Delhi District Court
Manish Kalra And Ans vs P.N. Ramalingam And Ors on 9 December, 2024
IN THE COURT OF SH. SUNIL BENIWAL,
DISTRICT JUDGE-06, SOUTH DISTRICT,
SAKET COURTS, NEW DELHI.
CS DJ No.521/2017
CNR No.DLST01-003813-2017
1. Manish Kalra
S/o Sh. R.C.Kalra,
R/o 38, Pocket A-8,
Kalkaji Extn,
New Delhi 110019
2. Sh. Yogesh Kumar,
S/o Sh. Girdhari Lal
R/o A-170, Double Storey Kalkaji,
New Delhi. ....Plaintiffs
VERSUS
1. Shri P.N. Ramalingam (since deceased)
S/o Sh. Natarajan
R/o 6-A, Ber Sarai Flat,
ABC Block, New Delhi 110016.
Also at:
52, Lawyer's Chamber,
Supreme Court of India, New Delhi.
2. Sh. R. Karthikkeyan,
S/o Sh. Natarajan
R/o 6-A, Ber Sarai Flat,
ABC Block, New Delhi 110016.
CS DJ No.521/2017 page 1 of 19
3. Dr. Anuradha
D/o Sh.P.N. Ramalingam,
R/o 12, R.K.V. Nagar,
Poonamelleya, Chennai 56. .....Defendants
Date of Institution : 27.05.2017
Date of Judgment : 09.12.2024
Suit for specific performance with possession or in alternative recovery
of damages of Rs.50,00,000/- along with interest @ 24% per annum
w.e.f. 31.05.2014 till actual recovery and for permanent injunction
JUDGMENT
1. The case of the plaintiff in brief is that the defendant no.1 is the owner and in possession of property i.e. freehold DDA LIG Flat No.9A, Ground Floor, with Garage on ground floor measuring 1000 sq fts, situated at Ber Sarai, New Delhi 16 (hereinafter referred to as suit property) as shown in red colour in the site plan filed with plaint. The defendant no.1 had a friendly relations with plaintiffs.
2. It is further averred in the plaint that defendant no.1 was in dire need of funds, and as such he decided to sell his aforesaid suit property. After some negotiations between plaintiffs and defendant no.1, the defendant no.1 agreed to sell suit property to the plaintiffs for a total sale consideration of Rs.50 Lakh. On 31.05.2014, an Agreement to Sell and Purchase was executed between plaintiffs and defendants qua suit property for the total sale consideration of Rs.50 Lakh. A sum of Rs.10 Lakh in cash was handed over to defendant no.1 by plaintiffs as earnest money. Remaining Rs.40 lakh was to be paid by plaintiffs to the defendant no.1 on or before 30.04.2015 i.e. at the time of execution and registration of Sale CS DJ No.521/2017 page 2 of 19 Deed and prior to that the defendant no.1 was to obtain all kind of NOC/ITCC and no dues certificate from MCD etc.
3. It is further stated that on 13.06.2014, the defendant no.1 came to the plaintiffs with a request for some more money in continuation of earnest money of Rs.10 Lakh already paid on the day of Agreement to Sell, and accordingly, a sum of Rs.4,50,000/- as in continuation of the earlier earnest money of Rs.10 Lakh was paid by way of bearer cheque No.836451 drawn on OBC, Tuglakabad Ext, New Delhi on 13.06.2014 (The said cheque was issued from the account of plaintiff no.2) by virtue of separate receipt. Further a sum of Rs.2,50,000/- was paid to the defendant no.1 by the plaintiffs in cash on 14.06.2014 on the demand of defendant no.1 and the defendant no.1 acknowledged the same on the back of stamp paper on which the Agreement to Sell dated 31.05.2014 was prepared. The plaintiffs again paid a sum of Rs.1,00,000/- in cash to the defendant no.1 on his demand on 20.06.2014. Therefore, till 20.06.2014, a sum of Rs.18 Lakh was paid to the defendant no.1 as earnest money by the plaintiffs on account of sale and purchase of the suit property. That defendant no.2 had also assured the plaintiffs that only the defendant no.1 is having right to sell the suit property to the plaintiffs which he is doing for the bonafide need of the family. That on 20.06.2014, the defendant no.1 handed over to the plaintiffs one No Objection Certificate allegedly obtained by him from his daughter by post.
4. It is further averred in the plaint that balance sale consideration amount of Rs.32 Lakh was ready with the plaintiffs and they requested the defendant no.1 to execute the sale deed but defendant no.1 avoided the CS DJ No.521/2017 page 3 of 19 same on one pretext or the other. That the defendant no.1 expressed his inability to perform his part of contract and requested the plaintiffs to extend the time for performance of contract dated 31.05.2014. Accordingly, on 25.04.2015, the defendant no.1 got prepared Agreement for extension of time to execute the sale deed pertaining to agreement to sell dated 31.05.2014 as well as prepared two NOC in the name of the defendant no.2 and 3; accordingly agreement of extension of time to execute sale deed was got attested by the notary public but defendants no.2 and 3 failed turn up and execute said two NOC.
5. Further that as per agreement for extension of time dated 25.04.2015, the defendant had agreed to take all kinds of NOC on or before 15.11.2015 and intimate the plaintiffs by 18.11.2015 and also to send a complete chain of documents on or before 18.11.2015; that defendant no.1 had also agreed to execute and register the sale deed qua suit property in favour of plaintiffs on or before 18.11.2015 beside the defendant no.1 had also agreed to follow on other terms and conditions as mentioned in the agreement dated 25.04.2015. Plaintiff much before 15.11.2015, requested the defendants no.1 and 2 to take NOC/ITCC and also demanded the copy of complete chain of title deed and accept the remaining balance sale consideration of Rs.32 Lakh but the defendant no.1 and 2 avoided the same on one pretext or other. After putting pressure by plaintiffs, the defendant no.1 handed over NOC of defendants no.2 and 3 and told the plaintiffs that very shortly he will took the NOC from MCD and shall execute the sale deed in favour of the plaintiffs. That from NOC of defendants no.2 and 3, it reveals that they undertake to indemnify the plaintiffs for all the losses and also shall be responsible for the non performance of the agreement to sell CS DJ No.521/2017 page 4 of 19 dated 31.05.2014 and 25.04.2015.
6. Further that on 18.11.2015, the plaintiffs reached the office of Sub Registrar, Mehrauli, Delhi along with balance payment but the defendant no.1 neither picked up the phone of plaintiffs nor came to the office of Sub Registrar. Plaintiffs made several requests to the defendants to execute sale deed in terms of agreement entered into between the parties but to no avail. Thereafter, plaintiffs sent notice to the defendants on 18.11.2016, to which defendant no.1 sent reply dated 28.11.2016 seeking 15 days time to send the detailed reply but thereafter no reply received by plaintiffs from the defendants. Hence, the plaintiffs were constrained to file the present suit.
7. The plaintiffs in the suit have sought following reliefs:
(a)Pass the decree for specific performance in favour of the plaintiffs and against the defendants thereby directing the defendant no.1/defendants no.1 to 3, as the case may be, to execute and register Sale Deed in favour of plaintiffs qua suit property freehold DDA LIG Flat No.9A, Ground Floor, with Garage on ground floor measuring 1000 sq fts, situated at Ber Sarai, New Delhi 16, as shown in red colour in site plan and also to direct them to take all kind of NOC/ITCC whatever required for execution and registration of sale deed and to handover all previous title documents qua suit property to the plaintiffs and to put the plaintiff in peaceful possession of the suit property. The Sub-Registrar concerned may also be directed to execute and register the sale deed at the instance of either defendants or the officer likely to be appointed by the Court in the name of plaintiffs qua aforesaid suit property.
Or in alternative CS DJ No.521/2017 page 5 of 19 Pass the decree of recovery of damages of Rs.50,00,000/- in favour of plaintiffs and against the defendants along with interest at the rate of 24% per annum with effect from 31.05.2014 till actual recovery of the said amount.
(b)Pass the decree for permanent injunction in favour of the plaintiffs and against the defendants, their associates, legal heirs, representative, friends, attorney, nominee etc, thereby restraining them from creating third party interest, from damaging the suit property, from carrying any other alternation or material change or construction in the suit property in any manner either by way of sale, mortgage, let out etc.
8. Summons of the suit were issued to the defendants. Defendants no.1 and 2 filed their joint written statement, whereas as per proceedings dated 31.10.2017, defendant no.3 adopted written statement filed by defendants no.1 and 2.
9. For non appearance of defendants, vide order dated 27.04.2019, they were proceeded exparte; their application seeking condonation of delay in filing written statement was dismissed for non prosecution; written statement filed by defendants was ordered to be taken off from the record.
10. Further an application under order XXII rule 4 of the CPC was filed by plaintiffs stating that defendant no.1 has expired on 29.12.2020 and sought impleadment of his legal heirs; since legal heirs of defendant no.1 i.e. defendant no.2 and 3 were already party to the suit, vide order dated 14.03.2024, application under order XXII rule 4 of the CPC of the plaintiffs was allowed and disposed of accordingly.
CS DJ No.521/2017 page 6 of 19
11. Vide order dated 14.03.2024 following issues were settled:
(1)Whether plaintiffs are entitled to decree for specific performance as prayed for in prayer para (a) of the plaint?OPP (2)Whether plaintiffs are entitled to decree of permanent injunction, as prayed for in prayer para (b) of plaint?OPP (3)Relief.
12. Plaintiff Sh. Manish Kalra entered into witness box as PW1 and tendered his evidence by way of affidavit Ex.PW1/A and relied upon following documents:
(1)Site plan as Ex.PW1/1, (2)Original Agreement dated 31.05.2014 as Ex.PW1/2, (3)Acknowledgment of defendant no.1 dated
13.06.2014/photocopy of cheque bearing no.836451 dated 13.06.2014 for Rs.4,50,000/- issued by plaintiff no.2 in favour of defendant no.1 as Ex.PW1/3, (4)Original Agreement for extension of time dated 25.04.2015 as Ex.PW1/4, (5)Original NOC executed by Anuradha with postal receipt Ex.PW1/5, (6)Original NOC dated 25.04.2015 by defendant no.2 as Ex.PW1/6, (7)Original NOC dated 25.04.2015 by defendant no.3 as Ex.PW1/7, (8)Original draft of proposed sale deed Ex.PW1/8, (9)Legal notice dated 18.11.2016 as Ex.PW1/9, (10)Original postal receipt and tracking report as Ex.PW1/10, (11)Reply to legal notice by defendant no.1 dated 28.11.2016 with envelope as Ex.PW1/11.
CS DJ No.521/2017 page 7 of 19
13. I have heard arguments and perused the record.
14. In order to prove its case, plaintiffs have relied upon various documents Ex.PW1/1 to Ex.PW1/10 as mentioned above. All the above documents are duly available on record and have been proved by the plaintiffs as per law. On the other hand, the defendants failed to appear and cross examine witness of plaintiff.
15. It is pertinent to mention herein that remedy of specific performance being an equitable relief, it is upon the plaintiffs to prove the positive facts of readiness and willingness on their part, and that the defendants are not required to prove the negative. In this regard reliance is placed upon the case of N.P. Thirungnanam vs. R. Jagan Mohan Rao (1995) 5 SCC 115 and the relevant para 5 of the same is reproduced as hereunder:
"....Section 16(c) of the Act envisages that plaintiff must plead and prove that he had performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than those terms the performance of which has been prevented or waived by defendant. The continuous readiness and willingness on the part of plaintiff is a condition precedent to grant the relief of specific performance. This circumstance is material and relevant and is required to be considered by the Court while granting or refusing to grant the relief. If the Plaintiff fails to either to aver or prove the same, he must fail. To adjudge whether plaintiff is ready and willing to perform his part of the contract, the Court must take into consideration the conduct of plaintiff prior and subsequent to the filing of the suit along with other attending circumstances. The amount of CS DJ No.521/2017 page 8 of 19 consideration which he has to pay to defendant must of necessity be proved to be available. Right from the date of the execution till date of the decree he must prove that he is ready and has always been willing to perform his part of the contract. As stated, the factum of his readiness and willingness to perform his part of the contract is to be adjudged with reference to the conduct of the party and the attending circumstances. The Court may infer from the facts and circumstances whether the Plaintiff was ready and was always ready and willing to perform his part of the contract."
16. Reliance is also placed upon the judgment of Shree Aadhiya Built Well Pvt Ltd vs. Kartar Singh & Ors, 228 (2016) DLT 10 where it was observed that:
".... This provision (Section16(c) of Specific Relief Act, 1963) requires that a proposed purchaser has always to be and continues to be ready and willing to perform its part of the agreement to sell. It is settled law that the expressions 'readiness' and 'willingness' refer to the capacity to pay so far as the expression 'readiness' is concerned and the intention to go through with the transaction as reflected in the expression 'willingness'. These are the meanings of the expressions 'readiness' and 'willingness' as held in various judgments of the Supreme Court and one such judgment of the Supreme Court in this regard is in the case of J.P. Builders and Another v. A. Ramadas Rao and Another, VIII (2010) SLT 546 IV (2010) CLT 492 (SC)(2011) 1 SCC 429. We will therefore have to examine as to whether the plaintiff was always ready and willing to enter into the sale deed till the time of the present final arguments and from the date of entering into the agreement to sell.
At the time of considering this issue, no doubt, it is CS DJ No.521/2017 page 9 of 19 borne in mind that the plaintiff has to be willing to perform its part of the contract only when the defendants have obtained the NOC, however, Section 16(c) of the Specific Relief Act requires not one but two aspects to be proved by the plaintiff i.e. both readiness and willingness. In law the aspect of willingness being there is one which is to be acted upon by making the payment when the defendants make themselves capable of performing the agreement to sell by taking the necessary NOC, however, as contrasted from willingness, readiness is an aspect which has to be independently proved.
Readiness pertains to the financial capacity of a proposed purchaser to make payment of the balance consideration under the agreement to sell. The issue with respect to readiness and willingness is overlapping with the issue to defendants being guilty of breach of contract, but, the expression "has always been ready and willing" is an expansive expression not only encompassing therein that it has to be shown that the defendants are guilty of breach of contract, but also that it has to be shown that plaintiff had necessary financial capacity to pay the balance sale consideration at all points of time after the agreement to sell was entered into. The aspect of a plaintiff/proposed purchaser always being ready to perform its part of the contract i.e. having the necessary capacity to pay the sale consideration is because specific performance is a discretionary relief and an alternative to the relief of grant of damages...."
17. Now this Court shall examine as to whether plaintiffs have led evidence and proved that they were always ready and willing to perform their part of the contract.
18. The plaintiffs in order to establish their readiness and willingness to CS DJ No.521/2017 page 10 of 19 perform their part of the contract must show that they were having financial capacity to perform their part of the contract of making payment of balance sale consideration of Rs.32 Lakh. However, in the present case, plaintiffs have not brought any evidence on record to show that they were having balance sale consideration before due date, on due date or any date thereafter, to establish their readiness and willingness to make balance sale consideration of Rs.32 Lakh.
19. In the case of Saradamani Kandappan vs. Mrs. S. Rajalakshi, 2011 (12) SCC 18, the Hon'ble Supreme Court had given observations on the aspect of payment of a nominal advance price by plaintiff and Court's discretion in granting discretionary relief of specific performance; relvant paras of the said judgments are produced as hereunder:
"37. The reality arising from this economic change cannot continue to be ignored in deciding cases relating to specific performance. The steep increase in prices is a circumstance which makes it inequitable to grant the relief of specific performance where the purchaser does not take steps to complete the sale within the agreed period, and the vendor has not been responsible for any delay or nonperformance. A purchaser can no longer take shelter under the principle that time is not of essence in performance of contracts relating to immovable property, to cover his delays, laches, breaches and "non-readiness". The precedents from an era, when high inflation was unknown, holding that time is not of the essence of the contract in regard to immovable properties, may no longer apply, not because the principle laid down therein is unsound or erroneous, but the circumstances that existed when the said principle was evolved, no longer exist. In these days of galloping increases in prices of immovable properties, to hold that a vendor who took an earnest money of say about 10% of the sale price and agreed for three months or four months as the period for performance, did CS DJ No.521/2017 page 11 of 19 not intend that time should be the essence, will be a cruel joke on him, and will result in injustice. Adding to the misery is the delay in disposal of cases relating to specific performance, as suits and appeals therefrom routinely take two to three decades to attain finality. As a result, an owner agreeing to sell a property for rupees one lakh and received rupees ten thousand as advance may be required to execute a sale deed a quarter century later by receiving the remaining rupees ninety thousand, when the property value has risen to a crore of rupees. Till the issue is considered in an appropriate case, we can only reiterate what has been suggested in K.S. Vidyanandam & Ors. Vs. Vairavan 1997(1) SCR 993 that "The courts, while exercising discretion in suits for specific performance, should bear in mind that when the parties prescribe a time/period, for taking certain steps or for completion of the transaction, that must have some significance and therefore time/period prescribed cannot be ignored. The courts will apply greater scrutiny and strictness when considering whether the purchaser was "ready and willing" to perform his part of the contract. Every suit for specific performance need not be decreed merely because it is filed within the period of limitation by ignoring the time limits stipulated in the agreement. The courts will also "frown" upon suits which are not filed immediately after the breach/refusal. The fact that limitation is three years does not mean that a purchaser can wait for 1 or 2 years to file a suit and obtain specific performance. The three-year period is intended to assist the purchasers in special cases, as for example, where the major part of the consideration has been paid to the vendor and possession has been delivered in part performance, where equity shifts in favour of the purchaser."
20. Further, in the case of Baldev Behl & Ors vs. Bhule & Ors, 2012 SCC OnLine Del 4730, the Hon'ble High Court of Delhi has held that CS DJ No.521/2017 page 12 of 19 where substantial consideration is not paid (and for which a rough benchmark can be taken as 50% of the consideration), and where the plaintiff is not in possession of the subject property, the plaintiff is not entitled to the discretionary relief of specific performance.
21. In view of above, as the plaintiffs have failed to establish that there was readiness and willingness on their part, it is held that plaintiffs are not entitled to the discretionary relief of specific performance.
22. Now next issue requires to be adjudicated upon is whether plaintiffs are entitled to refund of Rs.18 lakh which they stated to have paid to the deceased defendant no.1 at the time of entering into Agreement or can defendants can be permitted to forfeit the said amount or plaintiff is entitled to recovery of Rs.50 Lakh along with interest @ 24% per annum commencing from 31.05.2014, the term stipulated in para 7 of Agreement for Extension of Time to Execute the Sale Deed Pertaining to Agreement to Sell dated 31.05.2014 Ex.PW1/4. It is also pertinent to mention herein that as per sub para of para 5 of Advance Receipt-Cum-Agreement to Sell and Purchase Ex.PW1/2, in case plaintiffs fails to make the payment in the time prescribed, the advance money will stand forfeited and if the defendant no.1 fails to execute all the documents and not able to give the physical possession of the suit property, he will pay the double of advance money received by him plus the cost and expenses incurred by the plaintiffs.
23. The Hon'ble High Court of Delhi in the case of M.C. Luthra vs. Ashok Kumar Khanna, 2018 SCC OnLine Del 7462 held that the earnest money can be forfeited in case loss is caused to the seller and same must be CS DJ No.521/2017 page 13 of 19 pleaded and proved by the seller.
24. In the present case Agreement for Extension of Time to Execute the Sale Deed Pertaining to Agreement to Sell dated 31.05.2014 Ex.PW1/4 was executed between plaintiffs and deceased defendant no.1, and the same having specific clause that in case of default on the part of defendants, the plaintiffs shall be entitled to recovery of Rs.50 Lakh along with interest @ 24% per annum commencing from 31.05.2014 from the defendant no.1 towards losses suffered by plaintiffs for default on the part of the defendant no.1.
25. Insofar as issue regarding enforceability of penalty clause 7 of the Agreement for Extension of Time to Execute the Sale Deed Pertaining to Agreement to Sell dated 31.05.2014 Ex.PW1/4, as per which defendant no.1 shall be liable to pay Rs.50 Lakh for losses for non execution and registration of Sale Deed by 18.11.2015, is concerned, lets have a look at the legal position. Such clauses are in the nature of penalty. The Hon'ble Supreme Court in the case of Maula Bux v. Union of India 1969 (2) SCC 554 had held that "If the forfeiture is of the nature of penalty section 74 applies. Where under the terms of 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 a nature of penalty."
26. Reliance is also made to AIR 1963 AP 312 and AIR 1987 SC 1260, gist of said authorities is that while invoking penalty clause as per section 74 of the Indian Contract Act, it is not necessary to award compensation as stated in agreement, rather a reasonable compensation is to be awarded CS DJ No.521/2017 page 14 of 19 irrespective to the fact whether the party invoking the clause has actually suffered the damages or not.
27. Reference is also made to the judgments of the Supreme Court in the cases of Fatesh Chand vs. Balkishan Dass, AIR 1963 SC 1405, Maula Baux (Supra) and Union of India vs. Raman Iron Foundry (1974) 2 SCC 231 and M/s Scipa India Ltd vs. Shri Manas Partim Deb Munu/6554/2011 RFA No.596/2012. Ratio of these cases is that clauses of liquidated damages which are in the nature of penalty are void and the liquidated damages are only upper limit of damages which are awarded once actual damages are proved. That such legal position applies when losses from breach of the contract can otherwise be proved, and that when losses cannot be proved in that case, the liquidated damages specified can always be recovered in terms of Sir Chunilal V. Mehta vs. Sons Ltd vs. Century Spinning and Manufacturing Co Ltd. AIR 1962 1314 (1).
28. In the case of Oil and Natural Gas Corporation Ltd v. Saw Pipes Ltd, 2003 (2) RAJ 1 (SC) the Hon'ble Supreme Court has laid down that when a contract has been broken, the party who suffers by such breach is entitled to receive compensation for any loss which naturally arise in the usual course of things from such breach. 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 consequences of the breach of contract.
29. Now this court has to see as to what reasonable compensation is to be awarded to the plaintiffs in the present case. Plaintiffs stated to have CS DJ No.521/2017 page 15 of 19 paid earnest money amounting Rs.18 Lakh to the defendant no.1 and claiming damages of Rs.50 Lakh along with interest @ 24% per annum on the basis of Ex.PW1/4, for which deceased defendant no.1 had duly consented and executed Ex.PW1/4. Accordingly, it is held that plaintiffs are entitled to damages of Rs.50 Lakh as was agreed by the deceased defendant no.1 to pay as mentioned in Ex.PW1/4.
30. In the present case the defendants have not appeared to cross examine PW1 nor led any evidence in order to controvert the version of plaintiffs, and as such failed to cause any dent to the evidence led by PW1. The testimony of PW1 has remained unrebutted, unchallenged and uncontroverted.
31. As per version of plaintiffs, the defendant no.1 had handed over them No Objection Certificates Ex.PW1/6 and Ex.PW1/7 stated to have been executed by defendant no.2 and defendant no.3 thereby undertaking to pay all the losses suffered by the plaintiffs. However, these documents are neither registered nor notarized; even not witnessed by any independent witness; it is also not the case of the plaintiffs that these documents were handed over to them by executants i.e. defendant no.2 and 3 or were executed in their presence. Furthermore, perusal of para 10 of Ex.PW1/7 wherein executant stated to have undertaken to pay all the losses, reveals that the same has been meddle with. Furthermore, same para in Ex.PW1/6 is without any numbering. In view of same, this court is of the considered view that execution of Ex.PW1/6 and Ex.PW1/7 by defendants no.2 and 3 is doubtful and the same cannot be relied upon. Furthermore, there is no separate agreement between plaintiffs and CS DJ No.521/2017 page 16 of 19 defendant nos.2 and 3 for being stood as guarantors for defendant no.1 for repayment of his liability. However, apparently defendants no.2 and 3 are First Class legal heirs of deceased defendant no.1 and hence, are liable to pay the liabilities of deceased defendant no.1 to the extent of estates they inherit from deceased defendant no.1 only.
32. Accordingly it is held that the plaintiffs are entitled to recovery of Rs.50,00,000/- from the deceased defendant no.1 only.
33. Plaintiff has demanded interest @ 24% p.a. on the basis of clause 7 of Agreement Ex.PW1/4. Apparently, the interest which is being claimed is on the higher side. I would like to here make a reference to the judgment of the Hon'ble High Court in Geetu Lakhpat & another Vs. Jaipal [2011 SCC OnLine Del 1706] wherein it was observed as follows:
"2. Learned counsel for the appellants has in the appeal only prayed for reduction of the unduly high rate of interest of 2% per month which has been granted by the trial Court. Reliance has firstly been placed upon Section 3 of the Usurious Loans Act, 1918 (as applicable to Delhi) as per which in case of an unsecured loan the maximum rate of interest which is allowed is 12−1/2% per annum simple. Learned counsel for the appellants also relies upon various judgments of the Supreme Court as per which the Supreme Court has directed the Courts to take note of the consistent fall in the rates of interest on account of the changed economic scenario, more so when there is time spent in litigation. These judgments of the Supreme Court are RajendraConstruction Co. v. Maharashtra Housing & Area Development Authority, (2005) 6 SCC 678, McDermott International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181, Rajasthan State Road Transport Corporation v. Indag Rubber Ltd., (2006) 7 SCC 700 & Krishna Bhagya Jala Nigam Ltd. v. G. Harischandra, (2007) 2 SCxxxxxxx, CS DJ No.521/2017 page 17 of 19 (2007) 2 SCC 720 and State of Rajasthan v. Ferro Concrete Construction Pvt. Ltd, (2009) 3 Arb. LR 140 (SC).
3. Learned counsel for the respondent, in reply, states that the respondent is entitled to interest @ 2% per month because the said rate was a contractual rate of interest.
4.In my opinion, the arguments as urged by the counsel for the appellants are well founded. In the present date, granting of interest @ 2% per month is both exorbitant and usurious. The Supreme Court in the aforesaid judgments, relied upon by the counsel for the appellants, has granted interest varying between 6% to 9% per annum. A Division Bench of this Court in the case of Pt. Munshi Ram & Associates (P) Ltd. v. Delhi Development Authority, 2010 (3) Arb. L.R. 284 (Delhi) has held that Court has power to reduce even the pre−suit rate of interest in case the said rate of interest is found to be against the public policy. In my opinion, rate of interest of 24% per annum i.e. 2% per month as granted by the trial Court is clearly against the public policy in the present economic scenario considering the aforesaid judgments of the Supreme Court.
Considering the facts and circumstances of the present case, I am of the opinion that interest of justice would be more than served if the respondent is granted interest @ 7−1/2% per annum instead of 2% per month i.e. 24% per annum."
34. In my opinion, in the given facts of the case, granting interest @ 12% p.a. on the amount of Rs.50,00,000/- from the date of issuance of legal notice i.e. 18.11.2016 till realization, would meet the ends of justice.
Relief
35. In view of above discussion, suit of the plaintiffs is decreed in favour of plaintiffs and against deceased defendant no.1 Sh. P.N. CS DJ No.521/2017 page 18 of 19 Ramalingam for recovery of Rs.50,00,000/- (Rupees fifty lakh only). Plaintiffs are granted interest @ 12% p.a. on the amount of Rs.50,00,000/- from the date of issuance of legal notice i.e. 18.11.2016 till realization.
36. Defendant no.1 has expired. Defendants no.2 and 3 are held jointly and severally liable to pay the decreetal amount being legal heirs of the deceased defendant no.1 Sh. P.N. Ramalingam, to the extent of estate(s) they inherit from deceased defendant no.1.
37. Cost is also awarded in favour of the plaintiffs.
38. Decree sheet be prepared accordingly, upon filing of deficit court fees, if any.
39. File be consigned to record room.
Announced in open court on 09.12.2024.
(Sunil Beniwal)
Sunil Digitally signed
by Sunil beniwal District Judge-06(South),
beniwal Date: 2024.12.10
14:55:24 +0530 Saket Courts, New Delhi
CS DJ No.521/2017 page 19 of 19