan submitted in January, 1991 was returned by the municipal authorities and it was brought to the notice of the plaintiffs, but the plaintiffs did not take any action. 20/- per square yard per month or part thereof. The plan submitted in January, 1991 was returned by the municipal authorities and it was brought to the notice of the plaintiffs, but the plaintiffs did not take any action. In september, 1991, the attention of the plaintiffs was also drawn that the plan was rejected by the municipal authorities on 4-9-1991. Though the second defendant stated that the enhancement of rate is required, the plaintiffs failed to perform their part of contract, therefore, the contract came to be terminated before filing of the suit and the urban land ceiling authority treated the property as that of the second defendant which led the first defendant and her sisters to file W. P. No. 7939 of 1993 challenging the orders of the urban land ceiling authorities. The defendants further contended that the cause of action is incorrect and the suit claim is barred by limitation as the plaintiffs failed to perform their part of contract, therefore, they are not entitled for the relief of specific performance of contract. The suit is, therefore, liable to the dismissed. ( 5 ) ON the basis of the above averments, the lower Court framed appropriate issues. The plaintiffs, in order to prove their claims, examined PW-1 and marked Exs. A-1 to a-9. The defendants examined DWs. 1 and 2 and no documents were marked. Exs. X-1 to X-5 were marked through one of the witnesses. ( 6 ) THE lower Court, after considering the oral and documentary evidence, held that the plaintiffs failed to prove that they performed their part of contract and they were always ready and willing to perform their part of contract and the suit failed on account of their laches. The lower Court further held that the plaintiffs are not entitled for damages and they are entitled for refund of the advance amount of rs. 25,250/ -. The lower Court accordingly dismissed the suit for the relief of specific performance and decreed the same for the alternative relief of refund of the advance amount. The plaintiffs, being aggrieved by the judgment of the lower court, dated 13-8-1999, preferred these appeals. 25,250/ -. The lower Court accordingly dismissed the suit for the relief of specific performance and decreed the same for the alternative relief of refund of the advance amount. The plaintiffs, being aggrieved by the judgment of the lower court, dated 13-8-1999, preferred these appeals. ( 7 ) THE appellants are contending that they were always ready and willing to perform their part of contract, but the defendants failed to execute the sale deed, therefore, they are entitled for the decree of specific performance of agreement of sale. They further contended that the lower Court did not properly appreciate the facts and circumstances of the case, therefore, the judgment of the lower Court is liable to be set aside. ( 8 ) THE defendants contended that as per the terms of the agreement, the plaintiffs agreed to obtain the sale deed after fulfilling certain conditions i. e. , obtaining no objection from the urban land ceiling authorities, obtaining no encumbrance certificate and obtaining approval of the plan for multi-storeyed building. They further contended that when the plan given by the plaintiffs was presented to the municipal authorities, they refused to approve the same and returned with certain objections. They further contended that when they informed the plaintiffs about the return of the plan, the plaintiffs did not take any steps to answer the objections raised by the municipal authorities and represent the plan for approval. The defendants further contended that the plaintiffs never offered to discharge their part of contract and they delayed the progress of the approval of the plan by failing to respond timely. ( 9 ) IN the light of the contentions raised by both parties, the point for consideration is whether the decrees of the lower Court dated 13-8-1999 in O. S. Nos. 1, 2, 3 and 4 of 1994 are liable to be set aside and whether the plaintiffs are entitled for the relief of specific performance as prayed for. ( 10 ) EX. A-1 is the agreement of sale. It was executed on 28-12-1988. It was agreed by both parties that the property shall be sold @ Rs. 1,150/- per square yard. The land covered by each suit was 1073 square yards and 39 square yards was set apart for formation of the road. The property was sold for construction of a building complex to be sold by the plaintiffs after construction of flats. It was agreed by both parties that the property shall be sold @ Rs. 1,150/- per square yard. The land covered by each suit was 1073 square yards and 39 square yards was set apart for formation of the road. The property was sold for construction of a building complex to be sold by the plaintiffs after construction of flats. It was further agreed between the parties that : 1) the seller shall obtain a non-encumbrance certificate from the Registrar s office for a period of 25 years from that day, 2) the seller shall obtain income tax clearance certificate and 3) The seller, who is the joint owner of the entire extent, will sign jointly with other three sellers who agreed to sell their respective shares. The seller also agreed to obtain necessary permissions/ approval from the Visakhapatnam Urban development authority and the Municipal corporation, Visakhapatnam. It was further agreed that the purchaser shall prepare a plan and documents for obtaining municipal permission which is acceptable and sanctionable by the Visakhapatnam Municipal corporation and Visakhapatnam Urban development Authority. It was further mentioned that for some reason the visakhapatnam Municipal Corporation and urban Development Authority do not sanction the plans submitted by the purchaser. The purchaser shall alter/reprint the plans, which can be sanctioned at Visakhapatnam. They also agreed that the purchaser will submit the plans to Visakhapatnam municipal Corporation and Urban development Authority by 31-1-1989. At the time of the said agreement covered by ex. A-1, the purchaser paid Rs. 25,250/- as advance to the respective sellers informing each of them that the entire sale price was agreed to be paid in full after deducting the advance within 15 days, whether the registration formalities are completed or not. It was further mentioned in the agreement that if there is any delay caused by the purchased for preparing the plans and documents before 31-1-1989, the vendor will be compensated by additional cost at rs. 20/- per square yard for every month. It was further agreed that if there is any delay in payment of the sale consideration within 15 days, the amount shall carry interest @ 15% per annum. ( 11 ) EX. A-2 is the tripartite agreement with almost the same terms and conditions of Ex. A-1. Ex. 20/- per square yard for every month. It was further agreed that if there is any delay in payment of the sale consideration within 15 days, the amount shall carry interest @ 15% per annum. ( 11 ) EX. A-2 is the tripartite agreement with almost the same terms and conditions of Ex. A-1. Ex. A-3, letter addressed by the second plaintiff to the first defendant on 9-4-1992, discloses that they were anxiously awaiting the no objection under the urban land ceiling and they are very keen to complete the transaction, but in the absence of no objection from the urban land ceiling authorities, they cannot go ahead and they requested to inform them the progress made in compliance of the conditions under ex. A-1. ( 12 ) IN Ex. A-4, letter dated 9-5-1992 addressed by the second plaintiff to the first defendant, the second plaintiff mentioned that they were given to understand that necessary steps have to be taken to get the no objection from the urban land ceiling authorities and unless there is no objection certificate, they cannot go ahead. ( 13 ) EX. A-5 is the legal notice dated 9-9-1992 issued by the plaintiffs informing that the intentions of the defendants became highly doubtful. They learnt that the defendants were offering the property for sale to third parties, that they were always ready and willing to perform their part of contract by way of paying the balance of sale consideration, if the defendants obtain necessary clearances for effectively conveying the property in their favour. A reply was given by the defendants under ex. A-6 mentioning that the first defendant met the plaintiffs at Calcutta to impress upon them to get the plans prepared as per the buildings rules and regulations so that the same can be presented before the municipal and other authorities for approval, as the entire transaction depends mainly on the approval of the plans by the authorities. The plaintiffs never bothered to get the plans prepared in accordance with the building regulations and on the contrary went on postponing the same resulting in abnormal delay in completion of the transaction. The plaintiffs were postponing the performance of their part of obligation with an oblique motive of making wrongful gain on account of escalation of prices at visakhapatnam. The plaintiffs paid a paltry sum of Rs. The plaintiffs were postponing the performance of their part of obligation with an oblique motive of making wrongful gain on account of escalation of prices at visakhapatnam. The plaintiffs paid a paltry sum of Rs. 25,000/- on 28-12-1988 and obtained an agreement in their favour, but failed to show any progress even after completion of three months. As per the terms of the contract, the plaintiffs are bound to furnish the plans drawn in accordance with the building rules and regulations before 31-1-1989, but they failed to submit the plans till 12-1-1991. The plaintiffs lack interest in completing the transaction. The defendants have promptly applied for urban land ceiling clearance and made all sincere efforts to obtain the same. However, due to false claim made by Sri Y. S. Kohli of Visakhapatnam claiming some rights over the same property, the authorities refused granting permission, therefore, the plaintiffs cannot throw blame on the defendants for not getting the approval of the urban land ceiling authorities. It was further mentioned on behalf of the defendants that at no point of time, the plaintiffs came down to visakhapatnam and requested the defendants to speed up the process. The contract could be completed only when the parties perform their respective obligations. The plaintiffs were only making empty promises without giving any affect to any of them. Therefore, the plaintiffs were required to take notice that the agreement of sale dated 28-12-1988 stood terminated as per its terms. ( 14 ) EX. X-3 is an endorsement given by the Municipal Corporation, Visakhapatnam on 2-4-1991 informing the second defendant that the plan submitted by her for construction of 1+6 floors has been rejected for the reasons mentioned therein. Ex. X-4 is a letter written by the Urban Development authority to the Commissioner, Municipal corporation mentioning that the party may be advised to resubmit the plan for ground + 2 floors and open stilt floor for parking, which was in turn communicated by the municipality to the second defendant. ( 15 ) IN the light of the above correspondence, the oral evidence adduced by both parties has to be examined. The first plaintiff as PW-1 deposed that in the year 1988, the second defendant offered the suit schedule property for sale and after deliberations, the property was agreed to be purchased by him at Rs. 1,150/- per square yard. They entered into Ex. A-1 agreement dated 28-12-1988. The first plaintiff as PW-1 deposed that in the year 1988, the second defendant offered the suit schedule property for sale and after deliberations, the property was agreed to be purchased by him at Rs. 1,150/- per square yard. They entered into Ex. A-1 agreement dated 28-12-1988. He purchased 1073 square yards and also agreed to purchase 39 square yards being the common place through the said agreement. It was further agreed by him to pay the balance sale consideration and obtain the sale deed after the defendants obtaining all clearances as mentioned in the agreement. At the time of Ex. A-1 agreement, he paid rs. 25,250/- as advance by means of demand draft in favour of the first defendant. The plaintiffs waited for about two or three years, but they did not hear anything from the second defendant. Subsequently, he was informed that the plans submitted by them were rejected. The second defendant also wrote a letter to that effect. In all the notices, he stated that he is ready and willing to pay the balance sale consideration and demanded for execution of the sale deed. After three months, the defendants gave a reply notice on 13-12-1992 mentioning that the contract stood terminated. He further deposed that the plaintiffs in O. S. Nos. 2 and 3 of 1994 and himself purchased the land from the four daughters of the second defendant. After receiving a letter from the second defendant that the price of the land at Visakhapatnam has considerably raised and asked them to pay the enhanced rate to enable them to register the sale deeds, he did not agree for enhancement of the price. He was always ready and willing to pay the balance of sale consideration to obtain the regular sale deed. As the defendants did not comply their request as per Ex. A-5 notice, he filed the suit. In the cross-examination, he stated that he cannot say if he had any proof to show that he handed over the plans to the defendants in January, 1989. Ultimately, the plans submitted by them were not approved and he came to know about the same in the year, 1992. ( 16 ) IN Ex. A-7 letter, the second defendant mentioned that unless he gets the plans prepared by 1-10-1991, the agreement under Ex. A-1 will stand cancelled. Ultimately, the plans submitted by them were not approved and he came to know about the same in the year, 1992. ( 16 ) IN Ex. A-7 letter, the second defendant mentioned that unless he gets the plans prepared by 1-10-1991, the agreement under Ex. A-1 will stand cancelled. As per the agreement, he has to get the plans as well as the other documents prepared to complete the sale, but before that the defendants have to comply the other conditions. He further stated that he failed to get the plans prepared as per the local law, therefore, the question of getting urban land ceiling clearance will not arise. In Ex. A-6 reply notice, the first defendant stated that as he failed to comply the conditions, the agreement stood cancelled. He does not know if there is any dispute with regard to the suit schedule property raised by the Urban Land Ceiling authority and a writ petition is pending before the High Court. He gave an undertaking that he will deposit the balance of sale consideration as and when demanded. ( 17 ) AGAINST the above oral evidence, the defendants examined DWs. 1 and 2. The second defendant as DW-1 deposed that the property in the suit and three other three suits was hold by his four daughters. He is personally looking after their affairs and is acquainted with the facts of the case. Four separate agreements of sale came to be executed in favour of the respective first plaintiffs. At the time of purchase, the plaintiffs wanted to construct residential flats. One of the stipulations of the agreement was that the vendee has to get a plan prepared in conformity with the rules and regulations of Visakhapatnam municipal Corporation and submit the same to them for approval and plans have to be submitted by the end of January 1989. The plaintiffs in the respective suits failed to submit the plan within the stipulated time. In the month of November 1989, the plans were submitted by the plaintiffs to him and he submitted the same to the Municipal corporation for approval. The plans were returned as rejected, as the plans were not in conformity with the rules and regulations. The plans were not returned to him, as the fee payable was not paid by the plaintiffs. The plans were returned as rejected, as the plans were not in conformity with the rules and regulations. The plans were not returned to him, as the fee payable was not paid by the plaintiffs. As per the terms of the agreement, he has to get the clearance from the income tax authorities. The plaintiffs have not intimated the names of the persons in whose name he has to get the clearance. The balance of sale consideration was agreed to be paid by 31-1-1989 and in the event of delay, the plaintiffs have to pay Rs. 20/- per square yard in addition to the sale consideration agreed under the agreement and interest at 15% per annum on the balance sale consideration. Except making some payment at the time of agreement, the plaintiffs -did not make any payments subsequently. At no point of time, the plaintiffs ever expressed their willingness and readiness to perform their part of contract. As the plaintiffs failed to respond to the letter given by him, he got issued a legal notice informing that he is cancelling the agreement of sale and also made paper publication to that effect. In the meanwhile, the Urban Land Ceiling authorities got issued a notice to him claiming that the property by all these suits are owned by him in the name of his daughters and as such he is holding the surplus land and liable to surrender. His four daughters filed writs before the high Court challenging the order of the urban Land Ceiling Authority. The plaintiffs are not entitled for the relief of specific performance. ( 18 ) DW-2, a Town Planning Assistant of the Municipal Corporation, Visakhapatnam, deposed that on 4-5-1990, the first defendant applied for approval of a plan for construction of a multi-storeyed building. As per the existing rules, the application was forwarded to the Urban Development Authority for approval. On 17-12-1990, he got issued ex. X-3 directing the applicant to pay rs. 1,06,800/- towards betterment and other charges. On 14-8-1980, the plan came to be rejected. On 4-9-1991 under Ex. X-5 another endorsement was given to the effect that the plan was rejected as it was not in conformity with the rules and asked to submit the revised plan, but the applicant has not complied with the said direction. 1,06,800/- towards betterment and other charges. On 14-8-1980, the plan came to be rejected. On 4-9-1991 under Ex. X-5 another endorsement was given to the effect that the plan was rejected as it was not in conformity with the rules and asked to submit the revised plan, but the applicant has not complied with the said direction. ( 19 ) THE above evidence placed by the defendants indicates that there were laches on part of the plaintiffs in getting the plans prepared as per the rules for the purpose of presentation to the municipal authorities for approval for construction of the building. The lower Court also observed that there were laches on the part of the plaintiffs in pursuing the matter and in complying with their part of contract. From the above facts placed by both parties, it is noticed that the plaintiffs were required to get the building plans prepared as per the existing rules and were accepted to handover those plans to the defendants before the end of January 1989, but the plaintiffs failed to do so and caused so much delay in getting the plans prepared. Even after the delay in preparation of the plans, they were not prepared in conformity with the building rules of visakhapatnam Municipality. After forwarding the application through the defendants, it is the duty of the plaintiffs to see whether the application was returned, whether they were required to answer any queries or required to pay any amounts etc. The plaintiffs kept quite for a long time and did not monitor the progress of the transaction from time to time. The defendants could not get the plans approved, since they were not prepared as per the building rules. The defendants also could not get the clearance from the Urban Land ceiling Authority on account of the order of the said authority that the second defendant was the owner of the land, though he was showing the lands in the names of his daughters. Therefore, they intimated the second defendant that there is excess land, which made the defendants to file writs in the High Court questioning the said order. ( 20 ) THE above two circumstances are beyond the control of the defendants and they were not expected to obtain income tax clearance till they present the approved sale deed. Therefore, they intimated the second defendant that there is excess land, which made the defendants to file writs in the High Court questioning the said order. ( 20 ) THE above two circumstances are beyond the control of the defendants and they were not expected to obtain income tax clearance till they present the approved sale deed. Since the circumstances did not lead to the preparation of the approved sale deed, the question of obtaining income tax clearance at that stage does not arise. The plaintiffs have agreed to purchase the land at Rs. 1,150/- per square yard, paid only a paltry amount of Rs. 25,250/- and did not choose either to pay the balance sale consideration before the stipulated date or express their readiness to get the sale deed executed. ( 21 ) IN the light of the above circumstances, the lower Court was right in refusing the relief of specific performance and we do not find any grounds to interfere with the same. The damages claimed by the plaintiffs were also rightly refused by the lower Court. The plaintiffs are not entitled for damages as they are equally responsible for non-compliance of the conditions directed to be fulfilled by them. The lower Court directed refund of the advance amount, but did not award any interest on it. Since the amount was lying with the defendants from the date of agreement and as the plaintiffs were denied the relief of specific performance, it would be appropriate if the defendants are directed to pay interest @ 12 % per annum on the advance amount from the date of agreement till the date of refund. ( 22 ) IN Nirmala Anand v. Advent corpn. (P) Ltd. , 2002 (6) ALD 54 (SC) = (2002) 5 SCC 481 , the Supreme Court held that specific performance of contract is an equitable relief, therefore mere grant of such relief appears to the Court to be iniquitous, it is not obliged to grant the relief merely because it is lawful to do so. The Court has to strike a balance of equities and relevant aspects have to be considered by the Court while doing so. The Court has to strike a balance of equities and relevant aspects have to be considered by the Court while doing so. ( 23 ) THE Supreme Court further held that the escalation of price of the property during the pendency of the proceedings may be a relevant factor for refusing the relief or granting the relief with a direction to the plaintiffs to pay the additional amount to the defendant or to compensate him, however that would depend upon the facts and circumstances of each case. ( 24 ) IN S. V. R. Mudaliar v. Rajabu F. Buhari, AIR 1995 SC 1607 , the Supreme court held that in a suit for specific performance of contract, the relief cannot be refused merely on the ground that the price of the property in question has risen during the pendency of the litigation. ( 25 ) THE principles laid down in the above decisions are not in dispute. In the given set of facts and circumstances, the lower Court was right in refusing the relief of specific performance of the contract. ( 26 ) IN the result, all the appeals are allowed in part. The refusal of relief of specific performance by the lower Court is confirmed. The denial of awarding damages and the refund of the advance amount ordered by the lower Court are also confirmed. The appellants are granted interest @ 12% per annum on the advance amount of Rs. 25,250/- from the date of agreement till the date of refund. No order as to costs.