Delhi District Court
Vinod Rohilla vs Shanti Devi on 26 March, 2024
IN THE COURT OF MS. SHILPI M JAIN: ADDL. DISTRICT
JUDGE-05, SOUTH WEST DISTRICT, DWARKA
COURTS, NEW DELHI
CS No. 17745/2016
CNR No. DLSW01-0060592016
Vinod Rohilla
S/o Shri Sajjan Rohilla
R/o RZ-54, Naya Bazar,
Najafgarh,
Delhi ... Plaintiff
Versus
Smt. Shanti Devi
W/o Late Sh. Harphool Singh,
R/o H.no. 208, Village Kakrola,
New Delhi ....Defendant
Date of Institution : 16.04.2012
Date of Arguments : 02.03.2024
Date of Judgment : 26.03.2024
JUDGMENT
SUIT FOR SPECIFIC PERFORMANCE AND MANDATORY INJUNCTION INDEX FACTUAL BACKGROUND Page No. 3 ISSUES Page No. 5 EVIDENCE GIVEN BY PARTIES Page No. 5 SUBMISSIONS OF THE PARTIES Page No. 6 CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 1 of 33 ISSUEWISE ANALYSIS & FINDINGS Page No. 14 CONCLUSION Page No. 32
1. Present suit for specific performance and permanent/ mandatory injunction filed on behalf of plaintiff seeking specific performance of agreement dated 06.12.2011 entered between the parties in respect of unacquired / remaining portion of plot no. 17, Dwarka Vihar, Comprising in Khara no.37/19, Najafgarh, Delhi and possession thereof. Prayer mentioned in the plaint are reproduced herein below:
'a) pass a decree for specific performance of agreement dated 6.12.2011 entered between the Plaintiff and defendant, in respect of unacquired/remaining portion of the plot no. 17, Dwarka Vihar, comprising in khasra no. 37/19 Najafgarh, Delhi and also direct the defendant to hand over peaceful and vacant possession of the unacquired/remaining portion of the said plot to the plaintiff or plaintiff's nominee and also execute the Conveyance Deed or any other documents in respect of sale of the said unacquired/remaining portion of the said plot in favour of the Plaintiff or nominee of the Plaintiff or in alternative;
b) pass a decree for recovery of Rs. 21,56,000/- (Rupees Twenty One Lakhs Fifty Six Thousand) as compensation along with refund of amount paid by the plaintiff to the Defendant, with pendentelite and future interest @ 24%, per annum in favour of plaintiff and against the defendant;
c) pass a decree of permanent injunction restraining the defendant from in any manner, selling, alienating, encumbering, transferring or executing conveyance deed/title documents or handing over possession of the unacquired/remaining portion of the plot no.17, Dwarka Vihar, comprising in khasra no. 37/19, Najafgarh, Delhi to any third party except to the plaintiff or his nominee;
d) Pass a decree of mandatory injunction directing the defendant to apply for competent authorities for obtaining no objection certificate/sale permission of the unacquired/remaining portion of the said plot no.17, Dwarka Vihar, comprising in khasra no. 37/19, Najafgarh, Delhi in favour of the plaintiff and his nominee so that the said plot is completely and fully transferred to the plaintiff and his nominee;
e) Cost of the suit be awarded to the plaintiff against the defendant;
CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 2 of 33
f) Grant any such other and further relief as this Hon'ble Court deem fit and proper under the facts and circumstances of the case in favour of the plaintiff and against the defendant.' FACTUAL BACKROUND
2. It is averred that, defendant represented to plaintiff as actual owner of entire suit property (initially ad-measuring 250 Sq. yds) and said plot was free from all sort of encumbrances and there is no legal defect. Hence, bayana receipt dated 06.12.2011 for total consideration of Rs. 77,00,000/- @ Rs. 30,800/- per Sq. yds. was executed and plaintiff paid Rs. 11,00,000/- as Bayana amount. It is also averred that, time was the essence of contract and sale transaction was to be completed upto 06.04.2012. It is also averred that as per the terms of agreement seller would pay double amount i.e. Rs. 22,00,000/- in cash of his default while in case of default of purchaser Rs.11,00,000/- shall be forfeited by seller.
3. It is further averred that, the said plot was situated in unauthorized colony known as Dwarka Vihar and after execution of Bayana receipt plaintiff came to know that part of the said plot came under the public road. In view of which, plaintiff served legal notice dated 27.01.2012 thereby called upon defendant to supply chain of document alongwith NOC for clear marketable title. It is also averred that thereafter, it had came to the knowledge of plaintiff that award no. 05/2008-09/SW was announced by Land Acquisition Collector and the land was acquired for 100 mtr road under Plan Development of Delhi. It is submitted that area measuring 2 bigha 9 biswa of Khasra no. 37/19 out of total area 3 bigha 17 biswa has been acquired.
4. It is also averred that thereafter, plaintiff again served legal notice dated 19.03.2012 and shown his willingness to purchase remaining CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 3 of 33 land of 70 Sq. yds. out of 250 Sq. yds. (as land admeasuring 180 Sq. yds. has been acquired by Government) but defendant failed to comply. Hence, present suit is filed.
5. The summons of the suit were issued to the defendant and written statement was filed on behalf of defendant wherein she denied the contents of plaint. Defendant stated that, the sale transaction entered into between the parties vide receipt dt. 06.12.2011. However, said receipt is indivisible and can be enforced in its entirety and not in parts as sought for by the plaintiff. It is further stated that, the time was the essence of the sale transaction but, plaintiff did not take any steps for the completion of the sale transaction, consequently the sale transaction came to an end as its performance was not done by the plaintiff within the stipulated time. It is further stated that the defendant has entered into this sale transaction vide the Bayana receipt in respect of the suit property on as is where is basis and was not aware of this fact that part of this suit property is the subject matter of the acquisition as alleged by the plaintiff in the present suit. It is further submitted that plaintiff was neither ready nor willing to perform his part of the sale transaction as he was not having sufficient funds for the performance of his part and as such, he has not approached the court with clean hands, hence not entitled for the equitable reliefs and as such the suit is liable to be dismissed.
6. Plaintiff filed his replication to the written statement of defendant wherein he reiterated and reaffirmed the contents of his plaint and denied all objections raised by defendant in her written statement.
ISSUES:
CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 4 of 33
7. On the basis of pleadings of parties, following issues were framed vide order dated 03.11.2014 by Hon'ble High Court of Delhi:
i. Whether the plaintiff is entitled for the decree of Specific Performance of Agreement to Sell dated 06.12.2011? OPP ii. Whether the plaintiff has performed or is willing and ready to perform his part of the contract/agreement? OPP iii. Whether the plaintiff has any right, title or interest to execute the Agreement to Sell dated 06.12.2011 with respect to suit property bearing No. Plot No.17, Khasra Nno.37/19, Dwarka Vihar, Kakrola Road, Najafgarh, New Delhi measuring 250 sq.yds or unacquired/remaining portion of the plot in question? OPP iv. Whether the plaintiff is entitled for the refund of Rs. 11 lacs with compensation/interest, if so, at what rate and for what period? OPP v. Whether the plaintiff is entitled for injunctions prayed for? OPP vi. Whether the suit has not been properly valued for the purposes of Court Fee? OPD vii. Whether the suit is not maintainable under Order VII Rule 3 as alleged in para 11 of the Preliminary Objection in the written statement? OPD viii. Relief.
EVIDENCE LED BY THE PARTIES:
8. In support of his case, plaintiff examined himself only as PW1 and tendered his evidence by way of affidavit Ex. PW1/A and has relied upon following documents:
Sl. Documents Exhibits
No.
1. The photocopy of bayana receipt dt. 06.12.2011 Ex. PW1/1 (OSR)
2. Legal Notice dt. 27.01.2012 Ex. PW1/2 (office
copy seen and
returned)
CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 5 of 33
3. The copy of reply dt. 07.02.2012 to the legal notice Ex. PW1/3 (OSR) dt. 27.01.2012
4. The photocopy of legal notice dt. 09.03.2012 issued Mark X by the plaintiff
5. Lay out plan of Dwarka Vihar Mark A
6. Aksh Shizra for 100 mtrs. Road Mark B
7. Map in respect of the 100 mtrs. road Mark C PW-1 cross examined at length by Ld. Counsel for defendant and discharged.
9. Thereafter, PE stands closed and the matter was fixed for defendant's evidence.
10. In support of her case, defendant examined herself as DW-1 and tendered her evidence by way of affidavit Ex. DW1/A. She was cross- examined by Ld. Counsel for plaintiff and discharged. Thereafter, DE stands closed and the matter was fixed for final arguments.
SUBMISSIONS OF THE PARTIES:
11. Ld. Counsel for plaintiff submits that, plaintiff was always ready and willing to execute the agreement between the parties and it is only after he came to know about the acquisition of part of the suit property, he asked the defendant to produce the NOC w.r.t. the same and since defendant failed to provide the requisite document, plaintiff did not make any further payment. It is also submitted that, plaintiff is still ready and willing to perform his part of contract qua unacquired portion of the suit property i.e. 70 sq. yards, out of 250 sq. yards as 180 sq. yards has already been acquired.
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12. It is further averred that, as per the Bayana receipt, per square rate was Rs. 30,800/-, hence, plaintiff is bound to make the payment for Rs. 21,56,000/- being 70 sq. yards x 30,800/-.
13. Ld. Counsel for plaintiff has relied upon the judgment passed by Hon'ble Supreme Court of India in case titled as C. Haridasan vs. Anappath Parakkattu Vasudeva Kurup & Ors. CA 4072/22. But, same is split verdict on whether the plaintiff is entitled to the decree of specific relief and in view of difference of opinion in the matter, Registry was directed to place the papers before Hon'ble the Chief Justice of India for appropriate orders for constituting a larger Bench to decide the controversy.
14. Per contra, Ld. Counsel for defendant strongly opposed the claim made by the plaintiff. It is submitted that, as per the Bayana receipt, plaintiff was bound to make the payment for Rs. 10,00,000/- every month and final payment is to be made on 06.04.2012. It is further submitted that, the onus of the fact of acquisition was upon the plaintiff as no such notification was issued qua the suit property. It is also submitted that, plaintiff himself has breached the condition of agreement to sell. Hence, not entitled for any relief. It is also submitted that, plaintiff duly admitted the execution of Bayana receipt and in terms of Bayana receipt, the amount of Rs. 11,00,000/- stands forfeited.
15. Ld. Counsel for defendant relied upon the following judgments:
1) Rachakonda Narayana Vs. Ponthala Parvathamma & Anr AIR 2001 SC 3353;
2) Jaswinder Kaur (now deceased) Through her LRS and Ors. Vs. Gurmeet Singh & Ors (SLP (C) No. 8112/2016);
3) Desh Raj & Ors. Vs. Rohtash Singh (Civil Appeal No.921/2022), Judgment dated 14.12.2022;
4) Satish Batra VS. Sudhir Rawal (2013)SCC Page 345.
CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 7 of 33 ANALYSIS & FINDING:
16. Before going ahead for issue wise analysis, in the considered opinion of this court, it is imperative to discuss the law on specific performance before 2018 amendment and its applicability on the fact of present matter.
17. Recently, in the matter of Global Music Junction Pvt. Ltd V. Shatrughan Kumar Aka Khesari Lal Yadav & ORS (FAO(OS) (COMM) 7/2023), Hon'ble High Court of Delhi discussed in detail the scope of Spe- cific Performance before and after amendment i.e. as follows:
'This Court is of the view that the Amendment Act, 2018 introduces a paradigm shift in law regarding contractual enforcement in India. A glaring instance of the legisla- tive shift is the amendment of Section 14 of Act, 1963 which deletes the earlier sub-clause (a) which prescribed that the contracts for the non-performance of which compensation in money was an adequate relief would not be specifically enforced, meaning thereby that the plea that a party could be compensated in monetary terms as damages for breach of the contract and resultant refusal of interim injunction on the said ground, is no longer a ground to refuse specific performance of the contract. Consequently, the Amendment Act, 2018 does away with the primacy given to damages as a relief over spe- cific performance. It shifts the focus from the previous default remedy of award of damages for breach of con- tract to enforcing specific performance of contracts. To highlight the change some of the provisions of the Act, 1963 and the Amendment Act, 2018 are contrasted here- inbelow:
Sectio Act of 1963 Act as amended, effective on n 01.10.2018 Section 10. Cases in which specific performance of 10. Specific performance in respect of 10 contract enforceable- contracts.
Except as otherwise provided in this Chapter, the CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 8 of 33 specific performance of any contract may, in the The specific performance of a discretion of the court, be enforced- contract shall be enforced by the court subject to the provisions contained in
(a) when there exists no standard for ascertaining subsection (2) of section 11, section 14 actual damage caused by the non-performance of and section 16.
the act agreed to be done; or
(b) when the act agreed to be done is such that compensation in money for its non-performance would not afford adequate relief.
Explanation: Unless and until the contrary is proved, the court shall presume-
(i) that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money; and
(ii) that the breach of a contract to transfer movable property can be so relieved except in the following cases:
(a) where the property is not an ordinary article of commerce, or is of special value or interest to the plaintiff, or consists of goods which are not easily obtainable in the market;
(b) where the property is held by the defendant as the agent or trustee of the plaintiff.
Section 14. Contracts not specifically enforceable.- 14. Contracts not specifically 14 enforceable.-
(1) The following contracts cannot be specifically enforced, namely,- The following contracts cannot be specifically enforced, namely:--
(a) a contract for the non-performance of which compensation is an adequate relief; (a) where a party to the contract has obtained substituted performance of
(b) a contract which runs into such minute or contract in accordance with the numerous details or which is so dependent on the provisions of section 20;
personal qualifications or volition of the parties, or otherwise from its nature is such, that the court (b) a contract, the performance of which cannot enforce specific performance of its material involves the performance of a continuous terms; duty which the court cannot supervise;
(c) a contract which is in its nature determinable; (c) a contract which is so dependent on the personal qualifications of the parties
(d) a contract the performance of which involves that the court cannot enforce specific the performance of a continuous duty which the performance of its material terms; and court cannot supervise.
(d) a contract which is in its nature (2) Save as provided by the Arbitration Act, 1940, determinable. no contract to refer present or future differences to arbitration shall be specifically enforced; but if any CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 9 of 33 person who has made such a contract (other than arbitration agreement to which the provisions of the said Act apply) and has refused to perform it, sues in respect of any subject which he has contracted to refer, the existence of such contract shall bar the suit.
(3) Notwithstanding anything contained in clause
(a) or clause (c) or clause (d) of sub-section (1), the court may enforce specific performance in the following cases:
(a) where the suit is for the enforcement of a contract,-
(i) to execute a mortgage or furnish any other security for securing the repayment of any loan which the borrower is not willing to repay at once:
PROVIDED that where only a part of the loan has been advanced the vendor is willing to advance the remaining part of the loan in terms of the contract; or
(ii) to take up and pay for any debentures of a company;
(b) where the suit is for,-
(i) the execution of a formal deed of partnership, the parties having commenced to carry on the business of the partnership; or
(ii) the purchase of a share of a partner in a firm;
(c) where the suit is for the enforcement of a contract for the construction of any building or the execution of any other work on land:
PROVIDED that the following conditions are
fulfilled, namely,-
(i) the building or other work is described in the contract in terms sufficiently precise to enable the court to determine the exact nature of the building or work;
(ii) the plaintiff has a substantial interest in the performance of the contract and the interest is of such a nature that compensation in money for non-performance of the contract is not an adequate relief; and CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 10 of 33
(iii) the defendant has, in pursuance of the contract, obtained possession of the whole or any part of the land on which the building is to be constructed or other work is to be executed.
Section 16. Personal bars to relief.- 16. Personal bars to relief.-
16Specific performance of a contract cannot be Specific performance of a contract enforced in favor of a person- cannot be enforced in favour of a person-
(a) who would not be entitled to recover
compensation for its breach; or (a) who has obtained substituted
performance of contract under section
(b) who has become incapable of performing, or 20; or
violates any essential term of, the contract that on his part remains to be performed, or acts in fraud (b) who has become incapable of of the contract, or willfully acts at variance with, or performing, or violates any essential term in subversion of, the relation intended to be of, the contract that on his part remains established by the contract; or to be performed, or acts in fraud of the contract, or wilfully acts at variance with,
(c) who fails to aver and prove that he has or in subversion of, the relation intended performed or has always been ready and willing to to be established by the contract; or perform the essential terms of the contract which are to be performed by him, other than terms of (c) who fails to prove that he has the performance of which has been prevented or performed or has always been ready and waived by the defendant. willing to perform the essential terms of the contract which are to be performed Explanation: For the purposes of clause (c),- by him, other than terms of the performance of which has been
(i) where a contract involves the payment of prevented or waived by the defendant. money, it is not essential for the plaintiff to actually tender to the defendant or to deposit in court any Explanation.-For the purposes of clause money except when so directed by the court; (c),-
(ii) the plaintiff must aver performance of, or (i) where a contract involves the payment readiness and willingness to perform, the contract of money, it is not essential for the according to its true construction. plaintiff to actually tender to the defendant or to deposit in court any money except when so directed by the court;
(ii) the plaintiff must prove performance of, or readiness and willingness to perform, the contract according to its true construction.
Section 20. Discretion as to decreeing specific 20. Substituted performance of 20 performance.- contract.-
(1) The jurisdiction to decree specific performance (1) Without prejudice to the generality of is discretionary, and the court is not bound to grant the provisions contained in the Indian such relief merely because it is lawful to do so; but Contract Act, 1872 (9 of 1872), and, the discretion of the court is not arbitrary but sound except as otherwise agreed upon by the CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 11 of 33 and reasonable, guided by judicial principles and parties, where the contract is broken due capable of correction by a court of appeal. to non-performance of promise by any party, the party who suffers by such (2) The following are cases in which the court may breach shall have the option of properly exercise discretion not to decree specific substituted performance through a third performance: party or by his own agency, and, recover the expenses and other costs actually
(a) where the terms of the contract or the conduct incurred, spent or suffered by him, from of the parties at the time of entering into the the party committing such breach. contract or the other circumstances under which the contract was entered into are such that the (2) No substituted performance of contract, though not voidable, gives the plaintiff an contract under sub-section (1) shall be unfair advantage over the defendant; or undertaken unless the party who suffers such breach has given a notice in writing,
(b) where the performance of the contract would of not less than thirty days, to the party in involve some hardship on the defendant which he breach calling upon him to perform the did not foresee, whereas its non-performance contract within such time as specified in would involve no such hardship on the plaintiff; or the notice, and on his refusal or failure to do so, he may get the same performed
(c) where the defendant entered into the contract by a third party or by his own agency :
under circumstances which though not rendering Provided that the party who suffers such the contract voidable, makes it inequitable to breach shall not be entitled to recover the enforce specific performance.
expenses and costs under subsection (1) unless he has got the contract performed Explanation 1: Mere inadequacy of consideration, through a third party or by his own or the mere fact that the contract is onerous to the agency.
defendant or improvident in its nature, shall not be deemed to constitute an unfair advantage within (3) Where the party suffering breach of the meaning of clause (a) or hardship within the contract has got the contract performed meaning of clause (b).
through a third party or by his own agency after giving notice under sub-
Explanation 2: The question whether the section (1), he shall not be entitled to performance of a contract would involve hardship claim relief of specific performance on the defendant within the meaning of clause (b) against the party in breach.
shall, except in cases where the hardship has resulted from any act of the plaintiff subsequent to (4) Nothing in this section shall prevent the contract, be determined with reference to the the party who has suffered breach of circumstances existing at the time of the contract.
contract from claiming compensation from the party in breach.
(3) The court may properly exercise discretion to decree specific performance in any case where the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of specific performance.
(4) The court shall not refuse to any party specific performance of a contract merely on the ground that the contract is not enforceable at the instance of the party.
Section 21. Power to award compensation in certain 21. Power to award compensation in 21 cases- certain cases.-
CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 12 of 33 (1) In a suit for a specific performance of a (1) In a suit for specific performance of a contract, the plaintiff may also claim compensation contract, the plaintiff may also claim for its breach, either in addition to, or in compensation for its breach in addition substitution of, such performance. to such performance.
(2) If, in any such suit, the court decides that (2) If, in any such suit, the court decides specific performance ought not to be granted, but that specific performance ought not to be that there is a contract between the parties which granted, but that there is a contract has been broken by the defendant, and that the between the parties which has been plaintiff is entitled to compensation for that breach, broken by the defendant, and that the it shall award him such compensation accordingly. plaintiff is entitled to compensation for that breach, it shall award him such (3) If, in any such suit, the court decides that compensation accordingly. specific performance ought to be granted, but that it is not sufficient to satisfy the justice of the case, (3) If, in any such suit, the court decides and that some compensation for breach of the that specific performance ought to be contract should also be made to the plaintiff, it granted, but that it is not sufficient to shall award him such compensation accordingly. satisfy the justice of the case, and that some compensation for breach of the (4) In determining the amount of any contract should also be made to the compensation awarded under this section, the plaintiff, it shall award him such court shall be guided by the principles specified in compensation accordingly. section 73 of the Indian Contract Act, 1872.
(4) In determining the amount of any (5) No compensation shall be awarded under this compensation awarded under this section unless the plaintiff has claimed such section, the court shall be guided by the compensation in his plaint: principles specified in section 73 of the Indian Contract Act, 1872 (9 of 1872).
PROVIDED that where the plaintiff has not claimed any such compensation in the plaint, the (5) No compensation shall be awarded court shall, at any stage of the proceeding, allow under this section unless the plaintiff has him to amend the plaint on such terms as may be claimed such compensation in his plaint:
just, for including a claim for such compensation.
Provided that where the plaintiff has not Explanation: The circumstance that the contract claimed any such compensation in the has become incapable of specific performance plaint, the court shall, at any stage of the does not preclude the court from exercising the proceeding, allow him to amend the jurisdiction conferred by this section. plaint on such terms as may be just, for including a claim for such compensation.
Explanation.-The circumstances that the contract has become incapable of specific performance does not preclude the court from exercising the jurisdiction conferred by this section.
18. In the present matter, Bayana receipt was executed in the year 2011, hence, law applicable to the pre-amendment has been looked into wherein specific performance was purely equitable and discretionary relief.
CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 13 of 33 In Katta Sujatha Reddy vs M/S Siddamsetty Infra Projects Pvt. Ltd. 2022 LiveLaw (SC) 712, 3 bench of Hon'ble Supreme Court of India hold that 2018 amendment to the Specific Relief Act is prospective and cannot apply to those transactions that took place prior to its coming into force.
ISSUEWISE ANALYSIS:
ISSUE NO. 6: Whether the suit has not been properly valued for the purposes of Court Fee? OPD ISSUE NO. 7: Whether the suit is not maintainable under Order VII Rule 3 as alleged in para 11 of the Preliminary Objection in the written statement? OPD
19. Onus of above issues was on defendant but, no such evidence led by defendant in his evidence. But, since above issues are legal and preliminary in nature, this court dealt with them.
20. Ordinarily, pecuniary jurisdiction of a court is determined based on the interplay between the provisions of the Court Fees Act and the Suit Valuation Act. Sec. 7(x)(a) of Court Fees Act provides that, in suit for specific performance of Contract of Sales, court fees is to be paid according to the amount of consideration Moreover, to determine the jurisdiction of the court in which such a suit for specific performance is to be instituted, Section 8 of the Suit Valuation Act is to be looked into.
21. Section 8 of the Suit Valuation Act provides that Court-fee value and jurisdictional value to be the same in certain suits in following terms:
"Where in suits other than those referred to in the Court- fees Act, 1870 (7 of 1870), section 7, paragraphs V, VI and IX, and paragraph X, clause (d), Court-fees are payable CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 14 of 33 ad valorem under the Court-fees Act, 1870 (7 of 1870), the value as determinable for the computation of Court-fees and the value for purposes of jurisdiction shall be the same."
22. In the present matter, sale consideration amount was Rs. 77,00,000/- while plaintiff valued the present suit as follows:
'29. That the suit for the purpose of Specific Performance, for the purpose of jurisdiction is valued at Rs. 21,56,000/- on which a court fee of Rs. 23,462/- is affixed. As the suit is filed for specific performance, therefore, no Court fee is required to be paid on alternative relief. However, it is submitted that if unacquired/remaining portion of the said plot if more than 70 sq. yds. and plaintiff undertakes to pay the court fees on such more area. For the purpose of permanent injunction, for the purpose of jurisdiction Suit is valued at Rs. 200/- on which a Court fee of Rs.20/- is affixed. For the purpose of mandatory injunction, for the purpose of jurisdiction Suit is valued at Rs. 200/- on which a Court fee of Rs.20/- is affixed therefore, total jurisdiction value of the Suit is Rs.21,56,400/-, therefore a total Court fee of Rs.23,550/- is affixed.'
23. Hence, plaintiff is liable to pay deficient court fees as per correct valuation of present suit as directed in conclusion para.
24. Further, Order VII Rule 3 of Code of Civil Procedure 1908 provides that, when immovable property is the subject of the lawsuit, the plaint must provide a description of the property that is adequate to identify it. If the property may also be recognised by limits or digits in a settlement or survey record, the plaint must mention those bounds or numbers. But, admittedly identity of suit property is not disputed in present matter rather, entire controversy revolves around the fact of acquisition/Non acquisition of land parcel.
CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 15 of 33
25. Hence, present suit is well maintainable. Above issues disposed off accordingly.
ISSUE No. 1: Whether the plaintiff is entitled for the decree of Specific Performance of Agreement to Sell dated 06.12.2011? OPP ISSUE No. 2: Whether the plaintiff has performed or is willing and ready to perform his part of the contract/agreement? OPP ISSUE No. 3: Whether the plaintiff has any right, title or interest to execute the Agreement to Sell dated 06.12.2011 with respect to suit property bearing No. Plot No.17, Khasra Nno.37/19, Dwarka Vihar, Kakrola Road, Najafgarh, New Delhi measuring 250 sq.yds or unacquired/remaining portion of the plot in question? OPP ISSUE No. 5: Whether the plaintiff is entitled for injunctions prayed for?
OPP
26. Since, above issues are inter-connected, same are simultaneously discussed as follows.
27. In present matter, although no formal agreement to sell was executed between the parties. But, as per Bayana Receipt defendant agreed to sale suit property for Rs. 77,00,000/-. For the purpose of clarification, same is reproduced as below:
'BAYANA RECEIPT Dated: 6.12.2011 I, Shanti Devi w/o Late Shri Harphool Singh is resident address H.No.208, Village Kakrola, New Delhi. I sold my plot no.17, Khasra No.37/19 situated Dwarka Vihar, Kakrola Road, Najafgarh, New Delhi- 110043, area 250 sq. yds., two room and boundary wall has been constructed in it for Rs.77,00,000/- in words Seventy Seven Lakhs only half of which is Rs.38,50,000/- in words Thirty eight lakhs fifty thousand, today dated 6/12/2011 to Shri Vinod Rohilla S/o Shri Sajjan Rohilla R/o RZ-54, Naya Bazar, Najafgarh. I have received the bayana of Rs.11,00,000/- in words eleven lakhs only. Last date of documentation is upto 6/4/2012. Upto that CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 16 of 33 date purchaser can have documentation in his name or in name of any other. If the purchaser refuses to take the plot then amount of Rs.11,00,000/- received as bayana will be forfeited and for any reason seller refuse to give the plot then the amount received as bayana will be paid double Rs.22,00,000/- in words Twenty Two Lakhs. Above plot is completely in my possession. All documents are complete and same is my personal property. There is no encumbrance on the same and this bayana receipt is given on my own and without any pressure is return in the presence of witnesses. The total price of plot is Rs.77,00,000/ in words Rupess Seventy Seven Lakhs, bayana Rs.11,00,000/- in words Rupees Eleven Lakhs balance amount Rs.66,00,000/- in words Rupees Sixty Six Lakhs date of payment 6.4.2012 special plot rate @30800/- per sq. yds.
Note:
(1) Both parties purchaser and seller will pay 1-1% commission.
(2) If the agreement is not completed even then commission is to be paid to the dealer for both side by the party who received double amount of bayana or the party who forfeit bayana.
(3) Seller has to give all complete documents.
(4) After possession and documentation it will be risk of the party.
(5) Part payment Rs.10,00,000/- Ten Lakhs for every (for three) months given to seller.'
28. Perusal of above receipt reveals that, defendant assured to have complete documents and undertake to hand over the same. but, it is the case of plaintiff that, being satisfied with GPA, he agreed to purchase the suit property and executed Bayana Receipt. Relevant Cross-examination of PW1 is reproduced as below:
"The area of the suit property is 250 sq. yards. The defendant had shown me the GPA of the suit property. It is correct that I was satisfied with the document i.e. GPA shown by the defendant. Besides the same I did not see any other document CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 17 of 33 pertaining to the suit property. On 06.12.2011, one bayana receipt was executed between us.
29. The next aspect which this Court needs to consider is whether the parties had requisite willingness and readiness to perform the contract. The aforesaid requirement is one of the essential ingredients under Section 16 of the Specific Relief Act, 1963. It is clear that in order to prove readiness and willingness, the burden is on the purchaser to prove that he was always ready and it is only the vendor who refused to perform the contract for extraneous consideration. In order to support his averments, the purchaser entered into the witness box and deposed as PW1. In his cross examination, PW1 deposed as below:
"The said bayana receipt was written in my presence by Mr. Anil Sharma. I knew the contents of the bayana receipt. The contents of the bayana receipt were read over at the time of its execution and thereafter same was signed by myself, defendant and Mr. Anil Sharma. The bayana receipt was just a proforma type document and the necessary contents were filled in. The final payment was to be paid by 06.04.2012. It is correct that as per bayana receipt, I was required to pay Rs. 10 Lakhs every month to the defendant. I did not pay Rs. 10 Lakhs every month to the defendant. I had paid Rs. 11 Lakhs in cash to the defendant. The said amount was lying with me. I am an income tax assessee. I had shown the said amount in my ITR. I am not sure if the said ITR would be available because it is old one and if I can find out, I will produce the same before this court. Rs. 11 Lakhs which was lying with me was part of some savings and some amount was received by way of sale of property by my father. I will have to inquire from my father if the said sale document of the property are available with him.
The document Mark A was obtained from my known person. The said document came to my notice after 8-10 days of execution of bayana agreement. The document Mark B was obtained from Patwari Kapashera. I cannot tell the name of said Patwari. The CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 18 of 33 Patwari has signed at point A on document Mark B. wrong to suggest that the Patwari has not issued the document Mark B. The said document Mark B was obtained in December 2011. The document Mark C was obtained from my known person namely Sanjay in December 2011. I cannot tell who has signed at point A on the document Mark A. The dimensions of the suit property is 30x75 ft. It is correct that apart from bayana receipt, no other document was executed between me and defendant. It is correct that there is no stipulation in bayana receipt that the NOC was to be procured by the defendant. It is correct that there is also no stipulation in the bayana receipt that the defendant shall execute the registered sale deed. My broker in the deal with the defendant was Mr. Praveen. The suit property was consisting two rooms with boundary wall. The first legal notice was sent to the defendant on 27.01.2012. I do not remember now the contents of the said legal notice Ex. P2 dated 27.01.2012. I came to know that major part of the suit plot was acquired by the Government for the purpose of Urban Extension- II, Dwarka Expressway after 8-10 days of execution of bayana receipt. This fact was told to me by Mr. Sanjay who owned a shop on the Kakrola Road. I thereafter inquired from DDA Planning office, Mangla Puri and other various government authorities about the said fact. I had started making inquiries to this effect in the month of December 2011. The document Mark C was shown to me in DDA planning that major part of the suit plot was acquired by the government. The Kapashera Acquisition department also confirmed that the said Khasra was of 3 bighas and some biswas, out of which, 2 bighas and some biswas had been acquired. I do not remember now the award number by which the same was acquired by the government but the same was mentioned in my notice.
XXXXX I cannot produce any document showing my visit to the Sub- Registrar Office, Kapashera in March-April, 2012. It is wrong to suggest that I never visited the Sub-Registrar office, Kapashera at any point of time. I have not filed any site plan of the suit property. Voltr. I have filed only Map which is Mark-A & Mark- C. I have stated on the basis of Map filed by me that the area measuring 180 sq. yards out of suit property has been acquired and the remaining area remains unacquired. I have not carried out any demarcation of the said plot. On the North side of the property measuring 70 sq. yards there is Kakrola Road, towards Southern side remaining portion of said plot which was acquired CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 19 of 33 by Government, towards Eastern and Western side, there are other plots. Since I never contacted the Shanti Devi for execution of the documents of the suit property measuring 250 sq. yards. Voltr. She refused to execute the documents qua 70 sq. yards property and remaining portion. I do not remember the date but it was the month of Feb-March 2012 when I met Shanti Devi. I had shown the Map Mark-C to Smt. Shanti Devi at that time. The area encircled in red and marked A in Map Mark-C was acquired by the Government. It is correct that the accurate acquired area has not been shown at point A in Map Mark-C. It is wrong to suggest that at the time of negotiations for the sale of the suit plot, no such discussion took place regarding acquisition of the suit property. I had not verified the factum regarding acquisition of the suit property because Shanti Devi had assured that suit property has not been acquired. There was no such discussion between me and Shanti Devi that she will get the sale deed done of a particular area. I have not filed any other document to show that area measuring 180 sq. yards has been acquired by the government and the remaining area measuring 70 sq. yards has not been acquired. I have seen the chain of documents of Shanti Devi and after being satisfied I entered into the sale transaction with her. It is correct that the sale transaction was to be completed upto 06.04.2012. I do not remember if I had checked Khasra Khatoni of Khasra of the suit property from the revenue authorities. I had visited Halka Patwari to this effect in January, 2012. I do not remember if the name of Smt. Shanti Devi was not in revenue records. I do not know when the acquisition proceedings takes place, the notice is given by the government to the person whose name is being shown in revenue records. I came to know about the Notification of the suit property in the newspaper and also through Patwari. I cannot tell the name of the said Patwari but he was from Kapashera, Acquirement Office. I cannot produce any such document regarding the source of information from Patwari. I have not filed the copy of Award as mentioned in para no.16 of my affidavit. I came to know said Award through newspaper as well as Patwari, Kapashera. I had made only oral inquiry from the Patwari. The Patwari had shown me Map Mark-B showing Khasra number under acquisition. I cannot say whether Map Mark-B had been issued by the Patwari. The Map Mark-A and Mark C had been given to me by Praveen Sharma S/o. Sh. Ram Kanwar, R/o. Najafgarh, Neelkath Enclave, however, I do not know the exact house number. He had given me the said Maps in January, 2012.
CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 20 of 33 However, I do not remember the exact date when these Maps were given to me. Probably, I met with Shanti Devi in the month of Feb-March, 2012. Thereafter, I never met with her. I do not remember whether these maps were available with me at the time of sending legal notice by me to Shanti Devi. I do not remember whether I had given any details qua said Maps in my legal notice served upon the Shanti Devi.'
30. From the above it is clear that the purchaser did not voluntarily adhere to the time stipulation under the contract. In order to by-pass the condition of time being the essence, the purchaser took plea of acquisition. But, failed to produce any notification, circular or award with respect to the same. During the course of arguments, both parties conceded to the fact that, physical status of suit property is as it was earlier. In fact, during cross examination DW1 deposed as follows:
'It is correct that I am illiterate and not able to read English and Hindi. I do not know about the contents of Ex. DW- 1/A because its in English. I do not remember the date, month and the year when the property in question was purchased by me, however, it was purchased 20 years ago. It is correct that I am not having any registered documents in respect of the property in question. I do not know whether the mutation of the property was done by me in my name in the Registrar office. It is wrong to suggest that in the record of Registrar / Land Acquisition Department my name is not showing qua the suit property, therefore, I have not received any notice from the said department. I went to the Registrar office to get know whether any part of my plot have been acquired or not. I am in possession the documents in this regard and I can produce the same.
XXXXXXX My name is not recorded in the revenue record. No notice has been received by me regarding the acquisition of land. It is wrong to suggest that as I am not recorded owner of the suit property in Revenue record, therefore, notice regarding land CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 21 of 33 acquisition was not received by me. Vol. My land is not acquired and the possession is still lying with me.
It is correct that I never inquired from the concerned office regarding the acquisition of suit property. Vol. I never received any notice regarding acquisition.
I am not ready to sale out the suit property to the plaintiff.
It is wrong to suggest that I am deliberately denying to sale out the suit property even after taking the Bayana from the plaintiff. It is wrong to suggest that in order to grab Bayana amount, I backward myself from the agreement made with the plaintiff. It is wrong to suggest that I am deposing false regarding the fact of acquisition of some part of the suit property.'
31. Further, Ld. Counsel for plaintiff submits that when he came to know about acquisition, he immediately send Legal Notice dt. 27.01.2012 (Ex. PW1/2) in following terms:
'You are therefore called upon by this legal notice to supply the complete chain of previous documents and no objection certificate from the competent authority with the measurements of your property having clear and marketable title within one week from the receipt of this legal notice and further to be present before Sub-Registrar at the seventh day for the execution of title documents in favour of my client, failing which my client will be constrained to initiate legal proceedings at your risk, cost and liability.'
32. But, it is also admitted fact that vide reply dated 07.02.2012 Exh. PW1/3 (Colly) defendant clearly denied the factum of any acquisition and clearly stated that he is not having any chain of documents apart from GPA, Agreement to sell, Affidavit etc. which were already shown to Plaintiff.
CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 22 of 33 In fact, in said reply, defendant specifically asked plaintiff to comply the terms of Bayana Receipt otherwise he may face consequences.
33. Ld. Counsel for plaintiff submits that, on receipt of reply dated 07.02.2012, he send another notice dated 19.03.2012 in following terms:
'That my client enquired from the LAC and also sought information from the revenue department and by RTI and came to know that about 180 sq. yards land has already been acquired by Union of India for construction of 100 mtr wide road and only 70 sq. yards land left behind and my client is still ready and willing to purchase the said land on the agreed rate and for which my client is ready with consideration and for which you addressee no.1 is required to be present before the Sub-Registrar Office, Kapashara, Delhi for execution of title documents in favour of my client on 26.03.2012 at 10:00 AM for the execution, presentation and registration of sale deed in compliance of agreement to sell which is under reference.'
34. But, this court doesn't find any merit is aforesaid submission as plaintiff failed to prove Notice dated 19.03.2012 and it is only Marked document that's too without any postal receipt.
35. In the light of the above, it is clear that Section 16(c) of the Specific Relief Act would only come into force if the purchaser was ready and willing to perform the contract within the four month period prescribed as per Bayana Receipt. The aforesaid conclusion is also bolstered by the fact that specific performance can only be granted when essential terms of contract are not violated in terms of Section 16(b). Admittedly, plaintiff was bound to make payment for Rs. 10,00,000/- per month as per Bayana Receipt but, failed to do so. Thus, plaintiff himself breached the term of contract.
36. From the above, this court can safely conclude that the purchaser was not ready or willing to perform his part of the contract within the time CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 23 of 33 stipulated and accordingly, specific performance cannot be granted for the contract.
37. The last aspect which has been argued before this court concerns application of Section 12 of the Specific Relief Act, 1963 1. It is well settled law that, Section 12 of the Act does not apply where the inability to perform specific performance on part of contract arises because of the plaintiff's own conduct2.
38. Section 12(2) deals with the situation where a party is unable to perform and such part is only a small proportion in value and capable of compensation in form of money. But, present case is not covered in Section 12(2) at all. Under Section 12(3) party in default is entitled to specific performance on payment of whole consideration or for the part left unperformed but here in the instant case the plaintiff being in default could not be said to be entitled to invoke Section 12(3). Thus, it is clear that there was no inability on part of the parties to perform the rest of the contract or the 1 12. Specific performance of part of contract--
(1)Except as otherwise hereinafter provided in this section the court shall not direct the specific performance of a part of a contract.
(2)Where a party to a contract is unable to perform the whole of his part of it, but the part which must be left unperformed by only a small proportion to the whole in value and admits of compensation in money, the court may, at the suit of either party, direct the specific performance of so much of the contract as can be performed, and award compensation in money for the deficiency.
(3)Where a party to a contract is unable to perform the whole of his part of it, and the part which must be left unperformed either--
(a)forms a considerable part of the whole, though admitting of compensation in money; or
(b)does not admit of compensation in money, he is not entitled to obtain a decree for specific performance; but the court may, at the suit of other party, direct the party in default to perform specifically so much of his part of the contract as he can perform, if the other party--
(i) in a case falling under clause (a), pays or has paid the agreed consideration for the whole of the contract reduced by the consideration for the part which must be left unperformed and a case falling under clause (b), pays or had paid the consideration for the whole of the contract without any abatement; and
(ii) in either case, relinquishes all claims to the performance of the remaining part of the contract and all right to compensation, either for the deficiency or for the loss or damage sustained by him through the default of the defendant.
(4)When a part of a contract which, taken by itself, can and ought to be specifically performed, stands on a separate and independent footing from another part of the same contract which cannot or ought not to be specifically performed, the court may direct specific performance of the former part.
Explanation.--For the purposes of this section, a party to a contract shall be deemed to be unable to perform the whole of his part of it if a portion of its subject matter existing at the date of the contract has ceased to exist at the time of its performance.
2 Abdul Rahim v. Maidhar Gazi, 1928 SCC OnLine Cal 20 CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 24 of 33 remaining part was waived. In this case, the purchaser breached the essential condition of the contract, which altogether disentitles him to claim specific performance.
39. It was submitted on behalf of the plaintiff that in view of the fact that, the land in question has been acquired under the provisions of the Land Acquisition Act, the defendant has no saleable right and interest in the suit property and therefore the agreement could not be executed w.r.t. entire plot of 250 sq yds. But, again no evidence brought on record to show that, part of the land was acquired.
40. It is well settled law that, burden to proving facts raised upon the party which substantially asserts the affirmation of the issue. In the matter of Anil Rishi Vs. Gurbaksh Singh (2006) 5 SCC 558 of Hon'ble Supreme Court of India held as follows :
"8. The initial burden of proof would be on the plaintiff in view of Section 101 of the Evidence Act, which reads as under:
"101. Burden of proof. Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist.
When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person."
9. In terms of the said provision, the burden of proving the fact rests on the party who substantially asserts the affirmative issues and not the party who denies it. The said rule may not be universal in its application and there may be an exception thereto. The learned trial court and the High Court proceeded on the basis that the defendant was in a dominating position and there had been a fiduciary relationship between the parties. The appellant in his written statement denied and disputed the said averments made in the plaint.
CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 25 of 33 XXXXXX
15. Section 111 of the Evidence Act will apply when the bona fides of a transaction is in question but not when the real nature thereof is in question. The words "active confidence"
indicate that the relationship between the parties must be such that one is bound to protect the interests of the other.
XXXXXXX
19. There is another aspect of the matter which should be borne in mind. A distinction exists between burden of proof and onus of proof. The right to begin follows onus probandi. It assumes importance in the early stage of a case. The question of onus of proof has greater force, where the question is, which party is to begin. Burden of proof is used in three ways: (i) to indicate 9 the duty of bringing forward evidence in support of a proposition at the beginning or later, (ii) to make that of establishing a proposition as against all counter-evidence; and (iii) an indiscriminate use in which it may mean either or both of the others. The elementary rule in Section 101 is inflexible. In terms of Section 102 the initial onus is always on the plaintiff and if he discharges that onus and makes out a case which entitles him to a relief, the onus shifts to the defendant to prove those circumstances, if any, which would disentitle the plaintiff to the same."
41. Thus, plaintiff failed to discharge onus for the above issues. Hence, above issues decided against the plaintiff.
ISSUE NO. 4: Whether the plaintiff is entitled for the refund of Rs. 11 lacs with compensation/interest, if so, at what rate and for what period? OPP
42. Regarding forfeiture of the earnest money paid under an Agreement to Sell, earlier there were two divergent views taken by Hon'ble Supreme Court. One in the case of Fateh Chand v. Balkishan Das3 wherein 3 Fateh Chand v Balkishan Dass (1964) 1 SCR 515 CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 26 of 33 it was held that once loss is not pleaded and proved to be caused to the seller, then earnest money amount cannot be forfeited. This judgment was later on followed and relied upon in the case of Kailash Nath Associates v. DDA4. The other divergent view was taken in the case of Satish Batra v. Sudhir Rawal5 wherein it was held that earnest money in an Agreement to Sell can always be forfeited without pleading and proving any requirement of the seller having suffered any loss.
43. Recently, in Desh Raj & Ors. versus Rohtash Singh (2023) 3 SCC 714, Hon'ble Supreme Court of India discussed as follows:
' 32. We may now advert to the contention raised on behalf of the Respondent that even if the respondent is held responsible for breach of contract, the forfeited amount was 'penal' in nature and was hit by Section 74 of The Contract Act as has been interpreted by the Constitution Bench in Fateh Chand6. Section 74 of the Contract Act says that -
74. Compensation for breach of contract where penalty stipulated for-- When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for.
(Emphasis Applied)
33. Learned Counsel for the respondent submitted that merely because an amount is stipulated as earnest money would not justify its forfeiture. Instead, reliance was placed on Fateh Chand7 to state that the courts were duty bound to ascertain reasonable compensation in each case. In this respect, it would be prudent for our analysis to extract the following paragraphs from Fateh Chand8 which are relied upon by the respondent -
4 Kailash Nath Associates V DDA (2015) 4 SCC 136 5 Satish Batra v. Sudhir Rawal, (2013) 1 SCC 345 6 Fateh Chand v Balkishan Dass (1964) 1 SCR 515.7 Pls see reference No. 6 8 Pls see reference No. 6
CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 27 of 33 "11. .... 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 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.... x-x-x
15. Section 74 declares the law as to liability upon breach of contract where compensation is by agreement of the parties pre-determined, or where there is a stipulation by way of penalty. But the application of the enactment is not restricted to cases where the aggrieved party claims relief as a plaintiff. The section does not confer a special benefit upon any party; it merely declares the law that notwithstanding any term in the contract predetermining damages or providing for forfeiture of any property by way of penalty, the court will award to the party aggrieved only reasonable compensation not exceeding the amount named or penalty stipulated. The jurisdiction of the court is not determined by the accidental circumstance of the party in default being a plaintiff or a defendant in a suit. Use of the expression "to receive from the party who has broken the contract" does not predicate that the jurisdiction of the court to adjust amounts which have been paid by the party in default cannot be exercised in dealing with the claim of the party complaining of breach of contract. The court has to adjudge in every case reasonable compensation to which the plaintiff is entitled from the defendant on breach of the contract. Such compensation has to be ascertained having regard to the conditions existing on the date of the breach."
34. Per contra, the Appellants have heavily relied on the following passage of the decision of this Court in Satish Batra9 to justify the forfeiture of earnest money -
"15. The law is, therefore, clear that to justify the forfeiture of advance money being part of "earnest money" the terms of the contract should be clear and explicit. Earnest money is paid or given at the time when the contract is entered into and, as a pledge for its due performance by the depositor to be forfeited in case of non-performance by the depositor. There can be converse situation also that if the seller fails to perform the contract the purchaser can also get double 9 Satish Batra V. Sudhir Rawal (2013) 1 SCC 345 CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 28 of 33 the amount, if it is so stipulated. It is also the law that part- payment of purchase price cannot be forfeited unless it is a guarantee for the due performance of the contract. In other words, if the payment is made only towards part-payment of consideration and not intended as earnest money then the forfeiture clause will not apply."
In sum and substance, the Appellants contend that forfeiture of sum is justified when it is - (a) clearly stipulated as earnest money; (b) forms part of sale consideration and (c) intended to be in the nature of 'guarantee for the due performance of the contract', and (d) the binding agreement between the parties provides its forfeiture in the event of breach of contract.
35. In our considered opinion, Section 74 of Contract Act primarily pertains to the grant of compensation or damages when a contract has been broken and the amount of such compensation or damages payable in the event of breach of contract, is stipulated in the contract itself. In other words, all pre-estimated amounts which are specified to be paid on account of breach by any party under a contract are covered by Section 74 of Contract Act as noted by this court in Kailash Nath Associates v DDA10 . In Fateh Chand11, the Constitution Bench ruled that Section 74 dispenses with proof of "actual loss or damage" and attracts intervention by Courts where the pre-estimated amount is 'penal' in nature. We may at this juncture also note the following observations made by this court in ONGC Ltd. v. Saw Pipes Ltd.12-
"64. .... Section 74 emphasizes that in case of breach of contract, the party complaining of the breach is entitled to receive reasonable compensation whether or not actual loss is proved to have been caused by such breach. Therefore, the emphasis is on reasonable compensation. If the compensation named in the contract is by way of penalty, consideration would be different and the party is only entitled to reasonable compensation for the loss suffered. But if the compensation named in the contract for such breach is genuine pre-estimate of loss which the parties knew when they made the contract to be likely to result from the breach of it, there is no question of proving 10 Kailash Nath Associates V DDA (2015) 4 SCC 136, para 43.7 11 Pls see reference No. 6 12 ONGC Ltd. v. Saw Pipes Ltd. (2003) 5 SCC 705 CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 29 of 33 such loss or such party is not required to lead evidence to prove actual loss suffered by him. Burden is on the other party to lead evidence for proving that no loss is likely to occur by such breach...."
(Emphasis Applied) Hence, in a scenario where the contractual terms clearly provide the factum of the pre estimate amount being in the nature of 'earnest money', the onus to prove that the same was 'penal' in nature squarely lies on the party seeking refund of the same. Failure to discharge such burden would treat any pre-estimated amount stipulated in the contract as a 'genuine pre-estimate of loss'.'
44. Section 21(1) of the Specific Relief Act 13 provides that if the contract is broken by the defendant, in that event, compensation may be granted.
45. But, in the present matter, plaintiff failed to prove any default on the part of defendant. Hon'ble Delhi High Court in the case of M.C. Luthra v. Ashok Kumar Khanna, 2018 SCC OnLine Del 7462 also discussed the forfeiture clause and same is reproduced herein-under:
" All the judgments of the Supreme Court which have been relied upon in Satish Batra's case (supra) are of a Bench strength lesser than the Constitution Bench strength of the Supreme Court in Fateh Chand's case (supra) and the law is well settled that it is the judgment of the larger Bench of the Supreme Court which will prevail over the judgment of a Bench strength of 13 "21. Power to award compensation in certain cases. -
(1) In a suit for specific performance of a contract, the plaintiff may also claim compensation for its breach in addition to such performance.
(2) If, in any such suit, the court decided that specific performance ought not to be granted, but that there is a contract between the parties which has been broken by the defendant, and that the plaintiff is entitled to compensation for that breach, it shall award him such compensation accordingly. (3) If, in any such suit, the court decides that specific performance ought to be granted, but that it is not sufficient to satisfy the justice of the case, and that some compensation for breach of the contract should also be made to the plaintiff, it shall award him such compensation accordingly. (4) In determining the amount of any compensation awarded under this section, the court shall be guided by the principles specified in section 73 of the Indian Contract Act, 1872 (9 of 1872). (5) No compensation shall be awarded under this section unless the plaintiff has claimed such compensation in his plaint: Provided that where the plaintiff 10 has not claimed any such compensation in the plaint, the court shall, at any stage of the proceeding, allow him to amend the plaint on such terms as may be just, for including a claim for such compensation."
CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 30 of 33 lesser number of judges. Also, as already stated above, in the recent judgment in Kailash Nath Associates case (supra) Supreme Court has not clarified that a forfeiture of an earnest money necessarily falls under Section 74 of the Contract Act i.e. before forfeiture can take place it must be necessary that loss must be caused. Also, Supreme Court has further clarified in Kailash Nath Associates case (supra) that it is very much possible that forfeiture of an amount can be in the nature of penalty and if the amount which is allowed to be forfeited under the contract is in the nature of penalty then Courts are empowered to treat the amount of liquidated damages (earnest money) as one in the nature of penalty clause and that earnest money amount only represents the upper limit of damages which are allowed to be forfeited in terms of the forfeiture clause, and actual forfeiture only of a lesser and a reasonable amount should be allowed instead of the large amount/penalty as stated under a contract as being entitled to be forfeited and that too merely because a contractual clause allows such a forfeiture."
(emphasis is mine)
46. Now, admittedly, defendant has neither pleaded nor proved any actual loss suffered by her for non-performance of the contract. Further, the question of forfeiture of entire amount paid, even otherwise, does not arise in as much as a reading of the Bayana Receipt Ex. PW1/1 makes it apparent that payment of Rs. 11,00,000/- towards total sale consideration of 77,00,000/- as paid by plaintiff can't be taken as earnest money irrespective to the fact that, terminology 'Bayana Amount' has been used. Hence, in view of the aforesaid discussion and considering the fact and circumstances of the case, in the opinion of this Court, defendant is held entitled to forfeit only a reasonable sum of Rs. 5,00,000/- and not a sum of Rs. 11,00,000/- as claimed by her inasmuch as no loss is pleaded and proved to be caused to the defendant on account of the breach of the agreement by the plaintiff. Hence, plaintiff is entitled for refund of Rs. 6,00,000/- alogwith intt. @6% Per CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 31 of 33 Annum from the date of filing of the suit till realization. Thus, this issue is disposed off accordingly.
ISSUE NO. 8: Relief
47. Suit is partly decreed in favour of plaintiff in terms of following conclusions.
CONCLUSION:
(a) It was submitted on behalf of the plaintiff that in view of the fact that, the land in question has been acquired under the provisions of the Land Acquisition Act, the defendant has no saleable right and interest in the suit property and therefore the agreement could not be executed w.r.t. entire plot of 250 sq yds. But, no evidence brought on record to show that, part of the land was acquired. It is clear that, the purchaser did not voluntarily adhere to the time stipulation under the contract. In order to by-pass the condition of time being the essence, the purchaser took plea of acquisition. But, failed to produce any notification, circular or award with respect to the same. Hence, not entitle for relief of Specific performance.
(b) Admittedly, defendant has neither pleaded nor proved any actual loss suffered by her for non-performance of the contract. Further, the question of forfeiture of entire amount paid, even otherwise, does not arise in as much as a reading of the Bayana Receipt Ex. PW1/1 makes it apparent that payment of Rs. 11,00,000/- towards total sale consideration of 77,00,000/- as paid by plaintiff can't be taken as earnest money, irrespective to the fact that, terminology 'Bayana Amount' has been used. Hence, in view of the aforesaid discussion and considering the fact and circumstances of the case, in the opinion of CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 32 of 33 this Court, defendant is held entitled to forfeit only a reasonable sum of Rs. 5,00,000/- and not a sum of Rs. 11,00,000/- as claimed by her inasmuch as no loss is pleaded and proved to be caused to the defendant on account of the breach of the agreement by the plaintiff.
(c) Suit is partly decreed in favour of plaintiff. Hence, plaintiff is entitled for refund of Rs. 6,00,000/- alogwith interest @6% Per Annum from the date of filing of the suit till realization. But, said decree shall be executable subject to payment of deficient court fees as per correct valuation as discussed in preceding paras.
48. No order as to cost.
49. Decree Sheet to be prepared accordingly.
50. File be consigned to record room.
Announced in open court on 26.03.2024 (SHILPI M JAIN) ADDL. DISTRICT JUDGE-05 DWARKA COURTS, NEW DELHI CS No. 17745/17 Vinod Rohilla vs. Shanti Devi Page No. 33 of 33