Delhi District Court
M/S Unique Infocom Pvt. Ltd vs M/S Anthem Yash Kirti Infracity Pvt. Ltd on 19 March, 2020
IN THE COURT OF SHRI NARESH KUMAR LAKA
ADDITIONAL DISTRICT JUDGE - 03, SOUTH EAST,
SAKET COURTS, NEW DELHI
CS No. 211257/16
In the matter of:
M/s Unique Infocom Pvt. Ltd.
Through its Director: Sh. Sushil Kumar Goyal,
Having its Regd. Office at: G55, Masjid Moth,
Greater KailashIII, New Delhi110048
........ Plaintiff
VERSUS
1. M/s Anthem Yash Kirti Infracity Pvt. Ltd.
Through its Principal Director, Sh. Prashank Bindal
2. Sh. Prashank Bindal, (Deleted)
DirectorcumAuthorized Representative of
M/s Antehm Yash Kirti Infracity Pvt. Ltd.
3. Sh. Shiv Kumar Gupta, (Deleted)
DirectorcumAuthorized Representative of
M/s Antehm Yash Kirti Infracity Pvt. Ltd.
4. Sh. Jagdish Yadav, (Deleted)
DirectorcumAuthorized Representative of
M/s Antehm Yash Kirti Infracity Pvt. Ltd.
All four above at:
(i) B79, Madhuban Colony,
New Delhi110092
(ii) B38, Madhuban Colony,
New Delhi110092
(iii) C64, 2nd Floor, RDC, Raj Nagar,
Ghaziabad201002
(iv) 1A, 105, Rang Rasayan Apartments,
CS No. 11257/16 Page No. 1 of 14
M/S Unique Infocom Pvt Ltd Vs. M/S Anthem Yash Kirti Infracity Pvt Ltd
Digitally signed by
NARESH NARESH KUMAR
KUMAR LAKA
Date: 2020.03.20
LAKA 16:32:58 +0530
Sector13, Rohini, New Delhi110085
(v) 340, Shastree Nagar, Block D,
BralakI, Ghaziabad201001
5. Sh. Jagdish
R/o 257, Kalpana Nagar, Sibbanpura,
Ghaziabad201001
6. Sh. Rajan Gupta,
R/o 28G, Bihari Nagar, Ghaziabad201001
7. Smt. Kavita Yadav, Principal Director (Deleted)
of M/s Antehm Yash Kirti Infracity Pvt. Ltd.
340, Shastree Nagar, Block D,
BralakI, Ghaziabad201001
.........Defendants
Date of Institution : 06.10.2016
Conclusion of final arguments : 26.02.2020
Date of decision : 19.03.2020
Result : Decreed
SUIT FOR RECOVERY OF RS. 1 CRORE WITH INTEREST @ 18 %
PER ANNUM
JUDGMENT
Suit in brief The present suit was filed for recovery of Rs. 1 crore along with interest @ 18 % per annum by claiming that the plaintiff is a company and its officer was acquainted with defendant no.5 and 6, the latter got introduced the defendant no. 1 to 4 and thereafter, the plaintiff was allured by the officers of the defendant no.1 to pay amount of Rs. 1 core by showing dire need of funds for CS No. 11257/16 Page No. 2 of 14 M/S Unique Infocom Pvt Ltd Vs. M/S Anthem Yash Kirti Infracity Pvt Ltd their upcoming project at Rajnagar Extension, Ghaziabad, UP in the name of 'Yash Ozone Classic'. Various negotiations, meetings took place and the plaintiff was shown a rosy picture that all the approvals from GDA and other authorities are expected soon and the plaintiff will be given one tower/FSI of one lac sq.ft. @ 1265 per sq.ft. for total consideration amount of Rs. 12.65 crore. Initially, first payment of Rs. 21 lacs was made as earnest money upon oral agreement on 11.10.2013 and next payment was to be made within seven days upon entering into a written agreement but it is claimed that the defendant allured the plaintiff to pay further amount of Rs.79 lacs without signing the written agreement. The remaining payment of Rs. 11.65 crore have to be paid in phased manner depending on different stages of the project. The schedule of payment has been mentioned in the para no.3 of the plaint in detail. It is mainly alleged that the defendants did not obtain the permission from the concerned authority within time frame nor commenced the work and, as such, the defendants failed to perform their part of contract and as per the agreed terms, the defendants are liable to refund the amount of Rs. 1 crore along with interest @ 18% per annum.
Defence in brief
2. In the written statement, the defendants admitted the aforesaid transaction and receiving of Rs. 1 crore through banking mode but it is mainly claimed that since the plaintiff did not pay the remaining amount, the said amount was forfeited. Various formal CS No. 11257/16 Page No. 3 of 14 M/S Unique Infocom Pvt Ltd Vs. M/S Anthem Yash Kirti Infracity Pvt Ltd objections were also raised about the concealment of material facts, non maintainability of the present suit, filing of false case etc. On merits, it is claimed that this court has no territorial jurisdiction, the plaintiff was not having sufficient funds to pay remaining consideration amount, the amount given by the plaintiff was already utilized in the on going projects and now it cannot be given back to the plaintiff since the plaintiff was at fault and the plaintiff cannot take benefit of its own wrong.
Replication, issues & trial
3. The plaintiff filed replication to the written statement of the defendants wherein the averments made in the plaint were reiterated/reaffirmed and the allegations of the defendants were controverted.
4. From the pleadings of the parties, following issues were framed:
1. Whether this court has no territorial jurisdiction to try and entertain the present suit? OPD
2. Whether the plaintiff is entitled for money decree as prayed for ? OPD
3. Whether the plaintiff is entitled for interest.
If so, at what rate and for which period? OPP.
CS No. 11257/16 Page No. 4 of 14M/S Unique Infocom Pvt Ltd Vs. M/S Anthem Yash Kirti Infracity Pvt Ltd
5. The examination of the witnesses of the present case was got conducted through an Advocate who was appointed as a Ld. Local Commissioner. Details of witnesses examined by parties are as under:
(i) PW1 Sh. Sushil Kumar Goyal.
(ii) DW1 Sh. Vivek Upadhayay.
6. I have heard arguments from Sh. Vinay Gupta, Ld. Counsel for the plaintiff and Sh. Naresh Sharma, Ld. Counsel for the defendants. Record perused.
Reasons for decision Issue No. 1: Whether this court has no territorial jurisdiction to try and entertain the present suit? OPD
7. In the para no. 37 of the plaint, it is mentioned that the defendant no.1 is a company and its Branch is situated in Delhi and all the defendants are also carrying on their business from Delhi only, defendant no.2 and 4 are the residents of Delhi and the plaintiff is also operating from Delhi and having its Principal Office in Delhi. The defendant no.1 to 6 approached the plaintiff at its Delhi office, all the talks were initiated and concluded in Delhi and the agreement was finalized in Delhi. It is further claimed that the payment of cheques of Rs. 21 lacs and Rs. 79 lacs were credited in the bank account of the defendant no.1 from Delhi only.
CS No. 11257/16 Page No. 5 of 14M/S Unique Infocom Pvt Ltd Vs. M/S Anthem Yash Kirti Infracity Pvt Ltd
8. The defendant no.1 did not raise any dispute upon the aforesaid assertion. Even no suggestion was given to the witnesses of the plaintiff to counter the said claim of the plaintiff. The onus to prove this issue was upon the defendants but they failed to lead any evidence on this point. Therefore, this court is of the considered opinion that part of cause of action arose in Delhi only and accordingly, this court has jurisdiction to try and entertain the present suit. This issue is decided in favour of the plaintiff accordingly and against the defendant no.1.
Issue No. 2: Whether the plaintiff is entitled for money decree as prayed for ? OPD
9. At the outset, Ld. Counsel for the defendant raised an objection that in the Resolutions (Authority Letters), no specific authority was given to the PW1 to give evidence or to depose before this Court and, therefore, his evidence is nugatory and cannot be relied.
10. From the perusal of the Resolutions, Mark 'Z' and Mark 'Y', it is seen that the PW1 was authorised to make submissions before the court, settle the case, withdraw the case and compromise the case, etc. The word 'submissions' include the presentation of the case for all purposes. Moreover, it is seen that DW1 Sh. Vivek Upadhyay is the General Manager of the plaintiff company and in that capacity, he is the Principal Officer of the plaintiff company and as per Order 29 Rule 1 CPC, any Principal Officer of a company CS No. 11257/16 Page No. 6 of 14 M/S Unique Infocom Pvt Ltd Vs. M/S Anthem Yash Kirti Infracity Pvt Ltd is authorised to pursue or depose a case on behalf of the company and for that purpose, no specific authority letter is required. Accordingly, this court holds that DW1 Sh. Vivek Upadhyay was a competent witness to depose on behalf of the plaintiff. Moreover, it is a settled position of law that on mere procedural irregularity, a genuine case of a party should not be rejected if the said objection does not go to the root of the matter. Accordingly, the aforesaid plea is rejected being meritless.
11. From the perusal of the written statement, it is seen that an objection has been raised on the point that the plaintiff did not pay the remaining amount of Rs.11.65 Crore and as such, the amount of the plaintiff was forfeited.
12. On the other hand, it is the case of the plaintiff that the entire consideration amount has to be paid in phased manner depending upon the progress of the project, which has been enumerated in Para 13 of the plaint. It is further pleaded that the plaintiff was supposed to make remaining payment, if the defendant had obtained the approval from the GDA and get executed an agreement with the plaintiff and the said steps were required to be taken within a time frame of 45 to 95 days, but the defendants failed to obtain the approval of the GDA within the said time frame and to do other acts.
13. It is further claimed that the defendant No.1 even did CS No. 11257/16 Page No. 7 of 14 M/S Unique Infocom Pvt Ltd Vs. M/S Anthem Yash Kirti Infracity Pvt Ltd not raise construction of the tower which was supposed to be allotted to the plaintiff. During cross examination, DW1 specifically admitted that in October, 2013, no complete FSI of 1 lakh sq. ft. was available with the defendant as the approval was awaiting. He further admitted that the plaintiff has no role to play for getting the approval from the GDA and it was the defendants who were to provide material dumping, labour hutment, marketing office and other provisions for electricity and water connection at the site as per the verbal understanding of the parties. DW1 also admitted that the defendant did not do the aforesaid work. DW1 even categorically admitted that this subject project is lying scraped as on date (27.04.2019). Even, no specific tower number was disclosed by the DW1, which would be allotted to the plaintiff and rather it was disclosed that as per Mark DX1 (balance sheet), as on 31.03.2014, the defendant No.1 was having share capital of only Rs.1 lakh with long term borrowing of Rs. 22,65,32,818/ and current liability of Rs. 27,59,43,237/.
14. From the aforesaid specific admissions, this court holds that the defendants did not take the required approval within the agreed time period from the competent authority, did not execute the work and it was a company running into losses and not in a position to perform its part of contract for handing over the FSI/tower of 1 lakh sq. ft. to the plaintiff and, therefore, the plaintiff was justified in not making the further amount, which would only be to the detriment of the interest of the plaintiff.
CS No. 11257/16 Page No. 8 of 14M/S Unique Infocom Pvt Ltd Vs. M/S Anthem Yash Kirti Infracity Pvt Ltd
15. Ld. Counsel for the defendants also took a plea that the plaintiff was not having sufficient funds to pay the remaining amount of Rs.11.65 crore. In this regard, it is evident that DW1 admitted in his cross examination that no communication/letter was ever sent to the plaintiff for demanding the remaining amount. The plaintiff has also brought on record details of all the other properties and assets which were adequate to make arrangement of the remaining amount. The said details include the sale deed of the freehold land, (approximately 4 acre) situated in Dadri having market value of Rs.14 crores, four sale deeds pertaining to freehold property at Prakash Industrial Estate, U.P. Boarder (1000 sq. yds.) having market value of Rs.7 crores, etc. Even the DW1 also admitted in his cross examination that the defendant was fully convinced about the financial worthiness of the plaintiff to pay he aforesaid amount. Accordingly, this court holds that the aforesaid plea of the defendant is also found meritless and the plaintiff duly proved on record his financial capacity to pay the remaining amount to the defendant.
16. It is further contended that the amount paid by the plaintiff was forfeited since the plaintiff did not pay the remaining amount. Firstly, the defendant failed to prove any demand raised to the plaintiff for payment of remaining amount and further, there was no agreement in writing executed between the parties, whereby it was agreed that the amount paid by the plaintiff will be CS No. 11257/16 Page No. 9 of 14 M/S Unique Infocom Pvt Ltd Vs. M/S Anthem Yash Kirti Infracity Pvt Ltd forfeited. It is a settled position of law that in the absence of any specific agreement or clause of forfeiture, a party has no right to forfeit the amount.
17. In 'Delhi Development Authority v. Grihstrapana Cooperative Group Housing Society Ltd.', 1995 (1) SCC (Suppl.) 751, Hon'ble Apex Court held that the forfeiture of the earnest money was legal. However, in the case of 'V. Lakshmanan v. B.R. Mangalgiri and Others', 19 95 (2) SCC (Suppl.) 33, Hon'ble Supreme Court held that "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.
18. Further reliance can be placed on the case of 'Manoj Tomar vs. Smt. Neena Khattar & Anr.; CS (OS) No. 1371/2014, decided by Hon'ble Justice Valmiki J. Mehta, High Court of Delhi', where it was observed as under:
"This suit which is filed for recovery of Rs. 1,57,30,430/ is listed for framing of issues. In my opinion, issues do not arise and this suit has to be decreed in view of the pleadings of the defendants which do not make any averment that defendants have appropriated the amount of Rs. 1,35,00,000/ paid by the plaintiff to the defendants under the Agreement to Sell dated 26.04.2013 towards any losses caused to the defendants.
The facts of the case are that with respect to the property measuring 7 Bighas and 2½ Biswas in Khasra No. 256/2(415), 257/1(312), 257/2 Min (10½), 258 Min (215), situated in the area of Village CS No. 11257/16 Page No. 10 of 14 M/S Unique Infocom Pvt Ltd Vs. M/S Anthem Yash Kirti Infracity Pvt Ltd Sawda, Delhi (hereinafter referred to as "the suit property") parties entered into an Agreement to Sell on 26.04.2013. Total sale consideration was fixed at Rs. 8,91,69,271/, of which plaintiff paid a sum of Rs. 1,35,00,000/ to the defendants.
5. The issue is that even if the plaintiff is guilty of breach of contract, whether the defendants are entitled to forfeit the advance money received by the defendants under the agreement to sell. Para 14 of the written statement shows that defendants have made an averment that the defendants have forfeited the amount because the plaintiff did not call upon the defendants to complete the sale transaction, however there is no averment in the written statement that defendants have forfeited the amount on account of loss being caused to them by the plaintiff on account of breach of contract, much less details of loss and how caused as required by Order VI Rule 4 CPC is pleaded. In law, once no loss is caused to the aggrieved party as per Section 73 and 74 of the Indian Contract Act, 1872, no cause of action arises for claiming damages or forfeiture of advance money received under the agreement to sell as damages. This is the law as laid down in the Constitution bench judgment of the Supreme Court in the case of Fateh Chand vs. balkishan Dass, AIR 1963 SC 1405 and which judgment has been recently followed by the Supreme Court in the judgment in the case of Kailash Nath Associates vs. Delhi Development Authority and Another, (2015) 4 SCC 136.
31. Section 74 as it originally stood read thus:
"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, 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."
32. By an amendment made in 1899, the Section was amended to read:
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 CS No. 11257/16 Page No. 11 of 14 M/S Unique Infocom Pvt Ltd Vs. M/S Anthem Yash Kirti Infracity Pvt Ltd broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for.
33. Section 74 occurs in Chapter 6 of the Indian Contract Act, 1872 which reads "of the consequences of breach of contract". It is in fact sandwiched between Sections 73 and 75 which deal with compensation for loss or damage caused by breach of contract and compensation for damage which a party may sustain through non fulfillment of a contract after such party rightfully rescinds such contract. It is important to note that like Section 73 and 75, compensation is payable for breach of contract Under Section 74 only where damage or loss is caused by such breach.
6. A reading of the ratio of Kailash Nath Associates's case (Supra) makes it more than clear that the law with respect to entitlement of a defendant/proposed seller to forfeit an amount received under the agreement to sell is subject to loss being caused and appropriation is actually pursuant to Section 74 of the Indian Contract Act by taking the advance payment received as liquidated damages, but once there is no plea of loss being caused alongwith necessary details, there does not arise issue of appropriation by the defendants, of the advance price received under the contract as liquidated damages.
7. In my opinion, an amount of Rs. 1,35,00,000/ cannot be taken as earnest money inasmuch as, earnest money is only a nominal amount. In similar circumstances I have recently in the case of Sh. Sunil Sehgal vs. Sh. Chander Batra & Ors., CS(OS) No. 1250/2006 decided on 23.09.2015 held that what is to be seen is the substance and not the label and merely because a huge amount is called as earnest money, the same will not become an earnest money but would be an advance price paid under the agreement to sell. The relevant paras of this judgment are paras 9, and which read as under:
9. In the present case, defendants have led no evidence of any loss caused to them, and therefore, assuming that plaintiff is guilty of breach of contract, yet, the defendants cannot forfeit the amount of rs. 15 lacs laying with them. A huge amount of Rs. 15 lacs out of the total sale consideration of Rs. 79,50,000/ cannot in law be called earnest money. By giving a stamp of 'earnest money' to advance price, the latter cannot be come the former. What is to be seen is the substance and not the label. Only a nominal amount can be said to be earnest money and not an amount of Rs. 15 lacs out of CS No. 11257/16 Page No. 12 of 14 M/S Unique Infocom Pvt Ltd Vs. M/S Anthem Yash Kirti Infracity Pvt Ltd Rs. 79.50 lacs, by noting that if suppose an amount of rs. 30 lacs or 40 lacs would be called as earnest money by the parties, that would not take away the fact that such amount cannot be earnest money but would in fact be part of the price to be paid for sale." (underlining added).
8. In view of the above, since defendants have not pleaded any loss being caused to them on account of breach of contract by the plaintiff, the suit of the plaintiff is decreed for a sum of rs. 1,35,00,000/ alongwith pendente lite and future interest till payment at 12% per annum simple. Parties are left to bear their own costs.
19. In view of the above case laws, it is held that even if there is a forfeiture clause in the agreement, the defendant will not be entitled to forfeit the amount without showing any specific loss. In the instant case, no plea has been taken that the defendant has suffered any loss on account of failure on the part of the plaintiff. Thus, the defendant has no right to forfeit the said amount.
20. In the light of the aforesaid facts, this court holds that the plaintiff is entitled for recovery of the suit amount i.e. Rs.1 Crore from the defendant. This issue is accordingly decided in favour of the plaintiff and against the defendant no. 1.
Issue No. 3: Whether the plaintiff is also entitled for interest. If so at what rate and for which period? OPP.
21. In view of my finding on the Issue No.2, this court is of the considered opinion that the plaintiff is also entitled for claiming interest on the amount of Rs.1 crore because on account of failure of the defendants, the plaintiff suffered losses or the accrual of the CS No. 11257/16 Page No. 13 of 14 M/S Unique Infocom Pvt Ltd Vs. M/S Anthem Yash Kirti Infracity Pvt Ltd interest, if the said amount had been invested at some other place. Accordingly, in the facts and circumstances of the case, the plaintiff is awarded a reasonable interest @12% per annum on the said amount of Rs.1 crore from the 90 days of the last payment of Rs.79,00,000/ which was made on 18.10.2013 and it should be counted from 18.01.2014 till the date of realization. This issue is decided in favour of the plaintiff and against the defendant.
Conclusion/relief
22. In the light of aforesaid findings, the suit of the plaintiff is decreed against the defendant no.1 for recovery of Rs. 1 crore along with interest @12% per annum on the said amount of Rs.1 crore from 18.01.2014 till the date of realization. Cost of the suit is also awarded in favour of the plaintiff and against the defendant as per rules which will be shown in decree sheet. Decreesheet be prepared accordingly. File be consigned to record room.
Announced & dictated in the open court on 19.03.2020 (Naresh Kumar Laka) Additional District Judge03 South East District, Saket, New Delhi.
Digitally signedNARESH by NARESH KUMAR LAKA KUMAR Date: LAKA 2020.03.20 16:33:14 +0530 CS No. 11257/16 Page No. 14 of 14
M/S Unique Infocom Pvt Ltd Vs. M/S Anthem Yash Kirti Infracity Pvt Ltd