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Judgment
H.N. Nagamohan Das, J.—This second appeal is directed against the judgment and decree dated 30.08.2003 in O.S. No. 157/1999 passed by the Civil Judge (Junior Division) at Davangere and confirmed by the judgment and decree dated 24.03.2005 in R.A. No. 70/2003 passed by the District Judge at Davangere.
Appellant is the Plaintiff and Respondents are the Defendants before the Trial Court. In this judgment for convenience the parties are referred to their status before the trial Court.
Plaintiff contends that on 08.07.1993 the Defendants executed a registered agreement of sale agreeing to sell the plaint schedule property for a total sale consideration of Rs. 80,000/-. On the date of agreement of sale the Defendants acknowledged the receipt of Rs. 70,000/- and agreed to execute the registered sale deed by accepting the balance sale consideration of Rs. 10,000/- as and when the Plaintiff calls upon them to do. This agreement of sale further specifies the following obligations on the part of Defendants.
- to bear half of the registration expenses;
- to get schedule property duly measured by competent authority;
- to furnish encumbrance certificate;
- to discharge the land subsisting on the schedule property;
- to obtain clearance certificate;
- to pay up to date taxes.
Despite repeated requests and demands the Defendants refused to execute the registered sale deed by performing their part of obligation. Having no other alternative the Plaintiff finally got issued a notice on 03.06.1998 calling up on the Defendants to accept the balance sale consideration and to execute the registered sale deed. Despite service of notice the Defendants neither replied nor complied the demand made in the notice. Hence, the Plaintiff filed O.S. No. 157/1999 for decree of specific performance of agreement of sale or in the alternative for refund of the earnest money with interest and Court costs.
The Defendants entered appearance before the Trial Court and filed written statement inter alia denying the very execution of agreement of sale. The Defendants contend that the Plaintiff is a businessman carrying on Dallali business. Periodically the Defendants used to borrow money from the Plaintiff towards agricultural operations. The Plaintiff used to adjust the agricultural produce delivered to him towards the advance made. In this connection Plaintiff has obtained certain deeds from the Defendants as a security for repayment of money. Therefore the alleged agreement of sale dated 08.07.1993 is not an agreement of sale of immovable property. On these grounds the Defendants opposed the claim of Plaintiff. On the basis of pleadings the Trial Court framed the following issues for its consideration.
i. Whether the Plaintiff proves that Defendant-1 executed agreement of sale in favour of Plaintiff on 08.07.1993 agreeing to sell the suit property for a valuable consideration of Rs. 80,000.00 and received Rs. 70.000.00?
ii. Whether the Plaintiff further proves that the Plaintiff was all along ready and willing to perform his part of obligation?
iii. Whether the Plaintiff is entitled for the alternative relief sought i.e., damages by way of compensation alongwith earnest money?
iv. Whether the Defendant proves that the suit property was ancestral property?
v. Whether the Plaintiff is entitled for the decree sought?
vi. What decree or order?
Before the Trial Court the Plaintiff examined three witnesses as P.W.1 to P.W.3 and got marked Ex.P.1 to Ex.P.17. The Defendants examined one witness as D.W.1 and got marked Ex.D. 1 and Ex.D.2. On appreciation of the pleadings, oral and documentary evidence the Trial Court held that the Defendants have executed the agreement of sale dated 08.07.1993 and received the earnest money at `70,000/-. But the Plaintiff was not ready and willing to perform his part of obligation and therefore the Trial Court dismissed the suit of Plaintiff for decree of specific performance. Since the Plaintiff is not entitled for main prayer the Trial Court held that the Plaintiff is also not entitled for the alternative prayer for refund of earnest money. Consequently under the impugned judgment the Trial Court dismissed the suit of the Plaintiff. Aggrieved by this judgment of the Trial Court the Plaintiff filed an appeal before the first Appellate Court in R.A. No. 70/2003. At the time of arguments before the first Appellate Court learned Counsel for the Plaintiff restricted his claim for refund of earnest money. The first Appellate Court rejected the claim of Plaintiff for refund of money on the ground that the same is barred by limitation. Hence, this second appeal.
This Court by order dated 29.03.2006 admitted the appeal to consider the following substantial questions of law.
i. Whether the Courts below were justified in dismissing the suit of the Plaintiff on the ground that the plaint do not satisfy the requirement of Section 16(c) of the Specific Relief act read with Form 47 and 48 of Code of Criminal Procedure though in para 4 of the plaint the Plaintiff has stated that he was ready to perform his part of the contract?
ii. Whether the first Appellate Court was justified in declining even to grant a decree for refund of the amount paid on the ground that it is barred by time-treating it as a suit for recovery money?
I Heard arguments on both the side and perused the entire appeal papers.
Ex.P. 1 is the agreement of sale dated 08.07.1993. No time is fixed in this agreement of sale for completion of the agreement. On the other hand the agreement of sale creates certain obligations on both the Plaintiff and the Defendants. On appreciation of the oral and documentary evidence the Trial Court noticed that the Plaintiff was not ready and willing to perform his part of obligation under the agreement of sale. This finding of both the Courts below is in accordance with law and the same is supported by evidence on record. Before the first appellate court the counsel for Plaintiff has not pressed for decree of specific performance. Even before me the same submission is made. Therefore the question of granting decree of specific performance will not arise. Accordingly the first question of law is answered in affirmative.
It is not in dispute that in the plaint the Plaintiff has prayed for alternative relief of refund of earnest money of Rs. 70,000/- with 18% interest and costs. u/s 22 of the Specific Relief Act (for short ''the Act'') it is always open for the Plaintiff to seek relief of refund of earnest money. Both the Courts below concurrently held that the Plaintiff has approved the execution of agreement of sale Ex.P. 1 dated 08.07.1993 and the receipt of earnest money of Rs. 70,000/- by the Defendants. This concurrent finding of both the Courts below is supported by evidence on record.
11 u/s 22 of the Act if for any reason the Court is not inclined to gram decree of specific performance then it can grant refund of earnest money. In the instant case though both the Courts held that the Defendants have received the earnest money of Rs. 70,000/- committed an illegality in refusing to grant alternative relief prayed by the Plaintiff. The first Appellate Court committed an illegality in holding that the claim of Plaintiff for refund of earnest money is barred by limitation. As already pointed out no time is fixed under the agreement of sale - Ex.P. 1. Before the Trial Court no issue is framed with regard to the limitation. In the absence of any issue the first Appellate Court at the time of deciding the matter had taken up the issue relating to limitation and on that ground dismissed the suit of Plaintiff for refund of earnest money. This approach of both the Courts below is illegal and perverse.
A reading of agreement of sale Ex.P. 1 manifestly makes it clear that no time is fixed for performance of contractual obligations. On the other hand certain obligations are created on the Defendants to be performed. The Defendants have not placed any material on record to show that they have performed their part of obligation under the agreement of sale. Further the Defendants have not called upon the Plaintiff to perform his part of obligation under the agreement of sale. The Defendants have not issued any notice to the Plaintiff terminating the agreement of sale and forfeiting the earnest money. In the circumstances there is no justification for the Courts below in refusing the decree for refund of earnest money. Accordingly the second question of law is answered in negative.
The Trial Court by relying on a judgment of the Supreme Court in the case of Manjunath Anandappa Urf. Shivappa Hanasi Vs. Tammanasa and Others, held that when the Plaintiff is not entitled for discretionary relief of specific performance then he is also not entitled for decree for refund of earnest money. The Supreme Court in para 30 of the said judgment held as under:
There is another aspect of the matter which cannot be lost sight of. The Plaintiff filed the suit almost after six years from the date of entering into the agreement of sell. He did not bring any material on records to show that he had ever askect Defendant No. 1 the owner of the property, to execute a deed of sale. He filed a suit only after he came to know that the suit land had already been sold by her in favour of the Appellant herein. Furthermore, it was obligatory on the part of the Plaintiff for obtaining a discretionary relief having regard to Section 20 of the Act to approach the Court within a reasonable time. Having regard to his conduct, the Plaintiff was not entitled to a discretionary relief.
By misreading the law laid down by me Supreme Court in Manjunatha Anandappa''s case the Trial Court committed an illegality in dismissing the suit of Plaintiff for refund of earnest money. Nowhere the Supreme Court in Manjunatha Anandappa''s case held that the Court cannot grant alternative relief of decree for refund of earnest money.
For the reasons stated above, the following;
ORDER
i. The appeal is hereby allowed.
ii. The judgment and decree dated 30.08.2003 in O.S. No. 157/1999 passed by the Civil Judge (Junior Division) at Davangere and confirmed by the judgment and decree dated 24.03.2005 in R.A. No. 70/2003 passed by the District Judge at Davangere are hereby set aside insofar as they relate to dismissal of Plaintiff''s claim for refund of earnest money.
iii. The suit of the Plaintiff in O.S. No. 157/1999 is hereby decreed in part directing the Defendants to refund the earnest money of Rs. 70,000/- with costs and current interest at the rate of 6% p.a. from the date of suit till realisation. Ordered accordingly.