B.G. Nagaraj vs N.H. Channaveerappa

Ravi V. Malimath, J.—The case of the plaintiff is that he and the defendant entered into an agreement dated 04.06.2000 in favour of the plaintiff. The defendant agreed to sell the vacant site bearing No. 46, situated at 2nd/3rd Parallel Road, Shimoga, which is morefully described in the plaint schedule for a total consideration of Rs. 13,34,160/-. The defendant received an advance of Rs. 1,00,000/-. In terms of the agreement dated 04.06.2000, the transaction should be completed within 21 days from the said date and the expenses to be borne by the plaintiff.

The defendant had claimed that the suit property is free from all encumbrances, charges, etc., and that he would furnish all the documents pertaining to the title to the property, etc. for verification and get the sale deed prepared in respect of the said land. The plaintiff therefore paid an advance amount of Rs. 1 lakh. Thereafter, he requested the defendant to furnish the documents pertaining to the said land and on furnishing the same he is ready to pay the balance amount. The defendant did not come forward to furnish the relevant documents. He went on taking time on one pretext or other. Therefore, the plaintiff issued a legal notice dated 24.06.2000, calling upon the defendant to furnish the relevant documents. There was no reply forthcoming to the said notice. Since the documents were not given by the defendant, the transaction failed. Hence, the plaintiff is entitled to recover the amount of Rs. 1 lakh paid in good faith. Hence, he filed the instant suit seeking to recover Rs. 1,12,050/-, along with future interest at 18% per annum.

On service of summons, the defendant entered appearance and filed the written statement. He denied the plaint averments. He contended that the suit is not maintainable. That the plaintiff has issued a notice after expiry of 21 days from the date of the agreement. That there was no need to wait for the original documents since a xerox copy of the documents was already given to the plaintiff. That the previous suit in O.S. No. 461/2000, initiated by the plaintiff, was dismissed. Hence, the present suit was filed only to harass the defendant. That he is not entitled to claim the amount sought for, since it is beyond the time stipulated in the agreement. On the basis of the pleadings, the trial court framed the following issues:

"i. Whether the suit is not maintainable for want of court permission in the previous suit O.S. No. 461/2000 of Principal Civil Judge (Jr. Dn.) Shimoga?

ii. Whether the suit is barred by limitation in terms of the agreement dated 4.6.2000?

iii. Whether the plaintiff is entitled to the interest at 18% on the claimed amount?

iv. Whether the plaintiff is entitled to the suit claim of Rs. 1,12,050/- from the defendant?

v. What order or decree the plaintiff is entitled?"

In order to prove his case, the plaintiff examined himself as PW-1 and marked 25 documents. Two witnesses were examined on behalf of the defendant and 5 documents were marked.

All the issues were held in the negative. The trial court was of the view that since time is the essence of the contract and there is no readiness and willingness shown by the plaintiff with regard to performance of the terms of the agreement is concerned, and hence the plaintiff has not made out a case. That after a lapse of 21 days the notice has been issued and therefore he is not entitled to claim any amount. Hence, the suit was dismissed. Aggrieved by the same he filed the first appeal, which was also rejected. By an order dated 26.11.2012, the appeal was admitted to consider the following substantial questions of law:

"i. Whether the Courts below were right and justified in holding that the plaintiff - appellant herein could not successfully maintain the suit for recovery of the advance amount paid under the agreement of sale dated 04.06.2000 as he did not come forward to pay the balance amount and execute the registered Sale Deed within 21 days from the date of agreement as the plaintiff - appellant had issued the legal notice calling upon the defendant to furnish certain original documents and the same was neither complied nor was the legal notice replied.

ii. Whether the facts and circumstances of the case, the Courts below were justified in not considering the question as to whether the time was the essence of the contract keeping in mind the nature of the transaction which pertained to sale of immovable property?"

When the matter was taken up for consideration on 14.01.2015, the learned counsel for the respondent was absent. Hence, the matter was adjourned to 16.1.2015. On that day also, the learned counsel for the respondent was absent. The matter was adjourned once again adjourned to 19.01.2015. Even on 19.01.2015, the learned counsel for the respondent was absent. Hence, the matter is taken up for consideration.

Heard the learned counsel for the appellant and examined the records.

The contention of the appellant-plaintiff is that in terms of the agreement to sell vide Exhibit-P1, a sum of Rs. 1 lakh has been paid to the defendant. That the plaintiff was entitled to seek all the documentation pertaining to the property in question like the title deed, etc., which was required to be furnished by the defendant. That the sale agreement had to be executed within 21 days from the date of agreement to sell dated 04.06.2000, namely on or before 25.06.2000. That the plaintiff went on requesting for documents from the defendant which he failed to do so. Therefore, a legal notice was issued dated 24.06.2000, seeking for documents. Even then, it was not furnished. Therefore, the defendant has failed to perform his part of the contract with regard to furnishing the documents. The same cannot be held against the plaintiff. That the plaintiff was ready and willing to perform his part of the contract with regard to the payment of the balance amount of sale consideration. The trial court on considering the material on record considered the order passed in O.S. No. 461/2000 namely, the suit filed by the plaintiff himself seeking for a injunction against the present defendant and not to alienate in favour of the third party. Subsequently, the suit was dismissed as not pressed. The defendant contended the present suit is hit by the principles of res-judicata. However, the same was negatived. The issue on res-judicata cannot be held against the plaintiff. Therefore, the defendant failed to prove that the present suit is either not maintainable or that permission is required.

So far as issue No. 2 is concerned, with regard to the limitation in filing the suit, the trial court held that the suit is not barred by limitation. It answers the issue in favour of the plaintiff. Issue No. 3 as to whether the plaintiff is entitled for interest @ 18% and issue No. 4 whether he is entitled for Rs. 1,12,050/- were considered together. The trial court was of the view that the failure of the plaintiff to pay the balance consideration of Rs. 1,12,050/- and get the documents registered, the issues were held in the negative. The trial court was of the view that it was the bounden duty of the plaintiff to pay the balance consideration which he has failed to do so. That if the plaintiff kept the money ready, nothing prevented the plaintiff to pay the same. That he is ready and willing to perform his part of the contract. Prior to this, the legal notice was issued by the plaintiff in terms of Exhibit-P2 dated 24.06.2000. It is within the expiry of 21 days from the date of agreement of the sale. In the said notice, the plaintiff requested for documentation with regard to the title deeds of the property. Not only he did not furnish the documents, but there was no reply to Exhibit-P2. The trial court failed to consider Exhibit-P2. Even though reference was made to the issuance of Exhibit-P2, the trial court should have properly recorded the finding as to the failure of the defendant in replying to the notice. When the specific case of the plaintiff is that the defendant has failed to furnish title in spite of making repeated oral requests in view of the fact that time for completion of the agreement is 21 days, on failure of the defendant to reply, the trial court should have held adversely against the defendant. On the contrary, the trial court was at a tangent in considering the readiness and willingness on the part of the plaintiff to make the payment. This is not a suit for specific performance. It is a suit for recovery of money based on Exhibit-P2. Admittedly, a sum of Rs. 1 lakh has been paid to the plaintiff in terms of the Exhibit-P2 and the sale deed was subject to execution of the sale deed and on failure of the execution of the sale deed, the plaintiff would be entitled for the refund. The question of the trial court going into the aspect of readiness and willingness to make the payment is an alien consideration to the suit. The failure of the defendant to furnish the documents as sought for vide Exhibit-P2 resulted in the sale transaction falling through. In the absence of documentation, obviously he would not have paid the balance consideration. When the plaintiff is not in possession of the relevant documentation pertaining to the title of the property, he cannot be expected to make the balance sale consideration in the absence of such documents. Therefore, the findings recorded by the trial court on this issue is erroneous and the same requires to be reversed.

The payment of Rs. 1 lakh to the defendant is undisputed. The legal notice issued to the defendant within a period of 21 days from the date of agreement of sale vide Exhibit-P2 is admitted. Under these circumstances, none of the defence set-up by the defendant can be accepted. Both the courts committed an error in holding the same to the contrary. The readiness and willingness is an alien consideration in a suit seeking recovery of money. Under these circumstances, the first substantial question of law is answered in holding that the plaintiff was entitled to maintain the suit for recovery and that the appellate court committed an error in holding that the notice has been issued after the expiry of 21 days. The issue is answered holding that the notice is issued within a period of 21 days. The second substantial question of law is answered by holding that time was the essence of the contract. In view of answering both the substantial questions of law, the suit of the plaintiff requires to be decreed. Consequently, the judgment and decree of the trial court in O.S. No. 33/2001, dated 30.10.2009, on the file of the Principal Civil Judge (Sr. DN.), And CJM Shivamogga and the judgment and decree of the First Appellate Court in R.A. No. 35/2010 dated 18.10.2010 on the file of the Fast Track/District Judge, Shivamogga are set-aside. The suit of the plaintiff is decreed.

The suit claim is for 18% interest. The same is not a commercial transaction. Therefore, the interest stands reduced to 8% per annum. Consequently, the suit is decreed along with 8% interest per annum from the date of the suit till realisation along with costs.

Decreed with cost.