K.Alagar vs M.I.Kumaran on 21 July, 2009

[Cites 8, Cited by 1]

Madras High Court

K.Alagar vs M.I.Kumaran on 21 July, 2009

The Original Side Appeals in O.S.A.No.389 of 2001, 316 of 2002 and 115 of 2004 are filed against the common judgment and decree dated 22.7.2001 made in Tr.C.S.No.432 of 1997, C.S.No.2113 of 1995 and C.S.No.1356 of 1995 respectively.

2. The suit in Tr.C.S.Nos.432 of 1997 was originally filed as O.S.No.3922 of 1994 on the file of the City Civil Court, Madras by the appellant - K.Alagar against the respondents M.I.Kumaran, M.K.Ramachandran and M.K.Janaki seeking for a permanent injunction restraining the them from cancelling the agreement dated 18.3.1993 or encumbering the suit property or dispossessing the plaintiff from the suit property. The other suit in C.S.No.2113 of 1995 is also filed by the appellant K.Alagar against the very same respondents for specific performance of the agreement dated 18.3.1993. The suit in C.S.No.1356 of 1995 was filed by the respondents herein against the appellant - K.Alagar for a declaration declaring the appellant K.Alagar has committed breach of the agreement dated 18.3.1993 and for direction directing K.Alagar to pay damages of Rs.5 lakhs together with subsequent interest at 24% per annum and for permanent injunction restraining K.Alagar from interfering with the respondents' peaceful possession and enjoyment of the suit property.

3. For the sake of convenience, the parties are hereinafter referred to as arrayed in the suit for specific performance filed in C.S.NO.2113 of 1995.

4. The learned single Judge by judgment and decree impugned herein non-suited the plaintiff for the relief of specific performance, however, liberty was given to the plaintiff to withdraw the amount of Rs.9,20,000/- deposited by the defendants as per the order dated 27.6.1996 made in O.A.Nos.14369 and 1370 of 1995 in C.S.No.2113 of 1995. The learned single Judge also non-suited the plaintiff for the relief of permanent injunction restraining the defendants from cancelling the agreement dated 18.3.1993 or encumbering the suit property or dispossessing the plaintiff from the suit property. The learned single Judge decreed the suit in C.S.No.1356 of 1999 declaring that the plaintiff has committed breach of the agreement dated 18.3.1993 and granted the relief of permanent injunction restraining the plaintiff from in any way interfering with the peaceful possession and enjoyment of the suit property, however the relief of damages has been negatived. For granting such relief, the learned single Judge found that the plaintiff has committed breach of agreement and therefore not entitled to the equitable relief of specific performance and for the very same reasoning and on finding that the plaintiff has not established his possession, the relief of injunction sought for by the plaintiff in C.S.No.432 of 1997 was also rejected and on the very same reasonings granted the relief in favour of the defendants declaring that the plaintiff has no enforceable right under the said agreement dated 18.3.1993 and granted the relief of permanent injunction.

5. The correctness of the above judgment is put in issue in these appeals by the plaintiff on the ground that the learned single Judge having found that the defendants did not even make any attempt to hand over the original documents to the plaintiff for inspecting the documents, ought to have held that it was only the defendants who committed breach of the terms of the agreement. The judgment is not correct in holding that the defendants have committed breach of essential terms of the agreement. The act of the plaintiff taking possession of the property, which is in accordance with the conditions of the agreement has been put against the plaintiff. The agreement specifically provided about the right of the plaintiff to enter into the property, which factum has been totally lost sight of by the learned single Judge. Having found that the plaintiff was ready and willing to perform his part of the obligation under the agreement on the crucial date, yet, the relief of specific performance was denied. The reasoning of the learned Judge that possession of the suit property by the plaintiff in the absence of any written instrument amount to unlawful and without permission of the defendants is erroneous on the face of the covenants contained in the agreement giving right to the plaintiff to enter into the suit property. The factum that the defendants vacated the suit premises and occupied tenanted house for which the plaintiff has paid the advance and paying the rent, clinchingly prove that possession has been given to the plaintiff legally.

6. On behalf of the defendants, it was contended that the agreement is not specifically enforceable. As per the agreement,the defendants have to hand over possession after demolishing the superstructures. The sequence of events to be performed by the parties has been stated in the agreement. Hence allowing the plaintiff to put up his sign board would not amount to handing over of the possession. The factum of alleged taking over possession of the suit property by the plaintiff has been explicitly admitted by the plaintiff in the counter filed in the suit filed by the defendants for damages. The plaintiff having come forward with the suit on a persisted false case of possession, which is found to be not established, cannot claim the equitable discretionary relief of specific performance. It was also contended that a joint development agreement cannot be specifically enforced.

7. The brief facts of the case culled from the pleadings are as follows:

The plaintiff is a promoter and property developer. The defendants acquired the subject property by three sale deeds dated 31.7.1987, 19.6.1982 and 21.6.1993 through competent civill Court, in an application filed under Section 9 of City Tenants Protection Act in ejectment suit No.129 of 1982, 8 of 1985 and 109 of 1987 filed by the temple, the original owner of the property against the defendants. The plaintiff and defendants entered into an agreement on 18.3.1993 for development of the property on certain terms and conditions. According to the plaintiff, the defendants breached the agreement and sought to sell away or encumber the properties. Hence the plaintiff filed a suit in O.S.No.3922 of 1994 before the City Civil Court for injunction against the defendants. The said suit was transferred to this Court and numbered as Tr.C.S.No.432 of 1997. The defendants filed C.S.No.1356 of 1995 on the ground that the plaintiff committed breach of agreement and also filed a false case for injunction and prayed for declaration to declare that the plaintiff shall not enforce the agreement and injunction for possession. Thereupon the plaintiff filed the suit in C.S.No.2113 of 1995 for specific performance on the grounds which are stated in the injunction suit. With the above pleadings, the parties went on trial. A joint trial was conducted and the suits were disposed off as stated in the preamble portion of this judgment.

8. Now let us consider the dispute.

9. A property development agreement dated 18.3.1993 was entered into between the plaintiff and defendants in respect of land measuring 4 grounds or thereabout at block NO.7, T.N.Nos.10 and 11, Door Nos.11 and 12 of Sannithi Street, Vadapalani under Ex.P.1. The total consideration was fixed to Rs.47.40 lakhs at the rate of Rs.493.75ps per sq.ft., and a sum of Rs.5,00,001/- has been paid by the plaintiff to the defendant on the date of Ex.P.1. A further sum of Rs.4,00,000/- was paid on 26.10.1993 under Ex.P.2. There are several reciprocal obligations contained in the development agreement. The material terms are that the total consideration is Rs.47,40,000/-. Out of the total construction to be put up by the builder-the plaintiff in an extent of 16,000 sq.ft., four deluxe flats in an extent of 4000 sq.ft. has to be given to the defendants. The construction cost and the cost of undivided share of land over which the flat to be constructed was arrived at Rs.24 lakhs and it was agreed that the plaintiff could retain the said sum of Rs.24 lakhs and pay the balance sum of RS.23,40,000/-. Another advance sum of Rs.5,40,000/- was agreed to be paid on the defendant producing the sale deeds and entering into a supplemental agreement. On receipt of Rs.5,40,000/- as aforesaid, the defendants have to execute a general power of attorney in favour of the plaintiff for the purpose of filing necessary documents before the appropriate authorities for the development of the land. Within three months from the date of receipt of the said sum of Rs.5,40,000/-, the defendants have to produce other documents such as patta, no due certificate from the statutory bodies, receipt for payment of electricity consumption, certified copies of the parent documents and encumbrance certificate. The defendants have to demolish the existing structure leaving 15x11 ft of flooring, 10x11 ft room for watchman and another 20x11 ft for storing the building material and the electricity connection. The defendants are entitled to sell and appropriate the cost of the demolished materials. After the plaintiff obtained the building sanction plan and making payment of the balance amount of Rs.12,99,000/-, the defendants have to deliver vacant possession of the property. If the plaintiff put up additional construction over and above 16000 sq.ft., the defendants are entitled to 1/4th of the additional construction at the rate of Rs.400/- per sq.ft. Till the flats are constructed within a period of 18 months and handed over to the defendants, in order to facilitate the defendants to have a rental residence, the plaintiff agreed to pay a sum of Rs.2,000/- per month to the defendants.

10. It appears some dispute arose. On 9.5.1994, the defendants 1 and 2 caused a notice under Ex.P.4 through advocate informing that all the documents are available with them and called upon the plaintiff to inspect the document as per the agreement and proceed further and pay the balance amount by giving one week time. It was further informed that if any delay is caused by the plaintiff the agreement would have to be cancelled. The plaintiff under Ex.P.5 issued a reply notice stating that in pursuance of the agreement the defendants vacated the premises and gave vacant possession to the plaintiff. The defendants are not cooperating with the plaintiff for completing the venture, despite the fact the plaintiff is paying rent in a sum of Rs.2,000/- for the rental premises occupied by the defendants. The plaintiff immediately filed a suit on 18.5.1994 in O.S.No.3922 of 1994 on the file of the City Civil Court, Madras seeking for the relief of injunction as aforesaid by contending that the possession of the disputed land has been handed over by the defendants at the time of execution of the agreement and obtained an order of status quo. Subsequently that order was vacated. Against the order of vacating status quo, an appeal in C.M.A.No.33 of 1995 on the file of the VII Assistant City Civil Court, Madras has been filed. The C.M.A. was disposed of on 13.1.1996 by observing that both the parties to maintain status quo till the disposal of the suit in O.S.No.3922 of 1994. The defendants on their part filed C.S.No.1356 of 1995 for declaration declaring that the plaintiff committed breach of agreement dated 18.3.1993 and as such the plaintiff has no enforceable right under the said agreement and for damages and permanent injunction from interfering with their peaceful possession over the suit property and obtained an interim order. While that being so, the plaintiff filed C.S.No.2113 of 1995 seeking specific performance. In that suit, application Nos.1369 and 1370 of 1995 were taken out by the plaintiff seeking for injunction restraining the defendants from alienating and dealing with the property and interfering with the defendants peaceful possession and enjoyment of the suit properties respectively. The trial Judge taking note of the injunction granted in favour of the defendants in the suit filed by them protecting their possession, dismissed the application. That order was carried on appeal before a Division Bench in O.S.A.Nos.226, 227 and 247 of 1996, wherein also the Division Bench held against the plaintiff. Though such an order has been passed based on the documents produced pending suit, even after full-fledged trial, the case of the plaintiff has, in our view, not been improved. The plea of taking over possession of the property by the plaintiff has been considered by the earlier Division Bench with reference to the documents. After extracting the relevant clause contained in Ex.P.1 dated 18.3.1993 and also after referring to the averments of the affidavit filed by the plaintiff in I.A.No.9482 of 1994 in O.S.No.3922 of 1994 before the City Civil Court, the Division Bench of this Court by observing that the plaintiff has not furnished any particulars for grant of injunction and the averments of the plaintiff in the affidavit filed in support of the injunction application were very vague, that the plaintiff put forth inconsistent pleas, in the sense, that in the plaint, it was stated possession was handed over on the date of execution of the agreement, however in the reply notice dated 14.5.1994, it was stated that the defendants themselves vacated the premises and are residing separately by paying monthly rent of RS.2,000/" and ultimately held that the plaintiff miserably failed to establish that he was in possession of the suit property, but found that the defendants were continued to be in possession of the suit property.

11. The same inconsistency prevailed in the evidence of P.W.1. In the chief examination, he stated that after six months of the execution of the agreement the first defendant handed over vacant possession, which is not in consonance with the pleadings, wherein it was stated that pursuant to the agreement the plaintiff was in possession. The plaintiff is also not specific about the date or month or year in which the possession has been handed over, which is not only evident from Ex.P.5 reply notice but also from the averments in the plaint in O.S.No.3322 of 1994. He further conceded that in Ex.P.5 reply notice also such particulars were not available. His evasiveness is clear from his further evidence to the effect that defendants handed over possession of the suit property in 1994 and he did not remember the month and date of the same. In addition to that, in the cross examination, it was elicited from him that the defendants did not hand over possession of the property. He also admitted such handing over has not been reduced in writing or an endorsement has been obtained in the agreement. But very innocuously he has spoken in his evidence that it was true that after Ex.P.4 notice in June 1994, the defendants came back to the suit property. It is common knowledge that the evidence has to be adduced in consonance with the averments contained in the pleadings. But as already stated, the evidence is not only evasive but also not bringing home the case pleaded in the plaint and is also against the terms of agreement regarding handing over of possession.

12. On receipt of Ex.P.4 notice from the defendants in which the plaintiff was called upon to inspect the documents, the plaintiff would have inspected the original documents and proceeded further as per the terms of Ex.P.1 agreement. Instead, he has taken a curious stand of being in possession of the property under Ex.P.5 reply notice, which he was not able to establish before this Court either byway of documents or by way of oral evidence. Even in Ex.P.5, the plaintiff has not stated that he is ready and willing to perform his part of obligation. Even in the evidence, in order to establish his capacity, it is stated that the plaintiff is a builder of repute having several popular constructions on his credit and need not establish his capacity to pay the amount. We are afraid to accept by saying so the plaintiff established his capacity. Apart from that, in order to build up and support his false claim he manipulated and produced receipt for payment of property tax and electricity consumption charges for the properties. As per the agreement the defendants have to give possession after demolish the structures in the property after the balance consideration of Rs.23,40,000/- being paid and it was also agreed that the defendants are entitled to the proceeds of the old materials on demolition. It is a fact that the structures are still available without demolition in the suit property and the balance consideration was not paid. The above attitude and stand of the plaintiff only lead us to conclude that the plaintiff has not only breached the material terms of the agreement but also abused the process of law by filing false cases.

13. It is well established principle of law that the person who seeks the equitable and discretionary relief must come to the Court with clean hands. The relief of specific performance being a discretionary and equitable relief the plaintiff who has come forward with false case with inconsistent and conflicting plea is not entitled to the relief. Useful reference can be had to the judgment of this Court in the case of PANKAJAM PARTHASARATHY VS. KASTURI GUNA SINGH reported in 2001(1) CTC 200.

14. Admittedly, the agreement, which formed the basis for all these suits is a profit making commercial venture of constructing and selling residential complexes to the public. The question as to whether such a commercial venture reduced in the form of development agreement can be specifically enforced came up for consideration in the cases of DEWAN CHAND SABBARWAL VS. UNION OF INDIA, (AIR (38) 1951 PUNJAB 426), UNION CONSTRUCTION COMPANY VS. CHIEF ENGINEER, EASTERN COMMAND, (AIR 1960 ALLAHABAD 72) and in an unreported judgment of the Bombay High Court in the case of PANCHAMI MOOLOOR VS. NAMEDO PATIL AND OTHERS in Suit No.2607 of 1983 and was held that if an agreement under which both the parties have agreed to collaborate for the development of land which is purely commercial in nature, any breach of the agreement would not ordinarily be entitled to a specific performance of agreement.

15. In GAJANAN NARAYAN MALLIK VS. KOLTE PATIL DEVELOPERS reported in 1999(2) Bombay C.R. 118, the Bombay High court held as follows:

"This Court has consistently taken a view that the Development Agreement cannot be specifically enforced and that damages are an answer except where the Developer has invested substantial money and altered his position by creating third party rights."

We are in complete agreement with the above said judgments. On the facts of this case also, except the payment of advance, nothing was invested by the plaintiff and no third party right has been created by entering into an agreement. Not even the project has been commenced by obtaining sanction order of the competent authority.

16. Inasmuch as we have concluded that the plaintiff has breached the agreement and not entitled to have the relief of specific performance, the natural corollary is that the plaintiff is not entitled to legally enforce the agreement. The defendants, being the owners of the property, being in possession and the plea of taking over possession by the plaintiff has already been rejected by us, the defendants are entitled to the relief granted by the trial Court.

17. The following decisions were pressed into service on behalf of the plaintiff:

(1) NIRMALA ANAND VS. ADVENT CORPORATION (P) LTD (2002(4) CTC 624) (2) ANIGLASE YOHANNAN VS. RAMLATHA (2005(5) CTC 800) (3) P.D'SOUZA VS. SHONDRILO NAIDU (2004(4) CTC 150) (4) V.UDAYAKUMAR VS. L.NAVANEETHAMMAL (2002(1) M.L.J. 519)

18. In the first cited case reported in 2002(4) CTC 624, the purchaser entered into an agreement for purchase of flat in Bombay and paid advance sale consideration of RS.35,000/- leaving a balance of Rs.25,000/- alone. The seller committed breach of contract and did not complete the construction of flat. The purchaser filed a suit for specific performance and agreed to purchase the incomplete flat on payment of higher price. In the said facts, the Supreme Court held that the specific performance is an equitable and discretionary remedy. The Court can in exercise of such discretion impose any reasonable condition directing one party to pay additional amount to other party while granting or refusing decree of specific performance. Such directions would depend upon facts and circumstances of each case. Normally relief of specific performance cannot be denied merely because of phenomenal increase in price during pendency of litigation.

19. In the second cited case reported in 2005(5) CTC 800, the Supreme Court held that the basic principle behind the provisions of Section 16(c) of the Specific Relief Act was that any person seeking benefit of specific performance of contract must establish that his conduct is blemishless through out entitling him to specific relief and Court has to grant relief based on conduct of person seeking relief on perusal of plaint.

20. In the third cited case reported in 2004(4) CTC 150, the purchaser agreed to purchase the property for a specified consideration within a stipulated time the vendor agreed to produce the original title deed within specified time and agreed to redeem the mortgage in respect of the property, but failed. In those circumstances, the contention of the vendor that the purchasers were not ready and willing has been rejected by the Supreme Court.

21. In the fourth cited case reported in 2002(1) M.L.J. 519, it was emphasized by this Court that the readiness and willingness with reference to Section 16(c) of the Specific Relief Act has not only been pleaded but should be also established.

22. Our answer to the reliance placed on by the plaintiff is that the reliance of the judgments on behalf of the plaintiff rather strengthen the case of the defendants instead of advancing the case of the plaintiffs and is a misplaced reliance.

23. For the foregoing reasons, all the original side appeals are dismissed confirming the judgment and decree of this Court dated 27.2.2001 made in Tr.C.S.Nos.432 of 1997, 2113 of 1995 and Tr.C.S.No.1356 of 1995 respectively. However, there is no order as to costs. Consequently, the connected C.M.P.No.11645 of 2002 is also dismissed.

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