Karnataka High Court
M/S Canara Leasing Ltd vs Sri Prashanth K on 3 February, 2012
Author: C.R.Kumaraswamy
Bench: C R Kumaraswamy
IN THE HIGH COURT OF KARNATAKA, BANGAL
ORE
DATED THIS THE 03R1 DAY OF FEBRUARY 2012
BEFORE
THE HONBLE MR.JUSTICE C R KUMARASWAMY
REGULAR FIRST APPEAL NO.549 OF 2011
BETWEEN:
MIS CANARA LEASING LTD.
# 14/3, NRUPATHUNGA ROAD
BANGALORE 560 002
-
REPRESENTED BY ITS MANAGING DIRECTOR
SRI H S MOHAN KUMAR
NOW KNOWN AS
M/S NANDAKI BUSINESS SOLUTIONS PVT LTD
.
APPELLANT
(BY SRI:RAJADITHYA SADASIVAN, ADV)
AND:
SRI PRASHANTH K
AGED ABOUT 44 YEARS
S/OKGSHET
41 26/1, II CROSS
RAJARAM MOHAN ROY EXTENSION
BANGALORE 560 027
-
RESPONDENT
...
(BY SRI:G B NAN DISH GOWDA, ADV FOR
SRI:R B SADASIVAPPA. AD%')
1
I
S
THIS REGULAR FIRST APPEAL IS FILED UND
ER
SECTION 96 OF CPC AGAINST THE JUDGM
ENT AND
DECREE DATED 01.12.2010 PASSED IN
NO.6893/1997 ON THE FILE OF THE XI OS
ADDL CITY
CIVIL JUDGE, BANGALORE DECREEING
THE SUIT
FOR SPECIFIC PERFORMANCE.
THIS REGULAR FIRST APPEAL IS COMING
FOR ADMISSION THIS DAY, THE COURT ON
DELIVERED
THE FOLLOWING:
JUDGMENT
Though this matter had come up for adm ission, with the consent of learned Counsel for bot h the parties, the matter is taken up for final hearing.
The material placed before this Court is sufficient to disp ose of the matter at this stage.
2. This Regular First Appeal is filed und er Section 96 of Code of Civil Procedure against the judgment and decree dated 01.12.2010 passed in OS No.6893/1997 on the file of the XI Add l. City Civil Judge, Bangalore decreeing the suit for specific performance.
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'B' and C' propcrty 011 3 1.07.1993. The defendant company has failed to perform its pan of the coiitract The dt fend ant as unable to complete the flat. On the other hand. the defendant mad e endorsement on Document No.1 dated 07.09.1991. 23.03.1992 and 0l.07.1Q3.
On 01.07.10(13 the defendant (ompan made an endorsement that the schedule C' it ill be duly completed in all aspects and that schedule 'B' and properties ill bc transferred in fa our of plaintiff on or belore December 1994. But the defendant company did not 'omplete the c.onstntctions as ptr ts promise rh plaintiff itas s readi and t'illing to pertbrm his par' of the oni 1 t bs nrnr 1 n lran nn )rsdera U R%. I '.OJ(' . Ti t. 4 cief" iida'i inp ITt' lit 41 c ci . I umpietlia: lit stork i', i at I n i 'litk --tilt I f 4. •iecl .
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already transferred the proportionate undivided interest in favour of other purchasers in pursuance of the development plan, the defendant company by its own performance has to transfer the schedule 'B' and 'C' properties in favour of the plaintiff. One of the copy of sale deed executed by the defendant company in favour of the purchaser is also produced.
8. The plaintiff further states that the defendant company instead of executing the document transferring schedule 'B' and 'C' is deliberately and intentionally avoiding the same. The cause of action for the suit arose on 14.03.1991 and all subsequent dates wherein the plaintiff made payments to defendant on 01.07.1993 when defendant company promised to complete the flat on or before December, 1994.
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AddI. Issue No.1 and 2 In the negative
13. In the Trial Court, on behalf of the plaintiffs, two iitncsses ere examined as PWI and PW2 and got marked Exs.Pi to P64, On behalf of the defendants, defendant as examined as DWI and got marked Exs,DI to D12
14. The sum and substance of the findings of the Trial Court is as under
It is undisputed fact that the defendant company purchased plaint 'A' schedule property under the sale deed dated 27 03 1989 and proposed to build 11 its on thc said land md offt red to sell th€ flats muth undivickd Intrest in the and no th it t h i bt r C d m ic ed plan fo nt c m adi A iii propert The I na C o rt t pan 11 of the c m h )A I I cc rJ () ) > cc xj 1 $ 2 CD L cc 4 .èD'cc ) CD CD (A) CD H-
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with each other in issuing possession certificate as per Ex.P17. Further, it is not pleaded in the written statement that there was collusion between the plaintiff and late M P Prabhu in entering into contract as per Ex.P2. The Trial Court has observed that the plaintiff and M P Prabhu had known to each other for a long time even prior to entering into contract as per Ex.P2.
Except this, there is nothing on record to show that M P Prabhu had in any manner related to the plaintiff or be had interest in the benefit of the plaintiff in executing the agreement of sale Ex.P2. In the Trial Court, learned Counsel for the defendant argued that since M P Prabhu did not disclose this interest in the benefit of the plaintiff before Board of Directors of the defendant company, the agreement of sale Ex.P2 is invalid and is without any basis and the same cannot be accepted.
19
15. The Trial Court has also observed that the learned Counsel for the defendant has argued that M P Prabhu had no authority to execute the agreement of sale Ex.P2. But it is relevant to note that as per the resolution dated 10.05.1991, which is produced at Ex.P63(a) and Ex.D5 the defendant company had ratified the action taken by M P Prabhu regarding the business of building construction till then. Since Ex.P2 the agreement of sale dated 14.03.1991 is earlier to Ex.P63(a) and Ex.D5, the defendant company cannot contend that M P Prabhu had no authority to execute the agreement of sale as per Ex.P2.
16 The Trial Court has also observed at para 17 that it is further argued by the learned Counsel for the defendant that the meeting notice under Section 173 of Companies Act pursuant to which, the resolution Ex.P63 is passed is not €7 20 .1 produced by the plaintiff to the Court and so the fact as to whether the interest of late M P Prabhu was disclosed or not is not proved and that Ex.P63 is executed only by M P Prabhu and since he is having an interest in the benefit of the plaintiff, he should not have participated in the proceedings of the meeting held on 10.05.1991 and that the resolution as per Ex.P63(1) is void under Section 300 of Companies Act. But it is already recorded that there is nothing to show that M P Prabbu had interest in the benefit of the plaintiff in executing the agreement of sale Ex.P2. Further more, if M P Prabhu had done anything contrary to the interest of the defendant company and contravened the provisions of Section 300 of the Companies Act, he should have been prosecuted under Section 300(4) of Companies Act. On the contrary. M P Prabhu was allowed to continue as Chairman of defendant company till one year before his death in May 200$ It is also relevant to note that the defendant compan has received the amount of Rs342,000 from the phintiff towards th apartment and issued receipts as per ExsP3 to P15 and certific ate as per ExP1 6. DWI has admitted in his cross examination that the amount received from the plaintiff under Exs,P3 to P15 are credited to the company account Further the possession certificate as per ExP1 7 was issued to the plaintiff on 31 07 1993. DWI has pleaded his innoccnc to the suggestion that the plaintiff is in possession of the flat allotted to him But the plaintiff has produced cons inc ing materials to shov that he is rc siding in the flat ¶tllotted to him by the d fcndant ompany dmi t I t I a er C hi 1 t en i dc e df ends r I nc iC t Pike tg I ir ff t t ) r* r C) Z CD 9 C) C) • r1 CD Z f D CD C. c,: --
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the said purpose and he has to incur some more amount for completion of the work. DW1 in his evidence has categorically admitted that it was the duty of the defendant to complete the building and the same was to be completed before execution of the sale deeds and he has further admitted that they did not complete the building work. DW1 has also admitted that the balance consideration amount required to be paid by the plaintiff was only Rs.2, 18,000/-.
19. The Trial Court has also observed at pan 22 that the plaintiff in order to prove that he has incurred more than Rs.3,00.000/- towards completion of work has relied on the evidence of PW2 N M Nayeemulla, who is the proprietor of Nasco Cico Nest and he has deposed that Kensington Apartment Owners Association had appointed him to finish the incomplete work of the LV'
--m apartment and the plaintiff got the interior work of his apartment completed through him by incurring Rs.l,25,000/-. Ex.P59 and P60 are the quotations issued by PW2 towards the interior work of the plaintiffs apartment for Rs. 1,24,705/-. Plaintiff has also produced the receipts issued by the Kensington Apartment Owners Association as per Ex.P18 to P25, according to which, he has paid Rs.2,75,000/- towards the cost of the completion work of the apartments. Even accepting that the plaintiff has incurred more than Rs.3,00,000/- towards the cost of completion of unfinished work of the flat, but there is nothing on record to show that the plaintiff was authorised by the defendant to get the unfmished work completed and adjust the amount incurred by him towards balance consideration. The plaintiff has not even informed the defendant that he has completed the unfinished work by incurring C-,.
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Rs.2,18,000/- only. He has also admitted that as a builder it was their duty to complete the building and that it was to be completed before execution of the sale deed and they did not complete the building. PW. 1 has also admitted that according to EX.P. 17, the possession certificate, the balance consideration amount was required to be paid by the plaintiff at the time of registration of the sale deed. EX.P. 17 clearly reveals that plaintiff was required to pay the balance consideration amount at the time of the registration of the sale deed. Thus, from the evidence of DW. 1 himself and the documentary evidence of EX.P. 17, it is clear that the sale transaction could not be completed due to non completion of the building work from the defendant and due to that reason only, the plaintiff did not pay the balance consideration amount to the defendant.
€0-, 28 .1
21. The trial court on careful reading of EX.P.2 and the addendums EX.P.2(a) and (b), the time to pay the balance consideration was 30.4.1991 and it was extended to 30. 10. 1991 and further extended to 30.6.1992. As per EX.P.2(c), no time was fixed to pay the balance consideration, but EX.P.17 clearly establishes that the balance consideration was required to be paid by the plaintiff at the time of registration of the sale deed after completion of the building. Admittedly, the defendant has not completed the building. Thus, no time was fixed to pay the balance consideration amount by the plaintiff, but the same was to be paid after the completion of the building work and at the time for the registration of the sale deed.
22. The trial court has also observed that as per EX.P.2(a) and (b), the time was extended to 29 pay the balance consideration amount by the plaintiff and to complete the construction of the flat by the. defendant by mutual agree:ment and not at the instance of the plaintiff alone, Further more, it is not, at all t..he case of the defe.ndant that the plaintiff was incapable of paying the balance consideration amount. It is not elicited in the crossexamination of PW. 1 that the plaintiff was unable to pay the balance consideration amount to the defendant. It is not even suggested to PW. 1 that the plaintiff has no financial capacity to pay the balance consideration amount.
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possession certificate, the plaintiff was required to pay the balance consideration amount of Rs.2,18,000/- to the defendant at the time of the registration of the sale deed and it does not in any manner stipulates the date for registration of the sale deed. Thus, the time mentioned in EX.P.2, P.2(a), P.2(b) and P.2(c) cannot be taken into consideration for computation of the period of limitation. The trial court has also observed that in that view of the matter for the purpose of limitation, this suit will be governed by the 2nd part of Article 54 of Limitation Act, according to which, the suit has to be filed within 3 years from the date of refusal to perform the contract by the defendant. In the case on hand, the plaintiff has not issued any notice to the defendant calling upon it to execute the sale deed before filing this suit. But the defendant has filed the suit in OS. 4013/1995 against the plaintiff and others and 32 the plaintiff has produced the certified copy of the order dated 4.3.1997 passed on l.A. No.1 in the said suit as per EX.P.37. As per the body of the order EX.P.37, it could be seen that the said suit was filed for the relief of permanent injunction to restrain the plaintiff herein and others from interfering with the possession of the defendant herein in respect of the property bearing No.18/i situate at Ulsoor which is the plaint "A" schedule property and also for declaration that any transaction entered into between the plaintiff herein and other M.P. Prabhu is void. DW. 1 has admitted in his cross-examination that they have filed the suit in O.S.4010/ 1995 (which out to be 4013/1995) against the agreement holders. Thus, from the fact of the filing of the suit in 0.S. No.4013/1995, the defendant expressed its unwillingness to perform its part of contract in terms of EX.P.2. So, the date of institution of the '3 iuit in OS.4013 1995 will be the starting point for the computation of the period of limitation. Admlttedh, this suit is filed on 15.9 1997, whfrh is obuoudy aithin 3 iears from the date of the filing of the suit in OS. No.4013/1995. Therefore, the trial court has held that the suit Is flied within the period of limitation. Therefore the trial court held that instant suit is not barred by time.
25 The trial court has also observed at pam 31 that the plaintiff has paid Rs.3,42,000/ towards sale consideration to the defendant before 31 '31992 as could lx seen from the certificate EX 16 it has also come in the evidence of PW I and 2 that the plaintiff has been in posse non and njosmentof he hint C shedtlep pth I pirtpefonnancoftheapecmen ofs*FXP and he nat inc irred ,penditure f more thin R C ad tt ci 34 and interior work, It is already held that the plaintiff was all along ready and willing to perform his part of contract, Therefore the trial court held that if a decree for specific performance is not granted, the plaintiff will be put to untold hardship and loss, On the other hand, the defendant being a public limited company and also the developer, no hardship or inconvenience will be caused to the defendant, if it is directed to execute the sale deed in terms of EXP2 after receiving the balance consideration amount of Rs,2, l8,OOO/ from the plaintiff. So the comparative hardship u ill be more to the plaintiff than that of the defendant in case this suit is not decreed for the relief of specific. performance of contract, Therefore the trial court holds that the plaintiff is en title for decree of spe.cific performance. Therefore the trial court decreed the suit with cost and plaintiff was directed to deposit 1 balance sale consideration of Rs.2, 18,000/- to the court within two months from the date of its order. The defendant shall execute and register the sale deed conveying the plaint 'B" and "C" schedule properties in favour of the plaintiff in terms of EX.P.2 within one month from the date of deposit of balance consideration amount into the court by the plaintiff. In the event of failure on the part of the defendant in complying with the above direction, the plaintiff is at liberty to get the registered sale deed executed through the process of Court. The defendant is entitled to receive the balance consideration amount that will be deposited into Court by the plaintiff after the execution and registration of the sale deed.
26. Feeling aggrieved by the judgment and decree the defendant has preterred this appeal.
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memorandum and articles of association has not confirmed any power to the Chairman to transfer the property of the company. There was no resolution to the chairman to transfer the property of the company. Plaintiff has produced EX.P3 which has only ratified the construction activities and the court has misinterpreted this document. Though the Managing Director has extended time for payment, but there was no resolution authorising him to do so. The addendums in EX.P2 is void and without authority. The addendums shows that the payment was made by 30.6.92 and the construction was completed by 1992. By virtue of Section 52 of Contract Act there was no obligation to complete the construction unless the payment is made and admittedly no payment was made. The trial court did not appreciate EX.P2(b). EX.P2(a) to (c) are endorsements in respect of extension of time for payment of money. The suit was barred by limitation. The court finding with regard to the limitation is not in L-t-.
accordance xx ith lau I he onduct of the plaintiff does not entitle to the relief of specific performance. especialh then the plaintiff has forcibh secured the possession. lurther no balance sheet or passbook is produced to indicate that they were haxang sufficient amount to perform his part of the contract
29. Learned counsel for the respondent supports the impugned judgment In so far as the limitation aspect is concerned the learned counsel for the respondent submits that since the possession has been dclix ered to the plaintiff the litnitation runs for a period of 12 years as proxidcd under \rticlc 64 of the Limitation ct Ihe defendant omparn tiled i suit for njurn tior () 40 ) Ii hat suit if e dc ft dant xp s c d ts r x Ilin r c t x tf rrr if e ar f rtt FXI at 4 rr Ih r irorri if 1 it c 1 i he 1 t r 40 limitation. Admittedly the present suit was filed on 15.9.97 which is within three years from the date of filing the suit 0.5. No.4013/95. Learned counsel for the respondent also submits that account extract for the period from 01.10.1998 to 11.11.2003 and 14.07.95 to 11.11.2003 which would indicate that there was sufficient amount with the plaintiff. There is no pleadings to the effect that there is collusion between the Managing Director and the plaintiff by issuing the possession certificate as pr EX.P17.
30. So the point that arises for consideration in this appeal is:
Whether the impugned judgment calls for interference or not?
31. My answer to the above point is as under for the following reasons:
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company it is for the company court to take suitable action for the contravention of the provision of Companies Act. But in the instant case no complaint has been lodged before Company Court nor any petition has been presented before the Company Court. Without urging that ground in the Company, the civil court may not come to the aid of the appellant i.e., defendant herein.
37. Though the learned counsel for the appellant submitted that the Chairman of the leasing company has not empowered to extend the time limit for payment of balance sale consideration amount, but he has not come out as to who is the officer who is empowered to extend the time limit or to reject the same. In the absence of any definite pleadings as to who is the responsible officer can grant time, it is difficult to come to a conclusion that the Chairman was empowered to '7 46 a extend the time for payment of balance consideration from time to time.
38. Learned counsel for the appellant also invited the attention of this Court to Section 54 of the Indian Contract Act. This section deals with the fact that when a contract consists of reciprocal promises, such that one of them cannot be performed, or that its performance cannot be claimed till the other has been performed, and the promisor of the promise last mentioned fails to perform it, such promisor cannot claim the performance of the reciprocal promise, and must make compensation to the other party to the contract for any loss which such other party may sustain by the non-performance of the contract. In the instant case neither the plaintiff has paid full amount nor the defendant has completed the construction of the flat. On the other hand the chairman of the company in order to save the money from con structing has inducted 1 Cl CD r (J ) 3.
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Therefore the plaintiff was constrained to file the suit for specific performance of the contract. The trial court decreed the suit and directed the defendant to deposit the balance consideration amount of Rs.2,18,000/- and also directed the defendant to execute the sale deed, but the defendant did not executed the sale deed. Therefore the defendant was constrained to file the execution petition and the same was also closed. Now the plaintiff is living and settled in the property in which he has purchased. The date of agreement is 14.3.1991. Now we are in the year 2012. After a decade the plaintiff is living in the flat purchased from a public limited company. Now balance consideration amount has been paid to the company and the rest of the amount has been deposited in the court as per the direction of the court. The trial court has examined and come to a conclusion that the plaintiff is entitled for a relief of specific performance of the contract. The trial court has exercised the jurisdiction reasonably. At this stage I do t-..52
q not want to Interfere with the finding recorded by the court below. Exercising the power under Order 41 Rule 11 thIs appeal is disposed of at the stage of admission because execution petition has been filed and the sale deed has been executed and execution petition was also closed, besides no stay application was ified by the appellant. In that view of the matter, In my view, the findings recorded by the Court below Is sound and proper and does not call for Interference.
43. In the result, I pass the following:
ORDER This Regular First Appeal is dismissed.
Sd!-.
JUDGE Bgn/ykl