Rajiv Sahai Endlaw, J.@mdashThe two plaintiffs have sued for specific performance of an Agreement of Sale of third floor along with terrace rights of property No. 9, Sukhdev Vihar, New Delhi constructed over land admeasuring 450 sq. yds., together with one servant quarter having common WC on the terrace floor and one car parking space in the drive way, and in the alternative, for recovery, of Rs. 1 crore already paid as advance to the three defendants and Rs. 3,25,00,000/- as damages, pleading:
(i) that the defendants No. 1 & 2 i.e. Sh. Girish Chopra and Smt. Ashima Chopra vide Agreement to Sell dated 15th June, 2010 agreed to sell the aforesaid property to the two plaintiffs for a total sale consideration of Rs. 4,25,00,000/-;
(ii) that in terms of the said Agreement to Sell, the plaintiffs paid a sum of Rs. 50 lakhs in the name of the defendant No. 1 as earnest money at the time of signing of the Agreement to Sell and a further sum of Rs. 25 lakhs on 9th July, 2010;
(iii) that the balance sale consideration of Rs. 350 lakhs was payable at the time of execution of the Sale Deed on or before 15th August, 2010, after the defendants No. 1 & 2 had cleared the dues in respect of the home loan taken by them from the Bank of Baroda in respect of the entire property No. 9, Sukhdev Vihar, New Delhi;
(iv) that though the plaintiffs were ready to perform their part of the agreement and had applied for a home loan to Standard Chartered Bank which had been sanctioned in the sum of Rs. 2,91,50,000/- vide sanction letter dated 31st July, 2010 but the defendants No. 1 & 2 did not produce the No Dues Certificate from the Bank of Baroda and on the contrary in the last week of August, 2010 requested the plaintiffs for a further sum of Rs. 25 lakhs out of the sale consideration;
(v) that a cheque in the said sum of Rs. 25 lakhs was initially given in the name of the defendant No. 1 as sought by the defendants No. 1 & 2 but on the asking of the defendants No. 1 & 2 the payment under the said cheque was subsequently stopped and a cheque for Rs. 25 lakhs in the name of the defendant No. 3 M/s. Divij Infraprojects Pvt. Ltd. of which defendants No. 1 & 2 were Directors, as per the request of the defendants No. 1 & 2, was given and which was encashed;
(vi) the defendants No. 1 & 2 however did not come forward to execute the Sale Deed, not even inspite of legal notice dated 21st January, 2011;
Hence this suit.
2. Summons of the suit and notice of the application for interim relief were issued. After hearing the counsel for the defendants, the defendants were vide order dated 31st March, 2011 restrained from creating any third party interest and/or parting with possession of the property agreed to be sold. The said ad interim order was vide subsequent order dated 6th April, 2011 confirmed subject to the plaintiffs depositing an FDR of Rs. 34 lakhs in favour of the Registrar General of this Court. FAO(OS) No. 342/2011 preferred by the defendants against the said order was dismissed vide order dated 19th July, 2011. The plaintiffs have complied with the said condition.
3. The defendants have contested the suit by filing a common written statement pleading:
(a) that the Agreement to Sell dated 15th June, 2010 by its very terms, is a contingent contract within the meaning of Sections 31 & 32 of the Indian Contract Act 1872, performance of which was contingent upon the defendants obtaining the necessary permission from the Bank of Baroda with whom the entire property was mortgaged and as per the Agreement, in case the defendants failed to obtain the permission and transfer the property agreed to be sold on or before 15th August, 2010, the defendants had a right to return the advance amount to the plaintiffs along with interest @ 12.5% per annum on or before 15th September, 2010; the defendants having failed to obtain the necessary permission from the Bank of Baroda, offered refund of the advance received with interest and which was not accepted by the plaintiffs; the contingent contract had become void as per Sections 32 & 35 of the Indian Contract Act, 1872 and is unenforceable;
(b) that the defendants, to honour their obligations under the Agreement to Sell, endeavoured for permission of the Bank of Baroda but which permission was not granted as the defendants were not in a position to discharge the entire outstanding with the said Bank which as on 30th June, 2010 was Rs. 8,63,66,783/- and as on 30th August, 2010 was Rs. 4,22,30,393/- and as on 29th October, 2010 was Rs. 4,29,26,584/-;
(c) that the Bank of Baroda was not agreeable to release the property agreed to be sold to the plaintiffs as the plaintiffs were not coming forward to make the payment to the Bank or the defendants;
(d) that the plaintiffs were not ready and willing to perform their part of the agreement by the stipulated date of 15th August, 2010 and according to the plaintiffs themselves, the approval for their home loan was received only 29th September, 2010; that the earlier approval of 31st July, 2010 was only an in principal approval;
(e) that the plaintiffs have not shown their readiness and willingness for payment of the balance sum of Rs. 35 to Rs. 40 lakhs even if it were to be believed that the home loan for Rs. 2.91 crores had been got sanctioned.
4. The plaintiffs in their replication have inter alia denied that the defendants had at any time offered refund with interest and have further pleaded that the defendants No. 1 & 2, after the institution of the present suit, had sold the second floor of the property.
5. On the pleadings of the parties, the following issues were framed on 20th September, 2011:
(i) Whether the plaintiffs have always been ready and willing to perform their part of the contract? OPP
(ii) Whether the plaintiffs are not entitled to specific performance of the Agreement dated 15.06.2010 as alleged in the preliminary objection-3 of the written statement? OPD
(iii) Whether the plaintiffs are entitled to specific performance of the Agreement dated 15.06.2010 or in the alternative to recover Rs. 4.25 Crores as alleged in the plaint? OPP
(iv) Relief.
6. Evidence has been recorded before the Court Commissioner, with the plaintiffs examining four witnesses including both the plaintiffs and the defendants examining only the defendant No. 1 as a witness. The counsels have been heard.
7. My findings on the issues are as under. I will first take up Issue No. (ii) inasmuch as the same is in the nature of a preliminary issue striking at the very root of the claim of the plaintiff insofar as for specific performance.
8. Issue No. (ii) Whether the plaintiffs are not entitled to specific performance of the Agreement dated 15.06.2010 as alleged in the preliminary objection-3 of the written statement? OPD
8.1. The plea of the defendants in para 3 of the preliminary objections in the written statement is that the Agreement to Sell does not even contain any clause providing for enforcement of the same by the plaintiffs by resorting to specific performance through the Courts of Law but only provides for refund of the advance paid by the plaintiffs along with interest. However during hearing, under this issue, arguments were also addressed on the Agreement being a contingent one. The said plea of the defendants is based on the following clause in the Agreement to Sell proved as Ex. P1 and in which the defendants No. 1 & 2 are described as First Party and the plaintiffs as the Second Party:
That (if) the Second Party fails to get the registry done in favour of Second Party on or before 15th August, 2010, the First Party have the right to return the advance amount paid to the First Party, with an interest of 12.5% per annum to the Second Party on or before 15th September, 2010.
and on the basis of there being no clause in the said Agreement providing for the right of the plaintiffs of specific performance of the Agreement. The defendants in the written statement have further pleaded that the reference in the aforesaid clause to "Second Party" is "supposedly incorrect" and the reference in the said clause to ''the failure to get the registry done'' is in fact to the First Party i.e. the defendants. The defendants have pleaded that the aforesaid clause was inserted envisaging a possibility of the defendants'' failure to get the permission from the Bank of Baroda and opting for return of the advance amount to the plaintiffs.
8.2. I may at the outset state that there is no ''obvious'' mistake in the clause aforesaid. The defendants in their written statement also have not pleaded any circumstances for this Court to return a finding of there being such a mistake in the clause. I have perused the affidavit by way of examination-in-chief of the defendant No. 1 appearing as the sole witness of the defendants. In that also there is no evidence of any such mistake. The clause thus has to be read as it is.
8.3. Not only so, the said plea is also found to be an afterthought. The defendants, at no time prior to the filing of the written statement, are proved to have applied to the Bank of Baroda for release of the property agreed to be sold to the plaintiffs from mortgage or the Bank of Baroda having refused the same or of there being any other reason for the ''failure'' of the defendants to register the Sale Deed in favour of plaintiffs. The defendants have also not proved having communicated to the plaintiffs at any time that they were ''unable'' to get the registry done in favour of plaintiffs. The defendants have yet further not proved that interpreting the clause aforesaid, as pleaded in the written statement, the defendants at any time exercised the ''right'' to refund the monies received from the plaintiffs with interest at 12.5% per annum. The only inference is that the defendants also never understood the clause aforesaid in the manner pleaded in the written statement and the said plea is taken to only put obstacles to the relief claimed in the suit of specific performance.
8.4. A reading of the aforesaid clause shows the Agreement of the parties to be that even if the plaintiffs as purchasers were to fail to get the registry done in their favour by paying the balance sale consideration on or before 15th August, 2010, the defendants as sellers were still not entitled to forfeit or retain the advance received but remain liable to return the advance received with interest @ 12.5% per annum. There is no clause in the Agreement permitting the defendants to, in the event of failure of the plaintiffs to perform their part of the Agreement, forfeit the advance paid by the plaintiffs. The only meaning which can be ascribed to the said clause thus is that in the event of the plaintiffs being in breach, the defendants had agreed to refund the advance received with interest @ 12.5% per annum.
8.5. The next question which arises is whether owing to the aforesaid clause and owing to the fact that the Agreement does not provide for the right of the plaintiffs to specific performance, the said relief is not available to the plaintiffs.
8.6. The aforesaid clause is attracted only in the event of the plaintiffs i.e. the purchasers being in breach. The question as to whether the plaintiffs are in breach of the Agreement or not shall be considered under Issue No. (i) hereunder. If the plaintiffs are held to be in breach, the question of their being entitled for specific performance will not arise and they, in accordance with the said clause shall be entitled to refund of advance paid with interest @ 12.5% per annum.
8.7. The plea of the defendants, that the purport of the aforesaid clause was to make the defendants, even if themselves in breach, liable only to refund the advance received with interest, instead of for specific performance, is based on the judgment of the Apex Court in
8.8. The counsel for the defendants also, when confronted with the said position could only urge that the provision in the subject Agreement is not by way of damages/penalty. The counsel for the defendants has contended that the clause aforesaid cannot be said to be to ensure specific performance of the contract and was only for the purpose of giving to the defendants an option of paying money in lieu of specific performance. However, the language of Section 23 provides for giving option to the party in default, of paying in lieu of specific performance. In the present case, the clause is not of giving the defendants, if in default, an option but as aforesaid of making the defendants liable to refund the advance received with interest even if the plaintiffs be in default. Moreover, there are no express pleas in this regard in the written statement.
8.9. I accordingly decide Issue No. (ii) in favour of the plaintiffs and against the defendants and hold the clause aforesaid to be not in negation of the right if otherwise found of the plaintiffs, of specific performance of the Agreement to Sell.
9. Issue No. (i) Whether the plaintiffs have always been ready and willing to perform their part of the contract? OPP & Issue No. (iii) Whether the plaintiffs are entitled to specific performance of the Agreement dated 15.06.2010 or in the alternative to recover Rs. 4.25 Crores as alleged in the plaint? OPP
9.1. The said issues are taken up together for adjudication as the discussion and findings thereunder are intertwined.
9.2. The plaintiff No. 1 Mrs. Tanu Goel appearing as PW 1, in her affidavit Ex. PW 1/A by way of examination-in-chief, besides reiterating the contents of the plaint has deposed that the plaintiffs, after the Agreement to Sell, kept on verbally requesting the defendants No. 1 & 2 to provide the ''No Dues Certificate'' from the Bank of Baroda and the defendants No. 1 & 2 kept on requesting for some time and the plaintiffs had no option but to wait; that the Standard Chartered Bank had vide letter dated 31st July, 2010 Ex. PW 1/2 sanctioned home loan of Rs. 2,91,50,000/- for purchase aforesaid by the plaintiffs; that the said sanction was thereafter extended from time to time vide letter dated 11th August, 2010 Ex. PW 1/3 and letter dated 29th September, 2010 Ex. PW 1/4 and insurance cover for the said loan was also obtained from Royal Sundaram Alliance Insurance Company Ltd. vide Ex. PW 1/5; that the defendants at the time of receiving Rs. 25 lakhs on 1st September, 2010 in the name of defendant No. 3 had also assured that they will execute Sale Deed on or before 31st October, 2010; that the defendants on 10th November, 2010 had verbally agreed to sign an addendum extending the date of execution of the Sale Deed but did not sign the same also; that legal notice dated 21st January, 2011 Ex. PW 1/6 was sent to the defendants No. 1 & 2 vide postal receipt Ex. PW 1/7 and vide postal certificate Ex. PW 1/8 and acknowledgement cards Ex. PW 1/9 and Ex. PW 1/10 were returned.
9.3. The affidavit Ex. PW 2/A by way of examination-in-chief of the plaintiff No. 2 Sh. Sunil Goel appearing as PW 2 is on the same lines save that he has proved as Ex. PW 2/2 the addendum which was prepared for extension of time and as Ex. PW 2/3 the Sale Deed executed by the defendants No. 1 & 2 of the second floor and has also deposed that the defendants had also cleared the lien before sale of the basement, ground and first floors also.
9.4. PW 1 in her cross-examination was asked about the amount in her bank account and was not able to disclose the same; suggestion was given to her that she had not filed the statement of her bank as she was not possessed of the funds for purchase of the property; she admitted having not told the defendants of having to take loan from the bank for purchase of the property; she could not say whether the officials of the Standard Chartered Bank had gone to the Bank of Baroda to verify the title of the property and denied the suggestion that the officials of the Standard Chartered Bank had never inspected the subject property; she could not say whether Ex. PW 1/2, Ex. PW 1/3 and Ex. PW 1/5 were photocopies or the originals; she denied the suggestion that Ex. PW 1/2 was only an in-principal approval and that technical and legal approval was still required; she denied that the loan amount was never transferred and disbursed to the account of the plaintiffs and admitted that no bank draft of Rs. 3.25 crores for the balance sale consideration was got prepared before 15th August, 2010; she denied the suggestion of the understanding between the parties being, of the plaintiffs making payment of balance sale consideration to Bank of Baroda directly and getting ''No Objection Certificate'' (NOC) and thereafter getting the Sale Deed executed in their favour; she denied the suggestion that the defendants after 15th September, 2010 had offered to refund the entire amount with interest; upon being asked to produce the statement of her bank account in which the loan amount from Standard Chartered Bank had been disbursed, she produced Ex. PW 1/D1.
9.5. PW 2 in his cross-examination deposed having disclosed to the Standard Chartered Bank that the property was mortgaged; of the officials of the Standard Chartered Bank visiting and inspecting the property though having not verified the original title deeds; admitted Ex. PW 1/2 being in-principal sanction subject to legal and technical clearance but deposed that the same were Bank''s internal process and the plaintiffs got the disbursement of the loan amount in the home loan account on 10th August, 2010; he further deposed that since the date of the execution of the Sale Deed was extended, the amount so credited was debited from the account; he denied any understanding of the plaintiffs paying the balance sale consideration to Bank of Baroda directly; he denied that after August, 2010 the market value of the property had come down and the plaintiffs had lost interest in purchasing the same.
9.6. The plaintiffs have examined their Financial Consultant Sh. Upendra Tiwari as PW 3 and who has in his affidavit Ex. PW 3/A by way of examination-in-chief proved, the e-mails by which the Addendum dated 10th November, 2010 for extension of time was forwarded to the defendant No. 1 as Ex. PW 3/1 and Ex. PW 3/2; another e-mail requesting the defendant No. 1 to provide his bank account details for the purpose of execution of the Sale Deed as PW 3/3 and e-mail sent on 4th January, 2011 asking the defendants to accept the balance sale consideration as Ex. PW 3/4 and PW 3/5. In his cross-examination, he deposed that the e-mail address of the defendant No. 1 was provided by the plaintiffs and denied the suggestion that the said emails were never received by the defendant No. 1. Significantly, no suggestion was given to him that the address at which the e-mails were sent was not of the defendant No. 1.
9.7. The plaintiffs have also examined Sh. Prabhas Kumar, Operation Officer with Standard Chartered Bank as PW 4 who has proved his authority letter from the Bank as PW 4/A and the Bank''s office copies of Ex. PW 1/2 to Ex. PW 1/4 as Ex. PW 4/1 to Ex. PW 4/3 as well as the statements of account dated 8th October, 2010, 25th October, 2010 and 25th November, 2010 in the names of the plaintiffs as Ex. PW 4/4, Ex. PW 4/5 and Ex. PW 4/6 respectively; he has further deposed that the statement of a Home Saver Account is generated after disbursal of loan to the customer and the home loan amount was disbursed to the plaintiffs. In his cross-examination he denied any personal knowledge with respect to the home loan application of the plaintiffs or sanction and approval thereof and also could not tell whether the plaintiffs had disclosed in their loan application that the property intended to be purchased was mortgaged. He also could not answer any other queries regarding loan but denied the suggestion that the loan amount was never credited or disbursed to the plaintiffs.
9.8. The defendant No. 1 appearing as DW 1, in his affidavit Ex. DW 1/A by way of examination-in-chief besides reiterating the contents of the written statement has deposed, (i) that as on 31st May, 2010 a sum of Rs. 8 crores was due to the Bank of Baroda and the defendants were not possessed with sufficient means to pay the same and for this reason only had decided to sell the portions of the property falling to their share under the collaboration agreement for development thereof; that the urgent need of the defendants for the funds was disclosed to the plaintiffs; (ii) that for this reason only time was made the essence of the contract; (iii) of having told the plaintiffs that if the defendants were not able to pay the entire amount of the Bank of Baroda, they would refund the advance amount received from the plaintiffs with interest @ 12.5% per annum and it was for this reason only that the written contract was kept silent about the rights of the plaintiffs to specific performance; (iv) that the plaintiffs had not disclosed that they were required to take loan for the purchase of the property; (v) that the sale consideration was fixed on a lower side as compared to the prevalent market price for the reason of the plaintiffs representing ready, availability of funds with them; (vi) of the plaintiffs having remained silent after completing payment of Rs. 75 lakhs on 9th July, 2010; (vii) of the plaintiffs having offered a further sum of Rs. 25 lakhs only around 31st August, 2010; (viii) of the said amount having been received in the name of the defendant No. 3 for the reason of the same being not refundable under the terms of the Agreement and the balance payment being paid by 15th September, 2010; (ix) of the plaintiffs having again defaulted and having started avoiding the defendants; (x) of the plaintiffs being never ready with the funds; (xi) of the e-mails Ex. PW 3/1 and Ex. PW 3/2 having been not noticed by the defendants as the sender thereof was not known to the defendants; (xii) of the said e-mails having either never reached the inbox of the defendants or having been ignored or deleted by the defendants as spam; (xiii) of the defendants being not regularly using their e-mail address; (xiv) of the legal notice having not been received by the defendants; (xv) of the defendants having incurred interest levied by Bank of Baroda owing to the default by the plaintiffs.
9.9. DW 1 in his cross-examination, (a) admitted that he is engaged in the business of property development and construction and of selling residential flats after development thereof; (b) that the entire loan taken on security of the property No. 9, Sukhdev Vihar, New Delhi had not been repaid till then; (c) that he was not in default of re-payment of loan installments; (d) that he did not remember whether the entire portion of the property falling to his share under the collaboration agreement was unsold on the date of entering into the Agreement with the plaintiffs; (e) admitted that the ground floor of the property was sold by him by Sale Deed dated 28th June, 2010 Ex. DW 1/P1; (f) admitted that he did not apply for any permission from Bank of Baroda for selling of the property agreed to be sold to the plaintiffs; (g) admitted that he had not written to the plaintiffs that he was not able to so apply owing to the plaintiffs having not made the full payment; (h) could not explain the inconsistency in para 7 of the written statement that permission had been refused and in his deposition of permission having not been applied for; (i) admitted that at the time of sale of the ground and second floors permission of the Bank of Baroda had been obtained; (j) admitted that no notice demanding the balance sale consideration was sent to the plaintiffs; (k) admitted that no notice of termination of Agreement owing to the failure of the plaintiffs to make the balance sale consideration had been sent; (l) could not tell the dates when offer for refund of money with interest was made and admitted that no written letter in this regard was sent; (m) could not tell that as to how much amount had been offered; (n) admitted receipt of legal notice dated 21st January, 2011 and stated that after receipt thereof again a refund with interest was offered.
9.10. The senior counsel for the plaintiffs has argued, that sale of mortgaged property is not barred; that there is no plea in the written statement of time of payment being of essence; that the date fixed of 15th August, 2010 in the Agreement to Sell lost relevance upon payment on 1st September, 2010 of Rs. 25 lakhs; that the readiness and willingness of the plaintiffs is established from the e-mails of November, 2010, legal notice of 31st January, 2011 and the filing of the suit in March, 2011; that a plaintiff in a suit for specific performance is not required to have actual money in his pocket and is only required to prove ability to pay the same and which in the present case is proved by deposit of Rs. 34 lakhs in this Court and by the sanction of a home loan for Rs. 2.91 crores; that the loan was sanctioned by the Standard Chartered Bank on the basis of Agreement to Sell which mentions the factum of the property being mortgaged with the Bank of Baroda; that the defendants have not led any evidence of refusal of Bank of Baroda to issue NOC for sale; that home loan is always disbursed by issuing a cheque for the loan amount directly in the name of the seller and taking custody of the Sale Deed executed in favour of the loanee; that home loans are a norm today and specific performance cannot be denied for the reason of the purchaser intending to pay through the medium of a home loan. Reliance is placed on
9.11. Per contra, the counsel for the defendants has argued that the plaintiffs were insisting upon release from mortgage of the entire property instead of only the portion thereof agreed to be sold to the plaintiffs and which stand of the plaintiffs was in contravention of the Agreement to Sell (it may however be mentioned that neither there is plea to the said effect in the written statement nor any evidence led to the said effect and the said argument thus has to be ignored); that the plaintiffs have not been able to prove their readiness and willingness; that the letter dated 31st July, 2010 Ex. PW 1/2 of the Standard Chartered Bank is only of in-principal approval and not of sanction of the loan; that the letter of sanction of the loan Ex. PW 1/3 dated 11th August, 2010 has not been proved as no record with respect thereto was requisitioned from the Standard Chartered Bank; that the letter dated 29th September, 2010 Ex. PW 1/4 is again of in-principal approval and shows that the processing fees was still outstanding which means that the loan had not been sanctioned; that the insurance cover Ex. PW 1/5 is of the month of October, 2010 i.e. of after the stipulated date for completion of sale; that the plaintiffs have not proved offer of balance sale consideration; that the mortgaged property could not have been mortgaged again; that the witness from Standard Chartered Bank had no personal knowledge; that in any case, the loan was not for the entire balance sale consideration and the plaintiffs have not led any evidence of availability of the balance Rs. 3.25 crores with them; that there is no evidence of the loan being still alive; that no car parking space or servant quarter with common toilet can now be conveyed since the portions of the building stand occupied (it may again be said that there is no such plea or evidence and the said argument also thus has to be ignored).
9.12. The senior counsel for the plaintiffs in rejoinder has contended that there can be no presumption of inability of the plaintiffs to pay or of the plaintiffs being not able to revive the home loan.
9.13. The first question to be adjudicated is of the availability of funds with the plaintiffs for payment of balance sale consideration.
9.14. Though undoubtedly the Agreement to Sell does not record any representation of the plaintiffs as purchasers to the defendants No. 1 & 2 as sellers that the plaintiffs would be paying the balance sale consideration by availing finance from the Bank but the same to my mind is irrelevant. In today''s dates and time, when availing of such financial facilities is not uncommon and when such finance is taken, not necessarily owing to lack of funds with borrowers but as financial/tax planning, merely because the plaintiff/purchaser in a suit for specific performance does not show availability of liquid funds with him, though shows availability of financial facility, cannot be a ground for denial of the relief of specific performance. I am not able to fathom any principle where a purchaser is required to inform the seller at the time of entering into the Agreement to Sell that the balance sale consideration will be paid after availing such financial facility. The seller ought not to be concerned with the source from which balance sale consideration is arranged by the purchaser.
9.15. Under the Agreement to Sell, the balance sale consideration was payable on or before 15th August, 2010. The plaintiffs have proved that they had made an application for a home loan to the Standard Chartered Bank; that the Standard Chartered Bank vide their letter dated 31st July, 2010 to the plaintiffs had given in-principle sanction for a loan of Rs. 2,91,50,000/- to the plaintiffs, being 90% of the purchase price of the subject property and the said sanction was valid for a period of 30 days from the issuance thereof. Though the said sanction as per its face is "in-principle" and provides that disbursal of the loan thereunder was subject to all internal checks being positive and the property purchased therewith being offered as collateral and on the various terms and conditions contained therein and the counsel for the defendants laid much emphasis on Clauses 2, 3 &4 thereof, to contend that the same did not indicate readiness and willingness of the Bank to lend the sum of Rs. 2,91,50,000/- to the plaintiffs but the subsequent letter dated 11th August, 2010 of the Bank proved as Ex. PW 1/3 opening the loan account in the name of the plaintiffs is indicative of the Standard Chartered Bank, after 31st July, 2010, being satisfied, of the plaintiffs and the property being purchased by the plaintiffs being compliant of all the conditions contained in the letter dated 31st July, 2010. The argument of the counsel for the defendants, of the letter dated 31st July, 2010 being not proof of the sum of Rs. 2,91,50,000/- being available for payment towards sale consideration to the defendants No. 1 & 2, cannot be accepted.
9.16. Though the plaintiffs have also proved the subsequent letter dated 29th September, 2010 of the Standard Chartered Bank to the plaintiffs and which is on identical terms as the letter dated 31st July, 2010 but therefrom I am unable to hold that there was no sanction or availability of loan before 15th August, 2010. It cannot be lost sight of that though the parties had agreed for the Sale Deed to be executed by 15th August, 2010 but the Sale Deed was not so executed. However, the demand by the defendants and receipt by the defendants of further sale consideration in the last week of August, 2010 i.e. after 15th August, 2010 shows that the Agreement to Sell had not lapsed on 15th August, 2010 and was rather kept alive by the parties. The plaintiffs, could not have availed of the loan so arranged from Standard Chartered Bank, without the Sale Deed being executed. Rather, the letter dated 29th September, 2010 of the Bank shows that the Bank, inspite of loan having earlier sanctioned having not been availed, was willing to even then lend Rs. 2,91,50,000/- for payment of the balance sale consideration under the subject Agreement to Sell. I thus conclude that the plaintiffs had available to them, out of the balance sale consideration payable of Rs. 3.25 crores, the sum of Rs. 2,91,50,000/-.
9.17. However, that still leaves open the question of availability of the balance sale consideration of Rs. 33,50,000/- with the plaintiffs. Though undoubtedly the plaintiffs have not proved that the said amount of Rs. 33,50,000/- was lying in their account but considering the proportion which the said amount bears to the entire sale consideration and taking judicial notice of the fact that the Banks do not sanction such house loans without satisfying themselves that the borrower is in a position to pay the 10% of the sale consideration from the borrower''s own resources, I am of the view that the plaintiffs have proved availability of the said balance amount of Rs. 33,50,000/- also with them.
9.18. My this view is reinforced from the fact that the plaintiffs, even otherwise as herein below discussed, have proved that they continued to approach the defendants for completion of the transaction and it was the defendants who maintained a sphinx like attitude in the matter. Only if the defendants had in response to the said efforts of the plaintiffs, asked the plaintiffs to complete the transaction and the plaintiffs had failed to do so, could it have been said that the plaintiffs were not ready and willing. The said amount of Rs. 33,50,000/- is not only a mere 7.88% of the total sale consideration but is also approximately only 1/3rd of the advance paid by the plaintiffs to the defendants and it defies logic that a purchaser of immovable property would not have available to him such a small percentage of the total sale consideration price.
9.19. The judgments cited by the senior counsel for the plaintiffs, of the purchaser/plaintiff in a suit for specific performance of an Agreement of Sale of immovable property being not required to show ready availability of balance sale consideration with him, are apposite in this regard. Mention can also be made of the fact that the plaintiffs were vide interim order aforesaid directed to deposit Rs. 34 lakhs in this Court for the reason only of the contention of the defendants of the plaintiffs, though having loan of Rs. 2,91,50,000/-, not being capable of payment of the balance sale consideration and the plaintiffs immediately complied with the said condition and the said amount has been lying deposited in this Court since.
9.20. I thus conclude that the plaintiffs have proved availability of the balance sale consideration on the stipulated dated for payment thereof with them.
9.21. However, mere availability of the balance sale consideration does not complete the element of readiness and willingness and is only one part thereof. The other part of the said ingredient is of the communication by the purchaser to the seller of readiness to pay the said balance sale consideration on the stipulated date.
9.22. In my opinion, the plaintiffs have passed the said test as well.
9.23. The plaintiffs, admittedly out of the balance sale consideration of Rs. 3.50 crores which was payable at the time of registration of the Sale Deed only, complied with the demand of the defendants and paid a sum of Rs. 25 lakhs out thereof to the defendants. The same is indicative of the anxiety of the plaintiffs to complete the transaction. Had the plaintiffs not been so anxious, they could have very well taken a stand that the entire balance sale consideration of Rs. 3.50 crores will be paid only against the registration of the Sale Deed. Not only so, the plaintiffs have also proved having informed the defendants vide emails dated 15th November, 2010, 24th November, 2010, 4th January, 2011 and 10th January, 2011 of their Chartered Accountant, of the readiness and willingness with the balance sale consideration and having called upon the defendants to execute the Sale Deed and sought details of the bank accounts of the defendants for preparation by the plaintiffs of the demand drafts in favour of the said bank accounts towards balance sale consideration. In fact, the said emails also record that it is the defendants who had been postponing the date of execution of the Sale Deed by 15 days each time. The defendants have not denied the address at which the said emails are proved to have been delivered being not theirs. Rather, the defendants in their evidence have admitted the receipt of the said emails. The explanation of the defendants for not responding thereto, that the same were not noticed or were discarded as spam being not by the plaintiffs, is unbelievable. The said emails are abundantly clear, of being on behalf of the plaintiffs and being with respect to the transaction of sale admittedly entered into by the defendants. The said explanation is unbelievable. Once, it is held that the defendants were in receipt of such communications from the plaintiffs calling upon the defendants to complete the transaction and informing the defendants of the readiness and willingness of the plaintiffs to pay the balance sale consideration and recording grievance of the delay being on the part of the defendants, were received by the defendants, the only conclusion of non-reply thereof by the defendants, is that the defendants had nothing to show in response thereto and the plaintiffs'' version was correct.
9.24. The same is the position of the legal notice dated 21st January, 2011 got served by the plaintiffs on the defendants and the service whereof also stands proved and admitted. No reply was sent thereto also. The defendants continued to maintain a sphinx like silence.
9.25. The Supreme Court in
9.26. This suit was filed soon thereafter i.e. on 18th March, 2011.
9.27. I therefore conclude that the plaintiffs have been successful in discharging the onus of Issue No. (i), of having always been ready and willing to perform their part of the contract. The plaintiffs, after the institution of the suit also are found to have been ready and willing. Issue No. (i) is accordingly decided in favour of the plaintiffs and against the defendants.
9.28. As far as Issue No. (iii) is concerned, once it is held that the Agreement to Sell of which specific performance is claimed in this suit, was not contingent as argued by the counsel for the defendants and that the plaintiffs have been ready and willing to perform their part of the Agreement to Sell and the Agreement to Sell by its very nature is specifically enforceable, the ordinary rule is that an Agreement of Sale of immovable property is specifically enforceable and damages in lieu thereof are an exception. Reference in this regard can be made to
9.29. Though it is the admitted position that the property agreed to be sold was mortgaged and though the Agreement is of Sale free of mortgage and though the defendants have contended that the mortgagee Bank has refused to so discharge the mortgage but the defendants have totally failed to prove the same. The defendants have not proved any attempts made by them for having the mortgage so discharged and the mortgagee Bank having refused the same. On the contrary, it stands admitted that the mortgagee Bank has been floor-wise discharging the mortgage. There is no reason as to why the mortgagee Bank would not have so discharged the mortgage of the subject floor also. There is also merit in the contention that the mortgage is not an impediment to sell. At best the sale remains subject to the mortgage.
9.30. The question however still arises, as to whether this Court should order specific performance when the property remains mortgaged and the Agreement was for conveyance free from mortgage. In my opinion, a seller of mortgaged property cannot be permitted to wriggle out from an otherwise binding Agreement to Sell by refusing to take steps for making the property free from mortgage. The plaintiffs/purchasers, if the property on the date when specific performance ordered is still mortgaged, would have a choice to either have the mortgage discharged by paying balance sale consideration to mortgagee Bank, including by payment of additional amount, if any claimed by the mortgagee Bank and have the Sale Deed executed and to take proceedings for recovery of the additional amount paid from the defendants.
9.31. Thus, Issue No. (iii) is answered by ordering that the plaintiffs are entitled to specific performance of the Agreement to Sell dated 15th June, 2010.
10. Resultantly, the suit of the plaintiffs is allowed by passing a decree in favour of the plaintiffs and against the defendants No. 1 & 2 of specific performance of the Agreement dated 15th June, 2010, by directing:
(i) The defendants No. 1 & 2 to within three months hereof, after having the third floor along with terrace of property No. 9, Sukhdev Vihar, New Delhi constructed over land admeasuring 450 sq. yds., freed from mortgage, execute a Sale Deed thereof in favour of the plaintiffs on the terms and conditions contained in the Agreement to Sell dated 15th June, 2010 against receipt of balance sale consideration of Rs. 3.25 crores from the plaintiffs; the amount of Rs. 34 lakhs deposited in this Court shall then form part of the sale consideration and be paid to the defendants No. 1 & 2; if the defendants No. 1 & 2 so voluntarily execute the Sale Deed, the interest accrued there on shall also be released to the defendants No. 1 & 2 besides the sale consideration;
(ii) If the defendants No. 1 & 2 do not get the property freed from mortgage within the said three months and do not so execute the Sale Deed, the plaintiffs shall be entitled to negotiate with the mortgagee Bank for settling the dues of the said Bank; the mortgagee Bank i.e. Bank of Baroda is directed in this context to so deal with the plaintiffs insofar as the mortgage of the third floor and terrace is concerned; and to after having the property freed from mortgage, have the Conveyance Deed of the said property executed in their favour through the process of the Court; in such eventuality, if the amount paid by the plaintiffs to the mortgagee Bank is more than the balance sale consideration, the plaintiffs shall be free to institute proceedings for recovery of the excess amount so paid from the defendants and in such an eventually, the plaintiffs shall also be entitled to withdraw the amount of Rs. 34 lakhs deposited in this Court together with interest accrued thereon;
(iii) In the event of the defendants No. 1 & 2 complying with the decree in terms of one above, no costs; else, the defendants shall also be liable for costs.
Counsels fee is assessed at Rs. 50,000/-.
Decree sheet be drawn up.
