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Karnataka High Court · body

2012 DIGILAW 367 (KAR)

R. Srinivasa Murthy v. Munichinnappa

2012-04-17

ANAND BYRAREDDY

body2012
Judgment :- 1. Heard the learned counsel for the appellant. The learned counsel for the respondent remains absent. 2. The appellant was the plaintiff before the trial court. It was the case of the plaintiff that he had entered into an agreement of sale with the defendant, to purchase a parcel of land measuring 40 feet by 150 feet in Survey no.71/5 of Kavalbyrasandra, Bangalore North Taluk. The sale price agreed upon was Rs.16000/-. The agreement was dated 21.4.1980. An advance amount of Rs.5,000/-was paid at the time of execution of the agreement. The land in question was agricultural land, which was sought to be sold by the vendor as a house site/s. The sale transaction was to be completed, by the execution and registration of a sale deed, within three months from the date of the agreement. The defendant did not abide by the agreement and failed to execute the sale deed on the expiry of the time agreed upon. The plaintiff had issued a notice and followed-up with a suit for specific performance of contract as on 2.8.1980, as the defendant failed to respond. The suit was contested. The trial court rendered judgment, dated 5.2.1997, dismissing the suit on the finding that the plaintiff had expressly agreed that he would be entitled to damages only in the event of a breach of the agreement by the defendant and hence was not entitled for the relief of specific performance of contract. The judgment of the trial court was challenged in appeal before this court. This court, by its judgment, dated 10.6.2001, set aside the judgment of the trial court and remanded the matter for consideration of the quantum of damages, to which the plaintiff was held entitled in terms of the agreement. On remand, the plaintiff had amended his plaint to claim damages and costs of litigation at Rs.12,00,000/-and Rs.25000/-, respectively. The suit was decreed, in part, awarding damages at Rs.10,000/-and costs of Rs.3,000/-. It is this which is under challenge in the present appeal. 3. On remand, the plaintiff had amended his plaint to claim damages and costs of litigation at Rs.12,00,000/-and Rs.25000/-, respectively. The suit was decreed, in part, awarding damages at Rs.10,000/-and costs of Rs.3,000/-. It is this which is under challenge in the present appeal. 3. The learned counsel for the appellant contends that the court below has thought it fit to award only twice the amount of the advance price, paid by the plaintiff to the defendant, as compensation, it is contended that the court below has held that the alleged loss on account of the breach of contract could not be assessed on the basis on which the plaintiff was claiming since the land in question continued to be treated as agricultural land, for the record, by the competent authority though the environs of the suit property consisted of similar lands but were completely built up and were no longer under cultivation, as was the case with the suit property, which was also intended to be built upon. This reasoning of the court below according to the learned counsel for the appellant is divorced from reality and contends that there was need for a more pragmatic approach, in the interest of justice while considering the grant of an equitable relief. The learned counsel would point out that material was produced before the trial namely, Exhibits -P5, P6 and P7, which were copies of registered sale deeds pertaining to neighbouring lands, to demonstrate the comparative value of the property, as on the date of agreement and over a period of time. It is contended that if the defendant had adhered to the contract, the property which the appellant would have acquired would not be less than the sum claimed as compensation, which ought to have been granted by the trial court. It is contended that the court below has failed to apply the settled principles of law in addressing the case of the appellant. It is further contended that the court below has not taken into account the litigation expenses actually incurred over a period of 25 years, in awarding a nominal sum towards costs claimed. It is contended that the court below has failed to apply the settled principles of law in addressing the case of the appellant. It is further contended that the court below has not taken into account the litigation expenses actually incurred over a period of 25 years, in awarding a nominal sum towards costs claimed. The learned counsel places reliance on the decision of the apex court in Jai Narain Parasrampuria (dead) versus Pushpa devi Saraf and others, (2006)7 SCC 756 , to contend that the appellant would be entitled to not only the refund of the advance amount paid, with interest, but also damages assessed on the basis of the difference in the price of the land as on the date of agreement and the date of judgment. 4. In the light of the above the points for consideration are: a) What is the measure of damages that the appellant would be entitled to in terms of the contract and in law? b) Which is the effective date upto which such head of damages as could be allowed, is to be computed? c) Whether the quantum of damages and costs awarded by the court below is to be enhanced as claimed by the appellant. The agreement of sale was dated 21.4.1980. The sale deed was to be executed within three months from the date of agreement. The defendant having committed a breach in failing to execute the sale deed on demand, within the prescribed period, the suit was filed on 2.8.1980. Under the agreement, which is in the Kannada language, the defendant had agreed that in the event he should fail to complete the sale transaction -he would be liable to repay twice the amount of the advance sale amount received and also be liable in damages. This term was not a bar to a suit for specific performance of contract in terms of Section 23 of the Specific Relief Act, 1963. However, that aspect of the matter is no longer debatable in the light of the conclusion arrived at by this court, in the appeal filed earlier, and the scope of enquiry having been restricted to the appropriate quantum of damages. The appellant had instituted the suit almost immediately after the expiry of the period prescribed for completion of the transaction. There is no indication that the cost of the land had increased dramatically by then. The appellant had instituted the suit almost immediately after the expiry of the period prescribed for completion of the transaction. There is no indication that the cost of the land had increased dramatically by then. The trial court, however, had rendered its judgment, in the first instance, only as on 5.2.1997. The defendant having agreed that he would be liable to pay costs incurred and damages, in addition to refund of twice the amount of advance, we may take note of the settled legal position in addressing the first point for consideration. In case of breach of contract, damages may be claimed by one party from the other who has broken his contractual obligation in some way or the other. The damages may be liquidated or unliquidated. Liquidated damages are such damages as have been agreed upon and fixed by the parties in anticipation of the breach. Unliquidated damages are such damages as are required to be assessed. Broadly the principle underlying assessment of damages is to put the aggrieved party monetarily in the same position as far as possible in which he would have been if the contract had been performed. Here the rule as to remoteness of damages comes into play. Such loss may be compensated as the parties could have contemplated at the time of entering into the contract. The party held liable to compensation shall be obliged to compensate for such losses as directly flow from its breach. The ordinary heads of damages allowable in contracts of sale of land are settled. A vendor who breaks the contract by failing to convey the land to the purchaser is liable to pay damages for the purchaser's loss of bargain by paying the market value of the property at the time fixed for completion, less the contract price. The purchaser may claim the loss of profit he intended to make from a particular use of the land if the vendor had actual or implied knowledge thereof. The purchaser may claim the loss of profit he intended to make from a particular use of the land if the vendor had actual or implied knowledge thereof. For delay in performance the normal nature of damages is the value of the use of the land for the period of delay, viz., usually its rental value (See: Chitty on Contracts 27th Edition, Volume-1, Para 26.041 Referred to with approval by the apex court in Ghaziabad Development Authority versus Union of India (2000) 6 SCC 113 ) There is no evidence on record that in the instant case there was any substantial difference in the price of the land between the date of agreement and the time fixed for completion of the transaction. It may even be safely presumed that there was not any marked difference in price. Therefore the plaintiff may not be entitled to any damages under the head of purchaser's loss of bargain. Insofar as the damages, if any, payable under the head of loss of profit, is concerned, it is evident that the land intended to be sold for purposes of building a house or houses. As the plaintiff was keen on recovering the difference in the value of the land as on the date of judgment vis-a-vis the price fixed under the agreement, there is no attempt made to even speculate about the loss of profit on account of being deprived of the use of the land for the purposes for which it was proposed to be purchased. It is pertinent that the land in question was vacant land and therefore any estimation of the loss of profit in terms of rental value of any building or buildings could only be speculative and imaginary. The normal measure of damages, as already indicated, is the value of the user of the land which will generally be taken as its rental value, for the period from the contractual time for completion to the date of actual completion. This is so whether the delay is brought to an end by the voluntary action of an indolent seller or by a decree of specific performance against a recalcitrant seller. This is so whether the delay is brought to an end by the voluntary action of an indolent seller or by a decree of specific performance against a recalcitrant seller. (See: McGregor on Damages, fourteenth Edition, Para 729) Incidentally, the decision sought to be relied upon by the learned counsel for the appellant was decided purely on the facts of that case and the relief granted was at the discretion of the apex court. The appellant was however, entitled to a refund of double the amount of advance paid, which the court below has granted. But the sheer efflux of time denies the plaintiff the benefit of the money he had parted with, notwithstanding that double the amount is directed to be paid. In other words, if the plaintiff were to seek mere recovery of the sum paid with interest thereon, he would have become entitled to a larger sum as on the date of the first judgment of the trial court in the year 1997. Therefore, the relief of refund of the deposit requires lo be suitably modified. Further, the plaintiffs claim towards litigation expenses at Rs.25,000/-has been granted limiting it to Rs.3000/-. Thelitigation having stretched over 25 years -even in the absence of the necessary particulars of the claim the plaintiff was certainly entitled to a larger sum and the same also requires to be modified. Accordingly, the judgment and decree of the court below stands modified as follows: The suit of the plaintiff is partly decreed. The defendant is liable to pay to the plaintiff a sum of Rs.5,000/-with interest at 10% per annum from May 1980 to February 1997. The defendant is also liable to pay costs Rs.15,000/-to the plaintiff.