Delhi District Court
Ankur Jain And Ors vs Manoj Jain And Anr on 25 August, 2023
BEFORE THE COURT OF SH. SURINDER S. RATHI, DISTRICT JUDGE
(COMM.)-03 SHAHDARA, KARKARDOOMA, DELHI.
CS Comm. No.538/2020
1.Ankur Jain S/o Sh. Ashok Kumar Jain H.No.25/58, Street No.15 Vishwas Nagar, Shahdara, S.O. East, Delhi-110032
2. Manish Parashar S/o Sh. M K Sharma R/o H.No.1938, DDA Janta Flats GTB Enclave, Nand Nagri, Mandoli Saboli, North East Delhi, Delhi-110093
3. Veeneet Verma (Deceased) through his LRs i. Ranjana Verma (Wife of Deceased) ii. Neeru Verma (Mother of Deceased) W/o Sh. Veenod Verma iii. Master Kavya Verma (Son of Deceased) Through his mother Ranjana Verma All defendants are R/o H.No.23/FM/2, Shalimar Garden Extension-2 Sahibabad.
.......Plaintiffs Vs.
1. Manoj Jain S/o Sh. Raj Kumar Jain R/o 43, Rishabh Vihar, Delhi-110092 CS Comm. No.538/2020 Page 1 of 37 Ankur Jain and Ors. Vs. Manoj Jain and Anr.
2. Suresh Chand Jain S/o Late Sh. Kashmiri Lal Jain R/o A-213, Ground Floor, Surajmal Vihar, Delhi-110092.
........Defendants
Date of Institution : 17.11.2020
Date of Final Arguments : 25.08.2023
Date of Judgment : 25.08.2023
Decision : Dismissed
Judgment
1. This suit is filed by three plaintiffs conjointly for recovery of Rs.4.60 lakhs along-with interest @ 18% per annum.
Plaintiffs' case
2. Case of the plaintiffs as per plaint and the evidence led is that all three of them are engaged in the business of property dealing and are working together in the name and style of "M/s Property Solution". The plaintiffs enjoyed good relations with the defendants for the last around 2-3 years and were facilitating sale-purchase of their properties as dealers. It is pleaded that defendant no. 1 and 2 are financers by profession and do business by investing in properties and thereafter selling them at higher rates.
3. Sometimes in first week of July 2019, defendant no. 1 approached the plaintiffs and asked them to arrange for a buyer of second floor of property no. 138 Jagriti Enclave, Delhi-110092. He apprised the plaintiffs that he holds an Agreement to Sell dated 11.07.2019, qua the said floor which was claimed to have been executed by its owner Surinder Jain. On receiving this request of the defendants, plaintiffs claims to have inspected the title documents and also visited the property. They apprised defendant no. 1 that defendant no. 2 is interested in purchasing of the same and in this regard CS Comm. No.538/2020 Page 2 of 37 Ankur Jain and Ors. Vs. Manoj Jain and Anr.
plaintiffs convened a meeting between defendant no. 1 and 2 at their office i.e. five days before the agreement. After this meeting was over, the deal was struck between defendant no. 1 and 2 and a fresh Agreement to Sell was executed between them on 12.07.2019. In this new Agreement to Sell, a clear reference of earlier Agreement to Sell dated 11.07.2019 in favour of defendant no. 1 was given. While executing the Agreement to Sell dated 12.07.2019 defendant no. 2 paid a sum of Rs.50 lakhs to Surinder Jain, the actual owner, directly instead of making payment to defendant no. 1. This payment was made through three cheques drawn on Oriental Bank of Commerce, Surajmal Vihar dated 07.07.2019. The final sale amount was agreed at Rs.2.30 Crores and after initial payment of Rs.50 lakhs the balance sale consideration was of Rs.1.80 Crore.
4. As per plaintiffs this balance of Rs.1.80 crore was supposed to be paid by defendant no. 2 within three and a half months i.e. on or by 31.10.2019 but the plaint is silent as to who shall be recipient of this balance money. It is pleaded that the physical possession of the property was agreed to be handed over to the defendant no. 2 post making of the entire payment. It was also agreed that original title documents will be handed over by defendant no. 1 to defendant no. 2 at the time of execution of final documents.
5. It is plaintiffs' case that they were able to materialize this deal by putting their best efforts. Reference is made to Clause 8 of the Agreement to Sell dated 12.07.2019 wherein it was mentioned that both the defendants shall pay service charge of 1% of the sale consideration and also that even if the deal does not mature the defaulting party shall pay 2% commission. It is case of the plaintiffs that defendant no. 2 buyer made another payment of Rs.20 lakhs on 05.09.2019 again directly to Surinder Jain and not to CS Comm. No.538/2020 Page 3 of 37 Ankur Jain and Ors. Vs. Manoj Jain and Anr.
defendant no. 1. He requested that physical possession of the property may be handed over to him so that renovation work may be carried out. Since both the sides and the actual owner had the cordial relations, it is pleaded that the keys of the property was handed over by defendant no. 1, purported seller under the Agreement to Sell, to defendant no. 2, the purported buyer.
6. On 25-26.10.2019 plaintiffs contacted defendant no. 2 buyer and asked him for registration of Sale deed on 31.10.2019 as agreed apart from seeking balance payment i.e. remaining amount after initial payment of Rs.70 lakhs. However, defendant no. 2 sought extension of one month time citing paucity of funds. This request of defendant no. 2 was agreed to by plaintiffs and defendant no. 1 but soon thereafter defendants stopped responding to calls made by the plaintiffs and on 28.11.2019 plaintiffs came to know that Agreement to Sell dated 12.07.2019 stood terminated. Plaintiffs tried to reach the defendants repeatedly but to no avail. It is pleaded that defendants' intention became malafide and they wanted to usurp and misappropriate the 2% commission in the deal. Having no other option left plaintiffs issued a joint legal notice to both the defendants on 05.12.2019. This notice was not responded to by defendant no. 1 but defendant no. 2 buyer sent a reply on 11.12.2019 thereby denying their liability of paying any commission to the plaintiffs. In this backdrop, plaintiffs approached Shahdara DLSA for Pre- Institution Mediation under Section 12A of Commercial Courts Act, 2015.
7. Upon service of the suit summons issued to the defendants they entered appearance on 22.01.2022. Separate detailed WS was filed on behalf of both the defendants. During the course of trial plaintiff no. 3 expired and application under Order 22 Rule 3 CPC for impleadment of his mother, widow and one child was allowed. Application under Order 32 Rule 2 CPC was also allowed.
CS Comm. No.538/2020 Page 4 of 37Ankur Jain and Ors. Vs. Manoj Jain and Anr.
8. In this backdrop, the suit in hand has been filed with following prayer:
Prayer:
i. Pass a money decree for a sum of Rs.4,60,000/- in favour of plaintiff and against the defendant;
ii. Award interest @18% per annum pendente lite and future on the suit amount till the date of realization.
iii. Award cost of the suit; and iv. Pass such other and further order as this Hon'ble Court deem fit and proper in the facts and circumstances of the present case.
Case of Defendant no. 1
9. In his WS Defendant no. 1 prayed for dismissal of the suit on the ground that it is barred under Section 69 (3) of Indian Partnership Act, 1932, in so far as "M/s Property Solution", a partnership firm of the plaintiffs is not registered under the Act. Another plea was raised that plaintiffs are not registered under Real Estate Regulation and Development Act, 2016 read with Delhi Real Estate Regulation and Development General Rules 2016 it is also pointed out that plaintiffs are not registered under Central Goods and Services Act 2015 as well. An objection was taken that plaintiff did not comply Section 12A of Commercial Courts Act 2015 which provides for mandatory pre-institution mediation.
10.An other objection was taken by defendant no. 1 that the suit is not covered under Section 2 (c) of Commercial Courts Act, 2015 which defines commercial disputes. It is pleaded that the documents relied to file this suit are only a photocopy and that the entire suit is based on false, frivolous and forged documentation and concocted pleas. It is further pleaded that the plaint deserves to be dismissed for want of cause of action and that the suit is barred by law and is a gross misuse of court's process. On merits defendant no. 1 has denied the plaintiffs' plea that they are working in the name of "M/s Property Solution" and are doing business of property dealers.
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It is mentioned that at no point of time defendant no. 1 interacted with plaintiff no. 2 and 3. It is further denied that defendants are financers and investors or that plaintiff provided brokerage services to him in August- September 2019. The defendant no. 1 has denied that he approached the plaintiffs for arranging buyer of the suit property. It is stated that the property in question was not registered in his name and there was no marketable title to the property. It is added that defendant no. 1 and 2 are residing in the same vicinity and belong to the same community and were known to each other and there was no occasion for intervention of the plaintiffs in the manner narrated in the plaint. As regards the plea of the plaintiffs that Rs.50 lakhs advance was paid qua the second Agreement to Sell dated 12.07.2019, as per defendant no. 1 no payment was received by him under his account. However, no reply is given to plaintiffs' plea that it was paid to Surinder Jain, original owner of the property. Likewise, defendant no. 1 has not denied that he had an Agreement to Sell dated 11.07.2019 in his favour from Surinder Jain. As regards the other Agreement to Sell dated 12.07.2019 it is stated that he does not have the original of the same.
11.As regards the plaintiff's plea that he is entitled to 2% commission at the rate of 1% each from defendant no. 1 and 2 it is pleaded that there was no contract between him and the plaintiffs to pay any such commission since no deal was finalized with their intervention. The factum of handing over of the keys of the suit property by defendant no. 1 to defendant no. 2 is not denied in the WS. Likewise, defendant no. 1 has not denied that plaintiff approached defendant no. 2 for execution of sale of suit property. As per defendant the plaintiffs have not specified as to which of the defendants committed the default in the claimed deal. There is no specific denial to the CS Comm. No.538/2020 Page 6 of 37 Ankur Jain and Ors. Vs. Manoj Jain and Anr.
plaintiffs' plea that they tried to contact defendant no. 1. There is no denial that plaintiffs issued legal notice to him on 05.12.2019. With these pleas dismissal of the suit is prayed.
12.In his affidavit of admission and denial he denied that agreement dated 12.07.2019 apart from other documents filed by plaintiffs.
Replication to WS of defendant no. 1
13.In their replication, plaintiffs reiterated their pleaded case and denied the averments of the defendant no. 1. It is pleaded that the suit is not barred under Section 69 of Partnership Act in so far as they are filing this suit jointly as co-plaintiffs. As regards the objection of non-registration under RERA Act, 2016, it is pointed out the RERA does not apply to deals like the one mentioned by the plaintiffs in the plaint. As regards the plea of non- compliance of Section 12A of Commercial Courts Act, 2015 it is pleaded that it was duly followed and that Non-Starter Report dated 07.03.2020 is already placed on record. It is pleaded initially that plaintiffs filed this suit as a non-commercial one but later on a commercial suit was filed. As regards the original Agreement to Sell dated 12.07.2019 it is pleaded that the original was in possession of defendant no. 2 but they subsequently entered into a MoU dated 23.11.2019 and at that time the original Agreement to Sell was torn by them. It is pleaded that in these circumstances the photocopy filed by him be treated as the admissible one. WS of Defendant no. 2
14.Defendant no. 2, the purported buyer, prayed for dismissal of the suit on the ground that plaintiffs have not calculated the correct specified value of the suit and has paid court fees only on Rs.4.60 lakhs. It is further pleaded that there is no privity of contract between the plaintiffs and defendant no. 2 as CS Comm. No.538/2020 Page 7 of 37 Ankur Jain and Ors. Vs. Manoj Jain and Anr.
plaintiffs are not party to Agreement dated 12.07.2019 and as such no suit can be filed by them on its basis. It is pleaded that the Agreement dated 12.07.2019 was not a registered document and was prepared on a stamp paper of Rs.100 and it was understamped and unregistered. A plea is taken that the plaintiffs had approached the Court with unclean hands and have suppressed material facts. It is pleaded that after defendant no. 2 paid Rs. 70 lakhs to defendant no.1 a dispute arose and police complaints were made. Finally, the deal did not fructify and MoU dated 23.11.2019 was executed. As per defendant no. 2 plaintiffs were aware of all these facts as they were party to the negotiations which ended up in termination of MoU dated 23.11.2019.
15.It is pleaded by defendant no. 2 that plaintiffs misrepresented the facts to him when they claimed that defendant no. 1 is owner of the property in question and that they will supply all the title documents for the suit property within three days of 12.07.2019. However, both the plaintiffs and defendant no. 1 failed to produce any such document. On account of this suppression of facts and misleading statements defendant no. 2 ended up paying Rs.70 lakhs. On account of this criminal act on their part defendant no. 2 returned the keys of the property to defendant no. 1 and got his entire payment of Rs.70 lakhs back followed by filing of the MoU dated 23.11.2019.
16.It is further pleaded that he was simply asked to append his signatures on the MoU dated 12.07.2019 and its contents were not explained to him in Hindi and he was made to understand that any commission would be payable only if the deal fructifies. Post execution of Agreement dated 12.07.2019 defendant no. 2 tried to get the property renovated when he found that the property is infested by termites and there was seepage at CS Comm. No.538/2020 Page 8 of 37 Ankur Jain and Ors. Vs. Manoj Jain and Anr.
several places. He submitted an estimate of Rs.10 lakhs with defendant no. 1 and was assured that he would be reimbursed for the same, which never happened. It is further case of the defendant no. 2 that even before agreement dated 12.07.2019 was executed plaintiffs took three cheques on 07.07.2019 worth Rs.50 lakhs from him as advance money and he was forced to pay another Rs.20 lakhs on 05.09.2019. Objections under RERA Act and Indian Partnership Act were also taken by him.
17.On merits it is pleaded that plaintiffs had no cause of action. Defendant denied that he is a financer and carries out investments in property. Defendant no. 2 admitted that the agreement dated 12.07.2019 was executed because he wanted to purchase property for his own usage and not for investment purpose. He expressed unawareness if original owner of the property Surinder jain executed Agreement to Sell dated 11.07.2019 in favour of defendant no. 1 Manoj Jain. He denied that he was shown title documents of the property. It is pleaded that plaintiffs played a fraud upon him as he was mislead that defendant no. 1 is owner of the suit property and was competent to sell the same to him. He denied that he appended his signatures on agreement to sell dated 12.07.2019 after he was satisfied about the title documents of the property. He rather said that he was never shown any agreement dated 11.07.2019. He added that the deal did not fructify primarily because neither the title documents nor claimed agreement dated 11.07.2019 was shown to him. He denied that the agreement dated 12.07.2019 was materialised only on account of efforts of plaintiffs. He denied that plaintiffs contacted him for making remaining payment and execution of sale deed dated 31.10.2019. He admitted receipt of legal notice dated 05.12.2019 which was replied on 11.12.2019. With these pleas he prayed for dismissal of the suit. No affidavit of admission and denial was CS Comm. No.538/2020 Page 9 of 37 Ankur Jain and Ors. Vs. Manoj Jain and Anr.
filed by defendant no. 2.
Replication to WS of defendant no. 2
18.Plaintiffs reiterated their pleaded case and denied the averments of the defendant no.2. It is mentioned that the plaintiffs were never taken into confidence when the MoU dated 23.11.2019 was executed whereby Agreement to Sell dated 12.07.2019 was scrapped.
19. Upon completion of pleadings following notional issues were identified by this Court on on 30.01.2023:
Issues:
i. Whether the suit is maintainable as per Section 69 of Partnership Act, 1932?
OPP ii. Whether the plaintiff is entitled to recover Rs.4.60 lakhs alongwith interest @18% per annum? OPP iii. Relief.
20.Before the identification of issues, Order 22 Rule 3 CPC application of plaintiff read with Order 22 Rule 9 CPC and Order 32 Rule 2 CPC application of plaintiffs was allowed as plaintiff no. 3 had died. Defendant's objection under Section 12A Commercial Courts Act, 2015 was also disposed of in favour of plaintiff. Objections under RERA Act, 2016 as taken by both the defendants were decided in favour of plaintiff. Defendant's another application under Section 12 (1) (c) of Commercial Courts Act, 2015 qua specified value of the suit was decided in favour of plaintiffs and against the defendants.
21.Plaintiffs' application under Order 13A CPC was dismissed. Preliminary objection of defendants qua plaintiffs being partners of an unregistered firm was decided in favour of plaintiffs for the purpose of holding of tried in the form presented under Order 1 Rule 1 CPC but the larger issue was kept CS Comm. No.538/2020 Page 10 of 37 Ankur Jain and Ors. Vs. Manoj Jain and Anr.
open and an issue under Section 69 Partnership Act, 1932 was dedicated in this regard.
22.Evidence in this case was ordered to be recorded before Ld. LC as per following protocol created by this Court under Order 18 Rule 4 CPC read with Order 15A Rule 6(l) CPC as applicable to Commercial suits. Evidence was recorded before Ld. LC Ms. Deepika Tomar, Advocate appointed by this Court for the sake of timely disposal of this case.
"Protocol for Recording of Evidence before Court Commissioner appointed by District Judge, Commercial Court, 2022"
Part - 1 Preliminary
1. Short title- This Protocol is titled "Protocol for Recording of Evidence before Court Commissioner appointed by Commercial Court 2022."
2. Statutory Provision- This protocol is prepared as per Order 18 Rule 4 CPC and Order 15A Rule 6(l) CPC as applicable to Commercial Court.
3. Court- Whenever the term 'Court' appears in this Protocol it should refer to Commercial Court as defined under Section 2(b) of Commercial Court Act 2015.
Part - 2 Preparation for Assignment
4. Recording of evidence in Commercial Cases- Recording of evidence in Commercial Cases may be carried out before the Court Commissioner.
Explanation: For reasons to be recorded, Court may retain the case for recording of evidence before the Court.
5. Appointment of Court Commissioner- As per the Protocol, on the first Case Management Hearing when the issues are identified, the Court may pass an order for appointment of Court Commissioner.
6. Copy of order be shared with parties and Court Commissioner- Copy of the order of framing of issues, appointment of Court Commissioner and the schedule of recording of evidence shall be supplied to the parties as well as the Court Commissioner.
Part - 3 Recording of Evidence
7. Filing of list of witnesses- Both sides shall file list of witnesses preferably within one week but not later than 15 days of identification of issues before the Court while sharing an advanced copy thereof with the opposite party.
CS Comm. No.538/2020 Page 11 of 37Ankur Jain and Ors. Vs. Manoj Jain and Anr.
8. Order of assignment of Case to the Court Commissioner- While assigning the case, following aspects shall be complied :
i. Schedule of evidence- Recording of evidence shall start within two weeks of identification of issues.
Evidence shall continue on day to day basis, till conclusion. Any alteration in schedule for recording of evidence, if needed, shall be decided by the Court Commissioner as per convenience of all concerned, as far as possible. However, entire evidence shall be concluded within Eight weeks of initiation. ii. Judicial File- Judicial file shall not be sent or summoned for the purpose of recording of evidence by the Court Commissioner.
iii. Examination-in-Chief- An advance copy of examination in chief by way of affidavit shall be supplied to opposite party preferably one week in advance. However, no adjournment shall be granted in case of non-supply of advance copy.
iv. Production of documents for cross-examination- In case the opposite side is desirous of production of any document by the witness or any other entity for the purpose of cross-examination, an application requesting the same shall be moved well in advance before the Court.
Part - 4 Duty of Court Commissioner
9. Recording of evidence by the Court Commissioner-
i. Place and Time- Court Commissioner shall record evidence either in Lawyer's chamber, or Judges/Bar Library, Court Room or any other public place within the Court Complex as mutually agreed by all concerned. Evidence shall be recorded between 10.00 AM to 5.00 PM. It can carry on beyond 5.00 PM as well in case both parties agree. It can be recorded even on a holiday if all the stakeholders are comfortable and agree to the same.
ii. Chronology of recording- Court Commissioner shall proceed to record the examination by first recording the deposition of litigating party before examining additional summoned witnesses. iii. Oath to witnesses- Court Commissioner shall administer oath to the witnesses under examination as a delegatee of the Court as per Oaths Act, 1969.
iv. Recording of evidence- The evidence shall be preferably typed on a computer but can also be recorded by hand neatly.
v. Time frame- Court Commissioner shall conclude the recording of evidence, as early as possible, but not later than eight weeks of assignment of a case. In case, for any reason the parties are unable to adhere to the time schedule, extension can be sought from the Court. vi. Comfortable sitting space- Witnesses and their Counsel shall be provided comfortable sitting space by the Court Commissioner.
vii. Exhibition of documents- Court Commissioner shall exhibit all the documents sought to be proved by a party on record. In case of any objection to exhibition of the documents by either side, the objection shall be recorded in some detail and left open with an assurance that mere marking of such exhibits will not be treated as conclusive proof thereof and that admissibility of such document shall be decided by the referral Court at final stage.
viii. Original documents to be retained by parties- Court Commissioner shall make an observation in the record of evidence of all original documents produced and shall sign the exhibits with an endorsement OSR (original seen and returned) wherever necessary. If a party has filed original documents along with pleadings in Court, the same can be taken back as per rules for the purpose of recording of evidence before the Court Commissioner. Original documents be submitted with the Court at the time of final arguments.
ix. Language- Recording of evidence shall preferably be carried out in English or Court language, as the case may be, unless requested by the parties otherwise. x. Adjournments- Once started, the cross-examination shall preferably concluded on the same day or continue on day-to-day basis. In case of any hardship viz. ill health etc. the case can be deferred but preferably for a day or two but not later than a week.
In case an evidence schedule is fixed and adjournment is sought by the opposite side, i.e the side other than who is leading evidence, without 24 hour advance notice.
CS Comm. No.538/2020 Page 12 of 37Ankur Jain and Ors. Vs. Manoj Jain and Anr.
Explanation: In case a witness scheduled to be examined or under examination is reported to be unwell or unavailable, the party leading the evidence shall produce the next witness in line in the list for recording of evidence.
xi. Recording of objections- All the objections raised during cross-examination/reexamination shall be recorded in the deposition under title objections and shall be left open for the decision of the Court at the stage of final arguments. Witness shall not refuse to answer the question asked. xii. Questions to be allowed- In case Court Commissioner finds any question not related to the fact and issue, he shall record his objection but shall allow the question to be put and witness must answer. xiii. No third person intervention- Court Commissioner shall ensure that the witness is not assisted by his Counsel or any other person while under examination in answering the questions. xiv. Recording of demeanour of witness- Court Commissioner shall record the demeanour of the witness wherever it is found pertinent and necessary for sharing with the Court. xv. Copy of evidence- All parties shall be provided uncertified electronic/hard copy of the evidence recorded, free of cost by Court Commissioner.
xvi. Safe keeping of original deposition- Court Commissioner shall keep the original depositions in his safe custody till such time they are filed in the Court in original upon completion of each witness individually.
xvii. Miscellaneous proceedings- Court Commissioner shall maintain a miscellaneous proceeding sheet for each day of work and shall submit it in the Court at the time of submission of final report. xviii. Hostile Witness- In case a witness is sought to be declared hostile, then Court Commissioner shall refer both the parties to Court at the earliest and the Court shall decide the issue within three days.
Part - 5 Miscellaneous
10. Summoning of Witness-
i. Summons from Court- In case a litigating party is desirous of summoning a person for deposition or production of documents, it shall obtain summons from the Court with an endorsement that such person shall appear before the address of Court Commissioner on scheduled date, time and place. ii. Diet Money- Diet money shall be paid to such witness by the party desirous of summoning as per rules.
11. Advisory to Court Commissioner- While recording the evidence on commission, the Court Commissioner shall ensure the following:
i. Impartial- Court Commissioner shall conduct himself in an impartial way and behave in an indiscriminate manner while recording of evidence. ii. Polite- Court Commissioner shall be polite with the witness and other stakeholders while recording of evidence.
iii. Confidentiality- Court Commissioner shall maintain confidentiality during the whole process. iv. Keeping professional distance- Court Commissioner shall not solicit professional work from the parties.
v. Integrity- Court Commissioner shall not accept remuneration or any favour in cash or kind from the parties over and above the honorarium fixed by the Court. vi. Non-judgmental- Court Commissioner shall not criticize the professional conduct of lawyers and litigating parties on their understanding of law.
vii. Punctuality- Court Commissioner shall adhere to time schedules and shall not make excuses like being engaged in some personal or Court work etc. CS Comm. No.538/2020 Page 13 of 37 Ankur Jain and Ors. Vs. Manoj Jain and Anr.
viii. Coordination- In case of any unforeseen circumstances warranting change of dates of hearing, for his own case or the request of other side, he shall apprise the other side in advance via phone call, email, SMS, Whatsapp Group etc..
ix. No third party sharing- Court Commissioner shall not allow the deposition to be inspected by any third party and shall not share a copy thereof with any stranger without permission of the Court. x. Inspection- Court Commissioner shall allow any party to inspect the recorded proceedings only in his presence.
xi. Recusal- In case either of the parties or Counsel for the parties are related or closely known to Court Commissioner, he/she shall recuse self from the case and inform the referral Court.
12. Remuneration of Court Commissioner -
i. Remuneration- In terms of Order 18 Rule 4 of the Code read with Order 15 Rule 2(l) and Rule 2(o) of the Code, Court Commissioner shall be paid remuneration for the work carried out. ii. Mode of payment- Such remuneration shall be paid by the party directly for the work carried out by way of cash, UPI, Bank Transfer, cheque or draft against due receipt. iii. Cost to parties- Each party shall individually bear the cost incurred in leading its evidence. iv. Fee to be paid- Remuneration fee for recording of evidence is fixed at Rs.10,000/- per witness.
Court Commissioner shall record the Evidence himself and in case the Stenographer services are taken it can either be arranged by a litigating party on its own cost or in case the same is arranged by Court Commissioner, then the actual cost of typing shall be reimbursed by the party to the Court Commissioner.
v. Litigation Cost- Expenditure incurred in recording of evidence shall be redeemable as cost of litigation at the end of the suit.
13. Judicial Intervention during recording of evidence-
i. Parties to cooperate- It is expected that both the sides will cooperate with Court Commissioner as well as with each other in recording of evidence and carry out proceedings in a cordial manner. ii. Dissolution of hindrances- In case of any conflict resulting into hindrance recording of evidence, it shall be resolved amicably by the parties at their own level with the active help of the Court Commissioner.
iii. Court intervention- However, in case of any unforeseen situation requiring judicial intervention, Court Commissioner shall fix date and time for joint appearance of both sides before the Court for removal of any such impediment.
14. Miscellaneous Applications-
i. Moving the application- In case either of the parties is desirous of moving any miscellaneous application viz. amending of pleadings, interim injunction etc. it shall share an advance copy with the opposite side and reply thereof, if any, shall be filed and shared within seven days. ii. Date of hearing- Upon receipt of reply, both the sides shall get the application fixed for disposal in the Court with the help of Reader of the Court and shall not wait till next date fixed for hearing. All such miscellaneous applications shall be registered, numbered and indexed separately. iii. Evidence not to be stalled- It is clarified that, unless Court Commissioner is of the view that the interim application moved by either of the parties is such that evidence cannot be recorded before its disposal, the recording of PE/DE shall continue unabatedly.
Plaintiff's Evidence CS Comm. No.538/2020 Page 14 of 37 Ankur Jain and Ors. Vs. Manoj Jain and Anr.
23.To prove their case plaintiffs examined plaintiff no. 1 PW1 Ankur Jain. Vide his affidavit Ex.PW1/A, he deposed on the lines of plaint and exhibited following documents:
i. Photocopy of agreement to sell dated 12.07.2019 is Ex.PW1/1; ii. Office Copy of notice dated 05.12.2019 is Ex.PW1/2; iii. Postal receipts are Ex.PW1/3 and Ex.PW1/4 iv. Copy of reply dated 11.12.2019 is Ex.PW1/5.
24.Objection qua putting an exhibit on agreement to sell dated 12.07.2019 as Ex.PW1/1 was taken on the ground that it is a photocopy and the original was not produced. Submissions in this regard heard.
25.It is argued by Ld. Counsel for plaintiffs that circumstance exists as required by Section 63 Evidence Act that as per affidavit of admission and denial filed by defendant no. 2 in support of WS it is specifically mentioned that the original copy of agreement to sell dated 12.07.2019 was destroyed. Even plaintiff's notice under Order 12 Rule 8 CPC for production of the original documents was not replied by either of the defendants and as such plaintiff has a right for adverse inference. Furthermore, it is pointed out in cross- examination of DW1 and DW2 that the original Agreement to Sell dated 12.07.2019 was destroyed at the time of execution of MoU dated 23.11.2019.
26.The observations of the trial court as to the petitioner/plaintiff having not applied for secondary evidence are also found to be enormous. I have recently in Prem Chandra Jain Vs. Sri Ram MANU/DE/2860/2009 deprecated the practice of filing applications for permission to lead secondary evidence. There is no basis in law for the said practice. The documents are permitted to be proved by primary or secondary evidence. If a party is desirous of proving the document by secondary evidence, it will have to, during the course of its evidence, lead evidence not only for laying CS Comm. No.538/2020 Page 15 of 37 Ankur Jain and Ors. Vs. Manoj Jain and Anr.
foundation for reception of secondary evidence but also prove the document by secondary evidence as prescribed. The court merely on an application is not competent to decide whether to allow secondary evidence or not. Moreover, the issues had not been framed in the suit and the question of the plaintiff seeking permission to lead secondary evidence did not arise."
27.It is concluded that plaintiff has established on record circumstances which permit him to lead secondary evidence qua this document. The said document Ex.PW1/1 dated 12.07.2019 contains the signatures of PW1 (plaintiff no.1) Ankur Jain. Objections of defendants in Ex.PW1/1 are answered in favour of plaintiffs and against the defendants.
28.In his cross-examination done on behalf of defendant no. 1, PW1 stated that they carry out business in the name and style of "M/s Property Solution"
jointly but also do business individually. There was no fixed ratio in which they used to divide the profits. He denied that they are working as a partnership firm. He stated that he had seen the Agreement to Sell of the property in question in favour of Defendant no. 1 Manoj Jain dated 11.07.2019 and said that it was an unregistered document executed by actual owner of the property Surinder Jain in favour of Defendant no. 1 Manoj Jain. He claimed that he had seen the entire chain of the property on 07.07.2019 when the first meeting was held by him. He added that he saw the document Agreement to Sell dated 11.07.2019 on 12.07.2019. He stated that the cheques were drawn by Defendant no. 2 directly in favour of Surinder Jain, property owner because Defendant no. 1 Manoj Jain did not have the title of the property. The possession of the property was handed over to Defendant no. 2 after payment of additional Rs.20 lakhs after initial payment of Rs.50 lakhs. He denied the suggestion that there was no deed between plaintiffs and Defendant no.1 or that Ex.PW1/1 was never CS Comm. No.538/2020 Page 16 of 37 Ankur Jain and Ors. Vs. Manoj Jain and Anr.
executed.
29.In his cross-examination done on behalf of Defendant no. 2 he accepted that the partnership firm was not registered and no separate agreement was entered into between plaintiffs and defendants for charging the commission or service charge. He accepted that he is not a party to Ex.PW1/1 and has only signed as a witness. He denied that there was no agreement to sell between Surinder Jain and Defendant no. 1 Manoj Jain as on 07.07.2019. He accepted the suggestion that meeting of 07.07.2019 was attended by Surinder Jain. He accepted that the cheques of Rs.50 lakhs were drawn by Defendant no. 2 in favour of actual owner Surinder Jain on 07.07.2019 itself and he denied that as on 07.07.2019 there was no agreement between Surinder Jain and Defendant no. 1. He accepted that he does not have copy of agreement between Surinder Jain and Defendant no. 1 and as such is unaware as to what was the sale consideration in that agreement. He expressed unawareness if Defendant no. 2 issued any notice to Defendant no. 1 on 23.10.2019 but claimed that the initial execution period of up to 31.10.2019 was extended by one month. He stated that he has not read the MoU dated 23.11.2019 between the two defendants whereby the agreement Ex.PW1/1 was cancelled. He expressed unawareness if after initial payment of Rs.50 lakhs, payment of Rs.20 lakhs was made by cheque or cash. PW1 claimed that he had visited the property twice after 12.07.2019 but could not give specific dates. He denied that Defendant no. 2 suffered a loss of interest on Rs.70 lakhs which he paid to Defendant no. 1 on the asking of PW1.
30.Plaintiffs did not examine any other witness.
31.In defence of his case Defendant no. 1 examined himself as D1W1 Manoj Jain. Vide affidavit Ex.DW1/A he deposed on the lines of his WS. It is CS Comm. No.538/2020 Page 17 of 37 Ankur Jain and Ors. Vs. Manoj Jain and Anr.
submitted by Ld. Counsel for the plaintiffs that certain portions of the affidavit are beyond pleadings. In his cross-examination done on behalf of Ld. Counsel for plaintiffs he accepted that he had entered into an agreement qua property in question with Defendant no. 2. He accepted that Defendant no. 2 had sent him a legal notice. He added that the original agreement entered by him with Defendant no. 2 (which is Ex.PW1/1 on record) was destroyed when the deal was cancelled. It was torn and burnt. He claimed that he had full authority to enter into Agreement to Sell with Defendant no. 2 under authority of Surinder Jain but the authority was oral. The money received in the deal was returned by Surinder Jain to Defendant no. 2. He accepted receiving Order 12 Rule 8 CPC notice of plaintiff. He denied that he is liable to pay 1% commission to the plaintiffs if the deal would have been successful or that in case the deal does not happen 2% commission was to be paid by the defaulting party.
32.Defendant no. 2 examined himself as D2W1 Suresh Chand Jain. Vide his affidavit Ex.D2W1/A he deposed on the lines of his WS.
33.In his cross-examination done on behalf of plaintiffs he stated that he had given three cheques cumulatively worth Rs.50 lakhs to Manoj Jain on 07.07.2019 since he was told that Manoj Jain has entered into an agreement to sell with actual property owner Surinder Jain. He inspected the property twice between 07.07.2019 and 12.07.2019 it was in dilapidated condition as there was enormous seepage and termite infestation. He had shown the property to plaintiff and Defendant no. 1 to show the damage. He claimed that he made a total payment of Rs.70 lakhs by cheques drawn in the name of Surinder Jain. He accepted that the original Agreement to Sell Ex.PW1/1 dated 12.07.2019 was handed over to him but it was subsequently destroyed. He claimed that no previous chain of documents was shown to CS Comm. No.538/2020 Page 18 of 37 Ankur Jain and Ors. Vs. Manoj Jain and Anr.
him at the time of execution of Ex.PW1/1 on 12.07.2019. He denied that there was no seepage or damage to the property or that he backed out from the deal as he had no funds. As per him the deal was not finalized as cost of its repair of Rs.10 lakhs was not paid by Defendant no. 1 Manoj Jain to him. He denied that he is liable to pay any commission to the plaintiff. He added that he was not shown the chain of the original title documents and the property was not in a condition to be bought.
34.As per him the arrangement of commission was not explained to him by plaintiffs and Defendant no. 1. As per him it is the plaintiff who is responsible for non-completion of the deal because he did misrepresentation about the condition of the property. The MoU for ending the deal was executed mutually between Defendant no. 2 and Defendant no. 1 and some members of the society but plaintiff Ankur Jain was not involved in the same.
35. I have heard arguments of Sh. Mukesh Kumar Aggarwal, Ld. Counsel for plaintiffs and Sh. Dinesh Kumar Gupta, Ld. Counsel for defendant no. 1 and Sh. Gorakhnath Yadav and Sh. Aslam Khan, Ld. Counsel for defendant no. 2. I have perused the case file carefully.
36.Now I shall dispose of individual notional issues framed in this case.
Discussion and Findings on Issues:
Issue No. 1:
i. Whether the suit is maintainable as per Section 69 of Partnership Act, 1932?
OPP
37.In the suit in hand an objection is taken by the defendants that this suit is hit by Section 69 of Partnership Act,1932 in so far as even though plaintiffs CS Comm. No.538/2020 Page 19 of 37 Ankur Jain and Ors. Vs. Manoj Jain and Anr.
Ankur Jain, Manish Parashar and late Veeneet Verma were working under a partnership firm namely unregistered partnership "M/s Property Solution". They have filed this suit which is hit by Section 69 (1) of Partnership Act. For ready reference the same is reproduced hereunder:
Section 69: Effect of Non-registration.-
"No suit to enforce a right arising from a contract or conferred by this Act shall be instituted in any Court by or on behalf of any person suing as a partner in a firm against the firm or any person alleged to be or to have been a partner in the firm unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm."
(Emphasis Supplied)
38.It is pleaded case of the plaintiffs that they are jointly running a business in the name and style of "M/s Property Solution" as mentioned in para 1 of the plaint. The plea of the suit being hit by Section 69 of Indian Partnership Act, 1932 has been vehemently opposed on the ground that it has not been filed by "M/s Property Solution" but has been filed by three co-plaintiffs in their individual capacity. The factum of "M/s Property Solution" being not registered under Indian Partnership Act, 1932 is not denied either in the pleadings or during the course of arguments by the plaintiffs.
39.Although this aspect was preliminarily heard by this Court on an application of the defendant and vide order dated 16.12.2022 the suit was allowed to continue by implication of Order 1 Rule 1 CPC which provides for filing of a common suit by co-plaintiffs. But still this larger issue as to whether this suit shall be treated by partners of a partnership firm and whether it is hit by Section 69 of Partnership Act was left open and the above issue was separately dedicated in this regard.
40.Once the plaintiff has conceded in the plaint that they are doing business jointly, it is evident that they are not denying that there is a partnership CS Comm. No.538/2020 Page 20 of 37 Ankur Jain and Ors. Vs. Manoj Jain and Anr.
between the three co-plaintiffs and that the name of the said partnership is "M/s Property Solution". The extract of para 1 of the plaint is reproduced hereunder for ready reference:
1. "That the plaintiffs are engaged in the business of property dealing and all the three plaintiffs are jointly running their business of property dealing in the name and style of "PROPERTY SOLUTION"...................
41.In order to appreciate the above statement, it has to be tested on the touchstone of the Partnership Act, 1932 as to what constitutes a partnership firm and that can there be a partnership firm without execution of a conventional written partnership deed, registered or otherwise.
42.The terms 'Partnership', 'Partner', 'Firm' and 'Firm Name' are defined in Section 4 of the Act. The same is reproduced as under:
Section 4: Definition of "partnership", "partner", "firm" and "firm name".-
"Partnership" is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Persons who have entered into partnership with one another are called individually "Partners" and collectively "a Firm", and the name under which their business is carried on is called the "Firm name".
43.Plain reading of the above statute shows that legally speaking "Partnership" is just a relation between the persons who share profit of business carried out together". The law in this regard is well-settled. In case titled Comptroller & Auditor General Vs. Kamlesh Vadilal Mehta, (2003) 2 SCC 349, Hon'ble Supreme Court has ruled, "Partnership firm is not a legal entity, like a company, it is a group of individual partners".
44.Likewise, in case titled N. Khadervali Saheb Vs. N. Gudu Saheb, (2003) 3 SCC 229 Hon'ble Supreme Court has ruled, CS Comm. No.538/2020 Page 21 of 37 Ankur Jain and Ors. Vs. Manoj Jain and Anr.
"Firm name is only a compendious name given to the partnership and the partners are real owners of assets and partnership firm is not legal entity".
45.In case titled Malabar Fisheries Co. Vs. I.T.Commissioner, Kerala, AIR 1980 SC 176 Hon'ble Supreme Court has ruled,' "A partnership firm is not a distinct legal entity and the partnership property belongs to all the partners constituting the firm".
46.In the celebrated case Mollow, March and Co. Vs. Court of Wards (1872,) LR 4 PC419 the privy counsel had the occasion to place a test to check whether a partnership exists or not in following words:
"Although a right to participation in profits is a strong test of partnership and there may be cases where upon a simple participation in profits there is a presumption, not of law, but of fact that there is a partnership, yet whether the relation of partnership does not exist must depend upon the whole contract between the parties, and the circumstance as act conclusive."
(Emphasis Supplied)
47.The statute Partnership Act itself provides under Section 6, Section 7 and Section 8 as to what shall be the mode of determining the existence of a partnership. The same are reproduced as under:
Section 6 Partnership Act: Mode of determining existence of partnership In determining whether a group of persons is or is not a firm, or whether a person is or is not a partner in a firm, regard shall be had to the real relation between the parties, as shown by all relevant facts taken together. Explanation 1.--The sharing of profits or of gross returns arising from property by persons holding a joint or common interest in that property does not of itself make such persons partners.
Explanation 2.--The receipt by a person of a share of the profits of a business, or of a payment contingent upon the earning of profits or varying with the profits earned by a business, does not of itself make him a partner with the persons carrying on the business;
and, in particular, the receipt of such share or payment--
(a) by a lender of money to persons engaged or about to engage in any business,
(b) by a servant or agent as remuneration,
(c) by the widow or child of a deceased partner, as annuity, or
(d) by a previous owner or part owner of the business, as consideration for the sale of the goodwill or share thereof, does not of itself make the receiver a CS Comm. No.538/2020 Page 22 of 37 Ankur Jain and Ors. Vs. Manoj Jain and Anr.
partner with the persons carrying on the business.
Section 7 Partnership Act: Partnership at Will Where no provision is made by contract between the partners for the duration of their partnership or for the determination of their partnership, the partnership is "partnership at will".
Section 8 Partnership Act: Partnership at Will A person may become a partner with another person in particular adventures or undertakings.
48.Conjoint reading of the above statutory provision shows that the final test for ascertaining whether a partnership firm exists or not is not a formal contract entered between the parties but the same is to be determined on the basis of will, intent and work culture of the persons viz. whether they intent to work as a cohesive group and share profits of the business carried out together.
49.It is a settled legal proposition that existence of a partnership is not dependent upon its constituents using the word "partner" for each other. Testing the case in hand in the light of above statutory provision and the guiding case law, the conjoint declaration of the plaintiffs in para 1 of the plaint duly supported by their individual affidavits and standalone statement of truth as per Appendix 1 of Commercial Courts Act, 2015. They have stated that they are "jointly running their business of property dealing" not only this they have even given a name to this joint business "M/s Property Solution". It is also evident from the plaintiff itself that from the text of the plaint and the prayer itself that they are conjointly demanding the suit amount of Rs.4.60 lakhs evidently so as to share one-third thereof for each plaintiff.
CS Comm. No.538/2020 Page 23 of 37Ankur Jain and Ors. Vs. Manoj Jain and Anr.
50.The fact that according to the pleadings the entire role which was played during the transactions detailed supra was played by plaintiff no. 1 Ankur Jain. While plaintiff no. 2 can be seen to be one of the witnesses in purported Agreement to Sell dated 12.07.2019, admittedly there is no role assigned to now deceased Vineet Verma plaintiff no. 3. The fact that the plaintiffs jointly are desirous of sharing the one-third of the claim amount sought from the defendants also goes along the definition of a 'Partnership Firm' discussed supra that under a partnership, the partners share the profits or proceeds irrespective of role played by each one of them.
51.As such I have no hesitation in concluding that the three co-plaintiffs are actually carrying out business as partners in the name and style of "M/s Property Solution" and not in their individual capacity. Hence collectively they are a 'Partnership Firm' as defined under Section 4 of the Act. Again in para 3 of the plaint it has been categorically stated that defendants approached the plaintiffs. The fact that the plaintiffs are not doing individual business is evident from the usage of the word "plaintiffs" which shows that whatever was done from the beginning till the end in the factual matrix of this case was done conjointly and not by the plaintiffs and not individually. Why Plaintiffs filed suit as individuals:
52.Now the question comes as to why the plaintiffs chose to file the suit individually when they were acting collectively and conjointly akin to a relationship of partnership firm. The answer is that being an unregistered partnership firm they were legally not competent to sue by virtue of Section 69 (1) of the Partnership Act.
53.Apparently this suit has been filed in individual capacities so as to circumvent and surpass the categorical legal prohibition on an unregistered CS Comm. No.538/2020 Page 24 of 37 Ankur Jain and Ors. Vs. Manoj Jain and Anr.
partnership firm to sue and file a suit under Section 9 of CPC. It is a settled legal principle and doctorine "that what is not permissible directly cannot be allowed to be done indirectly".
54.In case titled MTNL Vs. Telecom Regulatory Authority of India 2000 Latest Caselaw 26 Del dated 17.01.2000 Division Bench of Hon'ble Delhi High Court while dealing with Telecom matter wherein it was pleaded that the decision of Central Govt. in Telecom Arena cannot be overridden by the Authority either directly or indirectly ruled, "It is settled law that what cannot be done directly, cannot also be done indirectly. No authority is required for this proposition, but if any authority is required the authorities in the case of Jagir Singh Vs. Ranbir Singh and Another and the case of District Collector, Chittor and Others Vs. Chittoor District Groundunt Traders" Association, Chittoor and Others are sufficient in Jagir Singh's case the Supreme Court has held that what cannot be done directly, cannot be allowed to be done indirectly as that would be an evasion of the statute. The Supreme Court has held that it is a well known principle of law that the provisions of law cannot be evaded by shift or contrivance. The Supreme Court has held that in an indirect or circuitous manner the objects of a statute cannot be defeated. In the District Collector's case a circular was issued under the Commodities Act purporting to impose restriction on movement of edible oil and oil seeds and to impose compulsory levy for supply of oil to State Government at a fixed price. The Supreme Court held that there was no power to impose levies and what could not be done directly could not be done indirectly by using the regulatory powers given to that Authority."
55.In another case titled Supertech Limited Vs. Emerald Owners Resident Welfare Association 2021 Latest Caselaw 356 SC, Hon'ble Supreme Court ruled, " A judicial pronouncement cannot be subject to modification once the judgment has been pronounced, by filing a miscellaneous application. Filing of a miscellaneous application seeking modification/clarification of a judgment is not envisaged in law. Further, it is a settled legal principle that one cannot do indirectly what one cannot do directly ["Quando aliquid prohibetur ex directo, prohibetur et per obliquum.]"
(Emphasis Supplied)
56.Once the plaintiffs found that their partnership firm "M/s Property Solution"
was not competent to file this suit, they tried to circumvent the legal bar by filing it in individual capacities. If such suits are allowed to be entertained where parties circumvent the duly promulgated law, it can lead to legal CS Comm. No.538/2020 Page 25 of 37 Ankur Jain and Ors. Vs. Manoj Jain and Anr.
chaos and anarchy. As such I have no hesitation in concluding that this suit is squarely hit by Section 69 (1) of Partnership Act, 1932 and is not maintainable in the form presented. This issue is answered against the plaintiffs and in favour of defendants.Issue No. 2
ii. Whether the plaintiff is entitled to recover Rs.4.60 lakhs alongwith interest @18% per annum? OPP
57.Although the fate of the suit stands sealed with the decision of above issue on the maintainability of frame of suit but it would be appropriate and in the interest of justice if the second issue is also dealt with on merits and in detail. As discussed supra, it is evident that plaintiffs and defendants are not strangers of each other. It is admitted case of both the sides that plaintiffs are property dealers and they work together as "M/s Property Solution". Defendant no. 1 is purported to have contacted the plaintiffs for sale of property in question i.e. Second floor, Plot No. 138 Jagriti Enclave, Delhi- 110092. While claiming to be holder of an Agreement to Sell dated 11.07.2019 purportedly executed by its original owner Surinder Jain, it is also evident from the record that defendant no. 2 was contacted and another agreement to sell was purportedly executed dated 12.07.2019 which is claimed to have been executed by defendant no. 1 in favour of defendant no.
2. It is this agreement to sell and the terms contained therein, specially clause no. 8, which is sought to be specifically enforced by three plaintiffs. This clause is to be reproduced hereunder:
Clause No.8 of Agreement to Sell dated 12.07.2019:
"That it is mutually decided in between both the parties that this deal has been materialised through the best efforts of Mr. Ankur Jain, Mr. Manish Parashar, Vineet Verma and for the said each party shall pay the service charges @1% of the total sale consideration to Mr. Ankur Jain, Mr. Manish Parashar and Vineet Verma and if the deal will not mature in that case the defaulting party shall pay the both side commission to the above mentioned dealers i.e. 2%.CS Comm. No.538/2020 Page 26 of 37
Ankur Jain and Ors. Vs. Manoj Jain and Anr.
58.Record reveals that only a photocopy of this agreement to sell/contract for sale is available on record. This Court had allowed proving of the same by way of secondary evidence in so far as it had come on record in the pleadings of the defendants that the original of the same was destroyed by them after an MoU dated 23.11.2019 was entered between defendant no. 1 and 2 thereby the contract for sale dated 12.07.2019 nullified and brought to an end.
59.In so far as plaintiffs are seeking specific performance of the above referred clause of Agreement to Sell i.e. Ex.PW1/1 contained in agreement dated 12.07.2019, this Court will have to test the above agreement on the touchstone of legal admissibility as per combined application of Contract Act 1872 and Indian Evidence Act, 1872. The need for a strict scrutiny specially arises also from the fact that even though the deal which the plaintiffs claims to have jointly broken did not mature, admittedly no sale deed was executed by defendant no. 1 in favour of defendant no.2. It is interesting to observe that, plaintiffs who claim that they are property dealers and are desirous of seeking on commission without apparently delivering the end result i.e. a successful deal of sale of an immovable property. Per contra, the stand taken by Ld. Counsel for plaintiffs is that their role ended with execution of the Agreement to Sell Ex.PW1/1 and that their agreed commission of 1% from both the sides stood due and payable irrespective of the fact that the final deal did not mature. Duty of Broker/Property Dealer
60.Evidently the law which governs sale of an immovable property in India is the Transfer of Property Act, 1882. The term broker or a property dealer have not been defined or described in the same. Although relatively new CS Comm. No.538/2020 Page 27 of 37 Ankur Jain and Ors. Vs. Manoj Jain and Anr.
legislation in the form of Real Estate Regulation and Development Act, 2016 popularly known as RERA Act, 2016 does contain details of duties of property brokers and provides for their registration. However, this statute is applicable only on properties and details which are registered under RERA Act, 2016. This aspect has already been dealt with by this Court under Order dated 16.12.2022. For ready reference Section 2 (zm) and (zn) and (zj), RERA, 2016 is reproduced hereunder:
Section 2 (zm):
"Real estate Agent means any person, who negotiates or acts on behalf of one person in a transaction of transfer of his plot, apartment or building, as the case may be, in a real estate project, by way of sale, with another person or transfer of plot, apartment or building, as the case may be, of any other person to him and receives remuneration or fees or any other charges for his services whether as a commission or otherwise and includes a person who introduces, through any medium, prospective buyers and sellers to each other for negotiation for sale or purchase of plot, apartment or building as the case may be and includes property dealers, brokers, middlemen by whatever name called."
"Real Estate Project means the development of a building or a building consisting of apartments, or converting an existing building or a part thereof into apartments, or the development of land into plots or apartments, as the case may be, for the purpose of selling all or some of the said apartments or plots or building, as the case may be, and includes the common areas, the development works, all improvements and structures thereon and all easement, right and appurtenances belonging thereto."
"Project means the Real Estate Project as defined in Clause 2 (zn)."
61.On the aspect of plaintiffs' right to seek commission irrespective of the fact that the deal did not mature he has relied on case titled Roopji and Sons Vs. Dyer Meaken and Co. Ltd. AIR 1930 All 545. In the instant case the plaintiff offered services to the defendant as a commission agent for sale of a bungalow in Meerut. Even though the plaintiffs introduced the buyer to the defendant, the deal was executed directly between the two on the insistence of the buyer without further contribution from the defendant.
CS Comm. No.538/2020 Page 28 of 37Ankur Jain and Ors. Vs. Manoj Jain and Anr.
When the plaintiff was denied his commission he filed the suit. While dealing with the matter Hon'ble High Court discussed,
27."Generally speaking, the broker "is the middleman or intermediate negotiator between the parties: "Story's Law of Agency, p.25. But his exact position may be defined or limited by the terms of the contract. His right to remuneration for any work done by him is dependent upon the terms of the contract and upon his fulfillment thereof. In order that the agent be entitled to receive remuneration from the principal for any work done, it is not absolutely necessary in each case, that the whole of the transaction should be done to a finish by him or through his intervention. Indeed the authorities have gone to the length of holding that the agent may in a proper case be entitled to receive remuneration even though the principal has got no benefit. Where the remuneration of an agent is payable upon the performance by him of a definite undertaking, he is entitled to be paid that remuneration as soon as he has substantially done what he undertook to do, even if the principal acquires no benefit from his services."
33. It may be conceded that the mere fact of introduction may not be conclusive. But where the introduction is the foundation on which the negotiation proceeded, and the negotiation eventually ripened into sale, the introducer is entitled to claim the fruit of his labour. The real test is whether the vendor and the purchaser were brought together by the agent acting in the matter either for one or the other or for both. If the ultimate sale could not have taken place but for the introduction made by the agent, the latter is entitled to get his brokerage."
62.Perusal of the cited case law shows that the plaintiff was allowed his brokerage because his introduction of the parties was instrumental as the deal matured. Unlike the case in hand where the plaintiffs left the deal midway and the deal never fell through.
63.Another case relied by the plaintiff is Saraswati Devi Vs. Moti Lal AIR 1982 Raj 108. In this case Hon'ble High Court observed:
9."In my opinion in case of estate agent, who is employed to find a purhcaser "ordinarily the commission is payable out of the purchase price when the sale takes place." If in the given case the agent seeks to depart from that term, he must make it perfectly plain to his client and for that a strong case is required to show that the event on the happening of which commission was payable was to find a purchaser ready and willing."
64.This judgment is rather working against the case of case of the plaintiffs in so far as it makes a very striking observation that any state agent would ordinarily get commissioned when the actually sales takes place.
CS Comm. No.538/2020 Page 29 of 37Ankur Jain and Ors. Vs. Manoj Jain and Anr.
65.Another case relied by the plaintiff is Vasanji Moolji Vs. Karsondas Tejpal, (1928) 30 BOMLR 486. In the cited case Hon'ble High Court (discussing English Laws) concluded that a commission agent is entitled to his commission only after he has executed all that he was required to do so while his services were engaged. In the case in hand plaintiffs have categorically conceded that there was no written contract between them and defendant no. 1 and 2 as to what kind of services would be provided by them or that defendant no. 1 has engaged the services of the plaintiff only up to the stage of agreement to sell and not till conclusion of the sale deed.
66.Per contra defendant has relied on case titled K J Arora Vs. M/s Cama Automobiles Pvt. Ltd., 2010 Latest Caselaw 204 Del. This judgment was passed in an original suit by Hon'ble Delhi High Court wherein the above cited judgments of Ld. Counsel for plaintiff were also discussed. In a similar circumstance Hon'ble High Court ruled, "It is only on the finalisation of the deal with anyone of the said brokers/commission agents that the said person becomes entitled to his finder's fee/commission. There is no doubt to the proposition that the finder's fee/commission becomes payable to the broker once it is recognised that it was through his effective services that the transaction had concluded."
67.Appreciating the evidence of this case in the light of above binding judgments of Hon'ble High Court of Delhi it is evident that since no sale deed was got executed by the plaintiffs between defendant no. 1 and 2 the quesion of paying commission to them does not arise. More so when plaintiffs have conceded that there was no prior agreement or understanding between them and defendant no. 1 or for that matter also defendant no.2 that plaintiffs would get 1% commission each from both the sides or that even if no sale deed matures one party will pay 2%.
CS Comm. No.538/2020 Page 30 of 37Ankur Jain and Ors. Vs. Manoj Jain and Anr.
68.On this aspect Ld. Counsel for defendant has stressed on the language contained in clause 2 of Agreement to Sell Ex.PW1/1 so as to impress that this clause in its own wisdom is sufficient to fasten deficient liability to pay commission on defendant no. 1 and 2 because both the defendants willfully agreed to the same.
69.In view of this submission there is a need to scrutinise and appreciate the agreement to sell Ex.PW1/1 on the touchstone of Indian Contract Act, 1872. In this regard it has been vehemently argued by Ld. Counsel for defendant no. 2 that since it was he who was supposed to buy this property in question, he was misled, deceived and was defrauded by the plaintiffs as well as defendant no. 1 when he was told that defendant no. 1 is Agreement to Sell holder of the property in question. He has drawn attention of this Court to para 5 of Agreement to Sell Ex.PW1/1 which reads as, "Whereas the FIRST PARTY is the Agreement Holder vide Agreement to Sell and Purchase, dated 11th July 2019 executed between SHRI SURENDER JAIN son of Late Shri Suraj prakash Jain (Owner) and FIRST PARTY in respect of SECOND FLOOR UPTO CEILING LEVEL ONLY WITHOUT ROOF/TERRACE RIGHTS OF THE FREEHOLD PROPERTY BEARING NO.138, SITUATED AT JAGRITI ENCLAVE, DELHI-110092, area measuring 151.19 sq. mtrs., i.e. 180.83 sq. yards., alongwith 1/4th share in stilt parking floor, (hereinafter called the 'said property').
70.It is pleaded that the plaintiffs and the defendant no.1 have failed to place on record any Agreement to Sell dated 11.07.2019 purportedly executed by actual owner of the property Surinder Jain in favour of defendant no. 1 Manoj Jain. It is pleaded that the sheer fact that the agreement sought to be specifically enforced by the plaintiffs is based on actual concealment of facts, it is squarely hit by Section 17 to Section 19 of Indian Contract Act 1872.
Section 17 Contract Act : 'Fraud' defined.-
"Fraud" means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agents, with intent to deceive CS Comm. No.538/2020 Page 31 of 37 Ankur Jain and Ors. Vs. Manoj Jain and Anr.
another party thereto his agent, or to induce him to enter into the contract;
1. The suggestion as a fact, of that which is not true, by one who does not believe it to be true;
2. The active concealment of a fact by one having knowledge or belief of the fact;
3. A promise made without any intention of performing it;
4. Any other act fitted to deceive;
5. Any such act or omission as the law specially declares to be fraudulent.
Explanation.--Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak2, or unless his silence, is, in itself, equivalent to speech.
Section 18 Contract Act: "Misrepresentation" defined.- "Misrepresentation" means and includes -
1. The positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true;
2. Any breach of duty which, without an intent to deceive, gains an advantage to the person committing it, or anyone claiming under him; by misleading another to his prejudice, or to the prejudice of any one claiming under him;
3. Causing, however innocently, a party to an agreement, to make a mistake as to the substance of the thing which is subject of the agreement.
Section 19 Contract Act: Voidability of agreements without free consent.-
When consent to an agreement is caused by coercion, 1fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. A party to contract, whose consent was caused by fraud or misrepresentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put on the position in which he would have been if the representations made had been true.
Exception : If such consent was caused by misrepresentation or by silence, fraudulent within the meaning of section 17, the contract, nevertheless, is not voidable, if the party whose consent was so caused had the means of discovering the truth with ordinary diligence.
Explanation: A fraud or misrepresentation which did not cause the consent to a contract of the party on whom such fraud was practised, or to whom such misrepresentation was made, does not render a contract voidable.CS Comm. No.538/2020 Page 32 of 37
Ankur Jain and Ors. Vs. Manoj Jain and Anr.
71.With the aid of above two statutory provisions defendant no. 2 has impressed upon the Court that his consent to become a buyer of the property in question is based on fraud and misrepresentation of facts and such an agreement is voidable. It is only because of the above deceivement that the defendants entered into a MoU for nullifying the agreement to sell dated 12.07.2019 Ex.PW1/1. Attention of this Court is also drawn to Section 2g and 2j of Contract Act by Ld. Counsel for defendant no. 2 which are reproduced hereunder:
Section 2g:
"An agreement not enforceable by law is said to be void;"
Section 2j:
"A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable;".
72.Another important aspect of the matter is that on the one hand plaintiff claims that they are established property dealers of the area but they have neither pleaded nor placed on record either the claimed Agreement to Sell dated 11.07.2019 nor the complete set of chain of title documents. It is improbable that a property dealer would go ahead with the deal without cross-checking the credentials and title of the claimed seller. Non-placing of record of any such document calls for drawing of adverse inference under Section 114 (g) of Evidence Act. The same is reproduced as under:
Section 114 Evidence Act: Court may presume existence of certain facts Illustration The Court may presume-
(g) That evidence which could be and is not produced would, if produced, be unfavourable to the person who withholds it;
73.Another important aspect is that although it is pleaded in Agreement to Sell Ex.PW1/1 that defendant no.1 Manoj Jain is an agreement holder duly CS Comm. No.538/2020 Page 33 of 37 Ankur Jain and Ors. Vs. Manoj Jain and Anr.
executed by actual owner Surinder Jain but in his cross-examination carried out by Ld. Counsel for plaintiff on 20.04.2023 on initial page 14 defendant Manoj Jain was directed as to what authority he entered into the agreement to sell Ex.PW1/1 with defendant no. 1 he replied, "I had the authority to enter into the above said agreement to sell with defendant no. 2 as the said authority was given by Surinder Kumar Jain who happens to be my good friend and lives in the adjoining property 42, Rishabh Vihar, Delhi. No authority was given to him in writing by Surinder Kumar Join vol. The authority/instructions were oral". The above statement strikes to the root of agreement sought to be enfoced by plaintiff Ex.PW1/1 in so far as it clinches the fact that a factually incorrect averment has been made in the same by the plaintiffs and defendant no. 1 in a collusive manner. It is further argued that the Agreement to Sell Ex.PW1/1 is also hit by Section 20 of the Contract Act. For ready reference Section 20 and Section 29 of Contract Act is reproduced hereunder:
Section 20 Contract Act: Agreement void where both parties are under mistake as a matter of fact.-
Where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement the agreement is void.
Explanation.--An erroneous opinion as to the value of the thing which forms the subject- matter of the agreement, is not to be deemed a mistake as to a matter of fact.
Section 29 Contract Act: Agreements void for uncertainty.- Agreements, the meaning of which is not certain, or capable of being made certain, are void.
74.Appreciating the facts in the light of the statutory provision it is evident that Ex.PW1/1 is void on account of fraud, misrepresentation but also on account of its inherent uncertainty.
75.The plea of Ld. Counsel for plaintiff that he can explain why wrong facts were incorporated is hit by Section 93 of Evidence Act. For ready reference CS Comm. No.538/2020 Page 34 of 37 Ankur Jain and Ors. Vs. Manoj Jain and Anr.
the same is reproduced as under:
Section 93 Evidence Act: Exclusion of evidence to explain or amend ambiguous document.-
"When the language used in a document is, on its face, ambiguous or defective, evidence may not be given of facts which would show its meaning or supply its defects."
76.Once it is found that there is concealment, falsity and misrepresentation of true facts and apparently a fraud was played upon the defendant no. 2, evidently with active connivance between plaintiffs and defendant no.1, the question of allowing the plaintiffs to reap fruits of such a fraudulent act which resulted in execution of Agreement to Sell Ex.PW1/1 does not arise.
77.The clause 8 of this agreement is also uncertain and ambiguous in so far as it visualises a situation wherein the term of the contract are also not clear i.e. the provision that in case the deal do not mature, the defaulting party shall pay the commission of 2% to the plaintiffs. The ambiguity as to who would be the defaulting party would continue to marr the agreement, apart from other serious flaws. Furthermore, the fact that defendant no. 1 had absolutely no authority to execute Agreement to Sell Ex.PW1/1 is also evident from the fact that the payments of Rs.70 lakhs made by defendant no.2 Suresh Chand Jain was so made to actually owner Surinder Jain and not to defendant no. 1 Manoj Jain as per Ex.PW1/1.
78.The facts as pleaded in this case are not true and clever drafting has been carried out and there is much more than what meets the eyes. It is highly improbable that Ex.PW1/1 Agreement to Sell was executed on 12.07.2019 but the payments of Rs.50,00,000/- was taken from defendant no. 2 by way of cheque on 07.07.2019 i.e. five days prior to execution of this agreement and 4 days prior to claimed Agreement to Sell dated 11.07.2019. This is a classic example of putting a cart before the horse and then trying to take it CS Comm. No.538/2020 Page 35 of 37 Ankur Jain and Ors. Vs. Manoj Jain and Anr.
forward for making unauthorized money by way of filing of the suit in hand.
79.I have no hesitation in concluding that plaintiffs have miserably failed to prove this case evidently plaintiffs have approached this Court with unclean hands. As such this issue is answered against the plaintiffs and defendant no. 1 and in favour of defendant no. 2.
80.In Morgan Stanley Mutual Fund Vs. Kartick Das, 1994 Latest Caselaw 336 SC, Hon'ble SC dealt with the issue and with intention to:
"Discourage speculative and vexatious litigation and judicial adventurism. "There is an increasing tendency on the part of the litigants to indulge in speculative and vexatious litigation and adventurism which the fora seem readily to oblige. We think such a tendency should be curbed. Having regard to the frivolous nature of the complaint, we think it is a fit case for award of costs, more so, when the appellant has suffered heavily. Therefore, we award costs of Rs.25,000/- in favour of the appellant."
81.In case titled as State of Karnataka Vs. All India Manufacturers Organisation, 2006 Latest Caselaw 217 SC, a challenge was laid to a common judgment of the High Court of Karnataka disposing of three public interest litigations whereby a direction was issued to the State of Karnataka to continue to implement a certain project known as the "Bangalore-Mysore Infrastructure Corridor Project". While dismissing the appeals, the Apex Court held that there was no merit in them. It was further directed that:-
"Considering the frivolous argument and the mala fides with which the State of Karnataka and its instrumentalities have conducted this litigation before the High Court and us, it shall pay Nandi costs quantified at Rs.5,00,000/-, within a period of four weeks of this order".
82.In Kishore Samrite Vs. The State of UP, 2012 Latest Caselaw 606 SC, Hon'ble Supreme Court expounded that:
"As and when the Courts found that a litigating party is abusing the Court process and had approached the Court with unclean hands without disclosing complete facts, they shall be burdened with exemplary and deterrent cost. In the cited case while observing that the petitioner have misused the judicial process, a cost of Rs.5 lacs was imposed."CS Comm. No.538/2020 Page 36 of 37
Ankur Jain and Ors. Vs. Manoj Jain and Anr.
83.On account of apparent active connivance between the three plaintiffs and defendant no. 1, a cost of Rs.25,000/- each is imposed on plaintiff no. 1, plaintiff no. 2, plaintiff no. 3 through the LRs and defendant no. 1 which shall be paid to defendant no. 2 within four weeks.
84.Accordingly, the suit of the plaintiffs is dismissed with cost. File be consigned to Record Room after due compliance.
(SURINDER S. RATHI) District Judge, Commercial Court -03 Shahdara District, KKD Delhi/25.08.2023 CS Comm. No.538/2020 Page 37 of 37 Ankur Jain and Ors. Vs. Manoj Jain and Anr.