Delhi District Court
Sh. Rishi Khanna vs Mr. Subhash Khattar (Deceased) on 24 September, 2019
Rishi Khanna V. Subhash Khattar & Ors.
IN THE COURT OF SH. ARUN SUKHIJA,
ADDITIONAL DISTRICT JUDGE - 07, (CENTRAL DISTRICT)
TIS HAZARI COURTS, DELHI.
SUIT NO.: 25/2016
UNIQUE CASE ID NO.: 611346/2016
IN THE MATTER OF :
Sh. Rishi Khanna
S/o Mr. Ramesh Khanna
R/o R809, New Rajinder Nagar,
New Delhi110060. ....Plaintiff
VERSUS
1. Mr. Subhash Khattar (Deceased)
Through his LR
a) Smt. Vijay Laxmi Khattar
W/o Sh. Subhash Khattar
b) Ms. Raghvi Khattar
D/o Sh. Subhash Khattar
c) Ms. Rachayata
D/o Late Sh. Subhash Khattar
All R/o Flat No.132C, SFS,
DDA Flats, Gulabi Bagh, Delhi7.
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Rishi Khanna V. Subhash Khattar & Ors.
2. Mrs. Subhagya Wati
Widow of Late Sh. Kanhiya Lal Khattar
R/o 132C, SFS, DDA Flats,
Gulabi Bagh, New Delhi110007.
(Deleted vide order dated 01.11.2013)
3. Mrs. Sunita Joneja
W/o Mr. M.P. Joneja
D/o Late Mr. Kanhiya Lal Khattar
R/o S298, Greater Kailash PartII,
New Delhi.
4. Mrs. Rekha Khattar
W/o Late Mr. R.K. Khattar,
R/o 8, Dhawalgiri Coop. Housing Society,
Sector2, Plot No.31, Vashi,
Navi Mumbai400703.
5. Mrs. Asha Khanna
W/o Mr. Ramesh Khanna
R/o R809, New Rajinder Nagar,
New Delhi110060. ....Defendants
SUIT FOR SPECIFIC PERFORMANCE OF AN AGREEMENT
TO SELL IMMOVABLE PROPERTY AND FOR PERMANENT
INJUNCTION
Date of institution of the Suit : 12/12/2005
Date on which Judgment was reserved : 24/07/2019
Date of Judgment : 24/09/2019
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Rishi Khanna V. Subhash Khattar & Ors.
:: J U D G M E N T ::
By way of present judgment, this court shall adjudicate
upon suit for specific performance of an agreement to sell as
immovable property and for permanent injunction filed by the
plaintiff against the defendants.
CASE OF THE PLAINTIFF AS PER PLAINT
Succinctly, the necessary facts for just adjudication of
the present suit, as stated in the plaint, are as under:
(1) Late Sh. Kanhiya Lal Khattar, Son of Late Sh. Dwarka Dass,
resident of 65, Double Storey, New Rajinder Nagar, was the
lessee of the land admeasuring 123.66 sq. yds. and the owner
of flats no. 65 on the first floor and 66 on the ground floor,
Double Storey, New Rajinder Nagar, New Delhi.
(2) The said Sh. Kanhiya Lal Khattar vide Agreement to Sell dated
15.11.1996 and duly registered with the office of Sub
Registrar, Delhi, agreed to sell, convey, transfer and assign
the builtup property/ flat no. 66, Double Storey, New
Rajinder Nagar, New Delhi, measuring 123.66 sq. yds. unto
Mrs. Asha Khanna, the mother of the plaintiff herein and
against the receipt of entire sale consideration from her,
delivered vacant peaceful physical possession of the entire
property agreed to be sold to the said Mrs. Asha Khanna and
also executed a possession letter, with respect to the property
agreed to be sold and also executed a Will and a General
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Power of Attorney and a Special Power of Attorney and
registered the same in favour of Mrs. Asha Khanna and her
nominee and her husband Mr. Ramesh Khanna and also
executed other documents confirming the said Agreement to
Sell and/ or to enable the said Mrs. Asha Khanna to
beneficially use and enjoy the property agreed to be sold to
her of which she had paid the entire sale consideration to the
said Sh. Kanhiya Lal Khattar. However, since then the land
underneath the property agreed to be sold, had not been
converted into freehold, the Sale Deed with respect to the
said portion could not be executed in favour of the said Mrs.
Asha Khanna. However, Sh. Kanhiya Lal Khattar died before
he could complete the sale in favour of Mrs. Asha Khanna and
the defendants herein claim to be his only natural heirs and
successors.
(3) The defendants on 15th May 2004 entered into an Agreement
with the plaintiff for sale of property no. 65 on the first floor
also to the plaintiff, for a sale consideration of Rs.44.00 Lakhs
on 15th May 2004 executed a receipt in confirmation of the
said agreement to sell, confirming the receipt of Rs.4,00,000/
out of the total consideration of Rs.44.00 Lakhs from the
plaintiff. As per the agreement between the plaintiff and
defendants, the balance sale consideration of Rs.40.00 Lakhs
was payable by the plaintiff to the defendants at the time of
execution/registration of the Sale Deed in respect of the
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property agreed to be sold and against delivery by the
defendants to the plaintiff of absolute and peaceful vacant
possession of the property agreed to be sold. In the said
receipt also, the defendants undertook to apply for the
mutation and conversion of the leasehold rights in the land
underneath the property and of which 50% are appurtenant
to the property no. 65, agreed to be sold to the plaintiff as
early as possible, at the defendants' own cost and expense.
(4) After the demise of Sh. Kanhiya Lal Khattar, Mrs. Asha
Khanna, mother of the plaintiff, approached the defendants to
complete the sale to which their predecessor Sh. Kanhiya Lal
Khattar had agreed. However, the defendants kept on
delaying the same on the pretext that they will complete the
said transaction also at the time of completion of the
transaction with the plaintiff, since the entire land, including
that appurtenant to property no. 65, had been mentioned in
the Agreement in favour of mother of the plaintiff.
(5) The plaintiff received a letter dated 09.09.2005 from the
defendants no. 1, 3 and 4 informing the plaintiff that they
were, in terms of Agreement with the plaintiff, ready to
execute the Sale Deed of property no. 65 in favour of the
plaintiff and calling upon the plaintiff to pay the balance sale
consideration within 15 days of receipt of the said letter.
However, the defendants turned dishonest and refused to
complete the agreed sale by their predecessor in favour of the
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mother of plaintiff with respect to property no. 66 and
demanded more consideration for the same. The mother of
the plaintiff, who by way of abundant caution, has been made
a proper party as defendant no. 5. Accordingly, took a stand
that Sh. Kanhiya Lal Khattar had agreed to sell the entire
123.66 sq. yds. of land underneath both the properties to her
only, while 50% of the said land was appurtenant to the
property no. 65, agreed to be sold to the plaintiff and
therefore, it was essential that both the transactions should
be completed together and which the defendants had been
promising. However, the defendants are blackmailing the
plaintiff and his mother into paying more consideration/
monies and are attempting to show that plaintiff to be in
default and to forfeit Rs.4.00 Lakhs received from him.
(6) The plaintiff sent a reply dated 16.09.2005 to the letter dated
09.09.2005 of the defendants, showing his readiness and
willingness to pay the balance sale consideration, subject to
the defendants being in a position to, free from the prior
Agreement with the mother of plaintiff, conveying property no.
65 with 50% share in the land in favour of the plaintiff. The
plaintiff did not want any unnecessary litigation and hence,
he has been chasing the defendants to amicably resolve the
matter but the defendants were bent upon to make illegal
gains/ enrichment for themselves and the plaintiff had learnt
from Sh. Rajender Khanna and Mr. S.K. Kapoor, property
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broker that the defendants are attempting to sell the property,
which was agreed to be sold to the plaintiff, to others, leaving
the plaintiff with no choice but to institute the present suit.
CASE OF THE DEFENDANTS NO. 1 TO 4 AS PER WRITTEN
STATEMENT
Summons for settlement of issues were issued to the
defendants no. 1 to 4 and the defendants no. 1 to 4 have filed their
joint written statement in the present case. Succinctly, the case of
the defendants no. 1 to 4 is as under:
(a) The suit is bad for nonjoinder of necessary parties and
misjoinder of parties.
(b) The property no. 65 was not a freehold property at the
relevant time and the mutation was not done for the
reasons, it suffered from inherent legal infirmities as to
title and interest, which were contingent upon the
issuance of mutation certificate as well as conversion of
the same from leasehold to freehold by the competent
authorities and as such, the alleged receipt would
become void/ voidable for committing breach of the
terms of receipt and as such, is a nullity in the eyes of
law.
(c) The document of 'receipt' alleged to be agreement and
relied upon as such by the plaintiff is not an agreement
in the eyes of law, not having been signed by the
plaintiff, which is essential prerequisite for binding the
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parties to their respective contractual obligations. The
pleadings in the plaint travel beyond the contents of the
'receipt'.
(d) The plaintiff has made false and wrongful averments in
paras no. 2 to 10 of the plaint. The defendant no.5, who
is the mother of plaintiff, has been made a proforma
defendant by the plaintiff with malafide intentions in
order to assist each other in this suit, has admitted
letter dated 09.09.20905 addressed to the plaintiff by
defendants no. 1, 3 and 4 which was also filed in
another suit bearing no. 698 of 2007 filed by her mother
and in the counterclaim of the defendants pending
before this Court and marked Ex. DII, which clearly
proves that the Will, as alleged in the plaint, is unlawful
and wrongful affidavits were demanded by the plaintiff
in respect of property no. 66, Double Storey, New
Rajinder Nagar and further establishes that the plaintiff
has made wrongful averments in the plaint as also in his
letter dated 16.09.2005 with malafide intentions in
order to grab the entire property of the defendants. The
letter dated 16.09.2005 of the plaintiff was duly replied
vide letter dated 28.09.2005, which was duly received by
the plaintiff and which he has deliberately and
intentionally kept back from the information and
knowledge of the Court.
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(e) On merits, the contents of the plaint have been denied
and it has been submitted that the leasehold land
measuring 123.66 sq. yds. is situated in Tenement no.
65 and 66, as per terms and provisions of the Lease
Deed and the land is common to both the flats. The
defendant no.5 entered into an alleged Agreement to Sell
dated 15.11.1996 in respect of the property no. 66 with
Late Sh. Kanhiya Lal Khattar fully knowing the contents
of the Lease Deed and other relevant documents. The
requisite requirements were not at all complied with/
fulfilled by defendant no.5.
(f) The recital in the Lease Deed dated 31.01.1962 clearly
says that land admeasuring 123.66 sq. yards is situated
in tenements no. 65 and 66. Thus, it is explicitly clear
that the land underneath is common to both the flats/
properties and is not divisible by metes and bounds. The
defendant no.5 also got executed alleged General Power
of Attorney and Special Power of Attorney from Late Sh.
Kanhiya Lal Khattar in favour of her husband Sh.
Ramesh Khanna for seeking requisite written
permission/ approval etc. from Land and Development,
Nirman Bhawan, New Delhi, but they miserably failed to
obtain the requisite permission/ approval. Late Sh.
Kanhiya Lal Khattar, due to cruel circumstances created
by defendant no.5 and her husband, died on 31.01.1997
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within a short time after obtaining of the alleged
documents from him. Even otherwise also, the alleged
agreement is void and any action, claim or suit in
respect of the alleged agreement has become time
barred.
(g) So far as the defendants no. 1 to 4 are concerned, they
have performed their part of obligations under the
'receipt' filed by the plaintiff in their original plaint by
way of obtaining Mutation Certificate and Conveyance
Deed in favour of defendants no. 1 to 4, Rahul Khattar
and Smt. Dipti Mishra, the Xerox copies of which are
already in possession of the plaintiff. The plaintiff has
not performed his part of the obligations under the
'receipt' by not getting the Sale Deed executed, nor has
he ever made his intentions clear that he is ready and
willing to perform the obligations mentioned in the
'receipt' and is evading his part of obligations but
bringing extraneous matters, such as, giving of an
affidavit and specification of 50% of the land
appurtenant to the property no. 65, which are baseless,
wrong and which do not emanate from the terms of
'receipt'. It is only 'receipt alone and no agreement to
sell, as alleged, was ever executed nor any such
document has been placed on record by the plaintiff.
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(h) Since the plaintiff has overtly went beyond the terms of
the receipt and a such a conduct on his part renders the
receipt null and void/ voidable at the instance of
defendants no. 1 to 4. The mother of plaintiff has not at
all sent even a single letter from 31.01.1997, the date of
death of Late Sh. Kanhiya Lal Khattar till 18.09.2005 i.e.
a period of eight years and eight months approximately
elapsed in between. Such a conduct on the part of
mother of the plaintiff shows their and family's conduct.
(i) In the present transaction, the mother has nothing to do
and as such, by colluding with each other, the mother
and son duo are making every attempt to grab the
property of the defendants no. 1 to 4. There had never
been any condition mentioned in the receipt and as
such, the plaintiff, with certain ulterior designs, is trying
to be oversmart by introducing absolutely extraneous
mattes, which have no relevance with the present
receipt.
Summons for settlement of issues were issued to the
defendant no. 5 and the defendant no. 5 has filed written statement
in the present case. Succinctly, the case of the defendant no. 5 is as
under:
(a) It has been admitted that Sh. Kanhiya Lal Khattar was
the lessee of the land measuring 123.66 sq. yds. and
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owner of Flats no. 65 on the first floor and 66 on the
ground floor, Double Storey, New Rajinder Nagar, New
Delhi. However, Sh. Kanhiya Lal, vide agreement dated
15.11.1996, for his bonafide need and requirement, had
agreed to sell the property bearing no. 66, Double
Storey, New Rajinder Nagar, New Delhi, measuring
123.66 sq. yds. (land underneath) to defendant no.5 for
a sum of Rs.4,50,000/ and had received the entire sale
consideration from the defendant no.5 and in part
performance of the Agreement to Sell, put the defendant
no.5 into possession of the property agreed to be sold
and also executed General Power of Attorney, Special
Power of Attorney and Will in pursuance to the said
Agreement to Sell. It has also been admitted that the
documents referred to therein were executed in
pursuance to the Agreement to Sell in favour of
defendant no.5 with respect to property/ flat bearing no.
66, with land admeasuring 123.66 sq. yds. underneath.
(b) It has also been admitted that Sh. Kanhiya Lal Khattar
had died and defendants no. 1 to 4 are his heirs. The
defendant no.4 also had a daughter Mrs. Dipti Mishra
and a son Mr. Rahul Khattar, but the defendant no.4
only has been acting on their behalf and defendants
no.1 to 4 only entered into an agreement with the son of
defendant no.5 with respect to property no. 65. The
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defendants no. 1 to 4, while entering into Agreement
with the son of defendant no.5, agreed to sell 50% share
in land admeasuring 123.66 sq. yds. also to the son of
defendant no.5, although, Sh. Kanhiya Lal Khattar had
also agreed to sell the entire land admeasuring 123.66
sq. yds. to defendant no.5. The defendants no. 1 to 4
misrepresented to the said extent. The defendant no.5,
however, had no objection for surrendering her rights
with respect to 50% share in the land admeasuring
123.66 sq. yds. subject to defendants no. 1 to 4 as legal
representatives of Sh. Kanhiya Lal Khattar completing
the sale in favour of the defendant no.5. However,
defendants no. 1 to 4 while wanting to receive the entire
sale consideration from the plaintiff are blackmailing
the defendant no.5 and not completing the sale in spite
of the Ld. Predecessor having received the entire sale
consideration and are requiring further gratification
from the defendant no.5 and as such, the defendant
no.5 is not willing to let go of 50% undivided share in
the land admeasuring 123.66 sq. yds. the whole of
which has been agreed to be sold to her by the
predecessor of defendants no. 1 to 4.
(c) The defendants no. 1 to 4 are not entitled to sell any
portion/ share of the land admeasuring 123.66 sq. yds.
in favour of the plaintiff, their predecessor having by a
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registered Agreement to Sell agreed to sell the same to
the defendant no.5 and having put the defendant no.5
into possession thereof in part performance of the
Agreement to Sell. The defendants no. 1 to 4 are
dishonest persons and are blackmailing the defendant
no.5 and also want to appropriate the advances received
from the plaintiff. It has been admitted that defendant
no.5, on the failure of the defendants no. 1 to 4 to
complete the transaction with her, had informed
everyone, including the plaintiff that she was claiming
rights under the documents executed by Sh. Kanhiya
Lal Khattar with respect to the entire land admeasuring
123.66 sq. yds. There was a prior agreement to sell by
predecessor of the defendants no. 1 to 4 with respect to
the entire land admeasuring 123.66 sq. yds. in favour
of defendant no.5 and defendants no. 1 to 4 are not
entitled to convey any part/ share in land to the plaintiff
or to any other person. The defendant no.5 has a right
to purchase entire land admeasuring 123.66 sq. yds.
together with flat no. 66 and is in possession of the
same in partperformance of the Agreement to Sell and
defendants no. 1 to 4 are not entitled to convey the same
to the plaintiff or to any other person.
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REPLICATION AND ISSUES
Plaintiff has filed the replication controverting the
allegations/ contentions in the written statement of the defendants
no. 1 to 4 and contents of the plaint have been reiterated and
reaffirmed.
The issues were framed vide order dated 05.02.2007,
which were later on reframed vide order dated 13.05.2008. The
additional issues were framed vide order dated 05.10.2009 and
02.06.2010. The issues, which were reframed and additional issues
are mentioned as under :
ISSUES
1. Whether there is a valid agreement to sell dated 15.5.2004 of
property no. 65, First Floor, Double Story Building, New
Rajinder Nagar New Delhi between plaintiff and defendants?
OPP
2. If issue no.1 is answered in affirmative, whether plaintiff has
always been ready and willing to perform his part of
agreement? OPP
3. Whether the defendant no.5 is not a necessary party to the
suit and the suit is bad for joining defendant no.5? OPD
4. Whether the suit has not been correctly valued for the
purposes of court fees and jurisdiction? OPD
5. Whether the plaintiff is entitled to relief of specific
performance as claimed in the suit? OPP
6. Relief
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Additional issue was framed vide order dated
05.10.2009. The said issue is now numbered as 5A for convenience
and the same is as follows:
ADDITIONAL ISSUE
5A. Whether plaintiff is entitled to compensation as claimed in
the suit from defendant nos. 1 to 4 for breach of agreement
dated 15.5.2004, in case plaintiff fails to get relief of specific
performance? OPP
Another additional issue was framed vide order dated
02.06.2010. The said issue is now numbered as 3A for convenience
and the same is as follows:
ADDITIONAL ISSUE
3A. Whether suit is liable to be rejected on account of non
joinder of Sh. Rahul Khatter and Smt. Dipti Mishra as necessary
party? OPD
EVIDENCE OF PLAINTIFF AND DEFENDANTS AND THE
DOCUMENTS RELIED UPON BY THEM
Plaintiff, in order to prove his case, led plaintiff's
evidence and got examined himself as PW1. PW1 has filed his
evidence by way of affidavit, wherein he reiterated and reaffirmed
the contents of the plaint. PW1 was crossexamined by counsel for
the defendants. PW1 in his testimony has relied upon the
documents:
(i) Agreement to Sell cum Receipt dated 15.05.2004 is Ex.P1.
(ii) Letter dated 09.09.2005 is Ex.P2.
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(iii) Reply cum Notice dated 16.09.2005 alongwith original postal
receipt are Ex.P3.
(iv) Copy of Agreement to Sell dated 15.11.1996 is Ex.PW1/1.
(v) Copy of Possession Letter dated 15.11.1996 is Ex.PW1/2.
(vi) Copy of registered Will dated 15.11.1996 is Ex.PW1/3.
(vii) Copy of GPA dated 15.11.1996 is Ex.PW1/4.
(viii) SPA dated 15.11.1996 is Ex.PW1/5.
(ix) Letter dated 19.02.2005 is Ex.P4.
(x) Reply dated 28.09.2005 is Ex.P5.
(xi) Letter dated 14.11.2005 is Ex.P6.
(xii) Bank Statement pertaining to account no.100150320885102
running into 12 pages is MarkA.
(xiii) Bank Statement pertaining to account no. 100150320885072
running into 4 pages is MarkB and
(xiv) Bank statement pertaining to account no. 10050320885071 is
MarkC.
During crossexamination of PW1, copy of the letter
dated 28.09.2005 was exhibited as Ex.PW1/D1 and affidavit dated
11.03.2010 is Ex.PW1/DX.
The plaintiff also examined Sh. Deepak Singhla,
Assistant Manager, Tamilnad Mercantile Bank Ltd., Chandni
Chowk Branch, Delhi as PW2, who relied upon the following
documents:
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(i) Statement of Account pertaining to M/s. Heritage Fabrics
bearing account no. 100150320885102 for the period from
01.09.2005 to 08.12.2005 is Ex.PW2/1 (Colly.) and Certificate
under Section 65B of the Indian Evidence Act dated
19.11.2016 is Ex.PW2/2.
(ii) Statement of Account pertaining to M/s. Heritage Fabrics
bearing account no. 100150320885072 for the period from
01.09.2005 to 08.12.2005 is Ex.PW2/3 (Colly.) and Certificate
under Section 65B of the Indian Evidence Act dated
19.11.2016 is Ex.PW2/4.
(iii) Statement of Account pertaining to M/s. Heritage Tex Fab
bearing account no. 100150320885071 for the period from
01.09.2005 to 08.12.2005 is Ex.PW2/5 and Certificate under
Section 65B of the Indian Evidence Act dated 19.11.2016 is
Ex.PW2/6.
The plaintiff also examined Sh. R.K. Kapur as PW3.
On the other hand, the defendants have examined Smt.
Sunita Juneja as DW1.
During crossexamination of DW1, following documents
were exhibited:
(i) Copies of the statements dated 10.12.2018 and 25.01.2019
given by DW1 in Suit No. 26/16 (ID No. 611753/16) titled as
Asha Khanna V. Subhagya Wati & Ors. are Ex.DW1/P1 and
Ex.DW1/P2.
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(Ld. counsel for the plaintiff has adopted the crossexamination,
which was conducted vide Ex.DW1/P1 and Ex.DW1/P2, in the
present case. The said exhibits will be read as crossexamination in
the present case also).
This Court heard final arguments, as advanced by Ld.
Counsels for the parties. I have perused the material available on
record.
ISSUE WISE FINDINGS
ISSUE NO.4
4. Whether the suit has not been correctly valued for the
purposes of court fee and jurisdiction? OPD
The onus to prove this issue was upon the defendants
no. 1 to 4. The defendants no. 1 to 4 have neither pressed this
issue nor have argued this issue as to how the suit has not been
properly valued for the purposes of jurisdiction and proper court fee
has not been paid. The perusal of the Plaint reveals that the suit
has been valued for a sum of Rs.44,00,000/ for Specific
Performance for the amount shown in the receipt and for
Permanent Injunction, it has been valued for Rs.130/ and the
plaintiff has paid the Court Fees according to the valuation and the
same has been correctly valued.
Accordingly, issue no.4 is decided against the
defendants and in favour of the plaintiff.
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ISSUE NO.5
5. Whether the defendant no.5 is not a necessary party
to the suit and the suit is bad for joining defendant
no.5? OPD
ARGUMENTS OF THE PLAINTIFF
The ground floor of the property bearing No. 66 along
with entire land underneath was sold by its owner Late Sh. K.L
Khattar to Smt. Asha Khanna defendant no.5 vide agreement to
sell, receipt, affidavit, possession letter etc and possession of the
property was also handed over to Smt. Asha Khanna by Late Sh.
K.L.Khattar which is not disputed by either of the parties. Smt.
Asha Khanna has been impleaded as a party because the suit
property is situated above her flat and the land underneath both
the flats is basically common to both the flats and the plaintiff will
not be able to get suit for specific performance decreed in his favour
unless Smt. Asha Khanna defendant no.5 would not surrender her
50% land underneath to plaintiff. It is because of that reason Smt.
Asha Khanna as defendant no.5 in the present suit, who had
already given her written statement by stating that she is ready to
surrender the 50% of land underneath of the suit property in favour
of plaintiff. In fact defendants ought to have file application for
impleadment of defendant no.5 in the present suit if she would
have not been impleaded as defendant by the plaintiff. The
objection of defendant, as such, is baseless and untenable. The
defendants have failed to prove this issue. Because of above
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reasons the defendants have not pressed this issue and have not
even argued.
FINDINGS AND CONCLUSIONS OF THE COURT
The onus to prove this issue was upon the defendants
no. 1 to 4 but the defendants no. 1 to 4 have not argued this issue
in detail. I am fully in agreement with the arguments of the plaintiff
that although, the defendant no.5 may be not necessary party for
adjudication of the present case, but defendant no.5 is proper party
for complete and effective adjudication. Furthermore, in terms of
Order 1 Rule 9 CPC, no suit shall be defeated by reason of the
misjoinder of party and the Court may, in every suit, deal with the
matter in controversy so far as regards the rights and interests of
the parties actually before it. Accordingly, this issue is also decided
in favour of the plaintiff and against the defendants.
ISSUE NO.1
1. Whether there is a valid agreement to sell dated
15.5.2004 of property no. 65, First Floor, Double Story
Building, New Rajinder Nagar New Delhi between
plaintiff and defendants? OPP
FINDINGS AND CONCLUSIONS OF THE COURT
The Ld. counsel for defendants has argued with forensic
tenacity that the Receipt dated 15.05.2004 i.e. Exhibit P1 cannot
be considered as Agreement to Sell of the Suit Property interalia on
various grounds:
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(a) The nomenclature given to the said document itself shows
that it is merely receipt of the amount received and not the
Agreement.
(b) The plaintiff has not signed the aforesaid ReceiptExhibit P1,
therefore, there is no acceptance of behalf of the plaintiff.
(c) There is also no communication of acceptance, which is a pre
requisite for concluded contract.
(d) The Exhibit P1 nowhere provides the time for execution of the
final payment and execution of the Sale Deed.
(e) There are no formal terms and conditions of the Agreement
and even there is no implications in case of default.
The Ld. counsel for the defendants has relied upon the
following Judgments to fortify the arguments that there is no
concluded agreement between the parties:
1. 1955 LawSuit(SC)29 titled as Thawardas Pherumal Vs.
Union of India, decided on 24.03.1955, wherein the
following has been relied upon by the defendants:
"In any case, a person cannot be bound by a one
sided offer which is never accepted, particularly when
the parties intend that the contract should be reduced
to writing. That is the whole point of insisting on a
document. It excludes speculation as to what was
and what was not agreed to however much the matter
might have been raised by one of the parties during
the stage of negotiation."
Suit No. 25/2016 Page 22 of 85
Rishi Khanna V. Subhash Khattar & Ors.
2. 1990 LawSuit(SC) 202 titled as Mayawanti Vs.
Kaushalya Devi, decided on 06.04.1990, wherein the
following has been relied upon by the defendants:
"....... back the said agreement (styled as receipt) and
thereafter refused, to execute the stipulated sale deed
and in response to the plaintiffs lawyers notice dated
23/07/1971 the defendant took the false plea that the
agreement did not pertain to the building but only to
the machinery fitted therein......."
"...... inter alia pleas that the agreement being not
scribed on a proper stamped paper was not
permissible in evidence........"
"..........defendantrespondent contended that if the
entry PW11/a was to be treated as original document or its counterpart the same did not bear the signatures of one of the parties, that is, the respondent. The signatures of the husband of the respondent would be of no avail......."
"[8] In a case of specific performance it is settled law, and indeed it cannot be doubted, that the jurisdiction to order specific performance of a contract is based on the existence of a valid and enforceable contract. The Law of Contract is based on the ideal of freedom of contract and it provides the limiting principles within which the parties are free to make their own contracts. Where a valid and enforceable contract has not beenmade, the court will not make a contract for them. Specific performance will not be ordered if the contract itself suffers from some defect which makes the contract invalid or unenforceable. The discretion of the court will be there even though the contract is Suit No. 25/2016 Page 23 of 85 Rishi Khanna V. Subhash Khattar & Ors.
otherwise valid and enforceable and. it can pass a decree of specific performance even before there has been any breach of the contract. It is, therefore, necessary first to see whether there has been a valid and enforceable contract and then to see the nature and obligation arising out of it......"
"[11] If the above correspondence were true, it would appear that the contract was in the alternative of either whole or half of the property and that the offer and acceptance did not correspond. It is settled law that if a contract is to be made, the intention of the offeree to accept the offer must be expressed without leaving room for doubt as to the fact of acceptance or to the coincidence of the terms of acceptance with those of the offer. The rule is that the acceptance must be absolute, and must correspond with the terms of the offer. If the two minds were not ad idem in respect of the property to be sold, there cannot be said to have been a contract for specific performance. If the parties themselves were not ad idem as to the subject mater of the contract the court cannot order specific performance. If the plaintiff understood the terms to have included the building but the defendant understood it to have excluded the building and the so called memorandum Ex.PW11/a did not mention the building, there is no contract before the court for specific performance"
".......It is styled as "receipt" for Rs. 5,000.00 in column 4, and in column 3 the .............."
"Smt. Mayawanti w/o Master Kasturi Lal, Ludhiana owns and had a factory, flour mill, two 'kohlus for expelling oil. I and Smt. Lajwanti widow of Baru Ram, Ludhiana have an electric motor of 20 HP connection Suit No. 25/2016 Page 24 of 85 Rishi Khanna V. Subhash Khattar & Ors.
in working condition at Gokal Road. To the east Amar Singh, to the west Mansa Ram, Ramji Das, to the north there is a road, to the south there is a gali. All these are settled to be sold for Rs. 50,000.00 and Rs. 5,000.00 is taken as advance. The balance will be taken at the time of registration. The registration will be done at the expense of the buyer. It will be in the name of the buyer or in any other name he indicates by 26/09/1971. If any other person has a right or encumbrance on it, the advance and compensation will be paid back. If Lajwanti does not sign these sale deeds, then I will execute the sale deed of my one of the two shares, otherwise pay back the advance and compensation in the same amount. The buyer may take the advance."
[18[ The specific performance of a contract is the actual execution of the contract according to its stipulations and terms, and the courts direct the party in default to do the very thing which he contracted to do. The stipulations and terms of the contract have, therefore, to be certain and the parties must have been consensus ad idem. The burden of showing the stipulations and terms of the contract and that the minds were ad idem, is, of course, on the plaintiff. If the stipulations and terms are uncertain, and the parties are not ad idem, there can be no specific performance, for there was no contract at all......"
"[22] S. 9 of the Specific Relief Act says that except as otherwise provided in that Act where any relief is claimed under Ch. II of the Act in respect of a contract, the person against whom the relief is claimed may plead by way of defence any ground which is available to him under any law relating to contracts. In the instant case the defence of there having not Suit No. 25/2016 Page 25 of 85 Rishi Khanna V. Subhash Khattar & Ors.
been a contract for lack of consensus ad idem was available to the defendant."
3. (S) A.I.R. 1957 S.C. 95 (V 44 C 13 Feb.) titled as Pipraich Sugar Mills Ltd. Vs. Pipraich Sugar Mills Mazdoor Union, wherein the following has been relied upon by the defendants: "(12) We start with the letter dated 311951 wherein the management made an offer to pay 25 per cent. of the profits of the sale transaction to the workmen. It was expressly subject to the condition that the strike should be called off "at once and today". That was not done. On the other hand, the respondent made certain counterproposals in its letter dated 511951, and the management replied on 811951 that it would reconsider its terms provided the strike notice was withdrawn. Thus, the offer contained in the letter dated 311951 was not accepted and lapsed. Then on 1011951 the management renewed its offer subject again to the condition that the strike notice was withdrawn at once. The respondent passed no resolution withdrawing the notice, and in its reply dated 1011951 it made it clear that it was waiting for Kashinath Pandey for it to come to a final decision. There was no further communication from the Union. We do not see how on this correspondence it could he held that there was a concluded agreement between the parties, and that is the view which the Tribunal itself took of it when it observed that "no final agreement could be arrived at......."
"......The question whether there was consideration for the promise made by the management in its letters dated 311951 and 1011951 arises only if the offer Suit No. 25/2016 Page 26 of 85 Rishi Khanna V. Subhash Khattar & Ors.
contained in the letters had been accepted by the respondent, so as to ripen into an agreement. And if there was no concluded agreement between the parties, as the Tribunal itself had held, then the further question as to whether it was supported by consideration would not arise, nor would there be any question of its becoming one of the terms of the service."
"......In its letter dated 1011951, the respondent, while stating that the strike was not taking place on the 12th, made it clear that this was pending the final decision of the Union. That clearly is not an acceptance of the offer......"
"......It is impossible to hold on these facts that there was a concluded agreement between the parties binding the appellant to give the workmen a share of the profits of the sale transaction."
4. 1924 Nagpur 156 titled as Saleh Muhammad Vs. Ramrattan Tiwari, wherein the following has been relied upon by the defendants: "........A receipt is merely evidence of a fact. It is not an agreement requiring consideration to make it a valid contract.
5. AIR 2004 Madras 313 R. Chinnadurai Vs. Rajalakshmi, wherein the following has been relied upon by the defendants: Suit No. 25/2016 Page 27 of 85 Rishi Khanna V. Subhash Khattar & Ors.
"2........to the plaintiff for a total consideration of Rs.14,500/: that an agreement of sale was executed and as per the terms and conditions, the defendant receiving a sum of Rs.14,000/ in cash as advance and as part of sale price on 11121981 itself and agreed to execute a registered sale deed in favour of the plaintiff within two years from 11121981 on receipt of the balance sale consideration of Rs.500/:
that in case the plaintiff fails to perform her part of the contract within the agreed period, the defendant shall be entitled to forfeit, the advance of Rs.14,000/: that if the plaintiff is ready and willing to pay the balance of Rs.500/ and demand execution of sale deed......."
"5..........
......... Ex. A1 dated 11121981 being the sale agreement executed by the defendant in favour of the plaintiff for a sum of Rs. 14,500/......."
"7. ...........has ultimately dismissed the suit with costs....."
"......allow the appeal thereby reversing the findings of the trial court......."
"..... Whether Ex. A1 is admissible in evidence....."
"12......... therefore, the execution of Ex. A. 1 is not proved; (2) that in Ex. A1, the signature is different even from sheet to sheet; (3) that only the defendant has signed not the vendor and, therefore, the agreement is not enforceable...."
"19. An agreement must have two parties and both are to sign the same. Only then it is an agreement. For Suit No. 25/2016 Page 28 of 85 Rishi Khanna V. Subhash Khattar & Ors.
this basic necessity, there may be exceptions under exceptional circumstances as it has been advocated on the part of the courts and the case in hand is not falling under the exceptional cases. Why the plaintiff has not signed the papers is not made clear. It is stated that the defendant.........."
"........ Therefore, under these circumstances, the genuineness of Ex. A.1 has to be proceeded with in the context of the legal requirements for such a document particularly in the absence of any attesting witness being ........."
"23. But, the first appellate Court having done the patchup work, doing a research into what are all not necessary in making out a document, forgetting the fact that positively it should have assessed as to the necessary aspects which are essential for making out a document and has allowed the appeal filed by the plaintiff. Therefore, it must be said that the first appellate Court has indulged in unwarranted exercises in stuffing the frog to imitate a buffalo."
24. Basically, many questions have gone unanswered such as the necessity for an advance amount of Rs. 14,000/ to be paid from out of the sale consideration of Rs. 14,500/ and for the rest of the meagre amount of Rs. 500/ to be paid and getting the sale deed registered in favour of the plaintiff, a time of two years being granted. All these are not only improbable but unbelievable as well which could occur only in the event when possession of the property is being handed over to the intended purchaser without which, in the normal circumstances, such a thing cannot happen at all.
Suit No. 25/2016 Page 29 of 85Rishi Khanna V. Subhash Khattar & Ors.
25. Having on the background these and many such improbabilities, if this Court has to arrive at a conclusion in the above second appeal answering the sole substantial question of law framed, it should be spelt out that Ex. A.1 is neither an agreement nor could it be taken as a genuine document enforceable in law and the........"
6. AIR 1980 Karnataka 168 titled as Republic Medico Surgical Company Vs. Union of India & Anr. wherein the following has been relied upon by the defendants: "8. The contact is completed when the offer made is accepted. It is the acceptance that gives rise to the cause of action and not merely an offer. Hence, even though an offer is made from Bangalore, it cannot be said that a part of the cause of action arises in Bangalore. In a suit the cause of action will consist of making of the contract and its branch at the place where it is to be performed. Therefore, a suit for breach of contract can, at the option of the plaintiff be brought either at the place where the contract was made or at the place where the breach was committed. It can also be said that the place where money is to be paid or goods are to be supplied are also the places where parts of the cause of action arise, but certainly not the place where offer is made."
7. AIR 1971 Madras 28 (V 58 C 4) T. Linga Gowder Vs. The State of Madras, represented by the District Forest Officer, Ootacamund & Ors. wherein the following has been relied upon by the defendants: "(B).........
Suit No. 25/2016 Page 30 of 85Rishi Khanna V. Subhash Khattar & Ors.
To conclude a contract and to bring about contractual relationship between the parties, the acceptance must be communicated in some perceptible form. A mere resolve on the part of the offeree to accept an offer, when there is no external manifestation by speech, writing or other act, of the intention to do so, cannot result in an enforceable or a concluded contract. Both offer and acceptance must be absolute, unqualified and unconditional. If it is conditional, parties can withdraw at any moment until absolute acceptance takes place.
The position may, however, be different if there is a statutory rule having force of law precluding withdrawal of a bid in an auction sale before its acceptance or refusal is communicated to the bidder......"
8. (2006) 6 SCC 704 titled as Ashok Kumar Sahu Vs. Union of India & Ors. wherein the following has been relied upon by the defendants: "18. The expression "approval" presupposes an existing order. "Acceptance" means communicated acceptance. A distinction exists between the expressions "approval" and "acceptance". Whereas in the latter, an application of mind on the part of the competent authority is sine qua non, approval of an order only envisages statutory entitlement. Approval of an order is required as directed by the statute. It can be given a retrospective effect. Even valid contract comes into being only after the offer is accepted and communicated. Where services of an employee are dispensed with, the order takes effect from the date Suit No. 25/2016 Page 31 of 85 Rishi Khanna V. Subhash Khattar & Ors.
when it is communicated and not from the date of passing of the order."
9. AIR 2009 SC 2193 titled as Ahmmadsahab Abdul Mulla (deceased by L.Rs.) Vs. Bibijan & Ors. wherein the following has been relied upon by the defendants: "7. The inevitable conclusion is that the expression 'date fixed for the performance' is a crystallized notion. This is clear from the fact that the second part "time from which period begins to run" refers to a case where no such date is fixed. To put it differently, when date is fixed it means that there is a definite date fixed for doing a particular act. Even in the second part the stress is on 'when the plaintiff has notice that performance is refused'. Here again, there is a definite point of time, when the plaintiff notices the refusal. In that sense both the parties refer to definite dates. So, there is no question of finding out an intention from other circumstances. Whether the date was fixed or not the plaintiff had notice that performance is refused and the date thereof are to be established with reference to materials and evidence to be brought on record. The expression 'date' used in Article 54 of the Schedule to the Act definitely is suggestive of a specified date in the calendar........"
10. 2016 X AD (S.C.) 370 titled as Union of India & Anr. Vs. M/s. Indusind Bank Ltd. & Anr. wherein the following has been relied upon by the defendants: "14. ......and hence retrospective. It is common ground that the statute has not made the aforesaid Suit No. 25/2016 Page 32 of 85 Rishi Khanna V. Subhash Khattar & Ors.
amendment retrospective as it is to come into force only with effect from 8.1.1997.
19. ....... It seeks to bring about a substantive change in the law by stating, for the first time, that even where an agreement extinguishes the rights or discharges the liability of any party to an agreement, so as to restrict such party from enforcing his rights on the expiry of a specified period, such agreement would become void to that extent. The Amendment therefore seeks to set aside the distinction made in the case law up to date between agreements which limit the time within which remedies can be availed and agreements which do away with the right altogether in so limiting the time. These are obviously substantive changes in the law which are remedial in nature and cannot have retrospective effect.
25. On a conspectus of the aforesaid decisions, it becomes clear that Section 28, being substantive law, operates, prospectively as retrospectivity is not clearly made out by its language. Being remedial in nature, and not clarificatory or declaratory of the law, by making certain agreements covered by Section 28(b) void for the first time, it is clear that rights and liabilities that have already accrued as a result of agreements entered into between parties are sought to be taken away. This being the case, we are of the view that both the Single Judge and Division Bench were in error in holding that the amended Section 28 would apply."
11. AIR 2008 SC 3086 titled as Subodh S. Salaskar Vs. Jayprakash M. Shah & Anr. wherein the following has been relied upon by the defendants: Suit No. 25/2016 Page 33 of 85 Rishi Khanna V. Subhash Khattar & Ors.
"13. As noticed hereinbefore, the proviso appended to Clause (b) of Section 142 of the Act was inserted by the Negotiable Instruments (Amendments (Amendment and Miscellaneous Provisions) Act, 2002."
"24.......... The Parliament only with a view to obviate the aforementioned difficulties on the part of the complainant inserted proviso to Clause (b) of Section 142 of the Act in 2002. It confers a jurisdiction upon the court to condone the delay. It is, therefore, a substantive provision and not a procedural one. The matter might have been different........
......Clause (b) of Section 142 of the Act contained a substantive provision and not a procedural one, it could not have been given a retrospective effect. A substantive law, as it is wellsettled, in absence of an express provision, cannot be given a retrospective effect or retroactive operation."
12. 1985 Legal Eagle 458 titled as Baroda Cement and Chemicals Ltd. Vs. Commissioner of Income Tax wherein the following has been relied upon by the defendants: "8. .......... once a contract for the sale of movables is broken and the subjectmatter thereof is disposed of by the defaulting party, the only right which survives in the injured party is the right to sue for damages......."
"26........the question of exercise of the remedial right to sue for damages can arise only when the antecedent right is denied and is rendered unenforceable......"Suit No. 25/2016 Page 34 of 85
Rishi Khanna V. Subhash Khattar & Ors.
The Ld. Counsel for the plaintiff has argued assiduously that there is concluded agreement to sell with respect to the suit property interalia on the following grounds:
(a) The main objection of the defendants to EX P1 is that since the plaintiff has not signed EX P1, as such, this does not constitute a valid and enforceable agreement, as such, Specific Performance suit cannot be filed.
(b) As already submitted from the pleadings and the documents filed on record, the intention of defendants was to sell the suit property to the plaintiff and because of that reason, earnest money of Rs. 4 Lacs has been received by the defendants from the plaintiff, which fact is not denied.
(c) Merely by not signing EX P1 by the plaintiff does not mean that the plaintiff cannot maintain the suit for Specific Performance. The settled law on this has been given by the Hon'ble Supreme Court in case titled as Aloka Bose versus Parmatma Devi and others (2009) 2 Supreme Court cases 582, which has been followed by Hon'ble Delhi High Court vide judgment dated 01.02.2016 in RFA No.382/2015 titled as Mohinder Kumar Sharma Versus N.K. Mann & Ors.
(d) In view of above submissions and the law laiddown by the Hon'ble Supreme Court, followed by Hon'ble Delhi High Court, the receipt cum agreement dated 15.5.2004 (EX P1) is Suit No. 25/2016 Page 35 of 85 Rishi Khanna V. Subhash Khattar & Ors.
enforceable document and suit for Specific Performance is very much maintainable, because this is a valid document, which can be enforced.
There is no dispute that Receipt Exhibit P1 dated 15.5.2004 was executed by the original defendants no. 1 to 4. It is well settled law that it is not nomenclature given to the document but the contents of the document, which are to be read as a whole and thereafter, to determine the nature of the document. The Para No.1 of the receipt reflects that the defendants have received a sum of Rs.4,00,000/ (Rupees Four Lakhs only) towards advance/part payment of sale of suit property and total consideration has been settled at Rs.44,00,000/. The second para of the aforesaid Receipt reflects that balance consideration of Rs.40,00,000/ is required to be paid at the time of execution/ registration of Sale Deed in respect of the suit property. The third para of the aforesaid receipt reveals that the vacant and peaceful possession of suit property shall be handedover to the purchaser at the time of execution of the Sale Deed. The fourth para of the aforesaid receipt reveals that the defendants no. 1 to 4 undertake to apply for the mutation and conversion of leasehold rights into free hold rights as early as possible and shall obtain the same from the L&DO, New Delhi at their costs and expenses. There is no dispute that the suit property originally belongs and in the name of deceased Sh. Kanhiya Lal Khattar (in Short Sh. K.L. Khattar) and therefore, the property is Suit No. 25/2016 Page 36 of 85 Rishi Khanna V. Subhash Khattar & Ors.
required to be mutated in favour of the defendants and in order to execute the Sale Deed, the property was required to be converted from Leasehold to freehold and for this reason, there is no time limit fixed by the parties in the said document. The Exhibit P1 is having the complete flavor of Agreement to Sell, although, it is mentioned as Receipt. It is also further fortified from the future communications, which were exchanged between the parties. The letter dated 09.09.2005 Exhibit P2 is an admitted document. The perusal of the said letter clearly reveals that the defendants themselves are asking the plaintiff to pay the balance consideration and get registered the Sale Deed as the suit property was already converted from lease hold to freehold. The operative portion/last para of the said letter is reproduced as under: "We, once again request you to come forward for the execution and registration of the sale deed in your favour and pay the entire balance amount of the sale consideration before the Sub Registrar, Asaf Ali Road, New Delhi in respect of the subject property No.65, within 15 days (Fifteen Days) from the receipt of this Letter/ Notice, failing which, your part payment/ earnest money in this behalf will stand forfeited and your noncompliance in this behalf will be at your own risk, responsibility and further costs arising therefrom and the "Receipt" in respect of Earnest Money/Part Payment of the whole consideration of sale amount will become null and void, thereafter."
(Bolded portion in order to highlight) Suit No. 25/2016 Page 37 of 85 Rishi Khanna V. Subhash Khattar & Ors.
The parties were communicating with each other in pursuance of the Receipt dated 15.05.2004. The plaintiff has not disowned at any point the Receipt Ex.P1, which is actually the document in the nature of Agreement to Sell. It is well settled law that even the oral Agreement to Sell the immovable property is permissible in the eyes of law.
In pursuance of the Receipt, the defendants no. 1 to 4 themselves have alleged that the suit property got mutated and converted from Lease hold to Free hold and they themselves have communicated this fact to the plaintiff, which was also responded by the plaintiff. The cumulative effect of Ex.P1 and communications done between the defendants no. 1 to 4 and/ or defendants no. 1, 3 & 4 clearly reveal that there was an Agreement to Sell and concluded contract between the parties.
The Judgments, as relied upon by the defendants, are not at all applicable to facts and circumstances to the present case and the same are clearly distinguishable on the facts. The Judgments, as relied upon by the plaintiff that even the purchaser is not the signatory in the Agreement, still it is an Agreement to Sell, are squarely applicable to the facts of the case. The argument of the defendants that there was no concluded agreement between the parties sans merit and the same is hereby rejected. Accordingly, issue No.1 is decided in favour of the plaintiff and against the defendants.
Suit No. 25/2016 Page 38 of 85Rishi Khanna V. Subhash Khattar & Ors.
ISSUES NO. 2, 3A, 5 AND 5A
2. If issue no.1 is answered in affirmative, whether plaintiff has always been ready and willing to perform his part of agreement? OPP 3A. Whether suit is liable to be rejected on account of non joinder of Sh. Rahul Khatter and Smt. Dipti Mishra as necessary party? OPD
5. Whether the plaintiff is entitled to relief of specific performance as claimed in the suit? OPP 5A.Whether plaintiff is entitled to compensation as claimed in the suit from defendant nos. 1 to 4 for breach of agreement dated 15.5.2004, in case plaintiff fails to get relief of specific performance? OPP The aforesaid issues are interlinked, interrelated and interconnected to each other and accordingly, they are decided together.
ARGUMENTS OF THE PLAINTIFF
1. Regarding readiness, the plaintiff has to prove as to whether he was having balance sale consideration available with him for execution and registration of sale deed. The plaintiff has successfully proved by examining Assistant Manager of the bank as PW2, who has proved on record that the plaintiff was having balance sale consideration available with him for execution and registration of sale deed. It is because of this reason the counsel for defendant has not argued on this Suit No. 25/2016 Page 39 of 85 Rishi Khanna V. Subhash Khattar & Ors.
point. In view of this, the readiness of the plaintiff stands proved.
2. It is submitted that the plaintiff was always willing for getting the suit property. However, it was the duty of the defendants to get the property converted from lease hold to free hold. The defendants after converting the property in to free hold wrote a letter dated 9.9.2005 EX P2 to the plaintiff, thereby informing the plaintiff that they have converted the property from lease hold to free hold and as per the letter defendants have alleged that they have sent copy of mutation letter and conveyance deed to the plaintiff along with the said letter.
3. The plaintiff in response to EX P2 had written letter dated 16.9.2005 EX P3 to the defendants, thereby stating that he has not received copy of conveyance deed and mutation letter along with the letter EX P2. The defendants have deliberately not send these two documents to the plaintiff, because they were fully aware that by sending these documents the names of all the LR's of Late Sh. K.L. Khattar will be disclosed to the plaintiff and in order to avoid the same copies of these documents have not been enclosed with the letter EX P2. The plaintiff has also mentioned in the reply for explanations / clarification regarding land underneath the suit property, because Late Sh. K.L. Khattar had already sold entire land underneath to Asha Khanna. The defendants neither gave copies of conveyance deed and mutation letter to Suit No. 25/2016 Page 40 of 85 Rishi Khanna V. Subhash Khattar & Ors.
the plaintiff nor gave any explanation for the land underneath of the suit property. The plaintiff was left with no alternative except to file the present suit for Specific Performance.
4. The plaintiff has successfully proved about the enforceability of receipt cum agreement EX P1 and has also proved the readiness and willingness. The defendants 14 were playing game with the plaintiff by writing letters, when in fact they were never ready and willing to perform their part of the agreement. In case they would have been ready and willing, then they could have made offer in the beginning at the time of institution of suit.
5. From the written statement of defendants, it becomes clear that they have become dishonest due to price rise in the property and have raised absolutely false and incorrect pleas. The defendants have produced one witness i.e. Mrs. Sunita Juneja as DW1. Her affidavit as examination in chief is Ex.DW1/A. In cross examination she has admitted the signatures of herself at point X1 on EX P1. She has further stated that she has not made any correspondence with the plaintiff at any point of time. She has also deposed that she has no personal knowledge regarding the case. She has absolutely given false statement which doubts her credibility because she has stated on page no. 2 of cross examination recorded on 10.12.2018 as under:
Suit No. 25/2016 Page 41 of 85Rishi Khanna V. Subhash Khattar & Ors.
"As on date the suit property is in possession of my brother Sh. Subhash Khattar and Smt. Asha Khanna is not in possession of any portion of suit property".
Although it is admitted fact on record that Smt. Asha Khanna is in possession of ground floor of the property as per their written statement."
6. The said witness DW1 has admitted in her cross examination recorded on 25.01.2019 on page no.2 wherein she has stated that Late Sh. K.L. Khattar was to obtain permission from L&DO for selling the property to Smt. Asha Khanna. She has finally stated on page no.3 that she has no knowledge about the case. No other witness has been produced by the defendants. This witness DW1 has admitted that suit property is lying vacant and none of the parties are living in the suit property. She has further admitted that all the defendants own separate properties and are living in their said properties. In view of this the defendants do not require suit property for their own use.
7. In earlier specific relief Act, granting of specific performance was the discretion of the courts but in the amended specific relief act the word discretion has been deleted. This amendment had taken place during the pendency of the case and is very much applicable to the present case, because they are neither in appeal nor in second appeal. Reliance is placed upon judgment of the Hon'ble Supreme Court wherein it is Suit No. 25/2016 Page 42 of 85 Rishi Khanna V. Subhash Khattar & Ors.
held that during the pendency of suit amendment provisions can be made applicable. The judgment is reported as Civil Appeal Nos. 188189 of 2018 @ SLP (C) Nos. 1063810639 of 2013 titled as Danamma @ Suman Surpur Versus Amar and others dated 1.2.2018. In addition to that the Allahabad High Court has also given a judgment on the same issue which has already been filed before the Hon'ble Court. The said judgment is reported as First Appeal No. 594/2018 decided by Hon'ble Justice Surya Prakash Kesarwani on 3.5.2019. In view of above additional submissions the suit is liable to be decreed. The issue no.5 has accordingly been proved by the plaintiff. FINDINGS AND CONCLUSIONS OF THE COURT The basic and moot question raised by the Ld. Counsel for the defendants is that the suit is liable to be dismissed on account of nonjoinder of Sh. Rahul Khattar and Smt. Dipti Mishra, who are admittedly the classI legal heirs of Late Shri K.L. Khattar, being son of predeceased son and daughter of predeceased son respectively. The Ld. counsel for the defendants has vehemently argued as under:
(a) Admittedly, Late Shri K.L. Khattar was the owner of the suit property and Sh. Rahul Khattar and Smt. Dipti Mishra, who are admittedly the classI legal heirs of Late Shri K.L.Khattar, being son of predeceased son and daughter of predeceased Suit No. 25/2016 Page 43 of 85 Rishi Khanna V. Subhash Khattar & Ors.
son respectively, were not the signatory to the Receipt/alleged Agreement dated 15.05.2004.
(b) Smt. Rekha Khattar, W/o Late Mr. R.K. Khattar, mother of Sh. Rahul Khattar and Smt. Dipti Mishra, has signed the said Receipt Exhibit P1 only in her individual capacity and not on behalf of the said LRs, being their General Power of Attorney.
(c) Smt. Subhagyawati is also signatory to the said Receipt Exhibit P1 and during the pendency of the case, Smt. Subhagyawati had expired and the plaintiff has not impleaded/ substituted Sh. Rahul Khattar and Smt. Dipti Mishra as legal heirs of Smt. Subhagyawati and in terms of order dated 01.11.2013, Smt. Subhagyawati was deleted from array of parties. Sh. Rahul Khattar and Smt. Dipti Mishra are also son of predeceased son and daughter of predeceased son of Smt. Subhagwati and they are also the legal heirs in terms of Sections 15 and 16 of Hindu Succession Act.
The Ld. Counsel for the plaintiff has argued as under:
(a) Sh. Rahul Khattar and Smt. Dipti Mishra are son and daughter of Late Sh. R.K. Khattar and Smt. Rekha Khattar. These two children had executed registered power of attorney in favour of their mother Smt. Rekha Khattar. These two children have also filed application confirming the power of attorney executed by them in favour of their mother. Admittedly, at the time of execution of Ex. P1, the defendants Suit No. 25/2016 Page 44 of 85 Rishi Khanna V. Subhash Khattar & Ors.
nos.1 to 4 have not disclosed the names of these children. The intention of Smt. Rekha Khattar was to sign in her capacity and as attorney of her children Ms. Dipti Mishra and Sh. Rahul Khattar. Since they were not parties in Ex.P1, as such, they are not impleaded in the present suit and are not necessary parties in the present case, as there was no privity of contract between the plaintiff and these two children. In case, we take power of attorney, then, Smt. Rekha Khattar has signed in her capacity as well as in the capacity of attorney. These children are not necessary parties in the present suit.
(b) The issue remains now, in case, they have not sold their undivided share to the plaintiff, then whether the partial specific performance can be granted or not. The issue has been decided in the judgment reported as Sardar Singh versus Krishna Devi AIR 1995 Supreme Court Page 491 (Para 15). In this judgment, it has been clearly observed that partial enforcement of contract is permissible and instead of refusing specific performance in its entirety, it will be better to grant partial specific performance. Moreover, both the said children have not challenged the receipt cum agreement EX P 1 despite having knowledge of the present suit.
Suit No. 25/2016 Page 45 of 85Rishi Khanna V. Subhash Khattar & Ors.
The perusal of the Receipt Exhibit P1 clearly shows that it does not reflect that the said receipt was signed by Smt. Rekha Khattar for and on behalf of Ms. Dipti Mishra and Sh. Rahul Khattar. On the one hand, the plaintiff is alleging that the plaintiff was not aware about the other LR's of deceased Shri K.L. Khattar and on the other hand, the plaintiff is alleging that the receipt was signed by Smt. Rekha Khattar as attorney of Ms. Dipti Mishra and Shri Rahul Khattar. Moreover, the mother of the plaintiff has also filed the suit in respect of flat no. 66, Double Storey, New Rajinder Nagar, New Delhi and in the said Suit, Ms. Dipti Mishra and Shri Rahul Khattar are the parties. The perusal of the Memo of parties of the said suit, which is decided alongwith this suit clearly reveals that they are parties. The perusal of Memo of Parties of this case also shows that the plaintiff and his mother are resident of one and the same address. The mother and son are also represented by one and the same counsel in both the suits. The plaintiff has mentioned about the transaction of her mother in the present suit. The perusal of the crossexamination also reveals that the plaintiff was aware about Ms. Dipti Mishra and Shri Rahul Khattar. If the case of the plaintiff is that Smt. Rekha Khattar, the mother of the said LRs, had executed the Receipt on their behalf, then the plaintiff was required to implead them as party in the present case as it is their right in the suit property, which was at stake and the said parties were required to defend their case either themselves or by executing the authority letter/ power of attorney in favour of Suit No. 25/2016 Page 46 of 85 Rishi Khanna V. Subhash Khattar & Ors.
their mother Smt. Rekha Khattar. Moreover, after the death of Smt. Subhgyawati, the said LRs have also got the undivided right alongwith other LRs. Late Shri K.L. Khattar was survived by the following LR's:
(a) Smt. Subhagyawati (1/4th Share)
(b) Mr. Subhash Khattar (1/4th Share)
(c) Mrs. Sunita Joneja (1/4th Share)
(d) Mrs. Rekha Khattar (1/12th Share)
(e) Ms. Dipti Mishra (1/12th Share)
(f) Shri Rahul Khattar (1/12th Share) After the death of Smt. Subhagwati, during the pendency of this case, the share of Ms. Dipti Mishra comes to 1/9 th and the share of Shri Rahul Khattar also comes to 1/9 th share of the suit property and accordingly, their total shareholding in the suit property comes to 2/9th i.e. about 22% of total suit property. The question arises, whether the specific performance can be granted towards balance share i.e. about 78% share holding of the defendants.
Section 12(1) of the Specific Relief Act postulates that "Except as otherwise hereinafter provided in this section, the court shall not direct the specific performance of a part of a contract." The use of word "shall" connotes that the decree of Specific Performance cannot be granted, except the conditions and requirements, as Suit No. 25/2016 Page 47 of 85 Rishi Khanna V. Subhash Khattar & Ors.
envisaged under Section 12(2) to Section 12(4) of the Specific Relief Act, are fulfilled.
In the case of immovable property, in my considered opinion, Section 12(4) of the Specific Relief Act, which requires that "(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" is most relevant and important. The plaintiff has not set up the case of part performance of the contract. In terms of Section 12 of the Specific Relief Act, the plaintiff was required to specifically plead atleast the requirements of Section 12(4) of the Specific Relief Act. Even if, the plaintiff has not pleaded, yet it was bounden duty of the plaintiff to prove the requirements and conditions, as postulated in Section 12(4) of the Specific Performance Act. However, the plaintiff has failed to prove even the said requirements and conditions. The Ld. Counsel for the plaintiff has heavily relied upon the Judgment of Sardar Singh (Supra) and by referring the said Judgment, the Ld. Counsel for the plaintiff has argued that suit of the plaintiff is liable to be decreed for Specific Performance towards the undivided share of the defendants. The important aspect, which the Ld. Counsel for the plaintiff has failed to point in the said Judgment that the Hon'ble Supreme Court in the said Judgment has categorically came to the conclusion that the property was divisible. In the said case, the area of the property Suit No. 25/2016 Page 48 of 85 Rishi Khanna V. Subhash Khattar & Ors.
was about 222 sq. yards. In the present case, the area of the suit property, which is only a floor of about 123.66 sq. yds and having 50% in the land underneath. The plaintiff has neither pleaded nor proved that the suit property is divisible by metes and bounds. This Court cannot put the plaintiff into separate possession, if the property is not divisible by metes and bounds. The important aspect is that there is a provision under Section 22 of the Specific Relief Act and the said provision provides that "any person suing for the specific performance of a contract for the transfer of immovable property may, in an appropriate case, ask for (a)... partition and separate possession, of the property in addition to such performance". Although, the word is "may", however, the question arises what are the appropriate cases.
In my considered opinion, the present case falls in the category of appropriate cases because if the Court has to grant the relief of Specific Performance of the contract in the immovable property, although of definite share i.e. 78% then, the important question arises whether the property is divisible and for determining the said question, the parties, who are coowners of the suit property and even not signatory to the agreement, become the necessary and proper party, as any opinion of the Court that the property is divisible, would definitely affect the rights of the parties, who are nonsignatories and having the coownership right in the suit property. It is also well settled in terms of Order 2 Rule 1 CPC that "Every suit shall as far as practicable be framed so as to afford Suit No. 25/2016 Page 49 of 85 Rishi Khanna V. Subhash Khattar & Ors.
ground for final decision upon the subjects in dispute and to prevent further litigation concerning them". In terms of subrule (2) of Order 2 Rule 2 CPC, "where a plaintiff omits to sue in respect of, ......, he shall not afterwards sue for any relief so omitted." In terms of Section 22 of the Specific Relief Act 1963, the present case falls under the category of appropriate cases and the plaintiff has the option to sue for the specific performance, partition and separate possession but the plaintiff has omitted to sue for partition and separate possession. Furthermore, the plaintiff has not led any evidence that the suit property is divisible by metes and bounds or 78% share of the defendants is divisible and separable from the 22% shareholding of Ms. Dipti Mishra and Shri Rahul Khattar. Moreover, the question of division by metes and bounds cannot be adjudicated without Ms. Dipti Mishra and Shri Rahul Khattar, who are having the right of about 22% in the suit property.
I have also profit to refer the following judgment passed by the Hon'ble Supreme Court, where, the Hon'ble Supreme Court has dealt with the issue of nonsigning of the Agreement by the other coowners: "CIVIL APPEAL NO. 7835 OF 2014 (Arising out of SLP(C) NO. 24653 OF 2012) PEMMADA PRABHAKAR & ORS. Vs. YOUNGMEN'S VYSYA ASSOCIATION & ORS.
Decided on August 20, 2014 Suit No. 25/2016 Page 50 of 85 Rishi Khanna V. Subhash Khattar & Ors.
28. With reference to the above said rival contentions, the following points would arise for our consideration: (10) Whether the plaintiffs are entitled for the decree for specific performance of the Agreement of Sale (Ex. A1) when Agreement of Sale entered between the plaintiffs and defendant Nos. 1 and 2 who do not have absolute title to the property?
Answer to Point No. 129. It is an undisputed fact that the suit schedule property is self acquired property by late Pemmada Venkateswara Rao as he had purchased the said property vide SaleDeed Document No.5174 of 1970 dated 24.11.1970 from his vendors. It is also an undisputed fact that the said property is intestate property. He is survived by his wife, 3 sons and 3 daughters. The said property devolved upon them in view of Section 8 of Chapter 2 of the Hindu Succession Act as the defendants are class I legal heirs in the suit schedule property. Undisputedly, the Agreement of SaleEx.A1 is executed only by defendant Nos. 1 and 2. The 3rd son, mother and 3 sisters who have got equal shares in the property have not executed the Agreement of Sale. In view of the matter, the Agreement of Sale executed by defendant Nos. 1 and 2 who have no absolute right to property in question cannot confer any right whatsoever upon the plaintiffs for grant of decree of specific performance of Agreement of Sale in their favour. The said agreement is not enforceable in law in view of Section 17 of the Specific Relief Suit No. 25/2016 Page 51 of 85 Rishi Khanna V. Subhash Khattar & Ors.
Act in view of right accrued in favour of defendant Nos. 3 to 6 under Section 8 of the Hindu Succession Act.
The provisions of Section 17 of the Specific Relief Act in categorical term expressly state that a Contract to sell or let any immovable property cannot be specifically enforced in favour of a vendor or lessor who does not have absolute title and right upon the party. It is worthwhile to extract Section 17 of the Specific Relief Act,1963 here : "17.Contract to sell or let property by one who has no title, not specifically enforceable. A contract to sell or let any immovable property cannot be specifically enforced in favour of a vendor or lessor;
(a) who, knowing not to have any title to the property, has contracted to sell or let the property
(b) who, though he entered into the contract believing that he had a good title to the property, cannot at the time fixed by the parties or by the court for the completion of the sale or letting, give the purchaser or lessee a title free from reasonable doubt."
In view of the aforesaid provisions of the Specific Relief Act, the Agreement of Sale entered between the plaintiffs and some of the cosharers who do not have the absolute title to the suit schedule property is not enforceable in law. This aspect of the matter has not been properly appreciated and considered by both the First Appellate Court and the Second Appellate Court.
Suit No. 25/2016 Page 52 of 85Rishi Khanna V. Subhash Khattar & Ors.
Therefore, the impugned judgment is vitiated in law."
(Portions are bolded in order to highlight) Although, it may be presumed for the sake of arguments that the plaintiff was ready and willing to perform his part of the Contract, however, in the peculiar facts & circumstances and discussions made hereinabove, no decree can be passed for Specific Performance. Therefore, this Court is not examining in detail the question of readiness and willingness of the plaintiff in terms of Section16(1)(c) of the Specific Relief Act, 1963.
Now, the only question remains in this case, is whether the defendants no.1, 3 and 4 are entitled to forfeit the amount of Rs.4,00,000/, which is admittedly received by them. There is no agreement between the parties that the original defendants no. 1 to 4 can forfeit the amount even in the case of default by the plaintiff. However, the answer to forfeiture lies in the catena of Judgments passed by our Hon'ble High Court and I have profit to refer the latest Judgment of Hon'ble High Court of Delhi passed in RFA No.231/2018 titled as KAMAL JEET Versus SNEH LATA CHATURVEDI (DECEASED THROUGH HER LR BABITA. The part of para No.3 and complete para no. 4 are reproduced hereunder: "...14. At this stage this Court would like to observe with all humility that there are apparently two views which the Supreme Court has taken in its line of cases as regards entitlement to forfeit earnest moneys.
Suit No. 25/2016 Page 53 of 85Rishi Khanna V. Subhash Khattar & Ors.
Whereas one view is the view which is the view taken by no less than a Constitution Bench judgment of the Supreme Court in the case of Fateh Chand Vs. Balkishan Dass AIR 1963 SC 1405 that forfeiture of earnest money can only be of a nominal amount, and which was a sum of Rs. 1,000/ out of the total sale price of Rs. 1,12,500/ in Fateh Chand's case (supra), and that Supreme Court in this judgment has laid down the ratio that whenever a seller forfeits an amount paid by a buyer under an agreement to sell then the source of right of forfeiture arises only because of Section 74 of the Contract Act. It is held in Fateh Chand's case (supra) that where a seller pleads that there is a breach of contract by the buyer and the seller seeks to forfeit an amount as paid by the buyer for being appropriated as designated liquidated loss amount of damages as per contractual clause, then the act of forfeiture is one which falls under Section 74 of the Contract Act. Forfeiture of an amount paid under the agreement is by a seller who already has with him moneys in his pocket and therefore there is no requirement to file a suit to recover any amount from the buyer, however the law with respect to entitlement of forfeiture arises only because the forfeited amount is liquidated damages under Section 74 of the Contract Act. That the forfeiture of earnest money is nothing but forfeiture of liquidated damages is clearly so clarified by the recent judgment of the Supreme Court in the case of Kailash Nath Associates Vs. Delhi Development Authority and Another, (2015) 4 SCC 136 and relevant paras of this judgment are paras 30 to 44 which read as under: Suit No. 25/2016 Page 54 of 85 Rishi Khanna V. Subhash Khattar & Ors.
"30. We now come to the reasoning which involves Section 74 of the Contract Act. The Division Bench held: "38. The learned Single Judge has held that the property was ultimately auctioned in the year 1994 at a price which fetched DDA a handsome return of Rupees 11.78 crores and there being no damages suffered by DDA, it could not forfeit the earnest money
39. The said view runs in the teeth of the decision of the Supreme Court reported as AIR 1970 SC 1986 Shree Hanuman Cotton Mills & Anr. V. Tata Aircraft Ltd. which holds that as against an amount tendered by way of security, amount tendered as earnest money could be forfeited as per terms of the contract.
40. We may additionally observe that original time to pay the balance bid consideration, as per Ex.PI was May 18, 1982 and as extended by Ex. P8 was October 28, 1982. That DDA could auction the plot in the year 1994 in the sum of Rupees 11.78 crore was immaterial and not relevant evidence for the reason damages with respect to the price of property have to be computed with reference to the date of the breach of the contract."
"31. Section 74 as it originally stood read thus: Suit No. 25/2016 Page 55 of 85 Rishi Khanna V. Subhash Khattar & Ors.
"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, 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."
"32. By an amendment made in 1899, the Section was amended to read: ―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.
Explanation.--A stipulation for increased interest from the date of default may be a stipulation by way of penalty.
Exception.--When any person enters into any bailbond, recognizance or other instrument of the same nature, or, under Suit No. 25/2016 Page 56 of 85 Rishi Khanna V. Subhash Khattar & Ors.
the provisions of any law, or under the orders of the Central Government or of any State Government, gives any bond for the performance of any public duty or act in which the public are interested, he shall be liable, upon breach of any condition of any such instrument, to pay the whole sum mentioned therein.
Explanation.--A person who enters into a contract with Government does not necessarily thereby undertake any public duty, or promise to do an act in which the public are interested.
"33. Section 74 occurs in Chapter 6 of the Indian Contract Act, 1872 which reads ―Of the consequences of breach of contract‖. It is in fact sandwiched between Sections 73 and 75 which deal with compensation for loss or damage caused by breach of contract and compensation for damage which a party may sustain through nonfulfillment of a contract after such party rightfully rescinds such contract. It is important to note that like Sections 73 and 75, compensation is payable for breach of contract under Section 74 only where damage or loss is caused by such breach.
"34. In Fateh Chand v. Balkishan Das, 1964 SCR (1) 515, this Court held: "The section is clearly an attempt to eliminate the somewhat elaborate refinements made under the English common law in distinguishing between Suit No. 25/2016 Page 57 of 85 Rishi Khanna V. Subhash Khattar & Ors.
stipulations providing for payment of liquidated damages and stipulations in the nature of penalty. Under the common law a genuine preestimate of damages by mutual agreement is regarded as a stipulation naming liquidated damages and binding between the parties: a stipulation in a contract in terrorem is a penalty and the Court refuses to enforce it, awarding to the aggrieved party only reasonable compensation. The Indian Legislature has sought to cut across the web of rules and presumptions under the English common law, by enacting a uniform principle applicable to all stipulations naming amounts to be paid in case of breach, and stipulations by way of penalty. ....
"Section 74 of the Indian Contract Act deals with the measure of damages in two classesof cases (i) where the contract names a sum to be paid in case of breach and (ii) where the contract contains any other stipulation by way of penalty. We are in the present case not concerned to decide whether a covenant of forfeiture of deposit for due performance of a contract falls within the first class. The measure of damages in the case of breach of a stipulation by way of penalty is by Section 74 reasonable compensation not exceeding the penalty stipulated for. In assessing damages the Court has, subject to the limit of the penalty stipulated, jurisdiction to award such compensation as it deems Suit No. 25/2016 Page 58 of 85 Rishi Khanna V. Subhash Khattar & Ors.
reasonable having regard to all the circumstances of the case. Jurisdiction of the Court to award compensation in case of breach of contract is unqualified except as to the maximum stipulated; but compensation has to be reasonable, and that imposes upon the Court duty to award compensation according to settled principles. The section undoubtedly says that the aggrieved party is entitled to receive compensation from the party who has broken the contract, whether or not actual damage or loss is proved to have been caused by the breach. Thereby it merely dispenses with proof of "actual loss or damages"; it does not justify the award of compensation when in consequence of the breach no legal injury at all has resulted, because compensation for breach of contract can be awarded to make good loss or damage which naturally arose in the usual course of things, or which the parties knew when they made the contract, to be likely to result from the breach."(At page 526, 527) Section 74 declares the law as to liability upon breach of contract where compensation is by agreement of the parties predetermined, 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 Suit No. 25/2016 Page 59 of 85 Rishi Khanna V. Subhash Khattar & Ors.
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."(At page 530).
"35. Similarly, in Maula Bux v. Union of India (UOI), 1970 (1) SCR 928, it was held: "Forfeiture of earnest money under a contract for sale of propertymovable or immovableif the amount is reasonable, does not fall within Section 74. That has Suit No. 25/2016 Page 60 of 85 Rishi Khanna V. Subhash Khattar & Ors.
been decided in several cases :Kunwar Chiranjit Singh v. Har Swarup, A.I.R.1926 P.C.1; Roshan Lal v. The Delhi Cloth and General Mills Company Ltd., Delhi, I.L.R. All.166; Muhammad Habibullah v.
Muhammad Shafi, I.L.R. All. 324; Bishan Chand v. Radha Kishan Das, I.D. 19 All.
49. These cases are easily explained, for forfeiture of a reasonable amount paid as earnest money does not amount to imposing a penalty. But if forfeiture is of the nature of penalty, Section 74 applies. Where under the terms of the contract the party in breach has undertaken to pay a sum of money or to forfeit a sum of money which he has already paid to the party complaining of a breach of contract, the undertaking is of the nature of a penalty. Counsel for the Union, however, urged that in the present case Rs.10,000/ in respect of the potato contract and Rs. 8,500 in respect of the poultry contract were genuine preestimates of damages which the Union was likely to suffer as a result of breach of contract, and the plaintiff was not entitled to any relief against forfeiture. Reliance in support of this contention was placed upon the expression (used in Section 74 of the Contract Act), "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". It is true that in every case of breach of contract the person aggrieved by the breach is not Suit No. 25/2016 Page 61 of 85 Rishi Khanna V. Subhash Khattar & Ors.
required to prove actual loss or damage suffered by him before he can claim a decree, and the Court is competent to award reasonable compensation in case of breach even if no actual damage is proved to have been suffered in consequence of the breach of contract. But the expression "whether or not actual damage or loss is proved to have been caused thereby" is intended to cover different classes of contracts which come before the Courts. In case of breach of some contracts it may be impossible for the Court to assess compensation arising from breach, while in other cases compensation can be calculated in accordance with established rules. Where the Court is unable to assess the compensation, the sum named by the parties if it be regarded as a genuine pre estimate may be taken into consideration as the measure of reasonable compensation, but not if the sum named is in the nature of a penalty. Where loss in terms of money can be determined, the party claiming compensation must prove the loss suffered by him. In the present case, it was possible for the Government of India to lead evidence to prove the rates at which potatoes, poultry, eggs and fish were purchased by them when the plaintiff failed to deliver "regularly and fully" the quantities stipulated under the terms of the contracts and after the contracts were terminated. They could have proved the rates at which they had to be purchased and also the other incidental charges Suit No. 25/2016 Page 62 of 85 Rishi Khanna V. Subhash Khattar & Ors.
incurred by them in procuring the goods contracted for. But no such attempt was made."(At page 933,934) "36. In Shree Hanuman Cotton Mills and Anr. v. Tata Aircraft Limited, 1970 (3) SCR 127 it was held: "From a review of the decisions cited above, the following principles emerge regarding "earnest":
(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 the contract, on default committed by the buyer, the seller is entitled to forfeit the earnest" (At page 139) "The learned Attorney General very strongly urged that the pleas covered by the second contention of the appellant had never been raised in the pleadings nor in Suit No. 25/2016 Page 63 of 85 Rishi Khanna V. Subhash Khattar & Ors.
the contentions urged before the High Court. The question of the quantum of earnest deposit which was forfeited being unreasonable or the forfeiture being by way of penalty, were never raised by the appellants. The Attorney General also pointed out that as noted by the High Court the appellants led no evidence at all and, after abandoning the various pleas taken in the plaint, the only question pressed before the High Court was that the deposit was not by way of earnest and hence the amount could not be forfeited. Unless the appellants had pleaded and established that there was unreasonableness attached to the amount required to be deposited under the contract or that the clause regarding forfeiture amounted to a stipulation by way of a penalty, the respondents had no opportunity to satisfy the Court that no question of unreasonableness or the stipulation being by way of penalty arises. He further urged that the question of unreasonableness or otherwise regarding earnest money does not at all arise when it is forfeited according to the terms of the contract. In our opinion the learned Attorney General is well founded in his contention that the appellants raised no such contentions covered by the second point, noted above. It is therefore unnecessary for us to go into the question as to whether the amount deposited by the appellants, in this case, by way of earnest and forfeited as such, can be considered to be reasonable or not.
Suit No. 25/2016 Page 64 of 85Rishi Khanna V. Subhash Khattar & Ors.
We express no opinion on the question as to whether the element of unreasonableness can ever be considered regarding the forfeiture of an amount deposited by way of earnest and if so what are the necessary factors to be taken into account in considering the reasonableness or otherwise of the amount deposited by way of earnest. If the appellants were contesting the claim on any such grounds, they should have laid the foundation for the same by raising appropriate pleas and also led proper evidence regarding the same, so that the respondents would have had an opportunity of meeting such a claim."(At page142) "37. And finally in ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705, it was held: "64. It is apparent from the aforesaid reasoning recorded by the Arbitral Tribunal that it failed to consider Sections 73 and 74 of the Indian Contract Act and the ratio laid down in Fateh Chand case [AIR 1963 SC 140: (1964) 1 SCR 515 at p. 526] wherein it is specifically held that jurisdiction of the court to award compensation in case of breach of contract is unqualified except as to the maximum stipulated; and compensation has to be reasonable. Under Section 73, when a contract has been broken, the party who suffers by such breach is entitled to receive Suit No. 25/2016 Page 65 of 85 Rishi Khanna V. Subhash Khattar & Ors.
compensation for any loss caused to him which the parties knew when they made the contract to be likely to result from the breach of it. This section is to be read with Section 74, which deals with penalty stipulated in the contract, inter alia (relevant for the present case) provides that 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, the party complaining of breach is entitled, whether or not actual 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. 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 such loss or such party is not required to lead evidence to prove actual loss suffered by him.
Suit No. 25/2016 Page 66 of 85Rishi Khanna V. Subhash Khattar & Ors.
"67........In our view, in such a contract, it would be difficult to prove exact loss or damage which the parties suffer because of the breach thereof. In such a situation, if the parties have preestimated such loss after clear understanding, it would be totally unjustified to arrive at the conclusion that the party who has committed breach of the contract is not liable to pay compensation. It would be against the specific provisions of Sections 73 and 74 of the Indian Contract Act. There was nothing on record that compensation contemplated by the parties was in any way unreasonable. It has been specifically mentioned that it was an agreed genuine preestimate of damages duly agreed by the parties. It was also mentioned that the liquidated damages are not by way of penalty. It was also provided in the contract that such damages are to be recovered by the purchaser from the bills for payment of the cost of material submitted by the contractor. No evidence is led by the claimant to establish that the stipulated condition was by way of penalty or the compensation contemplated was, in any way, unreasonable. There was no reason for the Tribunal not to rely upon the clear and unambiguous terms of agreement stipulating preestimate damages because of delay in supply of goods. Further, while extending the time for delivery of the goods, the respondent was informed that it would be required to pay stipulated damages.Suit No. 25/2016 Page 67 of 85
Rishi Khanna V. Subhash Khattar & Ors.
"68. From the aforesaid discussions, it can be held that: (1) Terms of the contract are required to be taken into consideration before arriving at the conclusion whether the party claiming damages is entitled to the same.
(2) If the terms are clear and unambiguous stipulating the liquidated damages in case of the breach of the contract unless it is held that such estimate of damages/compensation is unreasonable or is by way of penalty, party who has committed the breach is required to pay such compensation and that is what is provided in Section 73 of the Contract Act.
(3) Section 74 is to be read along with Section 73 and, therefore, in every case of breach of contract, the person aggrieved by the breach is not required to prove actual loss or damage suffered by him before he can claim a decree. The court is competent to award reasonable compensation in case of breach even if no actual damage is proved to have been suffered in consequence of the breach of a contract.
(4) In some contracts, it would be impossible for the court to assess the compensation arising from breach and if the compensation contemplated is not by way of penalty or unreasonable, the court Suit No. 25/2016 Page 68 of 85 Rishi Khanna V. Subhash Khattar & Ors.
can award the same if it is genuine preestimate by the parties as the measure of reasonable compensation."
"38. It will be seen that when it comes to forfeiture of earnest money, in Fateh Chand's case, counsel for the appellant conceded on facts that Rs.1,000/ deposited as earnest money could be forfeited. (See: 1964 (1) SCR Page 515 at 525 and 531).
"39. Shree Hanuman Cotton Mills & Another which was so heavily relied by the Division Bench again was a case where the appellants conceded that they committed breach of contract. Further, the respondents also pleaded that the appellants had to pay them a sum of Rs.42,499/ for loss and damage sustained by them. (See: 1970 (3) SCR 127 at Page 132). This being the fact situation, only two questions were argued before the Supreme Court: (1) that the amount paid by the plaintiff is not earnest money and (2) that forfeiture of earnest money can be legal only if the amount is considered reasonable. (at page 133). Both questions were answered against the appellant. In deciding question two against the appellant, this Court held: "But, as we have already mentioned, we do not propose to go into those aspects in the case on hand. As mentioned earlier, the appellants never raised any contention that the forfeiture of the amount amounted to a penalty or that the amount forfeited is Suit No. 25/2016 Page 69 of 85 Rishi Khanna V. Subhash Khattar & Ors.
so large that the forfeiture is bad in law. Nor have they raised any contention that the amount of deposit is so unreasonable and therefore forfeiture of the entire amount is not justified. The decision in Maula Bux's [1970]1SCR928 had no occasion to consider the question of reasonableness or otherwise of the earnest deposit being forfeited. Because, from the said judgment it is clear that this Court did not agree with the view of the High Court that the deposits made, and which were under consideration, were paid as earnest money. It is under those circumstances that this Court proceeded to consider the applicability of Section 74 of the Contract Act. (At page 143)"
"40. From the above, it is clear that this Court held that Maula Bux's case was not, on facts, a case that related to earnest money. Consequently, the observation in Maula Bux that forfeiture of earnest money under a contract if reasonable does not fall within Section 74, and would fall within Section 74 only if earnest money is considered a penalty is not on a matter that directly arose for decision in that case. The law laid down by a Bench of 5 Judges in Fateh Chand's case is that all stipulations naming amounts to be paid in case of breach would be covered by Section 74. This is because Section 74 cuts across the rules of the English Common Law by enacting a uniform principle that would apply to all amounts to be paid in case of breach, whether they are in the nature of penalty or Suit No. 25/2016 Page 70 of 85 Rishi Khanna V. Subhash Khattar & Ors.
otherwise. It must not be forgotten that as has been stated above, forfeiture of earnest money on the facts in Fateh Chand's case was conceded. In the circumstances, it would therefore be correct to say that as earnest money is an amount to be paid in case of breach of contract and named in the contract as such, it would necessarily be covered by Section 74.
"41. It must, however, be pointed out that in cases where a public auction is held, forfeiture of earnest money may take place even before an agreement is reached, as DDA is to accept the bid only after the earnest money is paid. In the present case, under the terms and conditions of auction, the highest bid (along with which earnest money has to be paid) may well have been rejected. In such cases, Section 74 may not be attracted on its plain language because it applies only ―when a contract has been broken.
"42. In the present case, forfeiture of earnest money took place long after an agreement had been reached. It is obvious that the amount sought to be forfeited on the facts of the present case is sought to be forfeited without any loss being shown. In fact it has been shown that far from suffering any loss, DDA has received a much higher amount on reauction of the same plot of land.
"43. On a conspectus of the above authorities, the law on compensation for breach of contract under Section 74 can be stated to be as follows: Suit No. 25/2016 Page 71 of 85 Rishi Khanna V. Subhash Khattar & Ors.
1. Where a sum is named in a contract as a liquidated amount payable by way of damages, the party complaining of a breach can receive as reasonable compensation such liquidated amount only if it is a genuine preestimate of damages fixed by both parties and found to be such by the Court. In other cases, where a sum is named in a contract as a liquidated amount payable by way of damages, only reasonable compensation can be awarded not exceeding the amount so stated. Similarly, in cases where the amount fixed is in the nature of penalty, only reasonable compensation can be awarded not exceeding the penalty so stated. In both cases, the liquidated amount or penalty is the upper limit beyond which the Court cannot grant reasonable compensation.
2. Reasonable compensation will be fixed on well known principles that are applicable to the law of contract, which are to be found inter alia in Section 73 of the Contract Act.
3. Since Section 74 awards reasonable compensation for damage or loss caused by a breach of contract, damage or loss caused is a sine qua non for the applicability of the Section.
4. The Section applies whether a person is a plaintiff or a defendant in a suit.Suit No. 25/2016 Page 72 of 85
Rishi Khanna V. Subhash Khattar & Ors.
5. The sum spoken of may already be paid or be payable in future.
6. The expression ―whether or not actual damage or loss is proved to have been caused thereby‖ means that where it is possible to prove actual damage or loss, such proof is not dispensed with. It is only in cases where damage or loss is difficult or impossible to prove that the liquidated amount named in the contract, if a genuine preestimate of damage or loss, can be awarded.
7. Section 74 will apply to cases of forfeiture of earnest money under a contract. Where, however, forfeiture takes place under the terms and conditions of a public auction before agreement is reached, Section 74 would have no application.
"44. The Division Bench has gone wrong in principle. As has been pointed out above, there has been no breach of contract by the appellant. Further, we cannot accept the view of the Division Bench that the fact that the DDA made a profit from reauction is irrelevant, as that would fly in the face of the most basic principle on the award of damages - namely, that compensation can only be given for damage or loss suffered. If damage or loss is not suffered, the law does not provide for a windfall." (emphasis added) "15. In sum and substance what is held by the Constitution Bench of the Supreme Court in the Suit No. 25/2016 Page 73 of 85 Rishi Khanna V. Subhash Khattar & Ors.
cases of Fateh Chand (supra) and the recent judgment in Kailash Nath Associates (supra) is that whenever there is a breach of contract then earnest money which is forfeited because of the breach, whether by a plaintiff or a defendant in a contract, the forfeiture is of that amount which are in fact liquidated damages specified under a contract and that for claiming damages under a contract, whether liquidated under Section 74 of the Contract Act or unliquidated under Section 73 of the Contract Act, existence of loss is a sine qua non. In other words, if no loss is caused to a seller who has in his pocket monies of buyer, then the seller can only forfeit a nominal amount unless the seller has pleaded and proved that losses have been caused to him on account of the breach of contract by the buyer. Once there is no pleading of loss suffered by a seller under an agreement to sell, then large amounts cannot be forfeited though so entitled to a seller under a clause of an agreement to sell/contract entitling forfeiture of 'earnest money' because what is forfeited is towards loss caused, and that except a nominal amount being allowed to be forfeited as earnest money, any forfeiture of any amount, which is not a nominal amount, can only be towards loss if suffered by the seller. Thus if there is no loss which is suffered by a seller then there cannot be forfeiture of large amounts which is not a nominal amount, simply because a clause in a contract provides so. The following has been held in the judgment in the case of Kailash Nath Associates (supra): Suit No. 25/2016 Page 74 of 85 Rishi Khanna V. Subhash Khattar & Ors.
(i) As per the facts existing in the case of Kailash Nath Associates (supra) the Single Judge of the High Court had held that since no damages were suffered by DDA therefore DDA could not forfeit the earnest money. (Para 30 of Kailash Nath Associates's case (supra).
(ii) The Division Bench of the High Court however set aside the judgment of the Single Judge by holding that amount tendered as earnest money can be forfeited because and simply forfeiture of amount called as earnest money can be forfeited in terms of the contract. (Para 30 of Kailash Nath Associates's case (supra) reproducing Para 39 of the Division Bench judgment of the High Court).
(iii) Supreme Court in the case of Kailash Nath Associates (supra) as per Para 44 of its judgment holds that the Division Bench of the High Court had gone wrong in principle because compensation can be awarded (where there is breach of contract) only if loss or damage is suffered i.e where there is no loss or damage suffered as a result of breach of contract no compensation can be awarded as law does not provide for a windfall i.e large amounts though called contractually as earnest money cannot be forfeited unless loss is pleaded and proved to have been suffered. These observations have cross reference to Para 34 of the judgment of Suit No. 25/2016 Page 75 of 85 Rishi Khanna V. Subhash Khattar & Ors.
Kailash Nath Associates's case (supra) where with reference to the para of Fateh Chand's case (supra) it is held that the language of Section 74 of the Contract Act that 'whether or not damage or loss is proved to have been caused by breach' is the language that such language only discharges proof of actual loss but that does not justify award of compensation where in consequence of breach no injury/loss has at all resulted.
(iv) Earnest money is an amount to be paid in case of breach of contract, and named in contract as such, and that forfeiture of earnest money is covered under the entitlement to liquidated damages under Section 74 of the Contract Act vide Para 40 in the case of Kailash Nath Associates (supra).
(v) The language of Section 74 of the Contract Act that "whether or not actual loss or damage is proved to have been caused thereby" means only that where it is difficult or impossible to prove loss caused by the breach of contract then the liquidated damages/amount (being the amount of earnest money) can be awarded vide Para 43(6) of Kailash Nath Associates's case (supra) but where nature of contract is such that loss caused because of breach can be assessed and so proved then in such cases loss suffered must be proved to claim the liquidated Suit No. 25/2016 Page 76 of 85 Rishi Khanna V. Subhash Khattar & Ors.
damages of earnest money. This finding has cross reference to Para 37 of judgment in Kailash Nath Associates's case (supra) where the observations of Supreme Court in Para 67 of the case of ONGC Ltd.
Vs. Saw Pipes Ltd. (2003) 5 SCC 705 are quoted that liquidated damages are awarded where it is difficult to prove exact loss or damage caused as a result of breach of contract.
(vi) Even where liquidated damages can be awarded under Section 74 of the Contract Act because loss or damages cannot be proved in a contractual breach yet if the liquidated damages (earnest money) are a penalty amount by its nature i.e prescribed liquidated damages figure is unreasonable, then for the liquidated damages amount or earnest money amount forfeiture cannot be granted/allowed and that only reasonable amount is allowed as damages with the figure of liquidated damages being the upper limit vide Para 43(1) of Kailash Nath Associates's case (supra).
"16. Similar ratio as has been laid down by the Supreme Court in Kailash Nath Associates's case (supra) was also the ratio of the judgment of the Supreme Court in the case of V.K. Ashokan Vs. Assistant Excise Commissioner and Others (2009) 14 SCC 85 and paras 66 to 71 of this judgment reads as under: Suit No. 25/2016 Page 77 of 85 Rishi Khanna V. Subhash Khattar & Ors.
"66. There is another aspect of the matter which cannot be lost sight of. If damages cannot be calculated and the terms of the contract provides therefor only for penalty by way of liquidated damages, having regard to the provisions contained in Section 74 of the Indian Contract Act a reasonable sum only could be recovered which need not in all situations even be the sum specified in the contract. (See Maula Bux vs. Union of India and Shree Hanuman Cotton Mills vs. Tata Air Craft Ltd.)
67. Section 74 of the Contract Act reads as under: "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."
68. There are authorities, no doubt coloured by the view which was taken in English cases, that Section 74of the Suit No. 25/2016 Page 78 of 85 Rishi Khanna V. Subhash Khattar & Ors.
Contract Act would have no application to cases of deposit for due performance of a contract which is stipulated to be forfeited for breach, e.g.,. Natesa Aiyar v. Appavu Padayachi, Singer Manufacturing Company v. Raja Prosad; Manian Patter v. The Madras Railway Company, but this view no longer is good law in view of the judgment of this Court in Fateh Chand vs. Balkishan Das.
69. This Court in Fateh Chand case observed at pp. 52627 (of SCR):
10. Section 74 of the Contract Act deals with the measure of damages in two classes of cases (i) where the contract names a sum to be paid in case of breach, and (ii) where the contract contains any other stipulation by way of penalty. ... The measure of damages in the case of breach of a stipulation by way of penalty is by Section 74 reasonable compensation not exceeding the penalty stipulated for.‖ The Court also observed: (AIR p. 1411, para 11) ―11. It was urged that the section deals in terms with the right to receive from the party who has broken the contract reasonable Suit No. 25/2016 Page 79 of 85 Rishi Khanna V. Subhash Khattar & Ors.
compensation and not the right to forfeit what has already been received by the party aggrieved.
There is however no warrant for the assumption made by some of the High Courts in India, that Section 74 applies only to cases where the aggrieved party is seeking to receive some amount on breach of contract and not to cases where upon breach of contract an amount received under the contract is sought to be forfeited.
In our judgment the expression the
contract contains any other
stipulation by way of
penalty'comprehensively applies to every covenant involving a penalty whether it is for payment on breach of contract of money or delivery of property in future, or for forfeiture of right to money or other property already delivered. Duty not to enforce the penalty clause but only to award reasonable compensation is statutorily imposed upon courts by Section 74. In all cases, therefore, where there is a stipulation in the nature of penalty for forfeiture of an amount deposited pursuant to the terms of 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." and that, Suit No. 25/2016 Page 80 of 85 Rishi Khanna V. Subhash Khattar & Ors.
"14. ... There is no ground for holding that the expression contract contains any other stipulation by way of penalty' is limited to cases of stipulation in the nature of an agreement to pay money or deliver property on breach and does not comprehend covenants under which amounts paid or property delivered under the contract, which by the terms of the contract expressly or by clear implication are liable to be forfeited." (AIR p. 1412, para 14)
70. Forfeiture of earnest money under a contract for sale of property whether movable or immovable, if the amount is reasonable, would not fall within Section
74. That has been opined in several cases. (See Kunwar Chiranjit Singh v. Har Swarup; Roshan Lal v. Delhi Cloth and General Mills Co. Ltd.; Mohd. Habibullah v. Mohd. Shafi ; Bishan Chand v. Radha Kishan Das.) These cases have explained that forfeiture of a reasonable amount paid as earnest money does not amount to imposing a penalty. But if forfeiture is of the nature of penalty, Section 74 applies.
71. Where under the terms of the contract the party in breach has undertaken to pay a sum of money or to forfeit a sum of money which he has already paid to the party complaining of a breach of contract, the undertaking is of the nature of a Suit No. 25/2016 Page 81 of 85 Rishi Khanna V. Subhash Khattar & Ors.
penalty. (See Maula Bux and Saurabh Prakash v. DLF Universal Ltd.)" (emphasis added) "17. 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 lesser number of judges. Also, as already stated above, in the recent judgment in Kailash Nath Associates's case (supra) Supreme Court has now 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's 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 Suit No. 25/2016 Page 82 of 85 Rishi Khanna V. Subhash Khattar & Ors.
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.
"4. Accordingly, in view of the facts of the present case that the respondent/defendant has admittedly received Rs. 12,50,000/ from the appellant/plaintiff under the subject agreement to sell with respect to which suit for specific performance has been dismissed, and in this suit there is no loss which is pleaded and proved by the respondent/defendant to be caused on account of alleged breach of the agreement to sell by the appellant/plaintiff, and thus by applying the ratio in the case of M.C. Luthra (supra), a money decree for a sum of Rs.12,50,000/ is passed in favour of the appellant/plaintiff and against the respondent/defendant along with interest at 7½ % per annum simple pendente lite and future till realization. Decree sheet be accordingly drawn up. Appeal is allowed and disposed of to the extent as stated above."
The dictums of the Hon'ble Supreme Court, which were consistently followed by the Hon'ble High Court of Delhi, vividly expound the law that sufferance of damages is sinequa non for forfeiting the earnest money in case of breach of the contract. The Suit No. 25/2016 Page 83 of 85 Rishi Khanna V. Subhash Khattar & Ors.
defendants no.1 to 4 or for that matter, defendants no. 1, 3 and 4 have neither pleaded nor proved that they have suffered any damages. In the facts and circumstances of the present case, the original defendants no.1 to 4 and for that matter, defendants no. 1, 3 and 4 cannot be allowed to forfeit the amount of Rs.4,00,000/, which was paid by plaintiff to them. Although, the plaintiff has not claimed any relief for refund of money or compensation or damages as alternative relief but defendant no.1 cannot be allowed to forfeit the amount of Rs.4,00,000/ and this court in exercise of power under Order 7 Rule 7 CPC can always grant a lesser relief or an appropriate relief, as arising from the facts and circumstances of the case. The said aspect has been dealt with in catena of Judgments and in detail by our Hon'ble High Court in RFA No. 157/2019 decided on 22nd February, 2019 in the case titled as ANUJA SHARMA Versus MEMO DEVI & ORS. Accordingly, the plaintiff is entitled to refund of the sum of Rs.4,00,000/ alongwith simple interest @ 12% per annum from 15.05.2004 till its realization.
Considered from any view point, from the discussions made hereinabove, the plaintiff is not entitled to Specific Performance and Permanent Injunction, as prayed for, however, the plaintiff is entitled to the aforesaid amount, as prayed for, against the defendants no.1, 3 and 4, as mentioned hereinabove.
Suit No. 25/2016 Page 84 of 85Rishi Khanna V. Subhash Khattar & Ors.
Accordingly, issues No.2, 3A, 5 and 5A are decided in the aforesaid terms.
RELIEF:
From the discussions, as adumbrated hereinabove, I hereby pass the following FINAL ORDER
(i) The suit of the plaintiff qua reliefs (i) and (ii) relating to Specific Performance and Permanent injunction is hereby dismissed.
(ii) a decree in the sum of Rs.4,00,000/ alongwith simple interest @ 12% per annum from 15.05.2004 till its realization is passed in favour of the plaintiff and against defendants no.1, 3 and 4.
(iii) In view of the facts of this case, the parties shall bear their respective costs of the litigation.
Decreesheet be prepared accordingly in terms of the judgment.
File be consigned to Record Room after due compliance. Announced in the open court on this 24th Day of September, 2019.
(ARUN SUKHIJA) ADJ07 (Central) Tis Hazari Courts, Delhi Suit No. 25/2016 Page 85 of 85