Delhi District Court
Vantage Construction Pvt Ltd vs Lt Col. Suraj Jit Chaudhri on 16 April, 2019
IN THE COURT OF MS VANDANA JAIN
ADDITIONAL DISTRICT JUDGE-07 (SE)
SAKET COURTS NEW DELHI
CS No. 10244/16
[MORE THAN TWENTY SIX YEAR OLD]
In the matter of:
1. Vantage Construction Pvt Ltd
37, Prithviraj Road, New Delhi-110011
2. Earl Chawla & Co. (P) Ltd,
80, Janpath, New Delhi-110001,
3. Mr. Harinder Pal Singh Chawla,
(Now Deceased) (Through LR)
3 (i) Mrs. Marguerite Chawla W/o Late Mr. H.P. S. Chawla
R/o 38 Spy Hill, Poughkeepsie, New York 12603
presently residing at 37, Prithviraj Road, New Delhi-110011
3(ii) Kiran Abinashi Chawla
(Executor of will executed by deceased Sh. H.P.S. Chawla)
...........Plaintiffs
VERSUS
1. Lt Col. Suraj Jit Chaudhri
(Now Deceased) (Through LRs)
(i) Ms. Sonal Choudhri W/o Sh. Yadvinder Singh Dhillon
R/o 20-A, Friends Colony (West)
Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 1 of 89
(ii) Ms. Priya Mann
Govind Farm
9, Fern Hill, DLF-Chattarpur Farms,
New Delhi-110030
......... Defendants
Date of Institution : 14.09.1992
Date of Reserving : 15.03.2019
Date of Judgment : 16.04.2019
JUDGMENT
1. The present suit has been filed by the plaintiffs for specific performance.
2. Brief facts as stated in the plaint are that plaintiffs no. 1 and 2 are both companies and plaintiff no. 3 is the Principal Shareholder and Director Incharge of both plaintiff no. 1 and 2.
3. Defendant is the owner of piece or parcel of land measuring approximately 4300 Sq yds (3593.3 Sq Mtrs) forming part of a larger plot of land bearing no. 20, Friends Colony, New Delhi (hereinafter called the suit property) and defendant had entered into agreements dated 25.07.1984, 25.03.1986 and 23.04.1987 Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 2 of 89 with the plaintiff no. 1 for development of the suit property. Pursuant to the said agreements, the defendant handed over to the plaintiff no. 1 vacant possession of the plot, and the plaintiff no. 1 constructed thereon at its cost and is in possession of a Group Housing Complex consisting of five buildings bearing no. A, B, C, D & E as set out in the site plan.
4. It is further averred that in view of said agreement, plaintiff no. 1 was entitled to 54 % (fifty four per cent) of the built-up space in the Group Housing Complex constructed in the plot with proportionate rights in the ownership of the plot, while the defendant was entitled to 46 % (forty six per cent) thereof, with proportionate rights in the ownership of the plot. Each of the five buildings comprised in the Group Housing Complex was divided into two independent dwelling units bearing nos. A-1 & A-2, B-1 & B-2, C-1 & C-2, D-1 & D-2 and E-1 & E-2 respectively. It was initially decided that the plaintiff no. 1 would be allotted units bearing nos. A-1, B1, C-2, D-1 and E-2 with proportionate rights in the ownership of the plot, while the defendant would be allotted units A-2, B-1, C-1, D-2 and E-2 with proportionate rights in the Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 3 of 89 ownership of the plot. Defendant no. 1 had desired to keep two units for himself (one for residence and one for the residence of his daughter) and to sell the other 3 (three) units which came to his share in the Group Housing Complex. Defendant further selected the adjacent units B-1 & E-2 for himself, and decided to sell units A-2, C-1 and D-2.
5. Thereafter, defendant offered to sell unit C-1 measuring approximately 4400 Sq Ft to the plaintiff no. 1 for a sum of Rs. 53 Lakhs so that the entire building "C" could come exclusively to the plaintiff no. 1. Plaintiff no. 1 and defendant accordingly entered into an Agreement for sale on 27.03.1989 by which the plaintiff no. 1 agreed to purchase from the defendant and the defendant agreed to sell to the plaintiff no. 1 that said unit "C-1" for a price of Rs. 53,00,000/- on the terms and conditions mentioned in the said agreement for sale. Thereafter, plaintiff no. 1 paid the defendant a sum of Rs. 6,00,000/- by way of cheques. It is further averred that since the value of the said unit was in excess of Rs. 10,00,000/-, it was obligatory on the plaintiff no. 1 and defendant to file statement with respect thereto in form no. 37 (I) of Income Tax Act, however, Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 4 of 89 defendant left Delhi for Dalhausie without signing the required statement.
6. It is further averred that plaintiff no. 1 and defendant agreed to reallocate the units falling to the share of plaintiff no. 1 and defendant. Upon reallocation, unit "C-1" which was subject matter of the agreement for sale dated 27.03.1989 fell to the share of the plaintiff no. 1 and the said agreement for sale became redundant. According to reallocation, the entirety of buildings "A" & "C" and unit no. D-1 and approximately ½ of unit D-2 fell to the share of the plaintiff no. 1 while the balance of unit D-2 and whole building "B" & "E" fell to the share of the defendant. Consequently, unit D-2 was remodelled by the plaintiff no. 1 and divided into two separate parts, one allocated to the plaintiff no. 2 and the other to the defendant.
7. Thereafter, plaintiff entered into agreements for sale with different purchasers for all the units falling to its share. Defendant was, however, unable to sell units B-2, D-2 and E-1 falling to his share and requested the plaintiff no. 3 to either purchase these units or to nominate a buyer for these units at a specified price. Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 5 of 89
8. The plaintiff no. 3 agreed to purchase units B-2 & E-1 with proportionate rights in the ownership of the plot from the defendant on the terms and conditions set out in two separate agreement for sale dated 15.09.1989.
9. Plaintiff no. 3 nominated plaintiff no. 2 for the purchase of unit E-1 measuring approximately 4932 Sq Ft for a total consideration of Rs. 54,25,200/- and accordingly agreement for sale dated 15.09.1982 in respect of unit E-1 was executed between the plaintiff no. 2 and defendant and out of total price, Rs. 2,00,000/- were paid by way of cheque bearing no. 346945 dated 15.09.1989 drawn on the Standard Chartered Bank and the balance of amount was payable in installments after getting approval from the Income Tax authorities in pursuance of Section 269 U.C. Statement in prescribed form no. 37 (I) was signed by plaintiff no. 2 and the defendant and was filed by the defendant with appropriate authority. It was agreed that the plaintiffs and defendant shall adjust sum of Rs. 6,00,000/- paid by plaintiff no. 1 under the agreement to sell dated 27.03.1989 in respect of unit C-
1. Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 6 of 89
10. Unit B-2 measuring no. 4112 Sq Ft was purchased for total consideration of Rs. 45,23,200/- and plaintiff no. 3 desired that he be given time of fifteen days to nominate the purchaser in whose name the agreement for sale was proposed to be drawn, however, defendant stated that he was in urgent need of money which was payable at the time of signing the agreement of sale and he would immediately sign the agreement for sale with receipt of Rs. 2,00,000/- with the purchaser's name blank and also delivered form 37 (I) complete in all respects with the purchaser's name blank to Mr. U.N. Marwah, (common Chartered Accountant of plaintiffs and defendant) for submission to Income Tax authorities who would fill the purchaser's name and applied form 37 (I) to the Income Tax authorities. Plaintiff no. 3 agreed to this procedure and agreement dated 15.09.1989 was drawn up in respect of unit no. B-2 with the purchaser's name blank against payment of Rs. 2,00,000/- by cheque drawn on Standard Chartered Bank and balance was to be paid in installments after obtaining the permission from the Income Tax authorities. Statement in form 37 (I) Income Tax Act was signed by the defendant with the Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 7 of 89 purchaser's name blank and delivered to Mr U.N. Marwah with authority to fill in the purchaser's name and deposit the form with the Income Tax authorities. Plaintiff no. 3 was authorized to nominate and fill in the name of the purchaser in the agreement to sell. Plaintiff no. 3 proposed name of Sh. Gautam Thapar which was refused by defendant owing to some personal enmity with him. Thereafter plaintiff no. 3 proposed to nominate plaintiff no. 1 as purchaser in respect of unit no. B-2 and defendant initially agreed to this. Accordingly, name of plaintiff no. 1 was filled and the plaintiff no. 3 requested the defendant to restore original form 37 (I) removed by him from Mr. U.N. Marwah or to issue a fresh form 37 (I) with respect to the agreement so that the transaction could proceed, however, defendant declined to either issue a fresh form or to restore previous one and flatly declined to proceed with the transaction.
11. In the meantime, clearance from the Income Tax Authorities was received by defendant in or about end of November 1989 with respect to unit E-1 and in view thereof, plaintiff no. 2 and 3 requested the defendant to accept the second installment of the Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 8 of 89 purchase price under the said agreement to sell in respect of unit E-1 after deducting the sum of Rs. 6,00,000/- paid under agreement to sell dated 27.03.1989 in respect of unit no. C-1 but the defendant flatly refused to proceed with the transaction and subsequently stated that he would proceed with the transaction only when he was allowed to retain Rs. 6,00,000/- earlier paid in respect of unit C-1, in addition to the price payable under agreement to sale dated 15.09.1989 in respect of unit E-1. In other words, defendant was not willing to proceed with this transaction. Thereafter, defendant filed suit bearing no. 1286 of 1990 making frivolous allegations and for claiming relief of cancellation of these agreements.
12. It is stated that plaintiffs have always been ready and willing to perform their part of the transaction in both the agreements dated 15.09.1989 qua E-1 and B-2 respectively but the defendants has failed to do the same and hence this suit for specific performance of agreement to sell daed 15.09.1989 in respect of E- 1 and E-2.
13. Written statement was filed by the defendant stating that suit Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 9 of 89 is liable to be stayed u/s 10 of CPC in view of pendency of suit bearing no. 1286 of 1990. it is also stated that suit is bad for misjoinder of cause of action as one suit has been filed for specific performance of two alleged agreements to sell.
14. It is further averred that on 27.03.1989, defendant entered into an agreement with Ansal Properties and Industries Pvt Ltd (Ansals) for the development of the suit property and for construction of a Group Housing Residential Complex. Under the agreement, Ansals were entitled to approximately 66.2/3% of the built up area and the defendant was entitled to 33.1/3% built up area.
15. It is further averred that in about 1981, plaintiff no. 3 started to impress upon the defendant would to cancel the agreement with Ansals. Plaintiff no. 3 suggested that on cancellation of that agreement, the defendant enter into an agreement with him and as an incentive, plaintiff no. 3 offered the defendant 50% share in the built area as against 33.1/3% share offered by Ansals. The plaintiff no. 3 agreed to pay to the defendant an amount of Rs. 10,00,000/- in case the property was developed by him.
Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 10 of 89
16. It is further averred that in the year 1983, the defendant was falsely and wrongly implicated in a murder case relating to the death of one Mr Krishan Sikand which left the defendant in a state of shock both mentally and emotionally. The plaintiff no. 3 offered sympathy and financial support during that period.
17. It is further averred that on 31.03.1984, defendant acting upon the representations and advice of plaintiff no. 3 sought cancellation of the agreement dated 27.03.1989 with Ansals, and the said agreement was mutually cancelled on 31.03.1984.
18. It is further averred that on 28.07.1984, plaintiff no. 3 prepared an agreement dated 25.07.1984 in favour of plaintiff no. 1 as builder whilst the defendant was in Military custody. At the time of signing on the agreement, plaintiff no. 3 sprang a surprise on the defendant that sharing ratio would not be 50:50 but 46 % for the defendant and 54 % for plaintiff no. 3. The defendant was left with no option in those circumstances but to sign the Agreement as prepared by plaintiff no. 3. On signing, plaintiff no. 3 also did not make payment to the defendant of the advance monies as stipulated in the Agreement.
Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 11 of 89
19. It is further averred that in November, 1984, the defendant was released from Military custody. The defendant retired from the army on 31.01.1988 thereafter he shifted to Dalhousie and permanently settled down there where he owns a residential property. However, defendant from time to time had to visit Delhi in connection with his case and matters relating to this property.
20. It is further averred that in March 1986, plaintiff no. 3 approached the defendant and requested that the first page of the agreement dated 25.07.1984 be substituted. On 25.03.1986, he brought the said first page typed on stamp paper of Rs. 2/- to indicate that the agreement had been entered into on 25.03.1986.
21. It is further averred that in mid April, 1987, plaintiff no. 3 approached the defendant and requested for cancellation of the agreement dated 25.03.1986. He requested that a fresh agreement be signed between the parties. Accordingly, an agreement of 25.03.1986 was treated as cancelled and a new agreement was signed between the parties on 23.04.1987. This agreement provided for inter-alia the construction of the residential complex in accordance with duly approved plans. The plaintiff no. Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 12 of 89 3 was required to pay to the defendant a sum of Rs. 10,00,000/- by way of security deposit under the said agreement dated 23.04.1987. Although the said agreement envisaged that sum of Rs. 5,00,000/- was being paid to the defendant on the date of the execution of the agreement, the said payment was never made. Plaintiff no. 3 secured receipt of payment from the defendant on assurances that the said amount would be paid very soon after the signing of the agreement but the plaintiff failed to do so.
22. It is further averred that building plan for the construction of 10 flats was approved by the MCD on 12.11.1987. The plaintiff commenced construction work at site in January, 1988. In spite of requests by the defendant, plaintiff no. 3 did not make the outstanding payments under the Agreement of 23.04.1987 and requested for time for making payments. Thereafter, the defendant became aware that construction was being carried out contrary to the sanctioned plan. On objecting to the same, plaintiff no. 2 showed revised plans to the defendant and stated that the same were being submitted to the corporation.
23. It is further averred that in March 1988, the defendant Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 13 of 89 exercised his option by choosing five dwelling units, which was wrongly objected to by plaintiff no. 3. The defendant by his letter dated 06.05.1988 gave his revised option whereby he opted for dwelling units A-1, B-2 (mezzanine) C-1, D-2 and E-2. The defendant reserved his right to review his options in the event of any major alterations made subsequently by the plaintiff, in the layout schemes, etc and to make a fresh selection of his share. In October 1988, the construction activity at the site was completely stopped without any justification by the plaintiff no. 1 and 3 in an effort to coerce the defendant to exercise his option in the manner suggested by plaintiff no. 3.
24. It is further averred that till March, 1989, the plaintiffs failed to resume the construction work or activity after suspending the same in October, 1988. In March 1989, plaintiff no. 3 approached the defendant with the plea that he did not have the requisite funds to undertake further construction and needed to raise funds by offering for sale in future some of the areas/flats that would fall to his share on the completion of the project. Thereafter, plaintiff no. 3 stated that he had been approached by a company of the Birla Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 14 of 89 group who were willing to purchase the plaintiffs areas provided block no. C in its entirety was offered to them for sale i.e. including the areas falling to the defendant's share. Plaintiff no. 3 gave various assurances and undertakings to the defendant that:- (i) He would not take more than 40 % advance from the parties willing to purchase areas that would fall to his share and would take the balance 60 % payment only on completion of the buildings and the project in accordance with the plans. (ii) The funds received from prospective purchaser would be utilized only for discharging the plaintiff's outstanding liabilities to the defendant and then for completing the construction of the entire complex and would not be diverted elsewhere. (iii) The plaintiff would immediately obtain the requisite approvals and sanctions to the plans as modified in terms of the construction being actually carried on at site and which plans the plaintiff represented, had already been filed with the corporation. (iv) From advance received from prospective purchasers, a sum of Rs. 53,00,000/- would be first paid to the defendant in the following manner:- (a) Rs. 2,00,000/- on the defendant signing the agreements for sale of his allocation in Block Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 15 of 89 C i.e. Flat C-1 (b) Rs. 8,00,000/- on or before April 15,1989; (c) Rs. 8,00,000/- on or before June 15,1989; (d) Rs. 20,00,000/- on or before October 15, 1989; (e) Rs. 5,00,000/- on handing over possession of the flat to the prospective buyer.
25. It is further averred that defendant was not averse to executing an agreement for the sale of his flat C-1 directly to the prospective purchaser and requested plaintiff no. 3 to introduce him immediately to the prospective purchase as, the defendant was due to leave town on the early morning of 28.03.1989. On or about 26.03.1989, plaintiff no. 3 informed the defendant that the representative of the purchaser company interested in buying the flat in Block C was out of town and would return only in the first few days of April, 1989 to finalize the agreements and suggested the defendant to sell flat C-1 to the plaintiff who would make the payments strictly in accordance with the schedule stated above.
26. It is further averred that on the assurance of the plaintiff, the defendant on 27.03.1989 signed an agreement for sale to plaintiff no. 3 for flat C-1 for a total consideration of Rs. 53,00,000/- to be paid in the installments as stipulated and reproduced in para no. 3 Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 16 of 89 of that agreement. It was further stipulated in the said agreement that the defendant's obligation for sale of the said flat shall stand null void and cancelled if the payment schedule was not adhered to. The defendant alongwith the Agreement to sell dated 27.03.1989 also signed Form 37-I and the same was also handed over to plaintiff no. 3. At the same time, the plaintiff also obtained from the defendant signatures on various other agreements to sell with blanks as a confirming party on the representation that he was negotiating for sale of his proposed flats with various prospective parties/purchasers and as the defendant may not be in Delhi,, the plaintiff needed the flexibility of concluding agreements with the parties offering him the best terms. The plaintiff stated that he would use these sets of incomplete documents to finalize agreements to sell the four flats falling to his allocation i.e. flat A-2, C-2, D-1, B-2 and the fifth flat C-1 now agreed to be sold by the defendant to plaintiff no. 3 vide the aforesaid agreement dated 27.03.1989. Alongwith the aforesaid documents, the plaintiff no. 3 also got from the defendant his signatures on various sets of blank forms 37-I which were proposed to be filed in on finalizing the Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 17 of 89 transaction with any of the said parties.
27. It is further averred that defendant pressed plaintiff no. 3 for payments due in April, 1989 under the agreement of 27.03.1989 and plaintiff no. 3 handed over to the defendant on 10.04.1989, two post dated cheques of Rs. 2,00,000/- each towards part payment of Rs. 10,00,000/- due to the defendant on 15.04.1989. Plaintiff no. 3 pleaded that the delay was on account of his not having been able to finalize any agreement with prospective buyers. He undertook to deposit the balance Rs. 4,00,000/- due on 15.04.1989 into the defendant's bank account latest by the end of April, 1989.
28. It is further averred that in July, 1989 the defendant came to know that the plaintiff had failed to make payment of the balance Rs. 4,00,000/- by end of April, 1989. The installment due in June was also not paid. Plaintiff no. 3 had only paid a sum of Rs. 6,00,000/- under the Agreement dated 27.03.1989 as against the agreed sum of Rs. 18,00,000/- which had become payable by then. The defendant took up the matter with the plaintiff no. 3 who stated that he was unable to fulfill his obligations. Accordingly, the Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 18 of 89 agreement was taken to have been cancelled, being null and void in view of the plaintiff's failure to make the payments in accordance with the terms contained in the agreement to sell and defendant forfeited the amount of Rs. 6,00,000/- given in advance under the agreement dated 27.03.1989. This was not objected to by plaintiff no. 3. The defendant also pointed out that plaintiff no. 1 was in default in making payment of the full sum of Rs. 10,00,000/- under the collaboration agreement dated 23.04.1987. The plaintiff no. 3 stated that though he was unable to fulfill his obligations under the said agreement to purchase flat C-1 falling to the defendant's allocation but stated that the flat C-1 could not be restored to the defendant as the plaintiff has used one set of the documents signed by the defendant in blank to agree to sell flat C-1 to a third party. The plaintiff no. 3 also disclosed that he had already committed to transfer defendant's flat A-1 (which was also part of the defendant's allocation) and for that purpose had utilized another set of documents signed by the defendant in blank. The defendant protested, however, plaintiff no. 3 threatened the defendant with serious complications and legal disputes with Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 19 of 89 various third parties and inordinate delays if the defendant insisted on flats A-1 and C-1 forming part of his allocation. The plaintiff insisted that the defendant should accept instead flats E-1 and B-2 in his allocation in place of flat A-1 and C-1. Under threats of legal disputes, stoppage of work and threats of involving the entire property in protracted litigation, the defendant was coerced into accepting the plaintiff's unilateral modification to this allocation and was compelled and coerced to accept flats E-1 and B-2 in lieu of flats A-1 and C-1.
29. It is further averred that around the third week of August, 1989, plaintiff no. 3 approached the defendant stating that he had located a substantial party who was considering purchase of two flats together. The defendant requested that he be introduced to the party but the plaintiff no. 3 stated that they were not in town. The plaintiff was aware that the defendant was once again due to leave Delhi at the end of August, 1989. Around 25 th/26th August, 1989, the plaintiff no. 3 approached the defendant and stated that he was also due to leave India sometime in the first two weeks of September and wished to finalize for the defendant the sale of his Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 20 of 89 two flats before leaving. The plaintiff further suggested that as the defendant himself was due to definitely leave Delhi at the end of August, 1989, the defendant may consider signing two agreements in blank for the sale of his flats. The plaintiff invited the defendant to the office of their common chartered accountant M/s U.N. Marwah & Co. to consider the draft documents prepared by the plaintiff. The defendant alongwith plaintiff no. 3 visited the office of Mr. U.N. Marwah and saw two sets of pre-typed agreements (as prepared by the plaintiff no. 3) for the sale of flats B-2 & E-1. The names of the parties were blank as also the date. Once again, the defendant was coerced and misled into signing the said two sets of documents with the blanks accepting the plaintiff's assurances that the names of the purchasers of flats B-2 & E-1 who would be substantial companies would be filled in later. The documents were left with Mr. U.N. Marwah to be released on arrangements being finalized with the "substantial companies" as represented by the plaintiff.
30. It is further averred that defendant left Delhi on 30.08.1989 and returned in early October, 1989 and found that no work had Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 21 of 89 been done in the flats falling to his share and noticed that two vertical flats in Blocks A & C had been converted into three flats and Block D had been modified to the extent that instead of the two flats, four flats were being carved out. The defendant was also informed that plaintiff no. 3 had not been able to firm up the contract for the sale of flats B-2 or E-1 with any substantial company and that plaintiff no. 3 had utilized one of the documents with blanks signed by the defendant (and left with Mr. U.N. Marwah) for sale of flat E-1 to plaintiff no. 2. The defendant objected to this but was again told that he was now bound by the documents (signed in blank and as completed by plaintiff no. 3). The defendant told plaintiff no. 3 that he had no intention of entering into agreements for sale of any flats to plaintiff no. 3 or any company controlled or managed by him. However, the defendant was faced with a situation that plaintiff no. 3 had in breach of his assurance already filled a blank signed agreement with the name of plaintiff no. 2 and lodged the same for the requisite approval of the Income Tax authorities under Section 269 UC and deposited a sum of Rs. 2,00,000/- directly into the Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 22 of 89 defendant's bank account on or about 15.09.1989. The defendant was threatened with legal disputes and delays if he challenged the plaintiff no 3's action. The defendant was further informed that plaintiff no. 3 had removed from the office of Mr. Marwah the second agreement signed in blank but that the same was still in blank and had not been filled up in the name of any party. Form No. 37-I signed in blank was with Mr Marwah which was returned to the defendant. The defendant immediately asked plaintiff no. 3 to return the second signed agreement with blanks in it. Plaintiff no. 3 initially stated that he had sold the flat directly to one of the Thapar companies, it transpired that the document had not been utilized for sale to any company of the Thapar Group. Only when the plaintiff sent a legal notice dated 02.03.1990 the defendant became aware for the first time that plaintiff no. 3 had filled in the name of the plaintiff no. 1 company in that document. The defendant never intended to enter into any contract either with the plaintiff no. 1 or with plaintiff no. 2 or for that matter with plaintiff no. 3 for the sale of any flats. The plaintiffs had payed a fraud on the defendant.
Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 23 of 89
31. It is further averred that defendant by his letter dated 02.12.1989 put plaintiff no. 3 on notice that the requisite approval from the Income Tax authorities under Section 269 UC had been obtained vide their letter dated 20.11.1989 received on 23.11.1989 with respect to flat E-1 and that therefore, the installment of Rs. 17,00,000/- was required to be paid by 08.12.1989 for the sale of the said flat E-1 to plaintiff no. 2. This letter was personally handed over to plaintiff no. 3 by the defendant on 02.12.1989 itself but plaintiff no. 3 refused to give a receipt. Plaintiff no. 3 did not make the payment of Rs. 17,00,000/- as provided for under clause 2 (ii) of the agreement dated 15.09.1989.
32. It is further averred that on account of breach of the terms of the said agreement, the defendant exercised his option to cancel the said agreement in favour of plaintiff no. 2 with respect to flat E- 1 and gave notice in that respect to the said plaintiff vide his Regd. AD letter dated 21.12.1989.
33. It is further averred that defendant received a letter dated 02.1.1989 (to be read as 02.01.1990) wherein the plaintiff made incorrect statements of not having received the Income Tax Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 24 of 89 clearance order. The plaintiffs also made incorrect statements regarding the meeting held on 02.12.1989. They also sought to deny having received a photocopy of the Income Tax order enclosed by the defendant with his letter of 21.12.1989. All these wrong statements were made in an effort to justify the non- payment of Rs. 17,00,000/- and to complicate and confuse matters by raising disputes. The defendant became aware that there were third party buyers available for the flat E-1 and who were willing to pay a better and higher price and that plaintiff no. 3 in breach of trust and in an effort to defraud the defendant and cheat him for his due consideration, filled in the blank document first in the names of his company i.e. plaintiff's 2 and that he then proposed to resell the said flat at a higher price to some other party thereby appropriating to himself a substantial part of the market price of the flat.
34. It is further averred that defendant filed suit no. 1286/90 in Delhi High Court inter alia, seeking declaration that agreement dated 23.04.1987 and other agreements signed in blank by defendant (dated 15.09.1989) are cancelled or declared null and void.
Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 25 of 89
35. It is further averred that plaintiff filed the present suit in the Delhi High Court seeking specific performance of agreements dated 15.09.1989 with respect to flats E-1 and B-2.
36. Replication to written statement was filed wherein the contents of the plaint were reiterated and defence raised in the written statement was denied.
37. Thereafter, issues were framed on 23.03.2000 as under:-
(i) Whether the suit is time barred ? OPD.
(ii) Whether suit is bad for misjoinder of plaintiff ? OPD
(iii) Whether the defendant had not entered into agreement to sale dated 15.09.1989 ? OPD.
(iv) Whether the defendant is not bound by the terms and conditions as mentioned in this agreement to sell ?
OPD.
(v) Whether the plaintiff(s) has been/have been ready or willing to perform or have performed their part of agreement to sell ? OPP.
(vi) If this suit is to be decreed, which of the plaintiff is entitled to specific performance? OPP Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 26 of 89
(vii) if the suit for specific performance is decreed what direction should be made to complete the sale ? OPP.
(viii) Relief.
38. Thereafter, matter was listed for plaintiff evidence. Plaintiff examined five witnesses though they have been numbered as six. PW-1 is plaintiff no. 3 i.e. H.P.S. Chawala, PW-2 is R.K. Indora, witness from ROC, PW-3 is also R.K. Indora from ROC as he was called again, PW-4 is N.D. Khattar, Inspector from Income Tax Department who proved form 37 (I). PW-5 is Sanjay Issar, C.A, partner of S.K. Mittal & Co., PW-6 is Sunil Jain. CA of Kumar Chopra & Associates. Thereafter, plaintiff evidence was closed.
39. Defendant examined himself as DW-1, DW-2 is U.N. Marwah. Thereafter, DE was closed.
40. Ld counsel for plaintiff has argued that contention of defendant that he had signed the agreements on the misrepresentation and fraud of Sh H.P. S. Chawala is completely false. He has stated that both the agreements dated 15.09.1989 were complete in all respects including consideration amount and only the blank space was left for the name of the nominee to be Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 27 of 89 filled which was merely a formality. Ld counsel for plaintiff has argued that during cross examination of DW-1 he has admitted that both the agreements were blank in respect of buyer's name. It is further argued that DW-2 has admitted that he found two cheques of Rs. 2,00,000/- each to have been deposited in his account on 15.09.1989. It is further argued that DW-1 has falsely stated that his CA Mr. U.N. Marwah informed him that one of the two cheques was for payment under collaboration agreement whereas DW-2 Mr U.N. Marwah during his cross examination completely denied having any such knowledge on the question asked by counsel for the plaintiff. It is further argued that defendant has not placed any document on record to show that any kind of fraud was played by the plaintiffs upon him. It is argued that Rs. 10,00,000/- was paid to defendant under collaboration agreement dated 23.04.1987. Thereafter Rs. 6,00,000/- were paid under agreement to sell dated 15.03.1989 in respect of unit C-1 which was agreed to adjust in respect of unit E-1. Thereafter, Rs. 2,00,000/- each were paid under agreement to sell dated 15.09.1989 in respect of unit E-1 and B-2. It is argued that it was Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 28 of 89 not the plaintiff but the defendant who failed to discharge his obligation. It is further argued that defendant has stated in the written statement that agreement for unit E-1 was terminated vide letter dated 21.12.1989 for the reason that NOC dated 20.11.1989 was received by plaintiff no. 2 (Earl Chawla) and there had been a default to pay as per clause 2(ii) of the agreement. It is argued that plaintiff no. 2 Earl Chawla did not receive any such NOC at that time whereas defendant received NOC admittedly on 23.11.1989 but he did not supply the copy of NOC to the plaintiff. It is further argued that in the letter dated 21.12.1989. it is mentioned that during meeting on 02.12.1989 of defendant with H.P.S. Chawla, he handed over the letter in person to him where by defendant had informed that he had received the NOC on 23.11.1989. It is further argued that letter dated 02.12.1989 is a fabricated document and has not been proved as per law.
41. It is further argued with respect to unit B-2 that it has been wrongly averred by defendant that purchaser for the agreement was not agreed upon by him. It is argued that it was agreed between the parties that unit would be bought either by H.P.S. Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 29 of 89 Chawla or he would be appointing a nominee. It is stated that there is no requirement in law that agreement to sell in order to become enforceable must be seen by purchaser.
42. He has further argued that defendant objected to the name of the Thapar as purchaser proposed by H.P.S. Chawla. It is further argued that though H.P.S. Chawla was not bound to accommodate the defendant in respect of a ready buyer but he did accommodate him and nominated plaintiff no. 1 i.e. Vantage Construction. Defendant insisted on repayment of Rs. 6,00,000/- obtained by him under the earlier agreement for unit C-1. He refused to submit form 37-I and eventually filed suit seeking cancellation of these two agreements. It is stated that alleged forfeiture of Rs. 6,00,000/- paid under agreement for unit C-1 is completely wrong in view of the mutual agreement between the parties. It is further argued that H.P.S. Chawla was entitled to refund of this amount of Rs. 6,00,000/- as unit C-1 had fallen to the share of H.P.S. Chawla. It is argued that forfeiture is wrong as there was no clause of forfeiture in the agreement of unit C-1. It is further argued that no material has been placed on record to show Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 30 of 89 that defendant had forfeited Rs. 6,00,000/- paid under agreement for unit C-1. Ld counsel for plaintiff has argued that defendant has been cross examined comprehensively on this point and witness i.e. defendant failed to point out any document showing any notice of forfeiture having been issued by defendant to plaintiff at the relevant time. It is stated that both the agreements were legally executed and, therefore, plaintiff is entitled to decree of specific performance of both the agreements in respect of units i.e. E-1 & B-2 against defendants.
43. Ld counsel for plaintiffs has argued that plaintiffs were and are always ready and willing to perform their part of the contract in respect of the respective units at all point of time. He further argued that in order to show readiness and willingness, it is not necessary to prove that plaintiffs had ready cash with it all the times. It is sufficient if it is proved on record that plaintiffs were able to arrange the funds to pay consideration amount. He has placed reliance upon Sukhbir Singh Vs Brij Pal Singh (1997) 2 SCC 200, Sant Lal Vs Shayam Dhawan AIR 1986 Delhi 275, Swarnam Ramchandran Vs. Aravacode Chakungal Jayapalan Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 31 of 89 (2004) 8 SCC 689, Azhar Sultana Vs B. Rajamani AIR 2009 SC 2457, M/s Ansal Properties and Industrial Pvt Ltd Vs. Rajinder Singh ILR (1990) I Delhi 105, Rakesh Kumar Vs Kalawati (Deceased) through LRs 206 (2014) Delhi Law Times 363, Prakash Chandra Vs Angadlal & Ors (1979) 4 SCC 393, P. D'souza Vs Shondrilo Naidu (2004) 6 SCC 649, Narinderjit Singh Vs North Star State Promoters Ltd (2012) 5 SCC 712, Surjeet Singh Vs Kartar Singh AIR 1988 Punjab and Haryana
53.
44. It is further argued that in order to prove the financial capacity of the plaintiff no. 1 and 2, balance sheets of plaintiff no. 1 and 2 for the relevant period have already been proved on record.
45. On the other hand, Ld Sr. Advocate for one of the LR of the defendant alongwith Advocate for another LR has argued that agreement qua unit B-2 was signed in blank and same was fraudulently filled by the plaintiff no. 3 in the name of plaintiff no. 1. It is further argued that he had no intention to sell the said unit to the plaintiff and blanks filled by plaintiff does not bear the initials/signature of the defendant. It is further argued that Mr. U.N. Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 32 of 89 Marwah during his cross examination has stated that document was signed in blank and same was entrusted to him for utilization at the time of sale of said unit to the third party. It is further argued that defendant no. 1 entered into agreement with plaintiff for sale of unit C-1 wherein payment of Rs. 6,00,000/- was made by the plaintiffs to the defendant but the terms of the agreement were not honoured and agreement was cancelled. The amount of Rs. 6,00,000/- was forfeited. It is further argued that there is not even a whisper about adjustment of Rs. 6,00,000/- in any of the alleged agreement to sell dated 15.09.1989 qua E-1 & B-2. It is further argued that plaintiffs did not adhere to clause 2 (ii) of the agreement to sell in respect of unit E-1 and did not pay the next installment of Rs. 17,00,000/- within fifteen days from the receipt of NOC from the Income Tax authorities which was obtained by defendant on 23.11.1989. It is further argued intimation in this regard was given to plaintiff no. 3 by handing over a letter dt 02.12.1989, personally to plaintiff no. 3 in a meeting by defendant. It is further argued that no payment was made within fifteen days and, therefore, a notice dated 21.12.1989 was sent to plaintiffs Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 33 of 89 terminating the agreement in respect of E-1. It is further argued that vide letter dated 02.01.1990 (mentioned as 02.01.1989), it came to the notice of defendant that plaintiff no. 3 had filled the name of plaintiff no. 1 in the other agreement which was signed in blank in respect of unit B-2 and said agreement was taken from the custody of Mr. U.N. Marwah on the pretext of showing it to the buyer. It is argued that defendant never consented to sell this unit to plaintiff no. 1 and therefore, the agreement be declared null and void. It is further argued that plaintiff no. 2 has even failed to show its readiness and willingness for getting a decree of specific performance in respect of unit E-1. Ld Sr. Advocate for defendant has relied upon judgments i.e. His Holiness Acharya Swami Ganesh Dassji Vs. Sita Ram Thapar (1996) 4 SCC 526, N.P. Thirugnanam Vs. Dr. R. Jagan Mohan AIR 1996 SC 116, Kalawati (Dead) through LRs Vs.Rakesh Kumar & Ors (2018) 3 SCC 658, Umabai & Anr Vs. Nilkanth Dhondiba Chavan (Dead) through LRs (2015 6 SCC 243, B.Vijaya Bharathi Vs. P. Savitri & Ors (2018) 11 SCC 761, Ved Prakash Kharbanda Vs. Vimal Bindal 198 (2013) DLT 555, Hotz Industries Pvt Ltd Vs. Dr. Ravi Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 34 of 89 Singh (Dead) Through LRs 249 (2018) DLT 638, Raj Rani Vs. Prafulla Kumar 254 (2018) DLT 535, Kimti Lal Vs Harpal Singh & Anr 253 (2018) DLT 188, Farzana Ranjan Vs Preeti Arora 254 (2018) DLT 709, Ritu Saxena Vs J.S. Grover & Anr 251 (2018) DLT 758 stating that continuous readiness and willingness to perform is a condition precedent to grant the relief of specific performance and it is argued that right from the date of the execution of the agreement of sale till date of passing of decree, plaintiff must prove his readiness and willingness to perform his part of the contract.
46. Before dwelling upon facts, it is pertinent to mention here that deceased plaintiff no. 3 Sh H.P.S. Chawla had expired and one of the executor of the will executed by deceased plaintiff no. 3 in favour of Ms Krian Abinashi Chawla & wife of deceased plaintiff no. 3 were jointly impleaded as LR of deceased plaintiff no. 3. Though, it has come on record that some settlement has been taken placed between wife of deceased plaintiff no. 2 and executor namely Ms Kiran Abinashi Chawla, however, no such settlement has been placed on record, therefore, it is presumed that both of Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 35 of 89 them have contested the present case.
47. I shall deal with issues one by one
48. Issue No. 1 Whether the suit is time barred ? OPD.
49. As per the version of the plaintiffs, the alleged agreement to sell qua B-2 & E-1 were allegedly executed on 15.09.1989. It is defendant's version that agreement with respect to unit B-2 was never entered into by the defendant as he had left the blanks in the column of date and the name of the purchaser which his C.A. Mr. U.N. Marwah was authorized to fill. With respect to unit E-1 he has stated that letter dated 21.12.1989 Ex DW1/C was issued terminating the agreement to sell to which the plaintiff had given a reply dated 02.01.1990 (wrongly mentioned as 02.01.1989) which is Ex PW1/7. The suit was admittedly filed on 14.09.1992 before the filing counter and bears the stamp of Deputy Registrar on the plaint itself of the even date and, therefore, the same was filed within the period of three years from the date of entering into the agreement to sell. In any case, it is admitted that notice to terminate the agreement in respect of unit E-1 was given on 21.12.1989 so counting three years from that date, suit is safely Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 36 of 89 within the period of limitation. Hence, this issue is decided in favour of the plaintiffs and against the defendant.
50. Issue No. 2 Whether suit is bad for misjoinder of plaintiff ? OPD
51. The onus to prove this issue was upon defendant. This has been framed with respect to misjoinder of cause of action and plaintiffs stating that specific performance for two agreements to sell allegedly entered into by different plaintiffs with defendant cannot be taken up in one suit. No arguments have been addressed on this issue and this issue has remain unproved. Hence, this issue is decided in favour of the plaintiffs and against the defendant.
52. Issue No. 3 Whether the defendant had not entered into agreement to sale dated 15.09.1989 ? OPD and Issue No. 4 Whether the defendant is not bound by the terms and conditions as mentioned in this agreement to sell ? OPD.
53. Issue No. 3 & 4 are taken up together being inter-related.
54. The present suit for specific performance is with respect to two units E-1 & B-2. The case of the plaintiff is that Lt Col S.J. Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 37 of 89 Chaudhri (Defendant) was unable to sell E-1 & B-2 and he requested the H.P. S. Chawla (Plaintiff No. 3) to either purchase these two units or to nominate a buyer of that unit on specified price. H.P.S. Chawla agreed to purchase E-1 & B-2 vide two agreement to sell dated 15.09.1989. H.P.S. Chawla nominated Earl Chawla (Plaintiff No. 2) for purchase of E-1 for total consideration of Rs. 54,25,200/- and Rs. 2,00,000/- were paid to the Lt Col S.J. Chaudhri on 15.09.1989 as earnest money which was to be paid at the time of signing of agreement to sell. Second installment was to be paid within fifteen days from receiving of approval u/s 269 UC of Income Tax Act from the Income Tax authorities. It is the case of the plaintiffs herein that form 37-I was signed by Earl Chawla and Lt Col S.J. Chaudhri and was filed with IT department. It is also stated in plaint that it was agreed between the plaintiff and defendant that Rs. 6,00,000/- paid towards unit C- 1 earlier shall be adjusted. Lt Col. S.J. Chaudhri had rebutted these averments and has stated that H.P.S. Chawala was never authorized to nominate any purchaser in both the agreement to sell. His case is that he had prepared two agreement to sell which Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 38 of 89 were undated and having the column of purchaser and date blank for unit E-1 & B-2 alongwith form 37 (I) duly signed for both the agreements and they were left with common C.A. Mr. U.N. Marwah as he did not trust H.P.S. Chawla who failed to complete the earlier agreements and it was directed to Mr. U.N. Marwah that none of these units shall be sold either to Vantage Construction or to plaintiff no. 2 or to any other company belonging to the plaintiff no.
3. He also denied having agreed to any adjustment of Rs. 6,00,000/- paid earlier towards unit C-1 by H.P.S. Chawla to him vide agreement dated 27.03.1989. Having these versions in mind the background of the case as is necessary is discussed again, though, it is already mentioned in the plaint.
55. The defendant was owner of the property and had entered into collaboration agreement with plaintiff no. 1 and plaintiff's share was 54 % and defendant share was 46 %, according to which certain portions/units were allocated and initially unit E-1, B-1, C-2, D-1, E-2 came to the share of plaintiff no. 1 and unit A-2, B-2, C-1, D-2, E-1 came to the share of defendant. Defendant decided to sell C-1 to plaintiff and plaintiff paid Rs. 6,00,000/- by way of Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 39 of 89 separate cheques under agreement dated 27.03.1989. Units were reallocated after negotiations between the parties and unit C-1 fell to the share of the plaintiff no. 1 and, therefore, the agreement dated 27.03.1989 for unit C-1 became redundant. Finally reallocation was done and block A, C, D-1 and ½ of D-2 came to the share of the plaintiff no. 1 and block B & E & ½ of D-2 came to the share of the defendant. Plaintiff no. 3 has been examined as PW-1 and defendant has been examined as DW-1. With respect to unit E-1, it has been admitted by defendant in the cross examination that he had signed blank agreement for unit E-1 but no date was put on the same. It is stated that since he had to leave Delhi in the last week of August 1989 as he was based in Dalhousie and did not trust H.P.S. Chawla, he left the agreement alongwith form 37 (I) duly signed by him, left in blank in the safe custody of DW-2 Mr. U.N. Marwah and had instructed Mr U.N. Marwah not to involve plaintiff no. 3 in the same except as confirming party. He admits having received Rs. 4,00,000/- (two lacs each by way of different cheques) on 15.09.1989 in his account. He admits that his C.A. Mr. U.N. Marwah had filled the Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 40 of 89 agreement to sell in favour of plaintiff no. 2 Earl Chawla in his absence when he was in Dalhousie on the authority given by him to his C.A. i.e. DW-2. He admits that Rs. 2,00,000/- have been received in respect of E-1, though, he denied another Rs. 2,00,000/- to have been received in respect of B-2 and submits that this payment was made towards collaboration agreement entered between him and plaintiff no. 1 which was due. Form 37 (I) was duly filed with income tax department for obtaining the approval for sale of the said unit. The approval is admittedly dated 20.11.1989 and is exhibited as PW1/2. This original agreement of E-1 is witnessed by DW-2 Mr. U.N. Marwah and it is in favour of plaintiff no. 2 Earl Chawla. Clause 2 (ii) of the said agreement Ex PW1/1 provides for payment of Rs. 17,00,000/- by plantiff to defendant within fifteen days after receipt of no objection certificate from the income tax authorities u/s 269 of Income Tax Act. The date of approval i.e. 20.11.1989 is not disputed. The defendant stated that he received the approval on 23.11.1989 and handed over letter 02.12.1989 to the H.P.S. Chawla demanding the said amount stating that approval has been received. The receiving of Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 41 of 89 this letter has been denied by H.P.S. Chawla from Lt Col S.J. Chaudhri, though, it is admitted that they met on 02.12.1989. Except for oral testimony of the defendant, no other witness has been produced on record to show that this letter was ever handed over to H.P.S. Chawla by Lt Col. S.J. Chaudhri. Thereafter the letter dated 21.12.1989 Ex DW1/C was written by Lt Col. S.J. Chaudhri terminating the agreement which was addressed to Earl Chawla which is produced herein as under:-
Lt Col. S.J. Chaudhri VrC Reg. A/D.
20, Friends Colony (West) 20, Friends Colony (West)
New Delhi Mathura Road, New Delhi.
21 Dec. 1989
To
1. M/s Earl Chawla & Company (P) Ltd
37, Prithviraj Road, New Delhi
2. M/s Earl Chawla & Company (P) Ltd
80, Janpath, New Delhi.
Re: Agreement to sell dated 15.09.89
between
M/s Earl Chawla & Company (P) Ltd
Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 42 of 89
and MyselfApartment No. E1, 20 A
Friends Colony (West), New Delhi.
Please refer to the abovementioned agreement to
sell. The No objection/permission to sell dated 20.11.89 of the Appropriate Authority under Chapter XXC of the Income Tax Act 1961 was received by me on 23.11.89. the same has also been received by you.
As per clause 2(ii) of agreement to sell dated 15.9.89 you were to make payment of a sum of Rs. 17 Lacks to me within fifteen days of receipt of the said permission/No objection under Section 269 of the Income Tax Act, 1961.
In this regard, I had already spoken to you on 2 Dec.1989 at your residence when I personally handed over my letter dated 2nd December, 1989 (addressed to M/s Vantage Construction Pvt Ltdyour sister CompanyCopy attached for ready reference) and you assured me then that the payment would be made to me on the due date. I find you have inspite of your assurance failed and neglected to honour and adhere to the terms and conditions of the said agreement to sell dated 15.9.89. Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 43 of 89
In view of your non cooperative attitude and the breach committed on your part in respect of non payment of the said sum of Rs. 17 Lakhs till today, I, under Clause 14 of the said agreement to sell dated 15.9.1989 hereby exercise my option and appropraite the amount of Rs. 2 Lakhs paid by you upon execution of the said agreement to sell, as the agreed preestimated loss and damage suffered by me, and the said agreement to sell dated 15.9.1989 is hereby rescinded and becomes non operative, null and void which you may please note.
Your's faithfully (Col. S.J. Chaudhri) Copy to 1. The appropriate Authority Income Tax Department, New Delhi.
56. In response to the said letter a reply dated 02.01.1990, though, wrongly mentioned as 02.01.1989 was sent by Earl Chawla and Lt Col S.J. Chaudhri and said letter is also provided herein as under:-
Earl Chawla & Co (P) Ltd January 2, 1989 37 Prithvi Raj Road Lt. Col. S.J. Chaudhri Vr. C New Delhi11, India Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 44 of 89 20, Friends Coloney (West) Mathura Road, New Delhi.
Ref: Sales of unit E1, 20A Friends Colony, New Delhi.
Dear Sir, We acknowledge receipt of your letter dated 21st December 1989, on the above subject and at the outset deny all the allegations contained therein. We have neither till date received copy of the purported No Objection Certificate under Section 269 UC of the Income Tax Act 1961, nor advice of the same having being issued either from you, or from the Department. Furthermore the photocopy of the letter, which was enclosed with your letter under reply, has neither been received by us and in fact was not even addressed to us.
On 2nd December, 1989 when you met our Director Mr. H.P.S. Chawla you neither mentioned anything about the No Objection Certificate having been received from the Income Tax Dept. nor did you hand over your purported letter, a photocopy of which has been enclosed with your letter under reply. On 2nd December when you met our Mr. Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 45 of 89 H.P.S. Chawla you wanted to delete from the sale agreement dated 15.08.1989 your commitment to transfer proportionate right, title and interest in the land alongwith the dwelling unit agreed to be sold to us and when this was not agreed to, you threatened to not perform the sale agreement.
It is obvious that you are attempting to resile and repudiate the sale agreement on false and incorrect grounds and for reasons aforesaid. We are ready and willing to perform the sale agreement and it is you, who is now wrongfully seeking to renege on the agreement. We had in fact paid you not Rs. 2 lacs as stated in your letter but total of Rs. 8 lacs payment was made. Even though the payment was not due per the agreement till the Income Tax Dept had cleared the sale we advance you Rs. 6 lacs on the friendly understanding that you were in need of the funds. WE are surprised that you have failed to recognize this in your letter under reply.
It is apparent that for reasons best known to you it is you who has been committing breach of our sale agreement and in order to coverup your breaches you are Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 46 of 89 now making false and baseless allegations against us in your letter. Despite repeated assurance the said sale agreement to our nominees for the past three months contrary to the terms of our sale Agreement.
Please note that you purported rescission of the sale Agreement dated 15.9.1989 by you is incorrect, untenable and unlawful and we hereby call upon you to perform the said Agreement and furnish to us a copy of the No Objection Certificate if received by your from the Income Tax Department forthwith. We further call upon you to sign the documents assigning the said sale Agreement to our nominees within five days of the date of receipt of this letter. In the event of your failing to perform and fulfill the said sale Agreement and failing to executed the assignment document as aforesaid within 5 days of the receipt hereof, you shall be liable for all losses and damage that may be incurred by us and all the costs and consequences thereof. This is without prejudice to our right to seek specific performance of the said sale Agreement dated 15.9.89.
Yours sincerely, Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 47 of 89 For EARL CHAWLA & CO. (P) LIMITED.
Director Mr. U.N. Marwah R.N. Marwah & Co.
80, Janpath, New Delhi.
57. It is the case of the plaintiff that till the time of sending this letter to Lt Col. S.J. Chaudhri (Defendant), plaintiff no. 2 did not receive the approval/NOC either from Income Tax department or from the defendant. Ld counsel for plaintiff had laid emphasis on the point that defendant did not supply the copy of the approval to the plaintiff no. 2. The careful reading of the clause 2 (ii) of the agreement Ex PW1/1 shows that payment was to be made within fifteen days from the date of receiving of NOC from the Income Tax Department. During the cross examination of PW-1, it has come that approval was received by the plaintiffs either in late 1989 or in early 1990's and nowhere in the agreement, it is mentioned that defendant was bound to intimate the plaintiff with respect to the receiving of approval or to raise demand on receiving of approval. Per contra, it is recorded that following payment shall be made by Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 48 of 89 the purchaser.
58. (ii) "Rs. 17 Lacs within fifteen days of receiving of approval from Income Tax department."
59. It was the duty of the plaintiff no. 1/plaintiff no. 2 to disclose in the plaint as well as in the evidence that on which specific date, NOC was received by the plaintiff no. 2, however, this date is nowhere mentioned. It is admitted by PW-1 during cross examination that except for this letter dated 02.01.1989, Ex PW1/7, no other letter was written by plaintiffs to the defendant for completing the transaction or making of payment or tendering the amount. As per agreement, only Rs. 2,00,000/- were paid as the plaintiff has relied upon Ex PW1/1, agreement to sell in respect of E-1, however, in this reply Ex PW1/7, it is mentioned that total payment of Rs. 8,00,000/- was already made and Rs. 6,00,000/- were advanced on the friendly understanding to the defendant as he was in the need of funds. The contents of this reply are in contradistinction with the contents of agreement to sell Ex PW1/1 with respect to payment already made. It is nowhere mentioned in this letter that plaintiff no. 2 was ready to pay Rs. 11,00,000/- to Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 49 of 89 the defendant as is clear from the contents of this letter.
60. It is worthwhile to note here that though in this letter, it is stated that Rs. 6,00,000/- was advanced on the friendly understanding as defendant was in the need of fund but it is mentioned in the para no. 8 (f) of the plaint that:-
" It was agreed between the plaintiffs and the defendant that the sum of Rs. 6,00,000/ (Rupees six lakhs only) paid by the plaintiff no. 1 pursuant to the aforesaid agreement for sale dated March 27, 1989 in respect of unit "C1" would instead of being refunded to the plaintiff be treated as payment towards the balance payable for the purchase of unit "E 1"."
61. It is interesting to note here that agreement Ex PW1/1 neither contain any term with respect to adjustment of Rs. 6,00,000/- given under the agreement to sell in respect of C-1 nor talks about amount of Rs. 6,00,000/- having been given as loan to the defendant. Whether the amount of Rs. 6,00,000/- paid in respect of separate agreement to sell for unit C-1 could be Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 50 of 89 forfeited by defendant or not is not at all significant here. Had this been the intention of parties, it must have been incorporated as a covenant in Ex PW1/1. Said plea is barred u/s 91 & 92 of Indian Evidence Act. This clearly shows that plaintiff no. 2 was in breach of the terms of agreement by not paying amount of Rs. 17,00,000/- within fifteen days from 02.12.1989 when defendant alleges to have handed over the letter to the plaintiff no. 3 stating that approval has been received or within fifteen days from 21.12.1989 when agreement was terminated or at the most within fifteen days from the actual date when defendant received the said approval from the Income Tax department. PW-1 has clearly stated in his cross examination that no other letter with respect to fulfilling his part of obligation was ever written to the defendant apart from Ex PW1/7 i.e. 02.01.1990. Though, during the cross examination, it is stated by PW-1 that he had requested the defendant to accept the payment but the defendant refused to accept it. This averment has not been proved by plaintiffs. Therefore, in view of discussion made above, it cannot be said that defendant had not entered into agreement to sell dt 15.09.1989 with respect to E-1 with Earl Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 51 of 89 Chawla (Plaintiff No. 2) or that he is not bound by these terms and conditions, however, as far as readiness and willingness is concerned, both are different terminologies. Readiness is financial capacity of the plaintiff to perform the contract and willingness can be determined by evaluating the conduct of the parties. It has not been proved by plaintiff no. 2 that it was willing to perform its part of the contract. Therefore, as far as unit E-1 is concerned, its willingness has already been discussed above. It was plaintiff no. 2 who was in breach of the agreement and not the defendant.
62. As far as readiness of plaintiff with respect to E-1 is concerned, same shall be dealt in issue no. 5 i.e. Whether the plaintiff(s) has been/have been ready or willing to perform or have performed their part of agreement to sell ? OPP.
63. Now coming to the unit B-2, defendant had stated that he had signed the agreement in blank by authorizing his C.A. Mr. U.N. Marwah to fill the name of the purchaser and it was specifically directed that plaintiff no. 3 should not be involved in the transaction/sale as a confirming party. Though, defendant has stated that he has not received any consideration towards this Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 52 of 89 agreement to sell Ex PW1/DA or PW1/3, however, it is a matter of record that amount of Rs. 2,00,000/- was deposited on 15.09.1989 by plaintiffs in the account of the defendant which plaintiff claims to be towards the fulfillment of clause 2 (ii) of the said agreement whereas defendant claims that it was received as outstanding amount under collaboration agreement under which Rs. 10,00,000/- was to be paid and entire money was not paid. As far as collaboration agreement is concerned, plaintiffs have filed receipt which has been admitted by defendant during his cross examination. Defendant has admitted issuance of receipt Ex DW1/1 to Ex DW1/14 of various amounts during 1983 till 1987. He also acknowledged payments mentioned in those receipts to have been received by him. Those receipts are around Rs. 5,50,000/-. There is one more admission in the cross examination of DW-1 raised with respect to receiving of Rs. 3,00,000/- in the middle of 1987 which would roughly come around of Rs. 8,50,000/-, plaintiffs have not shown the remaining payment under the collaboration agreement. However, be the case as it may, same is not relevant. DW-1 in his cross examination has stated that he had inquired Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 53 of 89 from his C.A. Mr. U.N. Marwah with respect to payments in his accounts and C.A. Mr U.N. Marwah responded that one payment of Rs. 2,00,000/- was towards E-1 and another payment of Rs. 2,00,000/- was towards outstanding amount of collaboration agreement. During cross examination of DW-2 Mr U.N. Marwah, he has stated that he is not aware about any transaction which may have taken place between Lt Col S.J. Chaudhri and the plaintiffs. He categorically stated that he was only handed over one cheque amounting to Rs. 2,00,000/- in respect of E-1 meaning thereby, cheque of Rs. 2,00,000/- towards unit B-2 was never handed over to DW-2. Perusal of cross examination of DW-1 reveals that he has admitted having receiving Rs. 4,00,000/- by way of two entries in his account. He has nowhere stated that he was handed over Rs. 2,00,000/- with respect to unit B-2 meaning thereby that defendant had not received any cheque personally. Therefore, it can be presumed that Rs. 2,00,000/- were straightway deposited in the bank account of defendant. The case of the plaintiff as mentioned in para no. 9 of the plaint is that "unit B2 was purchased for amount of Rs.
Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 54 of 89
45,23,200/ and plaintiff no. 3 desired that he be
given time of fifteen days to nominate the
purchaser in whose name the agreement for sale was proposed to be drawn, however, defendant stated that he was in urgent need of money which was payable at the time of signing the agreement of sale and he would immediately sign the agreement for sale with purchaser's name blank against receipt of Rs. 2,00,000/ from plaintiff no. 3 and also signed form 37I complete in all respects with purchaser's name blank to Mr. U.N. Marwah who would fill in the purchaser name and would deliver the form 37I to the Income Tax authorities as soon as plaintiff no. 3 made the nomination."
64. It is further stated in para no. 9 (B) of the plaint that "Plaintiff no. 3 agreed to this procedure and accordingly the agreement to sell dated 15.09.1989 was drawn up for the sale of unit B2 for total consideration of Rs. 45,23,200/ with the purchaser name left in blank against payment of Rs.
2,00,000/, otherwise signed in all respects. It is further stated that form 37 (I) was signed with the purchaser name in blank by defendant and was Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 55 of 89 delivered to Mr. U.N. Marwah. Plaintiff no. 3 was authorized to nominate and fill in the name of the purchaser in the agreement to sell. Plaintiff no. 3 thereafter informed the defendant that he proposed the name of Gautam Thapar as purchaser of the unit B2. Defendant, however, stated that he had personal enmity with Gautam Thapar and with a purview to prevent any such dispute, defendant took back the form 37 (I) from Mr U.N. Marwah.
Thereafter, plaintiff no. 3 told the defendant that he would nominate plaintiff no. 1 as purchaser and that subsequently defendant may join the plaintiff no. 3 entering into fresh transaction with nominated purchaser acceptable to the defendant. Defendant initially agreed to the suggestion and plaintiff no. 3 accordingly filled in the name of the plaintiff no. 1 as a purchaser and requested the defendant to restore original form 37 (I) or to issue fresh form but the defendant declined."
65. It is argued that in view of the defendant's refusal to furnish form 37 (I) dully signed by him, approval could not be taken and, Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 56 of 89 therefore, defendant is in the breach of his obligation and, therefore, plaintiff no. 1 is entitled to specific performance.
66. On the other hand, defendant had categorically stated that he had never authorized plaintiff no. 3 i.e. H.P.S. Chawla to nominate the purchaser on his behalf. It is categorically stated that he has authorized his C.A. Mr. U.N. Marwah to fill in the name of the purchaser. He had stated that he never signed the agreement on 15.09.1989 and he had signed the same much before with the date left blank and name of the purchase left blank. He has also stated that he had never agreed for plaintiff no. 1 to become the purchaser of unit B-2. DW-2 Mr. U.N. Marwah has also filed his affidavit in evidence.
67. In para no. 7 to 10 of his affidavit of evidence, it is mentioned that:-
"That the second agreement to sell in respect of Flat no. B2 to be constructed at 20A, Friends Colony, New Delhi, which was undated, without name of a purchaser signed by Plaintiff No. 3 as Director of Plaintiff No. 1 and the Defendant, unwitnessed, alongwith Form No. 37I Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 57 of 89 in blank, signed by the Defendant were retained in my custody.
" That the Plaintiff No. 3 on the pretext of showing the said agreement to a prospective purchaser, who Plaintiff No. 3 named as Mr. Gautam Thapar of "Thapar Group of Industries"
took delivery of only the agreement in respect of Flat No. B2 which I have in good faith. The said agreement was handed over to Plaintiff No. 3 upon the understanding that after satisfying the prospective purchaser, the Plaintiff No. 3 would return the same to me, which regrettably was not returned.
" I conveyed this information to the Defendant as also that the original sets for Form No. 37I in respect of the said Flat No. B2 had been retained by me in order to avoid any misuse of the agreement to sell which had been taken by Plaintiff No. 3 from me.
"Subsequently, the Defendant came to my office and to be fair to the Defendant, I Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 58 of 89 returned the Form 37I explaining to him the reasons for my inability to return the original Agreement to him which have been set out above.
68. DW-2 Mr. U.N. Marwah had supported the version of DW- 1/defendant. No question was put to DW-2 Mr. U.N. Marwah with respect to para no. 7 or para no. 8 of his affidavit. On the contrary, during the cross examination of PW-1 ( Plaintiff no. 3 in the present case) a new story emerged in the cross examination of PW-1 dated 19.05.2003. PW-1 during his cross examination stated that "Original sale agreement alongwith original form 37 (I) of Income Tax was left by defendant Lt Col S.J. Chaudhri with his C.A. Mr. U.N. Marwah to be processed with the Income Tax authorities. One original of the sale agreement and photocopy of form 37 (I) was made. The original documents were never left with us by the defendant but with C.A."
69. It is further stated during cross examination that to the best of his recollection, two original agreement for unit B-2 were signed and they both were on stamp paper. He denied the suggestion that Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 59 of 89 there is only one agreement on stamp paper of unit B-2. It is worthwhile to note here that this stand was never taken by the plaintiffs at the time of filing of the suit and is nowhere mentioned in the plaint. The plaint simply stated that H.P.S. Chawla was nominated to fill the name of the purchaser. Plaint is silent with respect to execution of two agreement to sell out of which one was handed over to H.P.S. Chawla. DW-2 Mr. U.N. Marwah had clearly stated that agreement to sell for B-2 was taken away by the plaintiff no. 3 H.P.S. Chawla on the pretext of showing it to prospective buyer and was never returned back. Same is also evident from this version of the plaintiff which clearly shows falsity in his testimony, as being beyond the pleadings and cannot be considered. It is categorically stated by defendant that plaintiff no. 3 was never authorized to nominate the purchaser and the agreement was duly signed but left blank with respect to date and name of the purchaser and it was left with Mr. U.N. Marwah as defendant was permanent resident of Dalhousie and he has given the authority to Mr. U.N. Marwah to fill in the name of the purchaser and not to the plaintiff no. 3. It is not explained by Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 60 of 89 plaintiff as to how he came in the possession of the agreement to sell and it is straightway mentioned in the plaint that plaintiff no. 3 filled the name of plaintiff no. 1. The discussion made above clearly shows that agreement was left in blank with respect to name of the purchaser and date by defendant with his C.A. Mr. U.N. Marwah which was taken by the plaintiff no. 3 from his custody and was never returned back. It is proved that defendant never intended to enter into any agreement to sell with any of the plaintiffs in respect of unit B-2 and name of plaintiff no. 1 was filled up by plaintiff no. 3 without any authority. The amount of Rs. 2 Lacs was deposited in the account of defendant straightway without taking his consent which cannot be taken an amount of consideration for purchase of unit B-2. Hence, issue no. 3 & 4 with respect to unit no. B-2 is decided in favour of the defendant and against the plaintiffs. Defendant was never bound by terms and conditions of the agreement filled in the name of plaintiff no. 1. Therefore, it is clarified that no readiness or willingness is required to be discussed for unit B-2.
70. Issue No. 5. Whether the plaintiff(s) has been/have been Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 61 of 89 ready or willing to perform or have performed their part of agreement to sell ? OPP.
71. Ld counsel for parties have relied upon several judgments in respect of readiness and willingness and they are taken up one by one. Before taking them individually, it is stated that Hon'ble Supreme Court and Hon'ble High Court of Delhi in numerous judgments has held that while granting the relief of specific performance, the conduct of the parties has to be properly scrutinized. There is no doubt about this ratio and same is reiterated in all the judgments relied upon by both the counsels for the parties.
72. Ld counsel for plaintiffs have relied upon Sukhbir Singh Vs. Brij Pal Singh (1997) 2 SCC 200 and Sant Lal Vs. Shayam Dhawan AIR 1986 Delhi 275 in order to state that it is not incumbent upon the plaintiff to establish that vendee should have ready cash if it is proved that he had ability to perform and pay the sale consideration.
73. Ld counsel for the plaintiff had further gone to the extent of saying that it is not necessary that the entire amount of Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 62 of 89 consideration should be kept ready and plaintiff must file a proof in this regard. It would be sufficient to show that vendee could arrange such amount for payment of consideration at the appropriate stage. In this regard, he has relied upon Azhar Sultana Vs. B. Rajamani AIR 2009 SC 2157 and Swarnam Ramachandran Vs. Aravacode Chakungal Jayapalan (2004) 8 SCC 689. He has further argued that it is not essential for the plaintiff to actually tender money to the defendant or deposit the money in the court and has relied upon M/s Ansal Properties & Industrial Pvt Ltd Vs. Rajinder Singh ILR (1990) I Delhi 105.
74. These judgments are dealt with one by one. As far as Sukhbir Singh (Supra) is concerned, in that case the facts were such that respondent/vendee attended Sub-Registrar office to have sale deed executed and waited for the petitioner to attend the office of the Sub-Registrar and it was taken to be a positive fact to prove that defendant had necessary funds to pass on consideration. In this background, it was held in the aforesaid judgment that it is not necessary that vendee should have ready cash.
Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 63 of 89
75. The facts of the present case are entirely different from the aforesaid case. In the present case, no overt act on the part of plaintiff has been proved in order to show that any effort was made by it/him by which court could presume having capacity to pay the consideration amount. Therefore, this judgment is not applicable to the case in hand.
76. It is also worthwhile to put here that judgments where facts are not similar can not be taken into consideration. Reliance is placed upon :- Padma Sundara Rao & Ors Vs. State of Tamil Nadu & Ors (2002) 3 SCC 533 wherein it was held that: "Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, a it is to be remembered that judicial utterances are made in the setting of the facts of a particular case."
Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 64 of 89
77. As far as, Sant Lal (Supra) is concerned, in that case, plaintiff had brought a sum of Rs. 1,60,000/- in the court and was ready to pay to the defendant. It was also proved that amounts were lying in the form of deposit in the firm and in view of these facts it was decided that only ability to pay has to be proved and it is not to be shown that actual cash is ready or not. The ratio of this case is not disputed. Though, it is reiterated that readiness and willingness of the party to perform obligation can only be adjudicated from the surroundings facts and circumstances of the case. Similar is reasoning with respect to judgment Swarnam Ramachandran (Supra), though ratio is not disputed. Judgment is strictly not applicable as it was on the issue of time being the essence of the contract or not which was held to be depending upon the facts.
78. Similarly in Azhar Sultana (Supra) it was contended by the counsel for the appellant that it is not necessary to prove that she had enough liquid cash and this argument was accepted by the Hon'ble Supreme Court in a passing reference. There is no denial to the fact that in case the plaintiff is able to show his ability to Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 65 of 89 perform his readiness is proved, however, the manner in which the readiness is proved depends upon peculiar facts of each and every case.
79. Therefore, as regard the aforesaid judgment relied by counsel for plaintiff, the only proposition which comes forth is that in case vendee/plaintiff is able to prove that plaintiff had the capacity to arrange the funds, the readiness to perform the contract would be proved. This ratio is not disputed. As far as tendering the money to the defendant or depositing the same in the court concerned, it is again a matter of fact wherein it has to be considered whether the tendering nor non-tendering of money makes any difference or not. The only ground that the money was not tendered to the defendant or not deposited in the court is not a sole ground to establish readiness of the party to perform.
80. As against this judgment, learned Sr. Advocate for the defendant has also relied upon certain judgments. In these judgments, Ld Sr Advocate for the defendant has stated that This proposition is not disputed as is held in various cases. However, way of proving the readiness and willingness is the same as has Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 66 of 89 been referred to in various judgments relied upon by counsel for plaintiff as well, meaning thereby, in case the plaintiff is able to show to the court that plaintiff was able to generate funds for paying the consideration to the defendant at the time of executing agreement to sell or any time thereafter, it would be sufficient to assume that he was ready to perform the contract. It is not necessary to prove each and every year accounts or the ready cash with the plaintiffs to prove readiness and willingness. None of the judgments relied upon by Ld Sr. Advocate for defendant suggests so. Ld Sr. Advocate for defendant has also relied upon I.S. Sikandar Vs. K. Subramani & Ors (2013) 15 SCC 27, it was held that without seeking a declaratory relief to declare the termination notice as null and void decree of specific performance is not maintainable.
81. Ld Sr. Advocate for the defendant has argued that in this case also termination notice was given which was dated 21.12.1989 and, therefore, suit is not maintainable without seeking relief of declaration with respect to that notice. In the aforesaid judgment facts were such that two legal notices were issued by Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 67 of 89 defendant to pay sale consideration demanding the consideration which were dully replied by plaintiff and despite that plaintiff not did not perform his part of the contract and the agreement to sell was terminated. In this background, it was held that since notice terminating the agreement has not been challenged specific performance cannot be granted but in this case the letter dated 02.12.1989 allegedly handed over by defendant to plaintiff is denied and, therefore, letter dated 21.12.1989 straightway terminating the agreement is not required to be challenged and no declaration is required to be sought.
82. In N.P. Thirugnanam (Supra) it was held that plaintiff has to prove that he had sufficient funds from the date of the execution of the agreement till the date of passing of decree. It was held in that judgment that:-
"It is settled law the remedy for specific performance is an equitable remedy and is in the discretion of the court, which discretion requires to be exercised according to settled principles of law and not arbitrarily as adumbrated under Section 20 of the Specific Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 68 of 89 Relief Act 1963 (for short, 'the Act'). Under Section 20, the court is not bound to grant the relief just because there was valid agreement of sale. Section 16 (c) of the Act envisages that plaintiff must plead and prove that he had performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than those terms the performance of which has been prevented or waived by the defendant. The continuous readiness and willingness on the part of the plaintiff is a condition precedent to grant the relief of specific performance. This circumstance is material and relevant and is required to be considered by the court while granting or refusing to grant the relief. If the plaintiff fails to either aver or prove the same, he must fail. To adjudge whether the plaintiff is ready and willing to perform his part of the contract, the court must take into consideration the conduct of the plaintiff prior and subsequent to Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 69 of 89 the filing of the suit alongwith other attending circumstances. The amount of consideration which he has to pay to the defendant must of necessity be proved to be available. Right from the date of the execution till date of the decree he must prove that he is ready and has always been willing to perform his part of the conduct. As stated, the factum of his readiness and willingness to perform his part of the contract is to be adjudged with reference to the conduct of the party and the attending circumstances. The court may infer from the facts and circumstances whether the plaintiff was ready and was always ready and willing to perform his part of contract."
83. In this case also which is relied upon by defendant, the ratio which comes forth is that the conduct of the parties is to be adjudged for assessing readiness and willingness.
84. Though, this issue is with respect to readiness and willingness of the plaintiff, however, willingness has already been dealt with in issue no. 3 & 4 and in this issue, readiness of the Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 70 of 89 plaintiff in respect of E-1 only has to be determined. By readiness, we mean the financial capacity of the plaintiff to pay. In order to prove readiness, plaintiff has examined PW-2 R.K. Indora from ROC. He was also examined as PW-3. He produced the balance sheet for the period ending year of 31.03.1990, 31.03.1991, 31.03.2000 and 31.03.2001 in respect of Vantage Construction and he also brought the balance sheet of Earl Chawla i.e. plaintiff no. 2 for the year ending 31.03.1990, 31.03.1991, 31.03.2001. He proved the entries of filing of balance sheet of both the companies for the year ending 31.03.1990, 31.03.1991 with ROC. PW-4 Sanjay Issar, C.A. partner of Mittal & Associates was examined who proved the balance sheet for the year ending 31.03.2001, 31.03.2000 of Vantage Construction, also of Earl Chawla for the same time period. PW-6 Sunil Jain, partner of Kumar Chopra & Associates was examined and he proved the balance sheet of plaintiff no. 1 and 2 for the ending year 31.03.1990 which are Ex PW1/11 for the plaintiff no. 1 and Ex PW1/15 for the plaintiff no. 2. Since the filing of these entries before the ROC have been proved by plaintiff no. 2 & 3 by Sh R.K. Indora who has exhibited the Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 71 of 89 entries and these balance sheets have also been proved by concerned C.A. There is no reason to disbelieve that these balance sheets and accounts have been prepared in the regular course of business.
85. Witnesses were duly cross examined by opposite counsel who had failed to rebut the legal presumption with respect to preparation of these books of account prepared during the regular course of business.
86. As far as financial capacity of plaintiff no. 1 and 2 are concerned, we need not go into financial capacity of plaintiff no. 1 with respect to unit B-2 as it has been decided in the preceding issue that defendant had never authorized plaintiff no. 3 to fill the name of the plaintiff no. 1 and there was no agreement to sell between plaintiff no. 1 and defendant in respect of unit B-2.
87. As far as balance sheets of Earl Chawla (Plaintiff No. 2) are concerned, balance sheet exhibited PW1/15 shows that on 31.03.1990 i.e. date, year in which the transaction took place, cash in hand and balance with scheduled banks was Rs. 296/- and loan and advances were Rs. 92,777/-. Though, it has been argued by Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 72 of 89 Ld Sr. Advocate for defendant that plaintiff is bound to show his financial capacity to pay its capacity from the date entering into agreement to sell till the date of decree, however, Ld counsel for defendant put forth the judgments to the effect that in order to show financial capacity, it is not necessary to shows that plaintiff should carry the funds or should have liquid cash. It is required only to show from the documents that plaintiff was in a position to arrange the funds in order to pay consideration mentioned in the agreement and that too only the amount which had become due. It is pertinent to mention here that plaintiff no. 1 and plaintiff no. 2 both are the companies in which H.P.S. Chawla (Plaintiff no. 3) was the director and it was plaintiff no. 3 who was dealing with the defendant, therefore, it has also come during the cross examination of DW-1 that cheque of Rs. 2,00,000/- in respect of transaction towards unit E-1 have been paid by the Vantage Construction i.e. plaintiff no. 1. Therefore, being sister concern, account/balance sheet of Vantage Construction can also be considered for assessing the financial capacity of plaintiff no. 2 to pay the consideration amount in respect of unit E-1. Ex PW1/11 is Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 73 of 89 balance sheet of Vantage Construction i.e. plaintiff no. 1 for year ending 31.03.1990 i.e. relevant year when the transaction took place. As per this balance sheet, cash in hand and the balance with scheduled banks in current account was around Rs. 15,00,000/-. There was approximately amount of Rs. 14,00,000/- in short term deposit with scheduled banks but there were loan and advances to the extent of Rs. 1,47,87,515/-. The agreement to sell in respect of E-1 was executed for Rs. 54,25,200/- and next payment which was to be made was of Rs. 17,00,000/- only. Another balance sheet of 31.03.2001 has been placed on record wherein there is cash in hand of Rs. 44,393/- and loans and advances for an amount of Rs. 9,75,470/-. Loss of Rs. 40,58,443/- is reflected n balance sheet of plaintiff no. 2 in the year 2001 i.e. Ex PW1/2 meaning thereby that company was not in a position to pay the amount in year 2001. As far as plaintiff no. 1 is concerned, in balance sheet of year 2001 i.e. Ex PW2/1, plantiff no. 1 was only having cash of Rs. 7918, balance with scheduled banks as Rs. 16,266/- and as contrary to deposit in bank for amounts of Rs. 14,00,000/- in year 1990, no such deposits were Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 74 of 89 found in year 2001. Other unsecured loan of Rs. 13,05,067/- were shown for which no evidence has been led to show from whom they were to be recovered. The payments were to be made in installments at different point of time, therefore, it can be said that plaintiffs had the financial capacity to arrange the payments for unit E-1 initially, though plaintiff no. 2 did not have sufficient funds, however, keeping in view the balance sheet for the year 31.03.1990 Ex PW1/11 of plaintiff no. 1, it is opined that the plaintiff had the financial capacity to meet with the requirements of paying consideration at the time of filing the suit. No document has been produced on record to show that as on date what is the financial capacity of the plaintiff which becomes pertinent in view of the fact that the plaintiff no. 2 also had suffered losses in year 2001 and further keeping in view the financial capacity of plaintiff no. 1 as discussed above. Therefore, keeping in view the totality of facts & circumstances, it cannot be said that plaintiff had the financial capacity to pay.
88. Though, plaintiff has been able to show his financial capacity to pay the consideration amount with respect to unit E-1 at the time Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 75 of 89 of execution of agreement to sell in year 1989, however, it has not been able to show the same in subsequent years. Nevertheless, it has already been discussed in the preceding issue that it was the plaintiff who was in default of the breach of the contract, therefore, did not have willingness to perform the contract. Even though, it is presumed that plaintiff no. 2 had the financial capacity to pay but in the absence of willingness, relief of specific performance cannot be granted. In this background, it is necessary to discuss Section 20 of the Specific Relief Act which provides herein as under:-
"Discretion as to decreeing specific performance: (1) The jurisdiction to decree specific performance is discretionary, and the court is not bound to grant such relief merely because it is lawful to do so; but the discretion of the court is not arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a court of appeal.
(2) The following are cases in which the court may properly exercise discretion not to decree specific performance: Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 76 of 89
(a) where the terms of the contract or the conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was entered into are such that the contract, though not voidable, gives the plaintiff an unfair advantage over the defendant;
or
(b) where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its nonperformance would involve no such hardship on the plaintiff;
or
(c) where the defendant entered into the
contract under circumstances which though not
rendering the contract voidable, makes its
inequitable to enforce specific performance.
(3) The court may properly exercise discretion to decree specific performance in any case where the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of specific performance.
Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 77 of 89
(4) The court shall not refuse to any party specific performance of a contract merely on the ground that the contract is not enforceable at the instance of the party.
89. Section 20 of Specific Relief Act grant discretion to the courts in granting the relief of specific performance but the discretion should not be arbitrary and it should be guided by judicial principles. The scope of Section 20 has been discussed in Ved prakash Kharbanda Vs. Vimal Bindal 198 (2013) DLT 555 wherein it is held that:-
" 20.1 The specific performance is an equitable relief. Section 20 of the Specific Relief Act, 1963 preserves judicial discretion. The court is not bound to grant specific relief merely because it is lawful to do so. The relief sought under Section 20 is not automatic as the court is required to see the totality of the circumstances which are to be assessed by the court in the light of the facts and circumstances of each case.
Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 78 of 89
20.2 The specific performance is usually
granted where substantial sale consideration
has been paid and the possession of the
property has been delivered to the purchaser.
20.3 In the event of any delay/inaction
on the part of the purchaser, it would be
inequitable to give the relief of specific
performance to the purchaser. The rationale
behind refusal of the court to grant the
specific performance where long time has gone by is that the prices of the property may have increased many times with the passage of time and it would be injustice to a person who has not received the sale consideration within the time stipulated in the agreement.
20.4 If under the terms of contract, the
plaintiff gets an unfair advantage over the
defendant, the court may not exercise its
discretion in favour of the plaintiff. So also specific relief may not be granted if the defendant would be put to undue hardship which Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 79 of 89 he did not foresee at the time of agreement. If it is inequitable to grant specific relief, then also the court would desist from granting a decree to the plaintiff.
20.5 If the sale consideration fixed
under the agreement is given to the seller
years after the agreement, great prejudice may be caused to a seller who may have intended to purchase another property with the sale consideration.
20.6 While a purchaser cannot be made to suffer because of court delays, one cannot lose sight of the fact that he retained the sale consideration with him and the seller could not use the money when he wanted. The court also has to consider that whereas the value of the sale consideration would have reduced due to inflation. These factors have to be taken into consideration by the court.
20.7 The party who seeks specific performance being an equitable relief, must Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 80 of 89 come to the court with clean hands. In other words, the party who makes false allegations does not come with clean hands and is not entitled to the equitable relief.
20.8 While exercising the discretion, the
court would take into consideration the
circumstances of the case, the conduct of
parties, and the motive behind the litigation.
20.9 The relevant judgments relating to Section 20 of the Specific Relief Act, 1963 are as under: 20.9.1 In K.S. Vidyanadam Vs Vairavan (1997) 3 SCC 1, the Supreme Court held that in case of delay/inaction on the part of the plaintiff for two and a half years, it would be inequitable to give a relief of specific performance to the plaintiff. The finding of the Supreme Court is reproduced hereunder: "13. In the case before us, it is not mere delay. It is a case of total inaction on the part of the plaintiff for 2 ½ years in Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 81 of 89 clear violation of the terms of agreement which required him to pay the balance, purchase the stamp papers and then ask for execution of sale deed within six months. Further, the delay is coupled with substantial rise in prices according to the defendants, three times between the date of agreement and the date of suit notice. The delay has brought about a situation where it would be inequitable to give the relief of specific performance to the plaintiff."
20.9.2 In Sardamani Kandappan V. S. Rajalakshi, V (2011) SLT 50=III (2011) CLT 57 (SC)=(2011) 12 SCC 18, the Supreme Court declined to grant the discretionary relief of specific performance to the purchaser who had made payment of nominal advance to the seller.
The finding of the Supreme Court is reproduced hereunder:
"36..... The third quarter of the twentieth century saw a very; slow but steady Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 82 of 89 increase in prices. But a drastic change occurred from the beginning of the last quarter of the twentieth century. There has been a galloping inflation and prices of immovable properties have increased steeply, by leaps and bounds. Market values of properties are no longer stable or steady. WE can take judicial notice of the comparative purchase power of a rupee in the year 1975 and now, as also the steep increase in the value of the immovable properties between then and now. It is no exaggeration to say that properties in cities, worth a lakh or so in or about 1975 to 1980, may cost a crore or more now.
37. The reality arising from this economic change cannot continue to be ignored in deciding cases relating to specific performance. The steep increase in prices is a circumstance which makes it inequitable to grant the relief of specific performance where the purchase does not take steps to complete Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 83 of 89 the sale within the agreed period, and the vendor has not been responsible for any delay or nonperformance. A purchaser can no longer take shelter under the principle that time is not of essence in performance of contracts relating to immovable property, to cover his delays, laches, breaches and nonreadiness. The precedents from an era, when high inflation was unknown, holding that time is not the essence of the contract in regard to immovable properties, may no longer apply, not because the principle laid down therein is unsound or erroneous, but the circumstances that existed when the said principle was evolved, no longer exist. In these days of galloping increases in prices of immovable properties, to hold that a vendor who took an earnest money of say about 10 % of the sale price and agreed for three months or four months as the period for performance, did not intend that time should be the essence, will be a cruel joke on him, and Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 84 of 89 will result in injustice. Adding to the misery is the delay in disposal of cases relating to specific performance, as suits and appeals therefrom routinely take two to three decades to attain finality. As a result, an owner agreeing to sell a property for rupees one lakh and received rupees ten thousand as advance may be required to execute a sale deed a quarter century later by receiving the remaining rupees ninety thousand, when the property value has risen to a crore of rupees.
43. Till the issue is considered in an appropriate case, we can only reiterate what has been suggested in K.S. Vidyanadam, [(1997)3 SCC1]:
(i) The courts, while exercising discretion in suits for specific performance, should bear in mind that when the parties prescribe a time/period for taking certain steps or for completion of the transaction, that must have some significance and therefore Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 85 of 89 time/period prescribed cannot be ignored.
(ii) The courts will apply greater
scrutiny and strictness when considering
whether the purchaser was 'ready and willing' to perform his part of the contract.
(iii) Every suit for specific performance need not be decreed merely because it is filed within the period of limitation by ignoring the timelimits stipulated in the agreement. The courts will also 'frown' upon suits which are not filed immediately after the breach/refusal.
The fact that limitation is three years does not mean that a purchaser can wait for 1 or 2 years to file a suit and obtain specific performance. The threeyear period is intended to assist the purchasers in special cases, as for example, where the major part of the consideration has been paid to the vendor and possession has been delivered in part performance, where equity shifts in favour of the purchaser."
Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 86 of 89
90. In view of this judgment and on the basis of the facts and circumstances already discussed in the preceding issue, it has to be seen whether the plaintiffs are entitled to specific performance with respect to unit E-1. It is further noted here that only a meager amount of Rs. 2,00,000/- out of total consideration of Rs. 54,25,200/- has been paid. It has been held in preceding issues that it was plaintiff no. 2 who was in the breach of agreement. Even if for the sake for presuming, it is stated that plaintiff was not at fault, it is to be kept in mind that suit was filed in September 1992 whereas agreement was terminated in December 1989. Ld counsel for plaintiffs have relied upon judgments i.e. Satyanarayana Vs. Yellowji Rao AIR 1965 SC 1405 and Vuppalapati Butchiraju Vs. Rajah Sri Ranga Satyanarayana AIR 1967 AP 69 to say that mere delay extending till limitation is not a sufficient ground for refusal. The facts of the case of both aforesaid judgments are entirely different from the facts of the present one. As far as refusing the relief on this sole ground is concerned, ratio of both these judgments is not disputed, however, applying the ratio to the peculiar facts of the present case, it is Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 87 of 89 seen that immediately after termination of the agreement after few months, defendant herein filed a suit in year 1990 against the plaintiff seeking declaration in respect the said agreements to be declared null and void and even after filing of that suit, the present suit for specific performance did not come up either as a counter claim or as a cross suit at that very time. To the utter surprise, it was filed almost two years after the date of filing of the suit by defendant. This conduct of the plaintiffs cannot be ignored and definitely this delay in filing the suit for specific performance has to be counted to frame an opinion with respect to willingness of the plaintiff. There is a considerable delay in filing of present suit. Both the judgments relied upon by Ld counsel for plaintiffs as aforesaid are not applicable. Hence, this issue is decided against the plaintiffs and in favour of the defendant.
91. Issue No. (vi) If this suit is to be decreed which of the plaintiff is entitled to specific performance? OPP and Issue No. (vii) if the suit for specific performance is decreed what direction should be made to complete the sale ? OPP.
92. Since issue no. 3, 4 & 5 are decided against plaintiffs, both Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 88 of 89 these issues are decided against plaintiffs and in favour of defendant.
Relief.
93. Suit of the plaintiffs is dismissed. No order as to costs.
94. Decree sheet be prepared accordingly.
95. File be consigned to Record Room.
Digitally signed by
VANDANA VANDANA JAIN
JAIN Date: 2019.05.01
15:17:01 +0530
Announced in the open ( VANDANA JAIN)
court on 16.04.2019 Additional District Judge-07/SE
Saket Courts, New Delhi.
Vantage Construction Pvt Ltd Vs. Lt Col. Suraj Jit Chaudhri Page 89 of 89