Delhi District Court
(1) Ashok Kumar Taneja vs Ajay Babbar on 12 October, 2021
IN THE COURT OF HARVINDER SINGH,
SENIOR CIVIL JUDGE, SOUTH WEST DISTRICT,
DWARKA COURTS, NEW DELHI.
JUDGMENT
(1) Ashok Kumar Taneja ....................Plaintiffs S/o Late Sh. Chela Ram (2) Mrs. Meghna Munjial Taneja W/o Sh. Ankit Taneja both R/o Flat No.111, Plot No.13, Sector - 7, Dwarka, New Delhi - 110 075.
Versus
Ajay Babbar ................Defendant
S/o Sh. Prithvi Singh Babbar
R/o 6/43, Old Rajinder Nagar,
New Delhi - 110 060.
Also at
Ajay Babbar
Director of
M/s Digitex Medical Systems Pvt. Ltd.
At 2/6, 3rd Floor, Above ICICI Bank,
Main Road, West Patel Nagar,
New Delhi - 110 008.
Also at
A-10/5, 1st Floor,
DLF Phase - 1,
Gurugram - 122 002.
Date of institution : 16.05.2017
Date of final arguments : 04.10.2021
Date of final decision : 12.10.2021
SUIT FOR RECOVERY OF RS.3,00,000/-
(RUPEES THREE LAKH ONLY) ALONG-WITH FUTURE AND PENDENTE-LITE INTEREST
1. Vide this judgment, this Court shall decide this suit filed by plaintiffs for recovery of sum of Rs.3,00,000/- along-with A.K.Taneja & Ors. Vs. Ajay Babbar CS No.489/2017 [12.10.2021] Page No.1 of 16 future and pendente-lite interest @ 18% per annum against the defendant.
PLAINTIFF SIDE CASE
2. Succinctly, the case of plaintiffs as discernible from their plaint is that plaintiffs were interested in purchase of property at Gurugram and met many brokers who obtained the mobile number of plaintiffs. Defendant contacted plaintiffs through one broker and showed interest to sell out his property Flat No.A-803, Coral Tower, TDI Ourania, Gold Course Road, Sector - 53, Gurugram. Plaintiffs along-with other family members visited the property and were told by defendant that he is exclusive owner of said property. A meeting was fixed on 03.11.2016. Defendant along-with his son Akshay came to residents of plaintiffs at Flat No.111, Sargodha Vihar Apartments, Plot No.13, Sector - 7, Dwarka, New Delhi at about 07:00 pm and after negotiations, defendant agreed to sell the property in sum of Rs.1,00,00,000/-. Plaintiffs paid a sum of Rs.3,00,000/- to defendant vide cheque bearing no.888229 dated 03.11.2016 drawn on ICICI Bank Ltd., Sector - 5, Dwarka, New Delhi from account of Mr. Ankit Taneja who is son of plaintiff no.01 and husband of defendant no.02. Defendant assured to execute the Agreement to Sell within 10 days A.K.Taneja & Ors. Vs. Ajay Babbar CS No.489/2017 [12.10.2021] Page No.2 of 16 of the date of cheque and handed over copies of ownership documents of the property along-with his ID-cards etc. The defendant also signed an unstamped receipt to that effect. Defendant got encashed the cheque on 05.11.2016 in his account no.033201001752 maintained with ICICI Bank Ltd., West Patel Nagar, New Delhi without fulfilling his promise/commitment. Plaintiff no.01 tried to contact defendant and his son through mobile phone calls, SMS messages and emails number of times, but they were not responded. The defendant willfully and intentionally neglected to fulfill his promise of executing the documents in favour of plaintiffs. On inquiry, it was revealed that defendant is not the absolute owner of the property and his wife is joint owner in the same. The plaintiffs are entitled for recovery of token amount of Rs.3,00,000/- provided to the defendant. Hence, this suit.
MISCELLANEOUS PROCEEDINGS
3. Summons of the suit were issued against defendant, same were served, defendant appeared and filed his written statement.
DEFENDANT SIDE CASE
4. Succinctly, the case of defendant as discernible from A.K.Taneja & Ors. Vs. Ajay Babbar CS No.489/2017 [12.10.2021] Page No.3 of 16 his written statement is that plaintiff no.01 has no locus-standi in present case. He is neither direct or indirect party in this case. Deal was finalized by Mr. Ankit Taneja who issued cheque in question of Rs.3,00,000/- as earnest amount from his account to purchase the property in question on behalf of his wife/plaintiff no.02. Plaintiffs failed to make payment of balance amount on or before 20.11.2016 as per terms and conditions of Agreement to Sell dated 06.11.2016 which lead to forfeiture of earnest money of Rs.3,00,000/- by defendant. The defendant is joint owner of property in question with his wife which was displayed by him for sale online on website namely magicbrick in month of October, 2016. One broker namely Mr. Ram Chander Yadav came into their contact for purchase of property on behalf of his client/plaintiff no.02. The husband of plaintiff no.02 and plaintiff no.01 had meeting with defendant where after inspecting original documents, negotiations, the deal was finalized in sum of Rs.1.25 Crore. The husband of plaintiff no.02 agreed to pay said amount with intention to purchase flat in question in the name of plaintiff no.02. The next date of 03.11.2016 was fixed and on said date at Cafe Barista, Qutub Plaza Market, DLF Phase - 1, Gurugram, Haryana, the husband of the plaintiff no.02 handed over cheque in question of A.K.Taneja & Ors. Vs. Ajay Babbar CS No.489/2017 [12.10.2021] Page No.4 of 16 Rs.3,00,000/- on account of bayana/earnest money. A draft Agreement to Sell was sent by broker vide email dated 06.11.2017 to the son of defendant, same required changes and after correction, same was sent back to broker on 07.11.2017. Later on, a duly signed hard copy was also delivered to him in the evening. Broker agreed to be paid Rs.40,000/- as his brokerage charges vide his email dated 08.11.2016. As per terms and conditions of Agreement to Sell dated 07.11.2016, plaintiff no.02 was required to make balance payment on or before 20.11.2016 for execution of final documents of transfer of property. Plaintiff no.02 could not make the balance payment. She also never tried to contact the defendant. The defendant was constrained to invoke forfeiture clause of agreement. The plaintiff no.01 threatened the defendant with dire consequences vide telephonic call on 05.02.2017. The defendant denied the other averments of the plaint and sought dismissal of suit of plaintiffs with heavy costs. REPLICATION OF PLAINTIFF SIDE
5. The plaintiff side filed replication to the written statement of the defendant vide which they denied the averments of the defendant. Plaintiff side reaffirmed and reiterated their averments to be true and correct.
A.K.Taneja & Ors. Vs. Ajay Babbar CS No.489/2017 [12.10.2021] Page No.5 of 16 ADMISSION-DENIAL OF DOCUMENTS
6. The defendant admitted receipt dated 03.11.2016 issued by him in favour of plaintiff no.02 and payment of Rs.3,00,000/- vide cheque in question of Mr. Ankit Taneja. He stated that he received the payment as earnest money towards sale consideration of property in question.
ISSUES FRAMED
7. After completion of pleadings, following issues were framed by my scholarly predecessor vide order dated 16.07.2018 : -
(i) Whether plaintiffs are entitled to recovery of the claimed amount as prayed for? OPP
(ii) Whether plaintiffs are entitled to interest on claimed amount as prayed for? OPP
(iii) Relief.
PLAINTIFF SIDE EVIDENCE
8. In order to prove their case, plaintiff side has examined plaintiff no.01 as PW1 who tendered his examination-in- chief vide affidavit Ex.PW1/A reiterating almost similar facts as of their pleadings and exhibited document i.e. Copy of receipt dated 03.11.2016 (OSR) Ex.PW1/1 and copy of statement from 01.11.2016 to 30.11.2016 (OSR) Ex.PW1/2 in his evidence. PW1 A.K.Taneja & Ors. Vs. Ajay Babbar CS No.489/2017 [12.10.2021] Page No.6 of 16 was examined, cross-examined at length by Ld. Counsel for the defendant which is not reproduced herein for sake of brevity. PW1 was examined and discharged.
9. No other witness was examined by plaintiff side. The defendant failed to examine any witness despite ample opportunities and his right to lead defendant evidence was closed vide order dated 23.03.2021. Thereafter, matter was fixed for final arguments.
ARGUMENTS/SUBMISSIONS/CONTENTIONS 10.1 Final arguments from plaintiff side were heard. The defendant side did not turn up to address final arguments despite number of opportunities given. No written submissions have been filed by either side despite providing opportunities for the same also.
10.2 It is the contention of the plaintiff side that the plaintiff side made a payment of Rs.3,00,000/- to the defendant vide cheque as token money to the defendant on his assurance that he would execute agreement to sell of the property in question in the favour of plaintiffs within 10 days. He agreed it to sell in Rs.1,00,00,000/-. The cheque was encashed on 15.11.2016 by defendant, but when plaintiff side tried to contact defendant and his A.K.Taneja & Ors. Vs. Ajay Babbar CS No.489/2017 [12.10.2021] Page No.7 of 16 son, they did not attend them. The defendant failed to execute the documents in favour of plaintiffs, so the plaintiff side is entitled for return of Rs.3,00,000/- paid to the defendant vide said cheque. It is the contention of the plaintiff side that the suit of plaintiff side be decreed in sum of Rs.3,00,000/- with pendente-lite and future interest @ 18% per annum.
10.3 Per contra, the case of the defendant side as could be inferred from its pleadings is that the plaintiff side agreed to make balance payment on or before 20.11.2016 as per terms and conditions of agreement to sell dated 07.11.2016, it failed to do so and it led to forfeiture of Rs.3,00,000/- by the defendant. The deal was in fact finalized at Rs.1,25,00,000/- and was agreed to be paid by husband of the plaintiff no.02 on her behalf. The draft agreement to sell was sent to the son of defendant by the broker vide email on 06.11.2017, it required changes and after correction it was sent back to the broker on 07.11.2017 and later on duly signed hard copy was also delivered to said broker. As per terms and conditions of agreement to sell dated 07.11.2016, the plaintiff no.02 was required to make balance payment on or before 20.11.2016 in order to get executed the final documents. The case of the defendant is that the amount of Rs.3,00,000/- has been A.K.Taneja & Ors. Vs. Ajay Babbar CS No.489/2017 [12.10.2021] Page No.8 of 16 forfeited and retained by defendant as per terms and conditions of agreement to sell dated 07.11.2016. The defendant side seeks dismissal of suit of plaintiffs on said grounds. 10.4 Case of both sides considered. Records perused. ISSUE WISE DISCUSSION Issue no.(i) 11.1 The onus of proving the said issue was upon the plaintiff side. It is not in dispute that payment of Rs.3,00,000/- was made from the account of husband of the plaintiff no.02 to the defendant. It is also not in dispute that there was no other relation between both sides except to the fact that the plaintiff side was interested in purchase of one flat of the defendant no.A-10/5, FF-2, DLF Phase-I, Gurugram - 122 002 and the said amount was paid regarding said flat only. The case of the plaintiff side is that the defendant orally agreed to sell the said flat to the plaintiffs in sum of Rs.1,00,00,000/-, the said amount of Rs.3,00,000/- was paid as a token amount to further finalize the terms and conditions of sale vide written agreement to sell to be executed within 10 days after providing of said amount and the defendant failed to execute the agreement to sell after receiving the amount of Rs.3,00,000/-. The case of the defendant on the other hand is that the deal was finalized in sum of Rs.1,25,00,000/-, amount of Rs.3,00,000/- was A.K.Taneja & Ors. Vs. Ajay Babbar CS No.489/2017 [12.10.2021] Page No.9 of 16 paid by the plaintiff side as earnest amount, a draft agreement to sell was sent by broker to the defendant which after minor corrections was sent back to the broker. The plaintiff side failed to pay the balance amount according to the agreement to sell, therefore, the defendant forfeited the earnest amount as per agreement to sell. Now, keeping in mind the case of both sides, if we go through the evidence on record, the plaintiff no.01/PW1 remained firm during his cross-examination that cheque in question was provided only as a token amount instead of earnest amount (bayana). He remained firm during his cross-examination that the agreement to sell was to be executed later on after providing of said amount of Rs.3,00,000/-. Even if we ignore his deposition to that effect, it is not in dispute that cheque in question was provided by the plaintiff side to the defendant side on 03.11.2016. It is also not in dispute that said cheque was encashed in the account of defendant on 05.11.2016. Had there already been entered an agreement to sell between both sides as per the case of the defendant side, there would have not been any occasion for providing a draft agreement to sell by the broker to the defendant side on 06.11.2016. The defendant side has not led any evidence in this matter, so the draft agreement to sell, emails and other A.K.Taneja & Ors. Vs. Ajay Babbar CS No.489/2017 [12.10.2021] Page No.10 of 16 documents of the defendant side has not been proved on record. But for the sake of assuring ourselves, if we go through the copies of agreement to sell filed by the defendant side, it is revealed that they were not completed in any manner as some blank columns are left in the same. The same is certainly not signed by the plaintiff side. In totality of circumstances, at the scales of preponderance of probabilities, the case of the plaintiff side looks more probable that the amount of Rs.3,00,000/- was provided to the defendant side only as a token amount and the agreement to sell was agreed to the executed later on. Though, after this conclusion, there is no need for any discussion on forfeiture clause(s) or their effects, but in the opinion of this Court for sake of clarity and complete adjudication of case of both sides, it would be relevant to discuss the law relating to clause(s) of forfeiture of earnest amount in an agreement to sell and what would have been the scenario in present case, had there been concluded agreement to sell between both sides. 11.2 The sections 73 and 74 of The Indian Contract Act, 1872 provides as under : -
"73. Compensation for loss of 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........."
A.K.Taneja & Ors. Vs. Ajay Babbar CS No.489/2017 [12.10.2021] Page No.11 of 16 "74. Compensation for breach of contract where penalty stipulated for - When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for..............." 11.3 In matter of "Fatehchand Vs. Balkishan Dass" AIR 1963 SC 1405 constitution bench of Hon'ble Supreme Court of India has held as under : -
"10. Section 74 of the Indian Contract Act, 1872 deals with the measure of damages in two classes of cases (I) where the contract names a sum to be paid in case of breach and (ii) where the contract contains any other stipulation by way of penalty. We are in the present case not concerned to decide whether a contract containing a covenant of forfeiture of deposit for due performance of a contract falls within the first class. The measure of damages in the case of breach of a stipulation by way of penalty is by section 74 reasonable compensation not exceeding the penalty stipulated for. In assessing damages the Court has, subject to the limit of the penalty stipulated, jurisdiction to award such compensation as it deems reasonable having regard to all the circumstances of the case. Jurisdiction of the Court to award the compensation in case of breach of contract is unqualified except as to the maximum stipulated; but compensation has to be reasonable, and that imposes upon the Court duty to award compensation according to settled principles. The section undoubtedly says that the aggrieved party is entitled to receive compensation from the party who has broken the contract, whether or not actual damage or loss is proved to have been caused by the breach. Thereby, it merely dispenses with proof of "actual loss or damage"; it does not justify the award of compensation when in consequence of the breach no legal injury at all has resulted, because compensation for breach of contract, can be awarded to make good loss or damage which naturally arose in the usual course of things, or which the parties knew when they made the contract, to be likely to result from the breach."
In matter of "Maula Bux Vs. Union of India" 1969(2) SCC 554 Hon'ble Supreme Court of India has held as under : -
"........There is however, no warrant of assumption made by some of the High courts in India, that section 74 applies only to cases where the aggrieved party is seeking to receive some amount on breach of contract and not to cases where upon breach of contract an amount received under the contract is sought to be forfeited. In our judgment the expression "the contract contains any other stipulation by way of penalty" comprehensively applies to every covenant involving a money or delivery of property in future, or for forfeiture of money or delivery of property in future, or for forfeiture of right to money or other property already delivered. Duty not to enforce the penalty clause but only to award reasonable compensation is statutorily imposed upon courts by Section 74, therefore, where there is a stipulation in the nature of penalty for forfeiture of an amount deposited pursuant to the terms of A.K.Taneja & Ors. Vs. Ajay Babbar CS No.489/2017 [12.10.2021] Page No.12 of 16 contract which expressly provides for forfeiture, the court has jurisdiction to awards such sum only as it considers reasonable but not exceeding the amount specified in the contract as liable to forfeiture".
In matter of "Dilip Kumar Bhagava v. Urmila Devi Sharma & Ors." RFA No.129/2011 decided on 31.03.2011 Hon'ble High Court of Delhi while deciding almost similar case has held as under : -
"7. On reading of aforesaid decisions of the Supreme Court it becomes clear that there cannot be forfeiture of an amount which is paid by a buyer under an Agreement to Sell to the respondents, even if, the buyer is guilty of breach of contract because the seller who has received monies, cannot forfeit the monies unless he has suffered loss in the bargain. A seller ordinarily suffers loss under an Agreement to Sell only if value of the property decreases as per the breach committed by the buyer/plaintiff/appellant and in the present case no loss has been pleaded or proved by the respondents. Even assuming therefore that the appellant/plaintiff is guilty of breach of contract, the respondent no.1, at best, can forfeit only a reasonable amount and not an amount of Rs.10 lacs out of the total sale consideration of Rs.55 lacs. It could not be argued with any conviction by the learned counsel for the respondent no.1/defendant no.1 that there are any pleadings in the trial Court that the respondent no.1/defendant no.1 led no evidence as to any fall in the value of the property by a specific amount of Rs.10 lacs so as to entitle him to forfeit the amount of Rs.10 lacs received as advance price".
11.4 In view of above discussed statutory and case law it is clear that even in cases where there is stipulation of forfeiture of earnest amount in case of breach of contract, it would depend upon the facts of each case whether same is in the form of genuine pre- estimate of loss/damages or is in form of penalty. In either case, any party who is seeking damages against the party who is at default can only be granted reasonable damages which cannot be above the pre-estimated damages or penalty which has been stipulated vide their contract. In present case, even if we accept the case of the defendant that there was a concluded contract of A.K.Taneja & Ors. Vs. Ajay Babbar CS No.489/2017 [12.10.2021] Page No.13 of 16 agreement to sell dated 07.11.2016 between both sides, the terms of forfeiture of whole of the earnest amount provided is certainly a stipulation in the form of penalty instead of a genuine pre-estimate of any damages. No case has been put forward by the defendant side as to how and up to what extent, they have suffered damages due to breach of contract by the plaintiff side. It is not the case of defendant that he has suffered any loss on account of depreciation in the value of the property due to breach of contract by plaintiff side and he has to sell it at lesser price to a third person. The pleadings of the defendant are completely absent on that aspect. It could be assumed in given circumstances he has not suffered any damages due to breach of contract by the plaintiff side even if his case is accepted in toto. So, on the scales of preponderance of probabilities, the case of the plaintiff needs to be accepted in all circumstances. The plaintiff side is entitled for recovery of sum of Rs.3,00,000/- from the defendant. Hence, issue no.01 is decided in favour of plaintiff side and against the defendant. Issue no.(ii)
12. The onus of proving the said issue was on the plaintiff side. The plaintiff has claimed pendente-lite and future interest @ 18% per annum upon the amount recoverable. The plaintiff side A.K.Taneja & Ors. Vs. Ajay Babbar CS No.489/2017 [12.10.2021] Page No.14 of 16 has not brought on record any documentary evidence to show that said rate of interest is customarily charged in such transactions. No citations etc. has also been shown/cited as to what particular rate of interest should be awarded in such matters. The transaction in question is certainly not a commercial transaction. However, plaintiff side is certainly entitled for grant of nominal interest upon the amount recoverable. In totality of circumstances, in the opinion of this Court, the scales of justice would be balanced if the plaintiff side is granted pendente-lite interest @ 6% per annum and further future interest @ 6% per annum only can be granted as per section 34 of The Code of Civil Procedure, 1908 upon sum adjudged to be payable in above discussion. Hence, issue no.02 is decided in favour of plaintiff side and against the defendant in said terms. RELIEF
13. In view of discussions above, suit of the plaintiffs is decreed and a decree of sum of Rs.3,00,000/- (Rupees Three Lakh only) along-with pendente-lite interest @ 6% (six percent) per annum and future interest @ 6% (six percent) per annum as per Section 34 of The Code of Civil Procedure, 1908 is passed in favour of plaintiffs and against the defendant. Plaintiffs are also entitled for the costs of the suit. Decree sheet be prepared A.K.Taneja & Ors. Vs. Ajay Babbar CS No.489/2017 [12.10.2021] Page No.15 of 16 accordingly upon filing of deficient Court fees, if any. After preparation of decree-sheet, file be consigned to record room after Digitally due compliance. signed by HARVINDER HARVINDER SINGH Announced in open Court SINGH Date:
2021.10.12 on October 12, 2021. 17:40:27 +0530 (HARVINDER SINGH) SCJ-cum-RC/South-West, DWK/ND/12.10.2021 A.K.Taneja & Ors. Vs. Ajay Babbar CS No.489/2017 [12.10.2021] Page No.16 of 16