Kerala High Court
Link India Homes Pvt. Ltd vs Joe Joseph on 17 November, 2006
Equivalent citations: AIR 2007 (NOC) 532 (KER.), 2007 (3) AKAR (NOC) 234 (KER.)
Bench: M.Ramachandran, K.T.Sankaran
IN THE HIGH COURT OF KERALA AT ERNAKULAM
RFA No. 565 of 2005(C)
1. LINK INDIA HOMES PVT. LTD.,
... Petitioner
2. GENERAL MANAGER (PROJECT)
3. JOSE KUTTAN, LINK INDIA HOMES PVT. LTD.,
4. K.G.PRATAP SIMHAN, S/O.GOPAL PANICKER,
5. K.J.GEORGE, S/O.K.V.JOHN,
6. T.B.PARAMESWARAN, S/O.NARAYANAN,
7. G.KARTHIKEYAN, S/O.GOVINDAN,
8. M/S.LINK CONSTRUCTIONS, T.V.NO.3226/AVS
9. O.G.SUNIL, LINK HORISON,
10. BHANU PRAKASH V.PAI,
Vs
1. JOE JOSEPH, FLAT NO.V.,
... Respondent
2. PHILO JOSEPH, FLAT NO.V.,
3. ANTONY JOSEPH, FLAT NO.V.,
For Petitioner :SRI.S.SREEKUMAR
For Respondent :SRI.P.SANTHALINGAM
The Hon'ble MR. Justice M.RAMACHANDRAN
The Hon'ble MR. Justice K.T.SANKARAN
Dated :17/11/2006
O R D E R
(M.RAMACHANDRAN & K.T.SANKARAN, JJ)
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R.F.A.No.565 of 2005-C
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Dated this the 17th day of November, 2006
JUDGMENT
Ramachandran, J:
Judgment and decree of the Second Additional Sub Judge, Ernakulam in O.S.No.606 of 2002 is under challenge at the hands of the defendants. The suit was filed with seven defendants in the array of parties. In the written statement, objections had been raised suggesting that there was mis-joinder as well as non-joinder of parties. Defendants 8, 9 and 10 came to be impleaded at that point of time. The suit was one for specific performance and compensation. The appellants suggested that it could have been understood as a suit for mandatory injunction requiring execution of sale of plaint schedule properties. However, the controversy had been resolved at the preliminary stage, and taking note of the scope and purport of the suit, the plaintiff had been directed to remit the deficit court fee before the court below and in consonance therewith required court fee had been remitted by the appellants herein.
[RFA No.565 of 2005] -2-
2. The learned Sub Judge had directed the defendants to execute a sale deed in favour of the plaintiffs in respect of apartment No.14D on the 14th floor of the building Link Horizon situated in the plaint schedule property with car parking facilities, after receiving the balance consideration for a total plinth area of 1980 sq.feet. Consequential directions were also issued as warranted. Aggrieved by the judgment and decree, the defendants in the suit have come up with this appeal. The case of the plaintiffs and the defence put in by the defendants could be briefly stated herein below.
3. Essentially it is pleaded that the plaintiffs, who are residing at Calcutta, but who are Keralites, were looking forward to settle at Cochin during their evening years. They had come to note of the project launched by the first defendant-Company and had negotiated for allotment of Flat No.14D in the building, described as Link Horizon, proposed to be put up at Marine Drive. The saleable area was 1790 sq.feet consisting of 3 bed rooms with car parking facility. The plaintiffs (respondents herein) thereafter had jointly paid a sum of Rs.7 lakhs towards consideration on 26-09-94. According to them, they were given to understand that on allotment they were to pay a further sum of Rs.4,72,500/- and quarterly instalments of Rs.1,16,250/- from November, 1994 [RFA No.565 of 2005] -3- onwards, totalling Rs.19,83,750/-. The price per square feet was Rs.1000/-. The last instalment was payable on Ist of November, 1996 and at the time of taking possession they were to pay Rs.54,472/-.
4. They claimed that they had remitted the full consideration as per the understanding and was expected of them. The last payment was made on 05-11-1996 and the total payment came to Rs.19, 85,000/-. Receipts had been issued routinely. They had referred to the salient features of the brochure supplied to them, which indicated that the consolidated contract value covered the cost of construction of the building as well as the cost of undivided share of land value. The sale deed for the undivided share, in due course, was to be registered in favour of purchasers by the builder on receipt of the entire amount of contract and such share was inseparable from the building.
5. According to the plaintiffs, although certain communications thereafter were received from the General Manager (Projects) of the Link Constructions (2nd defendant) and suggestions had been passed on from time to time, after 1996 the communications had abruptly stopped. During 1996, a representative deputed by them had reported that practically no work was going on. Exasperated as they were, they had issued a [RFA No.565 of 2005] -4- letter on 16-05-1998 requesting the first defendant to intimate them as to when the project will be completed for them to take possession. A reminder was sent on 06-06-1998, but there was no answer. Again a letter was sent on 25-07-1998 requesting the defendants to forward the agreement so as to subscribe their signature. But nothing transpired thereafter and a lawyer's notice was issued on 25-05-2001. It is pleaded that by taking advantage of the plaintiffs' absence at Cochin, the defendants had failed to take steps to finish the work as promised at the time of offer. They had come to note that about 12 families had moved into the unit by completing the finishing work by themselves. There were about 60 flats, but most of them were remaining incomplete. The excuse forthcoming was that there was a crash in real estate business and the defendants had sustained loss. But, when they found that the defendants were not interested in handing over possession of the promised premises, even after receiving the full consideration, they felt that they are being taken for a ride, and since there was a concluded contract as between them, they had no other recourse than to approach the court for specific performance of contract for sale as well as mandatory injunction for handing over possession of Flat No.14D and similar reliefs. It had been pleaded that they were always ready and willing to do [RFA No.565 of 2005] -5- whatever they have to do under the terms of the contract, and therefore, they are entitled to get the sale deed executed in their favour. Reliefs were incorporated in consonance with the tenor of the plaint.
6. A written statement had been filed by defendants 1 to 7 on 07-02-2003. It had been pleaded that the suit is not maintainable for a variety of reasons. The first defendant had undertaken the construction of a multi storied residential complex in 57 cents of land in Sy.No.843 of Ernakulam Village. The above land had been taken on lease by Sri.O.G.Sunil from the Greater Cochin Development Authority for a period of 99 years. The land owner Sri.Sunil and a few others had formed a partnership in the name and style of "M/s.Link Constructions" to own the property and flats were constructed by the first respondent. Therefore, the Link Constructions are the owner of the property. Since they were not parties to the proceedings, the suit filed only with the General Manager of the partnership as a defendant, could not have been maintainable.
7. It had been, however, admitted that one of the plaintiffs of course had approached the Link Constructions evincing interest in the project and he had booked a 3 bed room apartment on the 14th floor and had submitted the duly filled [RFA No.565 of 2005] -6- registration form on 26-09-1994. It is also admitted that Rs.7 lakhs was paid at that time. Mode of payment was not disclosed or given at the time of submitting the registration form. But, however, it had been admitted that as on 05-11-1996 a sum of Rs.19,85,000/- was paid by the plaintiffs. But this would not have enured to them rights to compel any specific performance.
8. The defendants disclosed that progress reports were being appropriately despatched. It is admitted that "the plaintiffs have changed the drawings several times as detailed in the plaint". It is further claimed that on 07-02-1996 M/s.Link constructions had informed the first plaintiff about the completion of the work. The plaintiff was informed that a sum of Rs.1,40,750/- was outstanding and delayed payment will be charged with 21% interest. Thereafter the plaintiffs had paid a sum of Rs.1,16,250/-. Another sum of Rs.1,00,000/- was paid on 05-11-1996. Thereafter, they had not paid any amount nor there was any communication. On 16-05-1998, of course the plaintiff issued a letter enquiring about the progress of the work. But, however, as the plaintiffs were not ready to pay the balance amount, no further communications were sent. It is denied that the entire amount due for entitling allotment of Flat No.14D is made, since as much as Rs.13,29,626/- was outstanding in connection with the extra [RFA No.565 of 2005] -7- work and statutory obligations. Emphasis is that for want of payment the Link Constructions was compelled to stop their work and the work was not done due to the non-co-operation of the plaintiffs. It is further claimed, by way of paragraph 12 of the written statement, that as demanded by the plaintiffs 90% of the work was completed as early as in March, 1997. "The plaintiffs failed to pay not only the original amount but also for additional works".
9. The plea for repudiating the contract thereafter had been incorporated in the written statement as following:
"The averments in paragraph 11 of the plaint are not fully correct and hence denied. As the plaintiffs failed to pay the amount no agreement was essential. The averment that the plaintiffs have remitted the entire instalments is absolutely false and hence denied. The further averment that there was an offer and acceptances of terms and conditions put forward by the defendants, were agreed and acted upon and entire sale consideration was paid is false and hence denied. The further averment that there was a concluded contract is absolutely false. There was only a proposal by the plaintiffs for the purchase of the flat which will culminate into a contract only on payment of entire cost of construction and value of car park. Since there was no payment, there was no acceptance and consequently there was no concluded contract. The averment that the defendant was acted in a callous and fraudulent manner and after receiving so much money have clearly managed not to give anything in writing is absolutely false and hence denied. As there is no concluded contract between the parties, the [RFA No.565 of 2005] -8- plaintiff cannot claim possession of the flat. The averment that for all purposes there was a concluded contract between the plaintiffs and defendants is absolutely false and hence denied. The principles of law of promissory estoppal has no application to the case in hand".
10. There was also a plea of limitation incorporated, in the following terms. If at all there is an oral agreement as alleged, the said agreement was dated 26-09-1994. The period for specific performance is for three years from the date of agreement, as the plaintiffs were aware of the refusal of the defendants to perform their part of the agreement, as gatherable from their own letters dated 16-05-1998, 06-06-1998 and 23-07-1998. The suit was hit by limitation, as the date commences from 23-07-1998, but the suit was filed only during September, 2002. The suit presumably is filed only on an experimental basis, without bona fides and was frivolous and vexatious. The plaintiffs had not performed their part of the contract and there was no cause of action on 23-02-2001 as alleged.
11. The plaintiffs thereupon had impleaded defendants 8, 9 and 10, the partnership which owned the premises, and the authority who were engaged in the construction. They had filed their written statement on 27-09-2004 practically reiterating the [RFA No.565 of 2005] -9- contentions raised by their colleagues. They had but additionally referred to the circumstance that the 8th defendant, managing partner of M/s.Link Constructions, had sent a notice on 02-03- 1997 calling upon the plaintiffs to settle the dues as on date advising of the consequence that in case of failure the booking of Flat No.14D will be cancelled and the amounts advanced will be forfeited. As there was no response, yet another notice had been issued on 28-03-1997 cancelling the booking made by the plaintiffs. Although the plaintiffs had received the letters, they had not cared to send a reply, suggesting that it led to irresistible conclusions.
12. On behalf of the plaintiffs, PW1 to PW6 had been examined. Among them, PW2 was the Advocate Commissioner deputed from the Court for a local inspection to report the state of affairs as prevailing during August, 2003. Defendants had examined three witnesses. Reliance had been placed on documentary evidence (Exts.A1 to A45 and B1 to B14). The court had the benefit of Exts.C1 (Commissioner's Report) and Ext.C2 (Expert Report) and X1 (a drawing of the multi storied building prepared by the architects.
13. As referred to earlier, the learned Sub Judge decreed the suit holding that there was privity of contract as between the [RFA No.565 of 2005] -10- plaintiffs and all the defendants and the contract was concluded. It had also been held that the objections raised about the limitation having been set in, was unacceptable. The court further held that for technical grounds, it could not have been possible to deny the reliefs. It had been observed that the defendants notwithstanding their contentions and opportunity to adduce evidence, had not been successful to bring any authentic material so as to show that the dues as claimed in the written statement was factually accurate. The accounts had been withheld from the court. It had therefore been held that the circumstances require a direction, whereby the defendants were obliged to hand over the premises, claimed as Flat No.14D, after due formalities.
14. Mr.Sreekumar had submitted that the findings as above were thoroughly unsustainable. According to him, there was no contract as between the plaintiffs and the defendants, which could have been directed to be enforced. He also referred to a circumstance that even if there was any claim sustainable or available to the plaintiffs, the court should not have enforced such claims as limitation had set in. The plaintiffs had not explained their laches and even if there was a claim legally sustainable, the discretion of the court should not have been exercised in their [RFA No.565 of 2005] -11- favour. In total, there was no justification for the court to take a view, whereby the defendants were subjected to great prejudice and loss and the suit ought to have been dismissed.
15. Mr.P.Santhalingam, on the other hand, maintained that having obtained the full consideration, the efforts of the defendants were always to take the plaintiffs for a ride oblivious about the resultant chaos and loss of expectation of a settled life. They are constrained to reside away from their native place incurring unnecessary expenditure for their upkeep. Per force they had to initiate legal proceedings. The circumstances required that they are to be appropriately compensated by award of costs. According to him, there was no laches and there was also no limitation whatsoever and equitable principles appropriately had been borne in mind by the court. There is even a direction that they are to pay a large amount, taking notice of the circumstance that saleable area originally contracted had increased. Both sides had adverted to a number of decisions for substantiating their stand.
16. The first submission of Mr.Sreekumar was that there was no concluded contract and the presence of such a contract alone should have been the substratum for a decree in the nature of specific relief. Although there might be an initial payment, [RFA No.565 of 2005] -12- registration of name and earmarking of allotment and routine payments, this could not be equated to a concluded contract, which alone could have been the subject matter of enforcement.
17. We do not intend to dwell in this region much, as the contentions raised by the defendants are conflicting in nature. When it is conceded that on an application, after discussions, the request of the plaintiffs had been registered and a substantial amount of Rs.7 lakhs had been received from them, it paves stones for foundation of a contract. Ext.A5 registration do bind the psarties. We respectfully agree with the observations made in Hassankutty v. P.P.Rawther [2000 (1) KLT 8 - Case No.8] in this regard. Regular quarterly payments, evidenced by Exts.A8 to A18, compel us to come to a conclusion that such payments had been received by the defendants in token of an enforceable contract. It is pleaded that the company is the builder and the partnership is the owner of the project. But the receipts were issued for such payments by the company and as far as a third party was concerned, when it had been held out that the signatory of the receipt was an authorised representative of the principal, plaintiffs could not have been blamed. Since there is a definite admission, that amounts had come to the accounts of M/s.Link Constructions, and since the company, the partnership as well as [RFA No.565 of 2005] -13- the partners and directors are in the array of parties, the issue of non-joinder or mis-joinder practically has no place. Order 1 Rules 4 to 7 of the Code of Civil Procedure approves of such conduct by the plaintiffs.
18. Communications issued from time to time, including an invitation sent on 25-05-2002 (Exts.A36 and A37) show that the plaintiffs were accepted as persons who had been recognised as allottees of Flat No.14D. Even Exts.B11 and B12, relied on behalf of the defendants, require to be construed against them, notwithstanding the circumstance that there has been no sufficient evidence to show that such letters had been ever before seen the light of the day or were served on the plaintiffs. Ext.B11 dated 02-03-1997 required the plaintiffs to make immediate payment and failure was to result in forfeiture of the amounts in deposit. Ext.B12 dated 28-03-1997 issued by the Managing Partner of M/s.Link Constructions advised them that the allotment had been cancelled. An allotment could be subjected to cancellation only if there was an agreement preceding it. The frequent letters, intimation of revised plans etc., produced as documents by the defendants (Exts.B1 to B4), unambiguously indicated that suggestions were being accepted from their counter parts without demur. As required of the situation, they [RFA No.565 of 2005] -14- were being assumed as suggestions implemented. It is too late for the appellants to contend that there was no contract possible to be enforced. We feel that one more document might be clinching, viz., Ext.B10. The plaintiffs thereby were informed that if they surrendered their rights, it may be possible for them to receive a premium compensation. It is seen issued on 24-08-1995 and has come as a document produced by the defendants. The parties, therefore, had come to accept that a contract had already been entered as between them.
19. Now we will go to the issue of limitation. In fact, the written statements filed by the defendants hardly show the circumstances or justification for bringing such a plea. Even though they had referred to a letter received from the plaintiffs on 16-05-1998, the objection was that as the plaintiffs were not ready to remit the balance amount and no further communication was being sent. The first written statement referred to limitation highlighting the circumstance that if there was an oral agreement it was on 26-09-1994 and period of specific performance was three years from the date of agreement. They also relied on a letter issued on 23-07-1998, when there is an admission, according to them, that the plaintiffs knew about the decision of the defendants not to perform their part of the contract. Therefore, the limitation [RFA No.565 of 2005] -15- commenced at least from 23-07-1998.
20. It might be in that context that much was stated about the statement made by PW6, an agent of the plaintiffs, in the course of his deposition. The appellants have attempted to bring out every ounce of possible arguments on this score from the stray sentence of the witness. The witness had stated that on instructions he had been enquiring about the progress of the work during 1996 and 1997, but practically no work was being carried out at the site. But, however, he had stated in his proof affidavit that in 1998 Sri.Jose Kuttan, the Managing Director had informed him that as there as no agreement entered into , it may not be possible for the plaintiffs to compel for completing and handing over the constructed flat. In the cross examination, he had also stated that the Managing Director had told him that he had decided to give Flat No.14D to a film producer. Mr.Sreekumar submits that there is ample evidence to show that PW6 has informed the stand adopted by the Managing Director to the plaintiffs and this could be clear from the correspondence which ensued, and therefore the refusal to act upon the contract was so brought to the knowledge of the plaintiffs. From that date cause of action had arisen and a suit required to be filed within three years, in any case, and as of now it is filed therefore out of date. [RFA No.565 of 2005] -16-
21. Although counsel had adverted to pronouncements of various High Courts as well as the Privy Council on the legal principles relating to limitation, we do not think it may be necessary to advert to any of them, as the issue appropriately has to be appreciated with reference to the available facts. The maximum that could be gatherable from the evidence of PW6 is that he had been told by the Managing Director that for want of agreement, it could not have been possible for the plaintiffs to press for construction to be carried out as of right. However, this could not so amount to understand the situation as a repudiation or refusal, as is commonly understood. The argument deserves to be rejected as such.
22. Article 54 of the Limitation Act provides the limitation as three years, in respect of a suit for enforcing specific relief. The date from which limitation starts is the date fixed for performance, or if no such date is fixed, when the plaintiffs have noticed that performance is refused. This contingency was not there forthcoming at least with reference to the deposition of PW6. The defendants apparently had their own plans to substantiate an argument about limitation. They had brought in Ext.B12 notice dated 28-03-1997, which purported to advice the plaintiffs that the contract had been cancelled. However, the [RFA No.565 of 2005] -17- defendants have miserably failed to prove that such letter had been received by the plaintiffs or at least sent from the office of the defendants. This simple circumstance in fact compels us to conclude otherwise. The contract was to hand over a specified flat after construction in a specified property.
23. The Specific Relief Act do take notice of such situations. Even though under Section 14(d), it is specified that a contract the performance of which involves the performance of a continuous duty which the court cannot supervise, cannot be specifically enforced, sub-section (3)(c) explains that where the suit is for the enforcement of a contract for the construction of any building or the execution of any other work on land, when the building is described in the contract in terms sufficiently precise to enable the court to determine the exact nature of the building or work and the plaintiff has a substantial interest in the performance of the contract and the interest is of such a nature that compensation in money for non-performance of the contract is not an adequate relief, the court may enforce specific performance of the contract. Thus, the indication is that in the matter of construction of a building , specific performance could be ordered. It is clear in the present case that the defendants had secured permission and were going on with the project, but there [RFA No.565 of 2005] -18- was delay for some reason or other. They had come to notice that occupation had commenced, in some of the units, in early 2001. It has also been established, by documentary evidence, that although the plaintiffs had parted with money as early as in September, 1994, the approval of the plan was obtained on a far later date, and construction started at the end of 1995. No Objection Certificate from the Fire Department for construction of the complex had been obtained only on 01-08-1997 (Ext.A45), and sanction for work of additional floors had been given only effective from 09-03-1995 as could be seen from Ext.A44. Occupancy certificate in respect of the building was issued to the Managing Director of M/s.Link Constructions in respect of the property, certifying that the building was fit for occupation by the competent authority viz., Town Planning Officer, Corporation of Cochin only on 05-11-2001. The date of completion as arising from the declaration of the builder there is shown as 20-04-2001. It would not have been possible for the plaintiffs therefore to demand handing over possession of the completed structure fit for occupation before any such date, and therefore to hold that there was failure on their part to enforce their claims for specific relief, or that limitation had set in appear to be propositions, which are untenable.
[RFA No.565 of 2005] -19-
24. We may also advert to the evidence of the Town Planning Officer of the Corporation of Cochin, who was examined as PW5. He states that a certificate had been given on 05-11-2001 recording that the work of the building was completed on 20-04-2001. The Corporation is required to allot House Number only after the receipt of the completion report, the witness deposed, and occupation, according to him, without an occupancy certificate is considered as unauthorised. There is also a report forthcoming from the Advocate Commissioner, who visited the project during the year 2003. She reports that about 10% of the work of the flat remained undone and the photographs produced along with the report sufficiently indicated that the assessment as above was reasonable. Therefore, even at that point of time, the defendants were not in a position to honour their commitments and they could not have possibly blamed the plaintiffs for their lethargy.
25. The appellants thereupon had submitted that the delay and laches disentitle the plaintiffs to enforce an equitable remedy. However, the submission does not appear to be as acceptable, as it comes without grace. As early as in November, 1996, the plaintiffs had remitted the entire amounts as originally contracted and the balance amount of Rs.54, 472/- was payable only at the time of [RFA No.565 of 2005] -20- taking possession. Therefore, what was expected of the plaintiffs in terms of the contract had been carried out. The defendants had fully utilised the advantage of such amounts paid to them. There is nothing to indicate that the plaintiffs were advised about the requirement for payment of any amounts for additional works done. Even as of now, we see that convincing materials were not placed to show that the defendants had incurred additional expenditure, running to about 13 lakhs. The anxiety of the plaintiffs were evident, and situated as they were at Calcutta, it would not have been possible for them to make frequent inspection or visits. We have also to take notice of their submission that they are compelled to occupy rented flats at Calcutta paying high rents and the profitable use of their investments at Cochin were all the time denied to them. Of course they had not rushed to the court, although evidently after a certain stage the construction was at snail's pace.
26. Mr.Sreekumar refers to the flaw that is committed while the schedule is described in the suit, as fatal, since it runs counter to the reliefs prayed for. But, on the facts, this is too feeble a ground to non-suit the plaintiffs. As noted by the trial court, the contentions of the defendants were conflicting in nature, and not convincing. After allotment and after receiving [RFA No.565 of 2005] -21- payments, they could not have disowned their responsibility. The offer to buy back, the correspondence regarding the changes to be brought out in the structural details, their prolonged silence even after receiving letters, and the attempt to rely on imaginary letters/ notices are sufficient to establish that they were not adopting fair trade practices, while dealing with this particular client. Equity and law required that the plaintiffs were to be given the relief.
27. On the facts and circumstances of the case, we are of the view that the quality of the claims of the plaintiffs outweigh the alleged righteous indignation feigned by the defendants. We find that the learned Sub Judge had assessed the situations dispassionately and the decision is founded on legal principles.
26. Resultantly, the appeal is dismissed. No costs.
(M.RAMACHANDRAN) JUDGE (K.T.SANKARAN) JUDGE mks/