Harish Ramanlal Desai vs D.S. Construction Co. and Others

Jayant Patel, J.—The present appeal arises against the judgment and decree dated 22.9.2009 passed by the learned Civil Judge in Special Civil Suit No. 155 of 1992, whereby the suit is partly allowed against the Defendant Nos. 1, 2, and 3 and the Plaintiff is directed to pay the cost of Defendants No. 4 to 12.

The short facts of the case appear to be that the suit for specific performance of contract was filed on the ground that for the suit property, an agreement to sale was entered into between the Plaintiff and Defendants No. 1 to 3 for a consideration of Rs. 15,00,001/-. As per the Plaintiff, the amount of Rs. 75,000/- was paid as earnest money and thereafter Rs. 25,000/- was additionally paid. Thereafter, as the sale deed was not executed, the suit for specific performance of contract was filed. The lower Court after the evidence was recorded and the matter was heard, passed the judgment and decree, whereby the relief for specific performance of contract has not been granted and the Defendants No. 1 to 3 are directed to pay the amount of Rs. 1,50,000/- to the Plaintiff and the damages claim of Rs. 1 crore to the Plaintiff by the Defendants No. 4 to 12 is not granted. However, the lower Court has directed the Plaintiff to bare the cost of Defendants No. 4 to 12. Under these circumstances, the present appeal before this Court.

We have heard Mr. Mirza, learned Counsel for the Appellant, Mr. Hakim, learned Counsel for Respondent No. 1, 2 and 3 - original Defendants and Mr. Kapadia, learned Counsel for Respondents No. 4 to 12 - original Defendants No. 4 to 12. We have considered the relevant record and the reasons recorded in the Judgment.

The first contention raised by the learned Counsel for the Appellant is that in the revenue entry the property was shown in the name of original Defendants No. 1 to 3, therefore, the Plaintiff bonafide believed that the Defendants No. 1 to 3 were the owners of the property and, therefore, the agreement to sale was entered into and the earnest money was also paid. It was submitted that the said aspect is proved to the extent that the agreement to sale was entered into and the amount of Rs. 1 lac was paid. However, in spite of the same, the trial Court has not granted the relief for specific performance of contract and, therefore, there is an error committed by the trial Court.

The examination of the said contention shows that upon the evidence on record, the trial Court has found that the property in question was auctioned in the Court proceedings and vide order dated 26.7.1976 the sale was confirmed in favour of Smt. Fatesinhrao Gaekwad and sale certificate was also issued on 14.4.1977. Thereafter the said property was transferred in favour of M/s. Alaukik Trading and Investment Private Limited and the said M/s. Alaukik Trading and Investment Private Limited thereafter sold the property by a registered sale deed. Under these circumstances, the trial Court has found that the Defendants No. 1 to 3 were not owners of the property. Merely because the revenue entry was showing the names of Defendants No. 1 to 3 would not result into nullifying the effect of the registered sale deeds executed long back for transfer of the property. Once the trial Court found that the Defendant Nos. 1 to 3 were not the owners of the property, the exercise of direction for declining the decree for specific performance of contract cannot be said to be an erroneous approach on the part of the trial Court even if the agreement to sale was proved and the part of the consideration was paid. If the the sellers were not the owners at the relevant point of the property in question, they had no title of the property, which could be conveyed by way of specific performance of contract. Therefore, the said contention cannot be accepted.

It was next contended by the learned Counsel for the Appellant that no damages were ordered to be paid and only there is direction to pay the amount of Rs. 1,50,000/-, which includes Rs. 1,00,000/- towards the earnest money and Rs. 50,000/- towards damages. It was submitted that because of high appreciation of the property, Rs. 50,000/- was just a negligible amount towards damages and, therefore, there is an error committed by the trial Court.

Prima facie the contention appears to be attractive but upon close scrutiny, it appears that as per the agreement to sale itself Rs. 50,000/- was provided by way of liquidated damages in the event sale deed was not executed. It is by now well settled that when the liquidated damage is expressly provided under the contract, the party suffering the breach would be entitled to such amount. Had it been a case where any additional damages were provided, the matter would have been different, but when it was specifically provided for Rs. 50,000/- in the event the sale deed was not executed, as the damages, and if the trial Court has awarded such damages of Rs. 50,000/-, the approach cannot be said to be erroneous.

It was next contended by the learned Counsel for the Appellant that the trial Court ought not to have ordered the cost of the Defendants No. 4 to 12 to be borne by the Plaintiff, more particularly when the agreement for sale was proved and amount of earnest money was also found as proved.

There is considerable force in the submission and we would have considered the matter further, however, Mr. Kapadia, learned Counsel for Respondent Nos. 4 to 12 declared before this Court under the instructions of his clients that they shall not press for the execution of the decree for the costs as mentioned in paragraph 5 of the operative portion of the Judgment. Under these circumstances, that part of the judgment and decree of the trial Court deserves to be modified accordingly.

No other contention is raised.

In view of the aforesaid, Judgment and decree passed by the trial Court so far as it relates to directing the Plaintiff to bear costs of Respondent Nos. 4 to 12 is quashed and set aside. Rest of the judgment and the decree passed by the trial Court is not interfered with. The appeal partly allowed to the aforesaid extent with no order as to costs.