M/s COMBITIC GLOBAL CAPLET PVT. LTD. v. M/s UNITECH LTD

1. Exemption allowed subject to just exceptions. C.M. stands disposed of. C.M. No.5295/2018 (for condonation of delay) in RFA No.130/2018

2. For the reasons stated in the application, delay of 21 days in filing the appeal is condoned. C.M. stands disposed of. RFA No.130/2018

3. This Regular First Appeal is filed under Section 96 of Code of Civil Procedure, 1908 (CPC) by the plaintiff in the suit impugning the judgment of the Trial Court dated 18.8.2017 by which the trial court has decreed the suit by applying Order XII Rule 6 CPC and decreed the suit for an amount of Rs.29,37,675/- along with pendente lite and future interest at 10% per annum. By this appeal the plaintiff seeks a higher rate of interest and pre-suit interest.

4. Admittedly the appellant/plaintiff is an investor. Appellants/Plaintiffs in the appeals invested in a total of 33 plots in a housing project of the respondent/defendant at Mohali in Punjab. The case of the appellant/plaintiff was that a formal agreement dated 17.3.2008 was entered into between the parties and since the possession of the plots could not be given in original period of 36 months or even after a delay of more than six years, hence the appellants/plaintiffs were no longer interested in plots and therefore wanted refund of the amounts deposited, and which amount in RFA No. 130/2018 is of Rs.29,37,675/- and which RFA is taken as the lead matter. Written statement was filed by the respondent/defendant in the suit taking two preliminary objections. Firstly, it was stated that the suit was barred because admittedly there is an arbitration clause in the contract/agreement entered into between the parties being Article 13 of the contract/agreement. The second defence was that in terms of the Article 4 of the contract/agreement there is a provision for extension of time of performance on account of existence of force majeure conditions and that force majeure conditions existed on account of non-availability of sand, shortage of labour and also difficulty in obtaining regulatory clearance and which were disputed facts requiring trial. There was also a third defence to the suit which was suo moto noticed by the Court in view of the Article 12 of the contract/agreement and which provided that it is the courts at Mohali only which will have jurisdiction with respect to determination of matters in dispute between the parties.

5. Trial court by the impugned judgment has decreed the suit under Order XII Rule 6 CPC and passed a decree in favour of the appellant/plaintiff and against the respondent/defendant for the amount deposited of Rs.29,37,675/- along with pendente lite and future interest at 10% per annum. It may be noted that the rate of interest at 10% per annum is the rate which is specifically agreed between the parties in terms of the Clause 4(e) of the contract/agreement dated 17.3.2008. As already stated above, this appeal is filed by the appellant/plaintiff seeking enhancement in the rate of interest as also for granting pre-suit interest.

6. In my opinion, there is no merit in the appeal and in fact the appellant/plaintiff is lucky in having obtained a decree under Order XII Rule 6 CPC. A decree under Order XII Rule 6 CPC is passed when there are no disputed questions of fact which require trial. The respondent/defendant had pleaded existence of force majeure conditions being lack of availability of sand for construction, lack of availability of labour for construction, delay in regulatory clearances being obtained, and which all issues may not have been decided by deciding an application under Order XII Rule 6 CPC because such aspects are disputed questions of facts which require trial. Appellant/plaintiff is therefore lucky that in spite of existence of disputed questions of fact, the trial court has decreed the suit under Order XII Rule 6 CPC. 7.(i) I may note that admittedly there is an arbitration clause in the contract entered into between the parties in terms of Article 12 of the contract/agreement, and hence the suit was therefore barred because of Section 14(2) of the Specific Relief Act, 1963 which provides that existence of an arbitration clause will act as a bar to the suit. Section 14(2) of the Specific Relief Act reads as under:- “Section 14.Contracts not specifically enforceable.-(1) The following contracts cannot be specifically enforced, namely:xxxxx xxxxx xxxxx (2) Save as provided by the Arbitration Act, 1940 (10 of 1940), no contract to refer present or future differences to arbitration shall be specifically enforced; but if any person who has made such a contract (other than an arbitration agreement to which the provisions of the said Act apply) and has refused to perform it, sues in respect of any subject which he has contracted to refer, the existence of such contract shall bar the suit.”

(ii) Admittedly, the respondent/defendant had taken up this plea of bar to the suit on account of existence of the arbitration clause in the written statement and the trial court has in spite of this defence rejected that defence solely on the ground that no application was filed by the respondent/defendant under Section 8 of the Arbitration & Conciliation Act, 1996. In my opinion, this reasoning of the trial court is clearly faulty because once admittedly there existed an arbitration clause and such a defence was taken in the written statement, trial court ought not to have entertained the suit.

8. The next aspect noticed by the trial court suo moto is that contract/agreement in question contains Article 12 as per which only the court at Mohali will have jurisdiction and therefore once parties had agreed to jurisdiction of the courts at Mohali, the courts at Delhi had no jurisdiction, and therefore the impugned judgment could not be passed decreeing the suit more so by applying Order XII Rule 6 CPC. 9.(i) So far as the issue of interest is concerned, admittedly rate of interest granted is in terms of the agreement and which rate as per Clause 4(e) of the contract/agreement dated 17.3.2008 is 10%. There is therefore no scope of increasing the rate of interest.

(ii) So far as the claim of grant of pre-suit interest is concerned, it is seen that interest would have to be paid only once the principle becomes due. Since the appellant/plaintiff is an investor who deposited amounts towards the allotment of plots, on deposit of amounts appellant/plaintiff will not be entitled to interest but interest will become payable only when the contract between the parties would stand frustrated. Contract would stand frustrated in the present case as per the case set up by the appellant/plaintiff of appellant/plaintiff not having interest in continuing with the contract on account of long delay in performance by the respondent/defendant. In such a scenario, the appellant/plaintiff should have issued a legal notice terminating the contract and on termination of contract, the appellant/plaintiff would have been entitled to interest from that date but admittedly it is conceded that no legal notice has been issued by the appellant/plaintiff prior to the suit terminating the contract between the parties. It is therefore clear that no pre-suit interest can be granted to the appellant/plaintiff in the facts of the present case and nor can the appellant/plaintiff be granted interest higher than the contractual rate of interest at 10%. In fact, as already discussed above, appellant/plaintiff is not only lucky but much more than lucky in having got the suit decreed under Order XII Rule 6 CPC.

10. Dismissed. RFA Nos.131/2018, 132/2018, 133/2018, 134/2018, 135,2018, 136/2018, 137/2018, 138/2018, 139/2018,140/2018, 141/2018, 142/2018, 143/2018, 144/2018, 145/2018, 151/2018, 152/2018, 153/2018, 154/2018, 155/2018, 156/2018, 157/2018, 158/2018, 159/2018, 160/2018, 161/2018, 162/2018, 163/2018, 164/2018, 165/2018, 166/2018 & 167/2018

11. Applying the discussion and reasoning given while dismissing RFA No.130/2018, these appeals are also dismissed because identical issues are involved in these appeals.

FEBRUARY 13, 2018 VALMIKI J. MEHTA, J Ne