The defendants 3 & 4 in O.S.No.84 of 2000 which is transferred and re-numbered as OS. No.25 of 2004, are the appellants. The suit was filed by the first respondent, seeking refund of advance of a sum of Rs.5,75,000/- paid by the first respondent on various dates, pursuant to an agreement of sale dated 13.12.1996.
2. According to the plaintiff, the defendants 1 & 2 had entered into an agreement of sale, agreeing to sell about 2 acres and 94 cents of land in Amony ChellapillaiKuttai Village, Omalur Taluk, Salem District, for a consideration of Rs.6,00,000/- per acre. Pursuant to the said agreement, it is contended that the plaintiff/first respondent paid a sum of Rs.2,00,000/- on the date of agreement. The agreement was to be performed by 30.09.1997. Subsequently, the defendants had received the following amounts on various dates: Rs.2,00,000/- on 14.12.1996; Rs.20,000/- on 08.03.1997; Rs.1,00,000/- on 03.04.1997; a sum of Rs.10,000/- on 29.09.1997; a sum of Rs.10,000/- on 30.09.1997 and Rs.35,000/- on 07.10.1997. Thus, in all, according to the plaintiff-company, they have paid a sum of Rs.5,75,000/- as advance under the agreement. Since the defendants did not come forward to execute the sale deed, but started digging the land in such manner that would reduce the value of the land, the plaintiff was constrained to file a suit in O.S.No.44 of 1998 for permanent injunction, restraining the defendants from carrying on digging work and committing the acts of waste in the property. It is also alleged that the defendants did not disclose an encumbrance by way of mortgage by deposit of title deeds with one Kandasamy, at the time of the agreement.
3. It is also contended that on 09.09.1997, the first defendant had executed a sale deed in favour of the second defendant, who is the wife of the first defendant. Therefore, the plaintiff issued a legal notice on 02.11.1999, seeking refund of the advance amount of Rs.5,75,000/- with interest at 12% per annum. It is claimed that since the defendants 1 & 2 did not refund the advance, the suit came to be filed on 09.12.1999. Thereafter, it appears that the defendants 1 & 2, alienated the property in favour of the defendants 3 & 4 and accordingly, they were impleaded as defendants in the suit. The defendants 1 & 2 remained ex-parte. The defendants 3 & 4 contested the suit, claiming that the agreement itself is false. The claim of the plaintiff that the first defendant has received a portion of the advance after the sale deed dated 09.09.1997, executed by the first defendant in favour of the second defendant, is false. The readiness and willingness of the plaintiff is also denied. It is also contended that the suit sale agreement has been created and it is not binding on the defendants 3 & 4. It is also contended that the defendants 3 & 4 are the bona fide purchasers of a value without notice of earlier agreement.
4. On the above pleadings, the learned Trial Judge framed the following issues:
(1)Whether the claim of the plaintiff that it has paid advance amount as per the suit sale agreement dated 13.12.1996 is true?
(2)Whether the plaintiff was ready and willing to perform his part of the contract under the sale agreement?
(3)Whether the claim of the plaintiff that the first defendant committed acts of waste in the property is true?
(4)Whether the plaintiff is entitled to the amounts claimed under the suit is true?
(5)Whether the plaintiff is entitled to a personnel decree as against the defendants 3 & 4 and a charge decree as against the property?
(6)To what other relief, the plaintiff is entitled to?
5. During Trial, the Managing Director of the plaintiff Manickavasakam was examined as P.W.1 and Exs.A1 to A21 were marked. On the side of the defendants 3 & 4, the 3rd defendant was examined as D.W.1 and Exs.B1 to B10 were marked.
6. The learned Trial Judge, upon consideration of the evidence, both oral and documentary, concluded that the suit agreement is true and genuine. It was also concluded that the plaintiff has established the fact that the lands referred to under Exs.A2 to A5 and Exs.A8 to A10 were in fact paid by the plaintiff to the first defendant. On the above conclusions, the learned Trial Judge decreed the suit as prayed for.
7. Aggrieved the defendants 3 & 4 are on appeal before the Court.
8. I have heard Mr.A.Jenasenan, learned counsel appearing for the appellants and D.Prabhu Muhund Arunkumar, learned counsel appearing for Mr.B.Rahumanohar for the the first respondent.
9. The learned counsel for the appellant would contend that the suit being one for refund of advance, as such, cannot be decreed as against the subsequent purchasers, namely defendants 3 & 4. He would also contend that the defendants 1 and 2 are bona fide purchasers for value without notice of the earlier agreement of sale entered into between the plaintiff and defendants 1 & 2. It is also the contention of the learned counsel for the appellants that the plaintiff being guilty of non-performance of contract, cannot sue for refund of advance.
10. Mr.A.Jinasenan, learned counsel appearing for the appellants would further contend that the agreement, Ex.A2 contains forfeiture clause to the effect that if the plaintiff does not pay the balance consideration by 30.09.1997, namely, the date fixed for performance under the contract, he would forfeit the advance paid by him.
11. Per contra, Mr.Prabhu Mukunth Arunkumar, learned counsel appearing for the respondents would submit that the defendants 3 & 4, who are the purchasers, cannot deny the validity of the agreement and the factum of payment of advance is evidenced by Exs.A2 to A5 and A8 to A10. He would contend that the plaintiff is entitled to a decree against the property in the hands of the defendants 3 & 4, by virtue of
Section 55(6) of the Transfer of Property Act. He would also contend that the question whether the buyer knew about the preexisting agreement, is not a relevant question that is to be addressed in a suit for refund of advance amount. According to him, it is a charge created by apportion of law. Therefore, the fact as to whether the subsequent purchaser had notice of the prior contract or not, is not very germane to the proceedings in the suit. The learned counsel would further contend that the question of readiness and willingness is also not a sine-quo-non for the plaintiff to seek refund of advance amount.
12. On the above pleadings, the following points arise for determination in this appeal.
(1)Whether the plaintiff has established the fact that it had part with the money as claimed by under Exs.A2 to A5, Ex.A8 to A10?
(2)Whether the plaintiff is entitled a charge over the properties which was the subject matter of the agreement?
(3)Whether the Trial Court was right in granting a decree in respect of the property in the hands of the defendants 3 & 4?
Point No.1
13. The sale agreement is dated 13.12.1996, which is entered into between the plaintiff and the first defendant. On the date of agreement, namely on 13.12.1996, the plaintiff has paid a sum of Rs.2,00,000/- as advance and the same is acknowledged under the agreement itself. The very next day i.e. on 14.12.1996, the plaintiff had paid a further sum of Rs.2,00,000/- which is evidenced by the endorsement Ex.A3 on 08.03.1997. The plaintiff has paid a further sum of Rs.20,000/- which is evidenced by Ex.A4. Ex.A5 which is another endorsement in Ex.A2 agreement itself, evidencing payment of further sum of Rs.1,00,000/- by the plaintiff to the first defendant. Apart from these payments, which are evidenced by the endorsements in the sale agreement Ex.A2 itself, the plaintiff has paid a sum of Rs.10,000/- on 29.09.1997 as evidenced by Ex.A8, another a sum of Rs.10,000/- on 30.09.1999 and a sum of Rs.35,000/- on 07.10.1997. All these are evidenced by three receipts namely, Exs.A8, Ex.A9 and Ex.A10. Ex.A9 contains the statement with the period for performance of the agreement, is extended up to 30.06.1998. It is not in dispute that the first defendant had sold the property, subject matter of the agreement, on 09.09.1997 to his wife Alamelu. The said sale deed has been registered on the same day. Therefore, it is evident that even after the sale of the property, the first defendant had received money from the plaintiff on 29.09.1997, 30.09.1997 and 17.10.1997. He has also chosen to extend the time for the performance of the contract on 30.09.1997 up to 30.06.1998. The defendants 1 & 2 had not sent any reply to the legal notice issued by the plaintiff on 02.11.1999, though, they have received the said notice. The defendants 1 & 2 have also not chosen to appear before the Trial Court. The defendants 3 & 4 were not competent to speak about the agreement or the receipt of money under the agreement, since they are purchasers pending suit on 23.02.2000. Therefore, the evidence of the plaintiff with reference to the agreement and the payments made on different dates as evidenced in Exs.A2 to Ex.A5 and Ex.A8 to Ex.A10 stands uncontroverted. Therefore, the plaintiff company has established the fact that it had parted with a sum of Rs.5,75,000/- on various dates as evidenced by documents as advance amount to the first defendant.
Point No 2 & 3:
14. The next question that arises for consideration is as to whether the plaintiff would be entitled to a decree as against the property i.e. in the hands of defendants 3 & 4. In this regard, it is worthwhile to extract
Section 55(6) of the Transfer of Property Act which reads as follows:
55(6) The buyer is entitled
(a) where the ownership of the property has passed to him, to the benefit of any improvement in, or increase in value of, the property, and to the rents and profits thereof;
(b) Unless he has improperly declined to accept delivery of the property, to a charge on the property, as against the seller and all persons claiming under him, to the extent of the seller's interest in the property, for the amount of any purchase-money properly paid by the buyer in anticipation of the delivery and for interest on such amount; and, when he properly declines to accept the delivery, also for the earnest(if any) and for the costs(if any) awarded to him of a suit to compel specific performance of the contract or to obtain a decree for its rescission.
An omission to make such disclosures as are mentioned in this section, paragraph (1), clause (a) and paragraph (5), clause (a) is fradulent.
15. Therefore, it is clear that the buyer is entitled to a charge over the property against the seller or persons claiming under him to the extent of the sellers interest in the property for the amount of any purchase money paid by the buyer in anticipation of the delivery and for interest on such amount and properly declined to accept delivery, also for the earnest (if any) and for costs awarded to him in a suit for specific performance of the contract or to obtain a decree as evident from a decision of this Court in Nagammal and others Vs. Ayyavu Thevar and others, reported in AIR 1973 MADRAS 353, wherein this Court held that
Section 55(6)(b) creates a charge on the vendors interest in the property for the advance paid. This Court has observed as follows:
Where under an agreement of sale the vendee pays part of the purchase price by way of advance but the contract goes off by reason of the defective title of the vendor, the vendee is entitled to a charge on the vendor's interest in the property agreed to be sold. Since the contract goes off without any default on the part of the vendee it cannot be said that the vendee has improperly declined to accept the delivery and that therefore the vendee is deprived of the charge. In the said judgment also, the contention of the learned counsel for the appellant was that they are bona fide purchaser without value. This Court, while dealing with the said contention, has observed as follows:
The charge on the seller's interest in the property agreed to be sold created under
Section 55(6) (b) in favour of a vendee can be enforced not only against the seller but against all persons claiming through him irrespective of notice of prior agreement of sale. Hence a charge can be enforced against the seller's interest in the property notwithstanding the subsequent sale of the property.
16. Mr.Prabhu Mukund Arunkumar also relied upon a judgment of the Hon'ble Supreme Court in Videocon Properties Ltd Vs. Dr.Bhalchandra Laboratories and others, reported in (2004) 3 SCC 711, wherein the Apex Court held that the statutory charge would extend and enure in respect of purchase or earnest money paid before title passes and the property has been delivered by the seller to the buyer and on the seller's interest in the property including interest of purchase money and costs awarded to the buyer. The Hon'ble Supreme Court has stated the law on the charge created under
Section 55(6)(b) of the Transfer of Property Act.
Section 55(6)(b) reads as follows:
55(6)(b): Unless he has improperly declined to accept delivery of the property, to a charge on the property, as against the seller and all persons claiming under him, to the extent of the seller's interest in the property, for the amount of any purchase-money properly paid by the buyer in anticipation of the delivery and for interest on such amount; and, when he properly declines to accept the delivery, also for the earnest(if any) and for the costs(if any) awarded to him of a suit to compel specific performance of the contract or to obtain a decree for its rescission.
17. In K.Shanmugam and Another V. C.Samiappan and Others, reported in (2013) 7 MLJ 670, this Court had an occasion to consider the scope of the charge created under
Section 55(6)(b) of the Transfer of Property Act. After referring to the judgments of the Supreme Court of India in Videocon Properties Ltd Vs. Dr.Bhalchandra Laboratories and others, reported in (2004) 3 SCC 711, and in Delhi Development Authority Vs. Skipper Construction Co.(P) Ltd and others, reported in (2000) 10 SCC 130, this Court had declared the buyer's statutory charge over the immovable property under
Section 55(6)(b) of the Transfer of Property Act while dealing with the question of limitation with regard to the suit filed for refund of advance. This Court held that the effect of creation of such statutory charge over the property will be such that the suit would be governed by
Article 62 of the Limitation Act, and the larger period of 12 years would be available for the plaintiff to seek return of advance.
18. In view of the categorical pronouncement of the Supreme Court and this Court, it is clear that a statutory charge is created under
Section 55(6)(b) of the Transfer of Property Act for the advance amount paid by the plaintiff as against the property in the hands of defendants 3 & 4. The question as to whether the plaintiff was ready and willing to perform its part of the contract, would really fade into insignificance in a suit of this nature, particularly, in the light of the evidence, available to the effect that the first defendant had created the sale deed in favour of his wife with a view to screen away the property and to wriggle out of his obligations under the agreement dated 13.12.2006. The sale deed dated 09.09.1997 executed by the first defendant in favour of the second defendant, his wife, itself would show that the first defendant was not ready to honour his commitment under the agreement. It is also found from Exs.A9 that the first defendant had extended the time for performance of the contract upto 30th June, 1998, even after having sold the property. Therefore, if cannot be said that the plaintiff was not ready and willing to perform its part of the contract and therefore, the forfeiture clause in the agreement would not operate so as to disentitle the plaintiff to the relief of refund of advance amount. The forfeiture clause which is penal in nature, cannot be invoked to prevent the plaintiff from seeking refund of amounts and that would amount to unjust enrichment on the part of the first defendant. Mr.Jinasenan, learned counsel appearing for the appellants would invite the attention to the judgment of the Supreme Court in Padmakumari and others Vs. Dasayyan and others reported in 2015 (6) CTC 545 and A.K.Lakshmipathy and others v. Rai Saheb Pannalal H.Lahoti Charitable Trust and others reported in 2010 (1) SCC 287 and contend that the plaintiff in suit for specific performance must prove that he has been ready and willing to perform his part of the contract and in the absence of such proof, he would not be entitled to the relief specific performance. There is no dispute over the proposition of law laid down in the above decisions. In the case on hand, we are dealing with a suit seeking refund of advance amount and not a suit for specific performance. As I have already stated, the first defendant who has executed the agreement has exihibited his disinclination to honour the commitments under the agreement, by creating encumbrance over the property and also by committing acts of waste. Therefore, the proposition of law that the plaintiff must prove that he has always been ready and willing to perform his part of the contract, cannot be applied in the suit of this nature so as to deny the decree for refund of advance. Hence, I do not see any reason to interfere in the conclusions of the Trial Court.
20. In the result, the appeal is dismissed, confirming the judgment and decree of the Trial Court. It is needless to say that the defendants 3 & 4/appellants would be entitled to proceed against the first defendant for recovery of whatever amounts that they are compelled to pay under the decree in the present suit by virtue of the charge created under
Section 55(6)(b) of the Transfer of Property Act, as the nondisclosure is deemed to be fraudulent. However, in the circumstances there will be no order as to costs. Consequently, the connected miscellaneous petition is closed.
18.09.2017 Index: Yes Internet:Yes speaking order jv/kak To
1. The Additional District Judge, Fast Track Court II, Salem.
2. The Section Officer, V.R.Section.
High Court, Madras.
R.SUBRAMANIAN.,J.
jv/kak A.S.No.729 of 2005 and CMP No.11622 of 2005 18.09.2017