Poddar Construction Priv. Ltd. vs Mrs. Seema Bansal

Valmiki J Mehta, J.—Appellant by the present appeal u/s 96 of the Code of Civil Procedure, 1908 (CPC) seeks to challenge the impugned judgment and decree dated 13.5.1998 whereby the suit of the Respondent/Plaintiff for specific performance was decreed against the Appellant-Defendant company.

The facts of the case are that an agreement titled as a ''Receipt'' dated 11.8.1984 containing the terms of sale and purchase was entered into between the Appellant as seller and the Respondent as buyer with respect to a plot of land bearing K. No. 772(4-0), 765/2(1-6) measuring 1.107 acres situated in village Kapasehra, Tehsil Mehrauli, Delhi. The total price which was agreed upon was Rs. 2,65,000/- and an advance of Rs. 10,000/- was paid to the Appellant-Defendant at the time of entering of the agreement to sell. The balance of Rs. 2,55,000/- was payable within six months or within 60 days of the Appellant/Defendant obtaining the necessary certificates from the Income Tax Authority and the Urban Land Ceiling Authority. The case of the Respondent/Plaintiff is that the Appellant was dilly-dallying in the performance of its obligations under the contract and it was not getting the permissions or executing the sale deed with respect to the subject land in favour of the Respondent. An important aspect is that possession of the property was delivered to the Respondent buyer at the time of entering into the agreement to sell. The Appellant had at one point of time sought to contend that the Respondent Plaintiff had criminally trespassed into the property and physical possession was not handed over however, the admitted fact is that no criminal proceedings for criminal prosecution of the Respondent/Plaintiff was ever initiated by the Appellant seller considering that taking illegal possession of the property is indeed a very serious matter.

The Respondent Plaintiff wrote a letter dated 5.2.1985 (Ex.P-1/2) asking the Appellant to do the needful by obtaining the necessary permissions and executing the sale deed and which was followed by another letter dated 22.2.1985 (Ex.P1/5). The Appellant responded to the letter of the Respondent dated 5.2.1985 by its letter dated 20.2.1985 Ex.DW1/2 in which two basic stands were taken up, the first being that the Respondent had failed to execute an agreement to sell and which was necessary for obtaining Income Tax Clearance Certificate, and the second being that the Respondent was not in a position to make payment of the balance sale consideration, however, it was only the first stand which was really argued on behalf of the Appellant in this Court and the trial Court.

On account of the failure of the Appellant to execute the sale deed, the Respondent/Plaintiff filed a suit for specific performance on 7.8.1987 and which has been decreed by the impugned judgment and decree.

On completion of pleadings, the following issues were framed by the trial court.

Whether there is any valid and subsisting agreement to sell dt. 11.8.84 between the parties? OPP.

Whether the pltff. defaulted in execution of the agreement and the deft thereby terminated the arrangement as alleged by the deft in para No. 2 of the W/s.? OPD

Whether the deft could not obtain income tax clearance certificate on account of default of the pltff. as alleged in para No. 4 of the W/s? If so its effect?OPD

Relief.

In support of her case, the Respondent /Plaintiff examined herself as PW-1 and her husband Sh. Surendra Kumar Bansal, PW-2. On the other hand, the Appellant examined one of its employees Sh.M.K. Sharma as DW-1.

Before this Court, learned Counsel for the Appellant has very strenuously argued three points. The first argument is that the Respondent was in fact guilty of breach of contract because neither was any reply sent to the letter dated 20.2.1985 nor was an agreement to sell in the proper format executed as required in the said letter dated 20.2.1985 and that the Receipt dated 11.8.1984 was not an Agreement to Sell. The second argument was that once there was a non-response to the letter dated 20.2.1985 of the Appellant to the Respondent, then, the contents of the letter dated 20.2.1985 (DW1/2) stand admitted and therefore it should be held that the agreement was cancelled and the earnest money forfeited. The last argument which was raised on behalf of the Appellant was that the suit was barred by limitation.

On the aspect as to whether the receipt in question is only a receipt or is in fact an agreement to sell, since the findings and reasoning of the trial court exhaustively considers this while dealing with the issues No. 1 and 2, in paras 8 to 14 of the impugned judgment, I can do no better than reproduce those paragraphs which read as under:

At the outset I would like to point out that the learned Counsel for the deft argued that the receipt dated 11.8.84, proved on record by the Plaintiff as Ex.PW1/1, admittedly executed between the parties was not an agreement to sell. On the contrary on behalf of the pltff. reliance was placed on an authority reported as titled M/s. Nanak Builders & Investors Pvt. Ltd. v. Vinok Kumar Alag AIR 1991 Delhi 315, wherein it has been held that "mere heading or title of a document cannot deprive the document of its real nature. It is the substance which has to be seen and not the form. Where the document acknowledging the receipt of earnest money towards the sale of plot of land contains all the essential and basic ingredients required for an agreement to sell the same is signed by both the vendor and the vendee and is also witnessed by an attesting witness and it does not contain any mention that a formal agreement of sale will be executed. The fact that the vendee parts with a substantial amount in favour of the vendor shows that the parties have reached a consensus on the various terms of the arrangement between them meaning thereby that a contract has been arrived at, and merely because the document is titled as a "receipt" it does not render the document as a mere receipt. The document is a contract which is capable of being specifically enforce.

In the instant case the receipt executed between the parties Ex.PW1/1 contains all the terms necessary to constitute a contract for sale between the parties in as much as it clearly describes the land to be sold, consideration thereof and other terms regarding fencing, appurtenances and obtaining of necessary permission from the income tax authority, urban land clearance and declaration of clear title within 6 months and the buyer has also to pay balance consideration within 6 months or within 60 days of the obtaining of the clearance as the case may be failing which the advance was to be forfeited. I, thus, on bare reading of this receipt, find that it constitutes an agreement of sale of land and the observations made in the authority (supra) clearly apply to the said document and thus, in law too it tantamount to an agreement for sale of land.

PW1 pltff. herself in her statement stated that she had purchased the land in question on 11.8.84 vide agreement and receipt executed by the deft. The deft. had agreed to sell the suit land and received a sum of Rs. 10,000/- as advance and the receipt was executed by the deft, which contains terms and conditions of the agreement to sell. The receipt is Ex.PW1/1 which was written by her husband Sh. Surendra Kumar Bansal and it was signed by G.D. Poddar, director of the deft. The property was agreed to be sold by the deft. for a total sum of Rs. 2,65,000/-, out of which she had paid a sum of Rs. 10,000/- as advance and the balance was to be paid at the time of execution of the sale deed as per terms of the agreement contained in Ex.PW1/1.

PW2 Sh. Surendra Kuamr Bansal stated that the agreement to sell between the parties was written, settled and executed in his presence. Same is Ex.PW1/1 and is in his handwriting.

On behalf of the deft DW1 Mr. M.K. Sharma stated that he was working with the deft for the last more than 15 years (since 1980). Regarding the transaction in suit is Ex.PW1/1 and bears signatures of G.D. Poddar, director, were to enter into a written agreement within a period of 6 months from the date of the said receipt.

Apart from the weight, if any, to be given to the evidence adduced by the parties and referred to above, I may mention here that I have already dealt with the matter that the receipt Ex.PW1/1 amounted to an agreement thereof. The stand and allegation of the deft that an formal agreement was to be executed between the parties within 6 months, as stated by the DW1, was not a term in the receipt Ex.PW1/1, which in itself is an agreement. Thus, my finding on this issue is that the receipt Ex.PW1/1 is valid and subsisting agreement to sell in between the parties and decide the issue in favour of the pltff. and against the deft.

ISSUE No. 2

12.In this regard DW1 Mr. Sharma stated that the pltff. did not pay any heed with regard to the execution of the written agreement for sale. The deft. had issued a letter to the pltff. Ex.DW1/1 vide which pltff. was asked to make balance payment and to execute the agreement in question and prior to this letter pltff. was sent the proposed draft of agreement and deft. had written a letter Ex.DW1/2 but the pltff. failed to send the agreement duly signed by her and the pltff. was avoiding signing of the agreement since she had no arrangement to pay the balance amount and she failed to perform her part of the contract despite their personal visits.

On the other hand PW1 stated that she had written letters to the deft to fulfil the terms of the agreement and proved the same alongwith their postal receipts as Ex.PW1/2 to PW1/32.

As I have already discussed and held Ex.PW1/1 the receipt as a contract constituting sale agreement and it does not contemplate execution of separate agreement for sale. There was no question of the pltff''s executing the alleged separate sale agreement and having committed the default for not executing the same. The claim of the deft, therefore, that they terminated the arrangement for sale of the property for want of execution of the sale agreement, has no force. The issue is accordingly held and decided against the Defendant.

I whole heartedly agree with the aforesaid findings. It is trite that the label of a document is not material and the substance of the document has to be seen. The document in question is titled as a receipt being Ex.PW1/1 dated 11.8.1984 all the essential ingredients of an Agreement to Sell being the particulars as to who is the seller, who is buyer, what is the subject matter, what is sold, what is the total price, what is the advance, what is the balance payable and when the same is payable and also the obligations which were required to be performed by the Appellant as seller including of getting permissions from the Income Tax Authorities and the Urban Land Ceiling Authorities. The learned trial court while dealing with the issues No. 1 and 2 has accordingly rightly held that the receipt in fact though titled as a receipt, is in fact a complete agreement to sell as it contains all the necessary terms which are necessary to constitute a contract. I endorse these findings of the court below and sitting as an Appellate Court would not want to interfere with the detailed and clear findings in this regard. This Court would have only interfered with the findings of the trial court, if the same were illegal or perverse. I do not find any illegality or perversity. On the other hand, the findings as reached by the trial court are the only findings which can be arrived at in the facts and circumstances of the present case.

The argument urged by the learned Counsel for the Appellant that non reply to Ex.DW1/2 is conclusive of the breach of contract by the Respondent is also misconceived. No doubt, the letter Ex.DW1/2 dated 20.2.1985 of the Appellant was not replied to by the Respondent, however, at the very best, this would raise a rebuttable presumption against the Respondent. This presumption is not conclusive and is only one of the aspects which has to be considered with all other aspects and all other evidences by a court at the stage of final disposal of the suit. Let us now understand the contents of DW1/2. As already stated, it had two basic grievances raised against the Respondent. The first was with regard to the fact that the Respondent failed to execute an agreement to sell in a particular format and hence committed a breach of the contract for that reason the Appellant could not get the Income Tax Clearance Certificate. To test this argument, I put it to counsel for the Appellant to show to me whether any letter was received from the Income Tax Department , as to whether the subject receipt/agreement to sell was not as per the requirements of the Income Tax Authority and a proper agreement to sell was required to be executed by the Income Tax Authority, however learned Counsel for the Appellant has not been able to point out to me any document filed in the trial court or before this Court which could establish this argument that the Income Tax Authority had ever taken up this stand. Obviously, in the documents filed in the trial Court there is no document/letter of the Income Tax Authority that agreement to sell was required in a particular format. Not only that, I put it to the counsel for the Appellant to show the Court if there is any legal provision in the Income Tax Act and its rules which required any format with respect to agreement to sell, and again, counsel for the Appellant has failed to show me any such provision on legal format. Accordingly, I hold and so has been held by trial court that there is no requirement of any specific format of an Agreement to Sell in Income Tax law. Merely because, the Respondent did not reply to the letter dated 20.2.1985 (DW1/2) cannot mean that the Respondent has committed breach of contract. There was nothing to be done by the Respondent with regard to the performance of making the balance payment because in terms of the subject receipt/agreement to sell, the Respondent had to await the Income Tax Clearance Certificate and other clearances which was obtained by the Appellant. The Appellant cannot shift the onus on the Respondent merely by writing a letter more so when the admitted fact is that there is no income tax clearance which was obtained and there is no requirement in the Income Tax Act and Rules of any particular format with respect to an agreement to sell. Accordingly, I do not find any valid basis in this argument and which thus stands rejected.

The last argument which was raised on behalf of the Appellant was that the suit was barred by time. Firstly, as regards this argument I find that no such issue was raised in this behalf in the trial court, but, assuming that this issue can be argued, inasmuch as the counsel for the Appellant argued that u/s 3 of the Limitation Act, 1963 this Court can suo moto look into this aspect, I find that the suit was filed within limitation because the agreement to sell/receipt is dated 11.8.1984 and the suit was filed on 7.8.1987 that within 3 years. Secondly, in fact the cause of action for the purpose of limitation would only begin when the Defendant-Respondent committed a breach of contract and which breach of contract at the very best, would be from the receipt of the letter of the Appellant dated 20.2.1985. Therefore, in my opinion, the suit for specific performance could have in fact been filed till 19.2.1988. I, therefore, do not find any justifiable rationale in this argument that the suit is barred by limitation.

No other issue or argument was urged or advanced before this Court.

In view of the above discussion, inasmuch there is no illegality or perversity in the impugned judgment and I cannot interfere with the findings of the trial court merely because there may possibly be another view (and which of course definitely is not there in the facts and circumstances of the present case), the appeal therefore fails and the impugned judgment and decree is sustained and the present appeal is dismissed, leaving the parties to bear their own costs.