IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 23RD DAY OF AUGUST 2019 BEFORE THE HON’BLE Dr. JUSTICE H.B.PRABHAKARA SASTRY R.F.A.No.1818 OF 2011 BETWEEN:
Sri P.Satish Pai, S/o Late P.Narasimha Pai, Major, R/at.No.9, “Ashwin”, 8th Main, R.M.V.Extension, Bengaluru – 560 080. .. Appellant ( By Sri H.R.Ananthakrishna Murthy, Advocate ) AND:
1. Sri Ashwatha Narayana Gowda, S/o late M.Narayanappa, Hindu, Aged about 45 years, 2. Sri Chandrashekar S/o late M.Narayanappa, Hindu, Aged about 40 years, 3. Sri Seetharam S/o late M.Narayanappa, Hindu, Aged about 37 years, 4. Kum.Sowbhagya, D/o late M.Narayanappa, Hindu, Aged about 35 years, 5. Smt.Narasamma, W/o late M.Narayanappa, Hindu, Aged about 79 years, 6. Smt.Puttamma, W/o late M.Narayanappa, Hindu, Aged about 75 years, All are residing at Allasandra, Village, GKVK Post, Yelahanka Hobli, Bengaluru North Taluk, Bengaluru- 560 065. .. Respondents ( By Sri M.S.Rajendra Prasad, Senior Advocate For Sri D.Gangadhara, Advocate for R-2 to R-6, Respondent No.1 – served) This Regular First Appeal is filed under Section 96 of CPC against the judgment and decree dated 2.8.2011, passed in O.S.No.17427/2005, on the file of the IV Addl.City Civil & Sessions Judge, Mayo Hall Unit, Bengaluru City, dismissing the suit for recovery of money.
This Regular First Appeal having been heard and reserved for judgment on 6.8.2019, coming on for pronouncement this day, the Court delivered the following:
JUDGMENT This is the plaintiff’s appeal. The suit of the present appellant filed against the present respondents arraigning them as defendants in the Court of learned IV Addl.City Civil & Sessions Judge, at Mayohall Unit, Bengaluru City (CCH-21), (hereinafter for brevity referred to as `trial Court’), in O.S.No.17427/2005, for recovery of money of a sum of `27 lakhs, with future interest at 2% per month, came to be dismissed by the judgment and decree dated 02.08.2011. It is against the said judgment and decree, the plaintiff has preferred this appeal.
2. The summary of the case of the plaintiff is that the defendants are the owners of the land bearing Survey No.105, measuring 7 acres 14 guntas and Survey No.108, measuring 2 acres 5 guntas, both situated at Allalasandra Village, Yelahanka Hobli, Bengaluru South Taluk, Bengaluru, which are the suit schedule properties. The father of defendant Nos.1 to 4 by name M.Narayanappa, who is also the husband of defendant Nos.5 and 6, had negotiated for the sale of the said property with the University of Agricultural Science Employees House Building Co-operative Society Limited, Hebbal, Bengaluru, (hereinafter for brevity referred to as `Society’), without the consent of the defendants and had executed a Sale Deed dated 16.1.1987 in favour of the Society. After the death of said Narayanappa on 22.7.1987, the defendants filed a suit in O.S.No.423/1993, against the Society and they withdrew the said suit later and instituted another suit in O.S.No.4903/1993, against the Society and another person for partition in respect of suit schedule property. Defendants had also instituted one more suit in O.S.No.7632/1995, in respect of 7 acres 14 guntas of land in Survey No.105 and in respect of 2 acres 5 guntas in Survey No.108.
The defendants offered to sell their 1/10th share in the suit schedule property in favour of the plaintiff and the plaintiff agreed to purchase the 1/10th share of the defendants in the suit schedule property for a consideration of `23,60,000/-. Plaintiff paid a total sum of `90,000/- as an advance amount, which included `60,000/- through cheque and remaining `30,000/- by cash, to the defendants, who encashed the cheque for `60,000/- issued to them. In that regard, an Agreement was executed by the defendants in favour of the plaintiff on 18.11.1995 and other nine separate Agreements were also executed by the defendants in respect of 1/10th share of the defendants in favour of the plaintiff. Under each Agreement, the plaintiff had paid a sum of `30,000/- in cash and `60,000/- through cheque, in total amounting to `9,00,000/- towards ten Agreements, as an advance amount to the defendants towards purchase of suit schedule property. However, the civil disputes in respect of suit schedule property were not resolved by the defendants and they were not concluded. As such, left with no other remedy, the plaintiff had to claim the advance amount of `9,00,000/- along with interest at the rate of 2% per month. Therefore, by instituting a common suit with respect to all the ten agreements, the plaintiff claimed a sum of `9,00,000/- as the principle amount and `18,00,000/- as the interest accrued thereupon, thus, in total a sum of `27,00,000/- with future interest at 2% per month on the said amount from the defendants.
3. In response to the summons served upon them, the defendants appeared through their counsel and filed their written statement.
The defendant No.1 in his written statement contended that the agreements entered into between the plaintiff and the defendants have been cancelled and the defendants have returned `6 lakhs to the plaintiff in full settlement. Therefore, there is no cause of action for the plaintiff to institute the suit. The defendant No.1 also contended that suit was barred by limitation as the cause of action is dated 18.11.1995.
Defendant Nos.2 to 6 in their written statement also contended that the agreements for sale have been cancelled and the defendants have repaid the advance amount to the plaintiff. The agreements entered into between the parties were illegal and not enforceable in law, as such, the plaintiff is not entitled for the relief claimed in the suit. They also stated that the suit was barred by limitation since the cause of action is alleged to have arisen on 18.11.1995.
4. Based on the pleadings of the parties, the trial Court framed the following issues :
1. Does the plaintiff prove that the defendants are due to him in a total sum of Rs.27,00,000/- which is inclusive of principal and the interest as stated in the plaint?
2. Do the defendants prove that they made payments to the plaintiff and the contract with him was terminated?
3. Do the defendants prove that the suit is barred by limitation?
4. Is the plaintiff entitled for the relief claimed by him? If so what order or decree?
In order to prove his case, the plaintiff got himself examined as PW-1 and got marked documents at Exs.P-1 to P-10. On behalf of the defendants, defendant No.2 – N.Chandrashekar was examined as DW-1 and documents from Exs.D-1 to D-8 were marked.
After hearing both side, the trial Court by its judgment and decree dated 02.08.2011, though answered issue No.1 holding that the plaintiff has proved that he was entitled for `3 lakhs, but, simultaneously answered issue Nos.2 and 3 in the affirmative, resulting in the dismissal of the suit. It is against the said judgment and decree, the plaintiff has preferred this appeal.
5. Lower Court records were called for and the same are placed before this Court.
6. Heard the arguments of the learned counsel from both side and perused the materials placed before this Court, including the memorandum of appeal and the impugned judgment.
7. For the sake of convenience, the parties would be referred to as per their ranks before the trial Court.
8. The points that arise for my consideration are :
1. Whether the plaintiff has proved that defendants are liable to pay him a total sum of `27 lakhs with further interest as prayed?
2. Whether the suit is barred by limitation?
3. Whether the judgment and decree challenged in this appeal warrants any interference at the hands of this Court?
9. PW-1 in his examination-in-chief in the form of affidavit evidence, has reiterated the contentions taken up by him in his plaint. He has stated that, with respect to the purchase of suit schedule properties, he entered into ten different agreements with the defendants, all dated 18.11.1995, for a total consideration of a sum of `23,60,000/-, in which, `90,000/- as advance was paid under each agreement. Thus, in total, the advance amount paid by him to the defendants was a sum of `9 lakhs. At that time, he was not aware of pendency of various litigations with respect to suit schedule properties. Referring to Clause-3 and Clause-15 of the said agreement, the witness has stated that, with respect to the suit schedule property, a suit in O.S.No.7632/1995 was pending, which has not reached its finality. As such, he had no remedy, but, to institute a suit for recovery of money with interest.
In his cross-examination, the defendants have not denied or disputed the execution of Agreements at Exs.P-1 to P-10 in favor of the plaintiff. However, they contended that the cash amount of `30,000/- under each agreement has not been paid to them. But, the said suggestion was not admitted as true by PW-1. The witness has also stated that he has received a sum of `1,00,000/- + `70,000/- + `1,50,000/- + `1,50,000/-
towards interest and future interest. He also stated that he had received `1,30,000/- on 3.5.1996 towards future interest. He further stated that he had not terminated the Agreements at Exs.P-1 to P-10. However, he denied that the receipt of `6 lakhs by him as aforesaid was towards full settlement of Agreements at Exs.P-1 to P-10.
The witness has further stated in his cross- examination that, since it was taking about eight to ten years to conclude suits in O.S.No.4903/2003 and O.S.No.7632/1995, he was not interested in enforcing the Agreements at Exs.P-1 to P-10. He stated that time was not fixed in the agreements at Exs.P-1 to P-10.
10. DW-1 in his affidavit evidence in the form of examination-in-chief has stated that at the request of plaintiff for refund of earnest money, a sum of `6 lakhs which was paid by him through cash was refunded to him. DW-1 also stated that a sum of `3 lakhs which is agitated as having been paid in cash by the plaintiff had never been paid to the defendants.
In his cross-examination, a suggestion made to him that amount mentioned in Exs.P-1 to P-10 were paid by the plaintiff was not admitted as true by the witness. However, he stated that plaintiff had paid only a sum of `6 lakhs as an advance amount. He denied a suggestion that payment of `6 lakhs by the defendants to the plaintiff was only towards the interest. Except this, nothing more could be elicited in the cross- examination of DW-1.
11. In the light of the above, it was the argument of the learned counsel for the appellant/plaintiff that admission by the defendants in their written statement, as well in the cross-examination of DW-1 that they have received `6 lakhs from the plaintiff itself proves the Agreement of Sale at Exs.P-1 to P-10. He further submitted that the agreements were not terminated by the plaintiff and the pendency of the Original Suit, about which mentioning is made in the agreement, shows that those agreements are still subsisting and not terminated.
12. With respect to the limitation, learned counsel submitted that all the Agreements at Exs.P-1 to P-10 shows that time was not the essence of the agreement. First time the defendants came up with the termination in their reply to the legal notice at Ex.D-2 was on 12.12.2002. The suit was filed on 7.10.2005, which is within three years, therefore, within the period of limitation. However, the trial Court held that suit is barred by limitation, which is an erroneous finding. Stating that there cannot be any unilateral termination of the agreement in the circumstances of case, he relied upon some of the judgments of Hon’ble Apex Court and some other High Courts, which would be referred to at the relevant places here afterwards.
13. Learned Senior Counsel appearing for the respondents in his brief argument submitted that termination of contract was by bilateral contract of the parties. The admission by PW-1 in his cross- examination that he has received `6 lakhs in 1996 in full settlement shows that it was a bilateral termination of the agreements. He further submitted that the further statement made by PW-1 in his cross-examination that he is not interested in enforcing the Agreements at Exs.P-1 to P-10 also shows that there is termination of agreements which is bilateral. With more emphasis, he submitted that, since the trial Court has answered all other issues in favour of the plaintiff, except issue on limitation, this Court, in this appeal, need not re-appreciate those other issues, except the issue of limitation.
14. With respect to the limitation, learned Senior Counsel submitted that even according to the plaintiff, the cause of action has arisen to him on 18.11.1995, which was the date of agreements. Admittedly, the suit amount is refunded to him in 1996. Since the suit is filed in the year 2005, the same is barred by limitation.
15. The defendants have not denied or disputed of they having entered into an Agreement of Sale of their 1/10th share in the suit schedule properties with the plaintiff for a total consideration of `23,60,000/- and that with respect to the same about they having entered into agreements with the plaintiff on 18.11.1995 as per Exs.P-1 to P-10. Though the defendants have also admitted that under each of those agreements, they received an advance amount of `60,000/-, however, they denied of having received another sum of `30,000/- in cash under those agreements. Accordingly, the defendants denied that in total they have received an advance amount of `9 lakhs under those ten agreements, but, admitted of having received a sum of `6 lakhs. It is the contention of the defendants that though the agreements mention that `30,000/- under each of them have been given in the form of cash, but, in fact, by practicing fraud, their signatures were obtained by the plaintiff to the agreements, however, the said cash was not given to them. Except taking such a stand in their written statement and also reiterating the same in their evidence through DW-1, the defendants have not produced any other material to substantiate their contention.
On the other hand, their own admitted and executed documents at Exs.P-1 to P-10, which are ten different agreements for sale of the portions of the suit schedule properties, shows that apart from receiving a portion of advance amount to a sum of `60,000/- through cheques, the defendants also have acknowledged the receipt of the remaining portion of the advance amount at `30,000/- under each of the agreements in the form of cash. The evidence of PW-1 also corroborates to the same extent. Therefore, it is proved that defendants have in total received a sum of `9 lakhs from the plaintiff as an advance amount under Agreements of Sale at Exs.P-1 to P-10.
16. According to the plaintiff, the time for the performance of the contract was not the essence under those contracts under Exs.P-1 to P-10 and that the alleged termination of contract was unilateral by the defendants which was not binding upon the plaintiff. In that regard, learned counsel for the appellant also relied upon the judgment of Hon’ble Apex Court in State of Kerala –vs- The Cochin Chemical Refineries Ltd., reported in AIR 1968 SC 1361, wherein at Paragraph-6 of its judgment, the Hon’ble Apex Court was pleased to observe that, breach of contract by one party does not automatically terminate the obligation under the contract. The injured party has the option either to treat the contract as still in existence, or to regard himself as discharged. If he accepts the discharge of the contract by the other party, the contract is at an end. If he does not accept the discharge, he may insist on performance.
Relying upon the said observation made by the Hon’ble Apex Court, learned counsel for the appellant contended that the unilateral termination of the contract by the defendants does not bind the plaintiff.
17. Per contra, learned Senior Counsel appearing for the defendants submitted that PW-1 in his cross-examination has stated that he had received `6 lakhs in 1996 as full settlement. Therefore, there is bilateral termination of the agreements. He also submitted that the very same witness has further stated in his cross-examination that he was not interested in enforcing the Agreements at Exs.P-1 to P-10. This also shows that there was bilateral termination of the agreements.
18. A perusal of the agreements at Exs.P-1 to P-10 shows that no specific time fixing any time was agreed to between the parties for the performance of the contract. However, after referring to certain litigations said to have been pending with respect to the suit schedule properties, the parties have agreed that after the settlement of those cases, which are pending in the Civil Court and/or within one month from the Court passing of Final Decree in favour of the vendors and/or on settlement with the Agricultural University Employees House Building Co-operative Society Ltd., Hebbal, Bengaluru, whichever is latter. The remaining agreed balance sale consideration has to be paid by the purchaser to the vendors at the time of registration of the Sale Deed in favour of the purchaser.
Further, in Clause-6 of the Agreement, it has been specifically agreed between the parties that the time was not the essence of the contract/Sale Agreement and the said time shall stand extended till all the pending litigations over the schedule property are finally settled by the Court process or by private negotiations, settlement whichever is latter. Therefore, admittedly, the time was not the essence of the contract. However, by that itself, it cannot be inferred that there cannot be any termination of the contract.
19. According to the plaintiff, there is unilateral termination of the contract in view of the fact that the defendants in their reply notice at Ex.D-2 have made their intention clear not to continue with the Agreements. Thus, it was the defendants who unilaterally terminated the contract.
A perusal of the said document at Ex.D-2 go to show that it is a reply to the legal notices sent by the plaintiff dated 11.11.2002 and 28.11.2002 to them. In the said reply to the notice, the defendants have contended that due to the non-implementation of the promise made by the plaintiff under the Agreements dated 18.11.1995, the Agreements were cancelled and thereafter, the amount paid by the plaintiff through cheque under the agreements was returned to the plaintiff through cheque, which amount of `6 lakhs was encahsed by the plaintiff. According to the defendants, that repayment of `6 lakhs was made in the months of April and May 1996 through four different cheques for different amounts, which in total amounts to `6 lakhs. The plaintiff has admitted the receipt and encashment of those amounts paid to him through cheques, however, PW-1 in his evidence has called them as interest payable to him. The defendants denied that the same was the amount towards alleged interest, but, contended that it was full and final settlement towards the cancelled Agreements.
20. It is to be noticed that no where the plaintiff in his plaint has revealed about he receiving a sum of `6 lakhs in total from the defendants. Thus, he has suppressed the said material fact of he having received a sum of `6 lakhs from the defendants. Even according to the plaintiff, the same was the amount towards alleged interest, but, it was a material fact which the plaintiff was expected to disclose in his plaint, which he did not. Thus, it is for the first time, the plaintiff after acknowledging the receipt of the said amount of `6 lakhs from the defendants, has come up with a contention that the said amount was towards interest.
21. The only Clause in the Agreements at Exs.P-1 to P-10 which speaks about purchaser’s entitlement to claim interest on the advance amount paid by him to the purchaser is Clause-3 in the Agreement, which reads as below :
“ Clause -3 : It is specifically agreed between both the parties that the sum of Rs.90,000.00 (Rupees Ninety thousand only) given hereinabove, as advance towards the Schedule Property shall be refunded by the VENDORS to the PURCHASER with an interest calculated at 2% per month in the event of the PURCHASER is unable to bring about amicable settlement with the Agricultural University Employees House Building Co-operative Society Limited, and in the event of the Final Decree in the Court goes against the VENDORS in respect of the Schedule Property.”
The plaintiff no where has pleaded or led any evidence to the effect that, as a purchaser, he was unable to bring about amicable settlement with the Agricultural University Employees House Building Co-operative Society Limited or that final decree has already been passed in the Court which has gone against the vendors in respect of the suit schedule properties. Therefore, the right to claim interest by the in the circumstances of the case, has arisen. Therefore, when there is no agreement for the payment of the interest barring the above circumstances as shown in Clause-3 of the Agreement, the plaintiff cannot contend that the amount of `6 lakhs received by him, as observed above, was towards the interest on the advance amount paid by him.
22. Apart from the above, viewing the same facts and circumstances of the case from one more angle would also go to show that, even as per the Agreements at Exs.P-1 to P-10, the alleged payment of the interest arise only when the parties decide that agreement cannot be continued and the same when treated as terminated. This view is clear in Clause-3 of Exs.P-1 to P-10 itself. As such also, since the plaintiff has acknowledged the receipt of the said amount from the defendants, it means that, he has accepted and admitted the termination of the contract. However, by this possible interpretation, it cannot be inferred that the amount received by the plaintiff was towards interest only.
23. As observed above, since he was not entitled for interest barring the contingency shown in Clause-3 of the Agreement, the amount received by him, which is a sum of `6 lakhs, cannot be considered as the payment made towards interest. In such an event, when in the year 1996 itself, the appellant/plaintiff has accepted the refund of a sum of `6 lakhs from the defendants, the said amount is nothing, but, the refund of two-third’s of the principle amount received by the defendants under Exs.P-1 to P-10. Thus, remaining was only a sum of `3 lakhs as the balance advance amount with them.
Therefore, the termination of contract has proved to be not a unilateral termination by the defendants/vendors alone, but, it was a bilateral termination. This fact is further clear that, since the plaintiff, as PW-1, in his cross-examination, apart from stating that he has received `6 lakhs in 1996 in full settlement, has also stated that he was not interested in enforcing the Agreements at Exs.P-1 to P-10. Even though the said statement made by PW-1 that he received a sum of `6 lakhs in 1996 in full settlement cannot be isolated and is required to be read along with his other statement made in his evidence, still, the fact remains that, his disinterest in enforcing the agreements and the act of accepting refund of two-third’s principle amount paid by him, which is a sum of `6 lakhs, from the defendants, clearly establishes that termination of contract was a bilateral act of both the parties.
24. The second point which the learned counsel for the appellant canvassed in his argument is on the point of trial Court holding the suit as barred by limitation and thus, dismissing the suit of the plaintiff even after holding that the plaintiff was entitled for a sum of `3 lakhs.
It was the argument of learned counsel for the appellant that when the Agreements at Exs.P-1 to P-10 though clearly mentions that time was not the essence of the contract and the performance of the contract was depending upon several contingencies which had not yet happened, the Article 47 of the Limitation Act was applicable, as such, the period of Limitation was to be reckoned from the date of reply notice at Ex.D-2, which is dated 12.12.2002. In such an event, suit which is filed on 7.10.2005 is within the limitation of three years from the said date.
In his support, he relied upon two judgments, among which, the first judgment is in the case of Bhaskar S. Kattemar –vs- P.E.Hameed, reported in 2007 A I H C 2080, wherein with respect to a suit for advance purchase price and damages, a Division Bench of this Court in Paragraph-18 of its judgment was pleased to observe as below :
“ 18. A combined reading of clauses 7 and 8 would show that Clause 7 would provide for an option of seeking extension of time by one year for possession or for seeking specific performance, and clause 8 would provide that in the event of seller being unable to give vacant possession, the buyer may at his option treat the agreement as having been repudiated and cancelled. In such an event, the seller shall be bound to refund Rs. 2 lakhs. Therefore, what is provided for in clauses 7 and 8 is only an option to the seller and these two clauses cannot come to the aid of the defendant for the purpose of denying refund of the said amount. In fact, the only right available to the defendant is with regard to forfeiture and such forfeiture is not pleaded in the case on hand. Learned trial Judge after noticing all these aspects of the matter has come to a right conclusion, in our view, that Articles 47 of the Limitation Act would be applicable in the case on hand.”
The second judgment relied upon by the learned counsel for the appellant is the judgment in the case of M/s.Boards and Boards Pvt. Ltd., -vs- M/s.Himalaya Paper (Machinery) Pvt. Ltd., reported in AIR 2007 Rajasthan 1, wherein the Jaipur Bench of Rajasthan High Court, with respect to a suit for recovery involving a contract for supply of machinery entered into on 2.9.1975 and wherein the defendant after receiving the advance from the plaintiff had failed to fulfill the contract and consideration was subsisting till it failed on 8.1.1979 when a notice was served by the plaintiff, the High Court was pleased to observe that the article which would be attracted for filing suit for recovery is Article 47 and not Articles 24 or 13.
Relying on these two judgments, learned counsel for the appellant submitted that in view of the fact that reply to the legal notice sent by the defendants, which is at Ex.D-2 is dated 12.12.2002, the period of limitation of three years commences only from 12.12.2002 under Article 47 of Schedule to the Limitation Act.
25. The said argument of the learned counsel for the appellant is not acceptable for the reason that, as already observed above, the plaintiff has admitted and acknowledged the receipt of `6 lakhs from the defendants in four installments spreading between 23.4.1996 and 3.5.1996. Admittedly all these four payments were through cheques which have been encashed by the plaintiff. Further, as observed above, the said receipt of `6 lakhs by the plaintiff was proved to be a receipt of two-third’s of the advance amount paid by him under the Agreements at Exs.P-1 to P-10. As such, at the latest, on 3.5.1996, when he received the last installment of `1,30,000/- from the defendants towards the refund of the advance amount, which amount was a part of the refund amount of `6 lakhs, the plaintiff had accepted and admitted the termination of the contract. Thus, the cause of action has accrued to the plaintiff latest on 3.5.1996 when he received the last installment and the refund of the advance amount, which according to the defendants, was paid to him as a last installment in the full settlement of the claim of the plaintiff.
Therefore, if he was interested in getting back his alleged balance amount of `3 lakhs from the defendants, he should not have caused any delay in instituting the suit and should have filed the suit within three years from the said date. However, admittedly the suit on hand has been instituted only on 7.10.2005 i.e., with a delay of more than five and half years. Therefore, the judgments relied upon by the appellant, which are cited above, would not enure to his benefit. On the other hand, the suit of the plaintiff has stood barred by limitation.
26. Since the trial Court has appreciated the evidence and arrived at the correct finding on the issues framed by it, though with different reasoning, I do not find any error in the said finding given by the trial Court which has resulted in dismissal of the suit. As such, there is no scope for interference in the judgment and decree challenged in this appeal.
27. Accordingly, I proceed to pass the following order:
ORDER The Appeal is dismissed. The judgment and decree dated 02.08.2011, passed by the learned IV Addl.City Civil & Sessions Judge, at Mayohall Unit, Bengaluru City (CCH-21), in O.S.No.17427/2005, is confirmed.
The Registry is directed to transmit a copy of this judgment along with lower Court records to the lower Court without delay.
Sd/- JUDGE bk/