Delhi District Court
Sh. Varinder Malik vs Taneja Developers Ltd on 27 November, 2018
IN THE COURT OF MS. TWINKLE WADHWA: LD. ADDITIONAL
DISTRICT JUDGE03:PATIALA HOUSE COURT:NEW DELHI
DISTRICT
CS No. 56385/16
Sh. Varinder Malik
S/o Sh. Brij Lal Malik
R/o B25, Sector 56, Noida
UP
.....Plaintiff
VERSUS
Taneja Developers Ltd.
9 Kasturba Gandhi Marg,
New Delhi110001
....Defendant
Date of Institution : 09.04.2013
Date of Final Arguments : 15.11.2018
Date of Decision : 27.11.2018
JUDGMENT
The Case
1. The present is a suit filed by plaintiff against defendant with whom it had booked a shop in a mall at Sonepat, Haryana. It is the case of plaintiff that he has made part payment but despite that a cancellation letter was issued to him, despite the fact that no construction of the mall had taken place in last five years when the said cancellation notice was issued to him. Hence, the present is a CS No.56385/16 Page 1 of 11 suit for recovery of the part payment made towards the purchase of the said flat.
Case of Plaintiff
2. It is the case of plaintiff that he had booked a shop of 500 sq ft @ 4,000/ per sq ft. with defendant in a Commercial Plaza named 'Park Street' at Sonepat, Haryana. At the time of booking, plaintiff had paid Rs. 4 lakh towards part payment by way of cheque on 20.01.2007. Vide letter dated 20.02.2007, plaintiff was alloted a commercial shop of 449.03 sq ft area. Thereafter, a letter was received by plaintiff on 08.03.2007 to make payment of further amount of Rs. 1,79,612/ which was paid by him on 06.04.2007. Thereafter, plaintiff received a letter from defendant dated 31.08.2007 thereby offering him to take 10% discount and to make one time down payment. But plaintiff did not opt for it.
3. It is further the case of plaintiff that he did not hear from defendant thereafter at all. After five years i.e on 13.01.2012, he received a cancellation letter from the defendant thereby canceling the allotment of the shop and forfeiting the amount of Rs. 5,79,612/. It is the case of plaintiff that it sent its reply dated 12.02.2012 to the defendant that plaintiff is willing to make the payment of rest of the amount provided possession was delivered to him of the shop. However, defendant did not give any reply to the said letter as defendant was never willing to perform his part of CS No.56385/16 Page 2 of 11 the contract. It is further the case of plaintiff that there is no clause in the allotment letter or any other terms and conditions thereby mentioning the time frame within which project was to be completed. No construction had taken place in those five years and despite that his allotment was canceled. It is submitted that it is no where inform to the plaintiff that it was a construction linked plan and plaintiff was to make rest of payment at the time of handing over of possession. It is submitted that there is no clause in any of the documents thereby treating part payment as earnest money and defendant had no right to forfeit the same. All the documents were duly exhibited on record.
Case of Defendant
4. Defendant admitted the booking of the shop, the allotment of shop and the payments which were made by plaintiff.
5. It is the case of defendant that plaintiff was bound by the terms and conditions mentioned overleaf the allotment letter, he was bound to make timely payment but he failed to do so. Plaintiff was written a letter by the company repeatedly to make payment but he failed to do so. Defendant has placed reliance on demand letters dated 28.07.2010, 03.09.2010 and reminder letter dated 02.12.2010 in order to show that repeated demands were made from the plaintiff to make payment up to 50% of the sale consideration but no payment was made by him. Hence eventually CS No.56385/16 Page 3 of 11 his allotment was canceled vide letter dated 13.01.2012. Defendant has also placed reliance on registration form dated 22.01.2007 wherein it is mentioned that it is a construction linked payment plan which plaintiff had opted for. Further this document was admitted by plaintiff during trial. Further defendant has also filed along with demand letters, courier receipts to show that these letters were duly dispatched as well. It is the case of defendant that demand was made at the time of laying of the first floor but it was not paid by him. It is denied that no construction had taken place in last five years. It is averred that defendant has right to forfeit registration amount as per terms and conditions of the allotment letter and practice.
6. On the pleadings of the parties, following issues were framed on 14.08.2013 ISSUES
1. Whether the plaintiff is entitled to a decree for recovery of the suit amount?
2. Relief
7. To prove its case, Plaintiff examined Shri Varinder Kumar Malik as PW1 and exhibited the following documents S.No. No. of Exhibits Details of the documents 1 Ex.P1 Original receipt dated 22.01.2007 2 Ex.P2 Allotment letter dated 20.02.2007 CS No.56385/16 Page 4 of 11 3 Ex.P3 Letter date 08.03.2007 4 Ex.P4 Receipt dated 06.04.2007 of Rs. 1,79,621/ 5 Ex.P5 Letter dated 13.01.2012 Ex.P6 Carbon/office copy of the legal notice dated 6 12.02.2012 7 Ex.P7 Original postal receipt 8 Ex.P8 AD Card 9 Ex.P10 Letter dated 31.08.2007
8. To prove its case, Defendant examined Shri Ritesh Vijhani as DW1 and exhibited the following documents S.No. No. of Exhibits Details of the documents 1 Ex.DW1/1 Copy of board resolution 2 Ex.DW1/2 Copy of Advance Registration Form Ex.DW1/3 to Demand letters dated 28.07.2010 alongwith 3 Ex.DW1/5 POD, 03.09.2010, 02.12.2010 respectively 4 Ex.DW1/6 Cancellation letter Reasons for Decision
9. I have heard both the sides and gone through the record.
10. The defendant's witness namely DW1 Sh. Ritesh Vijhani was asked in the cross examination regarding the time frame within which project was supposed to be completed but he could not state about the stage of construction and only stated that it was construction linked plan and hence payment was demanded according to the construction, but in all the documents and letters CS No.56385/16 Page 5 of 11 filed by defendant, it is no where mentioned in any of the documents or payment receipts or letters, what is the stage of construction.
11. It is pertinent to mention here that during the final arguments, defendant has raised issue regarding jurisdiction though no formal issue is framed in this case. However, it is well settled law that issue regarding territorial jurisdiction has to be raised before framing of issues but it was not done in this case. Hence, issue regarding jurisdiction has to be decided in favour of plaintiff.
12. It is also argued by ld counsel for defendant that last payment was made by plaintiff in the year 2007 and the present suit was filed in the year 2013. Hence, barred by limitation, limitation being three years. However, the allotment of the plaintiff was canceled in 2012 and thereafter a demand notice was issued in 2012 itself by the plaintiff thereby demanding back the part payment made by him towards the purchase of the shop. Hence, the cause of action in favour of plaintiff accrued when defendant canceled the shop in his favour and also when plaintiff issued a legal notice thereby demanding his money. Hence this issue is also decided in favour of plaintiff.
13. Coming to the facts of the case it is the specific case of plaintiff that in those five years, no construction had started. However, it is the case of defendant that it was a construction CS No.56385/16 Page 6 of 11 linked plan and demand was in proportion to the construction as is mentioned in the registration form. Needless to say a party who asserts the fact and wants Court to believe on it, the onus is on the said party to prove the same. It is the case of defendant that on the day when payment was demanded, 50% construction had already been completed, the onus of proving the same was on defendant /builder. But defendant did not file any proof on record to show what was the stage of construction at that time. In the demand letters it is mentioned that 50% demand was made, but it is not mentioned that it is pursuant to the 50% construction already being made or in the process of being made. During the course of final argument in the Court, I asked the Ld counsel for defendant that whether the project is already completed and the possession has been handed over to the owners as on today, it was stated that the construction is 85% completed. Hence, this project which was booked by plaintiff in the year 2007, this construction is not completed till date. Further, it is only a statement made in the Court that 85% construction is completed. No proof filed to support the claim that even 85% construction is completed. A person who has booked a flat or a shop is not supposed to wait endlessly for the completion of the project. In such circumstances, claim of the defendant that as on date when 50% payment was demanded, 50% construction has already taken place is not proved. Same is a CS No.56385/16 Page 7 of 11 bald averment without anything to support to the same. Even photographs are not filed. In such circumstances, the subsequent demand notices even if presumed to have been received by plaintiff, it cannot be said that the demand was justified as it is the own case of defendant that it was the construction linked plan and no proof is filed on record regarding the stage of construction at that time. Hence, the demand notices are not justified.
14. As far as forfeiture of the part payment made is concerned. It is the case of defendant that it was forfeited as it was earnest money. It was forfeited as is mentioned in cancellation letter. However in the allotment letter, there are certain terms are mentioned at the back of it but there is no clause regarding forfeiture of the registration amount. Defendant has placed reliance on registration form as well. The said registration form contains no clause regarding forfeiture. It is mentioned in the WS that forfeiture is done as is the practice in Real Estate Industry. However, a substantial portion of part payment cannot be called earnest money. Further, right to forfeit accrues only when it is the case of defendant that it had suffered certain losses which are specifically pleaded also. However, it is not pleaded anywhere in the pleadings by defendant that what loss was suffered by him and how. In support of its case, plaintiff has placed on record the following judgment titled as 'Adhunik Datamatics Pvt Ltd VS Chandan Singh & CS No.56385/16 Page 8 of 11 Ors' 241 (2017) Delhi Law Times 573. The relevant para as follow
10. ........ It is settled law that even the earnest money cannot be forfeited in entirety unless the loss is pleaded - as settled by the catena of judgments including Kailash Nath Associates vs. Delhi Development Authority and Another, 2016 (2015) DLT 433 (SC)=I (2015) SLT 344- (2015) 4 SCC 136. In Manoj Tomar vs. Smt.Neena Khatter & Anr., 2015 SCC Online Del 12831 a Co-ordinate Bench of this Court has observed as under:-
"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 the 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.
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 CS No.56385/16 Page 9 of 11 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 along with 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. Shri Chander Batra & Ors., CS(OS) No. 1250/2006 decided on 23.9.2015 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.
11. Further the Supreme Court in Satish Batra vs. Sudhir Rawal, VIII (2012) SLT 160= Civil Appeal No.7588/2012 decided on 18.10.2012 has observed as under: "17. 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 CS No.56385/16 Page 10 of 11 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."
15. In view of the above, defendant has no right to forfeit the amount which was paid as part payment towards the purchase of the flat. Hence, plaintiff is entitled to recover the same from defendant.
In view of above discussion, I hereby decided the following issues.
ISSUE no.1 Whether the plaintiff is entitled to a decree for recovery of the suit amount?
17. In view of above observation, this issue is decided in favour of plaintiff. Plaintiff is entitled to recovery the said amount of Rs. 5,79,000/ from defendant along with interest @ 8% from the date of filing of the present suit till actual realisation. ISSUE No.2. Relief.
18. In view of above, plaintiff is entitled to recovery of an amount of Rs. 5,79,000/ from the defendant along with interest @ 8% p.a from the date of filing of the present suit till actual realisation.
Digitally signed
File be consigned to record room. by TWINKLE
TWINKLE WADHWA
Announced in an open Court WADHWA Date:
2018.11.27
On 27th day of November, 2018. 14:43:31 +0530 (Twinkle Wadhwa) ADJ03/PHC/NEW DELHI 27.11.2018 CS No.56385/16 Page 11 of 11