Madras High Court
M/S.United Spirits Ltd vs M/S.Paramount Builders(Chennai)Ltd on 10 November, 2011
Author: R.Mala
Bench: R.Banumathi, R.Mala
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 10.11.2011
CORAM
THE HON'BLE MRS. JUSTICE R.BANUMATHI
and
THE HON'BLE MS. JUSTICE R.MALA
O.S.A.Nos.216 and 251 of 2005
M/S.United Spirits Ltd.,
Having Registered Office at
U.B.Tower, UB City No.24
Vittal Mallya Road, Bangalore-560 001
Rep. by Mr.Mahesh Nedungadi
Senior General Manager
Legal authorized signatory and
power of attorney
(cause title amended vide order of
Court dated 06.07.2011 made in
C.M.P.No.1657/2010) .. Appellant in O.S.A.No.216/2005
Kamal Babbar .. Appellant in O.S.A.No.251/2005
Vs.
1.M/S.Paramount Builders(Chennai)Ltd.,
Rep. by Chairman and Director
Mr.M.S.Hameed
No.34, Veerabadran Street
Nungambakkam, Chennai-34.
2.M.S.Hameed (deceased)
3.Kamal Babbar
4.Naseema Beevi
5.Sathak Ahmed Shaw
6.Dr.Faiza Hameed
7.Shafiq Mohammed Shaw
8.Zarook Syed Sha
9.Aminath Sithi Mariam
10.Kathijatu Nasrin
(RR4 to 10 brought on record as
Legal heirs of deceased R2 vide order
of Court dated 13.07.2010 made in
C.M.P.Nos.1983 to 1985 of 2009)
.. Respondents in O.S.A.No.216/2005
1.M/S.Paramount Builders(Chennai)Ltd.,
Rep. by Chairman and Director
Mr.M.S.Hameed
No.34, Veerabadran Street
Nungambakkam, Chennai-34.
2.M.S.Hameed (deceased)
3.M/S.Shaw Wallace and Company Ltd.,
No.166, Thambu Chetty Street
Chennai-600 001.
4.Naseema Beevi
5.Sathak Ahmed Shaw
6.Dr.Faiza Hameed
7.Shafiq Mohammed Shaw
8.Zarook Syed Sha
9.Aminath Sithi Mariam
10.Kathijatu Nasrin
(RR4 to 10 brought on record as
Legal heirs of deceased R2 vide order
of Court dated 20.10.2009 made in
C.M.P.Nos.1447 to 1449 of 2009)
.. Respondents in O.S.A.No.251/2005
Original Side Appeals are filed under Order XXXVI Rule 1 of the Original Side Rules read with Clause 15 of the Letters Patent against the Judgment and Decree dated 15.06.2005 made by this Court in C.S.No.182 of 1999.
For Appellant
in O.S.A.No.216/2005 :Mr.Ravi for M/S.Gupta&Ravi
For Appellant
in O.S.A.No.251/2005 :Mr.S.R.Rajagopal
For R1 to R4 to R10 : Mr.M.S.Krishnan, senior counsel for
Mr.P.V.Ramachandran(in both O.S.As.)
For R3 :Mr.S.R.Rajagopal(inO.S.A.No.216/2005)
For R3 :Mr.Ravi for M/S.Gupta&Ravi
(in O.S.A.No.251 of 2005)
R2 : Died
COMMON JUDGMENT
R.MALA,J.
These appeals arising out of the Judgment and decree made in C.S.No.182 of 1999 granting decree for Rs.1,84,17,044.15/- together with interest at the rate of 24% per annum from the date of that Judgment till the date of realisation with costs. The first defendant is appellant in O.S.A.No.251 of 2005 and second defendant is appellant in O.S.A.No.216 of 2005.
2.The gist and essence of averments in the plaint are as follows:
(i)The second defendant is the owner of the property bearing Door.No.166, Thambu Chetty Street, Chennai-1. The first plaintiff and the first defendant had entered into a sale agreement on 13th September, 1995 with the second defendant. The agreed sale price is Rs.2,95,00,000/-. Totally, the first plaintiff has paid Rs.2,10,65,000/- and the first defendant has paid Rs.64,35,000/- on various dates. Since the second defendant is not in a position to execute the sale deed, he gave a letter dated 31.03.1996 agreeing to pay compensation. Since the second defendant has not executed the sale deed, the first plaintiff and the first defendant filed C.S.No.823 of 1996 against the second defendant. During the pendency of C.S.No.823 of 1996, both the parties in C.S.No.823 of 1996 had entered into a compromise. In pursuance of that, a compromise decree has been passed on 22.01.1997. As per the compromise decree, the first plaintiff will be entitled to a sale deed for one half of undivided share in the land and the constructed area of the ground and the first floors. The first defendant will be entitled to a sale deed for one half of undivided share in the land and the constructed area of the second and third floors. The balance sale consideration of Rs.20 lakhs shall be adjusted towards interest for the sale consideration of Rs.2.75 crores, which was utilised by the second defendant herein and not conveying the property till then. Since the second defendant did not execute and register the sale deeds as per the decree passed in C.S.No.823 of 1996, the first plaintiff and first defendant jointly filed E.P.No.9 of 1997 in C.S.No.823 of 1996. Then only the Court has executed the sale deed through Assistant Registrar, Original Side, on 30.7.1997 in favour of seven persons.
(ii) Before filing the suit, there was a discussion between the first plaintiff and the first defendant on one hand and the second defendant on the other hand. In pursuant to the discussion, the second defendant gave a letter dated 3rd May,1996 to the first plaintiff. In the said letter, the second defendant herein agreed to pay compensation for the amount advanced at the rate of Rs.4.80 lakhs per month beginning from April 1996 and further agreed that out of that, a sum of Rs.2.50 lakhs would be disbursed on monthly basis and balance of Rs.2.30 lakhs per month would be accrued and settled at the time of transfer of property. It is also stated that as regards the compensation for the earlier period from the date of agreement of sale i.e., 13.9.1995 ending 31.03.1996, the second defendant agreed to pay a compensation of Rs.31.80 lakhs and agreed to adjust the same against the balance money due on the transfer of the said property. The compensation agreed to be paid by the second defendant was in effect at the rate of 21 per cent per annum on the sum of Rs.2.75 crores paid. In pursuance of the above said letter, the second defendant herein gave two cheques to the first defendant in May 1996, for Rs.1.25 lakhs each, one favouring the first plaintiff and the other favouring the first defendant. The first defendant forwarded the cheque to the first plaintiff, which was in favour of him. On receipt of the said cheque, the first plaintiff wrote a strong letter to the Head Office of the second defendant protesting against the same. In the said letter, the first plaintiff had specifically called upon the second defendant to remit the balance compensation in proportion to the amount paid by the first plaintiff.
(iii) There was an understanding between the first plaintiff and the first defendant that subject to final adjustment on pro-rata basis i.e., on the proportionate basis of contribution of the sale consideration, the interest/compensation that may be paid by the second defendant will be at the rate of Rs.1.5 lakhs to the first plaintiff and Rs.1.00 lakh to the first defendant. As per the letter dated 03.05.1996, the total compensation is Rs.74,38,686/-. The first defendant and the officers of the second defendant colluded together, with the result, the first defendant received substantially major portion of the compensation from the second defendant either by way of cheques from the second defendant or by way of adjustment towards the sale consideration, which the first defendant had to pay the second defendant in respect of another property at Door.No.154, Thambu Chetty street, Chennai-1. The first defendant has also received from the second defendant, rent which was actually payable to the first plaintiff in respect of tenants, Karur Vysya Bank and United India Insurance Company and also the rental deposit of the latter since both of them were and are tenants in the portions purchased by the first plaintiff herein. As per the accounts, the total amount received on 31.01.1999 is Rs.74,02,675/-.
(iv)Whenever, the second plaintiff was in Chennai, he would request the first defendant to settle the account and pay the amount due as stated above. The first defendant was going on promising to pay the amount and settle the account. He was pleading that since he had purchased two properties at a time and since he has borrowed money for the purchase of the said properties, he did not have the money to pay to the first plaintiff and requested the first plaintiff to bear with him and promised to pay interest at 24 percent per annum on the amount due for the delay in payment. Since the first defendant failed and neglected to pay the amount due for a long time, the first plaintiff sent a registered letter dated 7th December,1998 demanding Rs.50,75,263/- towards balance of principal amount and Rs.22,33,115/- towards interest at the rate of 24 per cent per annum, totalling Rs.73,08,378/-. He received a reply dated 12.12.1998 from the first defendant making false and frivolous allegations and denying the liability. Hence, he issued notice to the second defendant and claiming the share of 50%. But factually, the plaintiffs invested 76.6% and first defendant has invested 23.4%. After issuing notice to the second defendant on 28th December 1998, since he has not received any reply from him, he is constrained to file a suit for recovery of amount of Rs.74,02,675/- with interest at the rate of 24 per cent per annum from the date of plaint till the date of realisation and prayed for a decree.
3. The gist and essence of the written statement filed by the first defendant are as follows:
(i) The plaint does not disclose substantially any violation of legal or contractual right of the plaintiff. The second plaintiff is a Non-Resident Indian, who lives in HongKong and is known to first defendant for the past 20 years. During one of his visits to Chennai, the first defendant had informed the second plaintiff that the property at Door No.166, Thambu Chetty Street, Chennai-1 belonging to the second defendant was for sale. The second plaintiff requested the first defendant to negotiate with the second defendant on his behalf for purchasing the property. The second plaintiff, who deals in real estate business was fully aware of the market value of the property prevalent at that point of time. The first plaintiff was willing to buy the property on a condition that the property should be jointly purchased by the first defendant and the same is evident from the resolution dated 07.09.1995 passed by the first plaintiff. Though as admitted by the plaintiff, the investment made by both parties were unequal, they had agreed to share all the right and liabilities on a 50:50 ratio for a total sale consideration of Rs.2,95,00,000/- of which the first defendant had invested Rs.84,35,000/-. The total cost of building purchased is Rs.2.95 crores for 36,000 sq.ft and the average cost comes to Rs.800/- per sq.ft. At that time, the market value for the ground floor was Rs.4,500/- sq.ft, the first floor at Rs.2,000/-per sq.ft. and the second and third floors at Rs.1,500/- per sq.ft. It was agreed by both parties that the property will be divided and owned in a 50:50 ratio subject to the floors retained by each partner and based on the calculation of the market value, where the ground floor and the first floor had greater commercial value over the second and third floor of the property. The investments made by both the parties vary with regard to the market value of the floors owned by them in the property and this is evident from the sale deed of the first defendant. Consequently, it was suggested that the second plaintiff would retain the ground and the first floor valued at Rs.2,10,65,000/- and the second and third floor valued at Rs.84,35,000/- would be given to the first defendant. The plaintiff had agreed to give the first defendant and amount of Rs.25,00,000/- for acquiring the property after selling the ground floor. The first defendant was not interested in taking the second and third floor as the ground floor alone is estimated to fetch an amount of Rs.4 Crores approximately. The plaintiff pressurised the first defendant to accept the unjustified offer and also threatened that he will acquire the property by any means. The first defendant agreed to the proposal and a Memorandum of understanding was entered on 16.2.1999 prepared by his Manager. As per the agreement with the second defendant, an amount of Rs.2,75,00,000/- was paid to them except a balance of Rs.20 lakhs which was agreed to be paid by the first defendant at the time of registration. The second defendant was unable to execute the sale deed due to some internal problems. Even though he received Rs.2,75,00,000/-, the balance is only Rs.20 lakhs, on 03.05.1996, the second defendant had sent a letter confirming to pay a compensation of Rs.4.80 lakhs every month for the delay in executing the sale deed in favour of the plaintiff and the first defendant out of which Rs.2.5 lakhs was to be shared equally between the plaintiff and the first defendant. The balance amount of Rs.2,30,000/- will be acquired by the second defendant and paid to the plaintiff and the first defendant at the time of transfer of the property. The plaintiff is not entitled to the claim of Rs.74,02,675/- . The total compensation given by the second defendant is only Rs.59,98,686/-. Even to the knowledge of plaintiff, it was agreed to settle the compensation of Rs.59,98,686/- as full and final settlement. After deducting Rs.2,89,584/- as taxes paid by second defendant, the total amount due was only Rs.57,09,102/-. The plaintiff being 50% partner was to receive Rs.28,54,551/- and has already received Rs.8.75 lakhs towards compensation from the second defendant. The balance amount of Rs.19,79,551/- was transferred to the first defendant on the advise of the plaintiff for taking care of the expenses for the renovation of the property. The expenses incurred are:
1)The legal fees due to M/s.Surana & Surana Rs.6,31,950/-.
2)The plaintiff paid Rs.2,31,950/- and the first defendant paid Rs.4 lakhs by way of demand draft on behalf of the plaintiff Rs.4,00,000/-.
3)For renovating the building Rs.7,93,257.75 and
4)Service charges from the month of March 1996 to June 1997 Rs.8,00,000/-, thus totalling Rs.19,932,57.75.
(ii) In the Memorandum of Understanding signed by the plaintiff and the first defendant, nowhere it was mentioned that the parties shall enjoy the property in the ratio of the investments made by them and they shall bear the expenses of reconstruction in a 50:50 ratio. The sale deed registered in favour of the 1st defendant clearly states that due to the great commercial value and importance, the ground and first floor is valued at Rs.2,10,65,000/- and the property at second and third floor is valued at Rs.84,35,000/- and the property has been divided between the plaintiff and the first defendant. So the plaintiffs are not entitled to any relief.
4. The gist and essence of the written statement filed by the second defendant are as follows:
This defendant is an unnecessary party. No cause of action for the plaintiffs as against him. The second defendant is not aware of the terms and conditions agreed between the plaintiff and the first defendant. He is not a party to the said agreement. Sale consideration is Rs.2.95 crores. The plaintiff and the first defendant paid Rs.2.75 crores. Due to the other pending litigation, the second defendant was unable to execute the sale deed. The title deeds of the property was under the mortgage with Union Bank of India and M/s.Pierless General Finance Limited. Since there was a substantial delay in releasing the title deeds, the second defendant agreed to pay a total sum of Rs.4.80 lakhs per month beginning from April 1986 of which an amount of Rs.2.5 lakhs would be disbursed on a monthly basis and the balance of Rs.2.3 lakhs per month would be accrued and settled at the time of transfer of property. The payment of compensation was arrived at after discussion with the plaintiff and the first defendant. In pursuant to the letter dated 23.5.1996, this defendant paid a sum of Rs.1.5 lakhs to the first plaintiff and Rs.1 lakh to the first defendant. There was no collusion between the first defendant and the second defendant. There was some internal dispute between the plaintiff and the first defendant and the second defendant was no way responsible. The first defendant was negotiating and acting on behalf of the plaintiffs. The payments are made through the first defendant and the first defendant was in fact acting as the authorised agent of the plaintiffs. When the admitted fact remains that this defendant had paid the entire amount due as compensation to the plaintiffs and the first defendant and when admittedly the first defendant has received the entire amounts payable by this defendant, no further liability can be fastened on this defendant. If there is any dispute between the plaintiff and the first defendant about the sharing of the money, it is for them to work out their remedies with which this defendant is no way concerned. There is no cause of action against this defendant as the defendant had paid the entire compensation as agreed upon and possession of the property was also handed over to the plaintiff and the first defendant. In view of the fancy claim made by the plaintiff, the second defendant having discharged his entire liability took up this matter with the first defendant and the first defendant has agreed to indemnify the second defendant against any claims or losses that may be suffered by the second defendant in view of the litigation initiated by the plaintiff and the claim made by them.
5. The gist and essence of the additional written statement filed by the second defendant are as follows:
Since the defendant could not perform his obligation under the agreement of sale dated 13.09.1995, the first plaintiff and the first defendant jointly filed C.S.No.823 of 1996 for directing this defendant to convey the movable property at No.166, Thambu Chetty Street, Chennai-1 in favour of the first plaintiff and the first defendant. A compromise decree has been passed in C.S.No.823 of 1996. The said compromise decree dated 22.1.1997 would operate as res judicata as between the plaintiffs and the defendants and consequently, the plaintiffs are estopped from filing the present suit as against this defendant for the very same reliefs which were prayed for in C.S.No.823 of 1996.
6.The gist and essence of the reply statement filed by the plaintiffs are as follows:
(i)The suit is not hit by res judicata. Since in C.S.No.823 of 1996, only a compromise decree alone has been passed, it would not operate as res judicata.
(ii)Second defendant would submit that he paid the entire amount to the first defendant on behalf of the plaintiffs. In such circumstances, second defendant is not entitled to raise the plea of res judicata. Thus he prayed for allowing the suit.
7. The learned single Judge after considering the pleadings and arguments of both sides counsel, framed three issues and one additional issue. On considering the oral evidence of P.W.1 and D.W.1 and documentary evidence of Ex.P1 to Ex.P29 and Ex.D1 to Ex.D6, the learned single Judge decreed the suit as prayed for in the plaint against both defendants, against which, the first defendant has preferred O.S.A.No.251 of 2005 and the second defendant has preferred O.S.A.No.216 of 2005.
8.After considering the arguments of both sides counsel, the following points for consideration has been framed:
(1)Whether the compromise decree in C.S.No.823 of 1996 is hit by Res judicata?
(2)Whether the plaintiffs have relinquished and waived the amount of compensation in the compromise decree in C.S.No.823 of 1996?
(3)Whether the plaintiffs have entitled compensation of pro-rata basis? If so, what is the amount the plaintiffs are entitled to?
(4)Whether the judgment and decree of the learned single Judge are sustainable?
(5)To what relief, the appellants in O.S.A.Nos.216 and 251 of 2005/second and first defendants in C.S.No.182 of 1999 are entitled to?
9.Point Nos.1 and 2:
The admitted facts are as follows:
The property situated in D.No.166, Thambu Chetty Street, Chennai-1 is originally belonging to second defendant. The plaintiffs and first defendant jointly intended to purchase the above said property. So they entered into a sale agreement with second defendant (i.e.) Appellant in O.S.A.No.216 of 2005 on 13.09.1995 under Ex.P1. The sale consideration is fixed as Rs.2,95,00,000/-. Admittedly, the first plaintiff was paid a sum of Rs.2,10,65,000/- and the first defendant/Appellant in O.S.A.No.251 of 2005 was paid a sum of Rs.64,35,000/-. In total, a sum of Rs.2,75,00,000/- has been paid out of Rs.2,95,00,000/-. The balance sale consideration was only Rs.20,00,000/- to be payable to the second defendant/Appellant in O.S.A.No.216 of 2005. Thereafter, second defendant/Appellant in O.S.A.No.216 of 2005 was not in a position to execute the sale deed and the title deed of the property was under the mortgage with Union Bank of India, Calcutta Branch and M/s.Pierless General Finance Limited. After negotiation, second defendant gave a letter to the first plaintiff under Ex.P9 on 03.05.1996 agreeing to pay the compensation of Rs.31.80 lakhs up to 13.09.1995 to 31.03.1996. Further, he agreed to pay Rs.4,80,000/- per month beginning from April 1996 till transfer of the property and out of that, he agreed to pay every month Rs.2,50,000/-. The balance of Rs.2,30,000/- will be paid at the time of transfer of the property. However, second defendant had paid some amounts to plaintiffs and first defendant.
10.Admittedly, the plaintiffs/respondents have received Rs.8.75 lakhs and first defendant/Appellant in O.S.A.No.251 of 2005 received Rs.7.25 lakhs. Since second defendant/Appellant in O.S.A.No.216 of 2005 had not executed the sale deed, after issuance of notice, the first plaintiff and the first defendant filed a suit in C.S.No.823 of 1996. Admittedly, a Memorandum of Agreement had entered into between first defendant and first plaintiff on 16.02.1996, which was evidenced by Ex.P4. They entered into a compromise memo under Ex.P5 on 20.01.1997. Even though a compromise decree was passed on 22.01.1997 in C.S.No.823 of 1996 under Ex.P6, second defendant/Appellant in O.S.A.No.216 of 2005 has not executed any sale deed. Therefore, first plaintiff and first defendant/Appellant in O.S.A.No.251 of 2005 had jointly filed E.P.No.9 of 1997 in C.S.No.823 of 1996. Then, the Court had executed the sale deed through Assistant Registrar, Original Side, on 30.07.1997 in favour of the plaintiffs therein, which was marked as Ex.P10, wherein first plaintiff therein was entitled to half undivided share in the land and constructed area of ground and first floor and second plaintiff was entitled to half undivided share in the land and constructed area of second and third floor. In pursuant of the same, sale deeds executed in favour of first defendant/Appellant in O.S.A.No.251 of 2005, which was marked as Exs.P28 and P29. Out of the total sale consideration of Rs.2,95,00,000/-, the balance sale consideration of Rs.20,00,000/- was adjusted towards interest favouring the plaintiffs therein for the sale consideration.
11.The first plaintiff in C.S.No.823 of 1996 has come forward with the suit in C.S.No.182 of 1999 claiming compensation for non execution of sale deed after receipt of major portion of sale consideration/advance amount. It is an admitted fact that second defendant/Appellant in O.S.A.No.216 of 2005 has given a letter dated 03.05.1996 under Ex.P9 agreeing to pay the compensation. The plaintiffs/respondents have claimed Rs.74,02,675/- as compensation stating that they are entitled to pro-rata compensation at 76.6% whereas the first defendant/Appellant in O.S.A.No.251 of 2005 is entitled to 23.4%.
12.At this juncture, the learned counsel for second defendant/Appellant in O.S.A.No.216 of 2005 has raised a defence that in view of the consent decree passed in C.S.No.823 of 1996, it has been hit by Res judicata and hence, the plaintiffs/respondents in both the appeals are not entitled any amount. His second limb of argument is first defendant/Appellant in O.S.A.No.251 of 2005 has negotiated with second defendant/Appellant in O.S.A.No.216 of 2005 and the amount has been fixed as Rs.59,98,686/-. The remaining amount of Rs.20,00,000/- has been adjusted towards balance sale consideration at the time of execution of the sale deed. Totally, Rs.16,00,000/- has been paid to the first defendant/Appellant in O.S.A.No.251 of 2005 and the balance is only Rs.23,98,686/- and both are equally entitled. But the first defendant has received that amount on behalf of the first plaintiff, hence the second defendant has not liable to pay that amount. Hence, he prayed for allowing the appeal.
13.Even though Mr.Ravi, the learned counsel appearing for second defendant/Appellant in O.S.A.No.216 of 2005 vehemently argued that second defendant paid entire compensation to the first defendant/Appellant in O.S.A.No.251 of 2005 on the authority given by the plaintiffs/respondents. But admittedly, there is no scrap of paper has been filed to show that plaintiffs/respondents authorising the first defendant/Appellant in O.S.A.No.251 of 2005 to receive the compensation amount. So the argument of the learned counsel, does not merit acceptance.
14.Now this Court has to decide whether the decree in C.S.No.823 of 1996 is hit by Res judicata and whether the compensation was waived and relinquished?
It is true, plaintiffs and first defendant had entered into a sale agreement on 13.09.1995 as per Ex.P1. Ex.P4-Memorandum of Agreement came into existence between them on 16.02.1996 after payment of Rs.2,75,00,000/- to second defendant/Appellant in O.S.A.No.216 of 2005. As per Ex.P9-letter dated 03.05.1996, second defendant agreed to pay the compensation for the amount that he received (i.e.) Rs.2,75,00,000/-. It is true, after 03.05.1996 only, the suit in C.S.No.823 of 1996 has been filed and compromise memo has been entered on 20.01.1997 and in pursuant of the same, a compromise decree has been passed on 22.01.1997, which was evidenced by Ex.P6. In the said consent decree, it is silent about either waiver and relinquishing of balance compensation after adjusting Rs.20,00,000/- in the sale consideration.
15.At this juncture, it is appropriate to consider the document under Ex.D4 relied upon by the learned counsel for first defendant/Appellant in O.S.A.No.251 of 2005. Ex.D4-letter by the second defendant to plaintiff and first defendant dated 22.09.1997 came into existence after passing consent decree under Ex.P6 and Ex.D4 is extracted hereunder:
"In suppression/modification of the earlier letters exchanged between us, this is to confirm that we have handed over the physical possession of the above property to you on 23.02.1996. In respect of the delay in handling over the possession/execution of the sale deed, we have paid/credited to your account a sum of Rs.59,98,686/- in full and final settlement of the compensation. No further amounts of compensation is payable to you or to anyone else in this regard, as mutually agreed between us. We request you to return us the copy of this letter in token of your acceptance and confirmation."
The above contents of Ex.D4 falsifies the case of the second defendant that the decree in C.S.No.823 of 1996 is hit by Res judicata. Even in C.S.No.823 of 1996, they claimed Rs.54,20,000/- and future compensation from 01.01.1997 at the rate of Rs.4.80 lakhs per month till sale deeds executed in favour of the plaintiffs therein. But as per the consent decree dated 22.01.1997, Rs.20,00,000/- alone has been ordered to be adjusted. In clause-3 of the consent decree under Ex.P6, it was specifically stated as follows:
"3.That the balance of the sale consideration of Rs.20,00,000/- (Rupees twenty lakhs only) shall be adjusted towards interest favouring the plaintiffs for the sale consideration of the said Rs.2,75,000/- (Rupees two lakhs and seventy five thousand only) paid by the plaintiffs and utilised by the defendant and not conveying the property to the defendant till now."
In Ex.D4-letter, which was written by the second defendant to plaintiffs and first defendant on 22.09.1997, nothing has been stated about the remaining compensation amount. Ex.D4-letter was written much after Exs.P5 and P6 (i.e.) decree in C.S.No.823 of 1996. The second defendant himself admitted that the total amount of Rs.54,20,000/- has been paid in full and final settlement. Furthermore, except the minutes of the meeting dated 22.09.1997 under Ex.D6 is replica of Ex.P25. So conduct of the parties has clearly proved that the plaintiffs in C.S.No.823 of 1996 have not waived or relinquished the remaining compensation amount. Moreover, Exs.P18 letter dated 07.12.1998 and Exs.P19 letter dated 12.12.1998 shows that both the parties have been repeatedly corresponding with each other for payment of compensation. In the stated circumstance, we are of the opinion that the plaintiff neither waived his right nor relinquished his right of compensation for non-execution of sale deed in a stipulated time after receipt of major portion of sale consideration of Rs.2.75 crores. Hence, we are of the considered view that the suit in C.S.No.823 of 1996 is not hit by Res judicata. So the learned single Judge has considered this aspect and came to the correct conclusion and hence, we do not find any reason warranting interference with the findings of the learned single Judge. Point Nos.1 and 2 are answered accordingly.
16.Point No.3 The learned counsel Mr.Ravi appearing for the second defendant/Appellant in O.S.A.No.216 of 2005 would submit that the second defendant had paid compensation amount to the first defendant/Appellant in O.S.A.No.251 of 2005 and second defendant is not liable to pay any amount. Admittedly, both parties are admitted the amount of Rs.59,98,686/-, which was calculated in Ex.P25-Statement of Final Settlement and Ex.D6 on 22.09.1997 till the possession is handed over.
17.The learned counsel Mr.S.R.Rajagopal appearing for the first defendant/Appellant in O.S.A.No.251 of 2005 would submit that Rs.20,00,000/- has been adjusted towards sale consideration and Rs.16,00,000/- has been paid to both the parties, which was admitted by both of them and the balance amount is only Rs.23,98,686/- in which, both the plaintiffs/respondents and first defendant/Appellant in O.S.A.No.251 of 2005 are entitled 50:50, as per Ex.P4-Memorandum of Agreement. It is further submitted that as per Ex.P4, each entitled to Rs.11,99,343/- and since first defendant/Appellant in O.S.A.No.251 of 2005 had done renovation work and paid the service charges and legal fees to their counsel M/S.Surana & Surana, that amount has to be set off. Therefore, plaintiffs/respondents are not entitled any amount either from the first defendant or from the second defendant.
18.At this juncture, it is appropriate to consider whether Rs.20,00,000/- has been adjusted towards amount due to plaintiffs/respondents and first defendant/Appellant in O.S.A.No.251 of 2005. It is appropriate to consider Ex.P4-Memorandum of Agreement, in which, clause-3 is extracted hereunder:
"3. The second party shall pay the balance considerations due to M/S.Shaw Wallace & Co. Ltd., (i.e.) Rs.20,00,000/- under the said agreement dated 09.10.1995 on or before the date of registration of sale deeds which will be completed within one month."
19.Furthermore, in pursuance of consent decree passed in C.S.No.823 of 1996, Rs.20,00,000/- shall be adjusted towards interest favouring the first plaintiff/first defendant for the sale consideration. As per Ex.P28-Sale deed executed in favour of first defendant/Appellant in O.S.A.No.251 of 2005, balance sale consideration of Rs.20,00,000/- has been adjusted by the second defendant in C.S.No.823 of 1996, which shows that the sale deed executed in favour of first defendant was only for adjustment. Since balance sale consideration of Rs.20,00,000/- had been adjusted towards sale consideration payable by first defendant/Appellant in O.S.A.No.251 of 2005 in the sale deed dated 15.03.1997, it must be taken that first defendant alone had paid the amount to second defendant. So we are unable to accept the argument advanced by the learned counsel for the Appellants that adjustment of balance sale consideration of Rs.20,00,000/- is borne by both the plaintiffs/respondents and first defendant/Appellant. So we are of the considered view that Rs.20,00,000/- has been adjusted only towards the amount payable by the first defendant/Appellant. So that amount should be deducted only in the compensation payable to the first defendant/Appellant in O.S.A.No.251 of 2005 not the compensation payable to the plaintiffs/respondents herein. In Ex.P28-sale deed executed in favour of first defendant on 15.03.1997, in which, it is stated as follows:
" .. .. out of the total sale consideration of Rs.2,95,00,000/-, the plaintiffs had already paid to the defendant Rs.2,75,00,000/- leaving a balance of Rs.20,00,000/- and whereas as per the decree, the said balance of Rs.20,00,000/- will be adjusted towards interest favouring the plaintiffs for the sale consideration of Rs.2,75,00,000/- paid by the plaintiffs and utilised by the defendant .. .."
".. .. in pursuance of the aforesaid agreement and in consideration of the total sum of Rs.68,05,840/- paid/adjusted by the purchaser to the vendor/defendant/judgment debtor as detailed in the plaint and confirmed in the decree .. .."
20.The learned counsel for the first defendant/Appellant in O.S.A.No.251 of 2005 would submit that both the plaintiffs/respondents and first defendant/Appellant are entitled to each 50% and that has been admitted in Ex.P4- Memorandum of Agreement. While perusing Ex.P4, it is appropriate to incorporate clauses-6 and 10, which are stated as follows:
"6.Both parties herein have looked into the accounts and have jointly verified the accounts and satisfied themselves that each party has spent certain amounts upto date in connection with the agreement for sale and which amounts though unequal have been each party's contribution to the transaction. The parties hereto agree that each party is entitled to own and enjoy the constructed areas and undivided shares independently as stated above.
10.That in the event of demolition/ reconstruction the proceeds from demolition will be shared equally and the cost of reconstruction shall be met and borne by the first and second party in the ratio of 50:50 respectively. .. .."
As per clause-10, 50:50 has been specified only for the demolition and reconstruction costs, not for sharing the compensation. So We are of the considered opinion that the argument advanced by the learned counsel Mr.S.R.Rajagopal appearing for first defendant/Appellant in O.S.A.No.251 of 2005 that both the plaintiffs/respondents and first defendant/Appellant are entitled to compensation equally, does not merit acceptance.
21.Now this Court has to decide what is the proportion of compensation, the plaintiffs/respondents are entitled to?
At this juncture, it is appropriate to consider Ex.P11 relied upon by both the learned counsel for the appellants. They would submit that as per the letter written by the plaintiffs/respondents to second defendant under Ex.P11, even though plaintiffs/respondents objected for equal payment, they have stated that out of Rs.2,50,000/-, Rs.1,50,000/- will be paid to first plaintiff and Rs.1,00,000/- will be paid to first defendant/Appellant in O.S.A.No.251 of 2005 (i.e.) 60:40 ratio.
22.On perusal of Ex.P11, it would falsify the argument of both sides counsel appearing for the appellants. In Ex.P11-Letter by plaintiffs to second defendant, dated 23.05.1996, it is extracted hereunder:
"With reference to your letter dated 3rd May 1996, it has been agreed between us and Mr.Kamal Babbar on 22.05.96 that for the time being the portion of interest amount of Rs.2.5 lakhs will be shared at Rs.1,50,000/- to Paramount Builders (Chennai) Ltd and Rs.1,00,000/- to Mr.Kamal Babbar. This is subject to final adjustment on pro-rata basis of accrued interest payable by you at the time of transfer of property or earlier. .. .."
So only for time being, both the parities made an agreement for payment of compensation at the rate of Rs.1,50,000/- to the plaintiffs/respondents and Rs.1,00,000/- to the first defendant/Appellant in O.S.A.No.251 of 2005.
23.Now it is appropriate to consider Ex.P12-Notice issued by plaintiffs/respondents to second defendant/Appellant in O.S.A.No.216 of 2005, in which, it is stated as follows:
".. .. We would appreciate that in such cases your Madras Office being advised, in specific, to deal with us direct and put in writing what ever they wish to convey. In this particular case, please advise your Madras Office to remit the balance interest in proportion to the amount paid by Paramount Builders (Chennai) Ltd."
So Exs.P11 and P12 would clearly prove that plaintiffs/respondents herein have not agreed for 50:50 and that they are claiming compensation only on pro-rata basis of sale consideration paid by them. In such circumstances, We are of the view that the argument advanced by both the counsel appearing for the appellants that both the parties are agreed to receive the compensation equally, does not merit acceptance.
24.Now this Court has to decide what is the compensation, the plaintiffs/respondents are entitled to?
Admittedly, plaintiffs/respondents and First defendant/Appellant in O.S.A.No.251 of 2005 had paid Rs.2,10,65,000/- and Rs.64,35,000/- respectively and as per decree passed in C.S.No.823 of 1996, sale deed shall be executed in favour of plaintiffs/respondents for = undivided share in the land and the constructed area of the ground and first floor and sale deed shall be executed in favour first defendant/Appellant for = undivided share in the land and the constructed area of the second and third floor, which was valued at Rs.84,35,000/-. So as per the documents under Exs.P11 and P12, the plaintiffs/respondents are entitled to compensation on pro-rata basis.
25.At this juncture, it is appropriate to consider the amount stated in para-12 of the plaint. Total compensation payable by the second defendant is calculated as Rs.74,38,686/-, which was admitted by both the parties. Admittedly, Rs.20,00,000/- has been adjusted by way of sale consideration and first defendant/Appellant had received Rs.7,25,000/-. In total, he had received Rs.27,25,000/-. Likewise, plaintiffs/respondents had received Rs.8,75,000/- from the second defendant. The documents produced by both the parties would clearly prove that the amount payable in respect of Door No.166, Thambu Chetty Street, Chennai-1 had adjusted towards sale consideration payable by first defendant/Appellant in respect of Door No.154, Thambu Chetty Street, Chennai-1, which was executed in favour of first defendant/Appellant in O.S.A.No.251 of 2005 and one Satnam Singh. Plaintiffs/respondents herein had nothing to do with Door No.154, Thambu Chetty Street.
26.At this juncture, the learned counsel appearing for the Appellant in O.S.A.No.216 of 2005 would draw attention of this Court by relying upon Ex.P26-Letter dated 01.04.1997, which is much after consent decree passed in C.S.No.823 of 1996 on 22.01.1997. In Ex.P26, a notice was issued by M/S.Surana & Surana to plaintiffs/respondents, one Satnam Singh and the first defendant/Appellant. Plaintiffs/respondents are not parties in respect of Door No.154, Thambu Chetty Street. In such circumstances, merely because plaintiffs'/respondents' name finds place in para-1 of notice under Ex.P26, it will not create any right and liability in respect of Door No.154, Thambuchetty Street, Chennai-1.
27.Now it is appropriate on the part of this Court to consider the arguments advanced by the learned counsel for the first defendant/Appellant in O.S.A.No.251 of 2005. He has submitted that in para-9 of his written statement, he had given statement of accounts for legal fees, expenses for renovating the building and service charges. In respect of legal fees, M/S.Surana & Surana had issued notice claiming legal fees, which was marked as Ex.P21. In Ex.P21, it was specifically mentioned in para-4, which is extracted hereunder:
"4. .. .. The third of you has paid us Rs.2,10,650/- (Rupees two lakhs ten thousand and six hundred and fifty only) at the time of registration of the sale deed in favour of the third of you, representing 1% of the value of the sale deed. The balance Rs.7,89,350/- is payable by the first and second of you. It is long over due."
The above paragraph stated that "the third of you" (i.e.) the plaintiffs/respondents herein had paid Rs.2,10,650/- at the time of registration of the sale deed in his favour. So no document was shown that first defendant/Appellant in O.S.A.No.251 of 2005 paid the legal expenses due by plaintiffs/respondents. In the aforestated notice itself, it was stated that plaintiffs/respondents herein had paid the legal fees due to the counsel. Furthermore, in para-5 of the aforesaid notice, it was specifically mentioned as follows:
"5. .. .. The first and second of you are requested to pay us the said sum of Rs.7,89,350/- without any further delay and oblige. Your settlement of our account by early payment of Rs.7,89,350/- will be highly appreciated."
The above paragraph shows that only first defendant and Satnam Singh alone liable to pay Rs.7,89,350/-. Hence the argument advanced by the learned counsel Mr.S.R.Rajagopal appearing for the first defendant/Appellant in O.S.A.No.251 of 2005 that first defendant had paid legal fees to the concerned legal practitioner in respect of the payment of legal fees due to M/S.Surana & Surana, does not merit acceptance.
28.The second claim was expenses incurred for renovating building, which was specified as Rs.7,93,257.75. Even though first defendant/Appellant had filed a ledger to prove the same, he was not examined any independent witness and he had not filed any bills and vouchers regarding the same. In such circumstances, the learned single Judge had disbelieved the document and negatived the claim for Rs.7,93,257.75. So we do not find any infirmity in the findings of the learned single Judge not accepting the claim made by the first defendant/Appellant in O.S.A.No.251 of 2005.
29.The third claim was Rs.8,00,000/- service charges from the month of March 1996 to June 1997. But admittedly, first defendant/Appellant had not filed any single scrap of paper to show that he paid service charges. So we are of the considered view that first defendant/Appellant in O.S.A.No.251 of 2005 has not proved that he is entitled Rs.19,932,57.75/- for expenses incurred and that amount has been set off against the amount entitled by the plaintiffs/respondents in the suit. So we are concurred with the view of the learned single Judge in this aspect.
30.Calculation:
As per the statement of accounts filed by both sides, it has clearly proved that upto 28.02.1997, the total compensation is Rs. 74,38,686/-
(i)As per the payment of sale consideration, the plaintiffs/respondents paid Rs.2,10,65,000/-
(i.e.) 76.6%
(ii)First defendant/Appellant in
O.S.A.No.251/2005 had paid Rs. 64,35,000/-
(i.e.) 23.4%
(iii)From September 1995 to 28.02.1997,
interest/compensation amount is Rs. 74,38,686/-
(iv)Proportion for first defendant/Appellant : Rs. 17,40,652.24
(i.e.) Rs.74,38,686 X 23.4%
(v) Proportion for plaintiffs/respondents : Rs. 56,98,033.47
(i.e.) Rs.74,38,686 X 76.6%
(vi) Out of Rs.56,98,033.47,
plaintiffs/respondents received Rs. 8,75,000/-
(viii) Less: Balance amount, plaintiffs/respondents
are entitled to Rs. 48,23,033.47
31.But plaintiffs/respondents had calculated interest at the rate of 24% per annum from 01.03.1997 to 31.01.1999. But second defendant/Appellant in O.S.A.No.216 of 2005 admitted to pay Rs.4,80,000/- per month, which amounts to 21%. In such circumstances, we are of the considered view that interest calculated by the plaintiffs/respondents at the rate of 24% per annum from 01.03.1997 to 31.01.1999 is unacceptable. From 01.03.1997 to 31.01.1999, plaintiffs claimed interest at the rate of 24% p.a. Since the plaintiffs got the sale deed in July 1997, the interest claimed at the rate of 24% p.a. is exorbitant. Even though the transaction is a commercial transaction, it is to be borne in mind that plaintiff had taken the sale deed even in July 1997 and while so the plaintiffs cannot claim interest at the rate of 24% p.a. Considering the cost of living during the period, plaintiffs/respondents are entitled interest at the rate of 12% per annum from 01.03.1997 to 31.01.1999 (i.e.) from the date of filing the suit till the date of decree they are entitled to 9% p.a. and thereafter, 6% p.a. till realisation.
32. Now it is appropriate on the part of this Court to consider the document under Ex.P25, which is equivalent to Ex.D6, in which, it was mentioned that compensation for Door No.166, Thambu Chetty Street, has been adjusted towards the amount payable to balance sale consideration for the purchase of Door No.154, Thambu Chetty Street, which shows that first defendant had received entire compensation amount. Hence, both the defendants/appellants are jointly and severally liable to pay the amount of Rs. 48,23,033.47 to the plaintiffs/respondents with interest at the rate of 12% per annum from 01.03.1997 to the date of filing the suit and from the date of filing the suit till date of decree 9% p.a. and thereafter 6% p.a. till the date of realisation. Point No.3 is answered accordingly.
33. Plaintiffs also claimed rental income from Karur Vysya Bank for December 1996 and 1997, United Insurance Company's rental; and rental deposit of United India. While decreeing the suit as prayed for, the learned single Judge has also granted decree for the rental income also. The evidence adduced for the rental income is not convincing and therefore the plaintiffs are not entitled to the rental income.34.Point Nos.4 and 5
In view of Point Nos.1 to 3, we are of the considered view, plaintiffs/respondents are entitled compensation on pro-rata basis (i.e.) 76.6%. Admittedly, they had received Rs.8,75,000/-. So they are entitled the balance amount of Rs.48,23,033/- with interest at the rate of 12% per annum from 01.03.1997 to 31.01.1999. From the date of filing of the suit till the date of decree, the plaintiffs are entitled to 9% p.a. and thereafter at 6% p.a. till the date of realisation. Point Nos.4 and 5 are answered accordingly.
35.In the result, the judgment and decree dated 15.06.2005 made in C.S.No.182 of 1999 is modified and these Original Side Appeals are partly allowed. In these appeals, both the parties are directed to bear their own costs. Consequently, connected Miscellaneous Petitions are closed.
kj To The Sub Assistant Registrar, Original Side, High Court, Madras