Bangalore District Court
Smt.M.Lalitha vs Smt.S.Sandhya on 24 January, 2023
KABC010101512007
IN THE COURT OF THE XI ADDL. CITY CIVIL & SESSIONS
JUDGE, BENGALURU CITY (CCH-8)
PRESENT
SRI SANTHOSHKUMAR SHETTY N., B.Com., LL.M.
XI Addl. City Civil & Sessions Judge,
Bengaluru City.
DATED THIS THE 24 th DAY OF JANUARY, 2023
O.S.No.1641/2007
Plaintiffs: 1. Smt.M.Lalitha,
W/o.Sri.D.Murugesh,
Aged about 66 years.
2. Sri.D.Murugesh,
S/o.Dorai Swamy,
Aged about 73 years.
Both R/at No.635,
10th 'E' Main Road,
6th Block, Rajajinagar,
Bengaluru -10.
(By Adv. Sri.Ganesh Kumar R.)
Vs.
Defendants: 1. Smt.S.Sandhya,
2 O.S.No.1641/2007
W/o.M.Sudharshana Raju,
Aged about 37 years.
2. Sri.M.Sudharshana Raju,
S/o.late K.Muniswamy Raju,
Aged about 45 years.
3. Sri.M.Vishwanath
@ M.Vishwanath Raju,
S/o.late K.Muniswamy Raju,
Aged about 43 years.
All are R/at No.4/1,
30th Cross, Kilari Road,
Bengaluru - 53.
4. Smt.Susheelamma,
Since dead by her LRs:
4(a). Kalavathy,
Major,
D/o.late K.Muniswamy Raju.
4(b). Kokila V.,
Major,
D/o.late K.Muniswamy Raju.
4(c). Chandrakala G.,
Major,
D/o.late K.Muniswamy Raju.
Defendants No.4(a) to 4(c) are
Available at No.4/1,
30th Cross, Kilari Road,
Bengaluru - 560 053.
3 O.S.No.1641/2007
5. Sri.R.Mohan,
S/o.B.S.Ramalingam,
Aged about 53 years.
6. Smt.M.S.Selvi,
W/o.Sri.R.Mohan,
Aged about 42 years.
7. Sri.M.Sarvesh,
S/o.Sri.R.Mohan,
Aged about 19 years.
All are residing at No.59/1,
1st 'N' Block, Rajajinagar,
Bengaluru -10.
(D1 to D3 & D4(a) to 4(c) by
Adv. Sri.Prashanth U.T.
D4 - Dead
D5 to D7 by Adv. Sri.B.G.Thimmaiah)
Date of institution of the suit : 24.02.2007
Nature of the suit : Declaration and Specific
Performance of Contract/
Refund of Earnest Money
Date of commencement of
Recording of the evidence : 14.10.2022
Date on which the Judgment
was pronounced : 24.01.2023
Total Duration : Years Months Days
15 11 00
XI ADDL., CITY CIVIL & SESSIONS JUDGE,
BENGALURU CITY.
4 O.S.No.1641/2007
JUDGMENT
This is a suit filed by the plaintiffs for the relief of declaration that the Sale Deeds dated 06.09.2006 and 06.11.1996 executed by the defendants No.1 to 4 in favour of the defendants No.5 to 7 in respect of the suit schedule property are null and void and not binding on the plaintiffs and to direct the defendants to execute the Regular Sale Deed in their favour in respect of the suit schedule property. Or in the alternative, direct the defendants No.1 to 4 to refund the sum of Rs.14,10,000/- with interest at the rate of 18% per annum, from the date of Sale Agreement till realisation, with liquidated damages of Rs.4,10,000/- along with cost of the suit.
2. The brief facts of the case of the plaintiffs is that, the defendants are the absolute owners of the piece and parcel of the property bearing Nos.21/3, 21/4. 21/5 and 21/6, measuring East to West: 20 feet and North to South: 90 feet, consisting of Cellar, Ground Floor, 1st Floor and 2nd Floor, situated at 10th 'C' Main Road, 6th Block, Rajajinagar, Bengaluru. The defendants No.1 to 4 have purchased the suit schedule property under the Registered Sale Deeds dated 29.01.1992 and 10.02.1992, from their vendor Smt.Shanthamma. After purchase, khatha came to be changed in the names of defendants No.1 to 4 and they jointly and severally agreed to sell the suit schedule property in favour of the plaintiffs for the sum of Rs.40,00,000/- and executed the Sale Agreement dated 31.03.2003. But the defendants No.1 to 4 failed to perform their part of the contract. Hence the plaintiffs filed a suit in O.S.No.5882/2005 for the relief of specific performance of 5 O.S.No.1641/2007 contract. The defendants Nos.1 to 4 approached the plaintiffs and requested them to pay the higher price and agreed to execute Regular Sale Deed. Considering their request, the plaintiffs withdrew their suit on 20.09.2005. During the pendency of the said suit, the defendants No.1 to 4 agreeing to sell the suit schedule property for total consideration of Rs.54,00,000/- and executed the Sale Agreement on 11.07.2005, in the presence of witnesses and received Rs.4,10,000/- as advance and delivered the possession in favour of the plaintiff. Then the plaintiff have invested Rs.4,00,000/- for alteration of the suit schedule property to run the educational institutions under the name and style of "Good Luck Education Society". The plaintiffs have always been ready and willing to perform their part of the contract and to comply the terms and conditions incorporated in Para 2(i) in page 8 of the Agreement and they approached the defendants No.1 to 4 and offered 50% of the balance sale consideration of Rs.24,95,000/-. But the defendants No.1 to 4 have received the sum of Rs.10,00,000/- and stated that they would receive Rs.14,95,000/- as and when required. In compliance of condition No.2(ii) of page 8 of the Agreement of Sale, the plaintiffs approached the defendants No.1 to 4 and offered the remaining balance sale consideration of Rs.39,90,000/- and requested them to furnish the title deeds. But the defendants No.1 to 4 failed to hand over the title deeds and requested the plaintiffs to extend two months time to execute the Regular Sale Deed. Before expiry of the extended period, the plaintiffs approached the defendants No.1 to 4 and 6 O.S.No.1641/2007 requested them to receive the balance sale consideration and to execute the Sale Deed. But the defendants No.1 to 4 have postpone the same on one pretext or other and promised the plaintiffs that they would execute the Sale Deed even after expiry of extended period. But they failed to keep up their promise. Hence the plaintiff got issued the legal notice dated 08.08.2006 by RPAD and UCP. The notice issued by UCP was served on the defendants No.1 to 4. But the notice issued by RPAD was returned with postal shara as 'Refused'. But the defendants No.1 to 4 issued ante-dated notice dated 02.08.2006 to the plaintiffs terminating the Agreement on untenable grounds and the defendant No.1 has returned a cheque for a sum of Rs.7,05,000/-, drawn on State Bank of Mysore, P & S Division, Bangalore and the defendant No.2 has returned a cheque for a sum of Rs.7,05,000/-, drawn on Suvarna Co-operative Bank Ltd. Avenue Road, Bangalore. The plaintiffs suitably replied to the said notice on 18.08.2006. Though the defendants No.1 to 4 were aware of the subsistence of Agreement dated 11.07.2005, with an intention to defraud the plaintiffs sold the suit schedule property for Rs.38,60,000/- in favour of the defendants No.5 to 7. The plaintiffs came to know about the said fact on 02.02.2007 through their well- wishers. Immediately, ascertained the same in the Office of Sub- Registrar and obtained the certified copies of the Sale Deeds. Hence the Sale Deeds are null and void and not binding on the plaintiffs. Then the defendants colluding with each other tried to dispossess the plaintiffs from the suit schedule property. As 7 O.S.No.1641/2007 defendants No.5 to 7 have failed to achieve their goal, tried to alienate the suit schedule property. Hence the plaintiffs were constrained to file this suit.
3. In response to the suit summons, the defendants No.1 to 4 appeared through their counsel, filed the common written statement in the form of set off. They have admitted their ownership over the suit schedule property. However denied the alleged Agreement dated 31.03.2003 and pleaded ignorance about institution of suit in O.S.No.5882/2005. Further denied the alleged promise made by them as averred in para No.4 of the plaint. Further contended that, the plaintiffs have approached them to purchase the suit schedule property in the first week of July, 2005 and they agreed to sell the suit schedule property for total consideration of Rs.54,00,000/- and Sale Agreement came to be executed between them on 11.07.2005. The original Agreement dated 11.07.2005 was retained by the plaintiffs and its xerox copy was handed over to the defendants No.1 to 4. Further admitted that, the plaintiffs have paid Rs.4,10,000/- initially under the Agreement of Sale dated 11.07.2005. They have denied the alleged delivery of possession in favour of the plaintiffs. Further denied the alleged investment made by the plaintiffs for alteration of the suit schedule property. Further contended that, the plaintiffs never come forward to comply the terms of the Sale Agreement dated 11.07.2005. Therefore they have issued the legal notice on 02.08.2006, terminating the said Agreement. After receipt of the said legal notice, the plaintiffs have got issued the notice on 8 O.S.No.1641/2007 18.08.2006. Further, they have denied the allegation that, the notice issued by them was ante-dated. As per the Agreement, the plaintiffs have to pay Rs.24,95,000/- within a period of two months. Further they have failed to perform their part of the contract within nine months as stipulated in the Agreement. Hence time stipulated in the Agreement expired on 10.04.2006. Therefore the defendants have issued the legal notice on 02.08.2006, terminating the Agreement and repaid the partial consideration of Rs.14,10,000/- through two cheques, which have been received by the plaintiffs. But for the reasons best known to them, the plaintiffs have not encashed those cheques. However, they did not return those cheques to the defendants. The alleged legal notice dated 08.08.2006 was not at all sent to the defendants No.1 to 4. Therefore, defendants have sent a reply notice dated 30.08.2006 claiming damages to the tune of Rs.4,10,000/-. It is clear that, in the legal notice dated 18.08.2006, the address of the defendants was wrongly mentioned with a malafide intention. As per Condition No.2 of the Sale Agreement, within a period of 2 months from 11.07.2005, the plaintiffs were required to pay 50% of part sale consideration amount of Rs.24,95,000/-. It was agreed between them that, the title deed shall be delivered to the plaintiffs only after payment of part sale consideration amount within 2 months from the date of Agreement. In the legal notice dated 02.08.2006, the defendants No.1 to 4 have reserved their right to claim the damages of Rs.4,10,000/-, in view of the latches on the part of the plaintiffs. Therefore, the defendants No.1 to 4 are entitled to claim 9 O.S.No.1641/2007 set off to the tune of Rs.4,10,000/- out of Rs.14,10,000/- payable to the plaintiffs under the Agreement dated 11.07.2005. Hence the plaintiffs are not entitled for any alternative relief or liquidated damages as claimed in the suit. Hence the plaintiffs neither entitled to claim any interest on Rs.10,10,000/- nor to claim Rs.4,10,000/- as liquidated damages and thereby prayed for dismissal of the suit with exemplary cost.
4. The defendant No.4 died during the pendency of the suit and his legal heirs have been brought on record as defendants No.4(a) to 4(c) and they have filed a memo by adopting the written statement filed by the defendants No.1 to 4.
5. The plaintiffs have filed their written statement and reiterated the plaint averments to the set off pleaded by the defendants No.1 to 4.
6. The defendants No.5 to 7 appeared through their counsel and filed their written statement by denying the allegations levelled against them and contended that, they are the bonafide purchasers of the suit schedule property. The physical possession of the suit schedule property was also delivered to them by the defendants No.1 to 4. Earlier they were not aware of the suit filed by the plaintiffs. The defendants No.1 to 4 have terminated the Sale Agreement dated 11.07.2005 in accordance with law, after refunding the amount paid under the said Agreement. The defendants No.5 to 7 after taking reasonable care and ascertaining 10 O.S.No.1641/2007 the title of the defendants No.1 to 4 have purchased the suit schedule property in good faith for valuable consideration. At the time of execution of Sale Deed in their favour, all the title deeds were delivered to them by the defendants No.1 to 4. Therefore, there is absolutely no illegality in transferring the property in their favour. They have denied the alleged collusion between them and defendants No.1 to 4. There is no existing right under the Agreement dated 11.07.2005 for filing a suit for specific performance of contract. Hence amongst other grounds, they prayed for dismissal of the suit with exemplary cost.
7. On the basis of the pleadings of the parties, my predecessor-in-office has framed the following issues for determination:-
ISSUES
1. Whether the plaintiffs prove that the defendants No.1 to 4 have agreed to sell the suit schedule property in their favour for consideration of Rs.54-00 lakhs and received an advance amount of Rs.14,10,000/- and executed an Agreement of Sale dated 11.07.2005?
2. Whether the plaintiffs prove that they were and are ready and willing to perform their part of contract?
3. Whether the plaintiffs prove that the Sale Deeds dated 06.11.1996 executed by the defendants No.1 to 4 in favour of defendants No.5 to 7 in respect of the suit schedule property are null and void and are not binding on them?11 O.S.No.1641/2007
4. Whether the plaintiffs are entitled for the relief of specific performance of contract?
5. Whether the plaintiffs are entitled for alternative relief of refund of Rs.14,10,000/- with interest at 18% p.a. from the defendants No.1 to 4?
6. What Order or Decree?
8. In order to prove the case of the plaintiffs, the plaintiff No.1 has entered into the witness box as PW-1 and Ex.P.1 to Ex.P.5 were marked through her and closed their side. On behalf of the defendants No.1 to 4(a) to 4(c), the defendant No.1 has entered into the witness box as DW-1 and Ex.D.1 to D.8 and Ex.D.25 to D.31 were marked through her and closed their side. On behalf of defendants No.5 to 7, the defendant No.5 has entered into the witness box as DW-2 and Ex.D.9 to Ex.D.24 were marked through him and closed their side.
9. Heard the arguments of the learned counsel for plaintiffs, defendants No.1 to 4(a) to 4(c) and defendants No.5 to 7.
10. My findings on the above issues are as under:-
Issue No.1: In the affirmative.
Issue No.2: In the negative.
Issue No.3: In the negative.
Issue No.4: In the negative.
Issue No.5: Partly in the affirmative.
Issue No.6: As per final order
for the following:
12 O.S.No.1641/2007
REASONS
11. Issues No.1 to 3:- Since all these issues are interconnected, taken up together for discussion to avoid repetition. Before looking to the points in controversy, it is necessary to look into the background of this case. Before commencement of trial, the defendant No.5 has filed I.A.No.3 under Sections 33 & 34 of the Karnataka Stamp Act r/w Section 151 of CPC contending that, the Sale Agreement dated 11.07.2005 relied by the plaintiffs was insufficiently stamped and same is liable for duty and penalty. After hearing both parties, my predecessor-in-office in his Order dated 08.11.2011 has allowed the said application holding that, the Sale Agreement relied by the plaintiffs is liable for duty and penalty of Rs.47,49,800/- and directed the plaintiffs to pay the said amount. But the plaintiffs neither paid the duty and penalty nor come forward to adduce their evidence. As the plaintiffs were remained absent on all 9 hearing dates and failed to pay the cost imposed on them, the suit of the plaintiffs was dismissed for non-prosecution. Thereafter, the plaintiffs have filed Misc. Petition No.703/2012 on the file of this court for restoration of their suit. The said petition came to dismissed on 13.04.2017. Feeling aggrieved by the said Order, they have preferred W.P.No.18915/2017 on the file of Hon'ble High Court of Karnataka and it came to be allowed on 03.09.2022, subject to payment of Rs.10,000/- payable to the defendants No.5 to 7. Further, the Hon'ble High Court of Karnataka has fixed the date to adduce the evidence of plaintiffs and defendants and their 13 O.S.No.1641/2007 evidence shall be concluded on or before 29.10.2022. Further, directed to dispose of this suit within a period of six months from the date of conclusion of the evidence. Accordingly, the suit was restored. The plaintiffs have deposited the cost and thereafter, both parties have adduced their evidence. In the interval, the defendants No.5 to 7 have instituted a suit in O.S.No.5832/2013 against the plaintiffs No.1 and 2 for possession of the suit schedule property on the strength of their Sale Deeds on the file of V Addl. City Civil & Sessions Judge (CCH-13), Bengaluru. After recording of evidence and hearing arguments, the said suit was partly decreed on 29.06.2021 and thereby the plaintiffs herein were directed to hand over the vacant possession of the suit schedule property within three months from the date of decree.
12. Before restoration of this suit, the defendant No.4 died and an opportunity was given to the plaintiffs to bring his legal heirs on record. In the mean time, the plaintiffs have filed I.A.No.5 under Sections 34 & 37 of the Karnataka Stamp Act r/w Section 151 of CPC to collect appropriate stamp duty and penalty on the impounded Sale Agreement dated 11.07.2005. Since already there was an order on I.A.No.3 directing the plaintiffs to pay duty and penalty, this court opined that, as per earlier order, the plaintiffs are liable to pay duty and penalty and thereby held that, no ground to re-agitate the matter and said application came to be rejected. Even then also the plaintiffs did not come forward to pay the duty and penalty.
14 O.S.No.1641/200713. In her oral evidence, PW-1 has reiterated the averments made in the plaint. The documents marked through her at Ex.P.1 is the Termination Notice dated 02.08.2006, issued by the defendants No.1 to 3 to the plaintiffs through their Advocate. Ex.P.2 is the office copy of Reply Notice dated 18.08.2006 issued by the learned counsel for plaintiffs to the counsel for defendants No.1 to 4. Ex.P.3 and P.4 are the Cheques dated 02.08.2006, issued by defendants No.1 and 2 in favour of plaintiffs No.1 and 2, for repayment of Rs.7,05,000/- each with respect to the advance sum received by them amounting to Rs.14,10,000/-. Ex.P.5 is the office copy of Legal Notice dated 08.08.2006, issued by the plaintiffs No.1 and 2 in favour of defendants No.1 to 4.
14. Per contra, in her oral evidence DW-1 has reiterated the defence set out in the written statement of defendants No.1 to 4 and the documents marked through her at Ex.D.1 to D.4 are Postal Receipts & Postal Acknowledgments, to show that the legal notice dated 02.08.2006 issued on their behalf were served on the plaintiffs No.1 and 2 on 11.08.2006 . Ex.D.5 to D.8 are the certified copies of Sale Deeds executed by the defendants No.1 to 4 in favour of defendants No. 5 to 7, in respect of the suit schedule property. Ex.D.25 is the office copy of Legal Notice dated 30.08.2010. Ex.D.26 to 31 are 3 Postal Receipts and 3 Postal Acknowledgements, to show that the legal notices were duly served on the plaintiffs and their counsel.
15 O.S.No.1641/200715. In his oral evidence DW-2 has reiterated the defence set out in the written statement of defendants No.5 to 7 and the documents marked through him at Ex.D.9 to D.10 are the digital copies of their Sale Deeds dated 06.01.2006 in respect of the suit schedule property, executed by the defendants No.1 to 4. Ex.D.13 to D.16 are the certified copies of Khata Extracts in respect of the suit schedule property. Ex.D.17 and D.18 are the certified copies of bunch of Tax Paid Receipts in respect of the suit schedule property. Ex.D.19 is the certified copy of Legal Notice dated 08.07.2013. Ex.D.20 is the certified copies of 4 Postal Receipts. Ex.D.21 & 22 are the certified copies of Postal Acknowledgements. Ex.D.23 and D.24 are the certified copies of Judgment and Decree in O.S.No.5832/2013.
16. Placing reliance on the pleadings and evidence, the learned counsel for plaintiffs has vehemently argued that, the defendants No.1 to 4 in Paras No.4, 7 and 13 of their written statement have categorically admitted the execution of Sale Agreement dated 11.07.2005 and receipt of Rs.4,10,000/- on the date of Agreement. Further, they have admitted the payment of additional sum of Rs.10,00,000/- on 4 different dates and concede the right of the plaintiffs to recover Rs.10,00,000/-. Further argued that, as per Section 58 of the Indian Evidence Act, the facts admitted need not be proved. As per Order XII Rule 6 of CPC, the court is required to pass decree on such admission. As such, even in the absence of Sale Agreement there is no impediment to the plaintiffs to seek the relief of refund of Rs.14,10,000/- with interest 16 O.S.No.1641/2007 thereon at the rate of 18% per annum with liquidated damages of Rs.4,10,000/-.
17. In his written synopsis, the learned counsel for plaintiffs has reiterated all those contentions. Further he relied on the decision of Hon'ble Apex Court in the case of Uttam Singh Duggal and Co. Ltd., Vs. United Bank of India and others, reported in (2000) 7 SCC 120 and Raveesh Chand Jain Vs. Raj Rani Jain, reported in (2015) 8 SCC 428. In the case of Uttam Singh Duggal and Co. Ltd., it was held as under;
"Decree can be passed under Or.12 R.6 on the basis of admission made in minutes of a meeting and resolution passed thereon - When a statement of admission is brought before the court, as long as the party making the statement is given sufficient opportunity to explain such admission, judgment on admission can be decreed if the explanation is not accepted by the court.
18. In the case of Raveesh Chand Jain cited above, it was held as under:
"Or.12 R.6 is not a mandatory, but discretionary provision - It confers a wide discretion on court to pass a judgment at any stage of the suit on the basis of admission of the facts made in the pleadings or otherwise, without waiting for determination of other questions arising between the parties. Thus, by virtue of the said provision, there can be more than one decree that may be passed at different stages of same suit - Principle behind Or.12 R.6 is to give the plaintiff a right to speedy judgment so that either party may get rid of the rival claims which are not in controversy."17 O.S.No.1641/2007
19. Relying on the principles enumerated in Sections 58 and 92 of the Indian Evidence Act, he drew the attention of this court on the decision of Madras High Court in the case of G.P.Mallappa Vs. Matan Naga Chetty, reported in (1918) 35 MLJ 555. In the said decision, it was held as under;
"Part II of the Evidence Act deals with proof, and Chapter III, which is the first chapter of Part II, with 'Facts which need not be proved." Under Section 58 of this chapter, among the facts which need not be proved, are facts admitted in the pleadings, such as the subsequent agreement now in question. Evidence is tendered in proof of facts in issue; and no question of the admissibility of evidence, oral or documentary, arises when proof is dispensed with in consequence of an admission in the pleadings, either under Section 58 or under the provisions of the Code of Civil Procedure."
20. Refuting each and every contentions taken by the plaintiffs, the learned counsel for the defendants No.1 to 4 has strenuously argued that, in view of repeated latches on the part of the plaintiffs in paying the balance sale consideration amount in periodical instalments in terms of the impounded Sale Agreement, the defendants No.1 to 4 were constrained to terminate the Agreement by issuing legal notice dated 02.08.2006 and also refunded the advance sum of Rs.14,10,000/- paid in their favour by way of two cheques. Though the plaintiffs have collected those cheques, did not present for encashment. Further, no effort was made to return the cheques in favour of the defendants No.1 to 4. Further argued that, even in the first round of litigation inspite of sufficient opportunity, the plaintiffs did not take any trouble to pay 18 O.S.No.1641/2007 the duty and penalty on the Agreement tendered for marking. As the plaintiffs continuously absent and failed to pay the cost imposed on them, the suit was dismissed for non-prosecution. Even after restoration of the suit, the plaintiffs did not bother to pay the duty and penalty and to get mark the alleged document in support of their contentions. On the other hand, made an ill- attempt by filing I.A.No.5 to re-agitate the matter, though much earlier this court gave a direction to pay the duty and penalty of Rs.47,49,800/-. Even after dismissal of I.A.No.5, there was no impediment to them to pay the duty and penalty. But the intention of the plaintiffs is not to get any relief in their favour, rather their intention is to protract the proceedings in one way or the other and caused inconvenience to the defendants.
21. The alleged claim made by the plaintiffs regarding liquidated damages has no force in the eye of law. In support of the said contention, he placed reliance on decision of 4 judges in the case of Sir Chunilal V. Mehta & Sons, Ltd., Vs. The Century Spinning and Manufacturing Co. Ltd., reported in AIR 1962 SC 1314. In the said decision, Hon'ble Supreme Court has held as under;
"The right to claim liquidated damages is enforceable under Section 74 of the Contract Act and where such a right is found to exist no question of ascertaining damages really arises. Where the parties have deliberately specified the amount of liquidated damages there can be no presumption that they, at the same time, intended to allow the party who has suffered by the breach to give a go-bye to the sum specified and 19 O.S.No.1641/2007 claim instead a sum of' money which was not ascertained or ascertainable at the date of the breach."
22. On the point of liquidated damages as contemplated under Section 74 of the Contract Act, he relied on the full bench decision of Hon'ble Supreme Court in the case of Fateh Chand Vs. Balkishan Das, reported in AIR 1963 SC 1405 . In the said decision, it was held as under;
"In our judgment the expression "the contract contains any other stipulation by way of penalty"
comprehensively applies to every covenant involving a penalty whether it is for payment on breach of contract of money or delivery of property in future, or for forfeiture of right to money or other property already delivered. Duty not to enforce the penalty clause but only to award reasonable compensation is statutorily imposed upon Courts by Section 74. In all cases, therefore, where there is a stipulation in the nature of penalty for forfeiture of an amount deposited pursuant to the terms of a contract which expressly provides for forfeiture, the Court has jurisdiction to award such sum only as it considers reasonable, but not exceeding the amount specified in the contract as liable to forfeiture."
23. In the instant case, the defendants No.1 to 4 have pleaded partial set off for the sum of Rs.4,10,000/- which was initially paid by the plaintiffs. It was argued on behalf of the defendants No.1 to 4 that, as there were repeated latches on the part of the plaintiffs in performing their part of the contract, the defendants No.1 to 4 are entitled to plead set off. In support of the said contention, he relied on 3 judge Bench decision of Hon'ble 20 O.S.No.1641/2007 Supreme Court in the case of Shri Hanuman Cotton Mills and others Vs. Tat Air Craft Limited, reported in AIR 1970 SC 1986. In the said decision, it was held as under;
"Unless there is anything to the contrary in the terms of the contract, on default committed by the buyer, the seller is entitled to forfeit the earnest. Forfeiture of reasonable amount paid as earnest money does not amount to imposing a penalty. But if forfeiture is of the nature of penalty, Section 74 applies. Where under the terms of the contract the party in breach has undertaken to pay a sum of money or to forfeit a sum of money which he has already paid to the party complaining of a breach of contract, the undertaking is of the nature of a penalty."
24. The learned counsel for defendants No.5 to 7 has canvassed before the court that, after cancellation of the Sale Agreement in the name of the plaintiffs, the defendants No.5 to 7 have purchased the property after ascertaining the title of their vendors. Since the defendants No.5 to 7 are the bonafide purchasers, the plaintiffs are not entitled for any relief against them. Further, he has reiterated the defence set up by the defendants No.5 to 7.
25. When this court was about to finish the dictation, the learned counsel for defendants No.1 to 4 has filed the written synopsis with certain citations in support of the defence set up by the defendants No.1 to 3, 4(a) to 4(c). Relying the decision of Hon'ble High Court in the case of Shri.K.Dinesh Vs. Shri.K.S.Kumaraswamy and others (W.P.No.1428/2009) and 21 O.S.No.1641/2007 other connected matters he argued that, as the plaintiffs did not pay the duty and penalty, the document impounded is required to forward to the Collector for taking further steps as contemplated under the Karnataka Stamp Act. Further contended that, whenever there is no prayer for refund of earnest money, the said relief cannot be granted in favour of the plaintiffs. In support of the said contention, he relied on the decision of Apex Court in the case of Desh Raj and other Vs.Rohtash Singh, reported in 2022 LiveLaw (SC) 1026.
26. Keeping in mind the law laid down in the afore cited decisions, I have carefully gone through the pleadings of the parties, as well as their evidence before the court. Though this is a suit for the relief of specific performance of contract, the plaintiffs did not come forward to pay the duty and penalty as directed by this court and thereby, they gave a go-bye to the main relief and concentrated upon the alternative relief, that too on the basis of certain admissions given by the defendants No.1 to 4 in their pleadings.
27. In the W.P.No.18915/2017, there is a direction to this court to dispose of the matter within the time stipulated therein. Hence the law laid down in the case of Shri.K.Dinesh Vs. Shri.K.S.Kumaraswamy and others cited above cannot be applied in the present case. One more thing for consideration is that, as the plaintiffs sought for an alternative relief for refund of earnest money, the law laid down by the Apex Court in the case of 22 O.S.No.1641/2007 Desh Raj and other cited above is not applicable to the case on hand.
28. Though the defendants No.1 to 4 have denied the alleged Sale Agreement dated 31.03.2003, they have categorically admitted the execution of Sale Agreement dated 11.07.2005 and the payment of Rs.14,10,000/- to them in periodical instalments. Looking into the contentions taken by the defendants No.1 to 4 in their written statement dated 26.06.2007, it is crystal clear that, they have pleaded partial set off to the tune of Rs.4,10,000/- which is initially paid to them at the time of Sale Agreement. However, they generously offered to repay the remaining sum of Rs.10,00,000/- (But in the written statement it was mentioned as Rs.10,10,000/-). For better understanding, it is just and proper to reproduce the contentions taken by the defendants No.1 to 4 in para No.22 of their written statement. Same is read as under;
"These defendants submit that the plaintiffs are neither entitled to claim any interest on the amount of Rs.10,10,000/- payable to the plaintiffs nor the plaintiffs are entitled to claim Rs.4,10,000/- because the Agreement of Sale was terminated solely on account of the default on the part of the plaintiffs to comply with the terms of the Agreement. These defendants have shown their boanfide intention by refunding Rs.14,10,000/- to the plaintiffs. They have refused to encash the said cheques. Therefore, the plaintiffs are not entitled to claim any interest."
29. Now it is clear that, the defendants No.1 to 4 have expressed their willingness to refund the sum of Rs.10,00,000/- in 23 O.S.No.1641/2007 favour of the plaintiffs. But they have stoutly denied the right of the plaintiffs to claim interest on the said sum and additional sum of Rs.4,10,000/- as liquidated damages. Looking into the background of this case, it is manifestly clear that, though there was an obligation on the plaintiffs to pay the balance sale consideration in periodical instalments, they failed to keep up their promise. In the cross-examination of PW-1, she has clearly admitted that, as per the terms of the Agreement, they were required to get the Sale Deed within nine months from the date of Agreement. Further admitted that, in terms of the Sale Agreement they failed to pay the sum of Rs.24,95,000/- within two months from the date of Agreement. Further admitted that, they failed to pay the remaining sale consideration within nine months from the date of Agreement. Hence the unequivocal admission given by PW-1 makes it very clear that, there were clear latches on the part of the plaintiffs in complying the conditions stipulated in the Agreement. Therefore left with no alternative, the defendants No.1 to 4 themselves issued the notice by terminating the Agreement. However, they were generous in repaying Rs.14,10,000/- which were received by them as advance. Accordingly, the defendants No.1 and 2 issued two cheques for Rs.7,05,000/- each to the plaintiffs. The said cheques are in the custody of the plaintiffs and the plaintiffs themselves have produced them before the court at Ex.P.3 and P.4. As rightly contended by the defendants No.1 to 4, for the reasons best known to them, the plaintiffs did not present those cheques for encashment. Further they not at all return the said cheques to the defendants.
24 O.S.No.1641/2007Even though, they did not take any trouble to present those cheques for encashment, while cross-examining DW-1, strange suggestion was put to her that, they were not having sufficient funds in their account. By denying their suggestion, DW-1 clearly deposed that they were having sufficient funds for clearance of cheques issued to the plaintiffs. Since the plaintiffs were failed to present the cheques, now they are debarred from taking such contention. Further it makes an inference that, the plaintiffs themselves allowed the defendants to terminate the Agreement. Otherwise, there was no impediment for them to return the cheques to defendants No.1 to
54.
30. The other contention taken by the plaintiffs is that, as on the date of Agreement, possession was delivered in their favour and they have invested the sum of Rs.4,00,000/- towards alteration of the building. But except bald contention, nothing is placed before the court to show that, they have spent the sum of Rs.4,00,000/- for renovation of the building. On perusal of the defence set up by the defendants No.1 to 7, all of them have denied the delivery of possession in favour of the plaintiffs. But certain suggestions put by the learned counsel for the defendants No.5 to 7 in the course of cross-examination of PW-1, makes it very clear that, the possession was with the plaintiffs. But the contention of the defendants No.5 to 7 is that, the plaintiffs are in possession of the suit schedule property as tenants under the defendants No.1 to 4. Therefore after getting the Sale Deeds in their favour, the defendants No.5 to 7 being the owners of the suit schedule property instituted a suit against the 25 O.S.No.1641/2007 plaintiffs No.1 and 2 for possession of the suit schedule property and it is very clear in the certified copy of judgment in O.S.No.5832/2013 marked at Ex.D.23. In the said suit, the plaintiffs herein were the defendants and in the course of said proceeding, they have set up a defence that, there is an Agreement in their favour and pendency of the corresponding matter with respect to the suit schedule property. In the said suit also, the plaintiffs did not take any trouble to produce the Sale Agreement before the court. After conclusion of evidence, the suit instituted by the defendants No.5 to 7 was partly decreed holding that, they are entitled to take possession of the suit schedule property within three months from the date of decree. In her cross- examination, PW-1 has clearly admitted the disposal of O.S.No.5832/2013 and deposed that, they have preferred an Appeal against the said judgment in RFA.No.1048/2021, on the file of Hon'ble High Court of Karnataka. Further admitted that, in the said Appeal, there was a stay order in their favour with a direction to pay the sum of Rs.15,000/- as rent to the defendants No.5 to 7 on or before 5th of every month. It was suggested that, they failed to obey the conditions stipulated therein. But she has denied the same. Now it is clear that, though the plaintiffs herein made an attempt to defend the aforesaid suit stating that there is an Agreement in their favour, their contention has been negatived in the said suit. Further, in the Appeal there was specific direction to them to pay monthly rent of Rs.15,000/- to defendants No.5 to 7
31. Looking into the entire case, it is apparently clear that, from the day one, the plaintiffs are not diligent in prosecuting the 26 O.S.No.1641/2007 matter. The manner in which they are prosecuting this matter shows that, their intention is to protract the matter in one way or the other and there are several latches on the part of the plaintiffs. Such being the case, this court is of the opinion that, there is sufficient force in the set off pleaded by the defendants No.1 to 3, 4(a) to 4(c) with respect to initial advance amount of Rs.4,10,000/-. Since the Sale Agreement itself was not marked in this suit, no occasion to this court to look into the said document. Further, as there are several latches on their part, no reason to hold that, the plaintiffs are entitled for liquidated damages of Rs.4,10,000/- as prayed for.
32. As discussed earlier, the defendants No.1 to 3, 4(a) to 4(c) made generous offer to pay the remaining sum of Rs.10,10,000/- in favour of the plaintiffs. Looking into their admissions and in the light of provisions contemplated under Section 58 of Indian Evidence Act and the law laid down by the Hon'ble Supreme Court in the case of Uttam Singh Duggal and Co. Ltd. and Sir Chunilal cited above, it is clear that the plaintiffs are entitled for refund of Rs.10,00,000/- from defendants No.1 to 3, 4(a) to 4(c). at this stage, I have gone through the law laid down by Apex Court in the case of Ahmed Saheb Vs. Sayed Ismail, reported in (2012) 8 SCC 516. wherein it was held that, "admissions needs no corroboration". Hence the principles laid down therein is clearly applicable to the case on hand.
33. It was contended by the plaintiffs that, prior to institution of this suit, they have issued legal notice to the defendants No.1 to 4 27 O.S.No.1641/2007 expressing their desire to get the Sale Deed in their favour. Further contended that, the legal notice dated 02.08.2006 issued by the defendants was ante-dated. But looking to the evidence placed before the court, it is clear that, prior to issuance of notice by the plaintiffs, the defendants themselves have issued notice to the plaintiffs. Hence no reason to hold that, the notice issued by them was ante-dated. On the other hand, while issuing notice to the defendants No.1 to 4, the plaintiffs have not mentioned the correct address of the defendants No.1 to 4. PW-1 in her cross-examination has clearly admitted that, the address in respect of the defendants No.1 to 4 referred in the legal notice was not corresponding to the exact location, wherein the defendants No.1 to 4 were residing. Hence reasons to believe that, the notice issued to them was not duly served on defendants No.1 to 4.
34. The defendants No.1 to 4 after terminating the Sale Agreement, made an attempt to refund the sum of Rs.14,10,000/- by issuing two separate cheques. Then only, the defendants No.1 to 4 have sold the property in favour of the defendants No.5 to 7. Accordingly, the defendants No.5 to 7 being the purchasers of the property, exercised their ownership on the suit property and instituted the suit against the plaintiffs No.1 and 2 to dispossess them from the suit schedule property. Though the said suit came to be decreed, the Appeal preferred by the plaintiffs is pending on the file of Hon'ble High Court. This being the state of affair, the plaintiffs failed to prove that the Sale Deeds in favour of defendants No.5 to 7 are null and void and not binding on them. With these observations, 28 O.S.No.1641/2007 Issue No.1 is answered in the affirmative, Issues No.2 and 3 in the negative.
35. Issues No.4 & 5:- While answering the aforementioned issues, this court has come to the conclusion that, in view of latches on the part of the plaintiffs, they are not entitled for the main relief. However, in view of vital admissions given by the defendants No.1 to 4, the plaintiffs are entitled for refund of Rs.10,00,000/-. However, for the reasons stated above, this court did not find any reason to impose interest on the said sum of Rs.10,00,000/-. With these observations, Issue No.4 is answered in the negative and Issue No.4 partly in the affirmative.
36. As observed earlier, the plaintiffs did not pay the duty and penalty on the impounded Sale Agreement. Hence acting under Section 37(2) of the Karnataka Stamp Act, 1957 it is just and proper to forward the impounded Agreement to the Deputy Commissioner for collection of duty and penalty from plaintiffs No.1 and 2.
37. Issue No.6: In view of the above discussions, this court proceed to pass the following:-
ORDER Suit of the plaintiffs is partly decreed as under:
The defendants No.1 to 3, 4(a) to 4(c) are hereby directed to pay sum of Rs.10,00,000/- (Rupees Ten Lakhs) in favour of the plaintiffs within one month from the date of this order.29 O.S.No.1641/2007
In case, the defendants No.1 to 3, 4(a) to 4(c) failed to pay/deposit the aforesaid sum of Rs.10,00,000/- (Rupees Ten Lakhs) in the court within one month from the date of this order, they are liable to pay interest thereon at the rate of 18% per annum, from the date of this order till realisation.
Suit against defendants No.5 to 7 is hereby dismissed.
No order as to cost.
Draw decree accordingly.
(Dictated to the Judgment Writer, typed by her, the transcript thereof corrected and then pronounced by me, in the open court, on this the 24th day of January, 2023) (SANTHOSHKUMAR SHETTY N.) XI ADDL., CITY CIVIL & SESSIONS JUDGE BENGALURU CITY.
ANNEXURE List of witnesses examined for plaintiffs:
PW.1 : Smt.M.Lalitha
List of documents exhibited for plaintiffs:
Ex.P.1 : Office copy of Legal Notice
dated 02.08.2006
Ex.P.2 : Reply Notice dated 18.08.2006
Ex.P.3 & 4 : Cheques
30 O.S.No.1641/2007
Ex.P.5 : Office copy of Legal Notice
dated 08.08.2006
List of witnesses examined for defendants :
DW.1 : Smt.S.Sandhya
DW.2 : Sri.R.Mohan
List of documents exhibited for defendants :
Ex.D.1 & 2 : Postal Receipts
Ex.D.3 & 4 : Postal Acknowledgements
Ex.D.5 to 8 : Certified copies of 4 Sale Deeds
Ex.D.9 & 10 : Digital copies of 2 Sale Deeds
dated 06.01.2006
Ex.D.11 : Digital copy of Sale Deed
dated 06.11.2006
Ex.D.12 : Digital copy of Sale Deed
dated 06.09.2006
Ex.D.13 to 16: Certified copies of 4 Khatha
Uttara Pathra
Ex.D.17 : Certified copies of bunch of 41
Tax Paid Receipts
Ex.D.18 : Digital copies of 4 Tax Paid Receipts
Ex.D.19 : Certified copy of Legal Notice
dated 08.07.2013
Ex.D.20 : Certified copies of 4 Postal Receipts
Ex.D.21 & 22: Certified copies of 2 Postal
Acknowledgements
Ex.D.23 & 24: Certified copies of Judgment & Decree
in O.S.No.5832/2013
Ex.D.25 : Office copy of Legal Notice
dated 30.08.2010.
Ex.D.26 to 31: 3 Postal Receipts & 3 Postal
Acknowledgements
XI ADDL., CITY CIVIL & SESSIONS JUDGE
BENGALURU CITY.
31 O.S.No.1641/2007