P.K. Bhatia vs Simarjeet Singh and Others

Valmiki J Mehta, J.—The challenge by means of the present Regular First Appeal u/s 96 of the Code of Civil Procedure, 1908 is to the impugned judgment and decree dated 10.12.98 whereby the suit of the Respondents/plaintiff was decreed against the Appellant/Defendant No. 1 for Rs. 2,60,000/- with simple interest @ 6% per annum simple from the date of decree till realization. The original suit filed was for specific performance and which relief was declined to the Respondent/plaintiff on account of the fact that the Appellant/Defendant No. 1 was not the owner of the property, and the owners were his brothers namely the Defendants No. 2 and 3 in the suit and who are the Respondents No. 2 and 3 in the present appeal.

The facts of the case are that the Appellant entered into an agreement to sell dated 10.10.94 with the Respondent No. 1/plaintiff for selling of the first floor of the property bearing No. B-35/7, Industrial Area, G.T. Karnal Road, Delhi for the total sale consideration of Rs. 3,60,000/- and received an amount of Rs. 60,000/- as an advance. The Appellant/Defendant No. 1 represented that he was fully entitled to sell the property, which in fact belongs to his brothers the Defendants/Respondents No. 2 and 3 in the suit.

It has been found as a matter of fact by the Trial Court that the Appellant was not authorized on behalf of Respondents No. 2 and 3 to sell the property, which belonged to Respondents No. 2 and 3. The suit for specific performance was therefore dismissed, however, the Respondent No. 1 was granted a money decree of Rs. 60,000/-, being the original amount paid as advance, and a sum of Rs. 2,00,000/- as damages, on account of breach of contract as per Section 73 of the Contract Act, 1872. The suit has been therefore decreed for Rs. 2,60,000/- with interest at 6% per annum simple from the date of decree till realization.

Learned senior counsel for the Appellant argued that there is no evidence which was led by the Respondent No. 1/plaintiff to show that the prices of the property had increased in the meanwhile and that if the Respondent No. 1/plaintiff had gone to the market, he would have suffered loss by purchasing a similar property at a higher cost. Learned Counsel for the Appellant has taken me through the deposition of the Respondent No. 1/plaintiff and also the cross examination of the Appellant/Respondent No. 1''s witnesses to show that no such case was put up. It has therefore been argued that even assuming the Appellant/Respondent No. 1 was guilty of breach of contract, unless damages are properly quantified and proved an amount of Rs. 2,00,000/- could not be awarded against the Appellant/Respondent No. 1.

I agree with the counsel for the Appellant. No doubt the Appellant was held guilty of breach of contract by falsely representing that he was duly authorized by the owners of the property to sell the property, however, mere breach of contract does not entitle an aggrieved party to sue for damages unless the aggrieved party proves that an actual loss has been caused by rise in the value of the properties and which increase in the prices of the properties have to be proved for a specific amount so that a decree for that specific amount in terms of money can be awarded to the aggrieved person. As already stated, there is no evidence led whatsoever with respect to the increase in the price of the property which would have caused loss to the Respondent No. 1/plaintiff for purchase of a similar property at higher prices.

I however cannot overlook the fact that the Appellant is indeed the guilty party, having completely misrepresented the Respondent No. 1 and having made him part with a sum of Rs. 60,000/- on the ground that he was authorized by two brothers/Respondents No. 2 and 3 to sell the property. The Appellant has therefore quite clearly illegally caused the Respondent No. 1/plaintiff to part with monies. These monies have been illegally retained by the Appellant. The Appellant was therefore in any case bound to refund the principal amount of Rs. 60,000/- received as advance towards selling of the property. The issue is that once the damages are disallowed, how should Respondent No. 1/plaintiff be compensated because he was defrauded by an illegal act of the Appellant.

The Trial Court has granted interest from the date of decree at 6% simple i.e. the Trial Court has not granted any interest at all from the date when the amount of Rs. 60,000/- was received by the Appellant on 10.10.94 till 10.12.98. I may note that the Appellant has not deposited the decretal amount in this Court and the operation of the impugned judgment and decree was stayed subject to furnishing security to the satisfaction of the Registrar General of this Court. There is no reason why in the opinion of this Court, the Appellant should not be burdened with payment of interest from the date he received the advance on 10.10.94 till the amount is actually recovered back by the Respondent No. 1. This Court has ample powers under Order 41 Rule 33 CPC to do complete justice between the parties and mould the relief as required by the facts and circumstances of each case. I also take judicial notice u/s 57 of the Indian Evidence Act 1872 that in commercial transactions rate of interest is 18% per annum vide Section 80 of the Negotiable Instruments Act,1881. Accordingly, while accepting the appeal and setting aside the judgment and decree of the Trial Court that awarded a sum of 2,60,000/-with costs and interest at 6% interest per annum from the date of decree till realization I decree that the Respondent No. 1 will be entitled to a money decree of Rs. 60,000/- with interest @ 18% per annum simple from 10.10.94, pendente lite and future till realization of the decretal amount The appeal is accordingly disposed of. Trial Court Record be sent back. Decree sheet be prepared accordingly.