JUDGMENT
Sanjay Kishan Kaul, J.
1. The plaintiff has filed a suit for specific performance of the Agreement to Sell dated 27.5.1986 in respect of the suit property owned by defendant no. 1 consisting of agricultural land measuring 17 bighas and 4 biswas comprised in Khasra Nos.1018 min(4-9), 1021 (3-1), 1026 (2-18), 1027 (0-8), 1034/2 (1-4), 1035 (1-0), 1039 (4-4) with farm house (centrally airconditioned with plant) swimming pool with cleaning machine, lake electric connections, cow sheds, tube well, other fittings and fixtures situate in Village Chattarpur, Mehrauli, New Delhi.
2. It is the case of the plaintiff that the aforesaid agreement was signed on behalf of defendant no. 1 by defendant no. 2, its Director, in pursuance to an authorisation as per Board Resolution dated 24.5.1986. The agreement was originally entered into with the plaintiff and one Shri B.R.Chopra whereby the share of the plaintiff was to be 75% and of Shri B.R.Chopra 25%. Defendant No. 1 claimed to have purchased the property from one Shri H.M. Ahuja in terms of a Sale Deed dated 21.2.1979 for a total consideration of Rs.3,75,000/- and the suit property was agreed to be sold for a consideration of Rs.25.00 lacs to the vendees, out of which a sum of Rs.9.00 lacs was paid.
3. The plaint states that at the time of entering into the aforesaid Agreement to Sell, the defendants represented that the suit property was mortgaged with Oriental Bank of Commerce, and the outstanding to the bank were not likely to exceed the balance consideration of Rs.16.00 lacs. In case of any amount remaining due after payment of the mortgaged money, the same was to be paid to the defendants. The possession of the property was also handed over to the vendees.
4. On 2.7.1986 Shri B.R.Chopra, one of the intending purchasers is stated to have assigned his rights in favor of the plaintiff for a sum of Rs.2,70,000/- and such a right of nomination is stated to have been permissible under the agreement and the deed of assignment executed by Shri Chopra. The matter of the balance consideration payable and clearance of the mortgage, however, remained pending.
5. The Income Tax Act, 1961 (hereinafter referred to as the said Act) was amended and Chapter XX-C was introduced requiring permission from the appropriate authority under Section 269UC of the said Act for sale of over Rs.10.00 lacs and the provision came into effect from 1.10.1986. The plaintiff claims to have called upon the defendants No. 1 and 2 to join in signing and lodging statement of transfer of immovable property in Form 37-I, but the defendants No. 1 and 2 are stated to have avoided the same. The plaintiff states that the said form was lodged but was not entertained on account of the fact that the transferor had not signed the form.
6. The plaintiff claims to have raised structures, carried out constructions, additions and alterations of permanent nature and improvements were made in the suit property including installation of a gobar gas plant and a solar heater system. The plaintiff also obtained an LPG connection and a telephone connection in the suit property. The property was named as ‘Bansal Farms’. A contiguous piece of land to the suit property is also stated to have been held by the defendants No. 1 and 2 comprising of 9 bighas bearing Khasra Nos.1038 (4- 7), 1024/2 (2-0), 1002 (0-4) and 1021 (2-1), which was also agreed to be sold by the said defendants to the plaintiff and Shri B.R. Chopra for a total consideration of Rs.50.00 lacs. The said land has no lien or charge of any kind whatsoever. The plaintiff is stated to have combined the two areas into one farm by bringing about such permanent changes as would not distinct the two lands. The plaint states that since there were two agreements, two separate suits were filed.
7. The plaintiff alleges that the defendants failed to sort out their accounts with the bank and seek redemption of the property mortgaged. In view of the disputes having arisen, the plaintiff filed a suit for injunction before the trial court since the defendants were thereatening to negotiate the sale of the suit property to some outsiders and a status quo order was passed in those proceedings. The plaintiff has stated that it has always been ready to perform its part of the obligation. The decree sought is for specific performance of the agreement or in the alternative for recovery of Rs.20.00 lacs along with interest @20% per annum as also for injunction.
8. The suit was contested by the initial two defendants alleging that it is the plaintiff who failed to perform his part of the agreement. It is not disputed that the property was lying mortgaged with Oriental Bank of Commerce by deposit of original title deeds and the loan amount had to be repaid by the vendees. It is alleged that the plaintiff failed to clear the outstanding of the bank and did not come-forth to sign the Income Tax clearance certificate. The written statement states that it was the bounden duty of the vendees to have paid the dues of the bank as part of the agreement and there was no liability on the defendants to pay the balance amount. The said defendants claim that in view of the failure of the plaintiff to comply with the terms of the agreement, the possession was liable to handed over to the said defendants no. 1 and 2. A subsequent agreement dated 21.7.1987 is also stated to be entered into for sale of suit land by the plaintiff to defendants No. 1 and 2 on account of frustration of the earlier agreement requiring the plaintiff to hand back the possession of the suit property to the said defendants. The burden is sought to be put on the plaintiff and Shri B.R. Chopra for defaulting in complying with the obligations under the agreement to sell.
9. On the pleadings of the parties, the following issues were framed on 24.3.1995:
1. Whether an agreement to sell was entered into between the parties, as alleged? If so on what terms? O.P.P.
2. Whether the plaintiff was and is still ready and willing to perform his part of the contract? O.P.P.
3. Whether the plaintiff in pursuance to the agreement to sell has developed the suit property? If so, its effect? O.P.P.
4. Whether the plaintiff is entitled to specific performance of the agreement to sell? If so on what terms? O.P.P.
5. Whether the suit is bad for non-joinder of Shri B.R.Chopra? O.P.D.
6. Whether the suit is plaintiff has failed to perform his part of the contract, as alleged in paras 3 and 5 of the preliminary objections? If so, its effect? O.P.D.
7. Relief?
10. The suit was dismissed for non-prosecution in view of the absence of all the parties on 22.5.2000. An application for restoration was filed soon thereafter within two days. Despite a number of efforts, the defendants could not be served and ultimately substituted service was directed. The application was finally allowed on 14.11.2002. Since none put in appearance for the defendants, the defendants were proceeded ex parte. The plaintiff was directed to file affidavit of ex parte evidence which was so filed along with the original documents.
11. The plaintiff moved IA No. 5574/2003 for amendment of the plaint seeking addition of Oriental Bank of Commerce as a defendant. The amendment was sought as a necessity on account of the fact that since the original title documents were lying with the bank, effective relief could not be granted in the suit without impleading the bank. At the stage when such an amendment application was pending, defendant no. 1 appeared through counsel on 5.8.2004 and thereafter continued to appear. The application for amendment was allowed on 2.4.2007. At the stage of allowing the amendment application, it was noticed that the case of the plaintiff was that dues of the defendants were settled with the bank and the bank was sought to be added as a party since title deed was still lying with the bank. Defendant no. 3 was also given time to file its written statement, if any, within 30 days. Defendants no. 1 and 2 were already proceeded ex parte and it was noted that no steps had been taken by the said defendants seeking to set aside the ex parte proceedings though the counsel for defendant no. 1 had been marking his presence since 5.8.2004
12. Defendant no. 3 did not file any written statement to the amended plaint. Defendant No. 1 moved an IA No. 6229/2007 to the application filed by defendant no. 1 seeking to set aside the order dated 14.11.2002 whereby defendant no. 1 was proceeded ex parte. The application was considered in terms of order dated 24.5.2007 where no cogent reasons were found as to why the clock should be set back though it was found that defendant no. 1 could be permitted to participate in the proceeding at that stage. The evidence having been led by the plaintiff, the suit was set down for final hearing.
13. At that stage, the plaintiff filed an application under Order 18 Rule 4 of the Code of Civil Procedure, 1908 (hereinafter referred to as the said Code) to place on record an additional affidavit by way of evidence in view of the subsequent developments whereby the dues of the Oriental Bank of Commerce (imp leaded as defendant no. 3) were settled. It has been set out in the application that defendants no. 1 and 2 had approached the bank for one time settlement with a pay order of Rs.1.50 lacs obtained through the plaintiff which pay order was encashed to be adjusted against the settlement amount. The said pay order was sent vide letter dated 27.9.2001 by defendants no. 1 and 2 with a copy endorsed to the plaintiff. The one time settlement was arrived at thereafter with defendant no. 3 and in terms thereof a sum of Rs.52.00 lacs had to be paid to defendant no. 3 which was so paid by the plaintiff. This application has been kept with the present suit and on hearing the submissions made by the parties, I allow this application as it only brings on record the factum of payment in pursuance to the one time settlement by the plaintiff.
14. The plaintiff has filed an affidavit of evidence dated 9.12.2002 affirming to the facts set out in the plaint and enclosing the documents. Ex.P1 is the Agreement to Sell dated 27.5.1986 which inter alia records the payment of Rs.9.00 lacs and the factum of title documents lying with the bank. It is provided in the agreement that the vendees will repay the amount with interest to the bank on behalf of the vendor and same will be deducted out of the balance sale consideration of Rs.16.00 lacs. If some balance still remains outstanding, the amount would be paid to the vendor by the vendee but in case a higher amount is paid, the dues would be recoverable by the vendee from the vendor. The delivery of possession is also recorded as also the obligation that the vendor will obtain no objection certificate and Income Tax clearance certificate. A copy of the minutes of the Board meeting of defendant no. 1 dated 24.5.1986, authorising defendant no. 2 to sell the property, is exhibited as Ex.P2.
15. The plaintiff has proved Ex.P3, the deed of assignment of right to purchase the property by Shri B.R.Chopra in favor of the plaintiff. Defendants no. 1 and 2 acknowledged the same vide letter dated 2.7.1986 (Ex.P4) having received a copy of the deed of assignment and the letter states that the plaintiff would be treated as only a party to the agreement in pursuance thereto. Correction about one of the khasra number was informed by defendants no. 1 and 2 to the plaintiff vide letter dated 7.7.1986 (Ex.P5). The one time settlement proposal by defendants no. 1 and 2 under the cover of letter dated 27.9.2001 has been proved as Ex.P6-A which shows a copy being marked to the plaintiff ‘for information and to make arrangement for the balance payment, payable to the bank’. The said letter enclosed the pay order No. 807815 dated 26.9.2001 drawn on Vysya Bank Limited, Chandni Chowk, Delhi for Rs.1.50 lacs. The branch of Vysya Bank Limited had issued a certificate dated 7.12.2002 (Ex.P6-C) that the said pay order has been issued by the branch out of the Current A/c No. 7937 of the plaintiff and had been encashed by defendant no. 3.
16. The possession letter issued on 28.5.1986 has been proved as Ex.P7 and the entry in the Revenue record is exhibited as Ex.P10-A to P10-D. The assessment made in the name of the plaintiff by the MCD has been proved as P11-A and the House Tax receipts have been filed and exhibited as Ex.P11-a to Ex.P-11-d. Other House Tax bills and receipts, telephone bills etc. have also been filed. A provisional registration certificate as small scale unit in the name of Bansal Industries has been proved as Ex.P-23 showing the address of the suit property.
17. The additional affidavit affirmed on 30.7.2007 states that defendant no. 3 had obtained a certificate of recovery against defendants no. 1 and 2 on 28.2.2002 in which the plaintiff filed the objections and the one time settlement proposal was accepted by the bank vide letter dated 15.10.2005 for a sum of Rs.52.00 lacs (Ex.P24). The plaintiff consented to pay the amount vide letter dated 23.12.2005 and the entire amount is stated to have been paid vide different cheques issued in this behalf as set out in para-5 of the affidavit. The cover letters along with copies of the drafts/cheques for the said payment have been proved as Ex.P-6A, Ex.P-25 A, Ex.P-25B, Ex.P-25C, Ex.P-25D, Ex.P-26, Ex.P-27, Ex.P-28, Ex.P-29 and Ex.P-30 respectively. It is, thus, stated that the plaintiff has paid a sum of Rs.36.00 lacs in excess of the balance consideration of Rs.16.00 lacs.
18. On a consideration of the pleadings and the evidence on record, the findings on the issues are as under:
ISSUES NO.1 and 2.
1. Whether an agreement to sell was entered into between the parties, as alleged? If so on what terms? O.P.P.
2. Whether the plaintiff was and is still ready and willing to perform his part of the contract? O.P.P.
19. The plaintiff has proved the Agreement to Sell dated 27.5.1986 as Ex.P1. In fact, it is not even denied by defendants no. 1 and 2 that such an agreement was executed but the contention sought to be advanced in the written statement is that the plaintiff failed to comply with the obligations under the agreement. The Agreement to Sell acknowledged the receipt of Rs.9.00 lacs by defendants no. 1 and 2 out of a total consideration of Rs.25.00 lacs and the balance amount of Rs.16.00 lacs had to be used to clear the mortgage from defendant no. 3. It is only in case of some amount remaining still in the hands of the plaintiff after settlement of the dues of the bank, that there was a requirement to pay to defendants no. 1 and 2. Defendants no. 1 and 2 had also agreed to pay any additional amount to be paid by the plaintiff to the bank.
20. Defendants no. 1 and 2 clearly recognised the rights of the plaintiff as would be apparent even from the letter dated 27.9.2001 (Ex.P6-A) whereby a copy of the letter was forwarded to the plaintiff. The said letter enclosed a draft of Rs.1.50 lacs as the initial amount towards the one time settlement. The draft was also drawn to the debit of the account of the plaintiff as proved by the certificate of Vysya Bank Limited which issued the pay order (Ex.P6-C). Not only that, ultimately when the amount was much larger, Rs.52.00 lacs, it is the plaintiff who has paid the amount to defendant no. 3. The aforesaid clearly establishes the execution of the Agreement to Sell and the terms set out hereinabove. There was never any unwillingness on the part of the plaintiff to proceed with the transaction. The plaintiff is already in possession and was willing to pay the amount settled by defendants no. 1 and 2 with defendant no. 3 bank. Ultimately, the plaintiff did pay the amount of one time settlement, albeit a much larger amount.
21. The issues are accordingly answered in favor of the plaintiff. ISSUE NO.3: Whether the plaintiff in pursuance to the agreement to sell has developed the suit property? If so, its effect? O.P.P.
22. The plaintiff has filed an affidavit showing various developments in the suit land. In any case, once the plaintiff is held as having complied with the obligations under the Agreement to Sell and his readiness and willingness to perform the obligations, any development of the land would only further add to the rights of the plaintiff.
23. The issue is answered in favor of the plaintiff. ISSUE NO.4: Whether the plaintiff is entitled to specific performance of the agreement to sell? If so on what terms? O.P.P.
24. The plaintiff has complied with the obligations under the Agreement to Sell. The plaintiff has paid over and above the balance amount of Rs.16.00 lacs inasmuch as the plaintiff had to pay Rs.52.00 lacs. The balance paid is much larger. There is, thus, no reason why the plaintiff has no right to specific performance of the Agreement to Sell dated 27.5.1986.
25. The question, however, remains as to what should be terms of the Agreement to Sell. This question arises on account of the fact that the plaintiff has paid a much larger sum towards the settlement of the dues of the bank than was payable as the balance consideration under the agreement to sell dated 27.5.1986 of Rs.16.00 lacs. However, it cannot also be lost sight of that during this period of time, the plaintiff was enjoying possession of the suit land, developed the suit land and the time period which has passed running into almost 20 years. The balance amount of Rs.16.00 lacs was enjoyed by the plaintiff and, thus, if a reasonable return is taken on the same (say 12% per annum), I am of the considered view that the amount paid by the plaintiff as one time settlement to defendant no. 3 should be treated as in full and final settlement of the monetary claims inter se the plaintiff and defendants no. 1 and 2. The result is that neither the plaintiff has to pay any further amount to defendants no. 1 and 2 nor defendants no. 1 and 2 are liable to reimburse the plaintiff for payment of the extra amount.
26. The issue is answered accordingly.
ISSUE NO.5: Whether the suit is bad for non-joinder of Shri B.R.Chopra? O.P.D.
27. Shri B.R.Chopra assigned his rights in favor of the plaintiff under the assignment of right to purchase the property dated 2.7.1986. A copy of this document was received by defendant nos.1 and 2, who acknowledged the same vide letter dated 2.7.1986 (Ex.P4) and clearly stated that the agreement would be treated only between the plaintiff and the said defendants. To the similar effect is a letter dated 7.7.1984 (Ex.P5).
28. In view of the aforesaid, there was no necessity of joining Shri B.R. Chopra as a party to the suit.
29. The issue is answered against the defendants. ISSUE NO.6: Whether the suit is plaintiff has failed to perform his part of the contract, as alleged in paras 3 and 5 of the preliminary objections? If so, its effect? O.P.D.
30. The onus on this issue is on the defendants No. 1 and 2 in view of the preliminary objections in paras 3 and 5 of the written statement. The allegation was of the plaintiff not complying with the obligations under the agreement and of a subsequent agreement dated 21.7.1987 nullifying the Agreement to Sell dated 27.5.1986. No such agreement has been filed on record at any stage and there is no reason to accept the bald plea in the written statement. Defendants led no evidence. Not only that, the documents on record show that as on 27.9.2001, defendants no. 1 and 2 were making payments to the bank procured from the plaintiff and asked the plaintiff to settle the account with the bank, which the plaintiff so did, though the amount paid was much higher than the balance amount under the Agreement to Sell. Thus, there is no merit in the preliminary objections and the issue is answered against the defendants.
RELIEF
31. A decree of specific performance is passed in favor of the plaintiff and against the defendants in respect of the Agreement to Sell dated 27.5.1986 in respect of the agricultural land measuring 17 bighas and 4 biswas comprised in Khasra Nos.1018 min(4-9), 1021 (3-1), 1026 (2-18), 1027 (0-8), 1034/2 (1-4), 1035 (1-0), 1039 (4-4) with farm house (centrally airconditioned with plant) swimming pool with cleaning machine, lake electric connections, cow sheds, tube well, other fittings and fixtures situate in Village Chattarpur, Mehrauli, New Delhi. Defendant no. 3 is directed to release the original title deeds to the plaintiff. No further payment inter se the plaintiff and defendants No. 1 and 2 is to be made. The plaintiff is also entitled to costs from defendants no. 1 and 2.
32. Decree sheet be drawn up accordingly.