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2006 DIGILAW 1317 (DEL)

PRERNA BUILDERS PVT. LTD. v. ANIL KUMAR KAUSHIK

2006-08-07

PRADEEP NANDRAJOG

body2006
PRADEEP NANDRAJOG, J. ( 1 ) I am required to pronounce upon the following two issues which were framed on 28. 1. 1998:- (1) Whether the plaintiff has been ready and willing to perform its part of the obligation under the agreement to sell dated 28. 2. 1995. (2) Relief. ( 2 ) WHY am I called upon to decide the two issues" ( 3 ) M/s. PRERNA Builders Pvt. Ltd. , the plaintiff, has filed the present suit seeking specific performance of the agreement to sell dated 28. 2. 1995. The agreement to sell is an admitted document and stands exhibited as Ex. P-1. Defendant, Anil Kaushik, is the seller under the agreement. It relates to the entire ground floor with rear portion of the terrace over the first floor with proportionate share in the land comprised in property bearing municipal No. A-66 hauz Khas Enclave, New Delhi. Ownership qua the suit property was claimed by the defendant under a will dated 15. 5. 1985 executed by his father who died on 11. 10. 1985. Sale consideration was Rs. 33. 5 lacs out of which defendant received rs. 5 lacs at the time of the execution of the agreement to sell. Balance sale price in sum of Rs. 28. 5 lacs was to be paid, vide clause 2 of the agreement to sell, at the time of registration of the sale deed which was to be executed after necessary permissions were obtained from the authority concerned. Clause 3 of the agreement recorded that the defendant has applied for mutation of the property in his name and that the plaintiff shall pursue the mutation and permissions etc. in the concerned departments/offices. However, the defendant was obliged to accompany the plaintiff as and when required for obtaining the requisite sale permissions. ( 4 ) IN writing nothing happened between the parties for a little over 1 year and 1 month. There is a dispute as to what happened verbally. On 2. 4. 1996, defendant served a legal notice upon the plaintiff, Ex. However, the defendant was obliged to accompany the plaintiff as and when required for obtaining the requisite sale permissions. ( 4 ) IN writing nothing happened between the parties for a little over 1 year and 1 month. There is a dispute as to what happened verbally. On 2. 4. 1996, defendant served a legal notice upon the plaintiff, Ex. P-2, informing plaintiff that since plaintiff failed to get the property mutated in name of the defendant and additionally has failed to obtain the no objection from the income tax authorities which obligations, vide clause 3 of the agreement were the obligations of the plaintiff, and a year and one month having lapsed, 30 days' time was being given to the plaintiff to do the needful and pay the balance sale consideration and get the sale deed executed. ( 5 ) ON 25. 4. 1996 plaintiff replied vide Ex. PW1/2, informing that plaintiff had submitted the proformas of the applications to be signed by the defendant for submission to the income tax authorities for obtaining the requisite no objections as also relinquishment deeds to be executed by the other heirs of his deceased father accepting the will, which documents were necessary for obtaining mutation in records of the MCD. Plaintiff stated that the defendant had not signed the requisite applications nor obtained the relinquishments from the other heirs and therefore plaintiff could not be called a defaulter. ( 6 ) DEFENDANT responded vide letter dated 14. 5. 1996, Ex. P-3, reiterating that plaintiff was a defaulter. Defendant denied liability to obtain any relinquishment deeds. Defendant stated that since plaintiff had defaulted, advance received stood forfeited. ( 7 ) PRESENT suit was filed on 30. 5. 1996 in view of the fact that parties could not resolve their disputes. ( 8 ) DISPUTE between the parties requires an analysis of clauses 2, 3, and 4 of the agreement to sell; Ex. P-1; conduct of the parties post agreement and the oral testimony of the parties. ( 9 ) AS noted above, after 28. 2. 1995 when agreement to sell was entered into, only documentary evidence is the legal notice dated 2. 4. 1996 served upon the plaintiff by the defendant (Ex. P-2 ). Reply by plaintiff's lawyer on 25. 4. 1996 (Ex. PW-1/2) and response of defendant's lawyer on 14. 5. 1996 (Ex. P-3 ). ( 9 ) AS noted above, after 28. 2. 1995 when agreement to sell was entered into, only documentary evidence is the legal notice dated 2. 4. 1996 served upon the plaintiff by the defendant (Ex. P-2 ). Reply by plaintiff's lawyer on 25. 4. 1996 (Ex. PW-1/2) and response of defendant's lawyer on 14. 5. 1996 (Ex. P-3 ). ( 10 ) IT would be useful to note certain recitals in Ex. P-1 and clauses 2, 3 and 4 of the said document. ( 11 ) IN the recitals, inter alia, it is stated as under:-"whereas a plot of land bearing No. A-66, measuring 292 square yards in the residential colony known as HAUZ KHAS ENCLAVE situated at Village KHARERA, delhi, in the State of Delhi, and bounded as under:-EAST : Other land west : Road north : Plot No. A-67 south : Plot No. A-65 was purchased by Shri Satish Chandra Kaushik son of Late Shri Ram Dass, superintendent, National Archives of India, New Delhi from M/s. D. L. F. Housing and Construction Private Limited, Connaught Place, New Delhi, vide Sale Deed registered as document No. 1024, in Addl. Book No. 1, Volume No. 321, on pages 19 to 20, registered in the office of Sub-Registrar, New Delhi on 05. 04. 1957. WHEREAS Shri Satish Chandra Kaushik after purchase of the above said plot of land got the building plans approved and constructed a double storeyed house with his own funds and resources. WHEREAS the Ground Floor of the above said property bearing No. A-66, Hauz Khas, new Delhi, measuring 292 sq. yds. was occupied by Shri Anil Kumar Kaushik, son of shri S. C. Kaushik and the First Floor was occupied by Dr. Ashok Kumar Kaushik, son of Shri S. C. Kaushik, at the time of death of Shri S. C. Kaushik who died on 11th october, 1985 and his wife Shrimati Chander Kanta died on 5th July, 1988. WHEREAS the said Shri S. C. Kaushik vide 'will' dated 15. 5. 85 registered in the office of Sub-Registrar, New Delhi as document No. 1134, in Addl. Book No. 3, volume No. 346 on pages 189 to 190 on 21. 3. WHEREAS the said Shri S. C. Kaushik vide 'will' dated 15. 5. 85 registered in the office of Sub-Registrar, New Delhi as document No. 1134, in Addl. Book No. 3, volume No. 346 on pages 189 to 190 on 21. 3. 86, bequeathed the entire Ground Floor of Property No. A-66, hauz Khas, New Delhi to his son Shri Anil Kumar Kaushik, alongwith one-half back portion terrace on the first floor i. e. second floor and proportionate undivided one-half share of land i. e. 146 square yard of land underneath the said building, with all the common facilities. Similarly, the entire first floor of the said Property No. A-66, Hauz Khas, New Delhi was bequeathed by Shri S. C. Kaushik to his son- Dr. Ashok Kumar Kaushik along with one-half portion terrace to the second floor and above alongwith all the common facilities and proportionate one-half share of land i. e. 146 sq. yard underneath the said building. WHEREAS in view of the above said Registered 'will' the first party -Shri Anil kumar Kaushik, has become the absolute owner of the Entire Ground Floor of property bearing No. A-66, Hauz Khas, New Delhi and one-half back portion terrace on the first floor i. e. Second Floor and proportionate one-half share land i. e. 146 square yards of land underneath the said building i. e. 50% undivided share. ( 12 ) CLAUSES 2, 3 and 4 of the agreement to sell record as under:-"2. That out of the above said total sale price of Rs. 33,50,000/- (Rupees thirty Three lakhs Fifty thousand only), the SECOND PARTY has paid and the FIRST party has received a sum of Rs. 5,00,000/- (Rupees Five lakhs only) i. e. Rs. 3,00,000/- (Rupees Three lakhs only) IN CASH and Rs. 2,00,000/- (Rupees Two lakhs only) by cheque No. 296097 dated 28. 2. 1995 drawn on ANZ GRINDLAYS BANK, GK-I, Bank at the time of execution of this Agreement to Sell and the balance sale price of Rs. 28,50,000/- (Rupees Twenty eight lakhs Fifty thousand only) shall be paid by the SECOND PARTY to the FIRST PARTY at the time of registration of Sale deed after getting the necessary permissions from the authorities concerned. 3. That before the Sale Deed is registered, the FIRST PARTY initially has applied for mutation of the above said property in his favour. 28,50,000/- (Rupees Twenty eight lakhs Fifty thousand only) shall be paid by the SECOND PARTY to the FIRST PARTY at the time of registration of Sale deed after getting the necessary permissions from the authorities concerned. 3. That before the Sale Deed is registered, the FIRST PARTY initially has applied for mutation of the above said property in his favour. The SECOND PARTY shall pursue the Mutation and permissions etc. in the concerned departments/office. However, the FIRST PARTY shall accompany the SECOND PARTY as and when required. The Sale Deed shall be registered after the mutation and after obtaining all the permissions and mutation shall be borne by the SECOND party. 4. The SECOND PARTY within a period of 90 days from the date grant of mutation of Sale permission shall pay the balance sale price to the FIRST PARTY and shall get the Sale Deed registered either in their own favour or in favour of their nominee (s ). " ( 13 ) A perusal of the recitals recorded in the agreement to sell, Ex. P-1, shows that it was made known to the plaintiff by the defendant that the residential house A-66, Hauz Khas Enclave was owned by his father. That his father had executed a will on 15. 5. 1985. That his father died on 11. 10. 1985. That his mother died on 5. 7. 1988. That as per the will, entire ground floor along with " back portion terrace above the first floor and proportionate undivided " share in the land was bequeathed to the defendant. That entire first floor along with " portion terrace above together with proportionate share in the land was bequeathed in favour of his brother. ( 14 ) A perusal of Clauses 2, 3 and 4 of the agreement to sell reveals that defendant received Rs. 5 lacs towards part payment of the sale consideration which was Rs. 33. 5 lakhs. That balance sale consideration of Rs. 28. 5 lakhs was to be paid by the plaintiff to the defendant at the time of registration of the sale deed. That the sale deed was to be registered after obtaining the necessary permissions from the authorities concerned. ( 15 ) VIDE Clause 3 of the agreement it was recorded that the defendant has applied for mutation of the property in his favour. That the sale deed was to be registered after obtaining the necessary permissions from the authorities concerned. ( 15 ) VIDE Clause 3 of the agreement it was recorded that the defendant has applied for mutation of the property in his favour. That the plaintiff shall pursue the mutation and would process the matter with the concerned authorities from whom sale permission has to be obtained. That the defendant would accompany the plaintiff as and when required for obtaining the mutation and the no objection from the concerned authorities. That the sale deed would be registered after mutation is effected and after sale permissions are granted by the authorities concerned. ( 16 ) VIDE Clause 4 it was recorded that the sale deed would be got registered within a period of 90 days from date of grant of mutation and sale permission. Simultaneously, balance sale consideration would be paid. ( 17 ) IT is the common case of the parties that the application for mutation submitted by the defendant, reference whereof has been made in Clause-3 of the agreement, was submitted to the Municipal Corporation of Delhi. It is thus obvious that plaintiff was to pursue the application for mutation before municipal authorities and was to ensure that mutation is effected. Secondly, it was the duty of the plaintiff to pursue the matter with the concerned departments to obtain the necessary sale permission. ( 18 ) IT is the common case of the parties that the sale permissions required were the statutory no objection certificates to be obtained from the income tax authorities to the effect that there was no outstanding income tax dues payable by the defendant and that the sale could be effected. ( 19 ) PLAINTIFF examined Shri Vinod Saluja, its Managing Director as PW-1. In his examination-in-chief, PW-1, inter alia, deposed as under :-"for the purpose of mutation of the property we went to the office of MCD and were asked by MCD to bring no objection from legal heirs other than legatee under the will. We asked the defendant to provide the no objection certificate to us. The requisite performa taken by us from MCD was also handed over to the defendant. However, the defendant did not provide no objection certificates from other legal heirs to us. We also give performa to the defendant for obtaining permission u/s 34 (a) of income tax. We asked the defendant to provide the no objection certificate to us. The requisite performa taken by us from MCD was also handed over to the defendant. However, the defendant did not provide no objection certificates from other legal heirs to us. We also give performa to the defendant for obtaining permission u/s 34 (a) of income tax. We tried but MCD did not agree to mutate the property without no objection certificate. We were informed verbally about this but order to this effect was passed in the file of MCD. " ( 20 ) IT may be noted that PW-1 has not stated the date when somebody from the office of plaintiff went to the office of MCD and informed defendant that no objection certificates had to be obtained from other legal heirs, other than legatee under the will to comply with requirement of municipal authorities. He has not stated the date when plaintiff asked the defendant to obtain no objections from other legal heirs who were not beneficiaries under the will of the father of the defendant. PW-1 has not stated the date when the requisite proformas were handed over by the plaintiff to the defendant. Further, plaintiff has not stated as on what date the requisite proformas were handed over to the defendant for for obtaining permission under Section 34 (a) of the income Tax Act. ( 21 ) IN his cross examination, PW-1 denied that he was informed by the defendant that defendant had applied to MCD for mutation of the property. I may quote from the cross examination of PW-1. He stated :-'it is wrong to suggest that I was aware that the defendant had applied to MCD for mutation of the property. It is wrong to suggest that before entering into the agreement I was aware that the application for mutation was pending with the mcd. It is wrong to suggest that I was required to pursue the application of the defendant with MCD for mutation. I was not even aware that the defendant had applied for mutation. ' ( 22 ) BEING cross-examined further, PW-1 stated that after 10-15 days of the agreement, he went to the office of the Municipal Corporation of Delhi where he learnt of some dispute between the defendant and his brother. That he was told that till other legal heirs gave consent, mutation would not be effected. ' ( 22 ) BEING cross-examined further, PW-1 stated that after 10-15 days of the agreement, he went to the office of the Municipal Corporation of Delhi where he learnt of some dispute between the defendant and his brother. That he was told that till other legal heirs gave consent, mutation would not be effected. That he told the defendant a number of times about the requirements of MCD. Further cross-examined he stated as under :-'i never wrote to the defendant to complete the transactions. After the agreement, the first writing between the parties was the notice sent by defendant to us through his counsel. ' ( 23 ) DENIAL by PW-1 that before agreement Ex. P-1 was entered into, defendant never informed him that defendant had applied for mutation with MCD as also the denial that the plaintiff was to process the application of the defendant submitted to the Municipal Corporation for mutation are patently false denials. The denials run in the teeth of Clause 3 of the agreement to sell. ( 24 ) PLAINTIFF produced Shri G. S. Srivastava, Head Clerk, MCD, Green Park zone as PW-2. Suit property falls in the Green Park Zone of MCD. PW-2 produced the house tax records of the property. Witness deposed that an application for mutation and sub-division was received from the defendant but objections were received from his brother. Both brothers filed a letter on 6. 2. 1991 that request for mutation be kept pending till they settle the dispute. Witness outlined the procedure for mutation and stated that on death of the assessee, application for mutation is accepted along with affidavit, indemnity bond and original death certificate. If deceased was survived by other legal heirs, affidavit of other legal heirs has also to be submitted. If all legal heirs consent, mutation is effected. ( 25 ) IN cross-examination, witness stated that he could not say whether anyone from the office of the plaintiff came to the office of the Municipal corporation of Delhi for processing the mutation application. ( 26 ) RE-EXAMINED by the plaintiff, witness stated that MCD does not entertain a person other than the legal heirs of the deceased in connection with mutation and therefore, visit if any made by the said person would not be recorded in the file. ( 26 ) RE-EXAMINED by the plaintiff, witness stated that MCD does not entertain a person other than the legal heirs of the deceased in connection with mutation and therefore, visit if any made by the said person would not be recorded in the file. ( 27 ) DEFENDANT examined himself as DW-1 and reiterated that plaintiff had promised to get the mutation effected and the fact that he had applied for mutation with the Municipal authorities was disclosed by him to the plaintiff before agreement to sell was entered into. That he had shown a copy of the will to the plaintiff. That he went to the office of the plaintiff a number of times but plaintiff did not depute anybody to go to the office of the Municipal corporation of Delhi in connection with mutation. ( 28 ) IN view of Clauses 2, 3 and 4 of the agreement to sell, I have no hesitation in holding that plaintiff was made aware by the defendant that he had applied for mutation with the Municipal Corporation of Delhi. That he was claiming inheritance under the will executed by his father. That plaintiff was to process application for mutation submitted by the defendant with the municipal authorities and that the plaintiff was to process the matter with the income Tax authorities to obtain the necessary no objection certificate. ( 29 ) PLAINTIFF has failed to lead any evidence, much less, establish that the plaintiff pursued the matter, much less with due diligence. It would be interesting to note that on the one hand PW-1 states that the defendant never told him at the pre-negotiation stage that the defendant has applied for mutation with the municipal authorities, but on the other hand has attempted to show as if plaintiff attempted to get mutation effected in name of the defendant. Plaintiff has admitted to do so, by introducing in his examination-in-chief, that after 10-15 days of the agreement to sell, PW-1 learnt from the municipal authorities that the defendant had applied for mutation. It is obvious that the plaintiff, conscious of its obligations, and aware of the fact that it did not diligently process the matter pertaining to mutation with the municipal authorities is attempting to simultaneously sail in the two boats. ( 30 ) LAW is clear. It is obvious that the plaintiff, conscious of its obligations, and aware of the fact that it did not diligently process the matter pertaining to mutation with the municipal authorities is attempting to simultaneously sail in the two boats. ( 30 ) LAW is clear. Under Section 16 (c) of the Specific Relief Act, 1963, he who claims specific performance of an agreement to sell has to plead and prove that he had performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him continuously between the date of contract and till date of hearing of the suit. (AIR 1957 SC 868 Gomathinayagam Pillai and Ors. Vs. Pallani Swamynadu as also AIR 1928 PC 208 Ardeshirh Mama Vs. Flora Sassoon.) ( 31 ) IN the decision reported as 1996 (4) Scale 476 (SC) His Holiness Swami ganesh Dasji Vs. Sita Ram Thapar, the meaning of the 2 expressions 'readiness' and 'willingness' was explained. It was observed that there is a distinction between readiness to perform the contract and willingness to perform the contract. Readiness means the capacity of the plaintiff to perform the contract which includes his financial position to pay the purchase price. Willingness means the desire to perform his part of the contract. ( 32 ) IT is trite that factum of willingness to perform plaintiff's part of the contract is to be adjudged with reference to the conduct of the parties and the attending circumstances. In the decision reported as AIR 1950 PC (90) Bank of India Vs. Jamshetji A. H. Chenoy vs. M/s. Chenoy and Co. it was held that in order to prove himself ready and willing to perform his obligation under the contract to purchase, a purchaser has not necessarily to produce money or to vouch the concluding scheme for financing the transaction. The question is one of fact. The sequences in which obligations under the contract are to be performed have to be taken into account to determine willingness to perform his part of the contract by the plaintiff. ( 33 ) IN the decision reported as AIR 1997 SC 1751 K. S. Vidyanadam and Ors. Vs. Vairavan inaction on the part of the plaintiff for 2" years was taken as a fact indicative of non-willingness of the plaintiff to perform his obligations under the contract. ( 33 ) IN the decision reported as AIR 1997 SC 1751 K. S. Vidyanadam and Ors. Vs. Vairavan inaction on the part of the plaintiff for 2" years was taken as a fact indicative of non-willingness of the plaintiff to perform his obligations under the contract. ( 34 ) LEARNED counsel for the plaintiff harped on the point that the plaintiff had the requisite means to pay. But that is relevant only for proving readiness of a party. Willingness has to be determined on an evaluation of the conduct of the parties and whether the plaintiff has been complying with its other obligations under the contract. ( 35 ) THERE is merit in the submission made by the counsel for the defendant that the plaintiff is a builder. Plaintiff got entangled defendant's property. Plaintiff took no steps to pursue the application for mutation submitted with the Municipal Corporation of Delhi and additionally did not even bother to obtain the necessary no objection permission from the Income Tax authorities. ( 36 ) THE bald and vague assertions of PW-1 without specifying any date on which plaintiff furnished proforma of the applications to be signed by the defendant for submission before the Income Tax authorities have no teeth without supporting evidence. What clinches the issue against the plaintiff is the stunning silence of the plaintiff for over one year and one month in not addressing any communication to the defendant that the proformas sent by the plaintiff to the defendant for defendant's signatures have not been received back by the plaintiff after signatures from the defendant. I would not be wrong in presuming that any reasonable person would cause a communication to be sent to the party to whom proformas of an application are forwarded for his signatures if undue delay takes place in the party receiving the proforma not signing the same and and re-transmitting the same to the person forwarding the proformas. ( 37 ) PLAINTIFF has failed to prove compliance with its prior obligations under the agreement to sell before sale deed could be executed, being plaintiff's obligations to pursue and obtain mutation from the municipal authorities and to obtain necessary permissions from the Income Tax Authorities. ( 37 ) PLAINTIFF has failed to prove compliance with its prior obligations under the agreement to sell before sale deed could be executed, being plaintiff's obligations to pursue and obtain mutation from the municipal authorities and to obtain necessary permissions from the Income Tax Authorities. ( 38 ) I accordingly decide issue No. 1 by holding that the plaintiff has failed to prove that the plaintiff was willing to perform its part of the obligations under the agreement to sell dated 28. 2. 1995. ( 39 ) SECOND issue is, what relief has to be granted to the parties. ( 40 ) WHILE issuing the legal notice Ex. P-2 as also while responding to plaintiff's letter Ex. PW1/2, vide Ex. P-3, defendant stated that he was forfeiting the sum of Rs. 5 lacs received by him as advance sale consideration. Clause 9 of the agreement to sell dated 22. 8. 1995, inter alia, records that if the plaintiff backs out from the terms of the agreement, advance received by the second party shall stand forfeited. ( 41 ) SHRI Ravi Gupta, learned counsel for the defendant submitted that notwithstanding Clause 9 of the agreement, if this court was to hold against plaintiff on issue No. 1, defendant No. 1 is prepared to return the sum of Rs. 5 lacs received by him but without any interest. ( 42 ) DEFENDANT has not pleaded in the written statement that the sum of rs. 5 lacs liable to be forfeited under Clause 9 of the agreement was a reasonable pre-estimate of the damages which defendant would have suffered due to breach by the plaintiff. ( 43 ) IN absence of such plea, defendant had to establish actual loss suffered due to the breach committed by the plaintiff. This loss had to be a fall in the price of the property in question. Neither party has led any evidence to the effect that price of the property fell. ( 44 ) IN my opinion, notwithstanding concession of learned counsel for the defendant, plaintiff would be entitled to refund of Rs. 5 lacs. ( 45 ) QUESTION arises, should the plaintiff be recompensed with interest. ( 46 ) I have held that plaintiff has failed to establish willingness to perform its obligations under the agreement to sell. ( 44 ) IN my opinion, notwithstanding concession of learned counsel for the defendant, plaintiff would be entitled to refund of Rs. 5 lacs. ( 45 ) QUESTION arises, should the plaintiff be recompensed with interest. ( 46 ) I have held that plaintiff has failed to establish willingness to perform its obligations under the agreement to sell. ( 47 ) BEING a defaulter, plaintiff cannot claim that the defendant illegally withheld money refundable to it. But, since learned counsel for the defendant did not dispute that there was a rise in property prices and probably, as of today value of defendant's property is more than double vis-a-vis price agreed under the agreement to sell, in all fairness to the parties, plaintiff must get some interest for the reason defendant has utilized sum of Rs. 5 lacs received by him. ( 48 ) ON Issue No. 2 I hold that the plaintiff would be entitled to receive back the sum of Rs. 5 lacs from the defendant together with simple interest @ 8% p. a. from the date of suit till date of realisation. ( 49 ) SUIT is accordingly decreed in sum of Rs. 5 lacs in favour of the plaintiff and against defendant together with simple interest @ 8% p. a. from date of suit till date of realisation. However, plaintiff would not be entitled to any costs.