Delhi District Court
Sh. Ajit Singh vs Smt. Devinder Kaur on 13 December, 2014
-1-
IN THE COURT OF SH. RAJESH KUMAR SINGH
ADDITIONAL DISTRICT JUDGE-5, CENTRAL DISTRICT
TIS HAZARI COURTS, DELHI
Unique No. 02401C0813182006
Suit No. 86/11
Sh. Ajit Singh
through LR Sh. Harvinder Singh
r/o. 135-136, First Floor,
Pocket-16, Sector-24,
Rohini, New Delhi-110085.
.......Plaintiff.
Versus
Smt. Devinder Kaur
w/o. Sh. Jagjit Singh
r/o. A-6/7, 3rd Floor,
Rana Pratap Bagh,
Delhi-110007.
......Defendant.
DATE OF INSTITUTION:08/09/2006
JUDGMENT RESERVED ON:14/11/2014
DATE OF JUDGMENT:13/12/2014
JUDGMENT
1. Plaintiff filed the suit for recovery of Rs. 10 lakhs and for permanent injunction. During the pendency of the suit he expired. Application Suit No. 86/11 Page1/15 -2- under Order 22 Rule 3 CPC was moved on 23.10.13. Plaintiff was survived by his wife and children. The other legal heirs of the plaintiff gave no objection in favour of Sh. Harvinder Singh (son of the plaintiff) and also authorised him to pursue the matter. Vide order dt. 08.01.14 the application was allowed and Sh. Harvinder Singh was brought on record as LR of the deceased plaintiff.
2. Brief facts of the case set up by the parties in their pleadings, are that the plaintiff and the defendant entered into an agreement dt. 12.01.06 whereby defendant agreed to sell third floor (top floor) of the property bearing no. A-6/7 situated at Rana Pratap Bagh, Delhi with roof rights for a sum of Rs. 49,31,000/-. Plaintiff paid a sum of Rs. 5 lakhs to the defendant as earnest money and part payment. Rs. 20,000/- was paid in cash and Rs. 4,80,000/- was paid by cheque. Balance consideration was to be paid at the time of execution of the sale deed and last date for performance of the contract was 31.03.06. In the agreement it was stated that the property was free from all encumbrances but the fact was that the Suit No. 86/11 Page2/15 -3- property was mortgaged with Federal Bank, Karol Bagh against a loan of Rs. 17.5 lakhs. According to the plaintiff, defendant concealed this fact from him. Plaintiff asked the defendant vide letter dt. 18.03.06 to clarify the position and also to produce the completion certificate but the defendant did not reply. Defendant alleges that the fact that the property was kept as security against an overdraft facility granted to the firm of her husband by the bank, was disclosed to the plaintiff as well as to the property dealer at the time of execution of the agreement. Plaintiff was supposed to pay a sum of Rs. 20 lakhs to redeem the property from the bank but he did not pay this amount. Defendant had to sell her jewelery, car and stock of the firm of her husband to clear the debt of the bank. Plaintiff sent notice dt. 29.03.06 whereby he rescinded the contract but he again sent a telegram dt. 30.03.06 and asked the defendant to perform her part of the contract. According to defendant, the agreement could not be revived after plaintiff rescinded the contract. Plaintiff committed breach of the agreement and therefore the earnest money was forfeited. On the other hand, plaintiff claims Suit No. 86/11 Page3/15 -4- that defendant committed breach of the agreement and therefore he is entitled to recover double the amount of the earnest money as provided in the agreement.
3. Issues were framed vide order dt. 09.05.07. Plaintiff has examined himself as PW1. He has also examined six other witnesses. Defendant has examined her husband as DW1. I have considered the arguments of Ld. Counsel for the parties and I have perused the record. Issues are decided as hereunder.
4. Issue no. 1 : Whether plaintiff has cause of action? OPP.
AND Issue no. 2 : Whether plaintiff is entitled to relief claimed? OPP.
(4.1) Both issues are connected and therefore I shall decide them by a common discussion. The first question is whether plaintiff could ask the defendant to perform the contract by sending the telegram dt. 30.03.06 which is Ex. PW1/3? Plaintiff has stated in Suit No. 86/11 Page4/15 -5- para 10 of the plaint that he rescinded the contract vide notice dt. 29.03.06 as defendant failed to show the original documents, complete the formalities such as payment of the house tax and to show the clearances in respect of the property. Defendant has rightly stated that after revoking the agreement vide letter dt. 29.03.06, plaintiff could not have demanded performance of the contract. Section 66 of The Contract Act provides that the rescission of a voidable contract may be communicated or revoked in the same manner, and subject to the same rules, as apply to the communications or revocation of the proposal. Section 4 of The Contract Act, 1872 provides that communication of the revocation is complete as against the person who makes it, when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it. Carbon copy of notice dt. 29.03.06 is Ex. PW1/E and it was sent by post on the same day. Receipt issued by the post office is Ex. PW1/F. Communication of the revocation became complete as against the plaintiff after dispatching the notice by the post. Plaintiff could not Suit No. 86/11 Page5/15 -6- have asked for the performance of the contract by sending the telegram Ex. PW1/G. In the present suit, plaintiff has not prayed for decree for rescission of the contract under Section 27 of The Specific Relief Act. He has claimed compensation under clause 3 of the agreement. Question arises whether in absence of prayer under Section 27 of The Specific Relief Act, can the court decide whether the plaintiff rightly rescinded the contract and whether he is entitled to compensation? In the matter of Hungerford Investment Trust Vs. Haridas AIR 1972 SC 1826 Hon'ble Supreme Court has held that a party has an option to rescind a contract and no aid of the court is necessary in this behalf. The court only adjudicates upon the antecedent right of the parties. By grant of declaration that the contract has been validly rescinded the court does not create a right in favour of a party. In the present case, defendant took the stand that plaintiff rescinded the contract. Parties went to trial with clear understanding that the issue of rescission of contract and the grounds for rescission of contract are involved in the suit. Therefore the court can decide whether the plaintiff rightly Suit No. 86/11 Page6/15 -7- rescinded the contract and whether he is entitled to any compensation.
(4.2) In paragraph 9 of the plaint, plaintiff has stated that he sent letter dt. 18.03.06 to the defendant. The letter is Ex. PW1/C. In the written statement defendant admits that she received the letter. By the letter dt. 18.03.06, plaintiff asked the defendant to (a) show the original documents of the property, (b) to show the completion certificate and (c) to produce the no dues certificate for house tax and electricity. The aspect of no dues certificate for house tax and electricity has not been raised during trial. Therefore I have to confine myself to the aspect of production of original documents of title and the aspect of the production of the completion certificate by the defendant. I shall firstly take up the aspect of completion certificate of the property.
(4.3) Clause 5 of the agreement Ex. PW1/A reads as "That the first party hereby assure the second party, that the said property, under sale is free from all sorts of encumbrances such as sale, mortgage, gift, lien, lease, court case, legal flaws, litigation, surety, burden, Suit No. 86/11 Page7/15 -8- loan, decree or any dispute and defect etc.". It is pertinent to note that the defendant / seller made a declaration that the property was free from all legal flaws and defect. If a property is constructed in violation of the municipal laws, it would be said to have a legal flaw or defect. PW5 is Mr. Ashok Kumar who was the property dealer and he arranged the deal. In his cross examination he has stated that "It is correct that after the execution of agreement dt. 12.01.06 the threat of demolition of the third floors in all over Delhi was there due to the various orders of Hon'ble Supreme Court of India and Hon'ble Delhi High Court". This answer was given in response to a question put by Ld. Counsel for the defendant. The answer given by PW1 shows that construction of third floor was not permitted under the municipal laws during the relevant time. In the written arguments it is stated in paragraph C that MCD started demolition drive against constructions done at third floor but property of the defendant was protected as per the orders of the Hon'ble Courts. Defendant has not produced any document from which it can be ascertained whether the third floor which is subject matter of the Suit No. 86/11 Page8/15 -9- suit was duly constructed after taking permission from the municipal authorities. Defendant has also not disclosed the details of the court orders by which her property was protected. Defendant admits that she received the letter Ex. PW1/C dt. 18.03.06 but she did not reply. The fact that the property in question was not authorised would not bring it within the purview of Section 23 & 24 of The Indian Contract Act, 1872. However this fact gives a right to the plaintiff to rescind the contract. There is no presumption that plaintiff was aware at the time of execution of Ex.PW1/A about the legal defect in construction of the property and defendant has also not claimed that plaintiff was aware of this defect. In the written statement she has stated about the aspect of charge of the bank over the property but she is silent on the aspect of completion certificate. Therefore plaintiff could have rescinded the contract on this ground.
(4.4) Now I take up the aspect of the property being under a charge of the Federal Bank against the O.D. facility availed by the husband of the defendant. In the agreement Ex. PW1/A which is Suit No. 86/11 Page9/15 -10- quoted above, defendant made a categorical declaration that the property was free of all encumbrances, lien, loan etc. This declaration was against the true fact that is the property was mortgaged to the bank. According to the defendant, the plaintiff as well as the property dealer were informed at the time of negotiations that the documents of the property had been submitted to the bank as security and that plaintiff would be required to pay a sum of Rs. 20 lakhs to redeem the property from the bank. PW5 has also admitted this fact in his cross examination. Defendant claims that on the insistence of the plaintiff these facts were not mentioned in the agreement Ex. PW1/A. As per clause 1 of the agreement the balance consideration i.e. Rs. 44,31,000/- was to be paid at the time of execution of the sale deed before the sub registrar. Question arises whether the oral evidence regarding the alleged agreement between the parties to pay a further sum of Rs. 20 lakhs can be admitted? The terms of the agreement were reduced in writing by the parties. No oral evidence can be adduced for the purpose of contradicting, varying, Suit No. 86/11 Page10/15 -11- adding to or subtracting from the terms of the agreement except on the grounds provided under Section 92 of The Indian Evidence Act, 1872. The variation propounded by the defendant and admitted by PW5 is not covered under any of the provisos of Section 92 of The Indian Evidence Act, 1872. Clause 1 clearly provided that the balance consideration was to be paid at the time of execution of the sale deed. It also mentioned the amount of earnest money which the plaintiff had to pay. Clause 1 covers the aspect of earnest money and part payment to be made by the plaintiff before execution of the sale deed. Whatever was the condition precedent to attaching the obligation under the contract was set out in clause 1 and therefore no oral evidence regarding a separate agreement for further par payment of Rs. 20 lakhs can be admitted. Section 18 of The Indian Contract Act, 1872 defines mis-representation. Sub clause 1 provides that mis-representation means and includes the positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true. The representation made by the defendant in clause 5 Suit No. 86/11 Page11/15 -12- of the agreement was clearly false to her knowledge and this gave a right to the plaintiff to rescind the contract as the agreement became voidable under Section 19 r/w Section 64 of The Indian Contract Act, 1872.
(4.5) The discussion above shows that plaintiff had the right to rescind the contract for mis-representation regarding the legal flaw in the construction of the property as well as the mis-representation regarding the property being free from all encumbrances. Now question arises about the consequences of rescission of contract and the relief which can be granted to the plaintiff. (4.6) Section 75 on the Contract Act provides that a person who rightfully rescinds a contract is entitled to compensation for any damage which he has sustained through the non fulfillment of the contract. Section 55 (6) (b) of The Transfer of Property Act, 1882 provides that unless the buyer has improperly decline to accept delivery of property, he is entitled to a charge on the property as against the seller and all persons claiming under him, to the extent of the seller's interest in the property, for the amount of any Suit No. 86/11 Page12/15 -13- purchase-money properly paid by him in anticipation of the delivery and for interest on such amount; and when he properly declines to accept the delivery he is also entitled to the earnest money (if any) and for the costs (if any) awarded to him in a suit to compel specific performance of the contract or to obtain a decree for its rescission. (4.7) The legal provisions mentioned above show that plaintiff is entitled for refund of the earnest / purchase-money, compensation for loss if any suffered by him and he is also entitled for interest and cost of the suit. Plaintiff cannot claim the compensation under Clause 3 of the agreement. His claim for damages has to be considered under section 75 of The Indian Contract Act, 1872 r/w Section 55 (6) (b) of The Transfer of Property Act. Plaintiff has not proved that he suffered any loss by rescinding the contract. Therefore he is not entitled to any compensation except refund of the earnest money with interest and proportionate cost of the suit. (4.8) In view of the above discussion, it is held that plaintiff is entitled to the refund of the earnest money of Rs. 5 lakhs paid by him to the defendant. Plaintiff rescinded the contract vide letter dt. Suit No. 86/11 Page13/15 -14- 29.03.06 but again claimed performance of contract. He is not entitled to pre-suit interest and he is only entitled to pendente lite and future interest. The transaction between the parties was not commercial in nature and therefore plaintiff is entitled to interest @ 6% p.a. as provided under Section 34 CPC. Plaintiff is also entitled to injunction restraining the defendant from transferring the property in question till claim of the plaintiff for refund of the earnest money with interest (as directed above) is satisfied.
5. RELIEF:
The suit is decreed in favour of the plaintiff. Defendant is directed to pay to the plaintiff a sum of Rs. 5 lakhs (Rupees Five Lakhs only) with simple pendentelite and future interest @ 6% p.a. with proportionate cost of the suit. Defendant is restrained from selling, alienating or creating third party interest in respect of third floor portion of property bearing no. A-6/7, constructed on area measuring 470 sq. yards situated at Rana Pratap Bagh, Delhi till the claim of the plaintiff for refund of the earnest money with Suit No. 86/11 Page14/15 -15- interest and cost as allowed by the court is satisfied. Decree sheet be prepared.
File be consigned to record room.
ANNOUNCED IN THE OPEN COURT ON 13/12/2014 (RAJESH KUMAR SINGH) Additional District Judge -5/Central Tis Hazari Courts/ Delhi Suit No. 86/11 Page15/15