Delhi District Court
Kumud Saxena vs . M/S Israni Buildwell Pvt. Ltd. on 14 May, 2019
Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
IN THE COURT OF MS. JYOTI KLER, ADDL. DISTRICT JUDGE05,
ROOM NO. 605, SOUTH DISTRICT, SAKET COURTS, NEW DELHI
Suit No. 8811/16
Case ID No. DLST010038602016
In the matter of
Mrs. Kumud Saxena
W/o Late Sh. B.C. Saxena
R/o B97, Gulmohar Park, New Delhi
(through her attorney)
Sh. Sarvesh Bisaria
S/o Late Sh. S.K. Bisaria
R/o D83, Gulmohar Park
New Delhi).
.............Plaintiff
Versus
M/s Israni Buildwell Private Limited
(A limited company under the Companies
Act 1956 and sued through its Managing Director/Directors)
having registered office at:
S12, Green Park (Main), New Delhi
..............Defendant
Date of Institution : 12.09.2011
Date of reserving the judgment : 08.05.2019
Date of pronouncement : 14.05.2019
Decision : Dismissed.
Suit No.8811/16 Page 1 of 38
Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
JUDGMENT
1. This suit is for recovery of Rs. 70 lacs towards damages for breach of contract.
2. Plaintiff has instituted the suit through her attorney Sh.
Sarvesh Bisaria, who has been authorized by SPA dated 17.08.2011.
Case of the plaintiff
3. It is case of the plaintiff that she owns property bearing no.
B97, Gulmohar Park, New Delhi110049. She entered into a collaboration agreement for reconstruction of this property with the defendant on 06.09.2007. It was agreed between the parties that after construction, basement, ground floor and first floor of the Gulmohar Park property shall belong to the plaintiff and second floor of this property (without roof rights) shall be taken by the defendant as consideration towards the collaboration agreement. Time was essence of the collaboration agreement but construction was not completed in time. Defendant approached Suit No.8811/16 Page 2 of 38 Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
the plaintiff for extension of time and a supplementary collaboration agreement dated 21.11.2008 was executed between the parties. The time for completion of construction was extended by way of this agreement till 18.02.2009. It was also agreed that in case defendant failed to complete construction by the aforesaid date, it shall pay damages in the sum of Rs.3 lacs per month, quantified on the basis of rental prevalent in the vicinity, for the property equivalent to the share of the plaintiff. Defendant failed to complete construction by 18.02.2009. It sought further extension of three months for completing the construction, which was refused by the plaintiff. The plaintiff sent a legal notice dated 25.02.2009 to the defendant. The notice was served upon the defendant but defendant did not respond. Possession of ground floor and first floor of the property was finally handed over to the plaintiff on 03.01.2010 but possession of the basement was not given. Defendant sought 2 to 3 months more time for handing over possession of the basement and for payment of damages. The basement however was not completed neither damages were paid. Plaintiff again sent a legal notice to the defendant on 16.09.2010 to which defendant did not reply. Plaintiff then approached the defendant on 10.05.2011 for possession of Suit No.8811/16 Page 3 of 38 Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
basement and damages, but found that defendant had unilaterally stopped construction of the basement. Hence, plaintiff filed the present suit seeking damages on the following counts: Period Damages Interest 18.02.2009 - 03.01.2010 Rs.33,00,000/ Rs.6,00,000/ (for Basement, Ground Floor & First Floor) 04.01.2010 - 10.05.2011 (on the aforesaid Rs. 9,50,000/ amount) 04.01.2010 - 10.05.2011 (Basement) Rs.5,50,000/ Rs.16,00,000/
4. The prayer clause of the plaint reads as under: "(a) pass a decree in favour of the plaintiff and against the defendant for an amount of Rs. 70,00,000/ (Rs. Seventy lacs only) with pendente lite and future interest @18% p.a. till the date of realisation of the decreetal amount;
(b) award the cost of the present suit in favour of the plaintiff and against the defendant;
(c) Pass such other or further order/s, as deem just and proper in favour of the plaintiff and against the defendant."
Suit No.8811/16 Page 4 of 38Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
Case of the Defendant
5. Defendant filed written statement averring that the plaint has not been properly signed and verified as power of attorney holder claims to be personally aware about the facts but he was never present during any of the transactions between plaintiff and the defendant. The defendant admitted that collaboration agreement and supplementary collaboration agreement were executed with the plaintiff. Defendant also admitted that plaintiff is owner of the property no. B97, Gulmohar Park, New Delhi 110049. However, remaining case of the plaintiff was denied by the defendant.
6. It is case of the defendant that Smt. Manisha Israni, who is wife of Sh. Vijay Israni, Director of the defendant company, is owner of the property bearing no. B5/53, Safdarjung Enclave, Delhi. This property was to be redeveloped by the defendant. The plaintiff agreed to buy ground floor of this property for a sum of Rs. 1,15,00,000/ which was the total price towards cost of land and cost of construction. Plaintiff paid a sum of Rs. 1 lac to the defendant towards this transaction vide receipt dated 22.08.2007 and it was agreed that remaining amount shall be paid by Suit No.8811/16 Page 5 of 38 Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
15.09.2007. The plaintiff simultaneously proposed a collaboration agreement with the defendant regarding her property bearing no. B97, Gulmohar Park, New Delhi110049. It was agreed that cost of construction of the property of the plaintiff shall be borne by the defendant and the defendant shall also pay a sum of Rs.35 lacs to the plaintiff. However, in consideration, defendant would retain second floor of the developed Gulmohar Park property with proportionate rights to the extent of 25% in the land underneath. It was also agreed in the receipt dated 22.08.2007 that these two transactions i.e. transaction to buy ground floor of property no. B 5/53, Safdarjung Enclave, Delhi and the collaboration agreement with respect to the property at Gulmohar Park will be interdependent.
7. The plaintiff insisted for execution of sale deed with respect to ground floor of the S.J. Enclave property though it was still undeveloped. Hence, it was agreed that sale deed qua ground floor of the aforesaid property shall be executed for a sum of Rs. 30 lacs and remaining Rs. 85 lacs shall be paid by the plaintiff to the defendant towards redevelopment of the property. Since 1 lac was already paid vide receipt dated 22.08.2007, plaintiff agreed Suit No.8811/16 Page 6 of 38 Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
to pay remaining sum of Rs. 84 lacs. The sale deed for consideration of Rs. 30 lacs qua Ground Floor of the SJ Enclave property and collaboration agreement with respect to the property at Gulmohar Park were executed on 06.09.2007. Plaintiff paid Rs.30 lacs to Manisha Israni against the sale deed and received Rs.35 lacs from the defendant against the collaboration agreement.
8. Defendant started construction over the property at Gulmohar Park as per collaboration agreement dated 06.09.2007 in terms of the construction plan already sanctioned on 26.04.2007. The construction was to be completed within one year i.e. by 06.09.2008. The plaintiff however suggested certain changes in the construction and a fresh construction plan was accordingly got sanctioned on 19.06.2008. The plaintiff thereafter insisted for more rights in the property and therefore a supplementary collaboration agreement was executed on 21.11.2008. Plaintiff was given right to construct 3 rd floor by way of this supplementary agreement and it was agreed that construction shall be completed by the defendant by 18.02.2009.
Suit No.8811/16 Page 7 of 38Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
9. The defendant completed entire construction on 18.02.2009 and handed over possession of the basement, ground floor and first floor to the plaintiff on the said date. The plaintiff demanded extra work and did not pay Rs.84 lacs also. The defendant then took over possession of ground floor and first floor again from the plaintiff for carrying out extra work. The plaintiff also handed back possession of the basement to the defendant towards security for payment of Rs.84 lacs. It was agreed between the plaintiff and defendant that plaintiff shall pay Rs. 84 lacs & take possession of the basement and in case she is not able to pay Rs.84 lacs, she shall sell the basement to the defendant. However, the plaintiff issued a legal notice dated 25.02.2009 malafidely despite the aforesaid agreement. This notice was served upon the defendant and defendant approached the plaintiff. The plaintiff stated that legal notice was sent by her Lawyer without her consent and it may be ignored. So the defendant did not reply the legal notice in good faith.
10. Defendant completed extra work on ground floor & first floor on 03.01.2010 and handed over possession of the same to the plaintiff which was acknowledged by her in writing. However, Suit No.8811/16 Page 8 of 38 Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
in order to avoid payment of Rs. 84 lacs, plaintiff sent a legal notice dated 16.09.2010 which was never received by the defendant.
Counter Claim
11. The defendant also filed counter claim with written statement raising same averments as in foregoing paragraphs and further seeking reliefs against the plaintiff with respect to the basement of the property at Gulmohar Park alleging that plaintiff failed to pay Rs.84 lacs. Following prayers have been sought by defendant in the counter claim: "(i) that the plaintiff may please be directed to execute and get registered the Sale Deed in respect of the basement of property No. B97, Gulmohar Park, New Delhi, in favour of the defendant for the consideration of Rs.84,00,000/ already been with the plaintiff.
Or in the alternative A money decree be passed in favour of the defendant and against the plaintiff for recovery of Rs.84,00,000/ alongwith pendente lite and future interest @18% per annum.
(ii) cost of the counter claim be awarded in favour of the defendant.
Suit No.8811/16 Page 9 of 38Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
(iii) pass any other or further orders as this Hon'ble Court may deem fit and proper under the facts and circumstances of the present case."
Replication
12. Plaintiff filed replication averring that the written statement has not been filed by an authorized person because board resolution passed by the defendant company in favour of signatory of the written statement has not been placed on record. Plaintiff denied the case of the defendant, as set out in the written statement. The plaintiff, while admitting that a sale deed was executed in her favour with respect to the ground floor of the property at Safdarjung Enclave on 06.09.2007, pleaded that this sale deed was executed between her & Smt. Manisha Israni and not with the defendant, so it is a separate transaction. The plaintiff further averred that Sh. Vijay Israni, Director of the defendant misrepresented to her about his ownership over Safdarjung Enclave Property and took Rs. 1 lac. She denied that she was liable to pay Rs. 84 lacs to the defendant. Plaintiff relied upon the MOU dated 26.09.2007, executed between her and Smt. Manisha Israni, and pleaded that property at Safdarjung Enclave Suit No.8811/16 Page 10 of 38 Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
was to be redeveloped by Smt. Manisha Israni at her own cost. However, redevelopment was not done in time and therefore, a supplementary agreement was executed between her and Smt. Manisha Israni on 15.11.2008, whereby Manisha Israni agreed to hand over redeveloped ground floor of the property at Sardarjung Enclave to the plaintiff within 17 days else pay Rs. 70,000/ per month towards damages. Possession was not handed over by Manisha Israni within 17 days but on 21.12.2008. Hence, plaintiff sent a legal notice dated 16.09.2010 to Manisha Israni and demanded a sum of Rs.67,200/. The plaintiff admitted that a fresh site plan was got sanctioned after beginning of construction at the Gulmohar Park Property but she denied that this was at her instance. She averred that fresh site plan was got sanctioned as per mutual agreement between her and the defendant. Plaintiff admitted the possession letter dated 03.01.2010 but denied that possession was also given to her on 18.02.2009, but it was returned back because she had demanded some extra work in the ground floor & first floor. Plaintiff further admitted that the defendant had met her after receiving the legal notice dated 25.02.2009, but averred that the defendant met to assure her that damages will be paid.
Suit No.8811/16 Page 11 of 38Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
13. Plaintiff raised certain preliminary objections to the counter claim. It is averred that the counter claim is barred by limitation because the alleged agreement (Receipt dated 22.08.2007) was to be performed by 15.09.2007 but counter claim was filed on 03.02.2012 i.e. after 5 years. It is also averred that the agreement to purchase the property at S.J. Enclave was executed between the plaintiff and Manisha Israni but counter claim in this regard has been made by Vijay Israni in his personal capacity, who is not even a defendant in the main suit but a director of the defendant.
Issues
14. On the basis of pleadings, following issues were framed vide order dated 09.11.2012: "1. Whether the delay in completing the construction of property No.B97, Gulmohar Park, Delhi is not attributable to the defendant as alleged in the written statement of defendant company? OPD
2. Whether the plaintiff had entered into an agreement with the defendant company through Shri Vijay Israni, to buy back the ground floor of property no. B5/53, Safdarjung Enclave, New Delhi after its redevelopment and was required to pay Rs. 84 lakhs to the defendant company for re development of the aforesaid property or in the alternative to Suit No.8811/16 Page 12 of 38 Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
reconvey the basement of property No. B97, Gulmohar Park, Delhi to the defendants as alleged in the written statement? OPD
3. Whether the counter claim is not maintainable and is barred by limitation? OPP
4. To what amount, the plaintiff is entitled to damages in respect of the property No. B97, Gulmohar Park, Delhi? OPP
5. Whether the plaintiff is entitled to interest and if so, to what amount? OPP
6. Relief."
Plaintiff's Evidence
15. Plaintiff examined total four witnesses.
16. Plaintiff herself stepped in the witness box as PW1 and deposed by way of evidence affidavit Ex.PW1/1 wherein she reiterated contents of the plaint and relied upon the following documents: S.No. Description of Documents Exhibit Number
1. SPA dated 17.08.2011 Ex. PW1/A executed by plaintiff in favour of Sh. Sarvesh Bisaria
2. Legal Notice dated Ex.PW1/B 16.09.2010 sent by the Suit No.8811/16 Page 13 of 38 Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
plaintiff to the defendant
3. Postal receipts and UPC Ex.PW1/C to dated 17.09.2010 Ex.PW1/E
4. Possession letter dated Ex.PW1/F 03.01.2010 with respect to the ground floor and first floor of the property bearing no. B97, Gulmohar Park, New Delhi
5. Legal notice dated Ex.PW1/H 16.09.2010 sent by the plaintiff to Smt. Manisha Israni
6. Postal receipts dated Ex.PW1/I to 17.09.2010 and UPC dated Ex.PW1/K 17.09.2010
17. PW1 also relied upon certain documents admitted by the defendant which are as follows: S.No. Description of Documents Exhibit Number
1. Collaboration Agreement Ex. P1 dated 06.09.2007 executed between the plaintiff and the defendant
2. Supplementary Collaboration Ex.P2 Agreement dated 04.11.2008 executed between the plaintiff and the defendant
3. Legal notice dated Ex.P3 25.02.2009 sent by the Suit No.8811/16 Page 14 of 38 Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
plaintiff to the defendant
4. Supplementary MOU dated Ex.P4 15.11.2008 executed between the plaintiff and Smt. Manisha Israni
5. Possession letter dated Ex.P5 21.12.2008 with respect to the ground floor of property no. B5/53, Safdarjung Enclave, executed by plaintiff in favour of Manisha Israni
18. Certain documents were further put to PW1 during her cross examination. These are as below: S.No. Description of Documents Exhibit Number
1. Receipt of Rs.35 lacs dated Ex. PW1/D1 06.09.2007 executed by the plaintiff reflecting payment of the aforesaid sum under the Collaboration Agreement
2. Possession letter dated Ex.PW1/D2 06.09.2007 reflecting that possession of the property at Gulmohar Park was given by the plaintiff to the defendant for construction
3. Sale deed dated 06.09.2007 Ex.PW1/D3 executed between the plaintiff and Smt. Manisha Israni with respect to the ground floor of the Suit No.8811/16 Page 15 of 38 Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
property at Safdarjung Enclave
4. MOU dated 26.09.2007 executed Ex.PW1/D4 between the plaintiff Smt. Manisha Israni
19. PW1 was cross examined by the defendant at length.
20. The second witness examined by the plaintiff is Sh. Sarvesh Bisaria, her power of attorney holder, who deposed by way of evidence affidavit Ex.PW2/A. PW2 reiterated the contents of the plaint. This witness was also cross examined by the defendant.
21. PW3 is Sh. Praveen Chadha, who identified his signatures on Ex.P1, Ex.P2, Ex.PW1/F, Ex.PW1/D4 and Ex.P4. This witness was not cross examined by the defendant.
22. PW4 Smt. Manisha Israni deposed that she is not a director of the defendant company. She admitted the sale deed Ex.PW1/D3 and deposed that she had received full consideration towards the sale deed. She also admitted execution of Ex.PW1/D4, Ex.P4 and Ex.P5. She too was cross examined by the defendant.
Suit No.8811/16 Page 16 of 38Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
Defendant's Evidence
23. Defendant examined only one witness i.e. Sh. Vijay Israni as DW1 by way of evidence affidavit Ex.DW1/A. DW1 relied upon the documents already Ex.P1, Ex.PW1/D3, Ex.PW1/D4, Ex.P4, Ex.P5 and Ex.PW1/F. DW1 also relied upon Mark A which is the photocopy of receipt dated 22.08.2007 signed by the plaintiff, having reference to the property at Gulmohar Park and also the property of Safdarjung Enclave. Original of this receipt was not produced and therefore Mark A was not admitted in evidence. DW1 was cross examined by the plaintiff in detail. During cross examination DW1 was confronted with Ex.DW1/P1 which is the printout of 'Company Overview' of defendant and the same was admitted by him.
Arguments
24. Oral arguments were advanced by the plaintiff. Defendant did not advance oral arguments despite opportunity. Written arguments were filed by both sides.
25. It is argued on behalf of the plaintiff that the defendant failed to prove authorization in favour of DW1. The DW1 himself Suit No.8811/16 Page 17 of 38 Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
admitted in his cross examination that he was not authorized by the defendant and Directors of the defendants had been disqualified by ROC for 5 years. Hence, the law laid down by the Hon'ble High Court of Delhi in Nibro Ltd. Vs. National Insurance Company Ltd.:41 (1990) DLT 633 is squarely applicable and written statement & counter claim filed on behalf of the defendant, by its Director, does not exist in the eyes of law. Ld. Counsel contended that the sum of Rs. 3 lacs per month is specified in the contract itself as damages for the period of delay and plaintiff is entitled to recover the said amount under Section 74 of the Indian Contract Act. It is contended that the plaintiff has been able to prove that there was delay in completing the construction and the defendant has not been able to prove that there was an agreement between the plaintiff & the defendant for sale & purchase of the basement of the property at Gulmohar Park for a sum of Rs. 84 lacs or that such an amount was to be paid by the plaintiff to the defendant for redevelopment of the property at Safdarjung Enclave. It is also contended that the receipt Mark A was executed by Sh. Vijay Israni in his personal capacity and not on behalf of defendant, so the counter claim is not maintainable. It is further contended that the counter claim is barred by Suit No.8811/16 Page 18 of 38 Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
limitation and should be dismissed.
26. Ld. Counsel for the defendant contended that the plaintiff admitted about receipt Mark A in her replication but denied about it in her cross examination. She was then confronted with her replication to which she did not give a satisfactory reply. It is contended that this conduct of the plaintiff raises doubt upon the case put forth by her and proves that the receipt Mark A was indeed executed. The plaintiff has also admitted that she did not suffer any financial loss due to delay in construction. She further has not been able to prove if she had incurred any expenses in building the basement. It can therefore be safely assumed that basement was completed by the defendant. Receipt Mark A proves case of the defendant that plaintiff was to pay Rs.84 lacs for redevelopment of the property at Safdarjung Enclave, on preponderance of probability. Defendant is thus entitled for a decree in the counter claim.
27. Hon'ble High Court of Delhi, in Nibro Ltd. Vs. National Insurance Company Ltd. (Supra), held as under: "13. Order 3, rule 1 provides that any appearance, application or act in or to any court required or authorise by Suit No.8811/16 Page 19 of 38 Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
law can be made or done by the party in person or by his recognized agent or by a pleader appearing, applying or acting, as the case may be, on his behalf. Provided of course, such an appearance, application or act in or to any court is required or authorised by law to be done or done by a party in such court. Where, however, there is an express provision of law, then that provision will prevail. Thus, if an authority is given to a pleader or a recognised agent as provided by law, the recognised agent or pleader can file an appearance or file a suit in court if the party himself is not in a position to file it. In my view, if a party is a company or a corporation, the recognised agent or a pleader has to be authorised by law to file such a plaint. Such an authority can be given to a pleader or an agent in the case of a company by a person specifically authorised in this behalf. In other words, a pleader or an agent can be authorised to file a suit on behalf of a company only by an authorised representative of the company. If a director or a secretary is authorized by law, then he can certainly give the authority to another person as provided under Order 3, rule 1.
14. Order 29, rule 1 of the Code of Civil Procedure provides for subscription and verification of pleadings and states that in suits by or against the corporation, any pleadings may be signed and verified on behalf of the corporation by the secretary or by any director or other principal officer of the corporation who is able to depose to the facts of the case.
15. This court in Oberoi Hotels (India) Pvt. Ltd. (Suit No. 469 of 196626111968), while dealing with the scope of Order 29 of the Code of Civil Procedure has observed as Suit No.8811/16 Page 20 of 38 Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
follows: "Learned counsel for the plaintiff lastly argued that Shri Ram Lal Chaudhary had stated that he had authority to file the suit as a principal officer of the plaintiff company even apart form the resolution marked 'A'. He did not say so. But how does that help? The authority of a principal officer of a company in relation to suits filed on behalf of the limited company does not extend beyond what is laid down in Order 29 of the Code of Civil Procedure. That provision does not entitle the principal officer of a company to file a suit on its behalf and for that the authority has to be found either in the articles of association of the company or in the resolution of its board of directors. In the articles of association of several companies, provision is generally made authorising their managing directors and other officers to file and defend suits on their behalf. Similarly, the board of directors of a company can authorise the institution of a suit on behalf of the company by a resolution. In the case of some companies the articles empower the managing director or directors to appoint general attorneys and general managers and given them authority to institute suits on behalf of the company. But in the absence of any proof in regard to any such power having been conferred on Shri Ram Lal Choudhary, it is not possible to accept his statement that he was authorised to file the suit as the principal officer of the plaintiff hotel.
16. I, therefore, hold that although the plaint has been signed and verified by a person duly authorised to do so on behalf of the plaintiff company, it has not been proved that the suit has been instituted by any such person. The issue is consequently decided against the plaintiff."
Suit No.8811/16 Page 21 of 38Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
Findings
28. I have considered the rival contentions and perused the record carefully. Issue wise findings are as below: Issue no. (i): Whether the delay in completing the construction of property No.B97, Gulmohar Park, Delhi is not attributable to the defendant as alleged in the written statement of defendant company?OPD and Issue no. (ii): Whether the plaintiff had entered into an agreement with the defendant company through Shri Vijay Israni, to buy back the ground floor of property no. B5/53, Safdarjung Enclave, New Delhi after its redevelopment and was required to pay Rs. 84 lakhs to the defendant company for re development of the aforesaid property or in the alternative to reconvey the basement of property No. B97, Gulmohar Park, Delhi to the defendants as alleged in the written statement? OPD
29. Onus to prove issue no. (i) and (ii) was upon the defendant.
30. It is an admitted case of the parties that the construction of the property at Gulmohar Park was to be completed by the defendant by 18.02.2009 and on failure to complete the Suit No.8811/16 Page 22 of 38 Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
construction, defendant had bound itself to pay Rs.3 lacs per month till the time of completion of construction, to the plaintiff. This understanding is reflected in the document Ex.P2 which is a supplementary collaboration agreement dated 04.11.2008. It is also an admitted case that possession of first floor and ground floor of the property at Gulmohar Park was handed over by the defendant to the plaintiff on 03.01.2010.
31. It is case of the defendant that construction work in the Gulmohar Park property was completed on 18.02.2009, the date decided in the supplementary collaboration agreement Ex.P2 and possession of the portion of plaintiff was handed over to her on 18.02.2009 itself. The plaintiff however demanded certain extra work to be done on the ground floor & the first floor, due to which possession of ground floor & first floor was handed back to the defendant and it was returned to the plaintiff again on 03.01.2010 after completing the extra work. Cae of the plaintiff is that possession of the ground floor and first floor was not handed over on 18.02.2009 because work was incomplete and it was given on 03.01.2010 after completing the work.
Suit No.8811/16 Page 23 of 38Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
32. Defendant failed to specify in the written statement and also prove what extra work on the first floor & ground floor was done at the instance of the plaintiff after 18.02.2009. DW1 deposed in his cross examination that the plaintiff had sent an email listing the extra work to be done on the ground floor & first floor, but no such email was placed on record. Hence, an adverse presumption in terms of Section 114 of the Indian Evidence Act can be raised against the defendant to the effect that had the alleged email been filed, it would have been unfavourable to the defendant or that no such email was ever sent by the plaintiff.
33. Plaintiff sent a legal notice dated 25.02.2009, which is Ex.P 3, to the defendant indicating that construction work in the property at Gulmohar Park was not complete on 18.02.2009. She also demanded damages in the said legal notice. Defendant admitted receipt of Ex.P3 but no reply to it was sent by the defendant. It is claimed by the defendant that reply to the legal notice was not sent because plaintiff had asked the defendant to ignore the legal notice. This explanation is not plausible because the defendant was well aware that not completing the construction work in time would make him liable to pay damages Suit No.8811/16 Page 24 of 38 Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
as was specifically recorded in the supplementary collaboration agreement Ex.P2. Why then the defendant would leave such legal notice unanswered, where blame was being put upon it for not completing the construction? This conduct on the part of the defendant is unnatural and leaving the notice unrebutted on its part raises a doubt upon the story put forth by it.
34. It is a matter of record that receipts were made for handing over & taking over of possession of the property at Gulmohar Park. These receipts are Ex.PW1/D2 and Ex.PW1/F respectively. It is not explained by the defendant why no receipt of handing over of possession on 18.02.2009 was prepared when all other events were recorded in writing. The defendant further did not send any reply to the legal notice Ex.PW1/B dated 16.09.2010. It is case of the defendant that this notice was not received however DW1 clearly admitted in the cross examination that the notice was correctly addressed. The legal notice was sent by registered post. The presumption therefore is that notice was delivered to the defendant. The same not having been replied, an adverse presumption can be raised against the defendant to the effect that the defendant had nothing to rebut the plaintiff.
Suit No.8811/16 Page 25 of 38Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
35. In view of discussion above, it is proved on balance of probabilities that the defendant delayed the construction work and did not hand over possession of ground floor & first floor of the property at Gulmohar Park on 18.02.2009. The aforesaid portions were later handed over by the defendant to the plaintiff on 03.01.2010 and hence there was a delay from 18.02.2009 to 03.01.2010 in completing the construction of ground floor and first floor, on the part of the defendant.
36. Coming to the basement portion, it is an admitted case of both sides that possession of basement was not given by the defendant to the plaintiff on 03.01.2010. It is case of the defendant that possession of the basement was given by him to the plaintiff on 18.02.2009, however, plaintiff returned back the possession to the defendant as security for payment of Rs.84 lacs towards redevelopment of the property at Safdarjung Enclave, and promised to either pay the aforesaid amount or execute the sale deed in favour of the defendant with respect to the basement of the property at Gulmohar Park. Defendant states that a receipt Mark A was executed between the plaintiff and the defendant Suit No.8811/16 Page 26 of 38 Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
reflecting that defendant was to pay Rs. 1,15,00,000/ for purchasing the property at Safdarjung Enclave, out of which Rs. 30 lacs was the sale consideration as is reflected in the sale deed Ex.PW1/D3 and remaining Rs.85 lacs was to be paid towards redevelopment. Since the plaintiff had paid Rs. 1 lac vide receipt Mark A, the remaining sum to be paid by her was Rs.84 lacs.
37. The plaintiff admitted about execution of a receipt of Rs.1 lacs in her replication but stated that it was executed under fraud because Sh. Vijay Israni had represented to her that he was owner of the property at Safdarjung Enclave but later on she came to know that property was in fact owned by Ms. Manisha Israni his wife. Hence, plaintiff entered into fresh agreement with Smt. Manisha Israni who later executed a sale deed in her favour. The receipt Mark A was however denied by the plaintiff during her cross examination though she admitted her signature on this receipt. She was confronted with her replication on this aspect but she could not explain the contradictions satisfactorily which proves that receipt of Rs.1 lac was executed.
38. Contents of receipt Mark A were not admitted by the Suit No.8811/16 Page 27 of 38 Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
plaintiff but she did not also state about the actual contents of the receipt executed by her. When questioned, she stated that original of Mark A was not in her possession. Now, Mark A being a photocopy, is not admissible in evidence because defendant did not prove if original receipt was in possession of the plaintiff. Even if Mark 'A' is taken as proved and read in evidence, it does not specify anything about payment of Rs.85 lacs for redevelopment of the property at Safdarjung Enclave. The receipt only states that Sh. Vijay Israni is the sole owner of property at Safdarjung Enclave and he was agreeing to sell the said property to the plaintiff for a sum of Rs.1,15,00,000/. It was however proved during the trial that property at Safdarjung Enclave was infact owned by Ms. Manisha Israni and not by Sh. Vijay Israni. In such circumstances, the contention of the plaintiff that she was made to execute a receipt of Rs.1 lac under misrepresentation and fraud appears believable.
39. The defendant is not a party to the receipt Mark A. This receipt is signed by Sh. Vijay Israni in his personal capacity and does not indicate any role of the defendant i.e. Israni Buildwell Ltd. which is a company and thus a juristic person having Suit No.8811/16 Page 28 of 38 Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
separate entity in the eyes of law.
40. The plaintiff proved MOU dated 26.09.2007 and 15.11.2008, executed between her and Smt. Manisha Israni for redevelopment of the property at Safdarjung Enclave. These two MOUs are Ex.PW1/D4 and Ex.P4 respectively and are admitted by the parties. A reading of these two MOUs makes it clear that Ms. Manisha Israni had agreed to redevelop the property at Safdarjung Enclave free of cost for the plaintiff.
41. It is thus clear now that so far redevelopment of the property at Safdarjung Enclave is concerned, plaintiff was not supposed to pay any money and hence no question of giving possession of the basement to the defendant as security for payment of Rs.84 lacs arises. Defendant otherwise also did not acquire any right, title or interest under receipt Mark A because it was executed by Sh. Vijay Israni in his personal capacity, and thus cannot claim the basement against Rs. 84 lacs to be paid allegedly by the plaintiff.
42. The case of the plaintiff is that possession of the basement was not given to her because work in the basement was not Suit No.8811/16 Page 29 of 38 Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
complete. Defendant admitted that possession of the basement remained with the defendant even after 03.01.2010, the date on which First Floor & Ground Floor were given. As discussed above, it is improbable that possession of the basement was given to the defendant as security for payment of Rs.84 lacs. Now, the other purpose for which possession of the basement was given to the defendant is for construction. Plaintiff states that possession was not handed over to her as construction was not complete. The plaintiff raised this issue in the legal notice Ex.P3 as well as in the legal notice Ex.PW1/B which are dated 25.02.2009 and 16.09.2010 respectively. None of these legal notices was challenged by the defendant as no reply to these was sent. Defendant, moreover, failed to explain in what manner it was holding possession of the basement, like by putting lock & key, or by giving it on rent, or occupying it in any other manner. Plaintiff averred that possession of the basement was taken over by her when she came to know on 10.05.2011 that construction work in the basement had been abandoned by the defendant. The plaintiff was not cross examined by the defendant on this aspect. The defendant further did not take any action against the plaintiff on coming to know that the plaintiff unilaterally took over possession Suit No.8811/16 Page 30 of 38 Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
of the basement without it having been handed to the plaintiff by the defendant. This conduct of the defendant is unnatural and indicates that defendant indeed abandoned the construction work in the basement.
43. For reasons aforesaid, it is proved on balance of probabilities that there was a delay in handing over of possession of the basement by the defendant to the plaintiff and the possession was taken over by the plaintiff on 10.05.2011.
44. Issue no. (i) and (ii) are accordingly decided in favour of the plaintiff and against the defendant.
Issue no.(iii): Whether the counter claim is not maintainable and is barred by limitation? OPP
45. Onus to prove issue no. (iii) was upon the plaintiff. The counter claim is mainly based upon receipt Mark A which has not been proved by the defendant and also it has been held while deciding issues no. (i) and (ii) that there was no agreement between the plaintiff and the defendant for payment of Rs. 84 lacs for redevelopment of the property at Safdarjung Enclave. Since Suit No.8811/16 Page 31 of 38 Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
there was no such agreement between the plaintiff and defendant, no right has accrued to the defendasnt qua basement of the property at Gulmohar Park. Hence, the defendant cannot claim for execution of sale deed of the basement of the Gulmohar Park property in its favour. The counter claim is thus not maintainable.
46. The plaintiff has averred that the counter claim is time barred because as per the receipt Mark A, entire sale consideration was to be paid by 15.09.2007 but counter claim was filed on 13.02.2012 i.e. after expiry of prescribed period of three years. A suit for specific performance of a contract can be filed within three years from the date fixed for the performance or, if no such date is fixed, when the plaintiff had notice that performance is refused, as provided in Article 54 of the Limitation Act, 1963. The averment raised in the counter claim is that the plaintiff had agreed to execute the sale deed qua basement on 18.02.2009, in case she failed to pay Rs.84 lacs. There is no averment in the counter claim if any date was fixed for performance of the aforesaid alleged agreement. However, it is an admitted case of the defendant that the plaintiff had sent a legal notice on 25.02.2009 demanding damages for not completing Suit No.8811/16 Page 32 of 38 Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
construction of the basement. Hence, at least on 25.02.2009 defendant had the notice of refusal by the plaintiff to perform the alleged agreement. Counter claim should have been filed within three years accordingly i.e. by 25.02.2012. The counter claim was filed on 13.02.2012 and hence within the limitation period as per Article 54 of the Limitation Act, 1963.
47. Issue no. (iii) is accordingly partly decided in favour of the plaintiff and partly against the plaintiff.
Issue no.(iv): To what amount, the plaintiff is entitled to damages in respect of the property No. B97, Gulmohar Park, Delhi? OPP
48. Onus to prove issue no. (iv) was upon the plaintiff. The plaintiff is claiming damages @Rs.3 lacs per month for the period of delay in completing the construction, and damages @Rs.1 lac for the delay caused in completing the construction of basement after 03.01.2010. It is case of the plaintiff that the damages are specified in the contract itself and being claimed towards loss of rental by the plaintiff.
49. Section 74 of the Indian Contract Act, 1872 provides for Suit No.8811/16 Page 33 of 38 Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
payment of liquidated damages i.e. where damages are already specified by the parties to the contract. Section 74 of the Indian Contract Act reads as below: "74. Compensation for breach of contract where penalty stipulated for. - When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for."
50. Section 74 of the Indian Contract Act was interpreted by the Hon'ble Apex Court in Maula Bux Vs. Union of India:(1969) 2 SCC 554. Hon'ble Apex Court held that in cases where it is difficult to ascertain & prove monetary loss caused due to breach of contract and value of damages specified in the contract is a genuine preestimate, then Court can award reasonable compensation for breach of contract without proof of actual loss. However, in cases where monetary loss can be proved but has not been proved, no damages can be awarded under Section 74 of the Indian Contract Act, 1872.
Suit No.8811/16 Page 34 of 38Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
51. It is thus the settled law that even for claiming damages under Section 74 of the Indian Contract Act, plaintiff is required to prove that she suffered loss due to delay in construction. It is case of the plaintiff that loss was suffered by her on account of loss of rental income from the property at Gulmohar Park. The contract does not mention that the sum of Rs.3 lacs per month was being specified as damages towards delay, as this amount was equivalent to the rent received from a property of equivalent status located nearby. The contract i.e. MOU Ex.P2 merely states that the defendant shall pay damages @Rs. 3 lacs for every month's delay. It was thus necessary for the plaintiff to prove that she had lost rental income to the tune of Rs. 3 lacs per month due to delay in construction. She was also required to prove probable rent that she could have received, in order to enable this Court to determine reasonable compensation that could have been awarded to her for breach of contract.
52. Plaintiff did not lead any evidence to prove the rental being received by the properties of equivalent status located nearby the property of Gulmohar Park. She also admitted in her cross examination that first floor and ground floor of the suit property Suit No.8811/16 Page 35 of 38 Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
were occupied by her & her daughter after taking over possession from the defendant. It is thus clear that plaintiff never intended to put first floor and ground floor of the suit property for rental income. Plaintiff also deposed in her cross examination that during construction of the property at Gulmohar Park, she had shifted to HUDCO. She however did not aver and prove if this property at HUDCO was taken by her on rent or if it was a self acquired property and there was any loss of rental income because the property had been occupied by the plaintiff during the time of construction in the property at Gulmohar Park. It is thus not proved by the plaintiff that there actually was any loss of rental income qua property at Gulmohar Park during the period of delay in construction of the ground floor and the first floor.
53. Plaintiff deposed in her cross examination that basement of the property at Gulmohar Park was given on rent by her in 2013 but she filed no document on record to prove this averment. She also did not aver and prove how much rent she was receiving from the basement after 2013. It is moreover not averred for what purpose the basement was given on rent considering that property at Gulmohar Park is a residential property. Since no evidence on Suit No.8811/16 Page 36 of 38 Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
the aforesaid aspect was led by the plaintiff, there are no parameters before this Court to assess loss of rental income from the basement and thus court cannot assess reasonable compensation that may be awarded to the plaintiff under Section 74 of the Indian Contract Act, 1872.
54. In view of discussion above, though the plaintiff has been able to prove breach of contract by the defendant, issue no. (iv) is decided against the plaintiff because she has not proved that she suffered loss due to breach of contract.
Issue no.(v): Whether the plaintiff is entitled to interest and if so, to what amount? OPP
55. Issue no. (v) is dependent upon issue no. (iv). Since issue no. (iv) has been decided against the plaintiff, issue no. (v) is also decided against the plaintiff.
Relief
56. In view of aforesaid findings qua issue no. (i), (ii) (iii) and
(iv), the suit well as counter claim are dismissed.
Suit No.8811/16 Page 37 of 38Kumud Saxena Vs. M/s Israni Buildwell Pvt. Ltd.
57. No orders as costs.
58. Decree sheet of dismissal be prepared.
Digitally
59. File be consigned to Record Room. signed by JYOTI JYOTI KLER Date:
KLER 2019.06.01
17:17:14
+0530
Announced in the open (JYOTI KLER)
Court on 14.05.2019 ADJ05 (SOUTH DISTRICT)
(Judgment contains 38 pages) SAKET COURTS, NEW DELHI Suit No.8811/16 Page 38 of 38