Full Text
TAHALJEET ..... Appellant
Through : Mr.Sunil Choudhary, Advocate
Through : Mr.Baljeet Singh, Advocate with respondent in person.
JUDGMENT
1. This appeal is preferred by the appellant/plaintiff against the judgment and decree dated 23.09.2017 passed by the learned Additional District Judge-03/Central District, Tis Hazari Courts, Delhi (hereinafter referred as the learned ‘Trial Court‟) in CS No.28/2016 (New No.611137/2016) whereby the suit of the appellant for specific performance in respect of flat No.E-293, Pocket No.3, Bindapur, New Delhi (hereinafter referred as the „subject flat‟) and alternatively for recovery of Rs.5.00 Lacs was dismissed post trial.
2. This Court has issued limited notice in this appeal only qua refund of earnest money per order dated 29.01.2018.
3. The brief facts culminated into filing of this appeal are the respondent herein had allegedly entered into an agreement vide Bayana Receipt dated 26.03.2007 to sell the subject flat owned by him to the 2019:DHC:6395 appellant herein for a total sale consideration of Rs.5.00 lacs. The earnest money of Rs.2.50 lacs in cash was paid on the same day by appellant to respondent. On 25.07.2007 the appellant had requested the respondent to accept the balance sale consideration and finalise the deal but the respondent refused to do so, probably, on account of price escalation; on 27.07.2007 the appellant got issued a legal notice dated 26.07.2007 upon respondent through registered post and UPC; on 23.08.2007 appellant again approached the respondent for completing the deal and to pay balance amount but to no avail; on 31.08.2007 the appellant filed this suit against respondent for specific performance and permanent injunction with an alternate relief of recovery of Rs.5.00 lacs i.e. double the amount of earnest money; and vide the impugned judgment dated 23.09.2017 the suit of appellant came to be dismissed by the learned Trial Court.
4. The appellant though does not challenge the finding qua the suit for specific performance being not maintainable, but is aggrieved of the denial of relief of recovery of Rs.5.00 lacs, despite a Bayana receipt dated 26.03.2007 Ex.PW1/1 being proved by him to have been executed by the defendant/respondent herein. The reason for not accepting such Bayana receipt to be a valid receipt is given in the impugned judgment:-
5. A bare perusal of the impugned judgment would reveal the learned Trial Court raised concerns qua a) the veracity of the Bayana receipt Ex.PW1/1 on the ground Mr.N.K.Aggarwal from CFSL, who received the signatures and thumb impression of the respondent were never examined. However, the learned Trial Court ignored the deposition of PW[5] Mr.A.D.Shah, Sr Scientific Officer, CFSL who deposed Mr.Aggarwal had since retired and rather PW[5] identified signatures of Mr.Aggarwal on the reports to prove the same. The respondent did not put forth any evidence to show Mr.Aggarwal was still in service or was available without inconvenience etc. More so, such reports were prepared in the usual course of official business by a government servant and there was no need to unnecessarily raise an eye-brow on veracity of Ex.PW1/1. Nevertheless, the learned Trial Court accepted the signatures and thumb impression on Ex.PW1/1 to be of the defendant/respondent herein; b) the learned Trial Court held the appellant could not disclose the source of payment of Rs.2.50 lacs to respondent and consequently the execution of receipt Ex.PW1/1 by the respondent; and c) an agreement to sell of a flat, the possession of which, admittedly was not with the respondent, is a void agreement. Admittedly, no sale deed was ever executed between the parties and it was merely on receipt of allotment of subject property by the DDA to the respondent, an agreement/bayana receipt was entered into between the parties, I see no illegality in the same. Section 17, 48 & 49 of the Indian Registration Act would not be attracted in this case, since it is only an agreement and not sale. More so, a roving enquiry into the funds of the appellant was not at all necessary in view of the payment being only of 2.50 lacs. People do enter into cash transactions, even today.
6. Let me now examine the evidence of the appellant / plaintiff led by him before the learned Trial Court. The appellant examined himself as PW[1] and proved his affidavit Ex.PW1/A, saying the appellant and the respondent had entered into an agreement on 26.03.2007 in respect of purchase of subject flat for Rs.5.00 lac, out of which Rs.2.50 lacs in cash was paid to respondent as earnest money and balance was payable at the time of handing over of the possession, which was to be given as soon as the possession is received from the DDA. He also deposed on 25.07.2007 when the appellant had contacted the respondent for paying the balance amount, the respondent refused from selling the subject property as the prices had gone up. Thereafter, a legal notice dated 26.07.2007 Ex.PW1/2 was sent by the registered post and UPC since the respondent had failed to conclude the transaction; later the suit was filed. The agreement / Bayana receipt was proved as Ex.PW1/1; legal notice as Ex.PW1/2; original postal receipts, UPC and AD card as Ex.PW1/3 to Ex.PW1/5; reply to legal notice as Ex.PW1/6; copy of the police report dated 30.08.2007 to the SHO concerned by the appellant as Ex.PW1/7. During his cross examination, the appellant admitted of an earlier transaction entered into on 08.08.2003 between his mother and the respondent for a sum of Rs.30,000/- which admittedly could not materialise and the cash paid by his mother was ultimately returned by the respondent vide a demand draft dated 18.07.2005. He denied of any collusion with his mother or he allegedly forged Bayana receipt Ex.PW1/1. He rather deposed Bayana receipt Ex.PW1/1 was executed at the residence of one Charanjeet Sharma and was got typed from Narela and that his mother was not present at the time of execution of such Bayana receipt Ex.PW1/1 or at the time of payment of Rs.2.50 lacs; PW[1] denied he ever manipulated signatures of the respondent on the Bayana receipt Ex.PW1/1.
7. PW[2] Satish Kumar filed his affidavit Ex.PW2/A and deposed in the lines of the appellant. In the cross examination he admitted an agreement was executed at the residence of Kale @ Charanjeet Sharma and besides him one Savita Sharma was also present. The receipt was got typed from the market. He identified his signatures on Bayana receipt Ex.PW1/1 and deposed appellant paid Rs.2.50 lacs in cash to the respondent at the said spot.
8. Similarly, Charanjeet Sharma appeared as PW[3] and exhibited his evidentiary affidavit as Ex.PW3/A and supported the appellant herein. In his cross examination he deposed Smt.Savita Sharma, Satish Kumar, the appellant and the respondent, all were present at his house when the agreement was executed in Hindi language and Rs.2.50 lacs were paid to the respondent with a promise the balance payment shall be paid at the time of taking over of the possession of the flat. He even gave the denomination of the currency as of Rs.500 and Rs.1000 notes.
9. Smt.Savita Sharma-PW[4] also proved her affidavit as Ex.PW4/A and deposed in line with other witnesses saying Ex.PW1/1 was executed at the place of Shri Charanjeet Sharma. She also admitted contents of document Ex.PW4/A-D[1].
10. PW[5] Sh.A.D.Shah, Sr Scientific Officer, Grade-I, CFSL proved report Ex.PW5/1; its annexure as Ex.PW5/2; report of Mr.N.K. Aggarwal as Ex.PW5/3; forwarding letter as Ex.PW5/4. He examined thumb impression and came to the conclusion the receipt Ex.PW1/1 bear thumb impression of respondent. The signatures were examined by Mr.N.K. Aggarwal, who had since retired. His report was also proved by PW[5] who identified the signatures of Sh. N.K. Aggarwal. He denied finger prints photographs Ex.PW5/2 were of a different person or the reports are false.
11. The respondent / defendant examined himself as DW[1] and filed his affidavit Ex.DW1/A. He deposed qua the transaction dated 08.08.2003 of Rs.30,000/- and stated it was closed in the year 2005 itself. He deposed Bayana receipt Ex.PW1/1 is forged by the appellant with the help of his mother. He deposed that since the mother of the appellant was holding his earlier agreement dated 08.08.2003, duly signed by the respondent, so the appellant forged his signatures from such document in active connivance with certain mafia property dealers and land grabbers. In his cross examination he strangely denied document Ex.PW4/A-D[1] despite being put by him to PW[4] during her cross examination. Thus rather confirms the conduct of defendant being deceptive. There is no material dis-similarity between Bayana receipts Ex.PW1/1 and Ex.PW4/A-D[1].
12. The case of the respondent was he had never executed any Bayana receipt Ex.PW1/1 and his signatures and thumb impression thereon were forged. It was further his case the appellant had a retained copy of his earlier agreement dated 08.08.2013 entered into with his mother and the appellant must have copied his signatures and put thumb impression of someone else on Ex.PW1/1, which plea was proved to be a false plea vide CFSL reports. PW[5] proved the thumb impression and hand writing on Bayana receipt Ex.PW1/1 was of none else than of the respondent herein.
13. Thus, the following facts stood proved a) the appellant entered into an agreement with the respondent on 26.03.2007 vide Bayana receipt Ex.PW1/1; b) he paid cash of Rs.2.50 lacs in the presence of PW[2] to PW[4]; c) the stand of respondent that his signatures on Ex.PW1/1 are forged stood falsified by reports of CFSL and d) he himself put document Ex.PW4/A-D[1] to PW[4] but later denied such document. Thus, the reasoning recorded by the learned Trial Court in dismissing the suit is nothing but perverse. The disclosure about earlier agreement dated 08.08.2003 was never relevant since it does not relate to the subject transaction and was not between the same parties.
14. Let me now examine the entitlement of appellant to seek recovery of Rs.5.00 lacs from the respondent.
15. There is no dispute the appellant is claiming an amount equivalent to double of the earnest money of Rs.2.50 lacs paid in relation to purchase of subject flat, which transaction could not materialise. Admittedly there was no agreement to return double the amount of earnest money in case of failure of transaction by the respondent.
16. On earnest money the Co-ordinate Bench of this Court in Manoj Tomar vs. Smt.Neena Khatter & Anr. 2015 SCC Online Del 12831 has observed as under:- “6. A reading of the ratio of Kailash Nath Associates's case (supra) makes it more than clear that the law with respect to entitlement of a defendant/proposed seller to forfeit an amount received under the agreement to sell is subject to loss being caused and appropriation is actually pursuant to Section 74 of the Indian Contract Act by taking the advance payment received as liquidated damages, but once there is no plea of loss being caused along with necessary details, there does not arise issue of appropriation by the defendants, of the advance price received under the contract as liquidated damages.
7. In my opinion, an amount of Rs.1,35,00,000/- cannot be taken as earnest money inasmuch as, earnest money is only a nominal amount. In similar circumstances I have recently in the case of Sh. Sunil Sehgal Vs. Shri Chander Batra & Ors. CS(OS) No. 1250/2006 decided on 23.9.2015 held that what is to be seen is the substance and not the label and merely because a huge amount is called as earnest money, the same will not become an earnest money but would be an advance price paid under the agreement to sell. The relevant paras of this judgment are paras 8 and 9, and which read as under:- "8. In the present case, the nature of contract is such that losses could have been proved by the defendants by proving the falling of prices of the subject property, and only if the prices of the property had fallen and breach was committed by the plaintiff/buyer, the defendants could have only then been entitled to forfeit the amount paid by the plaintiff as damages on account of loss caused. Para 43.[4] of the judgment of the Supreme Court in the case of Kailash Nath Associates (supra) reproduced above shows that the provisions of Sections 73 and 74 of the Indian Contract Act applies whether a person is plaintiff or a defendant in the suit i.e. a defendant who is a seller cannot forfeit any moneys unless loss is proved to be caused by fall in the price of the property.
9. In the present case, defendants have led no evidence of any loss caused to them, and therefore, assuming that plaintiff is guilty of breach of contract, yet, the defendants cannot forfeit the amount of Rs.15 lacs lying with them. A huge amount of Rs.15 lacs out of the total sale consideration of Rs.79,50,000/cannot in law be called earnest money. By giving a stamp of 'earnest money' to advance price, the latter cannot become the former. What is to be seen is the substance and not the label. Only a nominal amount can be said to be earnest money and not an amount of Rs.15 lacs out of Rs.79.50 lacs, by noting that if suppose an amount of Rs. 30 lacs or 40 lacs would be called as earnest money by the parties, that would not take away the fact that such amount cannot be earnest money but would in fact be part of the price to be paid for sale." (underlining added)”
17. In Manoj Kumar vs. Smt.Neena Khattar and Anr. in CS(OS) 1371/2017 decided on 13.10.2015 it was held if loss is not pleaded there cannot be any forfeiture. Para 6 and 7 of the judgment are relevant and run as under: “6. A reading of the ratio of Kailash Nath Associates‟s case (supra) makes it more than clear that the law with respect to entitlement of a defendant/proposed seller to forfeit an amount received under the agreement to sell is subject to loss being caused and appropriation is actually pursuant to Section 74 of the Indian Contract Act by taking the advance payment received as liquidated damages, but once there is no plea of loss being caused alongwith necessary details, there does not arise issue of appropriation by the defendants, of the advance price received under the contract as liquidated damages.
7. In my opinion, an amount of Rs.1,35,00,000/- cannot be taken as earnest money inasmuch as, earnest money is only a nominal amount. xxxxxxxx”
18. Further in Kailash Nath Associates vs. DDA 216(2015) DLT 433 the Court held as follows:
19. Admittedly, there is no clause in Bayana receipt Ex.PW1/1 qua forfeiture of the earnest money. Even if there was such clause then also per Manoj Tomar (supra) only loss need to be deducted. Here in the facts of the case where the total consideration itself was Rs.5.00 lac; its 50% viz Rs.2.50 lacs paid, cannot be treated as an earnest money, hence could never be forfeited. The respondent is not entitled to deduct a part of the consideration even on account of an alleged loss, since has used the said money for the last 12 years.
20. In the circumstances, the appeal is allowed. The impugned judgment and decree dated 23.09.2018 is set aside. Consequently, the suit of the appellant is decreed in the sum of Rs.2,50,000/- with costs. Though there is no prayer for interest, yet the respondent has enjoyed the money of appellant from 26.03.2007 hence considering the nature of transaction between the parties, the appellant is awarded simple interest of 9% per annum on the decretal amount from 23.09.2017 till realisation. Decree sheet be drawn. The pending application, if any, also stands disposed of.
YOGESH KHANNA, J. NOVEMBER 27, 2019