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CASE NO.: Appeal (civil)  5453 of 2000

PETITIONER: Banshilal Soni (Dead) Through L.Rs

RESPONDENT: Kastoor Chand Begani(Dead) by L.Rs. & Ors

DATE OF JUDGMENT: 12/07/2007

BENCH: Dr. ARIJIT PASAYAT & LOKESHWAR SINGH PANTA

JUDGMENT: J U D G M E N T

Dr. ARIJIT PASAYAT, J.

1.      Challenge in this appeal is to the judgment rendered by a  Division Bench of the Madhya Pradesh High Court at  Jabalpur.  By the impugned judgment, the High Court held  that the Trial Court had erroneously accepted the explanation  given by the appellant. It accepted the plea of the defendant- respondent that there was abandonment of rights under the  contract by the plaintiff. The plaintiff was, therefore, held to be  not entitled to claim for specific performance of the contract.   However, directions were given for payment of rupees one lakh  in view of the wrong retention of a sum of Rs.25,000/- of the  plaintiff by the defendant.  The original plaintiff Banshilal Soni  is dead and his legal heirs are the appellants.    

Background facts in a nutshell are as follows:

The appellant-plaintiff instituted the Civil Suit No.8-A/92  for specific performance of contract for sale of house  no.11/198 situated at Halwai Line, Raipur as per the  agreement dated 10.10.1989. According to the plaintiff, the  defendants had agreed to sell the suit house to the plaintiff,  for a consideration of Rs.5 lakhs by execution of an agreement  for sale of the same on 10.10.1989. In pursuance of the  agreement dated 10.10.1989, the defendant no.1 had taken  Rs.50,000/- as an advance/earnest money by cheque  no.062037 dated 11.10.1989 drawn on Central Bank of India,  Raipur.  The defendants had undertaken to satisfy the plaintiff  about their clear title to obtain ’No Objection Certificate’ from  Income Tax Department and to complete all requisite  formalities before the registration of the sale deed.  The sale  deed was to be executed on 10.4.1991 and physical possession  of the house was to be given by that date. The defendants had  conveyed that the suit house was free from all encumbrances.   It was pleaded in the plaint that the plaintiff was and is still  ready to perform his part of the contract to pay the balance  consideration and get the sale deed executed and registered in  his favour. The plaintiff had given a registered notice on  15.7.1991 through his Advocate requiring the defendants to  execute the sale deed and get the same registered and to hand  over physical possession of the suit house. However, the  defendants, through their counsel, falsely alleged that the  plaintiff had no sufficient fund and thus was responsible for  breach of contract.  It was put-forth that the defendants did

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not take any step to obtain a clearance certificate from the  Income Tax Department and were taking steps to sell the suit  house to some one else at a higher price. With the aforesaid  averments, the plaintiff sought relief for issue of a direction to  the defendants to execute the sale deed and get the same  registered in favour of the plaintiff and to put the plaintiff in  actual physical possession and on his failure to comply with  the direction of the Court, for execution of the sale deed  through court. There was also a prayer for grant of any other  relief in the circumstances of the case.

The defendants resisted the relief sought in the suit.   According to them, the defendant No.2 had not signed the  above agreement.  In the year 1989, the defendant No.1 had  suffered loss in his business and was in financial difficulty  and, therefore, he approached the plaintiff for financial  assistance.  The plaintiff had advanced Rs.50,000/- as a loan  on the condition, that the defendants shall execute an  agreement to sell the suit house as a collateral security for  such loan.  It is the case of the defendants that the market  value of the suit house was Rs.10 lakhs but the defendants  were compelled to execute the agreement being in a precarious  financial condition. It was also stated that they were not  required to obtain any clearance certificate from the Income  Tax Department and had never agreed to hand over the  possession of the suit house after execution of sale deed.  They  disputed the plaintiff’s readiness and willingness. It was also  the case of the defendants before the Court below that the  plaintiff had accepted Rs.25,000/- on 3.4.1991 towards a part  of the loan advanced by him and granted a receipt thereof.  It  was also pleaded that the contract is not specifically  enforceable as the agreement itself stipulates that the parties  had agreed that the defendants shall pay Rs.2 lakhs to the  plaintiff in case the contract was not completed.  It was further  set forth that in case the court thinks it fit, it may grant  compensation to the plaintiff, instead of issuing a direction for  execution of the sale deed. It was also put-forth by the  defendants that the time was the essence of the contract and  the same having not been given due compliance, the plaintiff  was not entitled to any relief under the law. Lastly, it was  contended by the defendants that the plaintiff having  voluntarily accepted the return of Rs.25,000/- he had  abandoned his claim of specific enforcement of the contract.

The High Court accepted that the Trial Court’s finding  regarding readiness and willingness of the plaintiff was in  order, and that time was not the essence of the contract.   Exhibit P1 was an agreement for sale, and not for a loan  amount. After having accepted the plaintiff’s case to the  aforesaid extent the High Court ultimately came to the  conclusion that there was abandonment of the rights under  the contract by the plaintiff.

During the pendency of the appeal both the plaintiff and  the defendant no.1 have died and their legal heirs have been  brought on record.

Learned counsel for the appellants submitted that the  High Court has made out a new case which is contrary to the  evidence led in the matter and the evidence adduced.

With reference to the reply to the legal notice it is pointed  out that the execution of the agreement and receipt of the  money was not disputed.  Further, there was no question of  oral agreement as the agreement itself provided for the

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contingency when either of the parties failed to perform his  part of the contract. There was no evidence led regarding the  oral agreement. In the reply it was not mentioned that the  amount was taken as loan or as mortgage.  It was stated to be  refund of the earnest money. In the written statement a  different stand has been taken from what was stated in the  reply to the notice.  It was stated in the written statement that  the amount represented a loan.  It was further stated that the  document was one of security and there was part payment of  the loan.  In the additional plea it was stated that the hardship  was not realized at the time of the agreement.  Additionally,  this plea is also contrary with the plea about the loan.  When  the evidence of the defendants is scanned with the specific  stand there was no agreement to sale and the agreement of  security of loan.   

In para 6 of the evidence it was stated that Rs.25,000/-  was paid by way of repayment.  At para 7 it was indicated to  suggest that plaintiff had paid earnest money.  It is, therefore,  submitted that terms of the agreement were usual and could  not be treated to be one for agreement of sale. The Trial Court  recorded that stipulation for damages are unusual. The last  date for execution of sale deed was 10.4.1991. For a period of  nearly 20 months nothing was done and about 7 days before  the expiry of the 20 months period the receipt of Rs.25,000/-  was issued. There was no notice or demand indicating  readiness and willingness.  The notice was given three months  after the date i.e. 10.4.1991, on 15.7.1991.  There was no  mention about the payment of Rs.25,000/- in the suit.  Since  the relief claimed is discretionary one, it would not be proper  to interfere with the conclusions of the High Court.  

A bare reading of the evidence of the defendants clearly  shows that the specific case was one of loan and security and  not a case regarding refund of earnest money. That being so  the High Court has made out a new case that the sum of  Rs.25,000/- was by way of refund of earnest money.  That was  not the case of the defendants in the pleadings or in the  evidence. Interestingly, the stands in the reply to the notice  were at variance with the written statement. Therefore,  normally we would have set aside the order of the High Court.  But some factors which were relevant for the respondent need  to be noted. It is stated that the house is only one which is  possessed by the legal heirs of the original defendant though  the learned counsel for the appellants stated that the  statement is not fully correct. Both the plaintiff and the  defendant No.1  have died.  We feel in the peculiar  circumstances of the case interest of justice would be best  served if the respondents are directed to pay a sum of Rs.7.5  lakhs to the appellants.  It is stated that a sum of rupees one  lakh has been deposited pursuant to the order of the High  Court.  The same shall be permitted to be withdrawn by the  appellants.  Balance amount shall be paid within six months  by the respondents to the appellants.  If the payment is made,  it shall be treated as if we have not interfered with the order of  the High Court though the same is not sustainable. On the  contrary, if the amount is not paid, the appeal shall be treated  as allowed and the impugned order has to be treated to have  been set aside. The appeal is accordingly disposed of. There will be no  order as to costs.