Maruti vs Dharmamma

A.S. Pachhapure, J.—The appellant has challenged the Judgment and Decree of the trial Court, directing refund of the earnest money and refusing the specific performance of the contract of sale.

The facts reveal that the 1st respondent, who is the 1st defendant in the trial Court executed an Agreement of Sale in favour of the appellant/plaintiff, agreeing to sell the suit property bearing Sy. No. 146 measuring 11 acres of Eklaspur village in Raichur District with the boundaries mentioned in the schedule to the plaint. Under the said Agreement dated 18.04.2004, the appellant/plaintiff had advanced a sum of Rs. 1,00,000-00 under two cheques, each for a sum of Rs. 50,000-00 and the 1st defendant was to get the land surveyed. The sale consideration was fixed at Rs. 11,11,000-00 and it was agreed that the remaining amount of Rs. 10,11,000-00 was to be paid by the plaintiff at the time of registration of the Sale Deed on or before 20.11.2004. It was also agreed that if the plaintiff fails to pay the remaining sale consideration within the stipulated period, the Agreement stood cancelled. Though the plaintiff was ready and willing to perform his part of the contract, the 1st defendant did not execute the Sale Deed and said to have entered into a sale transaction with the other defendants and said to have executed the Sale Deed in their favour. In the aforesaid circumstances, the plaintiff approached the trial Court, seeking specific performance of the contract.

The 1st defendant filed her ''written statement denying the averments made and it was also contended that amongst the two cheques issued by the plaintiff, one cheque was encashed and the other cheque was bounced. It was the specific contention that the plaintiff was not ready and willing to perform his part of the contract. She also contended that as the Deed was to be executed on or before 20.11.2004 and as the plaintiff was not ready and willing to perform his part of the contract, the Sale Agreement executed stood cancelled. Denying the other averments made, she sought for dismissal of the suit. The 4th defendant has also filed his written statement and contends that he has purchased the suit property under different Sale Deeds. He submits that he is a bona fide purchaser of the suit property for a valuable consideration and sought for dismissal of the suit.

The trial Court framed the issues and permitted the parties to adduce their evidence. On behalf of the plaintiff, P.W. 1 was examined and in his evidence, Exs. P1 to 17 were marked. On behalf of the defendants, D.Ws. 1 and 2 were examined and in their evidence, Exs. D1 and 2 were marked. The trial Court after hearing the counsel for the parties and on appreciation of the evidence on record, decreed the suit in part, granting the relief of refund of the earnest money with interest. Dissatisfied with the decree in part, the plaintiff has approached this Court in appeal.

The 1st respondent though served is absent. The other respondents are represented by learned counsel Sri. C. Keshav Rao.

I have heard learned counsel for the appellant. Learned counsel for respondents 2 to 11 is absent.

Learned counsel for the appellant contends that the trial Court failed to appreciate the fact that it was the 1st defendant who was to survey the suit property before execution of the Sale Deed and she having failed to do so, the Court committed an error in holding that the appellant was not ready and willing to perform his part of the contract. It is also his submission that the plaintiff was waiting for conclusion of the survey so that he could pay the remaining sale consideration and get the Sale Deed executed. This aspect of the matter has not been taken into consideration by the trial Court and hence he seeks to allow this appeal.

The plaintiff has produced the Agreement of Sale at Ex. P14. It was entered into on 18.04.2004. Both the parties had agreed to sell the suit property for a sum of Rs. 11,11,000-00. Under this Agreement, a sum of Rs. 1,00,000-00 is said to have been paid to the plaintiff under two different cheques dated 19.04.2004 and 12.05., 2004 respectively. It is in the evidence that one amongst two cheques was encashed when presented by the 1st defendant and the other cheque was bounced for insufficient funds in the account of the plaintiff. This itself is clearly indicates that though under the Agreement, the plaintiff agreed to advance a sum of Rs. 1,00,000-00 as earnest money, he did not make available sufficient funds in his bank account so as to encase both the cheques. This conduct on the part of the plaintiff itself at the inception of the Agreement reveals the fact that he was not ready and willing to pay a sum of Rs. 1,00,000-00 as an advance amount.

It is no-doubt true that under Clause 4 of the aforesaid Agreement, the 1st defendant was to entrust the possession of the suit property after making the survey and it is the grievance of the plaintiff that the 1st defendant did not take steps to get the survey done and therefore, he attributes that the 1st defendant did not show her willingness to perform her part of the contract. Anyhow, the perusal of Clause 2 of the Agreement would reveal that the remaining sale consideration of Rs. 10,11,000-00 was to be paid at the time of registration of the Sale Deed and the date that was fixed was on before 20.11.2004. When the 1st defendant fails to get the survey done as required under Clause 4 of the Agreement, the plaintiff ought to have taken steps to get the survey conducted. That apart, instead of waiting for the 1st defendant to get the survey done, he could have approached the trial Court seeking the relief of specific performance in addition to the survey of the suit property. It is relevant to note that the plaintiff neither issued a notice calling upon the 1st defendant to perform her part of the contract indicating that he is ready and willing to perform his part of the contract. The suit came to be filed by the plaintiff for the first time on 15.06.2006. The fact that there was a condition in the Agreement to make the payment on the date fixed was not complied by the plaintiff and he failed to issue notice to the 1st defendant explaining his readiness and willingness to perform his part of the contract. That apart, even after expiry of the date i.e., 20.11.2004 fixed for registration of the Sale Deed and payment of the sale consideration, he kept quite for 1 1/2 years even without issuing any notice to the 1st defendant to execute the Sale Deed.

Furthermore, when the plaintiff himself agreed to pay a sum of Rs. 1,00,000-00 as earnest money, did not abide by his own condition incorporated in the Agreement and allowed one cheque issued by him returned for non-payment. This conduct on the part "of the plaintiff indicates that he was not ready and willing to perform his part of the contract as per the Agreement under Ex. P14. It is for the aforesaid reasons that the trial Court was of the opinion that the plaintiff did not show readiness and willingness to perform his part of the contract and though it held that the Agreement has been proved, it refused to grant the relief of specific performance of the contract.

The perusal of the material placed on record would reveal that the appellant was intending to purchase the suit property for the purpose of establishing the school and may be under a mistaken apprehension did not approach the Court immediately on or before or even immediately thereafter the date mentioned in the Agreement. The 1st defendant after receiving at least a sum of Rs. 50,000-00 was bound to repay the said sum. She did not show any interest to refund the earnest money. That apart, she sold the suit property to the other defendants i.e., respondents 2 to 11 herein. She did not inform this fact of sale to the plaintiff. Though the trial Court has directed refund of earnest money of Rs. 50,000-00, the interest of 6% p.a. appears to be on lower side. The trial Court has not awarded any compensation for breach of the contract. Taking into consideration the nature of the contract, the property in question and the fact that the suit property was needed for educational institution, I think it would be just and proper to award compensation of Rs. 25,000-00 in addition to the refund of earnest money with interest at reasonable rate.

Consequently, the appeal is allowed in part with costs. The appellant/plaintiff is entitled to refund of Rs. 50,000-00 with interest at 9% p.a. from the date of the suit till its payment. He is also entitled to the compensation of Rs. 25,000-00 and the costs throughout. The respondents/defendants are jointly and severally to pay the aforesaid sum.