Karnataka High Court
Smt. Suman S Jain vs Smt. C. Shylaja on 9 January, 2024
Author: P.S.Dinesh Kumar
Bench: P.S.Dinesh Kumar
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NC: 2024:KHC:1546-DB
RFA No. 1864 of 2023
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 9TH DAY OF JANUARY, 2024
PRESENT
THE HON'BLE MR JUSTICE P.S.DINESH KUMAR
AND
THE HON'BLE MR JUSTICE T.G. SHIVASHANKARE GOWDA
REGULAR FIRST APPEAL NO. 1864 OF 2023 (MON)
BETWEEN:
SMT. SUMAN S JAIN
AGED ABOUT 47 YEARS
D/O LATE SRI. J.K. SUKANRAJ
R/AT NO. 157/1, 3RD FLOOR
AKKIPET MAIN ROAD
BENGALURU - 560 053 ...APPELLANT
(BY SRI. NEGLUR ARAVIND, ADV.)
AND:
SMT. C. SHYLAJA
AGED ABOUT 52 YEARS
D/O SRI. CHIKKANNA
R/AT NO. 55/20, 6TH CROSS
SHAKTHIGANAPATHI NAGARA
Digitally signed by BASAVESHWARANAGAR
MALA K N BENGALURU - 560 079 ...RESPONDENT
Location: HIGH COURT (BY SRI. B N PRAKASH, ADV. FOR C/R)
OF KARNATAKA
THIS RFA IS FILED UNDER SECTION 96 OF CPC,
AGAINST THE JUDGMENT AND DECREE DATED 03.08.2023
PASSED IN OS.NO.591/2022 ON THE FILE OF THE LXVI
ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, BENGALURU,
PARTLY DECREEING THE SUIT FOR RECOVERY OF MONEY.
THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY,
T.G. SHIVASHANKARE GOWDA J., DELIVERED THE
FOLLOWING:
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NC: 2024:KHC:1546-DB
RFA No. 1864 of 2023
JUDGMENT
In this appeal, the second defendant has challenged the judgment and decree dated 03.08.2023 passed in O.S.No.591/2022 on the file of the LXVI Addl. City Civil and Sessions Judge, Bengaluru City (CCH-67) (for brevity 'the Trial Court'). The Trial Court decreed the suit directing the second defendant to return Rs.25,01,000/- with interest @ 6% per annum from 17.01.2020.
2. For the sake of convenience, parties shall be referred as per their status before the Trial Court.
3. Brief facts of the case are, first defendant/Smt.Pavan S.Jain and second defendant/Smt.Suman S.Jain are the owners of the property bearing Municipal No.21 (formerly part of Sy.No.20 of Vyalikavali village), New Municipal No.21/1 situated at 4th Cross Road, Subedharpalya, BBMP Ward no.7, New Ward No.45, Bengaluru (for short 'suit schedule property'). The defendants -3- NC: 2024:KHC:1546-DB RFA No. 1864 of 2023 offered to sell the said property for a sum of Rs.1.35 crores. The plaintiff entered into an agreement on 17.01.2020 by paying advance of Rs.10,01,000/-. Again on 30.01.2020, the second defendant received a sum of Rs.15 lakhs and thereby total advance of Rs.25,01,000/- was paid to the defendants as part performance of the contract. The plaintiff has approached the HDFC Bank for sanction of loan for paying the remaining part consideration. The Bank authorities visited the spot and ascertained that the suit property was proposed for road widening under the Comprehensive Development Plan ('CDP' for short). The loan application of the plaintiff was not considered. The defendants were aware of road widening, inspite of it, they offered to sell the suit property. Since the loan was declined by the Bank, plaintiff sent notice to the defendants terminating the agreement. They have not acknowledged the same. Plaintiff was ready and willing to purchase the property. But due to proposed acquisition of -4- NC: 2024:KHC:1546-DB RFA No. 1864 of 2023 property, she could not do so. She demanded refund of advance with interest at 12%. As the defendants did not come forward, she has filed the instant suit.
4. During the pendency of the suit, defendant No.1 died. She is represented by defendant No.2, as her daughter and legal representative. The second defendant has filed written statement interalia admitting the agreement entered with plaintiff agreeing to sell the suit property for a consideration of Rs.1.35 Crores and receipt of part consideration of Rs.10,01,000/- and Rs.15 lakhs. It is her case that the parties are bound by the terms of the agreement. There is no condition in the contract for refund of the advance paid. The plaintiff was aware of the proposed acquisition and with an intention of getting huge compensation, she had entered into an agreement on 17.01.2020. The date fixed for performance of the contract was 30 days. The suit is -5- NC: 2024:KHC:1546-DB RFA No. 1864 of 2023 filed after two years and the plaintiff has not made any efforts to take the sale deed by paying balance sale consideration. She is entitled to forfeit the advance and accordingly she has forfeited the same. Plaintiff's right to recovery or seeking execution of the sale deed is exhausted and thus sought for dismissal of the suit.
5. On the basis of the above pleadings, the Trial Court has framed the following issues:
1. Whether plaintiff proves that the defendant agreed to return advance amount with compensation of Rs.5,00,000/- in the event of schedule property is acquired?
2. Recasted Issue: Whether the defendant proves that the amount paid by the plaintiff is forfeited, as she has not paid the balance sale consideration amount within 1 st of March, 2020?
3. Whether the plaintiff is entitled for suit claimed amount of Rs.29,26,170/- with interest at the rate of 12% p.a. from the date of suit till realization?
4. What order or decree?
6. Before the Trial Court, plaintiff examined herself as PW-1 and marked Exs.P1 to P10. On behalf of the defendants, second defendant got -6- NC: 2024:KHC:1546-DB RFA No. 1864 of 2023 herself examined as DW-1 and no documents are marked.
7. The Trial Court after hearing both the parties recorded negative finding against re-casted issue No.2 and partly affirmed issue No.3 and decreed the suit. Aggrieved by the same, the second defendant has filed the instant appeal on various grounds.
8. Heard the arguments of Sri.Neglur Aravind, learned Counsel for defendant No.2 and Sri.B.N.Prakash, learned counsel for plaintiff.
9. It is the contention of the learned Counsel for the second defendant that the time is the essence of contract. Plaintiff was well aware of the CDP. To get higher compensation, plaintiff has entered into an agreement. She cannot be permitted to blow hot and cold when the defendants have not suppressed the factum of proposed acquisition. The defendants are always ready and willing to perform -7- NC: 2024:KHC:1546-DB RFA No. 1864 of 2023 their part of contract. It is the plaintiff, who committed default, but the Trial Court has ignored these aspects and cast burden upon the defendants and ordered refund of advance amount with interest.
10. Per contra, learned Counsel for the plaintiff has contended that sale consideration agreed is Rs.1.35 Crores. Payment of advance amount of Rs.25,01,000/- was made. The terms of the contract has been reduced into writing and the parties are bound by it. The plaintiff is required to pay part consideration. The loan was rejected by the Bank on the ground that under CDP, a portion of the suit schedule property is proposed for road widening. The plaintiff was not informed about CDP at the time of execution of the agreement. The defendants suppressed the factum of acquisition. They were holding the money belonging to the plaintiff and liable to pay interest. The Trial Court granted 6% -8- NC: 2024:KHC:1546-DB RFA No. 1864 of 2023 though interest at 12% was sought. He supported the impugned judgment.
11. We have given our anxious consideration to the arguments addressed on behalf of both parties and perused the records.
12. The points that arise for our consideration are:
(i) Whether the suit schedule property is amenable for future acquisition under CDP?
(ii) Whether the plaintiff was aware of proposed acquisition of the suit schedule property towards road widening?
(iii) Whether the defendants are entitled for forfeiture of the advance amount for non-
performance of the contract?
(iv) Whether the impugned judgment is perverse and calls for our interference? Reg. Point No.(i):
13. There is no dispute as to the ownership of the suit schedule property. The defendants entered into a contract with the plaintiff on 17.01.2020 agreeing to sell the suit schedule property for a consideration of Rs.1.35 Crores and received part -9- NC: 2024:KHC:1546-DB RFA No. 1864 of 2023 consideration of Rs.10,01,000/- and Rs.15 Lakhs on 17.01.2020 and 30.01.2020 respectively. Parties have agreed to complete the sale within 30 days for which the plaintiff has applied for loan with HDFC Bank. However, the Bank has turned down the said request on the ground that there is a CDP under which the suit schedule property is proposed for acquisition for road widening.
14. It is the contention of the plaintiff that the defendants have not informed her about the CDP or proposed acquisition of the suit schedule property, whereas, it is the contention of the defendants that the plaintiff is well aware of the same. Keeping an eye on higher compensation, the plaintiff ventured into sale agreement with the defendants. In this aspect, both the parties have led evidence and the undisputed fact is that under CDP, the suit schedule property is proposed for acquisition and thereby, we record finding on point No.(i) in the affirmative.
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NC: 2024:KHC:1546-DB RFA No. 1864 of 2023 Reg. Point No.(ii):
15. Ex.P2 is the original sale agreement dated 17.01.2020. The Trial Court has considered its recitals. No evidence is elicited to show that the plaintiff was aware of the CDP and the proposed acquisition of the suit property is for road widening. The recitals of Ex.P2 stand in support of it. As seen from the records, the plaintiff came to know about the CDP only on Bank's refusal to sanction the loan vide Ex.P5/Email. During spot inspection, the Bank has ascertained about the CDP and widening of the road. In the absence of convincing evidence, it is hard to accept that plaintiff is well aware of these aspects. No person will venture to acquire a property, which is under acquisition, unless it is beneficial to him. However, nothing is available on record to show that the plaintiff will get higher profit than sale consideration due to proposed acquisition. The material on record points out that the plaintiff
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NC: 2024:KHC:1546-DB RFA No. 1864 of 2023 was not aware of the CDP, so also the proposed acquisition till the HDFC Bank's e-mail under Ex.P5. Accordingly, we answer point No.(ii). Reg. Point No.(iii):
16. The defendants claim that they are entitled to forfeiture of the advance amount for the default committed by the plaintiff in not performing her part of contract within 30 days. It is interesting to note that the agreement is dated 17.01.2020. Within 15 days i.e., on 30.01.2020, defendant No.2 received another part consideration of Rs.15 Lakhs under Ex.P1. Neither in the terms of the agreement nor in the receipt, there is any recital to the effect that time is the essence of contract, non-performance of the contract within 30 days and the defendants are entitled to forfeit the part consideration. When there is no recital in the document, any amount of oral evidence that the plaintiff is entitled to forfeit the advance amount has no legal sanctity.
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NC: 2024:KHC:1546-DB RFA No. 1864 of 2023
17. Another contention of the defendants is that ten months after the agreement, Ex.P5/e-mail has been created by the plaintiff without performing her part of contract which caused loss to the defendants. The cancellation of agreement is unilateral and therefore, the plaintiff is entitled to forfeit the advance amount. To buttress the same, they relied upon a judgment of the Hon'ble Apex Court in Fateh Chand -vs- Balakrishna Das (AIR 1863 SC 1405). But the principle laid down in the said case is not fruitful to the defendant. Though it is mentioned in the agreement that time for completion of sale transaction is 30 days, nothing is found on record to show that time is the essence of contract. Unless the parties with expressed terms in the agreement state that time is the essence of contract, no presumption or assumption can be made. This is what the Trial Court has observed following the judgment of the Hon'ble Apex Court in
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NC: 2024:KHC:1546-DB RFA No. 1864 of 2023 Katta Sujatha Reddy -vs- Siddam Setty Infra Projects Pvt.Ltd. and Others ([2023] 1 SCC
355).
18. The defendant No.2 admits CDP and also the proposed acquisition of the suit schedule property for road widening. There is nothing on record to explain that the plaintiff is well aware of the proposed acquisition and for the purpose of getting higher compensation, the property is being acquired under Ex.P2 by the plaintiff. The material on record does not point out that time is the essence of contract and there is no clause in the agreement that the plaintiff is entitled to forfeit the advance amount. The agreement was entered on 17.01.2020 whereas the suit was filed on 25.01.2022 after two years. The defendants have not issued any notice to the plaintiff to perform her part of contract nor indicated the forfeiture of advance amount. Therefore, the conduct of the parties clearly points
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NC: 2024:KHC:1546-DB RFA No. 1864 of 2023 out that there was any specific clause for forfeiture of the advance money. Accordingly, we answer this point against the defendants.
Reg. Point No.(iv):
19. We have carefully perused the impugned judgment. The Trial Court has evaluated the pleadings, the evidence on record and also the documents. The Trial Court has appreciated the terms of the contract and recorded a finding that the time is not the essence of the contract; plaintiff is not aware of the CDP; the proposed acquisition and plaintiff came to know about the same only when the Bank sent an e-mail refusing to grant loan. Th ere is no forfeiture clause in the terms of the agreement enabling the plaintiff to forfeit the advance amount. When the suit schedule property is cast with cloud of acquisition, it is not free from encumbrance, the plaintiff has rightly terminated the agreement and sought refund of the advance amount of
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NC: 2024:KHC:1546-DB RFA No. 1864 of 2023 Rs.25,01,000/-. The Trial Court rightly recorded that the plaintiff is entitled to terminate the contract, seek refund and thereby decreed the suit directing the defendant No.2 to refund Rs.25,01,000/- with interest @ 6% per annum from 17.01.2020. We do not find any error or illegality in the finding recorded by the Trial Court. Accordingly, we answer point No.(iv).
20. In the light of above discussion, the appeal is devoid of merits. In the result, the following:
ORDER The appeal is dismissed with costs.
Sd/-
JUDGE Sd/-
JUDGE KNM CT:HS List No.: 2 Sl No.: 37