Delhi District Court
Ankush Kumar Prajapati vs Sh. Jamshed Alam on 23 April, 2019
IN THE COURT OF SHRI MURARI PRASAD SINGH :
ADDITIONAL DISTRICT JUDGE 03 (EAST)
KARKARDOOMA COURTS : DELHI
Civil Suit No. 588/17
Ankush Kumar Prajapati,
S/o Sh. Phool Kumar,
R/o 203, Main Road, Khichripur Village,
Khichripur, Delhi110091 ................Plaintiff
Vs.
1. Sh. Jamshed Alam,
S/o Sh. Kasim Ali
2. Sh. Salman Khan,
S/o Sh. Kasim Ali,
3. Sh. Yusuf Ali,
S/o Sh. Chhote Khan
All resident of H. No. C12/160, Block C12,
Yamuna Vihar, Garhi Mendu, Bhajan Pura,
North East Delhi, Delhi110053 ................Defendants
Date of institution : 05.09.2017
Date of reserving judgment : 23.04.2019
Date of judgment : 23.04.2019
JUDGMENT:
1. Vide an agreement to sell dated 02.05.2014, defendant no.1 agreed to sell property bearing no. C12/160, Yamuna Vihar, Residential Scheme, Shahdara, Delhi for a total sale consideration of Rs. 52,60,000/. Plaintiff paid Rs. 40 lacs through cheques, which was 76.045627% of the total sale consideration amount. In terms of the agreement, defendant no.1 Civil Suit No. 588/17 1 of 5 had to execute a sale deed within a period of one year upon receipt of the balance consideration of Rs. 12,60,000/. Defendant no.1 was not able to perform his part of the contract. He was served with the legal notice dated 01.03.2016. On 15.03.2016, defendant no.1 approached the plaintiff with a request not to initiate any legal action and sought extension of time till 25.05.2016 for performance of his part of the contract and that in case he failed to perform his obligations, he would make payment equivalent to 76.045627% of the current market value of the property to the plaintiff. This was reduced to writing in the own handwriting of defendant no.1 on the reverse page of the legal notice dated 01.03.2016. The plaintiff acceded to this request of defendant no.1. However, even by the extended date of 25.05.2016, defendant no.1 was not able to perform his part of the contract. In view thereof, defendant no.1 was liable to pay the proportionate market value of the property to the plaintiff.
2. Defendant no.1 then provided to the plaintiff a valuation report dated 12.04.2016 as per which the current market value of the property was Rs. 1,64,96,000/. The plaintiff had paid 76.045627% of the total sale consideration amount. Accordingly, the amount to be paid to him by defendant no.1 turned out to be Rs. 1,25,44,487/ i.e. 76.045627% of Rs. 1,64,96,000/. Thus, according to the plaintiff the amount of Rs. 40 lacs which he had paid in May 2014 towards purchase of the property tantamounted to Rs. 1,25,44,487/ in April 2016. Defendant no.1 insisted upon defendants no.2 and 3 to give a guarantee in respect of the settlement. Accordingly, all the three defendants jointly issued a cheque of Rs. 1,25,44,487/ bearing no. 519433 dated 26.07.2016 drawn on Punjab National Bank, Yamuna Vihar, Delhi. A deed of settlement dated 26.04.2016 was executed between plaintiff and defendant no.1. This was accompanied by Civil Suit No. 588/17 2 of 5 affidavits/undertaking dated 26.04.2016 of all the three defendants. The cheque returned dishonoured with remarks "funds insufficient". Plaintiff then issued a legal notice dated 06.08.2016 to the defendants which was of no avail. Plaintiff then instituted a complaint case under Section 138 of NI Act. On these averments, plaintiff filed the present suit for recovery of Rs. 1,25,44,487/ together with pendente lite and future interest thereon.
3. Defendants suffered the proceedings ex parte vide order dated 03.04.2018.
3. In plaintiff's evidence, plaintiff examined himself as PW1. He relied upon the following documents: Ex. PW1/annexureA is the certified copy of agreement to sell dated 02.05.2014;
Ex. PW1/annexureB is the certified copy of legal notice dated 01.03.2016;
Ex. PW1/annexureC is the certified copy of request letter on back side of the notice dated 01.03.2016;
Ex. PW1/annexureD is the certified copy of valuation report dated 12.04.2016;
Ex. PW1/annexureE is the certified copy of deed of settlement dated 26.04.2016;
Ex. PW1/annexureF is the certified copy of cheque bearing no. 519433 dated 26.07.2016 drawn on PNB, Branch Yamuna Vihar, Delhi;
Ex.PW1/annexureG (colly) (6 pages) is the certified copy of affidavit(s);
Ex.PW1/annexureH (colly) (6 pages) is the certified copy of undertakings;
Ex. PW1/annexure I is the certified copy of cheque return advice dated 29.07.2016 Ex. PW1/annexureJ (colly) (6 pages) is the certified copy of notices dated 06.08.2016.
Ex. PW1/annexureK is the certified copy of postal receipts; Ex. PW1/annexureL (colly) (3 pages) is the certified copies of delivery reports;
Ex. PW1/annexureM (colly) (2 pages) is the certified copy of acknowledgement/registered AD card, and Civil Suit No. 588/17 3 of 5 Ex. PW1/annexureN is the certified copy of received envelope by defendant no.1
4. Arguments heard. Record perused.
5. The unrebutted testimony of plaintiff (PW1) establishes that he had advanced Rs. 40 lacs for purchase of the aforesaid property vide agreement to sell dated 02.05.2014 to defendant no.1. His evidence also establishes that the deal did not fructify as defendant no.1 was not willing to perform his part of the contract. His evidence further establishes that at request of defendant no.1 plaintiff extended the time for performance of contract to 25.05.2016. It also stands proved on record that subsequently, plaintiff entered in to an agreement with defendant no.1 whereby and whereunder the latter agreed to pay Rs. 1,25,44,487/ to the former being 76.045627% of the current market value of the suit property. It is pertinent to mention that the plaintiff had advanced Rs. 40 lacs, which was 76.045627% of the total sale consideration of Rs. 52,60,000/. The evidence on record further establishes that defendants no.2 and 3 had stood as guarantors for payment of Rs. 1,25,44,487/. The evidence on record further establishes that all the three defendants had jointly issued a cheque of Rs. 1,25,44,487/ bearing no. 519433 dated 26.07.2016 drawn on Punjab National Bank, Yamuna Vihar, Delhi, which returned dishonoured due to insufficient funds.
6. The question is whether the plaintiff is entitled to recover Rs. 1,25,44,487/ from the defendants. The answer to this has to be clearly in the negative. The agreement to return more than triple the advance money paid two years earlier towards sale of the property is in the nature of penalty and consequently, the same cannot be enforced under Sections 73 and 74, Indian Contract Act. Under the extant law in order to recover more than Civil Suit No. 588/17 4 of 5 triple the advance money, the plaintiff would have to show that he suffered losses to that extent on account of failure on the part of the vendor to fulfill his part of the contract. In the case at hand, the plaintiff has not been able to show that on account of the failure of the vendor to perform his part of the contract, he suffered losses to the tune of Rs. 1,25,44,487/. Such a penalty clause cannot be enforced in a court of law. Two relevant judgments in this regard are a Constitution Bench judgment of Apex Court titled as Fateh Chand vs. Bal Kishan Dass, AIR 1963 SC 1405 and Kailash Nath Associates vs. Delhi Development Authority and Another, (2015) 4 SCC 136.
7. In the case at hand, the plaintiff can recover the advance of Rs. 40 lacs that he had paid. He can also recover the stamp duty that he had paid for the agreement to sell i.e. Rs. 2,84,040/. Thus, it is held that the plaintiff is entitled to recover Rs. 42,84,040/ from the defendants. On this amount of Rs. 42,84,040/, the plaintiff is awarded interest at the rate of 18% per annum. All the defendants shall jointly and severally liable to pay the decretal amount. Proportionate cost of the suit is also awarded in favour of plaintiff. Decree sheet be drawn accordingly.
File be consigned to Record Room.
MURARI Digitally signed by MURARI
Announced in the open Court
PRASAD SINGH
PRASAD SINGH Date: 2019.04.23 15:04:09 +0530
ON 23.04.2019
(MURARI PRASAD SINGH)
Addl. District Judge03 (East)
Karkardooma Courts, Delhi
Civil Suit No. 588/17 5 of 5