Uncategorized

Delhi High Court on the law of Specific Performance

Comment : The Court in this case was dealing with a case for specific performance. The Court dismissed the plea holding :
i) Vendee failed to prove his readiness (financial capacity) and willingness (desire) at the time when agreement was to be performed. The Court refused to act at the ipse dixit of the Plaintiff when he, in order to prove his financial prowess, tried proving that he sold a property before entering to buy the present one, however he could not even tell the address of property or name of buyer etc. The Court disengaged the falsity (much) from truth (not much), and negatived plea holding readiness is essential part of COA for specific Performance not just at time of petition but at time of performance originally agreed upon.
 
Delhi High Court
Shri Thakur Dass Verma & Anr vs Shri Harish Chand on 4 January, 2011

* IN THE HIGH COURT OF DELHI AT NEW DELHI + RFA No.163/1998

% 4th January, 2011 SHRI THAKUR DASS VERMA & ANR. …… Appellants Through: Mr. Vivek Singh,

Advocate.

VERSUS

SHRI HARISH CHAND

…… Respondent

Through: Mr. L.D.Adhlakha, Adv.

CORAM:

HON’BLE MR. JUSTICE VALMIKI J.MEHTA

1. Whether the Reporters of local papers may be allowed to see the judgment?

2. To be referred to the Reporter or not? Yes

3. Whether the judgment should be reported in the Digest? Yes VALMIKI J. MEHTA, J (ORAL)

1. The present first appeal under Section 96 of the Code of Civil Procedure, 1908 impugns the judgment and decree dated 12.1.1998 whereby the suit of the respondent/plaintiff for specific performance was decreed. The agreement to sell in question is dated 6.10.1986 with respect to the property No.874 (Old No.355/56) Prem Gali No.3-C, Gandhi Nagar, Delhi-31. The total consideration under the agreement to sell was Rs.90,000/- of which Rs.10,000/- was paid on the date of the agreement to sell. The balance amount of Rs.80,000/- was to be RFA No.163/1998 Page 1 of 10 payable in one month by 6.11.1986 when the sale deed was to be executed and registered.

2. It is not in dispute that there was an agreement to sell and nor is the consideration amount in dispute. It is also not disputed that the agreement to sell was to be performed within one month by the respondent/plaintiff getting executed the sale deed in its favour. Though various defences were raised by the appellant/defendant the main defence was the lack of readiness and willingness of the respondent/plaintiff.

3. The trial court framed the following issues for consideration. ” 1. Which of the parties is guilty of committing a breach of the agreement to sell dated 6-10-86? Onus on parties.

2. Whether the suit is within time as alleged?OPP

3. Whether the suit is without any causes of action as alleged?OPP

4. Whether the suit is bad for mis-joinder of defendant no.2 as alleged? If so to what effect? OPD

5. Whether the plaintiff is entitled to a decree for specific performance of the agreement as alleged?OPP

6. Relief.”

4. The learned counsel for the appellant has very vehemently argued before this court that the trial court clearly erred in its finding with regard to the issue no.5 because the respondent/plaintiff failed to show his capacity to pay the balance consideration of Rs.80,000/- RFA No.163/1998 Page 2 of 10 during the period when performance of this obligation was to be done viz in October/November,1986. The learned counsel for the appellant referred to the statement of PW-1 (respondent/plaintiff) and which is the only evidence led in the trial court with regard to the financial capacity of the respondent/ plaintiff.

“XXXXXX

I had the money ready for getting executing

the required document as I sold a residence

for Rs.70,000/- at Shankar nagar and the

remaining amount was available at my home.

It was a plot at Shankar nagar which I sold

about after 4-5 days of the agreement.

Number of which I do not remember. And I

have given over the documents pertaining to

that plot to the buyer. I do not remember the

name of the buyer.”

Referring to the aforesaid portion, counsel for the appellant argued that even this evidence is in the cross examination of PW1 and not in the examination in chief of the respondent/plaintiff. Nothing further was proved so as to show the readiness and willingness in terms of availability of money with the respondent/plaintiff for payment of the balance consideration for execution of the sale deed.

5. During the course of arguments, I put it to the learned counsel for the respondent as to whether the respondent/plaintiff had before the trial court filed his statement of bank account to show whether he had with him a sum of Rs.80,000/- in October/November,1986, and to which, the counsel for the respondent/plaintiff said that no such copy RFA No.163/1998 Page 3 of 10 of the bank account was filed in the trial court. I further put it to the counsel for the respondent/plaintiff as to whether the copies of the title documents of the property which the respondent/plaintiff allegedly owned at Shankar Nagar were filed in the trial court, and again to which, the learned counsel for the respondent/plaintiff replied in the negative. My further query was that whether the respondent/plaintiff had filed in the trial court copies of the documents showing the sale of the Shankar Nagar property, and once again learned counsel for the respondent/plaintiff said that no such documents were filed in the trial court. The conclusion therefore which emerges is that the readiness and willingness to pay the balance amount of consideration which the respondent/plaintiff claimed and his consequent capacity to pay such consideration on the basis of sale of an alleged Shankar Nagar property whose number cannot be said to emerge from the evidence led in the trial court. Thus, the ownership documents with respect to the Shankar Nagar property are not existing in the trial court record, the transfer documents by which the Shankar Nagar property was sold are not existing in the trial court record and finally there is also no statement of bank account on record so as to substantiate the availability of monies to the extent of Rs.80,000/- to pay the balance sale consideration.

6. Learned counsel for the respondent/plaintiff very vehemently argued RFA No.163/1998 Page 4 of 10 that the respondent/plaintiff had given legal notice dated 3.11.1986 (Ex.PW1/2) specifically asking the appellant/defendant to appear before the sub-Registrar for execution of the sale deed and which was followed up by a telegram and a subsequent legal notice dated 6.12.1986 (Ex.PW1/6) and since the appellant/defendant failed to appear before the sub-Registrar and failed to reply to the legal notices a presumption should be raised that the respondent/plaintiff had the necessary monies with him to make the payment of the balance sale consideration. I am unable to agree with the contention of the learned counsel for the respondent /plaintiff because mere silence to the legal notices is at best only one of the factors which has to be considered by court at the time of final arguments in the case. Non reply to a legal notice can raise a presumption against a person who does not reply to the same however this would not be conclusive for determination of the issue. The determination of the issue ultimately depends upon various evidences which are put in a scale, in a civil case, to arrive at the balance of probabilities for determination of the issue. In a case where specific performance of a property is asked for, the courts have insisted on clear cut proof of readiness and willingness because it deprives a seller of a property his valuable ownership rights. This is all the more accentuated in the present case because specific performance is sought of an agreement of the year 1986 when we are RFA No.163/1998 Page 5 of 10 today in the year 2011 and the property prices would have multiplied manifold. It is also not a case where a substantial part or most of the consideration under the agreement to sell has been received by the seller. Only an amount of Rs.10,000/- was paid out of the total consideration of Rs.90,000/-. Specific performance is necessarily predicated on the proof with regard to availability of balance monies so as to pay the sale consideration. On this aspect, in my opinion, the respondent/plaintiff has miserably failed. The learned trial court in my opinion has clearly committed an illegality and perversity in holding the respondent/plaintiff was ready and willing to perform his part of the contract. The relevant observations of the trial court in this regard for holding that the respondent/plaintiff was ready and willing are as under:-

“xxxxxx

He had the money ready for getting the execution of required document as he sold a residence for

Rs.70,000/- at Shankar Nagar and remaining amount was available with him at his home. He further stated that he sold a plot at Shankar Nagar of after four-five days of the agreement number of which he does not remember and he does not remember the name of the buyer but was a sweetmeat maker. He categorically denied that there was no plot on his name at Shankar Nagar which he did not sell and also denied that he had no money to pay the seller the balance consideration between the period of 6-10-86 to 6-11-86. He admitted that he told this fact that he has money ready with him to his counsel.”

“xxxxxx

PW1 has stated that Rs.70,000/- he received from a RFA No.163/1998 Page 6 of 10 sale proceedings of a plot after four-five days of the agreement and balance amount was ready with him at his home whereas it appears from the record that after the agreement defendant no.1 has not turned up for giving the possession and taking the money from the plaintiff.”

I have already discussed above that the aforesaid evidence is grossly insufficient because neither are there copies of the documents of title of the Shankar Nagar property nor are there documents showing transfer of the Shankar Nagar property and also, there is no specific proof of the alleged Shankar Nagar property and further there is no document on record to show the existence in the bank account of the respondent/plaintiff for a sum of Rs.80,000/- for payment of the balance sale consideration.

7. This court sitting in first appeal is a court for examining both findings of facts and law. If the findings of facts are clearly perverse, this court is fully justified in interfering with the impugned judgment and decree. In the facts of the present case, in my opinion, the impugned judgment and decree clearly suffers from a clear cut illegality and perversity in arriving at a finding, as the aforesaid discussion, that the respondent/plaintiff was ready and willing because he had the balance sale consideration for payment of the balance price of the property.

8. At this stage, I may deal with another contention of the learned RFA No.163/1998 Page 7 of 10 counsel for the respondent/plaintiff with regard to readiness and willingness. This contention was that immediately after the passing of the decree by this trial court, the respondent/plaintiff had deposited the balance sale consideration in the court showing that the respondent/plaintiff was always ready and willing. In my opinion, this argument is mis-placed because the issue of readiness and willingness is not to be decided on the date of the decree but on the date of the performance which was required under the subject agreement to sell. The period of performance under the agreement to sell was October/November, 1986 and for which period the respondent/plaintiff has failed to prove any resources with him to make payment of the balance sale consideration.

The learned counsel for the appellant/defendant sought to draw my attention to a judgment passed by the Additional Rent Controller against the respondent/plaintiff who is a tenant in the property and as per which judgment, the respondent/plaintiff had even failed to pay the amount of rent of Rs.35 per month. The learned counsel for the appellant also sought to place before me to a certified copy of another judgment, which is not in the trial court record, holding the respondent guilty of nonpayment of rent. I am not going into all these aspects firstly because the judgment of the leaned Addl. Rent Controller filed in the trial court has been set aside by the Rent Control RFA No.163/1998 Page 8 of 10 Tribunal and the second judgment which is relied upon by the appellant/defendant is not in trial court record. In any case, I have already adverted to the aspect of lack of readiness and willingness of the respondent/plaintiff and I have mentioned the aforesaid facts of the decrees of Rent Controller against the respondent/plaintiff of non- payment of rent on account of the arguments raised by counsel for the appellant only. I, therefore, am not adverting to these arguments as raised by the counsel for the appellant with regard to the lack of financial capacity of the respondent/plaintiff.

9. The counsel for the respondent/plaintiff then finally argued that the respondent/plaintiff should be refunded the amount of 10,000/- in terms of his prayer in the suit where this relief is claimed in alternate to decree of specific performance because the buyer is always entitled to refund of his advance amount paid. The stand of the appellant/defendant is that this amount has been forfeited on account of the breach committed by the respondent/plaintiff and which has been so deposed by the appellant/defendant in his evidence. In law, the entire amount of advance cannot be forfeited and only that part of advance can be forfeited which has a reasonable nexus to the total price. This is the ratio of various decisions of the Supreme Court starting from the Constitution Bench decision in the case of Fateh Chand Vs. Balkishan Das AIR 1963 SC 1485 in RFA No.163/1998 Page 9 of 10 which it was said that there can be forfeiture only of a nominal amount when no other loss is proved by the seller. In the facts of the present case I find that the appellant should only forfeit a sum of Rs.2,000/- on account of the respondent/plaintiff being guilty of breach of contract in not being ready and willing on the part of promise because no other loss is alleged or proved. The appellant/defendant should therefore refund to the respondent/plaintiff the sum of Rs.8000/- along with interest at the rate of 9% per annum from 6.11.1986 till the date of payment. This payment be deposited in this court by the appellant/defendant to the respondent/plaintiff within a period of six weeks from today. Since there are many respondents to whom this amount would have to be apportioned, this amount can be released to the respondents on an appropriate application being filed in this court.

10. In view of the above, the impugned judgment and decree being clearly illegal and perverse is therefore set aside. The appeal is accepted by set aside the judgment and decree dated 12.1.2008, the suit for specific performance of the respondent /plaintiff will accordingly stand dismissed. Decree sheet be prepared. Trial Court records be sent back.

JANUARY 04, 2011 VALMIKI J. MEHTA,J 


Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s