Delhi District Court
Mohd. Arshim vs Mukesh Kumar on 31 January, 2020
IN THE COURT OF DR. SUDHIR KUMAR JAIN
DISTRICT & SESSIONS JUDGE, NORTH-EAST
KARKARDOOMA COURTS, DELHI
CS No 21/2016
CNR No DLNE 01 000116-2016
MOHD. ARSHIM
S/O ABDUL AZIZ
R/O 2644
USTANIWALI INCLUDING MASJID
MOHALLA NIARIYAN
DELHI-110006
....PLAINTIFF
V
MUKESH KUMAR
SON OF LALA RAM
R/O A-107/1
GALI NO 1, BRAHAM PURI
DELHI-110053
AND
W-40
JAI NARAIN VERMA ROAD
PWD COLONY, FAROOKHABAD
UP
....DEFENDANT
Date of Institution: 08.01.2016
Date of Arguments: 14.01.2020
Date of Judgment : 31.01.2020
JUDGMENT
1. An agreement of sale constitutes the terms and conditions of sale of a property by the seller to the buyer. These terms and conditions include the amount at which property is to CS 21/2016 MD. ARSHIM V MUKESH KUMAR 1/14 be sold and the future date of full payment. Being an important document in the sale transaction, it enables the process of sale to go through without any hurdles. All the terms and conditions included in the agreement of sale must be understood thoroughly by both the parties and obeyed throughout the sale process till the time the sale deed is made. Agreement of sale is the base document on which the sale deed is drafted. Sale deed is the document prepared at the time of full payment made by the buyer and when the actual transfer of the property takes place. The plaintiff filed present suit for recovery and pleaded as under:-
The plaintiff and the defendant entered into an agreement to sell dated 16.09.2013 in respect of the property bearing No. A-1078/1, out of Khasra No.233/1 measuring 100 sq. yards situated at Ghonda Chauhan Bangar, Gali No 1, Brahampuri, Delhi-110053 (hereinafter referred to as "suit property") stated to be owned by the defendant. The defendant assured the plaintiff that he is the registered owner of the suit property and on his assurance the plaintiff has agreed to purchase the suit property for a sale consideration of Rs.1,15,50,000/-. The plaintiff paid Rs.10,00,000/- as earnest money in cash against the receipt in presence of two independent witnesses. The defendant agreed to execute the title deed in favor of the plaintiff in respect of the suit property on 15.02.2014 and on that day, the plaintiff has to pay balance sale consideration to the defendant. The plaintiff repeatedly approached the defendant to receive the balance sale consideration and to execute the title deed in respect of the suit property. The plaintiff was always ready and willing to make the balance payment and abide by the terms and conditions of the agreement to sell dated 16.09.2013. The defendant asked the plaintiff to come at the Office of Sub-Registrar, Seelampur, Delhi on 17.02.2014 with the balance sale consideration. The plaintiff on 17.02.2014 waited for the defendant in the Office of Sub-
Registrar, Seelampur for execution of title deed in his favor after payment of balance sale consideration. The plaintiff also marked his presence in Office of Sub-Registrar vide receipt no.1052 dated 17.02.2014. The plaintiff approached the defendant on 18.02.2014. The defendant informed the plaintiff that the original owner of the suit property did not execute the title deed in favor of the defendant and due to this reason the defendant could not execute the title deed in respect of the suit property in favor of plaintiff. The defendant as such cheated and defrauded the plaintiff as the defendant was not the owner of the suit property at the time of agreement to sell dated 16.09.2013. The plaintiff is always ready and willing to perform his part of contract and to make payment of balance sale CS 21/2016 MD. ARSHIM V MUKESH KUMAR 2/14 consideration. The defendant has failed to execute the title deed in favor of the plaintiff in terms of agreement to sell dated 16.09.2013 as such the defendant is liable to pay the double amount of the earnest money i.e. Rs.20,00,000/-. The plaintiff served a legal notice of demand dated 28.08.2015 on the defendant but the defendant despite service did not reply said notice. The plaintiff being aggrieved filed the present suit for recovery of Rs.20,00,000/- against the defendant along with interest at the rate of 24% per annum from the date of filing of the suit till realization of the amount.
2. The defendant filed the written statement and contested the claim of the plaintiff. The defendant in preliminary objections stated that the suit is liable to be dismissed being not maintainable as the plaintiff did not take appropriate steps for completion of contract entered between the plaintiff and the defendant. The plaintiff has not appeared with clean hands and suppressed the material facts. The plaintiff after payment of Rs.10,00,000/- never approached the defendant for execution of relevant documents. The defendant in second week of February, 2014 approached the plaintiff for execution of the documents in favor of the plaintiff. The plaintiff explained his financial difficulty to the defendant but it was agreed that the plaintiff would get the suit property transferred in his favor on 17.02.2014. The defendant approached the Office of Sub-Registrar, Seelampur on 17.02.2014 and paid Rs.100/- to the office as token on his presence in the office. The defendant remained present in the office for entire day but the plaintiff did not come for execution of title document in his favor. The plaintiff has implicated the defendant in frivolous litigations.
The defendant on reply on merits stated that the plaintiff never turned up to perform his part of contract for execution of the title document in his favor after payment of settled amount as the financial position of the plaintiff was no good due to low price of the property. The defendant on 17.02.2014 approached the concerned Sub-Registrar and marked his presence twice vide slip no. 10539 and 10541 dated 17.02.2014 but the plaintiff did not come to the office of the concerned Sub-Registrar. The defendant denied other allegations of the plaintiff.
3. The plaintiff filed the replication wherein reasserted and reaffirmed the previous stand. The plaintiff repeatedly approached the defendant for execution of title document with balance sale consideration but the defendant prolonged execution of title document. The plaintiff was always willing to perform part of his contract and was capable of making balance payment of sale consideration.
CS 21/2016 MD. ARSHIM V MUKESH KUMAR 3/14
4. Vide order dated 16.08.2016 following issues were framed:-
(1) Whether the plaintiff is entitled for decree of Rs.20 lakhs along with interest, as prayed in the suit? OPP (2) Relief.
5. The plaintiff examined him as PW1 and tendered affidavit which is Ex.PW1/A. The plaintiff relied upon the documents which are Ex.PW1/1 to Ex.PW1/7. The plaintiff's evidence was ordered to be closed vide order dated 29.11.2016.
The defendant examined him as DW1, Sanjay Singh as DW2 and Sunder Singh as DW3 who tendered their respective affidavits which are Ex.DW1/A, Ex.DW2/A and Ex.DW3/A. The defendant's evidence was ordered to be closed vide order dated 15.01.2019.
6. Sh. Habib Ahmed, Advocate for the plaintiff and Sh. S.D. Tiwari, Advocate for the defendant heard. Record perused.
ISSUE WISE FINDINGS ARE AS UNDER ISSUE NO 1 Whether the plaintiff is entitled for decree of Rs.20 lakhs along with interest, as prayed in the suit? OPP
7. The plaintiff pleaded that he has paid Rs.10,00,000/- as earnest money to the defendant in pursuance of Agreement to Sell Ex.PW1/1 executed between the plaintiff and the defendant for the sale of the suit property stated to be owned by the defendant. The defendant despite assurance did not execute the title documents in favour of the plaintiff and also did not accept the balance sale consideration. The plaintiff had gone to the office of the Sub-Registrar Seelampur, Delhi on 17.02.2014 but the defendant did not come there for execution of the title deed in favour of the plaintiff in respect of the suit property after accepting the sale consideration. The defendant has failed to execute title documents despite the service of the Legal Notice dated 28.08.2015. The plaintiff is claiming refund of double amount of the earnest money of Rs.10,00,000/- in paid in pursuance of Ex.PW1/1. The plaintiff to prove its case examined him as PW1 and tendered the affidavit Ex.PW1/A. The plaintiff in affidavit Ex.PW1/A also deposed about the execution of the Agreement to Sell dated 16.09.2013 Ex.PW1/1 in respect of the sale of the suit property between the plaintiff and the defendant for a sale consideration of Rs.1,15,50,000/- and payment of Rs.10,00,000/- as earnest money vide Receipt Ex.PW1/2. The plaintiff in CS 21/2016 MD. ARSHIM V MUKESH KUMAR 4/14 affidavit Ex.PW1/A also proved the Legal Notice dated 28.08.2015 as Ex.PW1/4. The plaintiff in cross-examination deposed that he did not know whether he was having sufficient money on relevant date for transferring the suit property in his name and denied the suggestion that he was not having sufficient money for the transfer of the suit property in his name. The plaintiff could not tell whether the market value of the suit property came down after execution of Agreement to Sell Ex.PW1/1 and denied the suggestion that due to the recession in the market value of the suit property he did not approach the defendant for the transfer of the suit property in his name. The plaintiff in the year 2013-14 was earning Rs.20,000/- per month by doing work of embroidery. The plaintiff admitted that he is not ready to purchase the suit property as the market value of the suit property has come down. The plaintiff has denied the suggestion that the defendant had suffered the loss/damage due to non-payment of balance sale consideration by him. The plaintiff also proved Receipt dated 17.02.2014 as Ex.PW1/2 to establish his visit to the office of Sub-Registrar, Seelampur, Delhi on 17.02.2014.
8. The defendant alleged that the plaintiff has not taken any step for execution of the Agreement to Sell Ex.PW1/1 for more than one and half years. The plaintiff after payment of Rs.10,00,000/- as earnest money never approached the defendant for payment of balance sale consideration and execution of the title deed in his favour. However, as per mutual settlement 17.02.2014 was fixed for transfer of suit property in favour of the plaintiff and by executing necessary documents in the office of Sub-Registrar, Seelampur. The defendant visited in the office of Sub-Registrar, Seelampur on 17.02.2014 but the plaintiff did not come for doing the necessary acts regarding the execution of the title deed in his favour in respect of the suit property. The defendant in affidavit Ex.DW1/A also deposed said facts and deposed that on 17./02.2014 he had gone to office of Sub-Registrar, Seelampur and placed on record two Receipts bearing no.10539 & 10541 which are Ex.DW1/1 & Ex.DW1/2. The defendant in the cross-examination deposed that he purchased the suit property in the year 2012. The defendant on 17.02.2014 was accompanied by DW2 Sanjay Singh and DW3 Sunder Singh to the office of Sub-Registrar, Seelampur. The defendant has taken the title documents in respect of the suit property to the office of Sub-Registrar, Seelampur. The defendant denied the suggestions that he was not the owner of the suit property at the time of the execution of the Agreement to Sell Ex.PW1/1 or that he was not competent to execute the sale documents in favour of the CS 21/2016 MD. ARSHIM V MUKESH KUMAR 5/14 plaintiff. The defendant admitted that he did not send any notice or written letter to the plaintiff regarding the execution of the title deed in favour of the plaintiff in respect of the suit property and for payment of balance sale consideration. The defendant in the cross- examination admitted that the sale deed was never executed by previous owner namely, Pradeep Rawal of the suit property who is in possession of the suit property and the defendant never remained in the possession of the suit property. The defendant to corroborate and support his testimony also examined Sanjay Singh as DW2 and Sunder Singh as DW3 who in their respective affidavits Ex.DW2/A and Ex.DW3/A deposed that on 15.02.2014 the defendant approached the plaintiff for execution of the title documents in respect of the suit property and it was agreed that the plaintiff shall be executing title documents in respect of the suit property on 17.02.2014 but the plaintiff did not come to the office of Sub-Registrar, Seelampur on 17.02.2014.
9. It is reflecting from the respective pleadings and evidence of the plaintiff and the defendant that Agreement to Sell dated 16.09.2013 Ex.PW1/1 was executed between the plaintiff and the defendant for the sale of the suit property for a total consideration of Rs.1,15,50,000/- and the plaintiff has paid Rs.10,00,000/- as earnest money to the defendant. However, the title deed in respect of the suit property was never executed between the plaintiff and the defendant and the plaintiff did not pay balance sale consideration in respect of the suit property. The defendant in Agreement to Sell Ex.PW1/1 mentioned that the suit property was free from all encumbrances. It was also agreed that in case of default on the part of the plaintiff, the earnest money shall be liable to be forfeited by the defendant and in case of default on the part of the defendant, he shall be liable to pay double amount of the earnest money back to the plaintiff. The defendant did not place or prove any document to reflect that he was the actual owner of the suit property and was also competent to enter into Agreement to Sell Ex.PW1/1 and to execute title documents in favour of the plaintiff. The cross-examination of the defendant is relevant wherein he admitted that the Agreement to Sell was executed by Pradeep Rawal, owner of the suit property in his favour but no sale deed was executed by Pradeep Rawal in his favour. The defendant in cross-examination admitted that the suit property is in the possession of Pradeep Rawal and the defendant never remained in possession of the suit property. The defendant also did not produce Agreement to Sell stated to be executed by Pradeep Rawal in his favour despite his deposition in cross-examination that he can CS 21/2016 MD. ARSHIM V MUKESH KUMAR 6/14 produce the Agreement to Sell executed by Pradeep Rawal in his favour. It reflects that on the day of execution of Agreement to Sell Ex.PW1/1, the defendant was not owner in possession of the suit property. The defendant also did not mention said facts in the written statement.
10. The plea of the defendant that on 17.02.2014 he was accompanied by DW2 Sanjay Singh and DW3 Sunder Singh when he visited office of Sub-Registrar, Seelampur for execution of title deed in favour of the plaintiff in respect of the suit property and to accept balance sale consideration. The defendant did not mention the said fact in the written statement that he was accompanied by DW2 Sanjay Singh and DW3 Sunder Singh on 17.02.2014 at the time of his visit to the office of Sub-Registrar, Seelampur. These were the material facts required to be mentioned in the written statement. In the absence of such pleas in written statement, it does not inspire any confidence that the defendant was accompanied by DW2 Sanjay Singh and DW3 Sunder Singh on 17.02.2014 at the time of his visit to the office of Sub-Registrar, Seelampur. In Maria Margarida Sequeria Fernandes V Erasmo Jack de Sequeria, (2012)5SCC370, the Supreme Court laid stress on purity of pleadings in civil cases. It was observed that pleadings are extremely important in civil cases and in order to do justice, it is necessary to give all details in the pleadings. This view was again reaffirmed in A. Shanmugam V Ariya Kshatriya Rajakula Vamsathu Madalaya Nandhavana Paripalanai Sangam, (2012)6SCC430.
11. The plaintiff admitted that he entered into Agreement to Sell Ex.PW1/1 for the purchase of the suit property from the defendant for sale consideration of Rs.1,15,50,000/- and he has paid Rs.10,00,000/- as earnest money. However, the plaintiff did not lead sufficient and adequate evidence to prove that he was having financial resources to pay the balance sale consideration to the defendant in terms of Agreement to Sell Ex.PW1/1. The plaintiff in the cross-examination admitted that he did not know whether he was having sufficient money on relevant day for the transfer of the suit property in his favour and denied the suggestion that he was not having sufficient money for the payment of the balance sale consideration. The plaintiff did not place any document which can reflect or prove that he was having the sufficient money for payment of balance sale consideration. The plaintiff in Legal Notice dated 28.08.2015 Ex.PW1/4 mentioned that still he is ready to perform his part of contract by making payment of balance sale consideration but the said plea of the plaintiff does not inspire any confidence in absence of the requisite documents.
CS 21/2016 MD. ARSHIM V MUKESH KUMAR 7/14 The plaintiff could not prove that he was having sufficient financial arrangement for the payment of balance sale consideration to the defendant in respect of the suit property on 17.02.2014.
12. It is admitted by the plaintiff and the defendant that the plaintiff has paid Rs.10,00,000/- to the defendant as earnest money in pursuance of the Agreement to Sell Ex.PW1/1 and the Agreement to Sell Ex.PW1/1 did not mature into executon of the sale deed/title document in respect of the suit property in favour of the plaintiff. The issue which needs judicial consideration and determination is that whether the plaintiff is entitled for recovery of earnest money from the defendant as per terms and conditions of the Agreement to Sell Ex.PW1/1. It is apparent from the analysis of the respective pleadings and evidence of the plaintiff and the defendant that both of them committed default towards execution of terms and conditions as mentioned in Agreement to Sell Ex.PW1/1.
13. Section 74 of the Indian Contract Act, 1872 deals with compensation for breach of contract where penalty is stipulated. It reads as under:-
74. Compensation for breach of contract where penalty stipulated for:- When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for.
It is necessary to consider whether section 74 applies to stipulations for forfeiture of amounts deposited or paid under the contract. The expression "the contract contains any other stipulation by way of penalty" comprehensively applies to every covenant involving a penalty whether it is for payment on breach of contract of money or delivery of property in future or for forfeiture of right to money or other property already delivered. Duty not to enforce the penalty clause but only to award reasonable compensation is statutorily imposed upon courts by Section 74. In all cases, therefore, where there is a stipulation in the nature of penalty for forfeiture of an amount deposited pursuant to the terms of contract which expressly provides for forfeiture, the court has jurisdiction to award such sum only as it considers reasonable, but not exceeding the amount specified in the contract as liable to forfeiture. Section 74 declares the law as to CS 21/2016 MD. ARSHIM V MUKESH KUMAR 8/14 liability upon breach of contract where compensation is by agreement of the parties predetermined or where there is a stipulation by way of penalty. Section 74 does not confer a special benefit upon any party; it merely declares the law that notwithstanding any term in the contract predetermining damages or providing for forfeiture of any property by way of penalty, the court will award to the party aggrieved only reasonable compensation not exceeding the amount named or penalty stipulated. The jurisdiction of the court is not determined by the accidental circumstance of the party in default being a plaintiff or a defendant in a suit. Use of the expression "to receive from the party who has broken the contract" does not predicate that the jurisdiction of the court to adjust amounts which have been paid by the party in default cannot be exercised in dealing with the claim of the party complaining of breach of contract. The court has to adjudge in every case reasonable compensation to which the plaintiff is entitled from the defendant on breach of the contract. Such compensation has to be ascertained having regard to the conditions existing on the date of the breach.
14. The Supreme Court of India in Fateh Chand V Balkishan Das, 1964 SCR (1) 515 regarding section 74 of the Indian Contract Act, 1872 observed as under:-
The section is clearly an attempt to eliminate the somewhat elabo- rate refinements made under the English common law in distin- guishing between stipulations providing for payment of liquidated damages and stipulations in the nature of penalty. Under the com- mon law a genuine pre-estimate of damages by mutual agreement is regarded as a stipulation naming liquidated damages and binding between the parties: a stipulation in a contract in terrorem is a penalty and the Court refuses to enforce it, awarding to the ag- grieved party only reasonable compensation. The Indian Legislature has sought to cut across the web of rules and presumptions under the English common law, by enacting a uniform principle applicable to all stipulations naming amounts to be paid in case of breach, and stipulations by way of penalty.
Section 74 of the Indian Contract Act deals with the measure of dam- ages in two classes of cases
(i) where the contract names a sum to be paid in case of breach and
ii) where the contract contains any other stipulation by way of penalty......The measure of damages in the case of breach of a stipu-
lation by way of penalty is by S. 74 reasonable compensation not ex- ceeding the penalty stipulated for. In assessing damages the Court has, subject to the limit of the penalty stipulated, jurisdiction to award such compensation as it deems reasonable having regard to CS 21/2016 MD. ARSHIM V MUKESH KUMAR 9/14 all the circumstances of the case. Jurisdiction of the Court to award compensation in case of breach of contract is unqualified except as to the maximum stipulated; but compensation has to be reasonable, and that imposes upon the Court duty to award compensation ac-
cording, to settled principles. The section undoubtedly says that the aggrieved party is entitled to receive compensation from the party who has broken the contract, whether or not actual damage or loss is proved to have been caused by the breach. Thereby it merely dis-
penses with proof of "actual loss or damages"; it does not justify the award of compensation when in consequence of the breach no legal injury at all has resulted, because compensation for breach of con- tract can be awarded to make good loss or damage which naturally arose in the usual course of things, or which the parties knew when they made the contract, to be likely to result from the breach.
15. The Supreme Court in subsequent decisions took different views. The Supreme Court in Shree Hanuman Cotton Mills and Others V Tata Air Craft Limited, 1969 (3) SCC 522 elaborately discussed the principles emerged from the expression "earnest money which re as under:-
1. It must be given at the moment at which the contract is concluded.
2. It represents a guarantee that the contract will be fulfilled or, in other words, "earnest" is given to bind the contract.
3. It is part of the purchase price when the transaction is carried out.
4. It is forfeited when the transaction falls through by reason of the default or failure of the purchaser.
5. Unless there is anything to the contrary in the terms of the contract, on default committed by the buyer, the seller is entitled to forfeit the earnest.
In Maula Bux V Union of India, 1970 (1) SCR 928, it was held that forfeiture of earnest money under a contract for sale of property-movable or immovable-if the amount is reasonable does not fall within Section 74. The forfeiture of a reasonable amount paid as earnest money does not amount to imposing a penalty. But if forfeiture is of the nature of penalty, Section 74 applies. In Delhi Development Authority V Grihstrapana Cooperative Group Housing Society Ltd., 1995 Supp (1) SCC 751, the Supreme Court following the judgment in Shree Hanuman Cotton Mills held that the forfeiture of the earnest money was legal. In V. Lakshmanan V B.R. Mangalgiri and others, (1995) Suppl. (2) SCC33, the Supreme Court held that the respondents are entitled to forfeit the entire amount when the contract fell through by the default committed by the appellant. The Supreme Court took similar views in Housing Urban Development Authority and another V Kewal Krishan Goel and others, (1996) 4 SCC 249 and CS 21/2016 MD. ARSHIM V MUKESH KUMAR 10/14 Videocon Properties Ltd. V Dr. Bhalchandra Laboratories and others, (2004) 3 SCC
711. In Satish Batra V Sudhir Rawal, Civil Appeal No. 7588 / 2012 decided on 18th October, 2012 the question come up for consideration was whether the seller is entitled to forfeit the earnest money deposit where the sale of an immovable property falls through by reason of the fault or failure of the purchaser. The Trial Court dismissed the suit by holding that the defendant is entitled to retain the amount of earnest money since the plaintiff had failed to pay the balance amount. The High Court after placing reliance on Fateh Chand took the view that the seller is entitled to forfeit only a nominal amount and not the entire amount. The Supreme Court after analyzing earlier judgments delivered by the Supreme Court held that the seller was justified in forfeiting earnest money as per the relevant clause since the earnest money was primarily a security for the due performance of the agreement and, consequently, the seller is entitled to forfeit the entire deposit. It was observed as under:-
Earnest money or deposit also, thus, serves two purposes of being part payment of the purchase money and security for the performances of the contract by the party concerned, which paid it.
Law is, therefore, clear that to justify the forfeiture of advance money being part of 'earnest money' the terms of the contract should be clear and explicit. Earnest money is paid or given at the time when the contract is entered into and, as a pledge for its due performance by the depositor to be forfeited in case of non- performance, by the depositor. There can be converse situation also that if the seller fails to perform the contract the purchaser can also get the double the amount, if it is so stipulated. It is also the law that part payment of purchase price cannot be forfeited unless it is a guarantee for the due performance of the contract. In other words, if the payment is made only towards part payment of consideration and not intended as earnest money then the forfeiture clause will not apply.
16. The High Court of Delhi in Bhuley Singh V Khazan Singh & Others, RFA no.422/11 refers the principles laid upon by the Supreme Court in Fateh Chand observed that the appellant/plaintiff could claim a sum of Rs.5,00,000/- from the respondents/defendants which was paid under the agreement to sell as an earnest amount on the basis of the undisputed position that the respondents/defendants did not plead or prove that loss had been caused to them so as to entitle them to forfeit the amount paid to them under the Agreement to Sell. It was further observed that the Constitution Bench of the Supreme CS 21/2016 MD. ARSHIM V MUKESH KUMAR 11/14 Court in the case of Fateh Chand makes it more than clear that a mere breach of contract by a buyer does not entitle the seller to forfeit the amount as received unless loss is proved to have been caused to the prospective sellers/defendants/respondents. The principles laid down in Fateh Chand that forfeiture of a reasonable amount is not penalty but if forfeiture is of a large amount the same is in the nature of penalty attracting the applicability of Section 74; have been recently reiterated by the Supreme Court in the case of V.K.Ashokan V CCE, 2009 (14) SCC 85. The Court did not accept argument raised on behalf of the respondents/defendants that it was the duty of the appellant/plaintiff to plead that no loss was caused to the respondents/defendants and therefore the amount could not have been forfeited because once it is admitted that the respondents/defendants have received an amount, and it was their/defendants'/respondents' case that they were entitled to forfeit such amount, it was for the respondents/defendants therefore to plead and prove that they could forfeit such an amount. Thus unless, there are pleadings and proof as to entitlement to forfeit the amount on account of loss being caused there cannot be a forfeiture in view of the ratio of Fateh Chand's case.
17. The High Court of Delhi in M.C. Luthra V Ashok Kumar Khanna, RFA No. 780/2017 decided on 27.2.2018 with reference to the Constitution Bench judgment of the Supreme Court in Fateh Chand and as explained by the recent judgment of the Supreme Court in Kailash Nath Associates V Delhi Development and Another, (2015) 4 SCC 136 held that there cannot be forfeiture of an amount paid under an agreement to sell once no loss is pleaded and proved by a proposed seller under an agreement to sell. For refunding of the amount of earnest money/advance price paid under the agreement to sell courts are entitled to invoke the powers under Order VII Rule 7 CPC. It was also observed that the ratio of the judgment of the Constitution Bench of five judges of the Supreme Court in Fateh Chand's would prevail and as explained in Kailash Nath Associates. The High Court of Delhi in Rajbir Singh & Another V Jaswant Yadav, RFA No 404/2018 decided on 14th May 2018 after analyzing law observed that there is no illegality in the impugned judgment which directs refund of the advance price/earnest money paid to the appellants/defendants by the respondent/plaintiff under the subject agreement to sell inasmuch as there is no dispute that appellants/defendants have not pleaded or proved any loss caused to them on account of any alleged breach of the agreement to sell by the respondent/plaintiff. (See Also Sudesh Kakkar V Sh. Satish Mittal, RFA No.216/2017 decided on 30 July, 2018; Arun Khanna V Sumit, RFA No.1014/2018 decided on 17 CS 21/2016 MD. ARSHIM V MUKESH KUMAR 12/14 December, 2018)
18. The plaintiff did not plead and proved that he suffered loss as sale deed/title deed in respect of the suit property was not executed by the defendant. There is no whisper in the plaint that the plaintiff has suffered financial losses due to non-execution of the sale deed in respect of the suit property in his favour by the defendant. The affidavit Ex.PW1/A tendered by the plaintiff in the evidence is also silent regarding the losses allegedly suffered by the plaintiff due to non-execution of sale deed in respect of the suit property in his favour by the defendant. The plaintiff also did not cross-examine the defendant that the plaintiff has suffered financial losses due to the omission of the defendant. There is absolutely no material which can reflect about the financial losses suffered by the plaintiff due to failure of the defendant to execute the sale deed in favour of the plaintiff in respect of the suit property.
The defendant also did not plead in the written statement that he has suffered losses due to the non-payment of balance sale consideration by the plaintiff. The affidavit Ex.DW1/A tendered by the defendant in evidence is also silent regarding the losses allegedly suffered by the defendant due to non-payment of balance sale consideration by the plaintiff in terms of agreement to sell. The plaintiff was also not cross-examined by the defendant in material particulars regarding the financial losses suffered by him. The plaintiff in cross-examination denied the suggestion that the defendant has suffered losses/damage due to non-payment of balance sale consideration by the plaintiff to the defendant. The plaintiff has only admitted that he is not ready to purchase the suit property as the market value of the suit property has come down which is not sufficient to prove that the defendant has actually suffered or incurred losses due to non-payment of balance sale consideration by the plaintiff. There is no evidence to prove that any loss was suffered either by the plaintiff or the defendant due to the transaction subject matter of Agreement to Sell Ex.PW1/1. There is no concrete evidence that the suit property has depreciated in value since the date of Agreement to Sell Ex.PW1/1. There is also no evidence to prove that special damage is resulted or caused either to the plaintiff or to the defendant. The plaintiff as such is not entitled to claim double amount of the earnest money as prayed from the defendant and the defendant is also not entitled to forfeit earnest money of Rs.10,00,000/- paid by the plaintiff to the defendant. The plaintiff is only entitled to recover Rs.10,00,000/- which was paid by him as earnest money to the defendant along CS 21/2016 MD. ARSHIM V MUKESH KUMAR 13/14 with nominal interest. Issue no.1 is accordingly decided in favour of the plaintiff and against the defendant.
ISSUE NO.2 RELIEF
19. The entire journey of the judicial process is to find the truth from the pleadings, documents and evidence of the parties. Truth is the basis of the justice. The Supreme Court in Dalip Singh V State of UP, (2010)2SCC114 observed that truth constituted an integral part of the justice delivery system. In Maria Margarida Sequeria Fernandes it was observed that the truth should be guiding star in the entire judicial process. Truth alone has to be the foundation of justice. This view was reiterated in A. Shanmugam. In view of above discussion, the plaintiff is entitled only for the recovery of Rs.10,00,000/ from the defendant. Accordingly, the suit of the plaintiff is partly decreed and a decree of Rs.10,00,000/ along with proportionate cost and simple interest @ 9% per annum from the date of the filing of the suit till realisation is passed in favour of the plaintiff and against the defendant. Decreesheet be prepared accordingly. File be consigned to record room.
SUDHIR Digitally signed by
SUDHIR KUMAR JAIN
ANNOUNCED IN THE OPEN KUMAR Location: Karkardooma
Courts
Date: 2020.02.01
JAIN
COURT ON 31st JANUARY, 2020
03:25:15 +0530
(DR. SUDHIR KUMAR JAIN)
DISTRICT AND SESSIONS JUDGE
NORTH EAST
KARKARDOOMA COURTS, DELHI
CS 21/2016 MD. ARSHIM V MUKESH KUMAR 14/14