Delhi District Court
Sh. Sardar Raja Singh vs M/S. Empire Trading Co on 27 August, 2022
IN THE COURT OF MS. GEETANJALI: ADJ05, SOUTH EAST
DISTRICT, SAKET COURTS, NEW DELHI
CS DJ No. 8517/2016
CNR No. DLSE010000041998
In the matter of:
Sh. Sardar Raja Singh
S/o Shri Sardar Mela Singh
R/o B47, Greater Kailash I
at present residing at
6B, Jangpura Extension,
Mathura road, New Delhi ......Plaintiff
Versus
1. M/s. Empire Trading Co.
A Sole Propitiatory firm of
Shri Mohd. Yameen
105, Jasspur, Ghaziabad, U.P.
Through its sole Proprietor
Shri Mohd. Yameen
2. Shri Mohd. Yameen
S/o Late Shri Mohd. Ismail
R/o House No. 49, Pucca Mori,
Dasna Gate, Ghaziabad - U.P. ......Defendants
AND
Counterclaim No. 47/2021
CNR No. DLSE01-000528-2021
CS No. 8517/2016 Page No. 1 of 20
In the matter of:
1. M/s. Empire Trading Co.
105, Jassipura, Ghaziabad, U.P.
2. Shri Mohd. Yamin Queshi
Proprietor of Empire Trading Co.
49, Pucci Mori (Dasna Gate)
Ghaziabad, U.P. ......Defendants/counterclaimants
Versus
Sh. Sardar Raja Singh ......Plaintiff/noncounter claimant
Date of institution of the suit : 09.02.1998
Date of institution of the counterclaim : 19.06.2000
Date on which order was reserved : 22.08.2022
Date of decision : 27.08.2022
SUIT FOR RECOVERY OF RS. 1,04,00,000/ ALONGWITH INTEREST
AND COUNTERCLAIM OF RS. 1,10,00,000/
JUDGMENT
1. Vide this judgment, I intend to dispose off the suit for recovery of Rs. 1,04,00,000/ alongwith interest against the defendants and defendants' counter claim of Rs. 1.10 crores against the plaintiff.
2. Succinctly stated the factual matrix of the case is that plaintiff entered into an agreement to sell with defendant no. 2 on 03.11.1995 for purchasing freehold land admeasuring 67 bighas, 15 biswa and 10 biswa situated at Village Beel Akbarpur Pargana, Post Office and Tehsil Dadri, Distt. Ghaziabad (UP) together with factory building, residential quarters, school building, canteen CS No. 8517/2016 Page No. 2 of 20 guest house administrative block, Time Office, Security Office, Power sub station and all those structures built pucca or kachha standing on or around the said land including standing trees and surrounded by a compound wall (hereinafter referred to as "the suit land") for total consideration of Rs.2,78,00,000/ out of which Rs.50,00,000/ was paid at the time of entering the said agreement. Before entering into said agreement he was supplied the copy of agreement to sell executed by M/s J.K. Synthetics Ltd. in favour of defendants alongwith permission from the Income Tax department for the sale of suit land. It was agreed between the plaintiff and defendant no. 2 that plaintiff will advance sum of Rs.1,10,00,000/ out of the remaining consideration amount within one month on furnishing original sale deed by defendant no. 2. However, the said condition was never complied by defendant no. 2 and hence there was no occasion for the plaintiff to advance any further sum to him though defendant no. 2 came out with a plea that he had purchased a suit land on 20.11.1996 but failed to supply the original sale deed. Moreso no such sale deed was found to be executed and registered with the office of Sub Registrar, Dadri on 22.10.1997. Henceforth the plaintiff has been unjustifiably being deprived of the use of the said money causing him business losses as well as loss of interest which he was to pay to the financial institutions. The defendants were issued demand notices dated 01.11.1997 and 12.12.1997 which were not complied and that gives cause of action to the plaintiff to file the present suit for recovery of Rs.1,00,00,000/ along with interest.
3. Defendant filed detailed written statement taking preliminary objections to the effect that plaintiff has no cause of action to file the present suit in Delhi since the contract was never terminated by them; that the present suit is barred under Order II Rule 2 CPC; that the present suit has been filed by a person CS No. 8517/2016 Page No. 3 of 20 claiming to be the Chairman of the company without any resolution of the Board; that the plaintiff has not disclosed about the filing of the suit before the Ghaziabad Court.
3.1 In reply on merits, he has denied all the material contents of the suit and prayed for its dismissal.
4. The defendants have also filed counter claim for a sum of Rs.1,10,00,000/ alongwith the written statement. By the present counterclaim, the counterclaimants are claiming a sum of Rs.2,42,16,200 after deducting a sum of Rs. 50,00,000/ received as earnest money on account of breach of contract on the agreement dated 03.11.1995. However, the actual amount claimed is Rs. 1,10,00,000/ together with interest @ 24% per annum from the date of payment.
5. The Plaintiff has filed replication to the written statement thereby reaffirming and reiterating the contents of plaint and denying the contents of the same and written statement to the counter claim of the defendant taking preliminary objections to the effect that the counter claim is barred by limitation; that the counter claim is not maintainable in view of the default on the part of defendant; that the verification of the counter claim is not in accordance with law.
5.1 In reply on merits, all the material contents of the counter claim have been denied and its dismissal has been sought.
6. On the basis of said pleadings, following issues were framed vide order dated 13.05.2004:
1. The company Bestavision Electronics Ltd. having already filed a suit, whether its Chairman, Shri Raja Singh can file the present suit?
2. Whether the plaintiff was guilt of breach of agreement and if so, CS No. 8517/2016 Page No. 4 of 20 was the defendant entitled to terminate the agreement?
3. Whether the plaintiff fabricated or produced false record for the purpose of showing that the defendant had not obtained sale deed of the property?
4. Whether the suit is bad for nonjoinder of parties?
5. Whether the plaintiff was not entitled to the relief of specific performance because the agreement to swell was not in accordance of the law of the place where the property was situated and if so, was he entitled to abandon the suit or was he not required to claim compensation by amendment of plaint?
6. Whether the present suit is not maintainable under Order XXIII Rule 1(4) CPC and Order IX Rule 9 and Order II Rule 1 and 2 of the CPC and Section 21 of the Specific Relief Act?
7. Whether this Court has territorial jurisdiction to try and entertain the present suit?
8. Whether the plaintiff failed to complete the transaction which was subject matter of the agreement to sell because of fall in prices of real estate?
9. Whether the plaintiff committed breach of agreement and is so, did the defendant suffer any loss?
10. Whether the plaintiff or defendant is entitled to claim any interest on the respective amounts claimed by them?
11. Whether the plaintiff has not come to this Court with clean hands and the suit is liable to be dismissed on this ground alone?
12. To what amount, if any, are the plaintiff and/or defendant entitled for?
13. Relief Thereafter, matter was fixed for PE.
7. In order to prove his case, the plaintiff examined himself as PW1 and has reiterated and reaffirmed the stand as taken by him in the plaint by affidavit Ex. PW1/A. He has relied upon the documents i.e. the agreement of sale as Ex. PW1/1, copy of certificate of search dated 22.10.1997 as Ex. PW1/2, certified copy of order dated 07.03.1996 passed by Ld. Civil Judge, Ghaziabad as Ex.
CS No. 8517/2016 Page No. 5 of 20PW1/3, demand notices dated 06.11.1997 and 12.12.1997 as Ex. PW1/4 and Ex. PW1/5 respectively. He was extensively crossexamined by Ld. Counsel for defendant. Thereafter, matter was fixed for defendant's evidence.
8. In defence, defendant examined three witnesses. Mohd. Shah Alam, Power of Attorney holder was examined as DW1. He has tendered his evidence by way of affidavit Ex. DW1/A thereby the reiterating the defence stated in the written statement. He also tendered his additional evidence by way of additional affidavit Ex. DW1/B. He has relied upon the document i.e. sale deed as Ex. D1, postal receipt as Ex. D2, original letter dated 02.12.1996 as Ex. D3, notice dated 06.01.1997 as Ex. D4, postal receipt as Ex. D5, original notice in reply dated 24.07.1997 as Ex. D6, original supplementary letter dated 28.07.1997 as Ex. D7, reply dated 12.08.1997 as Ex. D8, postal receipt as Ex. D9, AD card as Ex. D10, notice dated 06.11.1997 as Ex. D11, original continuation letter dated 12.12.1997 as Ex. D12, reply dated 22.12.1997 as Ex. D13 and postal receipt as Ex. D14. He has further relied on documents i.e. copy of application under Order XXXIX Rule 1 & 2 CPC as Ex. DW1/A1, counter affidavit dated 26.02.1996 as Ex. DW1/A2, copy of order dated 07.03.1996 as Ex. DW1/A3, Board Resolution dated 20.06.1995 as Ex. DW1/A4 and copy of ordersheets as Ex. DW1/A5. He was extensively cross examined by the counsel for the plaintiff.
8.1 DW2 Sh. Anupam Manglik Jr. Assistant (Registration), SubRegistrar, Dadri proved that the GPA dated 20.11.1996 was registered on 21.11.1996 and certified copy of same Ex.DW2/1. He has further proved that the Sale deed dated 20.11.1996 was registered on 29.05.1997 and certified copy of same is Ex. DW2/2. He was cross examined by the ld. counsel for plaintiff.
CS No. 8517/2016 Page No. 6 of 208.2 DW3 Sh. Sanjay Nagar, AR of Sh. Nath Ji Trust was summoned to proof agreement to sell dated 27.01.2000 in respect of land 9.2757 Hect. Village Beel Akbarpur, Tehsil Dadri, Gautam Budh Nagar, which is Ex. DW3/1, certified copy of sale deed dated 31.03.2000 in respect of said property is Ex. DW3/2, copy of agreement to sell dated 27.01.2000 in respect land measuring 8.4093 hect. Village Bajrang alias Nai Basti, Tehsil Dadri, Gautam Budh Nagar, is Ex. DW3/3 and copy of sale deed 31.03.2000 in respect of said property as Ex. DW3/4. He was cross examined at length by the ld. counsel for plaintiff. Thereafter, matter was listed for final arguments.
9. I have heard Ld. counsels for both the parties and meticulously gone through the record.
10. My issue wise findings are as follows:
11. For the sake of convenience, issue no. 7 is taken up first for decision. Issue no. 7 Whether this Court has territorial jurisdiction to try and entertain the present suit?
12. One of the objections taken from the side of the defendants is regarding the territorial jurisdiction of this Court to try and entertain the present suit.
13. The Plaintiff filed the present suit for recovery of earnest money of Rs.1,04,00,000/ paid vide agreement to sell dated 03.11.1995. It was argued from the side of defendant that the suit land is situated in Ghaziabad, U.P. and it was there only did the cause of action arose. Per contra it was argued from the side of plaintiff that payments were done at Delhi and agreement to sell was executed at Delhi and there is no denial that payment was received at Delhi in the written statement.
CS No. 8517/2016 Page No. 7 of 2014. The plaintiff has shown the territorial jurisdiction of this Court in para no. 13 of the plaint wherein he has specifically stated that the payments were made at Delhi and in reply to the corresponding para, the fact has not been specifically denied in the written statement. Further it is pertinent to note here that defendants have also preferred counter claim of Rs.1.10 crore arising out of the same transaction and counter claimant has specifically averred that this Court has territorial jurisdiction to try this counter claim. In view of the same, the objection taken by the defendant is found to be frivolous. The issue is accordingly decided in favour of the plaintiff.
Issue no. 1 and 6
1. The company Bestavision Electronics Ltd. having already filed a suit, whether its Chairman, Shri Raja Singh can file the present suit?
And
6. Whether the present suit is not maintainable under Order XXIII Rule 1(4) CPC and Order IX Rule 9 and Order II Rule 1 and 2 of the CPC and Section 21 of the Specific Relief Act?
15. It was contended from the side of defendants that the suit for declaration and permanent injuction qua the suit land on the basis of agreement to sell Ex. P1 was already filed on behalf of company Bestavision Electronics Ltd. before the Ghaziabad Court and hence the present suit is barred under the provision of Order II Rule 2 CPC and under section 21 of the Specific Relief Act.
16. Findings: Section 21 of the Specific Relief Act provides for power to award compensation in certain cases. Subsection (1) enables the plaintiff to seek the relief of compensation in addition to or in substitution of specific performance. Subsection (2) provides that the court may grant compensation in substitution of specific performance when it finds that there is a contract between the parties which has been broken, and decides that specific performance ought not to be granted. The claim for damages and the claim of CS No. 8517/2016 Page No. 8 of 20 specific performance under the other provisions in the chapter are claims independent of each other. An alternative relief under this provision, does not debar a plaintiff from asking for specific relief. In view of the same, the plaintiff can file independent suit claiming damages due to the breach of the agreement to sell and it is not the contention of the defendants that suit of the plaintiff is barred by limitation, which is to be only seen herein. Secondly, the orders under the Code of Civil Procedure prescribe the procedure and no substantive right can be taken away by the procedural law since procedures are only handmade of justice. The issues are accordingly decided in favour of the plaintiff.
Issue no. 4 Whether the suit is bad for nonjoinder of parties?
17. The suit of the plaintiff is further objected from the side of defendants on the ground of nonjoinder of parties. It was argued from the side of defendants that the entire documents were executed on the letterhead of Bestavision and even the plaintiff himself signed the documents as Chairman of M/s. Bestavision Pvt. Ltd. hence the suit is bad for nonjoinder of Bestavision Ltd. Per contra, the suit was defended by the plaintiff on the ground that agreement to sell dated 03.11.1995 was entered between two individuals in their individual capacity. The name of plaintiff Sardar Raja Singh has been mentioned as second party in the agreement Ex. P1 and it is nowhere mentioned in the same that the same was entered on behalf of Company M/s. Bestavision Electronics Pvt. Ltd. nor the agreement mentions about any resolution in favour of plaintiff nor did it bear any seal of the Company; that the plaintiff described himself as Chairman of said Company only for the purposes of identification and not as one who is representing the Company.
CS No. 8517/2016 Page No. 9 of 2018. Findings: The plaintiff filed the present suit on the basis of agreement to sell Ex. P1 which was entered between Mohd. Yamin i.e. defendant no. 2 as the proprietor of defendant no. 1 and plaintiff Sardar Raja Singh S/o Shri Mela Singh Chairman M/s. Bestavision Electronics Ltd. No doubt the agreement nowhere specifies that the plaintiff entered into said agreement to sell on behalf of the Company M/s. Bestavision Electronics Ltd. nor did it bear the seal of the Company but this is an admitted fact that before filing the present suit, the suit for declaration and permanent injunction was filed on behalf of M/s. Bestavision Electronics Ltd. through its Managing Director Shri Inderjeet Singh on the basis of Board resolution in his favour. The basis of said suit was also the same agreement to sell as relied herein i.e. Ex. P1 and now the plaintiff cannot change his stand that the agreement to sell was entered by plaintiff in his individual capacity. Ld. counsel for the plaintiff tried to justify the said contradiction by saying that filing of the suit by M/s. Bestavision Electronics Pvt. Ltd. was not proper as the company was not party to the agreement to sell and any suit could have only be filed by the plaintiff. Be that may be so, under Order I Rule 9 CPC a suit can never be defeated for misjoinder or nonjoinder of party. The very fact that the party may have been nonjoined will not be a ground to hold that the suit is not maintainable. In view of this legal position, this suit cannot be dismissed for nonjoinder of M/s. Bestavision Electronics Pvt. Ltd. Otherwise also the defendants have also preferred counter claim of Rs.1.10 crore on the basis of same agreement to sell Ex. P1 against the plaintiff. In view of the same, this objection taken by the defendant is too found to be frivolous. The issue is accordingly decided in favour of the plaintiff.
CS No. 8517/2016 Page No. 10 of 20Issue no. 5 Whether the plaintiff was not entitled to the relief of specific performance because the agreement to sell was not in accordance of the law of the place where the property was situated and if so, was he entitled to abandon the suit or was he not required to claim compensation by amendment of plaint?
19. Admittedly, prior to the filing of present suit, the suit for declaration and permanent injuction was filed on behalf of M/s. Bestavision Electronics Ltd. before the Ghaziabad Court on the basis of same agreement to sell Ex. P1. This is also an admitted fact that the said suit was withdrawn and it was contended on behalf of the defendants that the said suit was going to fail ultimately since the agreement to sell has to be registered for the relief of specific performance which it was not. However, the relief sought herein through the present suit is the claim for damages and in view of the findings given on issue nos. 1 and 6, this objection is also of no consequence. The issue is accordingly decided in favour of the plaintiff.
Issue nos. 2, 3, 8, 9, 10 and 12 2 Whether the plaintiff was guilt of breach of agreement and if so, was the defendant entitled to terminate the agreement?
3. Whether the plaintiff fabricated or produced false record for the purpose of showing that the defendant had not obtained sale deed of the property?
8. Whether the plaintiff failed to complete the transaction which was subject matter of the agreement to sell because of fall in prices of real estate?
9. Whether the plaintiff committed breach of agreement and is so, did the defendant suffer any loss?
10. Whether the plaintiff or defendant is entitled to claim any interest on CS No. 8517/2016 Page No. 11 of 20 the respective amounts claimed by them?
And
12. To what amount, if any, are the plaintiff and/or defendant entitled for?
20. All these issues are taken up together since they are interconnected and finding on one issue will have bearing on the other.
21. The Plaintiff filed the present suit for recovery of earnest money of Rs.1,04,00,000/ and defendants have preferred counterclaim of Rs.1,10,00,000/. The plaintiff entered into the witness box as PW1 and has deposed that he entered into an agreement to sell with defendant no. 2 on 03.11.1995 for purchasing the suit land for total consideration of Rs.2,78,00,000/ out of which Rs.50,00,000/ was paid at the time of entering the said agreement; that before entering into the said agreement he was to be supplied the copy of agreement to sell executed by M/s J.K. Synthetics Ltd. in favour of defendant no. 2 alongwith permission from the Income Tax department for the sale of suit land; that it was agreed that he will advance sum of Rs.1,10,00,000/ to defendant no. 2 out of remaining consideration amount within one month on furnishing original sale deed by defendant no. 2; that the said condition was never complied by defendant no. 2 and hence there was no occasion for the plaintiff to advance any further sum to him though defendant no. 2 came out with a plea that he had purchased a suit land on 20.11.1996 but failed to supply the original sale deed; that moreso no such sale deed was found to be executed and registered with the office of SubRegistrar, Dadri on 22.10.1997. Per contra DW1 has deposed that the amount of Rs.50 lakh was earnest money and is described as such in the agreement dated 03.11.1995 thereby entitling the counter claimant/ Vendors to forfeit the same in the event of breach of contract by the opposite party.
CS No. 8517/2016 Page No. 12 of 2022. There is no dispute from the side of defendants that an agreement to sell Ex. P1 was executed regarding the suit land neither they have disputed the receipt of Rs.50,00,000/ against the said agreement to sell but they have disputed that they failed to supply the copy of the sale deed executed by M/s. J.K. Synthetics Ltd. DW1 has deposed that the sale deed was submitted for registration on 20.11.1996 and the Registry after complying with the formalities and requirements in due course registered the same; that a short copy was immediately obtained from the office of the Subregistrar and the defendant without delay furnished the copy of the same to the plaintiff and that a short copy is not a summary of the document but it is a full document written closely for the purposes of record by the SubRegistrar.
23. The picture which arises from the above said testimony is that as per the agreement Ex. P1 the remaining consideration amount was to be paid within one month on furnishing original or copy of the sale deed in favour of the defendants to the plaintiff within one month. The said condition is admittedly not complied from the side of defendants within one month since the sale deed was submitted for registration only on 20.11.1996 after period of around a year and the question is that whether the time was extended to produce the sale deed by the parties mutually till that date or thereafter. DW1 has deposed that "...pursuant to the agreement to sell, sale deed was obtained from J.K. Synthetics Ltd., and got registered. I further say that more than once the Defendant asked the plaintiff to purchase the property as the sale deed had been executed / registered. I say that the plaintiff failed to purchase the property inspite of legal notices dated 23.11.1996 and 6.1.1997 and other written and verbal communications". Notice dated 23.11.1996 is Ex. D1 and notice dated 06.01.1997 is Ex. D4.
CS No. 8517/2016 Page No. 13 of 2024. It is pertinent to note here that there are series of notices exchanged between the parties before filing the present suit and the notices are admitted documents from both the sides. Vide admitted notice dated 23.11.1996 Ex. D1 defendants gave ten days time to the plaintiff to comply the said agreement failing which earnest money will be forfeited. The said notice was replied from the side of plaintiff vide reply dated 02.12.1996 Ex. D3 whereby plaintiff sought mandatory certificate from Income Tax authorities before execution of sale deed and vide said reply plaintiff was still inclined to honor their commitment in terms of agreement Ex. P1 which means the time period for producing the Sale Deed stood extended till December 1996. Vide legal notice dated 06.01.1997 Ex. D4, defendants proclaimed to send the photocopy of the sale deed executed by M/s. J.K. Synthetics in their favour along with notice Ex.D1 and gave fifteen days more time to execute the sale deed failing which the earnest money was to be forfeited. Vide legal notice dated 24.07.1997 Ex. D6 plaintiff denied the receipt of sale deed in terms of clause 5 of Ex. P1 and further called the defendants to execute the sale deed within one month of the receipt of notice failing which they will be entitled to claim refund of Rs.2,50,00,000/. Vide legal notice dated 12.08.1997 Ex. D8 defendants informed the plaintiff regarding the forfeiture of earnest money on account of nonpayment of remaining consideration amount. Lastly, vide legal notice dated 06.11.1997 Ex. D11 plaintiff asked for the refund of earnest money on account of non compliance of terms of agreement Ex. P1.
25. In view of the aforesaid, admittedly timeline for producing sale deed executed by M/s. J. K. Synthetics Ltd. in favour of defendants and for executing the sale deed in favour of plaintiff stood extended till 23.08.1997 subject to the delivery of copy of the sale deed in terms of Clause 5 of the CS No. 8517/2016 Page No. 14 of 20 agreement Ex.P1. Vide legal notice Ex. D4 and D8, defendants proclaimed to send the copy of the said Sale deed along with the notice dated 23.11.1996. However, DW2 has admitted that the said sale deed was executed on 29.05.1997 and in that situation where comes the question of forfeiting the earnest money by the defendants. Vide legal notice dated 06.11.1997 Ex.D11, the plaintiff again denied the receipt of certified copy of the sale deed and asked for payment of earnest money of Rs.50,00,000/ along with interest.
26. In view of the aforesaid, the point which becomes relevant here is regarding the delivery of the sale deed in terms of clause 5 of the agreement Ex.P1 and that burden is of the defendants to prove so however they failed to discharge the said burden. Firstly, defendants proclaimed to supply the sale deed along with notice dated 23.11.1996, the date on which it was not registered. Secondly, DW1 in his own words supplied short copy of the sale deed and what is that short copy stands clarified from the testimony of DW2 who states that the said sale deed was presented for registration on 23.11.1996 but same got registered on 29.05.1997 and from 23.11.1996 till 29.05.1997, there was no document existing as per clause 5 of the agreement Ex.P1 and when there was no document in existence where comes the question of delivering the same to the plaintiff. The fact that defendants failed to supply the sale deed got affirmed from the testimony of DW1 who expressed his ignorance as to whether notices issued after 23.11.1996 were accompanied with any document and that answer will be read in favour of the plaintiff.
27. On the other hand DW1 has deposed that "... this amount of Rs.50 lakh (Rupees fifty lakh) was earnest money and is described as such in the agreement dated 3.11.1995 thereby entitling the counter claimant/ Vendors to forfeit the same in the event of breach of contract by the opposite party." It has CS No. 8517/2016 Page No. 15 of 20 been held by Hon'ble Supreme Court in case titled as "Shree Hanuman Cotton Mills & Ors. Vs. Tata AirCraft Ltd. 128 (1970) 3 SCR" that ".... if the buyer makes default in making payment according to the contract the respondent has a right to cancel the contract and forfeit unconditionally the earnest money without prejudice to any other rights of the respondent in law." The Hon'ble Apex Court considering the scope of the term "earnest" laid down the following principles:
1) "It must be given at the moment at which the contract is concluded.
2) It represents a guarantee that the contract will be fulfilled or, in other words, "earnest" is given to bind the contract.
3) It is part of the purchase price when the transaction is carried out.
4) It is forfeited when the transaction falls through by reason of the default or failure of the purchaser.
5) Unless there is anything to the contrary in the terms of contract, on default committed by the buyer, the seller is entitled to forfeit the earnest."
27.1 In "V. Lakshmanan Vs. B.R. Mangalgir & Ors. (1995) Suppl.
(2) SCC 33" the Hon'ble Supreme Court has again reiterated that "the question then is whether the respondents are entitled to forfeit the entire amount. It is seen that a specific covenant under the contract was that respondents are entitled to forfeit the money paid under the contract. So when the contract fell through by the default committed by the appellant, as part of the contract, they are entitled to forfeit the entire amount."
27.2 In "Satish Batra Vs. Sudhir Rawal 2013 III AD (SC) 557, the Hon'ble Supreme Court again reiterated the abovesaid principles and held that ".....the seller is entitled to forfeit the earnest money deposit where the sale of an immovable property falls through by reason of the fault or failure of the CS No. 8517/2016 Page No. 16 of 20 purchaser.... It has been further held that " ....In other words "earnest" is given to bind the contract, which is a part of the purchase price when the transaction is carried out and it will be forfeited when the transaction falls through by reason of the default or failure of the purchaser."
28. In view of the aforesaid the burden is on the seller to prove that the present transaction falls due to the fault of the purchaser in order to justify forfeiture of earnest money. However defendants failed to prove that the present transaction falls due to the fault of the plaintiff rather it was vicea versa since the transaction failed on account of failure of the defendants to supply the certified copy of the sale deed in terms of clause 5 of the agreement, Ex.P1 and in that eventuality the defendants had no right to forfeit the earnest money.
29. At this point issue no. 3 becomes relevant which states "whether the plaintiff fabricated or produced false record for the purpose of showing that the defendant had not obtained sale deed of the property". PW1 has deposed that defendant no. 2 subsequently represented to him that the sale deed was executed in favour of defendant No. 1 by M/s J. K. Synthetics Ltd. on 20.11.1996; that in fact, a search and investigation was carried out on my instructions in the office of SubRegistrar, Dadri District, Gautam Budh Nagar on 22.10.1997 and it was found no such sale deed was executed or registered in the said office. The certificate is Ex.PW1/2 and the said certificate does not speak about execution of any sale deed by M/s J.K. Synthetics in favour of defendants and the certificate was verified by the DW2 in his evidence.
30. One of the other defences taken from the side of defendants again puts the burden on the plaintiff for the failure of the transaction and that defence is regarding the fall in prices of real estate due to which plaintiff failed to CS No. 8517/2016 Page No. 17 of 20 complete the transaction regarding which issue no. 8 has been framed. DW1 has deposed that "this transaction of sale resulted into loss of Rs.1.28 crores (Rupees One crore twenty eight lakhs) to the counter claimants. The agreed price with the opposite party was Rs.2.78 crores (Rupees two crore seventy eight lack). The price at which it has now been sold to Shri Nathi Trust is Rs.1.50 crores. I say that this reduction in price is due to the falling prices of real estate. I say that in addition, the defendant / counter claimant has suffered a loss of interest which it would have earned on the sum of Rs.2.28 crores after allowing for the earnest money. This interest has been calculated at 24%. The plaintiff is liable for loss of interest from 2.12.1996 till 27.1.2000 when the sale was made to Sri Nathji Trust. However, for convenience of calculation and rounding off the figures. Interest is being claimed from 1.1.1997 till 31.12.1999 and amounts to Rs.1,64,16,200/. I say that deducting Rs.50 lacs from this portion of the damages and net amount will be Rs.1,14,16,200/; that the total amount payable by the plaintiff/ opposite party to the counter claimant as compensation for loss caused to it will be as under:
a). Loss on resale of Rs.1,28,00,000/
property.
b). Loss of interest (as set
out above after
adjustment of forfeited
earnest money)
Rs.1,14,16,200/
Rs.2,42,16,200/
31. DW1 has relied on the certified copy of the sale deed entered with Nath Ji Trust qua the suit land Ex. DW3/2 and DW3/4 for consideration of Rs. 1,10,00,000/ and Rs. 40,00,000/ respectively which is much lesser than the consideration amount of Rs. 2.78 crores agreed qua agreement Ex. P1 by the CS No. 8517/2016 Page No. 18 of 20 party herein. However, in view of the aforesaid finding since the defendants failed to prove that plaintiff was guilty of breach of agreement, the burden of reduction in the prices of the suit land cannot be cast upon the plaintiff and blame of the lossess caused to the defendants due to the same cannot be put upon the plaintiff. Hence, defendants are not entitled to claim any damages from the plaintiff.
32. In view of the aforesaid discussion, I conclude that since the defendants have failed to prove that plaintiff was guilty of breach of agreement rather it was otherwise and in that situation, defendants are not entitled to forfeit the earnest money and plaintiff is entitled to the refund of said amount. However, apart from refund of earnest money, plaintiff has also claimed damages of Rs.54,00,000/ as well but nothing has been deposed by PW1 regarding the damages claimed by him nor PW1 has proved how and in what manner he suffered said damages so as to claim entitlement and the same are hereby declined.
33. Coming to the interest issue, the aforesaid findings confirms that defendants withheld the dues of plaintiff without any just reason and excuse. Plaintiff has claimed interest @ 24% per annum on the outstanding dues but he has failed to bring any contractual stipulation to the effect that he was entitled to any interest upon the earnest money. However, since he has been denied enjoyment of his outstanding sum, I am of the opinion that he deserves to be compensated for the said loss as the said sum could have been gainfully invested by him in some fruitful venture. Consequently, plaintiff is awarded interest @ 9% per annum with effect from the date of filing of the present suit till the realization of decreetal amount.
34. In view of the aforesaid discussion, issues no.2, 3, 8, 9, 10 and 12 are decided in favour of plaintiff.
CS No. 8517/2016 Page No. 19 of 20Issue no. 11 Whether the plaintiff has not come to this Court with clean hands and the suit is liable to be dismissed on this ground alone?
35. It was contended from the side of defendant that as per the plaint the agreement dated 03.11.1995 was executed between the plaintiff and defendant at Delhi but as such the said agreement was executed at Ghaziabad and same was attested by Oath Commissioner at Ghaziabad hence the plaintiff has not approached the Court with clean hands. However when the fact has already been disclosed in the plaint, where comes the question of unclean hands. In view of the same issue no. 11 is decided against the defendants.
Relief.
36. In view of findings on aforesaid issues, the suit of the plaintiff is partly decreed and partly dismissed and counterclaim stands dismissed. The suit is hereby decreed for an amount of Rs.50,00,000/ alongwith interest @ 9% per annum upon the decreed sum with effect from the date of filing of the present suit till date of realization. Cost of the suit also awarded in favour of plaintiff. Decree sheet be prepared accordingly. File be consigned to Record Room.
Digitally signed by GEETANJALI GEETANJALI Date:
Typed to the direct dictation and (Geetanjali) 2022.08.20 17:25:57 +0530 announced in the open court ADJ05, South East on this 27th August, 2022 Saket Courts, Delhi/27.08.2022 CS No. 8517/2016 Page No. 20 of 20