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2013 DIGILAW 515 (KER)

P. A. John v. Devan Pillai

2013-06-24

A.V.RAMAKRISHNA PILLAI, THOTTATHIL B.RADHAKRISHNAN

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Judgment :- Ramakrishna Pillai, J. 1. The plaintiff is in appeal. 2. The appellant filed the original suit (O.S No.94 of 2008) before the Sub Court, Kottarakkara, against the respondents for realisation of the amount advanced by him to the respondents pursuant to an agreement for sale of immovable property. He challenges the impugned judgment and decree of the court below to the extent it has confined the decree for an amount of Rs.2.5 lakhs together with interest, as against the amount of Rs.5 lakhs paid by him to the respondents by way of advance. 3. The first respondent filed another suit (O.S No.196 of 2009) praying for realisation of compensation, for the loss said to have been sustained by him on account of the alleged non-performance of the agreement by the appellant. The trial court tried the suits jointly and the suit filed by the appellant was ordered to be treated as the main suit. 4. For convenience of discussion, the parties can be referred as they are arrayed in the original suit. 5. The plaint averments in O.S No.94 of 2008 in brief, are as follows:- Defendants are the owners of 9 cents of property comprised in survey No.462/A of Alayamon Village out of which, 2 cents belongs to the first defendant, 6 cents to the 2nd defendant and the remaining 1 cent jointly to the defendants. The plaintiff was searching for a suitable place for the purpose of construction of a hospital, for his son and daughter in law, who are doctors working abroad and have decided to come back for good. While so, at the instance of a real estate broker, the plaintiff found the aforementioned 9 cents of property belonging to the defendants. The defendants and the broker made the plaintiff believe that the property was having an extent of 10 cents. A surveyor was brought at the instance of the first defendant and they fabricated the records to make it appear that the property in question has an extent of 10 cents. Believing the same, the plaintiff agreed to purchase the property for an amount of Rs.56 lakhs from the defendants. Thereafter, on 7.1.2008, the first defendant obtained an agreement for sale from the plaintiff and the plaintiff gave a cheque to the first defendant for Rs.5 lakhs by way of advance amount which was encashed by the first defendant. Believing the same, the plaintiff agreed to purchase the property for an amount of Rs.56 lakhs from the defendants. Thereafter, on 7.1.2008, the first defendant obtained an agreement for sale from the plaintiff and the plaintiff gave a cheque to the first defendant for Rs.5 lakhs by way of advance amount which was encashed by the first defendant. Later the plaintiff, on a scrutiny of the terms of the agreement found that the defendants had incorporated an unusual clause in the agreement that there is no necessity for measuring out the property, since the plaintiff had already been convinced about the area of the property.As it was factually incorrect, the plaintiff wanted the first defendant to conduct a survey of the property and accordingly on 18.3.2008, the property was measured with the help of a retired Surveyor Superintendent and Tahsildar. The measurement revealed that the property had an extent of 9 cents only. The first defendant had agreed to make necessary corrections in the agreement in question, to the effect that the property has only an extent of 9 cents and the sale consideration was, therefore, fixed as Rs.51 lakhs. On 22.3.2008, the plaintiff suggested that it would be better to execute a fresh agreement incorporating the aforesaid terms. Accordingly, the first defendant had agreed for execution of a fresh agreement on 31.3.2008. But the defendants did not turn up, as agreed, to execute a sale deed. Hence, on 25.3.2008, the plaintiff caused a lawyer's notice to be issued to the defendants demanding execution of the agreement on or before 29.3.2008. But on 2.4.2008, the defendants sent a reply notice raising untenable contentions. As the defendants committed breach of agreement, the plaintiff is entitled to a decree for return of the advance amount paid by him with interest from 7.1.2008 till recovery of the amount. The interest on the advance amount of Rs.5 lakhs from 7.1.2008 till the date of the suit at the rate of 12% would come to Rs.22,500/-. Thus, the suit for realisation of an amount of Rs.5,22,500/-together with future interest on the principal amount. 6. The defendants, by filing a joint written statement, took the following contentions. The extent of the property offered for sale was only 9.40 cents out of which, 0.04 cents is excess land and the plaintiff was much aware of the same. The contentions to the contrary are incorrect. 6. The defendants, by filing a joint written statement, took the following contentions. The extent of the property offered for sale was only 9.40 cents out of which, 0.04 cents is excess land and the plaintiff was much aware of the same. The contentions to the contrary are incorrect. The attempt of the plaintiff was to wriggle out of the contract. The defendants never agreed to execute any fresh agreement or to sell the property for Rs.51 lakhs. In this view of the matter, the plaintiff has committed breach of the agreement and, therefore, he is not entitled to get back the advance amount paid to the defendants. Thus, they prayed for dismissal of the suit. 7. On the side of the plaintiff, PWs.1 and 2 were examined and Exts.A1 to A6 were marked. On the side of the defendants, DWs.1 to 5 were examined and Exts.B1 to B14 were marked. Thereafter, the trial court proceeded to pass a decree in favour of the plaintiff for an amount of Rs.2.5 lakhs together with interest at the rate of 6% per annum from the date of suit till realisation from the defendants and their properties, as against the said claim of Rs.5,22,500/-. The trial court dismissed the suit (O.S.No.196 of 2009) filed by the first defendant. 8. We have heard the learned counsel for the appellant/plaintiff and the learned counsel appearing for the respondents/defendants. The impugned judgment and the lower court records were perused. 9. The main argument advanced by the learned counsel for the appellant is that it was incumbent on the court below to have passed a decree as prayed for in favour of the plaintiff, as the suit filed by the first defendant claiming compensation from the plaintiff for the damages suffered on account of the alleged breach of agreement by the plaintiff, has been dismissed by the trial court. According to the learned counsel for the appellant, both the findings now rendered by the court below cannot co- exist. It was argued that the finding is demonstrably incorrect, in so far as the court below, while considering the suit filed by the first defendant against the plaintiff's claim for recovery of damages alleged to have been suffered by him on account of the alleged breach of agreement by the plaintiff, found that the first defendant has not suffered any damage on account of the same. 10. 10. Ext.A1 is the agreement by which the property was agreed to be sold. The area made mention of in Ext.A1 was 10 cents. The trial court has found that the area made mention of in Ext.A1 was obviously wrong in the light of Exts.A5 and A6 documents, which are sale deeds, as per which, the defendants sold the property subsequently to third parties. Exts.A5 and A6 documents show that the extent of the property was 9 cents only. In the light of the above, the case of the plaintiff that the extent of the property was wrongly shown in the document, gains momentum. 11. PW2 was examined to prove that the property was subsequently measured. PW2 had occasion to go to the property at the time of measurement and he understood from the conversation between the surveyors and the parties that there was shortage of one cent in the total extent of the property. The trial court was not prepared to accept the testimony of PW2 finding that he was a chance witness. The plaintiff could not examine one of the surveyors, as he is no more. Non-examination of other surveyor is pointed out by the trial court as fatal. Thus, the trial court proceeded on the assumption that there was no measurement of the property on 18.3.2008 and, therefore, there was no possibility to make an offer to execute a fresh agreement reducing the sale consideration to Rs.51 lakhs. But the fact remains that, as per Ext.A1 agreement, the execution of which is admitted by both sides, the extent is wrongly shown as 10 cents instead of 9 cents, which is the actual extent of the property. 12. In the suit, the plaintiff has only sought for return of the advance amount paid by him to the defendants pursuant to Ext.A1 agreement for sale. The court below completely overlooked the artificial clause in Ext.A1 agreement to the effect that the plaintiff was already satisfied with the extent of the property and, therefore, the property need not be measured. This clause should have been read along with the specific case of the plaintiff, that he became suspicious of the artificial clause in Ext.A1 agreement, that the property need not be measured, and only when he conducted the survey of the property, he found that there was deficiency in the extent of the property. This clause should have been read along with the specific case of the plaintiff, that he became suspicious of the artificial clause in Ext.A1 agreement, that the property need not be measured, and only when he conducted the survey of the property, he found that there was deficiency in the extent of the property. This according to us appear to be more probable. 13. As a matter of fact, PW2, the witness examined on the side of the plaintiff, has deposed about the aspect relating to the subsequent measurement of the property. Despite searching cross examination, nothing was elicited to discredit the testimony of PW2. These aspects have been completely overlooked by the court below. 14. The case put forward by the plaintiff that when the deficiency in the extent of the property was found by him on measurement and he intimated the fact to the defendants, appears to be probable. Immediately on coming to know about the deficiency in the extent of the plaint schedule property, the plaintiff caused Ext.A2 lawyer's notice issued to the defendants. A reference to Ext.A2 notice shows that the plaintiff has put forward the entire facts at the earliest opportunity. The reasoning of the court below that since the plaintiff did not institute a suit for specific performance of the agreement, it should be presumed that the plaintiff is unwilling to purchase the property, does not appear to be correct. The basic case of the plaintiff is that, the agreement in question was induced by fraud and, therefore, the parties agreed to execute a new agreement incorporating the correct terms and it was thereafter, the defendants backed out from their promise to execute the new agreement. 15. We further notice a strange reasoning given by the trial court to disbelieve the case of the plaintiff. According to the trial court, since the property was subsequently sold for Rs.28 lakhs, the case of the plaintiff that the defendants agreed to sell the property for Rs.51 lakhs is highly improbable. It is relevant to note that none of the parties have difference of opinion regarding the sale consideration made mention of in Ext.A1 agreement. The case of the plaintiff is that only when the extent was found lesser, the defendants had agreed to execute a fresh agreement reducing the sale consideration to Rs.51 lakhs. 16. It is relevant to note that none of the parties have difference of opinion regarding the sale consideration made mention of in Ext.A1 agreement. The case of the plaintiff is that only when the extent was found lesser, the defendants had agreed to execute a fresh agreement reducing the sale consideration to Rs.51 lakhs. 16. The suit was for reaslisation of the advance amount paid to the defendants. None of the defendants have a case that they have not received the advance amount made mention of in Ext.A1 agreement. While granting decree in favour of the plaintiff, the well settled principles of law governed by Section 73 of the Indian Contract Act relating to the quantification of the damages has escaped the attention of the trial court. 17. Section 73 of the Indian Contract Act reads as under:- "Compensation for loss or damage caused by breach of contract.-When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach. Compensation for failure to discharge obligation resembling those created by contract.- When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract. Explanation.- In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by the non-performance of the contract must be taken into account." 18. It is the fundamental principle that the party who commits the breach is liable to compensate and the party who suffers the breach is entitled to claim damage. Therefore, it is essential that a person who claims damage for breach of a contract should have performed or should have been ready to perform his part of the obligation arising under the contract. 19. Therefore, it is essential that a person who claims damage for breach of a contract should have performed or should have been ready to perform his part of the obligation arising under the contract. 19. It is trite that a person claiming compensation on account of damages alleged to have been suffered by him consequent to a breach of agreement committed by the other party to the agreement has to plead and prove the extent of the damages suffered by him. There is no plea or evidence as regards the loss suffered by the defendants. It is relevant to note that the suit filed by the first respondent claiming compensation from the appellant for damages suffered by them on account of the breach of the agreement by the appellant has been dismissed by the trial court. In this view of the matter, the court below should have passed a decree in favour of the plaintiff as prayed for. 20. As rightly pointed out by the learned counsel for the appellant, a reference to the impugned judgment would show that the court below simply proceeded to make a wild guess to hold arbitrarily that the plaintiff is entitled to get back only Rs.2.5 lakhs out of Rs.5 lakhs paid by him by way of advance to the defendants. This finding cannot stand judicial scrutiny. 21. As the trial court found that the first respondent (the plaintiff in O.S No.196 of 2009) miserably failed to prove that he suffered damages by way of the alleged breach of agreement, it was obligatory on the part of the court below to have straightaway passed the decree in favour of the plaintiff. In the result, we allow the appeal. The impugned decree is modified. In supercession of the impugned decree, the appellant is granted a decree allowing him to realise the amount of Rs.5 lakhs together with interest at the rate of 10% per annum from 7.1.2008 (i.e. the date of Ext.A1 agreement) till realisation from the defendants and their properties together with costs throughout.