R. Muthusamy vs K. Govindammal and 2 others

Sivasubramaniam, J.—The unsuccessful first plaintiff in O.S. No. 650 of 1977, on the file of the III Additional Subordinate Judge, Coimbatore is the appellant in this regular appeal. The respondents 1 and 2 herein were the defendants in the said suit. The appellant/first plaintiff and the 3rd respondent herein filed the said suit for recovery of a sum of Rs. 70,000 from the defendants/respondents 1 and 2 herein. The material averments in the plaint are as follows: The suit schedule mentioned properties belong to the defendants. On 30-12-74, the plaintiff and the defendants entered into an agreement by which the defendants agreed to execute a sale deed in respect of the schedule mentioned properties for a sum of Rs. 5,15,000 in favour of the plaintiffs. On the same date, a sum of Rs. 50,000 was paid by the plaintiffs to the defendants as advance. The sale deed has to be executed as per the terms of the said agreement in a period of one year on receiving the balance of Rs. 4,65,000. As per the terms of the agreement, possession also was given to the plaintiffs on the same date and the plaintiffs has to make necessary arrangements for the purpose of dividing the same as house sites. After the execution of the said agreement, necessary lay-out roads were formed by the plaintiffs. The plaintiffs constructed bridges and thus the plaintiffs spent a sum of Rs. 20,000 towards the formation of roads, construction of bridges and for preparing the plan and other things. At the end of 1975, the defendants approached the plaintiffs and requested them that they themselves will take necessary steps for selling the house sites and they also requested that the agreement entered into on 30-12-74 may be cancelled. The plaintiffs also agreed to cancel the agreement provided the advance of Rs. 50,000 has to be returned and they should be duly compensated to the tune of Rs. 20,000 for the improvements effected. In pursuance of the said understanding, the defendants sold about nine sites to various parties in February, March, 1976. Further, a portion of the property was also sold by them as an agricultural land. As per the terms of the agreement and as agreed upon by both the plaintiffs and the defendants, the defendants are liable to pay a sum of Rs. 70,000 to the plaintiffs. Inspire of demands including a notice dated 15-10-76 issued to the defendants, the defendants failed to pay the said sum. Hence the suit.

The defendants resisted the suit and filed a written statement raising the following contentions: The defendants intended to sell their lands covering an extent of 7.15 acres and coming to know of the defendants, intention the plaintiffs approached the defendants with an offer to purchase the whole extent. A written sale agreement was entered into on 30-12-74 between the defendants and the plaintiffs incorporating certain terms and conditions regarding the price, the date for completion of the; deed and the consequences for the default in performance by the parties. Though the defendants complied with all the obligations, the plaintiff failed to carry out their part of the obligations up their default, (?) (sic) they are setting up a false cause cancellation of the written agreement and formation of a few oral agreement to get back the lost earnest-money with compensation for the alleged improvements which were never effected by them. The whole oral agreement is false and misconceived. The time was made the essence of the contract for performance. The plaintiffs have no right to get back the earnest money of the false claim for improvements. The plaintiffs never did any thing to provide for lay-out and division of plots. The averments in the plaint about the formation of the lay-out roads, construction of bridges by the plaintiffs are all false. The defendants were never informed of any such improvement of expenditure. By the terms of the agreement of 1974, which has not been cancelled, the plaintiffs have lost their rights to claim Rs. 50,000 as the same stood forfeited and unclaimable by the plaintiffs. The defendants had parted with possession of their valuable property worth several lakhs and were prevented from effecting any sale by their own efforts by which they could have gained large profits. The defendants suffered heavy loss of income. The plaintiffs destroyed the boundary fence which had to be reconstructed by the defendants at a huge cost after getting back possession of the land, after the expiry of the agreement period. There was no oral agreement at all in super-session of the written agreement to pay Rs. 70,000 to the plaintiffs. The entire claim is false and the suit itself is not maintainable. Plaintiffs voluntarily surrendered possession and gave up all rights to specific performance or to claim any other relief. The defendants are not liable to pay any amount to the plaintiffs under law, equity or justice.

The trial Court framed relevant issues arising out of the pleadings of the parties and dismissed the suit holding that the oral agreement pleaded by the plaintiffs is not true and the claim of compensation for improvements has not been proved. As against this judgment, and decree, the first plain tiff has filed the above appeal.

Sri G.M. Nathan, learned counsel appearing for the appellant submits that the following two points would arise for consideration in this appeal :

Whether the oral agreement between the plaintiffs and the defendants is true?

Whether the claim or improvements to the extent of Rs. 20,000 made by the plaintiffs is true?

Point No. 1: The plaintiffs filed the suit for recovery of a sum of Rs. 50,000 paid to the defendants as advance under the agreement of sale Ex.A1 dated 30-12-74 and foe recovery of Rs. 20,000 being the value of improvements effected by them. It is the admitted case of the parties that the plaintiffs and the defendants had entered into an agreement on 30-12-74 and the deed of agreement of sale Ex.A1 was executed by them and that the plaintiffs paid a sum of Rs. 50,000 to the defendants on the date of agreement. It is also admitted that the defendants agreed to execute a sale deed in respect of the suit properties in favour of the plaintiff for a sum of Rs. 5,15,000. The sale deed was to be executed as per the terms of the said agreement within a period of one year on receiving the balance of Rs. 4,65,000. As per the terms of the agreement, possession also was given to the plaintiffs on the same day and the plaintiffs had to make necessary arrangements for the purpose of dividing the same as house sites. According to the plaintiffs, at the end of one year period from the date of Ex.A1, the defendants approached them and represented that the lands should be handed over to them and in turn they would refund the advance of Rs. 50,000 and also pay a sum of Rs. 20,000 towards compensation. It was resisted by the defendants that the said sum of Rs. 50,000 was not paid as advance, but it was paid as earnest money and since the plaintiff failed to fulfil the conditions of the agreement and thereby committed breach of contract, they are not entitled to the refund of Rs. 50,000. According to them, there was no such oral agreement pleaded by the plaintiffs. Though the entire case depends upon the alleged oral agreement, the trial Court has resorted to an elaborate discussion about the time being the essence of the contract and the character of the amount paid by the plaintiffs to the defendants under the said agreement. The learned counsel for the appellant has rightly contended that such an approach in the case is wholly unwarranted and he submitted that he would confine his submissions only relating to the oral agreement pleaded by the appellant and the claim made by him for compensation. Therefore, we proceed to consider whether the alleged oral agreement is true or not.

The evidence adduced by the parties discloses that the plaintiffs had agreed to divide the suit properties with a view to sell to various persons by plots and to pay the sale price mentioned in Ex.A1 within a year. They have not performed their part of the obligation within the stipulated time. Therefore, at the end of one year period contemplated under Ex.A1, the defendants took possession of the properties. Thereafter, the defendants had sold the properties for a price lesser than the sale price fixed under Ex.A1 as seen from Ex.B1 to B6, B8 to 16 and B17. P.W.1 admitted that some of the portions of the lands were cultivated and used as agricultural lands. During the period in which the plaintiffs were in possession of the properties, the defendants could not cultivate and derive any income from the properties. Due to the default committed by the plaintiffs, the defendants were forced to sell the properties for a lesser price. Therefore, there is prima facie evidence to show that the defendants have suffered damage due to the default committed by the plaintiffs. According to the plaintiffs, the defendants approached them at the end of 1975 and requested the plaintiffs that they themselves would take necessary steps for selling the properties as house sites and wanted the agreement to be cancelled. According to them, at that time, there was an oral agreement in which the parties had agreed to cancel the agreement Ex.A1 and the defendants had agreed to refund the said sum of Rs. 50,000 apart from a sum of Rs. 20,000 towards improvements made by them. In support of the said oral agreement, apart from P.W.1, the first plaintiff, P.W.3, was examined. Though the plaintiffs put forward a case of mediation by P.W.3, the same was not spoken to by the witnesses. P.W.3 did not refer to any such mediation. The witnesses were not definite about the date of which such a mediation had taken place. It is stated that the said oral agreement took place in the house of P.W.3 and P.W.3 has stated that both the defendants were present at the time of the alleged mediation. It is seen from the evidence of D.Ws. 1 and 2 that such a suggestion was not put to them in the cross-examination. The evidence of P. W.3 is strongly relied on by the appellant to prove the said oral agreement, and apart from this evidence, there is no other independent evidence to corroborate the interested testimony of P.W.1. Therefore, it is necessary to find out whether the evidence of P.W.3 is acceptable.

At the outset, it should be noticed that in the notice Ex.A2 dated 10-10-76 issued by the plaintiffs'' counsel to the defendants 1 and 2, there is absolutely no reference to the part played by P.W.3. A perusal of the evidence of P.W.3 shows that he is a classmate of P.Ws.1 and he was the Ex-karnam of Nallur village. He is now working as a document writer. He was already connected with the preparation of the lay-out plan for the suit properties by the defendants. He has fairly admitted that there was an understanding between him and the plaintiffs that he should get his share but of the profits in the deal. He claims to have maintained accounts and managing the improvement works carried on by the plaintiffs in the suit properties. P.W.1 has stated that P.W.3 used to advance monies on occasions for the work. Therefore, these circumstances clearly indicate that he is highly interested in the case of the plaintiffs and, therefore, his evidence cannot be accepted at its face value.

Learned Counsel for the appellant submits that the oral agreement pleaded by the plaintiffs is probable in the circumstances of the case. When the plaintiffs have come forward with a case of an oral agreement with the defendants, they have not denied the said fact totally, but according to them the oral agreement was in a different form. In those circumstances, the Court has taken look into the probabilities, to find out the truth or otherwise of the alleged oral agreement. Considering the background in which the lands which were the subject matter of the agreement under Ex.A1 were delivered back to the defendants, there is ample scope to accept the case of the plaintiffs, since it is in accordance with the natural conduct of any one. He submits that the plaintiffs, having paid a substantial sum of Rs. 50,000 as advance for the said agreement and having spent more than Rs. 20,000 for carrying out improvements in the properties, would not have agreed to give up the entire agreement. According to the learned counsel, in appreciating the evidence of P.Ws.1 and 3, the Court has to consider the conduct of a person as a prudent man. According to him, in ascertaining the truth or otherwise of the oral agreement, the Court has to decide as to what was the Intention of the parties and how a reasonable person would have acted in the same circumstances. In support of his contentions, he relies upon the definition of the term "proved" found in S.3 of the Indian Evidence Act. What reads as follows :

A fact is said to be proved when, after considering the matters before if the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists.

According to him, when there are conflicting claims between the two interested parties, the test to be applied would be what a prudent man would have done in the given circumstance. Considering in that background, the learned Counsel submits that the case of the defendants that they took possession of the suit lands on voluntary surrender by the plaintiffs and the plaintiffs had agreed to forego the sum of Rs. 50,000 is highly improbable and unacceptable. Reliance is also placed on a passage found in Joseph Constantine Steamship Line. Limited v. Imperial Smelting Corporation, Limited 1942 A.C. 154 at 185 as follows:

In short, in ascertaining the meaning of the contract and its application to the actual occurrences, the Court has to decide, not what the parties actually intended, but what as reasonable men they should have intended. The Court personifies for this purpose the reasonable man.

We feel that the above principles may not have any application to the facts of the present case because on facts we are not inclined to accept the highly interested testimony of P.Ws. 1 and 3 in this case and therefore, there will be no scope to apply such a principle of interpretation of the evidence, in the peculiar circumstances of the present case. The oral agreement and the cancellation of the agreement Ex.A1 should be proved positively and it cannot be decided on mere presumptions or probabilities, especially when evidence has been let in by both parties.

According to the plaintiffs, they took necessary steps and lay-out roads were formed by them at a considerable expense. They relied on Exs.A4 and A5 for the said purpose. Exs.A4 is the lay-out application sent by the first defendant to the Tiruppur Municipality whereas Ex.A5 is the sketch showing the lay-out and surrounding details with scheme proposal in town-planning-scheme, No. 13 acres. (sic) Though P.W.1 has deposed than Exs.A4 and A5 have been sent by him to the Municipality P.W.2, has categorically stated that they have been sent only by the first defendant the Municipality. It is also in evidence that Ex.A4 and A5 were already available even on the date of the agreement Ex.A1. As a matter of fact, P.W.3 has admitted that two or three months before Ex.A1, Exs. A4 and A5 were returned by the Municipality. It was also admitted by him that Ex.A4 and A5 are not the plans submitted in pursuance of Ex.A1. The plaintiffs relied on another plan Ex.A8. But there is nothing to show that the same has been approved by the Municipality and they had formed roads and bridges according to the said plan. We have already seen that the evidence of P.W.3 is highly interested and it is not acceptable. Apart from that, we have got the evidence of P.W.3 only and his evidence does not stand in a better footing than the evidence of P.W.3. We have shown how it is contradictory with the evidence of P.W.3. Apart from that, there is one important circumstance which would show that the case put forward by the plaintiffs cannot be true. When there was a written agreement in respect of the agreement of sale, nothing prevented the plaintiffs from making an endorsement on the agreement Ex.A1 regarding the payment of Rs. 50,000 and Rs. 20,000. Similarly, they would have taken something in writing evidencing the alleged agreement between the parties. No acceptable explanation has been offered by the plaintiffs for having not taken any document in respect of the alleged oral agreement. When there is a written agreement between the parties evidencing a contract, it is not possible to accept the mere oral agreement in the circumstance of the present case. In support of this principle, learned counsel for the respondents and 2 relied on Bengal Nagpur Ry. Co. Ltd. Vs. Ruttanji Ramji and Others, where the learned Judges relied on a passage of House of Lords as follows--

When parties who have bound themselves by a written agreement depart from what has been so agreed on in writing, and adopt some other line of conduct, it is incumbent on the party insisting on, and endeavouring to enforce, substituted verbal agreement, to show, not merely what he understood to be the new terms on which the parties were proceeding, but also that the other party had the same understanding that both parties were proceeding on a new agreement the terms of which they both understood.

Reliance was also placed on a decision in Jainarain v. Surajmull AIR 1949 Federal Court 211, wherein the following principle was held:

If after a contract is concluded and its terms settled further negotiations are started with regard to new matters, that would not prevent full effect being given to the contract already existing, unless it is established as a fact that the contract was rescinded or varied with the consent of both the parties or that both parties treated it as incomplete and inconclusive. Once completed, the contract can be got rid of only with the concurrence of both parties.

Therefore, we are not inclined to take a different view that the one taken by the trial Court on this aspect.

Point No. 2: The plaintiffs have claimed that they have incurred an expenditure to the tune of Rs. 20,000 towards the improvement made in the suit properties by way of forming roads and constructing bridges. This claim also is made on the basis of the alleged oral agreement and once we find that the said oral agreement is not true, this claim also should fail. Apart from that, we are not satisfied with the evidence let in by the plaintiffs on this aspect. As already noticed, they are relying on Ex.A4 and A5. It has been shown that they were not prepared by the plaintiffs, but they were already in existence even before the date of Ex.A1 agreement, Reliance placed on the plan Ex.A8 is not also sustainable for the reasons already given supra. The appellant is relying upon the account book Ex.A7 to prove that he has incurred expenditure to the tune of Rs. 20,000 for forming roads and bridges. The person, who has actually executed the work, has not been examined in this case. According to P.W.3, one oven maistry was working and he was in charge of the work. But the account book Ex.A7 does not contain any entry referring to the said oven maistry. On the other hand, the name of one Patta Boyan is shown as the Maistry. The evidence of P.Ws. 1 and 3 on this aspect is not consistent. PW.3 claims to have written the accounts Ex.A7. It is seen from his evidence that the accounts were not written day-to-day and on the other hand he says that they were written once in a week or two. There is also considerable doubt as to the person who was in possession of Ex. A7. P.W.1 says that Ex.A7 was with P.W.3 and that he took the same from him in 1978 or 1979 and filed it into Court. On the other hand, P.W.3, says that he handed over Ex.A7 only 4 or 5 months before his examination in Court. One other curious circumstance is that the evidence of P.W.3 shows that Ex. A7 was not shown to the defendants at the time of the alleged oral agreement. It is highly unbelievable since the defendants would not have agreed to pay Rs. 20,000 even without looking into the accounts. Even though P.W.3 claims to have advanced monies for the improvements on behalf of P.W.1, there are no entries to that effect in Ex.A7. Reliance was placed on Ex.A6 which is an estimate for an expenditure of Rs. 21,620 for the formation of road and other works. But it has not been proved by proper evidence. The learned Counsel for the appellant urged that since the existence of some roads in the suit properties is admitted by D.Ws.3 and 4, the case of the appellant should be accepted. But we find it impossible to do so since there must be some evidence to fix the actual amount spent by them on the nature of the work executed by them, the appellant has examined P.W.2 to prove the said improvements. A perusal of his evidence shows that it does not advance the claim of the appellant in any manner. He is an astrologer by profession and he has no'' personal knowledge about the improvements. On a consideration of these aspect of the case, the trial Court has rightly come to the conclusion that the appellant has not made out a case for claiming a sum of Rs. 20,000 towards improvements and we find that there are no reasons to interfere with the said findings. Hence this point is answered against the appellant. In the result, the appeal is dismissed with costs.