Delhi District Court
Leo Roadlines Pvt. Ltd vs M/S Imperia Structures Ltd on 15 April, 2023
IN THE COURT OF Ms. NIRJA BHATIA
DISTRICT JUDGE (COMM. COURT-06),
SOUTH-EAST DISTRICT, SAKET COURT, NEW DELHI
CS (Comm) 286/2021
Leo Roadlines Pvt. Ltd.
G-25A, LGF, Basement, Flat No. 1,
Vishkarma Colony, M B Road, Pul Pehladpur,
New Delhi-110044.
Through its Director Sh. Sanjeev Maggu
..... Plaintiff
Versus
1. M/S Imperia Structures Ltd.
A-25, Mohan Cooperative Industrial Estate
Mathura Road, New Delhi-110044
.....Defendant no. 1
2. Sh. Harpeet Singh Batra
Director of M/S Imperia Structures Ltd.
A-25, Mohan Cooperative Industrial Estate
Mathura Road, New Delhi-110044.
.....Defendant no. 2
3. Sh. Ram Singh
Director of M/S Imperia Structures Ltd.
A-25, Mohan Cooperative Industrial Estate
Mathura Road, New Delhi-110044.
....Defendant no. 3
4. Sh. Brajinder Singh Batra.
Director of M/S Imperia Structures Ltd.
A-25, Mohan Cooperative Industrial Estate
Mathura Road, New Delhi-110044.
CS (COMM) 286/2021
Leo Roadlines Vs. M/s Imperia Structures
Page no. 1 of 28
.....Defendant no. 4
5. Sh. Karaj Singh
Director of M/S Imperia Structures Ltd.
A-25, Mohan Cooperative Industrial Estate
Mathura Road, New Delhi-110044.
.... Defendant no. 5.
Date of Institution: 23.08.2021
Arguments concluded on : 31.03.2023
Date of Judgment: 15.04.2023
JUDGMENT
In brief the factual matrix presented by parties for rendering the present decisions as below:-
Facts stated by the plaintiff.
(1) (a) The M/S Leo Roadlines Pvt. Ltd. (hereinafter referred as plaintiff) is a company incorporated under the Companies Act and is having its office at Mehrauli, Badarpur Road, Mumbai. Whereas, M/S Imperia Structures Ltd and Ors ( hereinafter referred as defendant ) is also a limited company incorporated under Companies Act and is engaged in the business of Real Estate having its office at Mohan Cooperative Industrial Estate, Mathura Road.
(b) The plaintiff booked a commercial space measuring 5000 + 250 lockable sq. ft. for a total consideration of Rs.
28,45,000/-. The initial payment of Rs. 2,50,000/- was made at the time of registration in the year of 2011. The CS (COMM) 286/2021 Leo Roadlines Vs. M/s Imperia Structures Page no. 2 of 28 balance amount was payable in installment in terms of construction linked payment plan.
(c) The plaintiff was allotted a space i.e. Flat No. A 6 th Floor 040 as well as customer id no. IMP-B-0040 in project of defendant named Imperia Byron situated at Sector-62, Gurgaon, Haryana.
(d) The plaintiff made following payments in installment:-
Receipt No. Payment Cheque No. &
Date
0041 dated Rs. 2,00,000/- 932748,
25.08.2011 25.07.2011
0072 dated Rs. 50,000/- 932749,
25.08.2011 23.08.2011
0238 dated Rs. 2,62,875/- 185743
30.09.2011 19.09.2011
0874 dated Rs. 2,60,876/- 833117
17.03.2016 17.03.2016
(e) The defendant raised a demand of Rs. 2,60,876/-
on 08.12.2015 which was payable within 15 days. Plaintiff wrote a corresponding letter on 19.12.2015 asking about the status of the construction alleging that even the basic process of initiating the construction has not commenced despite lapse of 4 years. The sanctioned plan for construction and title deeds of the company alongwith the approvals for project were demanded from defendant. However, the letter of plaintiff was not acknowledged and the defendant issued another demand letter dated CS (COMM) 286/2021 Leo Roadlines Vs. M/s Imperia Structures Page no. 3 of 28 29.12.2015 as a reminder, which was then corresponded with letter dated 04.01.2016 reiterating the request raised for providing the status of construction etc. as agitated in letter dated 19.12.2015. As no response was received, plaintiff wrote another letter dated 16.01.2016.
(f) Plaintiff alleges that all the requests and demand for sharing the status of land and construction on which project was proposed as well as details of sanctions were never stated back by defendant, who in the meanwhile informed through letter dated 15.03.2016 about the change in the name of the project from 'Imperia Byron' to 'Mind Space'. The defendant claimed its best endeavors and efforts for completing construction of the project by November 2018. An amount of Rs. 2,60,876/- on 17.03.2016 against receipt no. 0874 dated 17.03.2016 was deposited by plaintiff.
(g) Defendant sent other demand letters i.e. on 07.11.2016 for Rs. 3,65,750/-, on 28.06.2017 for Rs. 6,20,000, and on 12.10.2017 for Rs. 10,02,711/- and a purported final demand on 09.05.2018 to deposit Rs. 15,77,811/- immediately. The plaintiff was threatened of cancellation of allotment in the event of failure. However, despite issuing the threats defendant did not offer any status or the proof etc. of construction.
(h) As nothing was heard from the side of defendant for long period plaintiff demanded refund of amounts deposited till then for which plaintiff issued a letter to CS (COMM) 286/2021 Leo Roadlines Vs. M/s Imperia Structures Page no. 4 of 28 defendant on 21.05.2019 asking for refund along with interest for the reason that defendant failed to comply with any of the requests detailing about the status of the construction and its progress to plaintiff at any stage whatsoever. As despite above the payments were not received, defendant was served with legal demand notice dated 23.07.2020 asking for tendering the amount of Rs. 7,73,751/- paid till then along with interest @ 18%. Finally, as no payment was made, present suit was filed.
Facts stated by the defendant.
(2) (a) The defendant filed its written statement and proposed to traverse the account of facts stated in the plaint. While presenting its assessment of the facts, the defendant claimed that plaintiff had approached the defendant for allotment of commercial space and had made an application for allotment. As per the application form, plaintiff was well aware of conditions of allotment, that if the buyer did not fulfill the terms of the allotment, the defendant was authorized to forfeit the earnest money along with interest paid with other amounts of non- refundable nature. Accordingly, as per the combined reading of clause 12, 13 and 20, defendant was entitled to forfeit 15% of the sale price as earnest money and since the plaintiff did not fulfill the terms of the allotment the unit was cancelled and the amounts were forfeited.
CS (COMM) 286/2021 Leo Roadlines Vs. M/s Imperia Structures Page no. 5 of 28
(b) Defendant then raised doubt qua the maintainability of the present suit and stated that suit is bad for non- compliance of mandated provision of Section 12 A of Commercial Courts Act as well as for misjoinder of parties as the plaintiff has stated no reason for impleadment of its directors.
(c) While stating on merits, it is admitted that plaintiff was allotted unit bearing, Flat No. A 6 th Floor 040 in the project which was initially known as 'Imperia Byron' and was later renamed as 'Mind Space'. The project was belonging to defendant no. 1 and is of commercial and living spaces against which total amount of Rs. 30,19,961/- as per construction linked plan was payable in installments on completion of each level of construction. The receipts of amounts from plaintiff were admitted.
(d) Defendant averred that due to constant defaults made by plaintiff, several reminders were issued and lastly a final notice was delivered to plaintiff on 10.05.2018. Since as per clause 20 of the Application Form in case of delay of 60 days or beyond, the defendant was within its rights to terminate the allotment agreement and forfeit the earnest money. The allotment dated 09.01.2013 was recalled and unit was canceled. Whereafter the plaintiff was refunded the amount of Rs. 2,99,170/-. The defendant denied the receipt of letters dated 04.01.2016 and 19.12.2015 written from the end of plaintiff.
CS (COMM) 286/2021 Leo Roadlines Vs. M/s Imperia Structures Page no. 6 of 28
(e) Defendant admitted delay in delivering the possession, however, cited it as inevitable due to reasons beyond its control for the occurrence of unforeseen circumstances.
Replication and issues.
(3) Replication is filed wherein the fact stated in the plaint are reasserted and that of the Written Statement are denied. As the pleadings were complete, issues came to be framed vide order dated 06.12.2022 as under:-
(1) Whether plaintiff is entitled for the recovery of suit amounting to Rs. 7,73,751/- , as prayed? (OPP) (2) Whether any rate @ 18% p.a., as claimed, is payable? (OPP) (3) Whether the plaitiff is entitled to any costs, if so, what amount? (OPP) (4) Whether dispute inter-se/subject matter does not fall under the definition of Commercial Disputes within the domain of definition as suggested in the Act? (OP parties) (5) Whether suit is bad rejoinder for respondents No. 2 to 5? (OPD) (6) Any other relief?
(4) During the case management hearing Ld. Advocate Sh.
Abhishek Semwal was appointed as Local Commissioner for taking record of the evidence. The Ld. L.C. tendered his detailed report stating the demeanor of defendant CS (COMM) 286/2021 Leo Roadlines Vs. M/s Imperia Structures Page no. 7 of 28 which led to the imposition of cost. In view of the fact that despite taking time repeatedly order of cost remained uncomplied, further opportunities were closed and defence was directed to be struck off, in view of the amended provisions of Section 35 CPC.
(5) Final Arguments were addressed. Both sides have made their respective submissions and have perused the record and in light of detailed evidence of the parties and their respective submissions I propose to record my reasons in arriving at below findings, issue wise:-
Issue no. 4 (Non-compliance of Pre-Litigation Mediation) (6) I propose to deal with the issue of entitlement of plaintiff in wake of the specific objection to the maintainability in the first instance as it has the competence to strike at the legality and subsistence of the present proceedings.
(7) The defendant in the written statement claimed that the suit under the domain of Commercial Courts Act is not to be maintained for the reason that plaintiff avoided to take recourse to the provisions of Section 12 A, now a mandatory provision whereby it is a pre-requisite to invoke the pre-litigation mediation before filing the suit. However, the plaintiff rebutted the submissions and brought to the notice the report issued by the District Secretary, DLSA, South-East whereby notice was issued to the defendant for CS (COMM) 286/2021 Leo Roadlines Vs. M/s Imperia Structures Page no. 8 of 28 participation in the pre-litigation mediation and consequent to non-participation dated 27.03.2021 the non-starter report was returned. The original with the signature of the authority vide letter no. 625/11/Med/SE/DLSA/2020/1440-
41 which is neither rebutted nor disputed is placed on record. It is observed that though no exhibit mark is put upon the document, the court can take note of it being issued as an outcome during the domain of process established through SOP attached to the Commercial Courts Act. In circumstances above the objection is devoid of any merit and no further discussion on the above aspect is requisited or is called for.
Issue no. 5 ( Mis-Joinder of parties) (8) The objection regarding the misjoinder of parties i.e. the director of defendant no. 1 is raised on the ground that plaintiff has failed to show or even remotely suggest participation or involvement of any of the directors individually in any act concerning the matter. The plaintiff hence cannot be allowed to pierce the corporate veil and impunge their acts.
(9) It is not denied that defendant no. 1 is a juristic person, being a public limited company having its own independent identity and is competent to sue or being sued for the reason of incorporation. There is no denial that defendant no. 2 to 5 are the directors, and though are responsible for managing day to day affairs of Defendant no. 1. No evidence qua their direct or motivated CS (COMM) 286/2021 Leo Roadlines Vs. M/s Imperia Structures Page no. 9 of 28 participation in the act and affairs relating to the present cause is raised by plaintiff specifically. It is pertinent at this stage to take note of Law laid down in 2019 SCC Online Del 9505 in case titled as " Gurmeet Satwant Singh and Others Vs. Meera Gupta and Another" DOD 02.08.2019. wherein following observation is made in Para 9 & 10 which are reproduced below:-
9. The doctrine of lifting the corporate veil is available in limited circumstances where it is permitted by statute, or where the corporate structure has been instituted to perpetuate a fraud. Following its decision in LIC vs. Escorts Ltd (1986) 1 SCC 264, the Supreme Court has had occasion to explain this doctrine in several judgments. While the class of cases in which lifting of the corporate veil may be resorted to has not been exhaustively defined, broadly this course is available when contemplated by statute, or required to ensure that effect is given to a beneficent legislation, or where the corporate structure has been created to perpetuate a fraud. The conditions have been summarized thus in the recent judgment of the Supreme Court in Arcelormittal India Private Limited vs. Satish Kumar Gupta & Ors (2019) 2 SCC 1:
"37. It is thus clear that, where a statute itself lifts the corporate veil, or where protection of public interest is of paramount importance, or where a company has been formed to evade obligations imposed by the law, the court will disregard the corporate veil. Further, CS (COMM) 286/2021 Leo Roadlines Vs. M/s Imperia Structures Page no. 10 of 28 this principle is applied even to group companies, so that one is able to look at the economic entity of the group as a whole."
10. The averments contained in the plaint, in the present case, do not include any allegation which would justify the lifting of the corporate veil.
(10) In circumstances above, the defendant no. 2 to 5 are held as not necessary parties, however, for the aforesaid reason, the suit does not become bad as is settled law and can find way to a logical conclusion on merits as admitted. The defendant no. 1 being a body incorporate has its own juristic identity and can be sued as an independent entity. There is no dispute that the contratual relationship is caused at its end and assertion qua fixing the liability for breach is to be traced up to defendant no.1 in its capacity as a separate juristic person which is admitted by the defendants itself. Hence, on the basis of above reason the issue is partly decided in favour of defendant and partly in favour of the plaintiff.
Issue no. 2, 3 and 6 ( Entitlement and Interest) (11) The transaction between the parties and the contractual relationship between them is caused through application form. It is pertinent at this stage to note that application form is not exhibited though the same is admitted in the admission / denial proceedings conducted CS (COMM) 286/2021 Leo Roadlines Vs. M/s Imperia Structures Page no. 11 of 28 on 06.12.2022 and hence is not requisited to be proved separately. Being an admitted document its authenticity and competence to admissibility is not raised in dispute. It is hence reflected that through this document both parties engaged in a contractual relationship agreeing to receive obligations and confer rights correspondingly as per its terms and annexures on payment of consideration which is tendered and realized partially through the booking receipt Ex.PW1/1 for an amount of Rs. 2,00,000/-. (12) The perusal of the contents of the application form shows that the parties willingly entered in an agreement for sale / purchase of commercial space which is more particularly identified as Flat No. A 6th Floor 040. (13) The Law of Contract defines the agreement in following provision.
Section- 2D When, at the desire of the promisor the promissee or any other person has done or abstained from doing or does or abstains from doing or promises to do or to abstain from doing something, such act or abstinence or promise is called a consideration for the promise.
(14) There is no dispute that the agreement reflecting intention for sale of Commercial Space at the end of the defendant who is a builder and purchase at the end of the plaintiff against a lawful consideration existed. There is no dispute or denial to the fact of its legality as well as enforceability. The terms of the agreement hence can be CS (COMM) 286/2021 Leo Roadlines Vs. M/s Imperia Structures Page no. 12 of 28 construed as a contract whereby the contractual relationship is intended to be created by both sides. (15) The bare reading of the agreement / allotment form ( which at the cost of repetition is observed as an admitted document ) shows that it was a Construction linked plan, and the receipt of payments are co-related, conjuncted and combined with each stage of construction. The nature of such an agreement hence simply put brings it to an agreement categorized as reciprocal contract whereby each side had to perform its own obligation before asking / and / or seeking the performance from the other / opposite side. The mode and operation of such agreement is detailed under provisions of Section 51 of the Indian Contract Act which provision is reproduced below for ready reference:-
51.Promisor not bound to perform, unless reciprocal promisee ready and willing to perform.--When a contract consists of reciprocal promises to be simultaneously performed, no promisor need perform his promise unless the promisee is ready and willing to perform his reciprocal promise. Illustrations
(a) A and B contract that A shall deliver goods to B to be paid for by B on delivery. A need not deliver the goods, unless B is ready and willing to pay for the goods on delivery. B need not pay for the goods, unless A is ready and willing to deliver them on payment.(b) A and B contract that A CS (COMM) 286/2021 Leo Roadlines Vs. M/s Imperia Structures Page no. 13 of 28 shall deliver goods to B at a price to be paid by installments, the first installment to be paid on delivery. A need not deliver, unless B is ready and willing to pay the first installment on delivery. B need not pay the first installment, unless A is ready and willing to deliver the goods on payment of the first installment.
(16) Once it is noted that payment and construction of the project are linked, the next obvious question that emerges is to the order of performance of the promise or agreed obligation for which the perusal of Section 52 of the Contract Act is relevant which details qua the order of performance of the reciprocal as under:-
52.Order of performance of reciprocal promises.--Where the order in which reciprocal promises are to be performed is expressly fixed by the contract, they shall be performed in that order; and where the order is not expressly fixed by the contract, they shall be performed in that order which the nature of the transaction requires. Illustrations(a) A and B contract that A shall build a house for B at a fixed price. A's promise to build the house must be performed before B's promise to pay for it.(b) A and B contract that A shall make over his stock-in-trade to B at a fixed price,and B promises to give security for the payment of the money. A's promise need not be performed until the security is given, for the nature of the transaction CS (COMM) 286/2021 Leo Roadlines Vs. M/s Imperia Structures Page no. 14 of 28 requires that A should have security before he delivers up his stock.
(17) The illustrations provided to elaborate the understanding of above is also requisited to be noted as it provides the requisite insight and is applicable for bringing the interpretation of Section 52 of Contracts Act in context and perspective and is hence referred as :-
A & B Contract Act A shall build a house for B at a fixed price. A is promised to build a house must be performed before B's promise to pay for it.
(18) The application and perusal of above provisions suggest that the allotment agreement in its intent is a reciprocal contract and the order of demand could be raised on reaching / completing the earlier stage of construction, hence the fact that the payments were linked with construction pre-supposed that the defendant had to show the existence of the construction uptill that state in order to receive the payment and was first in order to complete / comply its part of obligation / duty to seek the performance from the plaintiff by raising demands in arriving at above interpretation. I draw strength from the law laid down in V. Pechimuthu Vs. Gowrammal,AIR 2001 SC, DOD 01.08.2001. wherein following is observed:-
CS (COMM) 286/2021 Leo Roadlines Vs. M/s Imperia Structures Page no. 15 of 28 "agreement for sale and purchase simplicitor is a reciprocal arrangement imposing obligations and benefits on both parties and is enforceable at the instance of the either. The interpretation of such a contract would be governed by the laws of Contract relating the performance of Reciprocal promises".
The fact that the order of performance of reciprocal promise has been determined by the parties is also reflected from the allotment agreement, slabs of payment or stages are stated specifically as under:-
Payment Plan / Price List
Construction Linked Payment Plan
On Booking 10% of BSP
Within 45 days from the 10% of BSP
booking
Within 90 days from the 10% of BSP
booking
On Casting of Basement Floor 10% + 50% of EDC & lDC
Slab
On Casting of Ground Floor 10%
Slab
On Casting of 2nd Floor Slab 10% + 50% of EDC & lDC
On Casting of 4th Floor Slab 10% of BSP
th
On casting of 7 Floor Slab 10% + 50% of Car Parking
On installation of plumbing 10% + 50% of Car Parking
On installation of Electrical 5.0%
On notice of Possession 5.0% + IFMS, EEC, FFC &
Registration charges
* The amount to be paid at the time of booking would be applicable s per the status of the construction of relevant tower of the said unit.
CS (COMM) 286/2021 Leo Roadlines Vs. M/s Imperia Structures Page no. 16 of 28 (19) Thus, as is evident from the bare perusal of the agreement that at each stage the liability to make payment should be treated to have accrued only after and / or at the stage uptill which the construction have been completed by the defendant. Hence, the completion of construction was a pre-requisite for demand.
(20) The facts and evidence in hand reveal that plaintiff has exhibited the letters written to defendant ExPW1/4 and Ex.PW1/6 to defendant demanding to know the status of construction. The letters Ex.PW1/4 and Ex.PW1/6 are not admitted by defendant during the stage of admission / denial of documents. However, the perusal of letters Ex.PW1/4 and Ex.PW1/6 which are dated 19.12.2015 and 04.01.2016 are addressed for demanding to know the status of the construction as well as the sanctioned plans.
During the pleas raised at the end of the defendant, the receipt of the above letters is denied blatantly. However, the perusal of the exhibits clearly state their receipt at the hand of one Gulab Singh as Ex.PW1/4 and another initials of an official of defendant on Ex.PW1/6 just above the stamp of defendant. Neither the genuineness of stamp nor the signatures is questioned by the defendant who had received the above much prior to the stage of evidence in court. No averment qua the misuse of stamp which is an apparent acknowledgement is stated or raised which falsify the statement of defendant qua these requests having not been received and rather shows the avoidance CS (COMM) 286/2021 Leo Roadlines Vs. M/s Imperia Structures Page no. 17 of 28 till the end and even during the proceedings being held in court.
(21) The demand letters are also relied upon by the defendant and are part of series of admitted documents on both sides and hence no separate evidence qua its authenticity and conformity to correctness of contents is requisited. While the booking of the allotment is collected on the date of 29.07.2011, the demand for construction linked payment is made on 08.12.2015.
(22) At this stage, the glance over the provisions of the agreement / provision of allotment application, suggest the duration of the completion of the construction is intended as three years in all. Hence, the maximum period available for completion of constructions with defendant was to be measured from the date of acceptance of application form for the allotment which is demonstrated to be accepted on receipt of booking amount as consideration. However, the period of 3 years is proposed to be bracketed through the date of an MOU ( memorandum of understanding ) purported to be signed in addition without specifying any further time line. The reading of the provision is put to reference as below:-
Broad terms and conditions for application cum registration of space in "Imperia Byron" Sector 62, Gurgaon, Haryana.
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3. The Applicant(s) agree(s) to pay the price of the space and other charges calculated on the basis of land rate per square feet /meter, Preferential Location Charges (PLC) per square feet/meter, and any other charges or levies as applicable as per the Competent Authority. It is further understood by the Applicant(s) that the calculation of all the charges applicable shall be more clearly defined in the Memorandum of Understanding and upon execution of the Memorandum of Understanding, the method of payment state therein shall become binding upon the parties to the Memorandum of Understanding.
15. The Company shall make all efforts to apply for the Occupation Certificate of the Project within Twenty Four (24) months from the date of signing of the Memorandum of Understanding, subject to certain limitations as provided in the Memorandum of Understanding and the timely compliance of the provisions of the Memorandum of Understanding by the Applicant(s). The Applicant(s) agree(s) and understand (s) that the Company shall be entitled to a grace period of hundred and eighty (180) days, after the expiry of Twenty Four (24) months, for applying and obtaining the Occupation Certificate in respect of the Said Imperia Byron Complex. The Company, subject to the Applicant(s) having complied with all the terms and conditions of the Memorandum of Understanding, shall handover the Space to the Applicant(s) for his/her/ their occupation and use or as provided in Memorandum of Understanding. In case of Virtual Allotment, the Space will be CS (COMM) 286/2021 Leo Roadlines Vs. M/s Imperia Structures Page no. 19 of 28 registered and handed over to the Leasse. In the event the Company fails to offer the possession of the Space to the Applicant (s) within the stipulated time period and as per the terms and conditions of the Memorandum of Understanding then the Company shall be from charges @ 10/- per sq. ft i.e. per sq. meter per month to the Applicant(s), liable to pay compensation the said delayed period, however the same shall be subject to the Applicant(s) having fulfilled his part of the obligations as per the term of allotment/Memorandum of Understanding.
(23) The aforementioned provision has been harped upon repeatedly and reiterated persistently during the arguments by the defendant's counsel stating that there is no delay in the construction as had been claimed by the plaintiff as the the duration for completion of construction is to be calculated from the period of signing of MOU. (Though the defendent's defence in the present proceedings had been stuck off for the reason of non-compliance with the orders, but for the reason that the maintainability of cause of action is one of the concern raised, hitting at the root of the filing of the suit itself as a response to an equitable expectation, I propose to deal with the aforementioned submissions). It be observed that the responsibility to draft, prepare, forward, sign and conclude the MOU was upon the defendant. The defendant has not brought any material for having taken any steps in the said direction. The defendant hence in such background cannot be permitted CS (COMM) 286/2021 Leo Roadlines Vs. M/s Imperia Structures Page no. 20 of 28 to take advantage of its own wrong and use the plea above for not completing the part of its obligation of construction in time as per allotment.
(24) Intent of an agreement is to be read from the comprehensive reading of all clauses, one clause cannot be interpreted in isolation to allow one party to an agreement to change or re-interpret the context which was not even offered or reflected to be existing. Rather such a clause reflect an intention of defendant to dodge or defend and circumvent any challenge likely to be raised for its inaction which is sought to be protected with help of insertion of such vague clause with no intention to fulfill it as otherwise there is no reason shown to keep such a clause where the application form itself exhaustively provide for all the terms and then secondly taking of no steps genuinely to reflect on its intention to enter into an MOU. While the intent of this clause and thus that of the entire agreement reflects the period of conclusion of the agreement itself as 3 years from the date of its commencement, it could not have been kept open as per whimps of one party ( in this case the defendant ) from the date of execution of the application form. It be observed that the fact that no MOU has been prepared and or forwarded at any stage is corresponding to the intention that the application form is to be treated as the conclusive agreement between the parties and time is essence of the CS (COMM) 286/2021 Leo Roadlines Vs. M/s Imperia Structures Page no. 21 of 28 agreement as per the intention of the aforementioned clause.
(25) In circumstances above, the receipt of the letter dated 08.12.2015 & 07.11.2016 wherein specific demand is raised at the end of the plaintiff to clearly state the construction progress as well as show the sanctions received qua the project are established in this background. The duty to show the existence of construction uptill the stage atleast qua which the demand of payment was made shifted to the defendant. There is no material that defendant at any stage invited the plaintiff or asked or assisted the plaintiff for a site visit and / or showed the construction uptill the stage upon which the liability could have shifted upon the plaintiff, burdening it to comply with the obligations by making good the payment. In this background the obligation set and expectations cast and / or forseen for performance of order of reciprocal promises as detailed in Section 52 as well the application / allotment agreement of which the payment plan is a part is not shown to have been fulfilled.
(26) The claim of defendant that deductions from the amount received were as per its assigned domain as Clause 20 of the agreement provided for it, needs to be tested from the facts. The provisions for deduction of earnest amount tantamounts to penal provision having been taken recourse for the fault assignable to plaintiff for having prevented the defendant from performing his part of CS (COMM) 286/2021 Leo Roadlines Vs. M/s Imperia Structures Page no. 22 of 28 obligation or even on which the contract is to take effect. The defendant was duly bound to establish the aforesaid, however, no such evidence has come on record that at any stage there was any prevention from the side of the plaintiff. Rather as observed above the defendant completely failed to discharge its part of obligation to show the existence of any construction as per the expectation of the agreement of allotment itself. In which case no recourse as claimed in terms of Clause 20 could have been invoked or availed by defendant without showing any default attributable to plaintiff. In fact the defendant capitalize the acts of its own wrong by first not completing the construction as per agreement and then cornering the plaintiff by intimidation of revocation and lastly enriching itself with the money belonging to plaintiff.
(27) It be observed that in order to succeed in the aforementioned plea, the defendant must have shown the existence of evidence for attracting the provisions of Section 54 and 55 as well as Section 73 and 74 of the Contract Act as had been argued. The defendant particularly claimed that as per the clauses, the payment was to be received within a period of 60 days from the demand and as no payment had been made within that time, the defendant was compelled to cancel the allotment. However, the record is devoid of evidence to support the aforesaid submissions. While the Application form may be CS (COMM) 286/2021 Leo Roadlines Vs. M/s Imperia Structures Page no. 23 of 28 treated to be one providing the time as its essence as discussed above, the defendant has not kept up with the expectations of its own drafted agreement of contract and has been unilaterally raising the demand letters with delay of more than three years the stipulated time in completing the entire project. As is apparent from the Ex.PW1/3 & Ex.PW1/11 the first demand itself is raised after the lapse of period of three years initially stated for completion of project.
(28) While the defendant has claimed discharge from obligations, set through the agreement by stating that after the deductions and an amount Rs. 2,99,000/- was offered to the plaintiff, at first there is no material to establish the above assertion since no account of defendant showing when and which manner the deductions were carried out, further no payment is sent to plaintiff or deposited in the account of plaintiff company. Defendant has not acted in consonance with the maxim Debtor must seeks the creditor. It is a general rule that where no place for payment is specified in the contract either expressly or impliedly, the debtor must seek the creditor. The reiteration of the aforementioned principal has been made repeatedly by the Courts above and is observed again in L.N. Gupta vs Tara Mani, AIR 1984 Delhi 49, 24 (1983) DLT 184, 1983 (5) DRJ 190, DOD 09.05.1983. The observations are noted as below:-
CS (COMM) 286/2021 Leo Roadlines Vs. M/s Imperia Structures Page no. 24 of 28 Place of performance in full or in part of a contract and, therefore, the place of payment or of part payment will give rise to a cause of action in that place. Such place can be specified at the time of making the contract, may be appointed later on, or may be implied. Indian Contract Act, 1872, Sections 47, 48 and 49 deal with the place of performance. So far as the stipulated place is concerned, there should ordinarily be no problem. But where the contract is silent about the place, and (i) the promiseis not required to indicate the place, the place of performance shall be the place at which the promise ought to be performed, or the promisor must ask the promise for a reasonable place, and (2) where the promise is required to specify the place, at the place appointed by him, provided such place is a proper place. Now, there may arise situations in which the promise is not required to specify the place or if required does not so specify the place, or if the place so specified is neither reasonable nor proper, then the court may be called upon to look for loci solution is, that is the proper place of performance. This the court can do by taking into consideration all the relevant factors. (5) In England, in a situation of this kind one of the basic rules has been that the creditor should seek the debtor, worked out in practice, it means that the debtor should make payment at the place where at the relevant time the creditor lives, carries on business or works turn gains as the case may be. Mr. Gopal Narain for the respondent urged that this rule is as well applicable to the case under consideration.
CS (COMM) 286/2021 Leo Roadlines Vs. M/s Imperia Structures Page no. 25 of 28 (29) There is no denial of the fact that the payments have not been made by either forwarding it directly to the plaintiff as the address of the plaintiff and or have not been deposited with plaintiff's bank / or were handed over in any manner, the fact that even as per the claim of defendant itself no payment has been forwarded to the plaintiff, the requisites have not been fulfilled. Having regard to the aforementioned in preponderance of probabilities the plaintiff has established its entitlement to claim the relief of amount of Rs. 7,73,751/-. (30) In regard to interest no separate evidence though is led, the record shows by way of Ex.PW1/3, Ex.PW1/11.The defendant proposed to charge the interest @ 18% in the event of delay of receipt of payment. It is hence apparent that the parties concurred at the aforementioned rate as interest in the event of delay or default of payment. What in this case is being proposed by the defendant to be leviable as interest from plaintiff in the event of delay, shall be equitably expected to be paid by the defendant in the even the payment remains unrealised despite cancellation of the allotment unilaterally at its end. Having made the aforesaid observation, I am supported by the provisions of Section74 of the Contract Act which states as under:-
74. Compensation for breach of contract where penalty stipulated for.--1[When a contract has been broken, if a sum is named in the contract as the amount to be CS (COMM) 286/2021 Leo Roadlines Vs. M/s Imperia Structures Page no. 26 of 28 paid in case of such breach, or if the contract contains any other stipulation byway 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.
(31) The illustration of the aforementioned provision includes the cases where the interest is provided and specifically stated as part of the reasonable expectation for compensation on account of delay by preventing the opposite side to utilise the same despite the grounds existing.
(32) In view of the discussions above the suit of the plaintiff is decreed for the amount of Rs. 7,73,751/- along with interest @ 18% pendente lite from the date of filing till realisation as no certificate of advocate fee is filed the amount of Rs. 15,000/- is observed reasonable towards the said cause for which the order is being made taking recourse to the provisions of Section 35 of Civil Procedure Court alongwith cost on account of Court fees of Rs. 9,900/-.Decreed accordingly.
(33) Decree Sheet be drawn. File be consigned to record room after completion of necessary formalities.
CS (COMM) 286/2021 Leo Roadlines Vs. M/s Imperia Structures Page no. 27 of 28 Announced in the open court on 15.04.2023 (Nirja Bhatia) District Judge (Commercial Court-06) South-East, Saket Courts, Delhi 15.04.2023 CS (COMM) 286/2021 Leo Roadlines Vs. M/s Imperia Structures Page no. 28 of 28