Hamaza Haji S/o. Anthru Haji v. Thykkandiyil Ibrahim S/o. Ammed Haji
2025-04-01
SATHISH NINAN, SHOBA ANNAMMA EAPEN
body2025
DigiLaw.ai
JUDGMENT : Sathish Ninan, J. The suit for return of advance sale consideration paid under an agreement for sale, was decreed in part. Challenging that part of the decree which declined relief, the plaintiff is in appeal. 2. Ext.A1 agreement dated 09.12.2013 was entered into between the plaintiff and the defendant, where under, the plaint 'A' schedule property was to be purchased by the plaintiff from the defendant for a total consideration of Rs. 1,79,50,000/-. The discharge of the consideration was to be by conveyance of the plaint 'B' schedule property having a value of Rs.50 lakhs in favour of the defendant and the balance amount of Rs. 1,29,50,000/- to be paid. The period fixed for performance was up to 30.09.2014. As evidenced by Ext.B1 memorandum dated 07.06.2015, the period fixed for performance was extended up to 20.08.2015. Under the agreement the plaintiff paid a total amount of Rs.85 lakhs towards advance sale consideration. Alleging that the defendant failed to convince the plaintiff of the extent and title, the suit was instituted for return of the advance sale consideration. 3. The execution of Ext.A1 agreement and Ext.B1 mediation memorandum, are not in dispute. The receipt of Rs.85 lakhs towards advance sale consideration is also admitted. It is the contention of the defendant that the plaintiff was not ready and willing to perform the agreement. It was claimed that consequent to the default on the part of the plaintiff to perform the agreement, the defendant sustained damages. He sought appropriation of the advance amount of Rs.85 lakhs, towards the damages. 4. The trial court held that the plaintiff had committed breach of the agreement. It is also found that the defendant has failed to prove the damages suffered by him consequent on the breach. However, the court opined that, upon the breach of the agreement, the defendant must have sustained damages and fixed the sum of Rs.10 lakhs. The plaintiff was granted a decree for recovery of the balance Rs.75 lakhs. 5. We have heard Sri.G.P.Shinod, the learned counsel for the appellant-plaintiff and Sri.Vinod Bhat, the learned counsel for the respondent-defendant. The points that arise for determination are:- (i) In the absence of any proof of damages, was the trial court right in having not granted a decree allowing the plaintiff to recover the entire advance sale consideration paid?
5. We have heard Sri.G.P.Shinod, the learned counsel for the appellant-plaintiff and Sri.Vinod Bhat, the learned counsel for the respondent-defendant. The points that arise for determination are:- (i) In the absence of any proof of damages, was the trial court right in having not granted a decree allowing the plaintiff to recover the entire advance sale consideration paid? (ii) Is the plaintiff entitled for interest on the advance sale consideration and if so at what rate? 6. Law is well settled that even if the plaintiff-purchaser is in breach of the agreement for sale, he is entitled for return of the advance sale consideration paid unless, the defendant-vendor proves that he has sustained any damages consequent to the breach ( See: Ahammedkutty Bran v. Sukumaran [ 2024 (3) KHC 494 ]) 7. It is the case of the defendant that consequent on the non-performance of the agreement by the plaintiff, he has suffered damages. The manner in which the defendant claims to have suffered damages is narrated in paragraph 23 of the written statement. The same reads thus :- “23. There was a coffee hulling mill with one 10 HP motor, one 2 HP motor, and one 8 HP motor, with all accessories such as a coffee huller, elevator, vibrator motor shed, husk shed, 3 phase electric connection and buildings in the A schedule property. The defendant No.1 was eking livelihood by running the mill in the A schedule property. The functioning of T.V.R. Mill in the A schedule property, was stopped by the defendants, with the sole intention and expectation that, the plaintiff would perform his part of the agreement well within time. Three phase electric connection was also dismantled on the request of the plaintiff. The claims of workers in the Mill were also not renewed since the agreement with plaintiff. Over and above all these, the buildings in the A schedule property also was demolished on the request of the plaintiff. All the machineries, allied articles were sold at a throw away price. In fact, entire investment made in the Mill were turned meaning less causing a huge loss to the defendants. The routine income from the mill was ceased. All the commitments and various business projects envisaged were all sabotaged. As a result of all these defendants suffered grave heavy, irretrievable loss and damages.
In fact, entire investment made in the Mill were turned meaning less causing a huge loss to the defendants. The routine income from the mill was ceased. All the commitments and various business projects envisaged were all sabotaged. As a result of all these defendants suffered grave heavy, irretrievable loss and damages. For the purpose of an average assessment of damages, the defendants limits therein claim for damages to the tune of advance amount. The plaintiff therefore is not entitled to claim or get any amount from the defendants.” It is the claim of the defendant that, pursuant to the agreement for sale he stopped functioning of the mill. The electricity connection was dismantled, the claims of workers were settled, the licence of the mill was not renewed, the machineries were sold and the building in the property was demolished, claims the defendant. Though the plaintiff does not dispute that there existed a mill in the property, according to him, it was not functioning. The subject matter of the agreement for sale included the building. Therefore, the defendant could not have demolished the building. Such conduct would amount to breach of the agreement. The defendant did not adduce any evidence to show that he had a licence for the running of the mill and that it was functioning at the relevant time. There is no evidence that, if at all the mill was functioning, it was on profit or its quantum. There is also no evidence adduced by him to prove the settlement of workmen's dues. There is no evidence that there were any workman employed. There is total lack of evidence on the above claims. Ext.A2 is the notice issued by the defendant to the plaintiff on 21.10.2014. Therein there is no claim regarding any damages. In the absence of any proof regarding damages, the defendant is not entitled to appropriate the advance amount or any part of it. Though the trial court also found that there is no evidence of any damages, the court awarded damages holding thus:- “..... But, when plaintiff is found to be the defaulting party in the contract, it is injustice on the part of the court to direct the defendants to refund the entire amount without considering their loss and sufferings. Based on the discussion made above, it has already found that defendants have suffered some loss.
But, when plaintiff is found to be the defaulting party in the contract, it is injustice on the part of the court to direct the defendants to refund the entire amount without considering their loss and sufferings. Based on the discussion made above, it has already found that defendants have suffered some loss. In the absence of a determined amount, this court is constrained to do a guess work and fix a reasonable amount as compensation for the said loss. 22. Hence, based on the evaluations made above, Rs.10,00,000/- (Rupees Ten lakhs only) is fixed as compensation for the loss sustained.…”. Evidently the finding of the trial court cannot be sustained. There is no basis upon which the court arrived at and awarded damages of Rs.10 lakhs. It is to be borne in mind that, the property involved is an immovable property and by passage of time its value is on the rise. As noticed above there is no evidence that the defendant suffered any damages consequent on the breach. Therefore, the defendant is not entitled to recover any amount as damages. The plaintiff is entitled to realise the entire sale consideration of Rs.85 lakhs. 8. Coming to the claim for interest, the learned counsel for the respondent-defendant would argue that, the plaintiff having committed breach of the agreement, he cannot be permitted to take advantage of his own fault. He is not entitled for any interest on the advance amount, it is argued. The learned counsel also referred to the judgment of the Apex Court in M/s.Tomorrowland Ltd. v. Housing and Urban Development Corporation Ltd. & another (2025 INSC 207) to contend that, grant of interest is a matter of discretion and it is to be on the facts and circumstances of each case, applying the principles of fairness and justice. In the said case before the Apex Court, the Court noticed the conduct of the plaintiff which was held to be unscrupulous. The Apex Court observed:- “We have no hesitation in holding that such conduct was nothing short of a brazen attempt at forum shopping, as the Appellant wanted to avoid the jurisdiction of the High Court before whom they had failed to prove their bona fides by not depositing the stipulated sum.
The Apex Court observed:- “We have no hesitation in holding that such conduct was nothing short of a brazen attempt at forum shopping, as the Appellant wanted to avoid the jurisdiction of the High Court before whom they had failed to prove their bona fides by not depositing the stipulated sum. Such demeanour not only raises grave suspicions on the Appellant’s propriety, but also amounts to sheer abuse of the process of law and a waste of precious judicial time”. On the circumstances as noticed therein, the claim for interest on the advance amount was declined. It is not in dispute that no such allegations could be raised against the conduct of the plaintiff in the present case. Admittedly, as on 23.12.2014 the plaintiff had paid a total amount of Rs.35 lakhs. He paid a further amount of Rs.50 lakhs on 25.07.2015, thus making the total amount at Rs.85 lakhs. The defendant as DW1 has admitted that he has invested the amount in other ventures. The defendant having had the benefit of enjoyed/utilised the amount of Rs.85 lakhs, is bound to pay reasonable interest upon the same. 9. Now we consider the question as to from which date the plaintiff is entitled to interest and the rate. The suit is filed only on 31.08.2017. Strangely, both the plaintiff and the defendant have not attempted to offer any explanation as to what happened in between, for a period of two years. There has been a long time gap in claiming the amount. Having not claimed back the amount, it cannot be held that the defendant withheld the amount. In the circumstances it is appropriate that interest be granted only from the date of suit. Taking note of the entire facts and circumstances and also the prevailing rate of interest in banking transactions, we are of the opinion that it would be reasonable to grant interest at the rate of 6% per annum from date of suit till recovery. 10. It is reported that, when execution proceedings followed the trial court decree, an amount of Rs.75 lakhs was deposited by the defendant which was withdrawn by the plaintiff. Needless to say that interest would accrue on the said amount of Rs.75 lakhs only up to the date of deposit. Resultantly, the appeal is allowed. The decree and judgment of the trial court are set aside.
Needless to say that interest would accrue on the said amount of Rs.75 lakhs only up to the date of deposit. Resultantly, the appeal is allowed. The decree and judgment of the trial court are set aside. In modification of the decree and judgment of the trial court it is held that the plaintiff is entitled to realise the entire advance sale consideration of Rs.85 lakhs with interest at the rate of 6% per annum from date of suit till recovery. The plaintiff-appellant shall be entitled for proportionate costs throughout.