Delhi District Court
Sh. Roop Chand vs M/S Rakshit Buildtech Pvt. Ltd on 11 July, 2022
: IN THE COURT OF :
Dr. V.K. DAHIYA
ADDITIONAL DISTRICT JUDGE01:
SOUTHWEST DISTRICT: DWARKA COURTS:
NEW DELHI
Civil Suit No. 180/2016 (517050/2016)
In the matter of:
Sh. Roop Chand
S/o late Sh. Khushi Ram
R/o Village Paprawat,
Najafgarh, New Delhi 110 043.
.....Plaintiff
Versus
M/s Rakshit Buildtech Pvt. Ltd.
through its Director Manjit Singh Khara
Office at, 18, Akshardham Apartment,
Pocket 3, Sector19, Dwarka,
New Delhi 110075.
....Defendant
Date of Institution of Suit : 01.06.2016
Date of reserving judgment : 01.07.2022
Date of pronouncement : 11.07.2022
Appearance:
(i) Sh. Umesh Yadav, Advocate, Ld. Counsel for the plaintiff.
(ii) Sh. Rakesh Sinha, Advocate & Sh. Jeemon Raju K. and
Advocate, Ld. Counsel for the defendant.
CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd.
Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand
Page no. 1 of 45
SUIT FOR DECLARATION
J U D G M E N T:
1. Vide this judgment I shall dispose off the suit filed by the plaintiff/non counter claimant as well as the counter claim filed by the defendant/counter claimant. For the sake of convenience plaintiff/non counter claimant and defendant/counter claimant are hereinafter referred to as the plaintiff and defendant respectively.
2. The plaintiff has filed the present suit seeking declaration, relevant facts, as emanating from the plaint, giving rise to the cause of action in favour of plaintiff, for filing the present suit are that :
(i) The plaintiff is residing at the abovesaid address alongwith his/his family while the defendant is a private limited company incorporated under Companies Act and having its registered address at 18, Akshardham Apartment, Pocket 3, Sector19, Dwarka, New Delhi 110075.
(ii) It is averred that plaintiff is the absolute owner of 1/6th share in agricultural land total measuring 30 Bigha and 05 biswas in Khata no.
56/54 and Khasra nos. 37//13(412), 14(416), 17(416), 18/1 (309), 55//11(416), 12(412) and 13 min (304) situated in the revenue estate of Village Paprawat, Tehsil Kapashera, New Delhi (in short, the said land and the share of plaintiff is hereinafter referred to as the suit property) CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 2 of 45
(iii) It is averred that defendant in the year 2015, entered into an agreement to purchase with another cosharer namely Sh. Ram Prasad of the said property, however, due to reason best known to the defendant till date, the sale deed could not be materialised. The defendant had purchased huge quantity of agricultural land in the rural area of Delhi and entered into many agreements for purchasing the agricultural land, which are in pipeline for execution of the sale deed.
(iv) It is averred that defendant in August 2015, through a middleman, namely Sh. Jagdish Yadav, resident of village Paprawat, Delhi met plaintiff and other cosharers for purchasing of their share in the said land. After some negotiations between the parties on 19.08.2015, the defendant gave ₹ 1 lakh in cash and ₹ 2 lakh by way of cheque as a token money to plaintiff for purchasing his share of the said land i.e. the suit property. The defendant on the same day, gave token money to five other cosharers of the said land in respect of their share in the said land (one is real brother and remaining are sons and widow of deceased brother Suresh Kumar).
(v) It is averred that on 22.10.2015, the above said deal was finalised and the parties to the suit entered into an agreement to sell (in short, the said agreement) in respect of 1/6th share of the plaintiff in the said land i.e. the suit property. The total sale consideration for plaintiff's share was fixed for ₹ 4,93,64,687/ and at that time, defendant had paid an amount of ₹ 47,00,000 lakhs to the plaintiff CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 3 of 45 through account payee cheque. The defendant on the same day, had executed five other agreements to sell with other five cosharers in respect of their share in the said land.
(vi) It is averred that the last date for registration of sale deed/payment of remaining amount to the plaintiff was 05.05.2016, subject to providing of the No Objection Certificate (NOC) from the revenue authorities by the plaintiff to the defendant. The plaintiff, in terms of the same, got No Objection Certificate from the revenue authority within time.
(vii) The plaintiff, on 13.04.2016, 16.04.2016 and 26.04.2016, delivered the copy of no objection certificate to the defendant through Emails as well as speed posts. That on 30.04.2016, Sh. Mahender Kumar, Sh. Roop Chand (plaintiff herein) and middleman Sh. Jagadish Yadav went to the office of defendant to handover the copy of NOC. The employee posted at the office of the defendant received the NOC and assured them that the registration of the sale deed would be done before the last date. The defendant had neither informed regarding registration of sale deed nor asked for any other information from plaintiff.
(viii) It is averred that plaintiff and other cosharers, after informing the defendant, on 03.05.2016, made their appearance in the office of concerned SubRegistrar, however, neither the defendant came to the CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 4 of 45 office of sub registrar for registration of sale deed nor did defendant inform anything about the registration of the same. The plaintiff on the very next day i.e. on 04.05.2016, through his counsel sent notice on email to the defendant and requested for appearance at 01.00 PM on the same day before the concerned SubRegistrar and get the registration of the sale deed in its favour. The plaintiff, on 04.05.2016, from 11.00 AM to 03.00 PM, along with other cosharers was present in the office of the concerned SubRegistrar, however, neither the defendant appeared there nor defendant has responded to the Email.
(ix) The plaintiff on 05.05.2016, through his counsel sent another notice to the defendant thereby requesting to make the payment of remaining amount and get registration of the sale deed in its favour. The plaintiff also got a public notice issued on 06.05.2016 in the newspaper "Amrit India" for the same purpose. The defendant, however, instead of execution of the sale deed and payment of the remaining amount to plaintiff, sent a false and frivolous reply dated 14.05.2016 to the legal notice dated 05.05.2016 and the defendant blamed the plaintiff for not fructifying the said agreement and demanded back the earnest money along with interest from the plaintiff.
(x) It is averred that the plaintiff and other five cosharers of the land entered into another agreement to purchase with Sh. Ashok Kumar S/o Sh.Rohtash R/o Village Molhahera, District Gurgaon, Haryana for CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 5 of 45 purchasing his agricultural land situated in village Dogada, Alwar, Rajasthan. The plaintiff has paid total amount of ₹ 5 lakhs to him as earnest money and fixed the last date of 20.05.2016 for final payment, however, due to failure of the defendant to pay the due amount, the plaintiff was unable to complete the agreement entered into with Sh. Ashok Kumar and the entire earnest money of the plaintiff was forfeited by him.
(xi) It is averred that the defendant by way of reply dated 14.05.2016, wanted to escape from its liability to fructify the said agreement. The defendant made false and frivolous grounds in fray, in fact, it has no consideration amount for payment of the due amount for purchase of the suit property to plaintiff.
(xii) It is averred that the defendant has entered into sale deeds and made too many arrangements of sell, more than its financial capacities, therefore, defendant wanted to escape from those agreements. The defendant is solely liable for not fructifying the said agreement as the plaintiff has already performed his part of the said agreement and has complied with his part to get the NOC from the revenue authorities, however, the defendant failed to perform its part of the said agreement. The defendant has itself denied registration of sale deed in its favour, therefore, on the basis of natural justice, equity and good conscience, the earnest money / amount paid by defendant to plaintiff should be forfeited.
CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 6 of 45
(xiii) It is averred that the plaintiff has also suffered monetary loss on account of default of defendant in making the payment of remaining sale consideration of the suit property. The plaintiff having good faith invested his earnest money for purchase of the land of Sh. Ashok Kumar, but on account of default of defendant, the said money was forfeited by Sh. Ashok Kumar. The defendant has not complied with the terms and conditions of the said agreement, whereas, defendant was legally bound to comply with the same. Now, the plaintiff is not bound by the said agreement and the earnest money of defendant should be forfeited in favour of the plaintiff and the said agreement is liable to be declared cancelled. Hence, the present suit.
3. After filing of the suit, summons for settlement of issues, was issued to the defendant. The defendant was served and filed written statement, which, lateron was amended and interalia submitted that plaintiff has concealed/ suppressed the material facts and has not come with clean hands before this Court, which disentitled plaintiff from the relief, as sought in the plaint. The motive of plaintiff to file the present suit in the present form is just to harass and put undue pressure on the shoulders of defendant to garner monetary benefits at the cost of defendant. That the plaintiff has filed the present suit with malafide intentions and mischievously concocting a story which is devoid of any merits whatsoever and derives no legal sanctity, however, the so called allegations made in the plaint are suppressio veri & suggestio falsi in so far as the defendant is concerned.
CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 7 of 45
4. It is submitted that present suit has been filed by plaintiff praying for a decree of declaration thereby declaring the said agreement as cancelled and earnest money paid by the defendant be forfeited in favour of the plaintiff is imaginary and mischievous with a malafide intention and the same cannot be entertained. The suit is not maintainable before this Court since the same is based on distorted facts and figures. The suit has been very clandestinely crafted for causing harm and loss to the defendant.
5. It is submitted that the total sale consideration of the suit property in terms of the express terms and conditions of the said agreement under Article 3 (i.e. articles3.1, 3.1.1, 3.1.2, 3.1.3 and 3.1.4) is fixed for a sum of Rs.4,93,64,687/, whereas, the plaintiff has failed to affix the requisite court fees on the total sale consideration of the subject matter. The plaintiff has only paid a meager amount of Rs.15,070/ for the purposes of Court fees, therefore, the suit deserves to be dismissed.
6. It is further submitted that the plaintiff has failed to comply with the reciprocal obligations especially article 2.3.3 under the said agreement, which is a condition precedent and failure of plaintiff to comply with the same, will in itself result into vitiating the said agreement void ab initio. The plaintiff has no locus standi to file the present suit against the defendant who has got the cause of action against the plaintiff to file the counter claim/cross suit.
CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 8 of 45
7. It is submitted that the plaintiff in terms of the said agreement has assured defendant that plaintiff is the absolute and exclusive owner of the suit property and that no person other than the plaintiff can claim title to the suit property and plaintiff is in vacant peaceful physical possession of the suit property, however, plaintiff is not owner of the suit property as the said land is still not partitioned. It was also assured by plaintiff that that there are no legal impediments whereby the plaintiff can be prevented from entering into the said agreement, and there is no order of attachment by income tax authorities and/ or by any other authorities under law for the time being in force. The suit property, is in the possession of plaintiff duly demarcated and the same is not HUF property, no part of the suit property in the name of any minor, the suit property is not subject to or part of any litigation or dispute and the land is free from all encumbrances. But those averments in the said agreement are not correct as per record.
8. It is submitted that plaintiff, right from the inception to the execution of the said agreement, failed to comply with its reciprocal obligations under article 2.3.3 of the said agreement, which is a condition precedent prior to the execution and registration of the sale deed of the suit property. Therefore, the plaintiff has violated the terms and conditions under Article 2.3.3 of the said agreement. In fact, before the sale deed could be registered it was a primary condition in the said agreement that plaintiff shall obtain a No Objection Certificate in favour of the defendant from the coparceners and their legal heirs on an affidavit. This condition precedent in terms of Article 2.3.3 for the CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 9 of 45 sale of the subject land, was an essential prerequisite for execution/registration of the sale deed, but no such NOC was obtained by the plaintiff. Moreover, the defendant was interested in purchasing the entire said land from all the cosharers, if the aforesaid condition of NOC from cosharer was complied with by plaintiff. The defendant, however, in the absence of the same, is not in a position to purchase the suit property from the plaintiff due to fear and anxiety keeping in mind the legal hurdles that might occur in future.
9. It is submitted that plaintiff in the entire plaint has not disclosed the requirement of obtaining NOC from the cosharers/coparcener in order to hoodwink this court and to be more explicit, merely obtaining NOC from the SDM Office, Kapashera in itself will not entitle the plaintiff to sell the suit property to defendant whereas, NOCs from the coparceners and their legal heirs on an affidavit, who have vested interest in the said land by way of coparcenary rights, was pre condition for execution of the sale deed. The said coparceners were also required to give their NOCs on affidavit to plaintiff prior to registration of the sale deed of the suit property in favour of defendant.
10. It is submitted that plaintiff has further failed to get the conditions fulfilled for the registration of the Sale Deed by 05.05.2016 despite the fact that an amount of Rs. 50 lakhs is still lying with plaintiff. The covenants mentioned in the said agreement that plaintiff has got a perfect title over the suit property and the plaintiff is competent enough to enter into the said agreement and, thereafter, execute/register the CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 10 of 45 sale deed has not been complied with as on date.
11. It is submitted that the plaintiff in connivance with the broker/ property dealer had made an attempt to cheat and defraud the defendant for oblique purposes knowingly that plaintiff has got no perfect title to the suit property and there are other rights of other coparceners and their legal heirs over the suit property. The plaintiff deliberately avoided to inform the defendant that the said land is a Hindu Undivided Family property and an ancestral property. On the contrary, a false representation was made by plaintiff that the suit property is not a Hindu Undivided Family Property.
12. It is submitted that the lien on the suit property still remains as on date in favour of the defendant, until and unless, the entire outstanding amount of Rs.2 crore along with interest @ 24% p.a. as well as legal fees and other damages for loss of business opportunities are compensated by the plaintiff to the full accord and satisfaction of the defendant. The failure of plaintiff to provide the NOCs of the coparceners and their legal heirs on the affidavit, has caused immense financial damage to the defendant as it has disrupted the complete schedule of the land buying by the defendant, besides that defendant suffered immense loss of business opportunities, which have occurred due to lackadaisical approach of plaintiff in not providing the documents / NOCs of the coparcener and their legal heirs on an affidavit.
CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 11 of 45
13. It is submitted that it was also loud and clear to the plaintiff that in case, the NOCs, as mandated by Article 2.3.3 of the said agreement are not supplied, then the defendant/ counter claimant will take all the precautions to protect its interest by all legal means before a competent court of law by way of filing a civil/ criminal case against the plaintiff for recovery of the advance amount of Rs.50 Lakhs alongwith interest @ 24% along with the legal fees and other damages for loss of business opportunities.
14. It is submitted that the malafide intention of plaintiff is well evident from the issuance of legal notice dated 05.05.2016 whereby plaintiff had very clandestinely stated in para no.5 that, in case, of failure of execution/ registration of sale deed within 10 days, the said agreement will be canceled and entire bayana/ earnest money will be forfeited and in these circumstances the defendant will be liable for all the damages occurred because of breach of the said agreement. The defendant has submitted that, in the first instance, there is no such clause/ article in the said agreement regarding forfeiture as alleged by plaintiff. The modus operandi of the plaintiff is to lure innocent customers like defendant and cheat them by way of misrepresentation. The plaintiff has falsely stated that the suit property is free from all encumbrances and the plaintiff is the sole and exclusive owner and in peaceful possession of the same and plaintiff has got full right to transfer the suit property to the defendant, which is a blatant lie just to extract monetary benefits from defendant. Had the plaintiff complied with its reciprocal obligations in terms of the said agreement under CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 12 of 45 Article 2.3.3, the present situation would not have arisen and the transaction of execution and registration of sale deed could have been well executed on the date mentioned in the said agreement.
15. It is submitted that the plaintiff is not the absolute owner of the suit property and had plaintiff been absolute owner of the same, then in that case, there not have been any hurdle in obtaining the NOCs from the coparcener and their legal heirs on an affidavit by way of no objection of such coparcener that they have no objection to the sale of their share in the suit property by plaintiff to the defendant. The said clause 2.3.3. of the said agreement is a mandatory and primary condition to be fulfilled and complied by the plaintiff. Had plaintiff been the the absolute owner of the suit property, the present controversy would not have arrived at and the execution and registration of the Sale Deed on the respective date, as mentioned in the said agreement, would have successfully carried out.
16. That the defendant is a real estate entity and the defendant had purchased agricultural land for developing and constructing activities, on the other hand, the plaintiff through the broker had offered to sell the suit property to the defendant. That the plaintiff is not interested in defending his case rather he is interested in knowing the status and outcome of other cosharers in order to divert the attention of this Court from the current issue, involving the plaintiff and the defendant, for the reasons best known to plaintiff. Neither the other cosharers are a direct party to the present suit nor they are being arrayed as a party in the present suit by plaintiff.4 CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 13 of 45
17. It is submitted that the plaint is palpably wrong in as much as prior to the execution and registration of the sale deed, NOC from the revenue authorities is not the only final document which is required for execution and registration of the sale deed. It was a precondition that prior to execution and registration of the sale deed of the suit property the NOCs from the coparceners and their legal heirs on an affidavit by way of no objection shall be obtained by the plaintiff from all the coparcener of the said land and their legal heirs, as mandated under Article 2.3.3 of the said agreement.
18. It is submitted that plaintiff has failed to supply the said document, as per Article 2.3.3 of the said agreement, at any point of time, despite repeated requests made by the defendant. That the defendant is not at all interested in knowing that whether the plaintiff has got the no objection certificate from the revenue authority within time. The defendant is also not at all interested in knowing that whether the plaintiff has got the no objection certificate from the revenue authorities within time and had informed defendant by Email and speed post,. However, in the entire plaint, the plaintiff has nowhere stated the requirement of obtaining the NOCs from the coparceners and their legal heirs.
19. It is submitted that defendant is not at all interested in knowing whether on 13.04.2016, 16.04.2016 and 26.04.2016 the plaintiff has delivered the copy of no objection certificate to the defendant by e mails as well as speed posts. The so called no objection certificate CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 14 of 45 sent on the said date are NOCs that have been obtained from the revenue authority.
20. It is submitted that the employee of the defendant who has accepted the NOC from the plaintiff was not well conversant with the subject matter and hence, he has not given any assurance to the plaintiff regarding the registration of the sale deed and he had only informed that the said document will be handedover to the concerned person.
21. The plaintiff till that point of time has not furnished any NOC of the coparceners on an affidavit, which is a prerequisite for the compliance of the terms and condition of the said agreement.
22. It has been submitted that it was a clever ploy adopted by the plaintiff to cause confusion and suspicion that the defendant was not interested in registration of the sale deed. The plaintiff was fully aware that defendant would not come for registration as the requisite NOC was not furnished by plaintiff to defendant. It has not been disputed that a notice for appearance before the Sub Registrar dated 04.05.2016 was received on email by the defendant. It has not been disputed that on 05.05.2016, the plaintiff, through his counsel, sent another notice to the defendant and thereby requesting him to make the payment of remaining amount and get registration of the Sale Deed in his favour. The defendant admitted that plaintiff got published a public notice on 06.05.2016 in Amrit India daily newspapers for the CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 15 of 45 same purpose. The notice dated 05.05.2016 was replied vide letter dated 14.05.2016 and defendant also terminated the said agreement and had sought for return of the advance amount of Rs.50 Lakhs along with interest from the plaintiff.
23. It is submitted that the "earnest money" word being used in the plaint is an afterthought on the part of plaintiff, although there is no whisper about the word "earnest money" in the entire said agreement. The plaintiff is trying to put the entire blame on the shoulders of the defendant for the reasons best known to plaintiff. The plaintiff is trying to omit the inclusion of Article 2.3.3 as detailed in the said agreement. There is no privity of contract of whatsoever nature between the plaintiff, Sh. Ashok Kumar and the defendant. The suit deserves to be dismissed.
24. The plaintiff filed replication denying the allegations levelled in the written statement and, inter alia, reiterating the contents of the plaint which are not reproduced for the sake of brevity.
25. From the pleadings of the parties, vide order dated 24.10.2016, following issues were framed :
1. Whether the plaintiff has not come to the court with clean hands, in view of preliminary objection no.1, 2 and 3 of the written statement? OPD
2. Whether the suit has not been valued properly for the purposes of court fee? OPD
3. Whether the plaintiff has no locus standi to file the present suit?
OPD CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 16 of 45
4. Whether the suit is not maintainable in view of preliminary submission no. 1.4, 1.5, 1.6 and 1.7 of the written statement? OPD
5. Whether the suit is bad for nonjoinder of necessary parties/Co Sharers? OPD
6. Whether the plaintiff is entitled to relief of declaration as prayed for? OPP
7. Relief ;
Counter Claim No. 214/2016 (10716 / 2016) In the matter of:
M/s Rakshit Buildtech Pvt. Ltd.
through its Director Sh. Manjit Singh Khara Office at, 18, Akshardham Apartment, Pocket 3, Sector19, Dwarka, New Delhi 110075.
.....Counter Claimant Versus Sh. Roop Chand S/o late Sh. Khushi Ram R/o Village Paprawat, Najafgarh, New Delhi 110 043.
....Non Counter Claimant
Date of Institution of Counter Claim : 12.07.2016
Date of reserving judgment : 01.07.2022
Date of pronouncement : 11.07.2022
Appearance:
(i) Sh. Rakesh Sinha, Advocate & Sh. Jeemon Raju K. and Advocate, Ld. Counsel for the counter claimant
(ii) Sh. Umesh Yadav, Advocate, Ld. Counsel for the non counter claimant CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd.
Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 17 of 45
26. The defendant has filed counter claim and it is submitted that the plaintiff filed a suit for declaration declaring the said agreement as cancelled and forfeiture of the amount of Rs.50 lakhs paid as earnest money. The defendant has claimed the amount of Rs.50 lakhs along with the interest @ 24% per annum w.e.f. 22.10.2015 till 04.07.2016. The defendant is also claiming pendent elite and future interest from the date of filing of the the counter claim till realisation of the said amount. The plaintiff has violated the terms and conditions of the said agreement. The plaintiff wanted to dispose off the suit property and entered into the said agreement for sale consideration of 4,93,64,687/ in respect of the suit property.
27. Defendant has filed the counter claimant/written statement and reiterated the contents of the written statement which are already reproduced in the foregoing paras of this judgment, however, interalia the sum and substance of the counter claim filed by the defendant is that plaintiff agreed to sell the suit property for an amount of Rs. 4,93,64,687/ in terms of the said agreement, however, plaintiff failed to comply with the reciprocal obligations of the said agreement, which is a condition precedent, and non compliance of the same would result in treating the said agreement as null and void ab initio. The said agreement was entered into after going through the each and every terms and conditions. The defendant has paid hefty amount as part of the sale consideration. The defendant has made the following payment to plaintiff which are reproduced below :
1. Rs. 1,00,000/ has been paid on 19.08.2015 in cash.
2. Rs. 2,00,000/ has been paid vide cheque no. 000008 dated 19.08.2015
3. Rs. 47,00,000/ has been paid vide cheque no. 000047 dated 22.10.2015 CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd.
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28. It is further stated that plaintiff had claimed to be absolute owners in possession of the suit property as detailed in the said agreement which fact is contrary to the record. The plaintiff has violated the clause 2.3.3 of the said agreement in as much as plaintiff failed to comply with the express terms and conditions of the said agreement. The plaintiff was under an obligation to get No Objection Certificate (NOC) from the coparceners and their legal heirs of the said land. The plaintiff could not dare to purchase the suit property on account of fear and anxiety which may arise in future so far as the legal hurdles, if any, involved in such sale transactions. The plaintiff has made an attempt to defraud and cheat the defendant. The defendant is having a lien over the suit property till the outstanding amount of Rs. 50,00,000/ along with interest @ 24% is paid by plaintiff to defendant. The defendant has never agreed for any forfeiture of the earnest/advance money paid in terms of the said agreement, whereas, plaintiff in terms of the legal notice dated 05.05.2016 has contended that bayana amount (earnest money) stood forfeited. The plaintiff failed to fulfill the terms and conditions as provided under the said agreement and on account of such acts and omissions of the plaintiff, the sale deed could not fructify.
29. It is further stated that defendant is entitled to recover the amount, details of which are as under :
(i) The principal amount of Rs. 50,00,000/
(ii) The amount of Rs. 8,46,667/ as interest @ 24% per annum w.e.f. 22.10.2015 to 04.07.2016 on the principal amount CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 19 of 45 The total amount comes to Rs. 58,46,667/ on the principal amount.
Defendant/counter claimant is also claiming pendentelite and future interest @24% per annum from the date of filing of the counter claim till the realization of the amount. In view of the same, counter claimant is eligible to contest the present suit and file the counter claim/crosssuit against the plaintiff for recovery of Rs. 58,46,667/ and for pendentelite and future interest @ 24% per annum from the date of filing of the written statement/counter claim till its realisation.
30. The plaintiff has filed the written statement to the counter claim of the defendant and reiterated the contents of the plaint, which are not reproduced for the sake of brevity, however, interalia, it is submitted that the suit filed by the plaintiff is maintainable. Plaintiff has paid the requisite court fees as per law. The counter claimant has failed to comply with any obligation under the said agreement in as much as the defendant never appeared before the ld. Sub Registrar for execution of the sale deed and the said NOC would have been provided to defendant, had he appeared before the ld. Sub Registrar on the date fixed for execution of the sale deed as per the terms and conditions of the said agreement. The conditions of the said agreement were never read over to the plaintiff. The counter claimant has taken the signature of the plaintiff hurriedly. None of the coparceners has any right over the suit property as alleged in the counter claim.
CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 20 of 45
31. It is denied that plaintiff failed to provide the NOC and on account of such failure, plaintiff has caused immense financial damages to the defendant in as much as schedule of the defendant for buying the land has been disrupted on account of acts or omissions of the plaintiff. Other contents of the counter claim are denied.
32. Replication to the written statement of the counter claim has been filed on behalf of the defendant, wherein the contents of the counter claim are reiterated which are not reproduced for the sake of brevity.
33. From the pleadings of the parties, vide order dated 24.10.2016, following issues were framed :
1. Whether the noncounter claimant (plaintiff in the main suit) was ready to comply with all the conditions mentioned in the agreement dated 22.10.2015? Onus of proof is upon the noncounter claimant (plaintiff in the main suit)
2. Whether the counter claimant (defendant in the main suit) is entitled to a decree for a sum of Rs.58,43,349/ as prayed for in prayer (b) of WS/Counter Claim? Onus of proof is upon the counter claimant (defendant in the main suit).
3. If the answer to the aforesaid issue no. 2 is in affirmative, whether the counter claimant (defendant in the main suit) is entitled to interest, if any, if so at what rate and for which period? Onus of proof is upon the counter claimant (defendant in the main suit).
4. Whether the counter claimant (defendant in the main suit) is entitled to claim damages, if any, if so, the quantum of damages? Onus of proof is upon the counter claimant CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd.
Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 21 of 45 (defendant in the main suit).
5. Relief.
34. After framing of issues, matter was listed for recording of plaintiff's evidence. Evidence in the main suit as well as counter claim was consolidated.
35. Plaintiff was thereafter, called upon to substantiate its case by leading evidence. Plaintiff in order to substantiate its case had examined himself as PW1 and deposed through affidavit by way of evidence Ex. PW1/A and relied upon the following documents:
1. The copy of the Agreement to Sell dated 22.10.2015 is MarkA,
2. The copy of No Objection Certificate dated 04.04.2016 is Mark B,
3. The copy of the emails dated 13.04.2016, 15.04.2016 (mentioned as 16.04.2016 in the affidavit Ex.PW1/A) and 25.04.2016 (mentioned as 26.04.2016 in the affidavit Ex.PW1/A) are MarkC (Colly.),
4. The copy of the Speed post receipt vide which copy of the NOC was sent to the defendant is MarkD,
5. The copy of the information letter received on 30.04.2016 as MarkE,
6. The received copy of the letter of appearance given to the Sub Registrar, Kapashera, New Delhi dated 03.05.2016 as Ex.PW1/1,
7. The Inspection receipt as Ex.PW1/2,
8. The office copy of the legal notice dated 04.05.2016 as Ex.PW2/3,
9. The email delivery receipt is Mark F,
10. The copy of declaration dated 04.05.2016 is Ex. PW1/4.
11. The office copy of notice dated 05.05.2016 is Ex.PW1/5.
12. The public notice published in newspaper "Amrit India dated 06.05.2016 is Ex. PW1/6, CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 22 of 45
13. The reply dated 14.05.2016 is Ex. PW1/7, During crossexamination of PW1 admitted receipts issued in respect of payment of Rs.1,00,000/ dated 19.08.2015 in cash and Rs.2.00 Lakhs on 19.08.2015 by way of cheque, mentioned in receipt dated 22.10.2015 Ex. DW1/1.
36. The plaintiff has also examined Sh. Jagdish Yadav as PW2 who deposed through affidavit by way of evidence Ex.PW2/A, has deposed on the lines of PW1.
37. Thereafter plaintiffs evidence was closed and matter was listed for recording of defendants evidence.
38. Defendant was, thereafter, called upon to substantiate its case by leading evidence. In order to substantiate its case, defendant has examined Sh. Sh. Manjit Singh Khara, AR of the defendant as CW1, who has deposed on affidavit Ex. CW1/A. He has relied upon the following documents :
1. Board resolution dated 05.06.2016 is Ex. CW1/1,
2. Agreement to Sell dated 22.10.2015 is Ex.CW1/2,
3. Copy of legal notice dated 05.05.2016 is MarkA,
4. Copy of reply notice dated 14.05.2016 issued by defendant to the plaintiff is Ex.CW1/3,
5. Copy of postal receipt dated 18.05.2016 is Ex.CW1/4,
6. Copy of NOC dated 04.04.2016 obtained from the revenue authority sent on various dates i.e. 13.04.2016, 16.04.2016 and 26.04.2016 is Mark B, C & D
7. Video clips made by defendant is Ex.CW1/5, CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd.
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8. Receipt and cheque bearing no. 000008 dated 19.08.2015 issued by counter claimant is Ex. CW1/2
9. Receipt cum agreement dated 19.08.2015 is Ex. CW1/7
39. I have heard the counsel for the parties and with their assistance have gone through the record and the written submissions filed by them.
40. My issue wise findings are as under :
Issue no. 6 of the Main Suit and Issue no. 1,2 & 3 of the Counter Claim.
These issues are overlapping each other and are, therefore, disposed off by this common order. Plaintiff as PW1 has testified through affidavit Ex. PW1/A and in crossexamination he admitted that he has received the following amount
1. Rs. 1,00,000/ has been paid on 19.08.2015 in cash.
2. Rs. 2,00,000/ has been paid vide cheque no. 000008 dated 19.08.2015
3. Rs. 47,00,000/ has been paid vide cheque no. 000047 dated 22.10.2015
41. PW1 admitted that Sh. Manjeet Singh Khara Director/AR of defendant no. 1 had visited plaintiff along with the cheque of balance sale consideration on 23.08.2015 and plaintiff has not signed the agreement on 23.08.2015. Plaintiff was aware as to whether plaintiff CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 24 of 45 has to obtain NOC as per clause 2.3.3 of agreement (Ex. PW1/D2) from the coparceners and the legal heirs of plaintiff. PW1 is an attesting witness to the said agreement and deposed on the lines of PW2.
42. PW2 in crossexamination submitted that token money was paid by the purchaser to seller and on 19.08.2015, token money was paid and final rate of consideration amount was settled and the date for execution of the said agreement was finalised. The date of execution of the said agreement was finalised as 23.08.2015. At the time of the payment of token money, it was loosely agreed that the said agreement shall be executed in a week or ten days time. He denied that all the terms and conditions were settled between plaintiff and defendant. The Representative of defendant was also carrying the payment to be made to plaintiff, however, some objections were raised by son of Sh. Roop Chand on the quantum of consideration amount, therefore the agreement could not be executed. He admitted that the same agreement on the same terms and conditions and consideration amount was entered into by plaintiff on 22.10.2015. Defendant did not bring to the notice of plaintiff about the requirement of affidavit from coparceners and their legal heirs.
43. Defendant led evidence through DW1/AR of the defendant company who has testified through his evidence affidavit Ex. DW1/A and reiterated the contents of the written statement/ counter claim and in crossexamination he testified that plaintiff was obligated to file CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 25 of 45 affidavit from coparceners and their legal heirs for their no objection to the sale of suit property by plaintiff to defendant. The plaintiff has failed to provide such affidavit on account of various disputes between the coparceners and their family. Defendant has placed on record video CD where the said persons refused to sign the said agreement. He testified that NOC was required as a condition precedent before execution of the sale deed. He admitted that he has not filed the script of the video CD conversation. He testified that plaintiff failed to execute the said agreement, therefore, he has right to cancel the said agreement seeking refund of the earnest money/advance money along with the interest @ 24%.
44. During the course of arguments, ld. counsel for the plaintiff has submitted that defendant is not a registered company and it is only an unregistered partnership firm, therefore, as per the mandate of Section 69 of the Indian Partnership Act, a partnership cannot file a suit for recovery against third person without registration of the said partnership firm. It is further contended that the incorporation certificate of the company and its birth certificate without production of incorporation certificate or its registration number in court record, the existence of alleged company cannot be proved in a suit for recovery, in as much as registration and incorporation of a legal person is a law point and a mere admission will not dispense with the burden of proof of proving the certificate of incorporation.
45. It is further contended that plaintiff has suffered damages in the CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 26 of 45 shape of forfeiture his/his bayana amount by Sh. Ashok Kumar in as much as defendant has not purchased the suit property and for that reason the plaintiff could not purchase the agricultural land of Sh. Ashok Kumar who, in turn, has forfeited the bayana amount paid by plaintiff to him.
46. It is further contended that defendant has no financial capacity to pay the remaining sale consideration so as to fructify the said bayana amount. The suit property is not an ancestral property, as claimed and plaintiff is the absolute owner of his share in the said land and the vague condition as contained in clause 2.3.3 of the said agreement cannot be interpreted in a manner that the said condition was a material condition to be fulfilled before execution/registration of the sale deed of the suit property in favour of defendant.
47. Per contra, ld. counsel for the defendant has claimed that no partition of the said land has been carried out, therefore, the proportionate share of all the coparceners and their legal heirs in the said land cannot be held as their self acquired property of which they have become absolute owner. The share of plaintiff cannot be termed as self acquired property until and unless partition has taken place and no coparceners and their legal heirs can claim the ancestral property to be their self acquired property. In this regard, reliance has been placed upon Surender Kumar v. Dhani Ram judgment passed by Hon'ble High Court of Delhi in CS (OS) no. 1737/2012.
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48. It is further contended that the defendant has to purchase the 3.15 acre of land of plaintiff and other five cosharers and as per clause 2.3.3 of the said agreement, the said NOC was required. It is further contended that the necessity of incorporation of the essential condition of getting the NOC from the coparceners and their legal heirs had arisen on account of the objections being raised by coparceners and their legal heirs on 23.08.2015 over the amount of sale consideration in as much as they were demanding more consideration/money of the said property fixed under the said agreement, which fact has been admitted by PW2 in his cross examination. Plaintiff, in his crossexamination stated that he was also aware about the agreed rate of the suit property which fact is an admission from the testimony of PW1.
49. It is contended that the defendant is a company and not a partnership firm as alleged and the authorisation issued by the said company in favour of the AR/DW1 of the defendant/counter claimant is on record, therefore counter claim is maintainable in the present form. Even the admission of the plaintiff in pleadings depicts that defendant is claimed to be a registered private limited company, otherwise, no objection has been raised in this regard; and no issue has been framed, therefore, this contention deserves to be dismissed.
50. It is further contended that plaintiff and other five co sharers of the said land are alleged to have entered into an agreement to sell with Ashok Kumar for purchasing his agricultural land and plaintiff is stated CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 28 of 45 to have paid an amount of Rs. 50 lakhs as earnest money and last date for registration of the sale deed is 20.05.2016 on payment of balance sale consideration. However, no evidence has been led in this regard, therefore, plaintiff/non counter claimant has failed to prove that plaintiff has suffered any damages. In this regard, reliance has been placed upon Anand Singh v. Anurag Bareja & Ors. judgment passed by Hon'ble High Court of Delhi in RFA no. 480/2011 & Fateh Chand v. Balkishan Das, AIR 1963 SC 1405.
51. It may be noted that so far as the objection regarding the maintainability of the counter claim on behalf of the defendant is concerned, suffice is to say that defendant is not a partnership firm as alleged, otherwise, the same is a registered private limited company whose details have been pleaded in para no. 2 of the plaint, details of which are reproduced as under :
"That the defendant is a private limited company incorporated under Company Act and having its registered address at 18, Akshardham Apartment, Pocket 3, Sector 19, Dwarka, New Delhi 110 075"
Apart from the admissions in the pleadings, made by plaintiff regarding the constitution of the defendant company, the defendant has placed on record the resolution Ex. DW1/1 passed in favour of DW1/AR authorising him to depose for and on behalf of the defendant company in terms of the abovesaid resolution. Plaintiff in para no. 2 of the plaint has stated that the defendant is a private limited company incorporated under Company Act and having its registered office at CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 29 of 45 Sector 18, Dwarka. In crossexamination, PW1 has stated that Mr. Manjit Singh Khara, Director/AR of defendant/counter claimant visited him/his along with agreement and cheque of balance sale consideration. PW2 also admitted in crossexamination that on 23.08.2015, Sh. Manjit Singh Khara, Director, AR of defendant had visited the plaintiff and other coparceners and their legal heirs. In crossexamination of DW1 even no question has been put to the said witness regarding the existence, constitution and passing of the resolution in favour of DW1/AR by the defendant, therefore, the facts which is not controverted in the crossexamination is deemed to have been admitted by the plaintiff. Therefore, this contention is hereby rejected.
52. It may be noted that in the testimony of PW1, PW2 and DW1, the factum of execution of the said agreement, the payment of the earnest/advance money of Rs. 50,00,000/ in respect of the suit property for purchase of total sale consideration of Rs. 4,93,64,687/ and, the remaining sale consideration was to be paid on 05.05.2016 is admitted.
53. Now the question arises as to whether the plaintiff has failed to perform his/his part of the contract or it is the defendant who has failed to perform its part of the contract as per the terms and conditions of the said agreement. In this regard suffice is to say that the relevant clause 2.3.3 of the said agreement, which is the bone of contention between the parties provides for getting the said NOC. Plaintiff CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 30 of 45 submitted that plaintiff was not supposed to get the NOC from the coparceners and their legal heirs and the basic edifice of the defence of the defendant is that the said condition is very much necessary for the execution of the sale deed in respect of the suit property on the payment of remaining sale consideration.
54. In this regard, before proceeding further, I would like to reproduce clause 2.3.3 of the said agreement :
"Receipt of NoObjection from coparceners and their legal heirs Affidavit by way of no objection shall be obtained from all the existing coparceners of the land and their legal heirs stating that they have no objection to sale of their share in the land by the vendors to the vendee herein and that they will not obstruct or cause hindrances in the sale or mutation of the land in favour of the vendee or subsequent thereto."
A bare perusal of this clause depicts that the said condition of getting NOC was very essential precondition for execution of the sale deed in respect of the suit property by plaintiff in favour of defendant in as much as the coparceners and their legal heirs has objected on 23.08.2015 regarding the amount fixed for sale consideration of the said land including the suit property and PW2 had admitted the said fact in his crossexamination that son of Sh. Roop Chand (cosharers of plaintiff) had raised objection on the quantum of consideration amount of the said land and, therefore, the said agreement could not be executed on 23.08.2015.
A bare perusal of this statement depicts that plaintiff and brother of the plaintiff and other coparceners were asking for a higher price rather than the price agreed upon under receipt executed on CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 31 of 45 19.08.2015 (Ex. DW1/2). However, plaintiff/PW1 in crossexamination admitted that he had demanded more money than the agreed rate of the sale of the suit property, and PW2 in his crossexamination has admitted that an objection was raised by son of Sh. Roop Chand on the quantum of consideration amount, therefore, agreement could not be executed. PW2 admitted that the same terms and conditions and consideration amount, was then agreed upon and the said agreement was entered into by the plaintiff on 22.10.2015. In crossexamination PW2 has stated that he was not aware about the rate and area of the land which was being sold out.
55. From the above discussion, it can be stated that clause 2.3.3 of the said agreement was an essential precondition which mandated that the plaintiff was supposed to get NOC from coparceners and their legal heirs before disposing off the suit property to defendant which plaintiff failed to fulfill. Although, the plaintiff has get the NOC from the revenue authorities regarding the sale of the suit property, however, without the NOC from the coparceners and their legal heirs, no sale deed was to be executed as stated above, therefore, it cannot be stated that plaintiff has not failed to perform his/his part of the contract in terms of the said agreement.
56. So far as the defendant is concerned, the defendant has neither pleaded nor proved that defendant is having the remaining sale consideration for payment of the same to the plaintiff at the time of registration of the sale deed.
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57. As a sequel to the above discussion, it can be safely concluded that neither the plaintiff nor the defendant had performed their part of the contract as per the terms and conditions of the said agreement.
58. Now the question arises as to whether even after noncompliance of his/his part of the contract in terms of the said agreement, the plaintiff is entitled to forfeit the earnest money/advance money or whether the defendant also having failed to prove, its readiness and willingness to perform its part of the contract as per the terms and conditions of the said agreement, is still entitled to recover the earnest money so paid by the defendant to plaintiff. In this regard, it may be noted that admittedly, plaintiff has failed to prove that plaintiff has ever entered into an agreement to sell for purchase of the land belonging to Sh. Ashok Kumar in as much as except pleadings in the plaint, no evidence has been led either documentary or oral that plaintiff has ever entered into the agreement to sell with Sh. Ashok Kumar, therefore, plaintiff has failed to prove that plaintiff has suffered any losses/damages for non compliance of its part of the contract by defendant in terms of the said agreement. The plaintiff has neither suffered any losses nor proved that plaintiff has performed his part of the contract. Even though for the sake of arguments, though not admitted, it may be presumed that plaintiff has performed his part of the contract as per terms and conditions of the said agreement. Even then, she is not entitled to forfeit the earnest money in the absence of any such clause regarding forfeiture of the earnest money /advance money in the said agreement and as per the law laid down by the superior court.
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59. It is pertinent to mention here that entitlement of plaintiff for forfeiture of said amount of earnest money in terms of the said agreement is based on Section 73 and 74 of the Indian Contract Act by way of liquidated damages. It may be noted that Section 74 provides for compensation for loss or damages suffered by a party by way of liquidity damages and said provision is reproduced as under:
"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. Explanation. A stipulation for increased interest from the date of default may be a stipulation by way of penalty."
xxxxx
60. Otherwise also, even if defendant has also committed the breach of the terms and conditions of the said agreement, even then the question arises as to whether the plaintiff is entitled to forfeit the said amount who herself has failed to perform his part of the contract as per the terms and conditions of the said agreement In this regard, it may be noted that the section 74 of the Contract Act lays down the principle for asking the other defaulting parties, the liquidity damages or penalty.
61. The basic principles with regard to the claim of liquidated damages are as follows:
CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 34 of 45 (1) no claim for such damages is maintainable unless the promisee is proved to have sustained loss due to the default of the promisor; (2) whatever the quantum of the loss so sustained, the claim cannot exceed the sum stipulated in the contract; (3) only reasonable sum can be awarded as damages which in a given situation may be less than the sum stipulated; (4) what is reasonable sum depends on facts; (5) court may proceed on the assumption that the sum stipulated that the sum stipulated reflects the genuine preestimate of the parties as to the probable loss and such clause was intended to dispense with the proof thereof and (6) it will always be open to the promisor to show that no loss was suffered or that the estimate so made is falsified by the change in the situation or that the loss suffered was less.
A bare perusal of the abovesaid principle of law depicts that, even if, the defendant has failed to perform its part of the contract, even then, the plaintiff is not entitled to ask for liquidity damages or could invoke the clause of the said agreement by way of forfeiture of the said amount either as a penalty or by way of liquidated damages. The mandate of section 74 of Indian Contract Act is that the defaulting party is to pay the reasonable damages not exceeding the amount so named only to the other party. The amount cannot be recovered by the other party from the party in default by way of the penalty in as much as the damages as penalty only are prohibited by virtue of section 74 of the Indian Contract Act. In this regard, though not quoted reliance is placed upon Nar Singh Prasad vs Shailender Kumar Mishra judgment passed in RFA No.702/2017 by Hon'ble High Court of Delhi, wherein it has been observed as under :
CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 35 of 45 "43. On a conspectus of the above authorities, the law on compensation for breach of contract Under Section 74 can be stated to be as follows:
43.1. Where a sum is named in a contract as a liquidated amount payable by way of damages, the party complaining of a breach can receive as reasonable compensation such liquidated amount only if it is a genuine pre estimate of damages fixed by both parties and found to be such by the Court. In other cases, where a sum is named in a contract as a liquidated amount payable by way of damages, only reasonable compensation can be awarded not exceeding the amount so stated. Similarly, in cases where the amount fixed is in the nature of penalty, only reasonable compensation can be awarded not exceeding the penalty so stated. In both cases, the liquidated amount or penalty is the upper limit beyond which the Court cannot grant reasonable compensation.
43.2. Reasonable compensation will be fixed on well known principles that are applicable to the law of contract, which are to be found inter alia in Section 73 of the Contract Act.
43.3. Since Section 74 awards reasonable compensation for damage or loss caused by a breach of contract, damage or loss caused is a sine qua non for the applicability of the Section.
43.4. The Section applies whether a person is a Plaintiff or a Defendant in a suit.
43.5. The sum spoken of may already be paid or be payable in future.
43.6. The expression "whether or not actual damage or loss is proved to have been caused thereby" means that where it is possible to prove actual damage or loss, such CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd.
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43.7. Section 74 will apply to cases of forfeiture of earnest money under a contract. Where, however, forfeiture takes place under the terms and conditions of a public auction before agreement is reached, Section 74 would have no application."
62. It is noted that law with regard to Section 74 of the Indian Contract Act has been interpreted variedly by the superior courts on the basis of the nature of the contract and the relevant facts and circumstances. One of the earliest case law under Section 74 of the Indian Contract Act is titled Fateh Chand (supra) wherein the plaintiff made a claim to forfeit a sum of Rs. 25,000 which consisted of Rs. 1,000/ as an earnest money and an amount of Rs. 24,000/ which the defendant paid against the delivery of possession of immovable property. The plaintiff's (therein) claim was based on his contractual entitlement, however, no evidence was lead by the plaintiff (therein) to prove that any actual loss was caused to him due to the breach committed by the defendant. It was further observed that section 74 of the Indian Contract Act does not justify the award of compensation when in consequence of the breach, no legal injury has resulted at all, and in all cases, where there is stipulation in the nature of the penalty for forfeiture of an amount deposited, the court has jurisdiction to award such some only as it considerable reasonable, but not exceeding the amount specified in the contract as liable to be forfeiture.
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63. It may also be relevant to observe that the Hon'ble Supreme Court in Maula Bux Vs. Union of India 1969 (2) SCC 554 has observed that the expression "whether or not actual damage or loss is proved to be have been caused thereby" is intended to cover different classes of contract which comes before the court and, in case of breach of some contract, it may be impossible for the court to assess the compensation arising from breach, while in other cases, compensation can be calculated in accordance with the established rules. Where the court is able to assess the compensation, the sum named by the parties, if it be regarded as a genuine preestimate, may be taken into consideration as the measure of the reasonable compensation, but not if the sum named is in the nature of the penalty. Where the loss in terms of money can be determined, the parties claiming compensation must prove the loss suffered by him.
64. The above said interpretation in the Maula bux (supra) case given by Hon'ble Supreme court of India does not dilute the ratio of law in Fateh Chand case, otherwise, it further clarified that there may be different classes of contract to which the law laid down in Fateh Chand (supra) case may not apply. Such different classes of contract are the ones where it may be impossible for the court to assess compensation arising from breach, and in such situations the sum named by the parties, if it be regarded as a genuine preestimate, may be taken into consideration as a measure of reasonable compensation. However, where a party suffering breach was in a position to prove its loss, and the situation be different and law laid down in Fateh Chand (supra) would apply.
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65. It may also be noted that the ratio of the law laid down in the case of Fateh Chand (supra) and Maula Bux (Supra) was followed in the later judgment, however, in the case of Oil & Natural Gas Corporation Ltd vs Saw Pipes Ltd (2003) 5 SCC 705. The Hon'ble Supreme Court of India was faced with different class of contract as propounded in Maula Bux (Supra) case and in that case the appellant (therein) entered into a contract with respondent (therein) for purchase of casing pipes, the delivery of which was to be completed by the respondent within the specified time, failing which liquidated damage would be payable. The respondent delayed the supply of casing pipes and appellant cleared the bills of the respondent after deducting the liquidated damages. The ld. arbitrator found such deduction of liquidated damages as legal in as much as appellant (therein) could not prove its specific loss visavis the delay in supply of the casing pipes. However, the Hon'ble Supreme Court of India upheld the deduction of the such liquidated damages by the appellant (therein) holding the such deduction as a preestimated damages agreed upon between the parties,in case, there is a delay in the supply of the casing pipes.
66. It may be noted that though not quoted reliance is placed upon judgment passed by the Hon'ble High Court of Delhi in case of Rajesh Gupta Vs. Ram Avtar, 2022 Live Law (Del)482 wherein, Hon'ble High Court has taken into consideration all the case law wherein the mandate the section 74 of the Contract Act has been considered and in para 41 has observed as under: CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 39 of 45 "A Coordinate Bench of this Court had also considered the aforesaid issue in M.C. Luthra v. Ashok Kumar Khanna [RFA No.780/2017 decided on 27.2.2018] and observed as under:
"15. In sum and substance what is held by the Constitution Bench of the Supreme Court in the cases of Fateh Chand (supra) and the recent judgment in Kailash Nath Associates (supra) is that whenever there is a breach of contract then earnest money which is forfeited because of the breach, whether by a plaintiff or a defendant in a contract, the forfeiture is of that amount which are in fact liquidated damages specified under a contract and that for claiming damages under a contract, whether liquidated under Section 74 of the Contract Act or unliquidated under Section 73 of the Contract Act, existence of loss is a sine qua non. In other words, if no loss is caused to a seller who has in his pocket monies of buyer, then the seller can only forfeit a nominal amount unless the seller has pleaded and proved that losses have been caused to him on account of the breach of contract by the buyer. Once there is no pleading of loss suffered by a seller under an agreement to sell, then large amounts cannot be forfeited though so entitled to a seller under a clause of an agreement to sell/contract entitling forfeiture of 'earnest money' because what is forfeited is towards loss caused, and that except a nominal amount being allowed to be forfeited as earnest money, any forfeiture of any amount, which is not a nominal amount, can only be towards loss if suffered by the seller. Thus if there is no loss which is suffered by a seller then there cannot be forfeiture of large amounts which is not a nominal amount, simply because a clause in a contract provides so. The following has been held in the judgment in the case of Kailash Nath Associates (supra) :
(i) As per the facts existing in the case of Kailash Nath Associates (supra) the Single Judge of the High Court had held that since no damages were suffered by DDA therefore DDA could not forfeit the earnest money. (Para 30 of Kailash Nath Associates's case (supra)).
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(ii) The Division Bench of the High Court however set aside the judgment of the Single Judge by holding that amount tendered as earnest money can be forfeited because and simply forfeiture of amount called as earnest money can be forfeited in terms of the contract.
(Para 30 of Kailash Nath Associates's case (supra) reproducing Para 39 of the Division Bench judgment of the High Court).
(iii) Supreme Court in the case of Kailash Nath Associates (supra) as per Para 44 of its judgment holds that the Division Bench of the High Court had gone wrong in principle because compensation can be awarded (where there is breach of contract) only if loss or damage is suffered i.e. where there is no loss or damage suffered as a result of breach of contract no compensation can be awarded as law does not provide for a windfall i.e. large amounts though called contractually as earnest money cannot be forfeited unless loss is pleaded and proved to have been suffered. These observations have crossreference to Para 34 of the judgment of Kailash Nath Associates's case (supra) where with reference to the para of Fateh Chand's case (supra) it is held that the language of Section 74 of the Contract Act that 'whether or not damage or loss is proved to have been caused by breach' is the language that such language only discharges proof of actual loss but that does not justify award of compensation where in consequence of breach no injury/loss has at all resulted.
(iv) Earnest money is an amount to be paid in case of breach of contract, and named in contract as such, and that forfeiture of earnest money is covered under the entitlement to liquidated damages under Section 74 of the Contract Act vide Para 40 in the case of Kailash Nath Associates (supra).
(v) The language of Section 74 of the Contract Act that "whether or not actual loss or damage is proved to have been caused thereby" means only that where it is difficult or impossible to prove loss caused by the breach of contract CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 41 of 45 then the liquidated damages/amount. Vide Para 43(6) of Kailash Nath Associates's case (supra) but where nature of contract is such that loss caused because of breach can be assessed and so proved then in such cases loss suffered must be proved to claim the liquidated damages of earnest money. This finding has cross reference to Para 37 of judgment in Kailash Nath Associates's case (supra) where the observations of Supreme Court in Para 67 of the case of ONGC Ltd. Vs. Saw Pipes Ltd. (2003) 5 SCC 705 are quoted that liquidated damages are awarded where it is difficult to prove exact loss or damage caused as a result of breach of contract.
(vi) Even where liquidated damages can be awarded under Section 74 of the Contract Act because loss or damages cannot be proved in a contractual breach yet if the liquidated damages (earnest money) are a penalty amount by its nature i.e. prescribed liquidated damages figure is unreasonable, then for the liquidated damages amount or earnest money amount forfeiture cannot be granted/allowed and that only reasonable amount is allowed as damages with the figure of liquidated damages being the upper limit vide Para 43(1) of Kailash Nath Associates case (supra)." If a party to a contract dies before he has performed the contract that, by itself, does not put an end to the obligation to perform the same. The promisee can bind the representative of the promisor in case of the death of the promisor before the performance."
As a sequel to the above said discussion, it can be safely concluded that plaintiff has neither performed his part of the contract as per terms and conditions of the said agreement nor defendant has performed its part of the contract. The plaintiff further failed to prove as to whether he has suffered any loss on account of the failure of the defendant to perform its part of the contract in terms of the said CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 42 of 45 judgment. In the same manner, defendant has also failed to prove that it has suffered any losses/damages on account of the failure of the plaintiff to perform his part of the contract in terms of the said agreement. In view of the dicta of the law laid down by the superior courts as discussed in the foregoing paras of this judgment and in the absence of any forfeiture clause in the said agreement, the plaintiff is not entitled to forfeit the amount as detailed in the said agreement and seeking cancellation thereof and such forfeiture is illegal. Defendant is found entitled to the decree of the amount so forfeited by plaintiff i.e. Rs. 50,00,000/ as per the dicta of the law laid down by the superior court. So far as interest is concerned, defendant led not evidence for its claim of presuit as well as post suit interest, except a clause regarding interest in the said agreement, therefore, interest of justice would be met if defendant is granted interest @6% per annum on the suit amount of Rs. 50,00,000/from the date of payment of the said amount till its realisation. In view of the same, these issue are decided in favour of the defendant and against the plaintiff.
Issue no. 4 of the Counter Claim
67. In view of the findings on the abovesaid issues in the foregoing paras and further in view of the no evidence led by defendant that it has suffered any damages on account of failure of the plaintiff to perform its part of the contract, in terms of the said agreement, defendant is not entitled to seek any damages. Therefore, this issue is decided in favour of the plaintiff and against the defendant.
CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 43 of 45 Issue no. 1,3 & 4 of the Main Suit
68. The onus to prove these issues is on the defendant, however, defendant has not led any evidence in this regard as to how the plaintiff has no locus standi to file the present suit and how the plaintiff has not come to the court with clean hands, therefore, in the absence of any evidence, these issues are decided in favour of the plaintiff and against the defendant.
Issue no. 2 of the Main Suit
69. Plaintiff has valued the suit for an amount which has claimed to be forfeited by plaintiff as well as declaration that the said agreement is null and void. Plaintiff has affixed the court fees on the said amount which is sought to be forfeited, and there is no legal requirement to pay court fees on the amount detailed in the said agreement as consideration for purchase of the suit property in as much no suit for specific performance of the said agreement has been filed so as to affix the court fee on the total sale consideration as detailed in the said agreement. Therefore, this issue is decided in favour of the plaintiff and against the defendant.
Issue no. 5 of the Main Suit
70. The suit is claimed to be bad for nonjoinder of necessary parties/cosharers in as much as cosharers are claimed by defendant either to be necessary party or a proper party, however, no evidence has been led in this regard. Otherwise also, plaintiff has claimed relief in respect of the said agreement whose terms and conditions were to CS No.180/2016 (517050/2016) Roop Chand v. Rakshit Buildtech Pvt. Ltd. Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand Page no. 44 of 45 be complied with between the parties to the said agreement and no relief has been sought against the coparceners, therefore, the said coparceners are neither necessary parties nor proper parties. This issue is decided in favour of plaintiff and against the defendant.
RELIEF
71. In view of my findings on the issue aforesaid, the suit filed by the plaintiff bearing Civil Suit No. 180/2016 (517050/2016) is dismissed. However, the defendant/counter claimant is found entitled to the amount of Rs. 50,00,000/ allegedly forfeited by the plaintiff, therefore, counter claim filed by the defendant is decreed as follows :
a) Decree in the sum of Rs.50,00,000/ (Rupees Fifty lakhs Only) i.e. the amount forfeited by the plaintiff along with interest @ 6% per annum from the date of payment of the said amount till its realization, is passed in favour of the defendant/counter claimant and against the plaintiff/noncounter claim.
b) Defendant, counter claimant is also entitled to cost.
A copy of this judgment be also placed in the Counter claim No.214/2016 (10716/2016) Rakshit Buildtech Pvt. Ltd. v. Roop Chand.
Decree Sheet be drawn accordingly.
File be consigned to record room.
Digitally
signed by
VIJAY VIJAY KUMAR
DAHIYA
Announced in the open court KUMAR Date:
on 11th Day of July 2022. DAHIYA 2022.07.28
10:21:33
+0530
(V.K. DAHIYA)
ADDL.DISTRICT JUDGE01 (SOUTH WEST)
DWARKA DISTRICT COURTS: NEW DELHI.
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