Karan Luthra v. M.K. Subba

1. IA No.1689/2018 is filed by the plaintiff under Order 39 Rule 1 and 2 CPC. This court on 5.2.2018 had passed an interim order restraining the defendant from selling, alienating or transferring the suit property measuring 13 bighas 5 bisws bearing Khasra Nos.179/2/1 (1-05), 179/2/2 (0-11), 180/2 (2-10), 181/2/1 (1-05), 180/2/2 (2-02), 181/1(2-11), 183/1 (2-11) with farm house, tube well, boundary wall, trees and other fitting and fixtures situated in village Sultanpur, Tehsil Hauz Khas, Mehrauli, New Delhi.

2. IA No.3991/2018 is filed under Order 39 Rule 4 CPC by defendant seeking vacation of the interim order.

3. The suit is filed seeking specific performance of Agreement to Sell dated 07.06.2011 in respect of the aforenoted suit property. It is stated that 2018:DHC:3484 as per the Agreement to Sell the agreed consideration was Rs.10,50,00,000/-. Initially parties entered into an oral agreement to sell in the month of March 2011. Out of the agreed sum of Rs.10,50,00,000/- the plaintiff paid a sum of Rs.3,00,00,000/- by cheque on 25.5.2011 and an amount of Rs.50,00,000/- in cash. Thereafter on 7.6.2011 the formal Agreement to Sell was executed and the balance amount of Rs.7,00,00,000/was paid by the plaintiff to the defendant by cheque. Hence, it is pleaded that the plaintiff has paid the entire sale consideration of Rs.10,50,00,000/on 07.06.2011.

4. Thereafter it is the case of the plaintiff that he requested the defendant in June, 2011 to execute the sale deed of the suit property. However, on one pretext or the other the defendant kept postponing the same. The defendant thereafter demanded an additional sum of R.1,00,00,000/- from the plaintiff for execution of the sale deed which was also paid by the plaintiff. Thereafter in December 2012 it is stated that the defendant further demanded a sum of Rs.50,00,000/- which was paid in two instalments namely on 23.07.2013 and 09.11.2013. Hence, it is pleaded that a total Rs.12 crores have been paid to the defendant. On 12.10.2015 the plaintiff sent a legal notice to the defendant for execution of the sale deed. Despite receipt of notice there was no response from the defendant though orally he did agree to execute the sale deed. It is the case of the plaintiff that he has been ready and willing to perform his part of the Agreement to Sell. As he received information that the defendant is trying to sell the property the present suit for specific performance was filed.

5. Defendant has strongly refuted the plea of the plaintiff. It has been pleaded that the suit of the plaintiff is blatantly false, frivolous and deserves to be dismissed. There is also a gross suppression of material facts. It is the case of the defendant that in March, 2012 the defendant had taken a loan of Rs.7.[7] crores from the plaintiff. It is contended that the transaction was essentially a loan agreement and the agreement to sell was executed merely as a security. It is pleaded that from 17.12.2012 to 28.02.2014 in all a sum of Rs.11.[6] crores was returned to the plaintiff by the defendant being the full loan amount. Based on this it is pleaded that the plaintiff has deliberately concealed these material facts and has wrongly persuaded this court to pass an interim injunction. It is pleaded that the suit itself is liable to be dismissed as these facts have not been brought on record. It is also stated that on 07.06.2011 despite having paid the full sale consideration as per the claim of the plaintiff, the plaintiff took no steps to enforce the Agreement to sell. It is hence pleaded that no prima facie case is made out and balance of convenience is also not in favour of the plaintiff. Manifest from the conduct of the plaintiff is that he also did not treat this document as an Agreement to Sell but only as a security for the loan amount paid to the defendant.

6. Reliance is also placed upon documents seized by the Department of Income Tax which raided the premises of the plaintiff in March, 2014. The documents which are now relied upon by the plaintiff were seized at the time on search and seizure of the residential premises of the plaintiff. Statements were recorded by the department of Income Tax of the plaintiff regarding the Agreement to Sell, the receipt, GPA etc. all dated 07.06.2011. In the said statement dated 23.04.2014 made by the plaintiff on oath and signed as well the plaintiff has categorically admitted that he paid the moneys to the defendant as loan and all the documents such as agreement to sell, GPA etc. were executed and kept in his custody as a security for the loan amount. Hence, it is pleaded that these facts indisputably show that the transaction is a purely loan transaction and is not an agreement to sell as is sought to be pleaded. The plaintiff having received back the entire loan amount cannot now seek to enforce the Agreement to Sell. It is further submitted that the property is worth nearly Rs.100 crores and the defendant would not enter into an Agreement to Sell for the said property at a paltry figure of Rs.10.[5] crores.

7. Learned senior counsel appearing for the plaintiff has refuted the said contentions. He has stated that in March, 2012 a loan of Rs.7.[7] crores had admittedly been advanced to the defendant. As per terms and conditions the interest of 4% compounded monthly was payable for the said loan. The money that has been received from 17.12.2012 to 28.02.2014 from the defendant being a sum of Rs.11,60,00,000/- was actually refund of this loan amount. This transaction is an independent transaction which has nothing to do with the agreement to sell dated 7.06.2011. He has also relied upon a receipt dated 30.02.2012 and a promissory note dated 16.09.2015.The promissory note is for Rs.3,50,00,000/- which is the outstanding amount which remains payable by the defendant on the loan of Rs.7.[7] crores that has been taken.

8. Learned senior counsel for the defendant has denied the promissory notes stating that it is one of the blank documents that were given to the plaintiff. He has also pointed out that the so called terms of loan namely interest @ 48% per annum compounded monthly is a preposterous figure based on which no transaction could possibly have been agreed upon.

9. It is no doubt true that the nature of transaction could sometimes be different from what is recorded in the documentation. Law permits the parties to plead that the real transaction was different from what was the recorded transaction.

10. In the case of Smt.Gangabai vs. Chhabubai, (1982) 1 SCC 4, the Supreme Court held as follows:- “11..... In that event, the law declares that the nature and intent of the transaction must be gathered from the terms of the document itself and no evidence of any oral agreement or statement can be admitted as between the parties to such document for the purpose of contradicting or modifying its terms. The sub-section is not attracted when the case of a party is that the transaction recorded in the document was never intended to be acted upon at all between the parties and that the document is a sham. Such a question arises when the party asserts that there was a different transaction altogether and what is recorded in the document was intended to be of non consequence whatever. For that purpose oral evidence is admissible to show that the document executed was never intended to operate as an agreement but that some other agreement altogether, not recorded in the document, was entered into between the parties... “

11. Similar are the observations made by the Supreme Court in the case of Ishwar Dass Jain(Dead) Through LRs vs. Sohan Lal (Dead) by LRs, (2000) 1 SCC 434, wherein it was held as follows:- “15. The point here is whether oral evidence is admissible under Section 92(1) of the Evidence Act to prove that a document though executed was a sham document and whether that would amount to varying or contradicting the terms of the document. The plea of the defendant in the written statement was that the mortgage deed though true was a sham document not intended to be acted upon and that it was executed only as a collateral security.....

16. This Court has held in Gangabai v. Chhabubai that in spite of Section 92(1) of the Evidence Act, it is permissible for a party to a deed to contend that the deed was not intended to be acted upon but was only a sham document. The bar arises only when the document is relied upon and its terms are sought to be varied and contradicted....”

12. To the same effect is Gurdial Singh and others vs. Raj Kumar Aneja and Ors., (2002) 2SCC 445, where the Supreme Court held as follows:- “11... The occupants are impeaching the outward validity of the lease deed by submitting that what has been described on paper is not the real intention of the parties to do; the lease deed and the transaction spelled out by it was a sham or fictitious transaction not intended to be acted upon, rather intended to overcome or avoid the effect of the rent control legislation. It is permissible to take such a plea and adduce evidence to substantiate the same. The plea can be taken though the onus would lay on the shoulders of the party taking such a plea. To discharge the onus, direct evidence may or may not be available and if would be permissible to draw an inference from tell tale circumstances. However, the inference to be drawn from the circumstances should be an irresistible one and not merely a matter of conjectures and surmises.”

13. The legal position that would follow from the above judgments is that it is permissible for the parties to raise the plea that the documents relied upon were sham documents and that the actual transaction was different as to what was the recorded transaction. However, as stated above, the onus to prove the same would be on the defendant and though direct evidence may not be available, the inference to be drawn from circumstances should be an irresistible one and not merely a matter of conjectures and surmises.

14. The issues which have been raised by the defendant are such which would require detailed consideration/adjudication after evidence is led by the parties. The execution of document being agreement to sell dated 07.06.2011 is not denied. The receipt of a sum at Rs.12 crores is also not denied by the defendant. The onus would be on the defendant to prove that this document was not an Agreement to Sell but was a security for the loan which was allegedly received from the plaintiff and that the full loan stands paid.