AI Structured Summary
Not yet generated for this judgment
Judgment
Anand Byrareddy
Heard the learned counsel for the parties. The parties are referred to by their rank before the trial court for the sake of convenience.
The appellants were the plaintiffs. It was the case of the plaintiffs, that they had entered into an agreement dated 17.6.1979 with the first defendant, which is a private limited company, engaged in the construction of multi-storeyed buildings and in respect of the project known as Garden Apartments at No. 21, Grant Road. Bangalore, envisaging the construction of three blocks of buildings, the plaintiffs proposed to purchase an apartment bearing No. 5, on the fifth floor of a block, known as ''Rajanigandha''. In terms of the agreement, the apartment was to be completed in all respects and fit for occupation on or about 30.6.1980 and was to be handed over to the plaintiffs. The total consideration was Rs. 1,80,000/- The amount was payable in installments, as provided for under the agreement corresponding to completion of the several stages of construction and initial payment of Rs. 5,000/- was paid on the execution of the agreement of sale.
It was the case of the plaintiffs that there was delay in the progress of construction, but however, the plaintiffs made payments as and when the demands were raised and by June 1981, the plaintiffs had paid a total sum of Rs. 1,45,000/-. In terms of the agreement, a further sum of Rs. 25,000/- was to be paid on 31.1.1980 on the commencement of the brick work and laying of tiles in the apartment earmarked for the plaintiffs. The plaintiffs had received a letter dated 10.11.1981, claiming Rs. 25,000/- as a further installment. Since the defendant had not completed the stage of construction, which was a precondition for the payment of the said installment, the plaintiffs had reluctantly paid a sum of Rs. 15,000/- on 12.5.1982 to which the defendant, by its letter dated 15.5.1982 informed that if the balance of Rs. 10,000/- was not paid, the defendant would he constrained to terminate the contract. At this, the plaintiffs had brought it to the attention of the defendant that if was not acting in terms of the agreement. As there was non-compliance, obligation was cast on the defendant to demand such payment. But however, a further payment of Rs. 3,000/- was made with an assurance that the balance of Rs. 7,000/- will be paid on completion of the work that was yet to be completed by the defendant. By a letter dated 28.5.1982 the defendant refused to accept a cheque for Rs. 3,000/- and returned the same and also stated that the agreement stood cancelled and that all payments made by the plaintiffs would be refunded in terms of the agreement. When the plaintiffs offered to pay the remaining amount of Rs. 10,000/- in entirety, the defendant refused to accept it. though initially, the defendant had agreed. Therefore, the plaintiffs had issued a legal notice that the unilateral termination of the contract was illegal and was not binding on the plaintiffs.
The defendant replied to the legal notice, reiterating the cancellation of the agreement, while putting forward untenable excuses to justify its action. Hence, a suit for specific performance of the agreement dated 17.6.1979 was filed.
The defendants contested the suit, justifying the termination of the agreement, while also seeking to contend that the delay in construction was on account of the circumstances beyond the control of the defendant, as delivery of possession of the apartments, on its completion, was subject to the availability of cement, steel and other building material and since there was a serious shortage of cement all over the country during October 1979 to February 1982 the defendant was not in a position to adhere to the time schedule and that the plaintiffs were fully aware of that circumstance. Yet another impediment was the cancellation and revocation of the building license granted by the competent authority, which required the defendant - company to challenge the same by way of a writ petition before the High Court of Karnataka which again delayed the project till such time the revocation was set at naught. Yet another reason for the delay in the construction was that a multi-storeyed building under construction, known as ''Gangaram Complex'' had collapsed, which lead to the local authority putting a stop to all construction activities, involving all high-rise buildings in Bangalore, till such time, the expert committee examines every single building under construction for its stability and therefore, the plaintiffs having failed to make payment, in terms of the schedule prescribed under the agreement, the defendant was well within its right to cancel the agreement and after such cancellation, an agreement of sale had been entered into with the second defendant allotting the very suit, property to the second defendant, under an agreement of sale dated 17.6.1982. Therefore, the plaintiffs were never ready and willing to perform their part of the contract and hence have not made out any case for grant of the relief.
On the basis of the pleadings, the court below had framed the following issues:-
Do the plaintiffs prove that they had not contravened any of the terms and conditions of the suit agreement of sale dated 17.6.1979 in payment of sale price and therefore the defendant had no right to cancel the suit agreement of sale and therefore the cancellation of suit agreement by the defendant is illegal?
Do the defendant prove that the plaintiffs have committed breach of the conditions of the suit agreement of sale as alleged in paragraph - 3 to 5 of the written statement?
Do the plaintiffs prove that they were always ready and willing to perform their part of the contract?
Are the plaintiffs entitled to a decree for specific performance of the suit agreement of sale?
What relief if any the plaintiffs are entitled to?
Additional Issues framed on 2.6.2000
Whether the second defendant proves that it is a bonafide purchaser of the suit property for valuable consideration.
Whether the second defendant proves that the suit against it is barred by limitation?
The court below answered issue nos. l and 3 and additional issue nos. 2 and 4 in the negative and issue no. 2 and additional issue no. 1 in the affirmative. It is that which is under challenge in the present appeal.
Shri Udaya Holla, learned Senior Advocate, appearing for the Counsel for the appellants takes this court through the record and would point out that it cannot be disputed that out of a total sale consideration of Rs. 1,80,000/-. the last but one installment of Rs. 25,000/- was required to be paid only on the completion of the seventh floor slab of the building and commencement of the brick works and laying of tiles in the apartment earmarked for the plaintiffs. Admittedly, these events have not occurred by the time the appellants have paid the sum of Rs. 15,000/- while withholding a sum of Rs. 10,000/- and under threat of unilateral termination of the agreement, even the balance amount of Rs. 10,000/- was tendered. Therefore, there was no cause for the defendant to have terminated the agreement since the defendant could not claim to have completed its part of the bargain in making such demand for the payment of installment of Rs. 25,000/- at all.
It is also pointed out that the plaintiffs were required to pay the last installment of Rs. 10,000/- only on the apartment being completed in all respects and being fit for occupation On receipt of a notice in this regard by the first defendant, it is on record that the building, admittedly, was not completed and fit for occupation fill the year 2001 and it has also been admitted that no notice was issued by the first defendant, calling upon the plaintiffs to take possession of the apartment in order to demand the last two installments. The learned Senior Advocate would also point out that the peculiar conduct of the first defendant company which claimed to have terminated the agreement, to again call upon the plaintiffs during the pendency of the suit, that the balance work had been completed and notwithstanding the earlier termination of the agreement, the first defendant was willing to allot the very apartment and execute a sale deed, provided certain escalation in costs was paid. This offer could not have been made if the first defendant''s contention that it had allotted the apartment to the second defendant subsequent to such termination is to be accepted. This circumstance alone was sufficient to enable the court below to have granted the decree of specific performance.
Further, it is pointed out that a total payment of Rs. 1,60,000/- was made as against the total consideration of Rs. 80,000/-. when the plaintiffs were required to pay only Rs. 1,45,000/- as on the date of the suit, going by the admitted stage of construction of the building. The glaring breach of contract on the part of the defendant has been completely overlooked by the court below. The reasoning afforded by the trial court to hold that the plaintiffs had not established that they are ready and willing to perform their part of the contract was in the circumstance that the plaintiffs had raised a loan initially to make payments. It was wholly irrelevant in addressing the actual circumstance, which, according to the first defendant, was the reason for termination of the contract. If she admitted sequence of events and the stand taken by the first defendant is looked into, it is evident that it was the first defendant which had committed breach of contract and that readiness and willingness on the part of the plaintiffs, was not at all an issue, in this regard, the learned Senior Advocate would take this court through the record and would particularly draw attention to the admissions made by a witness for the defendant - DW. 1 to the following effect:-
(7) It is true that under Ex. P1 the plaintiffs had agreed to pay me sale consideration of 1,80,000/- to the first defendant. As on the date of Ex.P-8. she alleged termination of agreement, the. plaintiffs in all paid 1,60,000/- and only the balance of 20,000/- was due it is true, that out of the balance of 20,000/- 10,000/- was payable by the plaintiffs after the completion of the constructions work. It is also true, that the plaintiffs should have been called for, to pay the balance of 10,000/- after issue of the notice by us, on completion of me constructions and informing the plaintiffs that, the flat was fit for occupation. I have not issued any notice to the plaintiffs about the alleged completion of constructions of the flat and that it was fit for occupation by me plaintiff, as required under Ex. P-1. It is true-that Ex. P 8 was issued by us because the plaintiffs did not pay the balance 10,000/- due, as shown in Ex.P-4 It is true, that the stipulated time for payment under Ex. P-4 was seven days from the date of the receipt of the notice. It is true that Ex.P-4 is dated 15.5.1932. It is true, that the plaintiffs have replied Ex.P-4, by virtue of Ex. P-5 dated 25.5.1982. 10,000/- balance demanded by us was towards the balance installments of 25,000/-. It is true, that because the plaintiffs had earlier paid 15,000/- in Ex.P-4 the balance is shown as 10,000/-. It is true that in Ex.P-5. the plaintiff''s had contended that, the stage for payment of 25,000/- as on the date of Ex. P-4 had not reached and that the considering the progress of the constructions, that it was likely to sake another one year more for completion, It is true, that the plaintiffs had also contended in Ex.P-5 that they had not committed any breach of the alleged agreement. Ex.P-1 with regard to the completion of the constructions. It is also true, that the plaintiffs in Ex.P-5 has -also contended that irrespective of the said facts, they were sending, a cheque for 3,000/- inspite of the incompletion of the building. It is true, that Ex P-6 the cheque sent by the plaintiffs along with Ex.P-5 was refused by us. It is true that on 4.6.1982 the first plaintiff had written a letter to the first defendant, which is now marked at Ex.P-16. It is true, that as per the contents of Ex.P-16, it is noticed that we have refused to receive the cheque for 10,000/- dated 2.6.1982, when it was tendered personally on 3.6.1982. That cheque is already marked at Ex.P-7. By virtue of Ex.P-9 our replay letter, we have contended that Ex.P-7 was refused by us because Ex.P-1 the agreement was already terminated by virtue of Ex.P-8. It is true, that 10,000/- the balance amount due by the plaintiffs should have been paid by them to us only in case of the completion of the constructions work, in case if we had to accept the cheque at Ex.P-7. Clause 4 of Ex.P-1 provides the schedule for payment of installments by the plaintiffs. It is true, that the plaintiffs on the day of Ex.P-1 had made initial payment of 5,000/-. It is true, that the payment of installments by the plaintiffs was deposited on the stage of constructions as mentioned in the schedule.'''' We have never received the payment of the installments by the plaintiffs as per the stages of the constructions, as stated in clause No. 1 of Ex.P-1. It is true, that we have accepted the balance amounts paid by the plaintiffs, as legally paid by the plaintiffs, although they were not made by the plaintiffs as per the schedule of the payments, as shown in clause No. 4 of Ex.P-1. It is true, that inspite of the agreement of clause No. 5 of Ex.P-1. time being the essence of the contract, the first defendant has received the payment from the plaintiffs. It is true, that by acceptance of belated payments made by the plaintiffs, the terms and conditions of clause No. 5 regarding the time was the essence of the connect was not observed. It is not correct to suggest that, that inspite of the clear violation of clause No. 5 of Ex.P-1 the alleged termination of agreement by virtue of Ex.P-8 is quite illegal, Still I maintain that, because the plaintiffs failed to make the payments, within the stipulated periods of installments. I say that, the time was the essence of the contract. There is no clause in Ex. 1 to claim escalation charges in the ever, of delayed payments made by the plaintiffs. I was not entitled to claim more than l,80,000/- the sale price from the plaintiffs on the ground of escalation of costs of constructions, till as on the date of Ex.P.-8 i.e. 28.12.1982 Even subsequent to Ex.P-8, out company is not entitled to claim such charges from the plaintiffs. " Only on the sole ground of nonpayment of 10,000/- by the plaintiffs, as shown in Ex.P-4. I allegedly terminated the agreement of the plaintiffs as Ex.P-1,
Therefore, the counsel would submit that the court below has not addressed the dispute and the case of the plaintiffs in its true and correct perspective. Further the learned Senior Advocate would bring to the attention of this court that a large number of prospective purchasers of the apartments in the very building had been denied the possession of their apartments on one pretext or the other, which lead those persons approaching the Karnataka State Consumer Disputes Redressal Commission, which had allowed their complaints and directed the first defendant to deliver possession. That order had been unsuccessfully challenged by the first defendant before the National Consumer Disputes Redressal Commission. In yet another case, the complainant before the Karnataka State Consumer Disputes Redressal Commission, having obtained an order, directing the first defendant to complete the construction and to put him in possession and also to pay the compensation, had not been challenged in appeal. An execution petition having been filed to enforce the order, which was resisted by filing objections, the executing court had dismissed the execution petition on the ground that it had no jurisdiction, which was challenged by way of a revision petition before this court, which was again dismissed and the matter having been carried to the apex Court, the apex Court allowed the appeal, therefore. the learned Senior Advocate would submit that persons, similarly placed, who had approached the above Commission, were in a position to obtain the relief which has been unfairly denied in the suit by the trial court, insofar as the plaintiffs are concerned on untenable grounds and would seek to place reliance on a large number of decisions, to support the case of the plaintiffs.
The learned Senior Advocate Shri Padmanabha Mahale, appearing for Counsel for respondent no. 2 and the learned Counsel appearing for respondent no. 1 would seek to justify the reasoning of the court below in dismissing the suit. The finding of the court below that the action taken by the first defendant company against the plaintiffs in terminating the agreement is justified, since admittedly, as against a total sum of Rs. 25,000/- payable towards the second last installment, only a part payment was made In a sum of Rs. 15,000/- and when a demand was made for the balance of Rs. 10,000/- admittedly, a cheque for Rs. 3,000/- was sent etc. as being to breath of contract on the part of the plaintiffs, is clearly an erroneous finding, since the defendant has admitted, as pointed out by the Senior Advocate. Shri Udaya Holla, from the evidence on record that defendant no. 1 had not completed its obligations in making a demand for the sum of Rs. 25,000/- and therefore, even the part payment by the plaintiffs was made under compulsion and was not in partial compliance with the terms of the agreement as pointed out by the court below. The material on record would also indicate that the defendant had not choice, but to admit the truth and hence the plaintiffs having been found to have committed breach of the agreement, is erroneous. Therefore, the termination of the contract is clearly illegal and the finding of the court below to that extent, requires to be reversed. The further finding that the plaintiffs were obliged to pay the escalation charges and the refusal on the part of the plaintiffs to pay the same justified the action of the defendant - company, is also a finding contrary to the agreement between the parties In fact the very witness for the defendant has admitted that there was no such obligation under the terms of the agreement. The further finding that the plaintiffs had not established their readiness and willingness because it was found that they had applied for a loan to pay advances and therefore, did not have the financial capability to complete the transaction, is again an irrelevant finding. The court also having found that the first defendant - company had executed a fresh agreement of sale in favour of the second defendant and that the second defendant has "purchased" the suit schedule property and it is a bona fide purchaser for valuable consideration is also not consistent with the actual circumstance. It is not the case of the defendants that the property has been sold. The second defendant only claims as an agreement holder. It is also not denied that both the companies are family concerns There is no sale deed executed in respect of the suit property.
The agreement of sale said to have been executed in favour of Defendant No. 2 by Defendant no. 1 is not binding, on the plaintiff''s. Hence, additional issue no. 1 having been held in the affirmative, is not a correct finding of fact. The court below having held that the plaintiffs are only entitled to the refund of the money paid towards the sale consideration is therefore to be set aside.
Accordingly, the judgment and decree of the court below is set aside and the suit is decided as prayed for Defendant no. 1 shall execute a sale deed in respect of the suit property in favour of the plaintiffs and put them in possession of the suit property within a period of three months from today failing which, the plaintiffs shall be entitled to obtain the sale deed to be executed on behalf of defendant no. 1, through a Court Commissioner and obtain possession of the suit property in terms of this judgment and decree. The suit is decreed with costs.