Zuhra Nangoli vs Joaquim Vaz and Others

N. Kumar, J—This is a first defendant''s regular first appeal challenging the judgment and decree of the trial Court which has dismissed the suit of the plaintiff for specific performance and directed refund of Rs. 1,00,000/- received as earnest money and also Rs. 1,00,000/- as liquidated damages from defendant No. 1 with interest @ 6% per annum.

For the purpose of convenience, the parties are referred to as they are referred to in the original suit.

The subject matter of the suit is a vacant building site presently bearing No. 9/5A(situated on the eastern side of property bearing No. 9/5 and immediately adjoining the rest of the western portion adjoining No. 9/4 carved out of 9/5) situated at Abdul Hafeez Road, Cox Town, Corporation division No. 49, Bangalore-560005 which is more particularly described in the schedule to the plaint and hereinafter referred to as ''schedule property''.

The defendant No. 1 is the owner of the schedule property. He offered to sell the same to the plaintiff. An agreement of sale was entered into on 11.2.1993 wherein the defendant agreed to convey the suit schedule property for a consideration of Rs. 6,25,000/-. An advance sum of Rs. 1,00,000/- was paid by cheque drawn on ANZ Grindlays Bank, Bangalore Branch. The time stipulated for completion of the transaction is on or before 20.4.1993. As per the terms of the contract, 1st defendant had to deliver possession of the property at the time of execution of the sale deed. The defendant delivered some of the original title deeds to the plaintiff and undertook to deliver other documents, at the time of execution of sale deed. The defendant had to furnish the necessary certificate under the Income Tax Act and also the clearance from the Urban Ceiling Regulation Act. The husband of the 1st defendant K.A. Nangoli is a consenting witness. The plaintiff was ready and willing to perform his part of the contract. He was ready with the stamp paper and balance consideration amount. The plaintiff with a letter dated 13.4.1993 issued through their Counsel called upon the defendant to furnish additional documents and also to obtain clearance under the Urban Land Ceiling Act. The plaintiff got issued advertisement through their Counsel in respect of the agreement of sale in Deccan Herald on 13.4.1993 which appeared on 15.4.1993. On 16.4.1993, plaintiff learnt that in a suit filed by the State Bank of India against the defendant and her husband in O.S. No. 10201/1993 before the City Civil Court, Mayo Hall Unit, an order of attachment before judgment has been passed attaching the schedule property. When this was brought to the notice of the defendant, she assured that she would take necessary steps to raise the attachment. Again by a letter dated 19.4.1993 through their Counsel, plaintiff made known their readiness and willingness to comply part of the contract subject to the defendant getting attachment raised. On 27.4.1993, an application was filed by the defendant for raising of the attachment and the same was rejected. The order of attachment was made absolute. The plaintiff has suffered damages of Rs. 1,00,000/- which the defendant is liable to pay under Clause 10 of the agreement of sale. The plaintiff intended to construct a residential house in the schedule property. Since the defendant did not take any steps to convey the schedule property, the plaintiff got issued a notice on 09.12.1993 calling upon the defendant to convey the schedule property on or before 15.1.1994. The defendant sent a reply raising untenable contentions and pointed out because of the paper publication issued, Court passed an order of attachment. The plaintiff contended that it is baseless because the order of attachment was before the filing of the suit. The defendant replied contending that she has preferred an appeal against the order of attachment to the High Court and she offered to return the advance amount if the plaintiff do not wish to complete the sale transaction and wait till the order of attachment is raised by the High Court. The plaintiff got issued a rejoinder dated 14.7.1994 reiterating the earlier stand. When the defendant was making an attempt to alienate the property, the plaintiff filed a suit for specific performance or in the alternative for refund of Rs. 1,00,000/- as earnest money under the agreement with a sum of Rs. 1,00,000/- towards liquidated damages and interest @ 18% per annum. In fact, second defendant purchased the property during the pendency of the suit. The third defendant is said to have caused sale of suit schedule property during the pendency of the suit. Therefore, they are all made parties to the suit by way of impleading.

After service of notice, defendant No. 1 entered appearance and filed a detailed written statement admitting the agreement of sale and all the terms stipulated therein. There was a specific agreement that plaintiff will not issue public notice in respect of the schedule property which was breached by the plaintiff. They had made it very clear if the plaintiff were to advertise, they would not be interested in selling the property. The plaintiff purchased the schedule property for putting up a residential house. In the meanwhile, defendant''s business ran into rough weather and was in financial crisis. She was negotiating with Bank and State Bank of India had also agreed to waive penal interest and compound interest and was ready to give concessions to defendant. When they saw the paper publication, they refused to extend the concessions. The act of plaintiff drove the defendant into trouble. The plaintiff own other property and has built mansion known as Vaz Villa at Cox Town. The act of the plaintiff has injured the defendant legally. The plaintiff is not entitled to specific performance. The plaintiff is guilty of having committed grave breach of trust and the suit is belated. Therefore, she sought for dismissal of the suit.

The second defendant also filed a detailed written statement contending that he is the bona fide auction purchaser of the schedule property, who purchased it in Court auction dated 06.10.1997 held by the Debt Recovery Tribunal in execution of judgment and decree of the Tribunal in O.A. NO. 280/1995 dated 10.11.1995 which was filed by defendant No. 2. The second defendant has obtained sale confirmation. The second defendant also filed a additional written statement after amendment to plaint was carried out and sought for dismissal of the suit for specific performance.

The third defendant also filed a written statement setting out the transaction between them and the plaintiff and the suit filed by them in O.S. No. 10201/1993 on 15.3.1993 in Civil Judge Court, Bangalore and obtaining an order of attachment on 18.3.1993 which order was confirmed and the High Court also confirmed it dismissing the revision petition filed by the first defendant. The claim of the first defendant was over and above Rs. 10,00,000/- and therefore, they sought for dismissal of the suit.

On the aforesaid pleadings, the trial Court framed the following issues and additional issues:

"1. Whether the plaintiff proves that they have been always ready and willing to perform their part of the contract?

Whether the defendant No. 1 proves that the plaintiffs have committed the breach of contract?

Whether plaintiffs are entitled to the relief of specific performance?

Whether the plaintiffs are entitled to the relief of possession?

Whether the plaintiffs are entitled for refund of advance amount of Rs. 1,00,000/- along with interest at the rate of 18% p. a. along with liquidated damages of Rs. 1,00,000/- in the alternative?

To what order or decree?"

Additional issues framed on 26.3.2003:

"1. Whether the defendant -2 proves that the Civil Court has no jurisdiction to try the suit?

Whether the suit is bad for mis-joinder of parties?"

Additional issues framed on 19.12.2005:

"3. Whether plaintiffs prove that defendant No. 2 is obliged to execute sale deed in favour of plaintiffs?

Whether defendant No. 2 proves that he is bona fide purchaser without notice of defect in title?

Whether defendant No. 2 proves that claim against him is barred by limitation?"

The plaintiff in order to substantiate his claim examined plaintiff No. 2 as P.W. 1 and himself as P.W. 2 and they have produced 13 documents which were marked as Exs. P.1 to P. 13. The second defendant was examined as D.W. 1 and they have produced 12 documents which were marked as Exs. D1 to D12.

The learned Trial Judge on consideration of the rival submissions and oral and documentary evidence on record held that the plaintiffs have proved that they were always ready and willing to perform their part of the contract. The 1st defendant has failed to prove that the plaintiff has committed breach of the terms of the contract and also held that in view of the property being the subject matter of attachment, the property being sold in public auction and the same being purchased by other defendant, plaintiff is not entitled for specific performance. The suit is not barred by limitation. The second defendant has failed to prove that the Civil Court has no jurisdiction to try the suit. The suit is not bad for rejoinder of parties. The plaintiff has failed to prove that defendant No. 2 is obliged to execute the sale deed in favour of the plaintiff and accordingly dismissed the suit of the plaintiff but directed the first defendant to refund Rs. 1,00,000/- received as earnest money and Rs. 1,00,000/- towards liquidated damages with interest @ 6% from the date of the suit. Aggrieved by the said judgment and decree, it is the 1st defendant who has preferred this appeal. The other defendants have not preferred any appeal, as there was no decree passed against them.

Learned Counsel for the appellant assailing the impugned judgment and decree reiterated the very same grounds urged before the trial Court.

The learned Counsel for the respondents supported the impugned order.

In the light of the aforesaid facts and rival contentions, the point that arises for our consideration is:

"Whether the trial Court was justified in directing the 1st defendant to refund Rs. 1,00,000/- received as earnest money and Rs. 1,00,000/- towards liquidated damages with interest @ 6% from the date of the suit"?.

It is not in dispute that the plaintiff and 1st defendant entered into an agreement of sale. The plaintiff paid a sum of Rs. 1,00,000/- as earnest money by way of cheque which has been duly encashed by the defendant. Clause 10 of the agreement states that in the event of either parties committing breach of this agreement, the party in default shall pay to the other a sum of Rs. 1,00,000/- by way of liquidated damages. When the default is on the part of the vendor, then the vendor is liable. In addition, she is also liable to refund all the monies received by her from the purchaser. If the default is on the part of the purchaser, vendor may forfeit the advance of Rs. 1,00,000/- paid by the purchaser. In the light of the aforesaid terms of the agreement and in the light of the undisputed facts of this case, the breach is committed by the first defendant in suppressing filing of the suit, suppressing the order of attachment passed and entering into an agreement to sell the property. When the plaintiff got paper publication before purchasing the property, they came to know about the proceedings and the order of attachment. The attempts made by the first defendant to get the attachment order raised in the High Court also failed and therefore, the breach is on the part of the 1st defendant and therefore, the plaintiff is entitled to get back his earnest money of Rs. 1,00,000/- which was paid as advance. As the first defendant has committed breach of the terms of the agreement in terms of clause 10 of the agreement, the first defendant is also liable to pay a sum of Rs. 1,00,000/- as liquidated damages. It is not in dispute that earnest money of Rs. 1,00,000/- is not received by the 1st defendant. Therefore, the Court below committed no illegality in passing the impugned order. No merits. Appeal is dismissed.