Delhi District Court
Sh. Tilak Raj Sharma vs M/S Vxl Realtors Pvt. Ltd on 15 October, 2019
In the Court of Ms. Vineeta Goyal: Additional District Judge
(South District) Saket Court Complex, New Delhi.
Suit No. 5882/16
CNR No. DLST010001492013
In the matter of :
1. Sh. Tilak Raj Sharma
2. Ms. Sunita Sharma
W/o Sh. Tilak Raj Sharma
Both R/o C194, Gali no. 5
Prem Nagar, Najafgarh
New Delhi ......Plaintiffs
VERSUS
1. M/s VXL Realtors Pvt. Ltd.
2. Sh. Harpreet Singh Thakkar
Managing Director of defendant no. 1
Both having office at:
22B, 2nd Floor,
Himalaya House
23 Kasturba Gandhi Marg
New Delhi110001
3. Sh. Vineet Kumar Saxena
Director, IR Real Tech Pvt. Ltd.
C61/III, Janta Garden, Pandav Nagar
Delhi110092 .....Defendants
Date of institution : 22.05.2013
Reserved for Judgment : 23.09.2019
Date of decision : 15.10.2019
CS No: 5882/2016 Page no. 1 of 12
Tilak Raj Sharma v. M/s VXL Realtors Pvt. Ltd. & ors
Appearance : Sh. Shashi Pawar, Counsel for plaintiff.
Sh. Deepak Kumar Singh, Counsel for defendants.
SUIT FOR RECOVERY
JUDGMENT
1. This is a suit for recovery of ₹5,46,498/ (Rupees Five Lacs Forty Six Thousand Four Hundred Ninety Eight only) filed by the plaintiff against the defendants.
2. Facts as epitomized in the plaint are that plaintiffs being husband and wife are permanent residents of C194, Gali no. 5, Prem Nagar, Najafgarh, New Delhi. The defendants claimed that their company is promoted by people with rich experience in real estate development, architecture, international business, marketing and distribution. The plaintiffs were in search of a new dwelling unit and were informed by one family friend about the project "French Arcade, Kaushambi, Ghaziabad, U.P." being developed by defendants. The defendant no. 3 authorized agent of defendant no. 1 took the plaintiff and his friend to the site and apprised the progress of construction work. The plaintiff was assured that aforesaid project is approved and clear in all respects and all necessary documents/ assistance for acquiring housing finance will be provided to the plaintiff, if a unit is booked by paying the registration money.
2.1. It is further averred that defendants made the plaintiffs to fill one application form and requested the plaintiffs to deposit 10% of basic cost at the time of submission of application form. The plaintiffs CS No: 5882/2016 Page no. 2 of 12 Tilak Raj Sharma v. M/s VXL Realtors Pvt. Ltd. & ors accordingly remitted a sum of ₹4,57,320/ (vide cheque no. 110289 dt. 01.04.2012 for ₹2,00,000/ and ₹ 2,57,320/ vide cheque no. 110290 dt. 12.04.2012 both drawn on Axis Bank Ltd., Najafgarh branch, New Delhi) in favour of defendant no. 1 as registration money. The application form alongwith payment of registration money was given to defendant no. 3, who passed on the same to defendant no. 2.
2.2. It is further averred that defendants informed the plaintiffs that one dwelling unit FA/509, French Arcade, Kaushambi, would be allotted very shortly and Flat buyer agreement/ allottment letter would have to be signed by the plaintiff in due course of time. The plaintiffs were in constant touch with the defendants to execute the said documents, but no avail.
2.3. It is further averred that plaintiffs were shocked to receive a demand letter dt. 11.04.2012 from the defendants demanding a sum of ₹17,67,210/. The plaintiffs personally visited the defendant company and apprised that the flat buyer agreement/ allotment letter is yet to be executed and therefore sending abovementioned demand letter is arbitrary and malafide. The officials of defendant no. 1 informed the plaintiffs to ignore the said letter and advised to contact First Blue Finance Ltd. i.e. approved financier for home loans for the said project to expedite loan process. Believing, the plaintiffs approached the said Finance Ltd., HDFC Ltd. and also Axis Bank Ltd. for getting home loan, however, in the meantime, the defendant no. 1 issued first reminder dt. 05.05.2012 to the plaintiffs followed by one more demand letter dated 30.05.2012 for ₹20,54,436/. On 10.07.2012, the defendant CS No: 5882/2016 Page no. 3 of 12 Tilak Raj Sharma v. M/s VXL Realtors Pvt. Ltd. & ors no. 1 canceled the allotment of said flat and advised the plaintiffs to collect refund after statutory deductions. On 11.07.2012, the plaintiff no. 1 wrote a letter to the defendant no. 1 requesting to reconsider the cancellation of flat and further sought 45 days more time to get the loan approved from the approved financier of defendant company. The plaintiffs were not able to procure home loan from any of the financial institution/ bank mentioned hereinabove as they had some reservation to finance projects developed by defendant company. The plaintiffs duly informed the defendants about it but the defendants did not take it seriously and shifted the onus on the plaintiff to get the home loan for the flat in question. The plaintiff no. 1 even requested the defendants to refund the earnest/ registration money as the defendants were backing out of their earlier statement, but defendants were evading refund of registration money.
2.4. It is further averred that on 02.11.2012, the defendants issued cancellation letter and forfeited the registration money of ₹4,57,320/ deposited by the plaintiffs. The plaintiff no. 1, upon receipt of cancellation letter, apprised reasons for not getting home loan sanctioned from any of the financial institution/ banks as the project was not as per their approved terms and further requested the defendants to refund earnest money at the earliest. Legal notice dated 23.04.2013 was issued. The defendants failed to respond to the legal notice and failed to refund the amount alongwith interest. The suit is within the period of limitation and the court has jurisdiction. The plaintiff is entitled to ₹5,46,498/ which includes ₹89,178/ interest @18% calculated upto 31.05.2013 from defendants, hence this suit.
CS No: 5882/2016 Page no. 4 of 12 Tilak Raj Sharma v. M/s VXL Realtors Pvt. Ltd. & ors
3. Pursuant to the summons issued, the defendants appeared.
3.1. Joint written statement was filed by defendant no. 1 and 2 inter alia raising preliminary objection that the suit is not maintainable. As per clause 5 and 6 of the Application Form, agreed by the parties, the amount paid to the extent of 10% of basic sale price of the unit shall constitute the earnest money which shall be stand forfeited in case of delay in payments and/or breach of any of the terms and conditions of allotment and also in the event of failure by the intending allottee to sign the flat buyer's agreement/ allotment letter within 30 days of booking. It is further submitted that payment of installments shall be of essence and in case of default, the earnest money would be forfeited. The plaintiffs being rank defaulter in making payment of installments as per payment schedule are not entitled for any relief as prayed by them.
3.2. On merits, the averments of the plaint were denied and the defendant no(s) 1 and 2 submitted that it is the plaintiffs who have chosen to deposit the money as per their capacity. The basic cost of flat was ₹45,73,200/ and accordingly the amount deposited by the plaintiffs is considered as earnest money (10% of basic cost of flat). As the plaintiffs failed to make further payment of installments and shown their inability to make further payment, therefore, the earnest money had already been forfeited as per agreed terms and conditions of application form and allotment of flat and therefore no relief remains. It is also submitted that demand letter sent by the defendants was as per payment schedule. On these grounds, a prayer was made that the CS No: 5882/2016 Page no. 5 of 12 Tilak Raj Sharma v. M/s VXL Realtors Pvt. Ltd. & ors suit filed by the plaintiff deserves dismissal.
3.3. Defendant no. 3 in separate written statement raised preliminary objection that the suit is not maintainable and defendant no. 3 has nothing to do with the present case and he has been implicated as party on the basis of false and frivolous grounds. In para wise reply, the defendant no. 3 denied the averments of the plaint.
4. Replication to written statements filed reaffirming the averments made in the plaint and denying the contents of the written statement.
5. Upon pleadings of parties, following issues have been framed on 26.11.2014:
1. Whether the defendants arbitrarily and with malafide intention canceled the register/booking of flat no. FA/509, French Arcade, and forfeited the registration/ earnest money deposited by the plaintiffs? OPP
2. Whether the plaintiffs defaulted in making payment of installments in terms of the agreement? OPD
3. Whether the plaintiff is entitled to any relief.
Subsequently, the following additional issue was framed pursuant to the order of Hon'ble High Court of Delhi as under:
1. Whether the written statement of the defendants has been filed by an incompetent person? OPP
6. In order to prove its case, plaintiff has stepped in witness box as PW1 and made statement in consonance with the averments made in the plaint. He relied upon several documents viz. Master Data of VXL CS No: 5882/2016 Page no. 6 of 12 Tilak Raj Sharma v. M/s VXL Realtors Pvt. Ltd. & ors Realtors (P) Ltd. Mark A, list of signatories Mark B, application form of plaintiff Ex. P1 (colly), copy of cheques no. 110289 and 110290 Ex. P2 and P3, letter dated 11.04.2012 given by defendant to the plaintiff Ex.
P4 (colly), letter dt. 05.05.2012 given by defendant to the plaintiff Ex. P5, letter dt. 30.05.2012 Ex. P6, letter dt. 11.07.2012 given by the plaintiff to the defendant Ex. P7, legal notice dt. 23.04.2013 Ex. P8, postal receipts Ex. P9 (colly), copy of letter dt. 10.07.2012 given by defendant to the plaintiff Ex. P10. Plaintiffs further got examined PW2 Sh. Sanjeev Kumar, Manager (Operation) from Axis Bank, Noida, Sector18 who produced sanction letter dt. 01.08.2012 bearing approval no. PH_LNPHG_Floating/ 917193/ RACNoidaRAC/1213, issued by Axis Bank, Noida Branch Ex. PW2/A 6.1. To rebut the case of the plaintiff, the defendants got examined Sh. Harpreet Singh, Director of defendant no. 1 as DW1 who made statement in consonance with the contents of the written statement. However, DW1 was only partly crossexamined and subsequently he stopped appearing and did not subject himself to further cross examination.
7. I have heard arguments advanced by Ld. Counsel for plaintiffs and perused the material available on record. My issuewise findings are as under:
Issue no(s). 1 and 2 7.1. Both these issues are being taken up together for appreciation of evidence. Onus to prove issue no. 1 was upon the plaintiffs and onus to CS No: 5882/2016 Page no. 7 of 12 Tilak Raj Sharma v. M/s VXL Realtors Pvt. Ltd. & ors prove issue no. 2 was upon the defendants.
7.2. The plaintiffs allegedly filled an application form Ex. P1 (colly) seeking allotment of residential flat from defendant company. This application does not bear any date and this has a following clause apart from many other clauses:
"5. The amount paid to the extent of 10% of the basic sale price of the unit shall constitute the earnest money which shall stand forfeited in case of delay in payment and /or breach of any of the terms and conditions of allotment as also in the event of the failure by the intending allottee to sign the Flat Buyer Agreement/ Allotment Letter within 30 days of booking."
7.3. The plaintiff thereafter has given two cheques dt. 01.04.2012 for ₹2,00,00/ Ex. P2 and cheque dated 12.04.2012 for ₹2,57,320/ Ex. P3. These together makes total payment of ₹4,57,320/. It is strange to note that defendant no. 1 issued letter dt. 11.04.2012 Ex. P4 i.e. one day prior to the date of cheque acknowledging receipt of ₹4,57,320/ and demanding further amount of ₹17,67,210/ contending that fourth floor roof slab work on the project has started, therefore, payment of the amount has become due, this letter has enclosure dt. 11.04.2012 mentioning payment schedule linked with construction. It is also matter of record that this was followed up by another letter dt. 05.05.2012 Ex. P5 stating that payment is due because fourth floor roof slab was in progress but suddenly on 30.05.2012, another letter Ex. P6 was issued stating that 6 th floor roof slab was in progress, therefore, demanding additional amounts from the plaintiffs. In these facts and circumstances, the defendants claim that since the plaintiffs did not honour the contractual commitment, therefore, the allotment CS No: 5882/2016 Page no. 8 of 12 Tilak Raj Sharma v. M/s VXL Realtors Pvt. Ltd. & ors was canceled and as per agreed / stipulated terms the earnest money was forfeited.
7.4. Per contra, the plaintiffs argued that there was no contract in the form of Flat buyer agreement entered between the parties, therefore, forfeiture of the amount paid is not justified. The case of the plaintiffs is based on the documents and he stepped in the witness box as PW1 and was subjected to crossexamination. He withstood his contentions in crossexamination. The defendants did not lead any evidence in support of the contention that forfeiture has been justified in this case. Perusal of written statement shows that the only justification for forfeiture has been above mentioned clause of the application form Ex. P1. At this point, it is relevant to mention here that the law of forfeiture in consequence to alleged breach of contract by resorting to The Indian Contract Act, 1872 (hereinafter referred to as the Act, 1872) has been laid down by the Constitution Bench of Hon'ble Supreme Court in the case of Fateh Chand v. Bal Krishan Dass AIR 1953 SC 1405. The same was reiterated in Kailash Nath Associates vs. DDA (2015) 4 SCC 136. It is settled that the party seeking forfeiture must show actual loss or damage as a part of pleadings as well as evidence to show the justification. It has been held that the provisions of the Act, 1872 does not confer any benefit but it provides for only reasonable compensation for the loss or the damages. In case, the forfeiture results into penalty, the same cannot be resorted to, even if, it has been provided.
CS No: 5882/2016 Page no. 9 of 12 Tilak Raj Sharma v. M/s VXL Realtors Pvt. Ltd. & ors 7.5. In the present case, the circumstances show that the allotment of the flat happened on 11.04.2012 and within no time upto 30.05.2012 Ex. P6, the defendant company claimed to have constructed number of floors seeking further amounts. The defendant company on 10.07.2012 Ex. P12 issued cancellation letter asking the plaintiffs to collect the refund after statutory deductions. The contention of the plaintiffs that there was no contract entered with till that time has force in itself because signing application form Ex. P1 unilaterally at the time of booking would not create any enforceable penalty clause of compensation unless proper contract of legal binding nature is duly executed. The earnest money under these circumstances cannot be forfeited. In so far as cancellation of booking is concerned, there is admission by the plaintiff that he was organizing loan from various banks and requested defendants to keep the demand in abeyance which the defendants did not accede. The cancellation of allotment has not been proved by the plaintiffs to be malafide. As has already been held, that even if the cancellation of allotment was not malafide yet, the defendants had not justified the forfeiture.
7.6. Issue no. 2 becomes academic because the plaintiffs made part payment but did not make the remaining part of the payment, this issue is decided in favour of the defendants.
7.7. So far as liability of defendants is concerned, it is settled law that a company is a juristic concern. Collectively decisions on behalf of company are taken by Board of Directors of the company and individual director has no power to act on behalf of company of which CS No: 5882/2016 Page no. 10 of 12 Tilak Raj Sharma v. M/s VXL Realtors Pvt. Ltd. & ors he is a director unless there is a specific resolution of the Board of Directors of company to give specific powers to him or her. There is no resolution on record filed by the plaintiff to prove that defendant no(s) 2 and 3 owe liability towards plaintiffs. In the absence of any document reflecting fiduciary or contractual duties towards the plaintiffs, the liability can be fastened only upon defendant no. 1 company not upon the defendant no(s) 2 and 3.
7.8. The plaintiffs are therefore entitled to refund of ₹4,57,320/ together with interest @6% per annum from the date of filing of suit till its realization from defendant no. 1 company only because no liability can be fastened against defendant no(s) 1 and 2.
Additional issue Whether the written statement of the defendants has been filed by an incompetent person? OPP 7.9. The onus to prove this issue was upon the plaintiffs. But by scanning through the entire length and breadth of the documentary evidence as well as deposition of PW1, I do not find even a shred of evidence to show that written statement has been filed by person not competent. In view of this fact that onus was upon the plaintiff to lead such evidence, which they have failed, this issue is decided against the plaintiffs.
Relief
8. In view of my findings given on issue no(s). 1 and 2, the present suit is decreed in favour of the plaintiffs whereby plaintiffs are entitled CS No: 5882/2016 Page no. 11 of 12 Tilak Raj Sharma v. M/s VXL Realtors Pvt. Ltd. & ors to recover a sum of ₹4,57,320/ together with interest @6% per annum from the date of filing of suit till its realization, from the defendant no. 1 company alongwith cost. Decree sheet be prepared accordingly.
File be consigned to record room.
Pronounced in the Open Court on 15.10.2019 (Vineeta Goyal) Additional District Judge South District: Saket: New Delhi CS No: 5882/2016 Page no. 12 of 12 Tilak Raj Sharma v. M/s VXL Realtors Pvt. Ltd. & ors