Karnataka High Court
M/S.Wellesley Corporation Limited vs Smt. Kalavathi on 8 July, 2014
Bench: K.L.Manjunath, Ravi Malimath
1
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
ON THE 8TH DAY OF JULY 2014
BEFORE
THE HON'BLE MR.JUSTICE K.L.MANJUNATH
AND
THE HON'BLE MR.JUSTICE RAVI MALIMATH
REGULAR FIRST APPEAL NO.166 OF 2011
BETWEEN:
1. *M/s.Wellesley Corporation Limited
No.36, Insat Nagar, Sector -10
Indira Nagar, Lucknow - 226 016
Uttar Pradesh, India
*Amendment carried out as per order dated
8.6.2014.
Earlier Known as:
Usha Housing Development Company Ltd
A Company incorporated under the
Indian Companies Act, 1956 and having
Its Registered Office at
B-704, Sterling Apartment
9, University Road
Lucknow, U.P
2
Represented by Authorised Signatory.
2. M/s.Windsor Infrastructure Ltd.,
A Company duly incorporated under
The provision of the Companies Act, 1956
Having its registered office at
B-206, Ansal Chambers-I,
Bhikaji Cama Place, New Delhi - 110 066,
Represented by its duly authorized Director,
Mr.Raghavendra Rao R
Appellant No.2 is deleted as per Court order
dated 3.12.2013. ...APPELLANTS
(By Sri Jayakumar S.Patil, Senior Advocate for Sri Ajay
R.Aneppanavar, Advocate)
AND:
1. Smt.Kalavathi
D/o Sri P.Channakeshavalu Naidu
Aged Major,
Residing at No.61
100 Feet Road, HAL II Stage,
Bangalore - 560 038.
2. Sri Y.Rajendra
S/o Sri Y.Dasanna
Aged Major,
Residing at No.55, I Stage,
Indirangar, Bangalore - 560 038.
3. Smt.H.V.Kalpana
D/o Sri H.D.Viswanath
Aged Major,
Residing at No.61
100 Feet Road, HAL II Stage,
Bangalore - 560 038.
3
4. Sri Y.V.Prasad
S/o Sri Y.Dasanna
Aged Major,
Residing at No.12,
Old Madras Road,
Indiranagar,
Bangalore - 560 038.
5. Sri Y.R.Anil
S/o Sri Y.Rajendra
Aged Major,
Residing at No.61
100 Feet Road, HAL II Stage,
Bangalore - 560 038.
6. Sri Y.R.Sunil
S/o Sri Y.Rajendra
Aged Major,
Residing at No.8, 18th A Cross,
Lakshmipuram Main Road,
Ulsoor, Bangalore - 560 038. ...RESPONDENTS
(By Sri Ashok Haranahalli, Senior Advocate for Sri
Vinayaka B & Sri Sandeep Patil, Advocate for C/R, R3-R6)
*****
This RFA is filed under Section 96 read with Order
41, Rule 1, R/w Order 43, Rule 1-A(1) of CPC, against the
judgment and decree dated 29.11.2010 passed in
O.S.No.1025/2004 on the file of the Prl. Senior Civil Judge,
Bangalore Rural District, Bangalore, decreeing the suit for
the specific performance.
This RFA having been heard and reserved for
judgment on 30.06.2014 coming on this day, Ravi
Malimath J., pronounced the following:-
4
JUDGMENT
Aggrieved by the Judgment & decree dated 29-1-2010 passed by the Principal Senior Civil Judge, Bangalore Rural District, Bangalore, in O.S.No.1025/2004 partly decreeing the suit of the plaintiff for a refund of 22,00,000/- along with the interest at 10%, from the date of termination of contract till the date of deposit, the plaintiff has filed the present appeal.
2. The parties would be referred to as per their rank before the trial court.
The plaint averments are that the plaintiff is a Company incorporated under the provisions of the Indian Companies Act, 1956. That the defendants approached the plaintiff claiming to be the owners of the suit schedule property. After various negotiations the plaintiff and the defendants entered into an agreement dated 26-8-1999 for a joint development of the immoveable property, on various terms and conditions. The total consideration was 5 fixed at Rs.45,00,000/-. It is contended that the plaintiff paid a sum of Rs.12,00,000/- prior to the date of the agreement, a sum of Rs.3,00,000/- in terms of the agreement towards the refundable advance and a sum of Rs.7,00,000/- towards non-refundable amount as on the date of the agreement. That further amounts had to be paid after approval by the Income-Tax department and another sum within 6 months after commencement of the construction. It was also narrated in the agreement that if the amounts were not paid they are liable to pay interest at 24% per annum. That if the defendants did not refund the amount then the plaintiff is entitled to retain the constructed areas. The terms and conditions were decided upon. In the development plan prepared by the BDA a road was shown passing through a portion of the schedule property which was being used by other people also. The defendants undertook that the said road would be removed and repositioned, so as not to affect the unity of the holding. A sum of Rs.22,00,000/- was handed over by 6 the plaintiff. On receipt of Rs.22,00,000/-, the defendants delivered possession of the suit schedule property to the plaintiff. The defendants executed a Power of Attorney in favour of the Managing Director of the plaintiff Company on 26-8-1999. It was also stated in the agreement that in the event the agreements be terminated, the defendants to repay the amount paid along with interest at 24% per annum. That after the receipt of Rs.22,00,000/- and execution of the Power of Attorney it was incumbent on the defendants to fulfill their part of the obligations. However, they failed to do so. The defendants began to state that they were getting other offers and they are willing to give the property to other builders and therefore called upon the plaintiff to commence the construction. The plaintiff replied asking the defendants to remove the road which was in existence in the property. The defendants replied. However, the road was not removed. The plaintiff commenced the plan approval process and made an application to the BDA. The BDA objected to the 7 same. The plaintiff insisted that it was the defendants obligation to rectify the objections raised by the BDA. The defendants by the letter dated 10-7-2002 requested the plaintiff to approach the City Municipal Council for obtaining the sanctioned plan. The plaintiff replied on the ground that the defendants had committed a default and it was the defendants who had not complied with the terms of the agreement. They also stated that a sum of Rs.22,00,000/-paid to the defendants be returned. Various correspondence took place between them. By the letter dated 29-4-2004, the defendants Advocate wrote a letter that the defendants would determine the agreement. They further contended that the plaintiff had incurred expenditure for engaging the architect, preparing plans. That the defendants had received valuable consideration in respect of the agreement. In terms of Section 53A of the Transfer of Property Act , the plaintiff is in a position of a true owner. That the defendants are estopped from challenging the rights of the plaintiff and cannot cancel the 8 agreement. The plaintiff contended that they are ready and willing to perform their part of the contract. In the circumstances the plaintiff filed the instant suit seeking for a decree against the defendants to perform the agreement dated 28-6-1999 and to do all the acts enjoined there upon or in the alternate to make a decree for refund in a sum of Rs.64,03,746/- along with interest at the rate of 24% per annum from the date of the suit till the date of recovery. On service of summons the defendants entered appearance and denied the suit averments. They contended that the plaintiff has given up the project in violation to the terms of the joint development agreement. That in terms of the notice dated 20-11-2003 the plaintiff had made it clear that they are interested in their money and called upon the defendants to refund the advance of Rs.22,00,000/- with interest. That the defendants have offered the entire money received from the plaintiff and have also obtained demand drafts dated 17-12-2003 for a total sum of Rs. 22,00,000/-and requested the plaintiff to 9 receive the amount. The plaintiff has not received the amount only on the ground that the interest at the rate of 24% also to be paid.
3. On the basis of the pleadings the trial court framed the following Issues:-
"1. Does the plaintiff proves that plaintiff has been always ready and willing to perform part of the contract?
2. Whether the plaintiff further proves that the non-performance of the contract is at the fault of the defendants?
3. Whether the defendants prove that the non-performance of the contract is at the fault of the plaintiff?
4. For what reliefs, if any, the plaintiff is entitled?
5. To what Order of Decree?"
In support of its case the plaintiff examined one Dr.M.C.Gupta and marked 33 exhibits. On behalf of the defendants, defendant No.4 was examined and marked 14 10 Exhibits. The trial court held Issues 1 & 2, in negative and Issue No.3 in affirmative. The trial court recorded a finding that the plaintiff were unable to perform their part of the contract. The demand of the amount paid to the defendants, would amount to waiver, of specific performance of contract. The plaintiff having waived their right to claim specific performance of the contract and having restricted their claim only to the extent of the refund of the amount paid to the defendants, the trial court partly decreed the suit by ordering refund of the amount paid to the defendants in a sum of Rs.22,00,000/- along with interest at 24%.
4. Sri Jayakumar S.Patil, learned senior counsel appearing for the plaintiff contends that the impugned Judgment is bad in law and liable to be set aside. That admittedly there has been non-performance by the defendants of the terms and conditions of the contract of the joint development agreement vide Ex.D-1. He 11 contends that in terms whereof, the defendants were to perform various acts. That they have failed to do so. On their failure to perform their obligations under Ex.D-1, the plaintiff is entitled for a decree for specific performance. The plaintiff was always ready to perform their part of the contract. It is the defendants alone who have failed to perform their part of the contract. The finding of the trial court to the contrary is therefore erroneous. The trial court failed to consider the obligations and the conditions in terms of Ex.D-1. Hence, he pleads that the appeal be allowed.
5. On the other hand, Sri Ashok Haranahalli, the learned senior counsel appearing for the defendants counsel, contends that there is no error committed by the trial court that calls for interference. Nodoubt, various obligations were culled out in Ex.D-1. In terms whereof various obligations have to be performed by the defendants as well as the plaintiff. Even if the contention 12 of the plaintiff were to be accepted that the defendants failed to perform their part of the contract, the intention of the plaintiff was not to enforce the terms of the agreement but only to ensure that the amounts paid to the defendants are returned with interest. It is therefore contended that the trial court has rightly decreed the suit of the plaintiff for refund of money. Hence, it is pleaded that the appeal be dismissed.
6. On hearing learned counsels we are of the considered view that the following Issues arise for determination:-
1) Whether the trial court is justified in decreeing the suit of the plaintiff only to the extent of refund of the amount paid and not for enforcement of contract ?
2) When there is no demand for specific performance of contract, whether it can be considered to be a waiver in law ?13
The plaintiff has made various allegations against the defendants. It is pleaded that the road that existed in the development plan of the BDA had to be removed by the defendants. That they have failed to do so. Therefore that was one of the obligations of the defendants which were not fulfilled by them. In the like manner, various other instances are sought to be pointed out by the plaintiff to show violations on behalf of the defendants. On considering the same, we are of the view that it would not been necessary to go into the said issues. What is of relevance is the letter written by the plaintiff to the defendants with regard to Ex.D.1 agreement. It is stated therein that the demand made by the plaintiff is to the extent of refund of money. There is no demand for specific performance of contract. Therefore when the demand is only for a refund of money, the question of considering the plea of the plaintiff for specific performance of the contract would not arise for consideration. It is under these 14 circumstances, that reliance is placed on Exs.D-13, D-14, D-15 and D-16. Ex.D-15 is the letter written by the plaintiff to the defendants dated 3rd October, 2002, wherein it is stated as follows:-
"As per agreement, in the event of your non-compliance we had given an option to you without prejudice to our right to book for an alternative developer to step into our shoes who could refund us our money along with 24% per annum interest as mentioned in our agreement."
In terms of Ex.D-13 namely, the letter written by the plaintiff to the defendants, the plaintiff has stated in para- 12 therein that they have no objection, if the defendants want to abandon the agreement subject to refund of advance of Rs.22,00,000/- along with interest 24% interest. It is reiterated in para-13 and 14 that in case the defendants want to abandon the agreement or want to execute the development agreement in favour of another builder, then the defendants may refund the advance 15 amount of Rs.22,00,000/- along with interest at 24%. The same can be found in para-15 as well as in the last para of the document. Identical language is used by the plaintiff in the exhibits also. Under these circumstances, we hold that the plaintiff has waived its right to seek enforcement of the agreement.
9. The learned counsel for the defendants relies on the Judgment reported in the case of PUKHRAJ D.JAIN AND OTHERS vs. G.GOPALAKRISHNA reported in (2004) 7 SCC 251. Therein a legal notice was issued resciding the contract and claimed refund of the advance paid. He filed a suit for recovery. The Supreme court held that in such situation it is apparent that no decree for specific performance could be passed. In para-6 of the Judgment the Hon'ble Supreme Court held as follows:-
"6. Section 16(c) of the Specific Relief Act lays down that specific performance of a contract cannot be enforced in favour of a person who 16 fails to aver and prove that he has 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 terms the performance of which has been prevented or waived by the defendant. Explanation(ii) to this sub-section provides that the plaintiff must aver performance of, or readiness and willingness to perform, the contract according to its true construction. The requirement of this provision is that the plaintiff must ever that he has always been ready and willing to perform the essential terms of the contract. Therefore, not only should there be such an averment in the plaint but the surrounding circumstances must also indicate that the readiness and willingness continue from the date of the contract till the hearing of the suit. It is well settled that equitable remedy of specific performance cannot be had on the basis of pleadings which do not contain averments of readiness and willingness of the plaintiff to perform his contract in terms of Forms 47 and 48 CPC. Here Respondent 1 himself sent a legal notice 17 rescinding the contract and thereafter filed OS No.801 of 1977 on 7.11.1977 claiming refund of the advance paid by him. In fact the suit for recovery of the amount was decreed by this trial court on 24.7.1985 but he himself preferred a revision against the decree wherein an order of rejection of the plaint was passed by the High Court. In such circumstances, it is absolutely apparent that Respondent 1 was not ready and willing to perform his part of the contract and in view of the mandate of Section 16 of the Specific Relief Act, no decree for specific performance could be passed in this favour. The trial court, therefore, rightly held that the suit filed by Respondent 1 was not maintainable."
On considering the said Judgment, we are of the considered view that the same would stand applicable to the facts & circumstances of this case.
The second Judgment relied upon by the defendants is in the case of MADEMSETTY SATYANARAYANA vs. G.YELLOJI RAO AND OTHERS reported in (1965) 2 SCR 18 221 wherein the Hon'ble Supreme court at para-12 held as follows:-
"12. The result of the aforesaid discussion of the case law may be briefly stated thus: While in England mere delay or laches may be a ground for refusing to give a relief of specific performance, in India mere delay without such conduct on the part of the plaintiff as would cause prejudice to the defendant does not empower a court to refuse such a relief. But as in England so in India, proof of abandonment or waiver of a right is not a pre-condition necessary to disentitle the plaintiff to the said relief, for if abandonment or waiver is established, no question of discretion on the part of the Court would arise. We have used the expression "waiver" in its legally accepted sense, namely, "waiver is contractual, and may constitute a cause of action: it is an agreement to release or not to assert a right"; see Dawson's Bank Ltd. v.
Nippon Menkwa Kabushiki Kaisha. It is not
possible or desirable to lay down the
circumstances under which a court can
exercise its discretion against the plaintiff. But 19 they must be such that the representation by or the conduct or neglect of the plaintiff is directly responsible in inducing the defendant to change his position to his prejudice or such as to bring about a situation when it would be inequitable to give him such a relief."
In the background of these Judgments and on the face of Exs.D-13 to 16 it is apparent that there has been a waiver by the plaintiff of his right to enforce the specific performance of the contact. The communication by the plaintiff does not call for any interpretation. The findings are clear and unambiguous. The intention of the plaintiff was to recover the amount paid to the defendants along with interest. Under these circumstances, we have no hesitation to hold that the Judgment & decree of the trial court is just and appropriate and does not call for any interference.
10. Furthermore, in the light of the deposit made by the plaintiff of the amount of Rs.22,00,000/- in the 20 State Bank of Mysore on 27-3-2000, the trial court was justified in ordering refund of Rs.22,00,000/- which is in deposit with the said bank, at the prevailing rate of interest at 10% per annum from the date of termination till the date of deposit. We are of the considered view that the award of interest for the relevant period is just and appropriate. Since the amounts have been deposited, the plaintiff is entitled for refund of the amount with interest at 24% only for the period from the date of termination of the agreement till date of such deposit.
Accordingly Issue No.1 is answered by affirming the Judgment of the trial court by holding that the Trial Court was justified in decreeing the suit only for refund of the amount paid and not specific performance of contract. The second issue is answered by holding that non-demand of specific performance of the contract and demand only for refund of money, would in law amount to waiver of the right to seek specific performance. The Issues are accordingly answered.
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For the aforesaid reasons, the appeal being devoid of merit, is dismissed.
Sd/-
JUDGE Sd/-
JUDGE Rsk/-