Madras High Court
Dr.Paul Vijayarajan vs K.J.Mathew(Deceased) on 26 March, 2012
Author: G.Rajasuria
Bench: G.Rajasuria
IN THE HIGH COURT OF JUDICATURE OF MADRAS DATED: 26.3.2012 CORAM:
THE HONOURABLE MR. JUSTICE G.RAJASURIA A.S.Nos.983 & 984 of 2004
1.Dr.Paul Vijayarajan
2.Ranipaul .... Appellants in both the appeals vs.
1.K.J.Mathew(deceased)
2.K.Krishnamurthy Proprietor S.K.Real Estates,
3.Karnataka Bank Limited, rep.by its Manager, Annanagar Branch
4.Aleyamma Mathew
5.K.M.John
6.K.M.Mathew R4 to R6 brought on record as LRs of deceased R1 vide order of Court dt.3.11.11 made in C.M.P.No.970 of 2011 ... Respondents in A.S.No.983 of 2004
1.K.J.Mathew(deceased)
2.K.Krishnamurthy Proprietor S.K.Real Estates,
3.Aleyamma Mathew
4.K.M.John
5.K.M.Mathew R4 to R5 brought on record as LRs of deceased R1 vide order of Court dt.3.11.11 made in C.M.P.No.973 of 2011 ... Respondents in A.S.No.984 of 2004 Appeals against the common judgement and decrees dated 30.9.2003 passed by the II Additional City Civil Judge, Madras,in O.S.Nos.2701 and 2700 of 2006.A.S.No.983 of 2004
For appellants :: Mr.S.Subbiah
For Respondents :: Mr.S.D.Balaji for R2
Mr.P.B.Balaji for R4 to R6
R3-No appearance
A.S.No.984 of 2004
For appellants :: Mr.S.Subbiah
For Respondents :: Mr.S.D.Balaji for R2
Mr.P.B.Balaji for R3 to R5
COMMON JUDGEMENT
A.S.No.983 of 2004 is focussed by the plaintiffs in the suit O.S.No.2701 of 1996 and A.S.No.984 of 2004 by the defendants in the suit O.S.No.2700 of 1996, as against the common judgement and decrees dated 30.9.2003 passed by the II Additional City Civil Judge, Madras, in O.S.Nos.2701 and 2700 of 2006 which were for specific performance of an agreement to sell and for permanent and mandatory injunctions, respectively, as against the respective parties.
2. The parties, for the sake of convenience, are referred to hereunder according to their litigative status and ranking before the trial Court.
3. Compendiously and concisely, the relevant facts absolutely necessary and germane for the disposal of these appeals would run thus:
The appellants herein, as plaintiffs, filed the suit O.S.No.2701 of 1996 as against the defendants for specific performance of an agreement to sell with the following prayer:
"a) directing the first defendant to execute the deed in favour of the plaintiffs jointly or in the name of the second plaintiff, in respect of the Flat No.4, Abhirami Apartments, 12th Avenue, Anna Nagar, Madras-600 040 more fully described in the schedule annexed hereto for a sum of Rs.4,75,000.00 (Rupees four lakhs and seventy five thousand) only, by passing a decree of specific performance.
b) directing the first defendant to hand over the symbolic possession of the property being Flat No.4, Abhirami Apartments, 12th Avenue, Anna Nagar, Madras-600 040 more fully described in the schedule annexed hereto, on the execution of the sale deed;
c) If the first defendant fails to execute the sale deed by himself, then this Honourable Court may be pleased to execute the sale deed in favour of the plaintiffs jointly or in the name of the second plaintiff in respect of the Flat No.4, Abhirami Apartments, 12th Venue, Anna Nagar, Madras-600 040 more fully described in the schedule annexed hereto, at the costs and expenses of the defendants 1 and 2, and
d) alternatively directing the defendants 2 and 3 jointly and severally to pay the plaintiffs a sum of Rs.4,39,625.00 together with subsequent interest on Rs.3,25,000.00 at the rate of 21% per annum from the date of plaint till the date of realization;
e) directing the defendants to pay the costs of the suit." (extracted as such)
4. The gist and kernel of the averments in the plaint would run thus:
(i) There was an oral agreement to sell, which emerged between the plaintiffs on the one side and D1 on the other side, whereby, the latter agreed to sell in favour of the former, the property described in the schedule of the plaint for a sum of Rs.4,75,000/- and under that agreement, a demand draft for Rs.1,00,000/- (Rupees one lakh) was given by the former to the latter (but it appears, that was not encashed and it was allowed to get lapsed, as transpired from the records and the submissions made before this Court).
(ii) D2-being a person dealing in real estate, acted as agent for D1 and negotiated with the plaintiffs and in fact, he obtained a demand draft for Rs.1,25,000/- in his own name and encashed it with the false promise that he would give the said sum to D1.
(iii) Subsequently, a demand draft for Rs.2,00,000/- was given by the plaintiffs in the name of D1, but the demand draft was handed over to D2-Krishnamurthy, through P2's authorised representative-Joseph Muthumalai, however, D2 fraudulently encashed it by impersonating D1-Mathew and colluding with the officials of the D3-Bank.
(iv) A demand draft for Rs.50,000/- was issued by the second plaintiff to the said Joseph Muthumalai for keeping it, so as to give it to D1 at the time of registration of the sale deed and it was misplaced by Joseph Muthumalai.
(v) In view of these murky situations created by D2-Krishnamurthy, there was a compromise emerged before the Commissioner of Police, Chennai, before whom, the said D2-Krishnamurthy agreed to hand over the amounts which he received, as stated supra, to D1-Mathew and arrange for the execution of the sale deed by him in favour of the plaintiffs; however, D2-Krishnamurthy failed to keep up his promise, whereupon the plaintiffs having no other go, were constrained to file this suit for specific performance, as stated supra.
5. In a bid to torpedo and pulverise the averments/allegations as found set out in the plaint, D1-Mathew filed the written statement, contending thus:
(i) D2-Krishnamurthy is not the agent of D1 and the act of D2 would not bind D1.
(ii) In fact, D1 was not in receipt of any amount from the plaintiffs. Even the sum of Rs.1,00,000/- under the oral agreement was not encashed and the demand draft got lapsed.
(iii) The plaintiffs were not justified in issuing the demand draft for Rs.1,25,000/- in the name of D2-Krishnamurthy. The plaintiffs also were not justified in handing over the demand draft for Rs.2,00,000/- in the name of D1-Mathew to D2-Krishnamurthy, as D2 was never projected by D1 as his authorised agent or power of attorney.
(iv) The officials of D3-Bank conducted themselves in an unbecoming manner, for which, D1 cannot be made to part with his property.
Accordingly, D1 would pray for dismissal of the suit.
6. D2-Krishnamurthy filed the written statement denying the averments in the plaint and also disowning his liability to pay damages or return any money for that matter.
7. Whereupon issues were framed by the trial Court.
8. The suit in O.S.No.2700 of 1996(A.S.No.984 of 2004) was filed by D1 in the aforesaid suit O.S.No.2701 of 1996, seeking the following reliefs:
"(a) to grant permanent injunction restraining the defendants, their servants and agents from in any way entering or interfering and dealing with flat No.4, Abirami Apartments, 12th Main Road, Madras-40, comprised in Plot No.2182, bearing R.S.No.207/23 in the Registration District of Madras;
(b) to hand over the key of the said flat to the plaintiff herein;
(c) for costs of the suit."
(extracted as such)
9. Pithily and precisely the averments/allegations in the plaint (O.S.No.2700 of 1996) would run thus:
(i) Possession of the suit property was not handed over to the defendants (plaintiffs in O.S.No.2701 of 1996); however, it was D2-Krishnamurthy, who obtained the key of the suit property from the plaintiff-Mathew (D1 in O.S.No.2701 of 1996) for showing the premises to the defendants, but fraudulently handed over the key to the defendants, namely, Dr.Paul Vijayarajan and Mrs.Rani Paul (plaintiffs in O.S.No.2701 of 1996), whereupon the plaintiff-Mathew was constrained to file the suit seeking the aforesaid reliefs.
10. D1-Rani Paul filed the written statement resisting the suit as though they were put in possession under the said agreement to sell.
11. D2-Krishnamurthy in fact filed the written statement in support of the defendants case in O.S.No.2701 of 1996.
12. Whereupon new issues were framed by the trial Court and a joint trial was conducted.
13. During trial, the first plaintiff examined herself as P.W.1 and marked Exs.A1 to A17. On the defendants' side, D1-Mathew examined himself as D.W.1 along with D.Ws.2 to 4 and marked Exs.B1 to B19.
14. Ultimately, the trial Court dismissed the prayer for specific performance in the suit O.S.No.2701 of 1996, but granted the alternative relief thus:
"1.That the suit be and the same is hereby dismissed, inrespect by specific performance.
2.That the 2nd defendant to pay a sum of Rs.2,75,000/- (Rupees two lakhs seventy five thousand only) towards together with interest at the rate of 21% p.a.from the date of plaint i.e. 4.8.92, till the date of realization.
3.That the plaintiff is directed to get back 1 lakh deposited in R.B.I.towards the sale consideration.
4.That the suit be and the same is hereby dismissed against the 3rd defendant.
5.That there by no order as to costs."
(extracted as such)
15. As far as O.S.No.2700 of 1996 (filed by D1-Mathew) is concerned, the trial Court granted the relief thus:
"The defendants their men and agents are hereby restrained by way of permanent injunction from entering or interfering and dealing with suit property."
16. At this juncture, it is worthwhile to refer to the fact that both the suits were initially filed on the original side of this Court based on the then existed pecuniary jurisdiction and subsequently, the suits were transferred to the City Civil Court, Chennai. However, while the suit for mandatory injunction was pending before this Court, the prayer of the plaintiffs therein for restitution of the suit property, as an interim measure was negatived, as against which, O.S.A. was filed, whereupon the Division Bench of this Court granted the interim relief by putting the appellant therein (Mathew) in possession, of the premises; however, the said O.S.A. was dismissed subsequently leaving the parties to seek their remedy before the trial Court. Consequently, the respondents therein, namely, Mrs.Rani Paul and Dr.Paul Vijayarajan (plaintiffs in O.S.No.2701 of 1996) tried to get restitution of the premises, which was negatived by the trial Court. As such, both these appeals are focussed as against the common judgement and decrees passed by the trial Court on various grounds.
17. The learned counsel for the plaintiffs in O.S.No.2701 of 1996 (A.S.No.983 of 2004) would put forth and set forth his arguements, which could pithily and precisely be set out thus:
(i) The trial Court failed to take into consideration the fact that the plaintiffs in O.S.No.2701 of 1996 performed what are all they were expected to perform under the agreement to sell and they cannot be found fault with.
(ii) It was D2-Krishnamurthy, who fraudulently failed to hand over the demand draft/money to D1-Mathew, for which, the claim for specific performance ought not to have been denied to the plaintiffs by the trial Court.
(iii) The method and manner in which D1 treated D2, as revealed by the documentary evidence, would evince and evidence that D2-Krishnamurthy projected himself as the agent of D1-Mathew, who connived at such conduct and in such a case, D1-Mathew cannot be allowed to veer round and take pleas quite antithetical to what he conveyed and projected by his own conduct. The trial Court failed to take note of all these facts, but simply ordered refund of a paltry sum, as set out supra.
(iv) In any event, the plaintiffs, as an alternative relief, are entitled to claim damages from D2-Krishnamurthy and D3-the Bank, but the trial Court did not even ordered as prayed for in the plaint.
Accordingly, the learned counsel for the appellants in A.S.No.984 of 2004 (O.S.No.2701 of 1996) prayed for granting the relief of specific performance.
18. In a bid to make mincemeat of and torpedo the arguements as put forth and set forth on the side of the appellants/plaintiffs (O.S.No.2701/96), the learned counsel for D1-Mathew would advance his arguements, the pith and marrow of them would run thus:
(a) The plaintiffs in O.S.No.2701 of 1996 were not at all justified in handing over the demand drafts, one in the name of D2-Kishnamurthy and another in the name of D1-Mathew to D2, and thereby enable D2 to misuse the same.
(b) the purchasers ought to have been careful enough in handling the matter and they cannot try to capitalize their own mistake and mulct D1-Mathew with liability to part with his valuable property.
19. The learned counsel for D2-Krishnamuthy would put forth and set forth his arguements thus:
As against the judgement of the trial Court in ordering refund with damages in the form of interest, D2 is not aggrieved. Wherefore, the learned counsel would pray for confirming the judgement of the trial Court. According to the learned counsel, his client cannot be mulcted with liability to pay damages to an extent of Rs.4,39,625.00.
20. There was no representation on behalf of D3-the Bank, despite printing the name of the advocate concerned.
21. The points for consideration are as under:
(i) Whether the plaintiffs in O.S.No.2701 of 1996 were ready and willing to perform their part of the contract throughout and whether they were justified in issuing the demand draft in the name of D2 for Rs.1,75,000/- and another demand draft for Rs.2,00,000/- in the name of D1 and handing over both to D2 towards payment of the sale consideration, instead of handing over the amounts contemplated therein in cash or demand draft directly to D1-Mathew?
(ii) Whether D2-Krishnamurthy could be projected as the legally authorised agent of D1-Mathew?
(iii) Whether the plaintiffs in O.S.No.2701 of 1996 are entitled to specific performance? Or in the alternative, for refund of the amounts paid by the plaintiffs with damages as prayed in the plaint in O.S.No.2701 of 1996?
(iv) Whether the same plaintiffs in O.S.No.2701 of 1996 as defendants in O.S.No.2700 of 1996 are entitled to retain possession of the suit property?
(v) Whether there is any perversity or illegality in the judgement and decrees of the trial Court.
22. All these points are taken together for discussion as they are interwoven and interlinked, interconnected and entwined with one another.
23. The whole kit and caboodle of facts, as could be inferred and understood, after analysing and scanning the evidence and records, might broadly but briefly, narratively but precisely be set out thus:
Indubitably and indisputably, earlier there was no written agreement but an oral one, which emerged between the plaintiffs and D1. However, only after the arisal of the dispute, the parties before the Police Commissioner, Chennai, entered into Ex.A15, which is in reiteration of the earlier oral agreement, but with additions in the form of tripartite agreement which instead of solving the problem or pouring oil on troubled water added fuel to the fire.
24. A bare perusal and poring over of Ex.A15 would display and evince that the said Krishnamurthy was made the pivotal figure in that agreement, for performance of the contract. Unassailably and unarguably the fact which emerged thereafter was to the effect that the said Krishnamurthy did not co-operate with the parties concerned, namely, the plaintiffs and D1 for getting the agreement to sell fructified in the form of sale deed being executed by D1 in favour of the plaintiffs, because the said Krishnamurthy did not honour his commitment in Ex.A15 by handing over the amounts which he fraudulently misappropriated.
25. The core question arises as to who was at fault in reposing confidence in Krishnamurthy.
26. Apparently and obviously there was no written authority executed by D1-Mathew in favour of D2-Krishnamurthy. The plaintiffs would try to project and portray as though the manner in which Krishnamurthy and D1 conducted themselves gave impression to the plaintiffs that the said Krishnamurthy was the authorised agent of D1. In my considered opinion mere belief on the part of the plaintiffs would not absolve them from being careful. Even for arguement's sake it is taken that the plaintiffs were given to understand that Krishnamurthy was the agent of D1-Mathew, still no prudent purchaser was expected to issue demand draft in the name of the agent when the principal was very much available.
27. The prayer for specific performance was rejected by the trial Court taking into account the fact that the plaintiffs were not diligent enough in getting the matter processed strictly in accordance with law. No doubt, there is no mala fide intention on the part of the plaintiffs, but they believed D2-Krishnamurthy and because of that alone, they could not get their claim processed legally.
28. I would like to recollect the following decisions of the Honourable Apex Court:
(i) 2011(12) SCC 18 [Saradamani Kandappan vs. S.Rajalakshmi and others]
36. The principle that time is not the essence of the contracts relating to immovable properties took shape in an era when market values of immovable properties were stable and did not undergo any marked change even over a few years (followed mechanically, even when value ceased to be stable). As a consequence, time for performance, stipulated in the agreement was assumed to be not material, or at all events considered as merely indicating the reasonable period within which contract should be performed. The assumption was that grant of specific performance would not prejudice the vendor defendant financially as there would not be much difference in the market value of the property even if the contract was performed after a few months. This principle made sense during the first half of the twentieth century, when there was comparatively very little inflation, in India. The third quarter of the twentieth century saw a very slow but steady increase in prices. But a drastic change occurred from the beginning of the last quarter of the twentieth century. There has been a galloping inflation and prices of immovable properties are no longer stable or steady. We can take judicial notice of the comparative purchase power of a rupee in the year 1975 and now, as also the steep increase in the value of the immovable properties between then and now. It is no exaggeration to say that properties in cities, worth a lakh or so in or about 1975 to 1980, may cost a crore or more now.
37. The reality arising from this economic change cannot continue to be ignored in deciding cases relating to specific performance. The steep increase in prices is a circumstance which makes it inequitable to grant the relief of specific performance where the purchaser does not take steps to complete the sale within the agreed period, and the vendor has not been responsible for any delay or non-performance. A purchaser can no longer take shelter under the principle that time is not the essence in performance of contracts relating to immovable property, to cover his delays, laches, breaches and "non-readiness". The precedents from an era, when high inflation was unknown, holding that time is not the essence of the contract in regard to immovable properties, may no longer apply, not because the principle laid down therein is unsound or erroneous, but the circumstances that existed when the said principle was evolved, no longer exist. In these days of galloping increases in prices of immovable properties, to hold that a vendor who took an earnest money of say about 10% of the sale price and agreed for three months or four months as the period of performance, did not intend that time should be the essence, will be a cruel joke on him, and will result in injustice. Adding to the misery is the delay in disposal of cases relating to specific performance, as suits and appeals therefrom routinely take two to three decades to attain finality. As a result, an owner agreeing to sell a property for rupees one lakh and received rupees ten thousand as advance may be required to execute a sale deed a quarter century later by receiving the remaining rupees ninety thousand, when the property value has risen to a crore of rupees.
41. A correct prospective relating to the question whether time is not of the essence of the contract in contracts relating to immovable property, is given by this court in K.S.Vidyanadam v. Vairavan (by Jeevan Reddy,J.,) who incidentally was a member of the Constitution Bench in Chand Rani. This Court observed:
"10. It has been consistently held by the courts in India, following certain early English decisions, that in the case of agreement of sale relating to immovable property, time is not of the essence of the contract unless specifically provided to that effect ...............in the case of urban properties in India, it is well-known that their prices have been going up sharply over the last few decades particularly after 1973*.
11.We cannot be oblivious to the reality and the reality is constant and continuous rise in the values of urban properties fuelled by large-scale migration of people from rural areas to urban centres and by inflation. ...........Indeed, we are inclined to think that the rigor of the rule evolved by courts that time is not of the essence of the contract in the case of immovable properties evolved in times when prices and values were stable and inflation was unknown requires to be relaxed, if not modified, particularly in the case of urban immovable properties. It is high time, we do so."
42. Therefore, there is an urgent need to revisit the principle that time is not of the essence of the contracts relating to immovable properties and also explain the current position of law with regard to contracts relating to immovable property made after 1975, in view of the changed circumstances arising from inflation and steep increase in prices. We do not propose to undertake that exercise in this case, nor referring the matter to a larger Bench as we have held on facts in this case that time is the essence of the contract, even with reference to the principles in Chand Rani and others cases. Be that as it may.
43. Till the issue is considered in an appropriate case, we can only reiterate what has been suggested in K.S.Vidyanadam.
(i) The Courts, while exercising discretion in suits for specific performance, should bear in mind that when the parties prescribe a time/period, for taking certain steps or for completion of the transaction, that must have some significance and therefore time/period prescribed cannot be ignored.
(ii) The courts will apply greater scrutiny and strictness when considering whether the purchaser was "ready and willing" to perform his part of the contract.
(iii) Every suit for specific performance need not be decreed merely because it is filed within the period of limitation by ignoring the time-limits stipulated in the agreement. The courts will also "frown" upon suits which are not filed immediately after the breach/refusal. The fact that limitation is three years does not mean that a purchaser can wait for 1 or 2 years to file a suit and obtain specific performance. The three-year period is intended to assist the purchasers in special cases, as for example, where the major part of the consideration has been paid to the vendor and possession has been delivered in part-performance, where equity shifts in favour of the purchaser.
(iii) 2011(6) CTC 112 (SC) [Citadel Fine Pharmaceuticals vs. Ramaniyam Real Estates P.Ltd. And another]
45. In K.S. Vidyanadam and others vs Vairavan, 1997 (1) CTC 628 (SC) : 1997 (3) SCC 1, this Court explained how discretion is to be exercised by the Court before granting specific performance. This Court held that in cases of urban properties in India it is well known that prices are going up sharply over the last few decades particularly after 1973. In Vidyanadam (supra) the Court was dealing with a property in Madurai in the State of Tamil Nadu and it was argued before this Court by referring to the Madras High Court judgment in S.V. Sankaralinga Nadar vs P.T.S. Ratnaswami Nadar, AIR 1952 Mad 389, that mere rise in price is no ground for denying the specific performance. This Court did not agree with the decision of the Madras High Court and held that the Court cannot be oblivious of the reality of constant and continuous rise in the value of urban properties. In that context the time limit set in the contract has to be strictly construed. In the case of Vidyanadam (supra) there is no such strict stipulation as time being of the essence of the contract as is in the instant case even then the Court refused to grant the relief of specific performance.
46. In Vidyanadam (supra) reference was made to a Constitution Bench judgment of this Court in Chand Rani (Smt.) (Dead) by Lrs. vs Kamal Rani (Smt.) (Dead) by Lrs., 1993 (1) SCC 519. The same question, whether time was of essence of the contract was discussed in Chand Rani (supra). The Constitution Bench of this Court while dealing with this question referred to another decision of this Court in the case of Hind Construction Contractors by its Sole Proprietor, Bhikamchand Mulchand Jain (Dead) by Lrs. vs State of Maharashtra, 1979 (2) SCC 70. By referring to various judgments, the Constitution Bench in Chand Rani (supra) formulated the proposition that even where parties have expressly provided time to be of the essence of the contract, such a stipulation will have to be read along with other terms of the contract. Such other terms, on a proper construction, may exclude the inference that the completion of work by a particular date was meant to be fundamental. The learned Judges indicated the following circumstances which may indicate a contrary inference; (a) if a contract includes clauses providing for extension of time in certain contingencies, or (b) if there are clauses for payment of fine or penalty for every day or week the work undertaken remains unfinished after the expiry of time. The Constitution Bench held that such clauses would be construed as rendering ineffective the express provision relating to time being of the essence of contract (see para 22 at page 528 of the report).
47. In the instant case, in the said agreement no such clause, as aforesaid, exists. Rather the stipulation as time being of the essence of the contract was specifically mentioned in Clause 10 and the consequences of non-completion are mentioned in Clause 9. So from the express terms of the contract and the commercial nature of the transaction and the surrounding circumstances make it clear that the parties intended time in this case was intended to be of the essence of the contract.'
29. A bare perusal of those decisions would reveal that the plaintiff who seeks specific performance must be diligent enough in getting the sale deed executed in his favour and ever since the date of emergence of the agreement to sell, he should be ready and willing to perform his part of the contract.
30. Even before the Police Commissioner, the plaintiffs having come to know of the misdeeds of D2-Krishnamurthy, did not come forward to pay the full consideration to D1-Mathew and get the sale deed executed in their favour. In fact, on 30.10.1991, the date of emergence of Ex.A15, had the plaintiffs offered to pay the entire sale consideration of Rs.3,75,000/-, certainly D1-Mathew might have executed the sale deed, but the clauses in Ex.A15 would not reveal the same.
31. No doubt, the plaintiffs' remedy as against D2-Krishnamurthy and D3-the bank, is one thing and their right to get specific performance of an agreement to sell as against D1-Mathew is another. But it appears, as on the date of emergence of Ex.A15, both those factors have been blended together and because of that tripartite agreement as observed by me supra now the plaintiffs are not in a position to get the specific performance enforced and the trial Court was right in rejecting their claim for specific performance, relating to which no interference by this Court is warranted.
32. The ratiocination adhered to supra in not granting the relief of specific performance in favour of plaintiffs in O.S.No.2701 of 1996 would as a sequela enable the plaintiffs for the return of amount with damages in the form of interest.
33. Here, the conduct of the plaintiffs in issuing demand draft for a sum of Rs.1,25,000/- in the name of Krishnamurthy, who is not the owner of the property bespeak and betoken that the plaintiffs were not careful and cautious enough in getting the matter processed.
34. No doubt, the evidence would connote and denote that it is the said D2-Krishnamurthy who misrepresented himself before D3-the bank and got the demand draft for Rs.2,00,000/- in the name of D1-Mathew, encashed and for which, undoubtedly D2-Krishnamurthy should be made liable to return the total sum with damages.
35. The trial Court without considering that fact simply curtailed the claim and awarded as aforesaid the sum of Rs.2,75,000/- with subsequent interest. The trial Court also without applying its mind simply exonerated D3-the bank, from its liability, which in my opinion is not correct, because, the bank was not expected to release the amount due payable under the demand draft for Rs.2,00,000/- in the name of D1-Mathew to D2-Krishnamurthy, on his misrepresentation, for which D1 cannot be made liable and the plaintiffs cannot be made to go without any remedy.
36. In the discharge of their duty alone the officials of D3 bank conducted themselves and allowed D2-Krishnamurthy to impersonate himself before the bank and encash the sum of Rs.2,00,000/- due payable under the demand draft in the name of D1-Mathew. It would not lie in the mouth of the bank to say that they are not liable to compensate the plaintiffs.
37. Relating to bankers liability, certain excerpts from the famous treatise 'Ratanlal & Dhirajlal - The Law of TORTS (25th Edition 2006), could fruitfully be referred to:
"With respect to money placed in their hands by their customers for the ordinary purposes of banking, bankers hold themselves out as persons worthy of trust, and as persons of skill. Their duty, in respect of paying their customer's cheques, is to honour them to any amount not exceeding the credit balance due to the customer from the banker at any material time. A failure to do so constitutes negligence and the bankers are liable in damages, which may include damages for injury to the credit of the customer. A Banker is vicariously liable for the negligent act of its employees done is the course of employment.
. . . . . . . .
. . . . . . . .
The payee of a demand draft sent it by unregistered post to his Calcutta office. During its transmission, a stranger, having obtained wrongful possession, forged an endorsement and delivered it to the defendant bank for collection and credit of the proceeds to his account. The bank got the draft cashed, credited the proceeds to the account of its constituent and allowed him to withdraw the money. In an action by the payee for conversion, the bank contended that it was an innocent agent and hence not liable, that there had been no conversion as the draft was already considered to be cash in mercantile usage, that the bank merely returned it to the person from whom it received and, further, inasmuch as the payee acted negligently in sending the draft by ordinary post, he was estopped from recovering the amount. It was held that the bank was liable to the payee for conversion and that the payee's negligence, if any, was not the direct cause of the loss and that there was no estoppel."
38. The trial Court in the judgement held that the bank failed to exercise proper care and caution, which ultimately resulted in heavy loss to the plaintiffs. After giving such finding, the trial Court did not direct D3-the bank to repay jointly and severally the said sum of Rs.2,00,000/- contemplated in the said demand draft, along with D2-Krishnamurthy, but the trial Court simply dismissed the suit as against D3 for no good reason. From the evidence available on record it is quite clear that it was D2, who obtained the said sum of Rs.2,00,000/- and not D1 and in view of the same, before the Police Commissioner in Ex.A15, D2-Krishnamurthy virtually admitted his liability and undertook to pay the same along with other amounts, which he received from the plaintiffs.
39. Accordingly it is obvious and axiomatic that the learned counsel for the plaintiffs (O.S.No.2701 of 1996) is right in arguing that the trial Court should have mandated the bank also to pay the amount claimed in the alternative prayer in the plaint along with D2-Krishnamurthy. However, I would like to observe at this juncture that for Rs.1,25,000/- relating to which demand draft was issued by the plaintiffs in the name of D2-Krishnamurthy, D3-the bank cannot be found fault with and it is quite obvious and an elephant in the room. D3-being the banker could not be expected to refuse to honour the demand draft in the name of D2-Krishnamurthy himself, but the bank could only be found fault with for it having honoured the request of D2-Krishnamurthy for encashing the demand draft for Rs.2,00,000/-, which was in the name of D1-Mathew. As such, the bank should be made liable jointly and severally with D2-Krishnamurthy for the return of Rs.2,00,000/- with damages, so to say, in the form of interest at the rate of 18% per annum. I make it clear that D2-Krishnamurthy is liable for the entire Rs.3,70,000/- (rupees three lakhs seventy thousand) with interest at the rate of 18% per annum from the date of Demand Drafts till the date of decree and at 6% per annum from the date of decree till the date of realization.
40. The learned counsel for the appellants would clarify as to how the suit amount was calculated, as under:
1. Delivery of the demand draft in the name of S.K.Krishnamurthy under Exhibit A2/B8 on 28.3.1991 Rs.1,25,000.00
2.The cash payment to S.K.Krishnamurthy under Exhibit A4 on 28.3.1991 Rs. 45,000.00
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Rs.1,70,000.00
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3. Interest from 28.3.1991 to 30.4.1992 for 13 months and 3 days Rs. 33,405.00
4.Demand Draft taken on 5.4.1991 in the name of K.J.Mathew was Rs.2,00,000.00
5.Date of delivery of the demand draft to Karnataka Bank 30.4.1991
6.Interest at the rate of 18% per annum on Rs.2,00,000/- worked out per month Rs. 3,000.00
7. Interest from 30.4.1991 to 30.4.1992 for 12 months and one day Rs.36,100.00
8.Total Rs.4,39,505.00
41. Accordingly, the judgement and decree in O.S.No.2701 of 1996 shall stand modified as under:
(i) D2-Krishnamurthy and D3-the bank are liable to pay jointly and severally a sum of Rs.2,00,000/- (rupees two lakhs) towards principal with pre litigation interest calculated at Rs.36,100/- with 18% interest per annum from the date of suit till the date of decree and at the rate 6% per annum from the date of decree till the date of realization on Rs.2,00,000/-.
(ii) D2-Krishnamurthy is liable to pay individually a sum of Rs.1,70,000/-(Rs.1,25,000/- + 45,000/- ) (Rupees one lakh seventy five thousand) with pre-litigation interest at Rs.33,405/- with 18% interest per annum from the date of suit till the date of decree and at 6% interest per annum from the date of decree till the date of realization on Rs.1,70,000/-.
(iii) D2-Krishnamurthy and D3-the bank shall also bear the cost throughout proportionately, as above.
42. Accordingly, A.S.No.983 of 2004 is partly allowed. The judgement and decree of the trial Court in O.S.No.2701 of 1996 shall stand modified to the extent indicated above.
43. Relating to the trial Court's judgement in decreeing the suit O.S.No.2700 of 1996 for mandatory injunction is concerned, I am of the considered view that in view of having decided the aforesaid A.S.No.983 of 2004 (O.S.No.2701 of 1996) that the plaintiffs therein are not entitled to specific performance, their prayer for regaining possession loses its significance.
44. The trial Court, after considering the oral and documentary evidence gave a categorical finding that there was no consensus between the plaintiffs and D1 in O.S.No.2700 of 1996 that the plaintiffs should be put in possession under the agreement to sell. Had D1 intended so, he could have specified the said fact in the agreement itself.
45. The preponderance of probabilities would govern the adjudication in civil cases. Here, taking into account the fact that it is Krishnamurthy, who meddled with the matter in an uncouth and unbecoming manner, the plaintiffs and D1-Mathew were put to trouble and it is readily inferable and understandable that D1-Mathew might not have intended to put the plaintiffs in possession of the suit property and that too, without receiving any amount from the plaintiffs. As such, the findings of the trial Court in O.S.No.2700 of 1996 warrants no interference. Accordingly, the judgement and decree in O.S.No.2700 of 1996 shall stand confirmed and consequently, the appeal A.S.No.984 of 2004 shall stand dismissed. However, there is no order as to costs in the appeal A.S.No.984 of 2004.
Msk 26.3.2012 Index Internet: To The II Additional City Civil Judge, Madras G.RAJASURIA, J msk A.S.Nos.983 & 984 of 2004 26.3.2012