IN THE HIGH COURT OF KARNATAKA AT BENGALURU ON THE 18TH DAY OF FEBRUARY, 2019 BEFORE THE HON'BLE MR. JUSTICE RAVI MALIMATH AND THE HON'BLE MR. JUSTICE B. M. SHYAM PRASAD REGULAR FIRST APPEAL NO.1788 OF 2014 BETWEEN:
SRI.S.RAJANDRA KUMAR SON OF A. SAMPATHRAJ JAIN HINDU, AGED ABOUT 45 YEARS RESIDING AT NO.54, 4TH CROSS 9TH MAIN, HANUMANTHANAGAR BENGALURU - 560 019.
... APPELLANT (BY SRI. S. GANGADHARA AITHAL, ADVOCATE) AND:
1. SMT. H.K.NAGAMMA WIFE OF H.K.CHOWDAIAH HINDU, AGED ABOUT 48 YEARS RESIDING AT NO.42/2, GROUND FLOOR 8TH CROSS, AZADNAGAR CHAMARAJAPET BENGALURU -560 018.
2. SRI.H.K.CHOWDAIAH HUSBAND OF H.K.NAGAMMA HINDU, AGED ABOUT 56 YEARS RESIDING AT NO.42/2, GROUND FLOOR 8TH CROSS, AZADNAGAR CHAMARAJAPET BENGALURU - 560 018.
... RESPONDENTS (VIDE ORDER DATED 02.01.2019 SERVICE OF NOTICE TO RESPONDENT NOS.1 & 2 IS HELD SUFFICIENT) THIS REGULAR FIRST APPEAL IS FILED UNDER SECTION 96 OF CODE OF CIVIL PROCEDURE AGAINST THE JUDGMENT AND DECREE DATED: 15.11.2014 PASSED IN O.S.NO.4315 OF 2009 ON THE FILE OF THE XVII-ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, BENGALURU, DECREEING THE SUIT FOR SPECIFIC PERFORMANCE.
THIS REGULAR FIRST APPEAL HAVING BEEN HEARD AND RESERVED ON 23.01.2019 AND COMING ON FOR PRONOUNCEMENT OF JUDGMENT THIS DAY, B.M.SHYAM PRASAD J., DELIVERED THE FOLLOWING:
JUDGMENT This appeal is filed by the plaintiff in O.S.No.4315 of 2009 on the file of the XVII Additional City Civil and Sessions Judge, Bengaluru (for short, ‘Trial Court’). The plaintiff’s suit for specific performance of the agreement dated 16.6.2006 is decreed by the learned Civil Court by the impugned judgment dated 15.11.2014. The Trial Court while directing the respondents to execute the sale deed for the subject property, directed the appellant to deposit the balance consideration amount of `27,75,000/- along with simple interest at the rate of 10% per annum from the date of the suit till the date of deposit within a period of one month from the date of judgment till deposit. The appellant – plaintiff is aggrieved by the impugned judgment only insofar as the rate of interest at 10% per annum.
2. This Court on 15.12.2014 stayed the operation of the impugned judgment and award only insofar as it relates to interest at the rate of 10% per annum. For convenience, the parties are referred to as they are arrayed in the suit before the Trial Court.
3. The plaintiff filed O.S.No.4315 of 2009 for specific performance of the agreement dated 16.06.2006 asserting that the defendants, who are husband and wife, had agreed to transfer the subject property in favour of the plaintiff for a total sale consideration of `35,00,000/-. The plaintiff, in part performance of his obligation under the aforesaid sale agreement, paid a total sum of `7,25,000/- to the defendants. Nevertheless, the defendants had refused to receive the balance sale consideration and execute the sale deed.
4. The defendants entered appearance and resisted the plaint by filing written statement. The defendants specifically contended that they had agreed to transfer the subject property under the agreement dated 16.06.2006 to meet their financial requirements. The subject property was mortgaged with M/s. Canara Bank, which initiated proceedings for sale of the property during the currency of the agreement dated 16.6.2006 as the defendants had defaulted in repayment of the loan. Further, because the plaintiff committed breach of the terms of the agreement dated 16.06.2006 in failing to tender the balance sale consideration within the timeline agreed, the defendants negotiated with the tenants in occupation with different tenements in the suit schedule property. The leases in favour of such tenements were renewed receiving additional advances that were applied to discharge the loan outstanding with the M/s. Canara Bank. The tenants, in terms of the agreement with the defendants, hold custody of the original documents deposited with M/s. Canara bank.
5. The plaintiff examined himself as PW.1 and marked exhibits P.1, P.17 to P.22, which included agreement to sell dated 16.06.2006, legal notices and plaintiff’s Income Tax Returns. However, the defendants neither cross- examined the plaintiff nor lead any evidence. The learned Civil Court decreed the suit as aforesaid because the plaintiff’s evidence had remained un-controverted, and the defendants, who had taken specific defense of breach by the plaintiff, had not tendered any evidence to establish such breach. As regards the interest on the balance sale consideration of Rs.27,75,000/-, the learned Civil Court directed the plaintiff to deposit the balance sale consideration with simple interest at rate of 10% per annum concluding that as the market value of the properties in and around Bengaluru were going up, the direction to pay simple interest at the rate of 10% would be justified.
6. Heard Sri S. Gangadhara Aithal, the learned counsel for the appellant. The respondents have remained absent. This Court permitted the appellant to cause service of notice of the appeal to the respondents by way of paper publication. The notices were published on 2.12.2018, but none entered appearance on behalf of the respondents. They remained unrepresented even as on 02.01.2019 when the appeal was listed before this Court. Therefore, this Court vide order dated 2.01.2019 held the service of notice on the respondents as sufficient.
7. The learned counsel for the appellant impugning the rate of interest at 10% per annum contended that the respondents had not pleaded for grant of any interest, and the plaintiff had suffered loss inasmuch as he was not able to secure title and possession of the subject property despite being ready and willing to complete the transaction. It is undisputed that the defendants have mobilized `13,00,000/- from the tenants, who are in possession of the different tenements in the subject property. These tenants are holding original documents of the subject property. Therefore, the plaintiff in addition to depositing the balance sale consideration of `27,75,000/- will have to pay an additional sum of `.13,00,000/- to the tenants to recover possession and custody of the original documents. As such, direction to pay simple interest at the rate of 10% per annum is unjustified and perverse.
8. The plaintiff has agreed to purchase the subject property for a total sale consideration of `.35,00,000/-, and he has paid, as of the date of the suit, a sum of `.7,25,000/-. Therefore, the plaintiff will have to pay the balance sale consideration of Rs.27,75,000/-. It is undisputed that the suit schedule property comprise of different tenements that are occupied by multiple tenants. The defendants’ specific defense is that to avert sale of the subject property at the instance of M/s.Canara Bank, they mobilized a further sum of `13,00,000/- from the tenants. If this remains indubitable, the plaintiff will have to pay an additional sum of `13,00,000/-. This additional obligation will have to be considered when calling upon the plaintiff to pay simple interest to offset any loss to the defendants because of the plausible value of the subject property during the pendency of the suit. The Trial Court had to consider this facet of the case while directing the plaintiff to pay the simple interest at the rate of 10% per annum. This court is of the considered opinion that it would be more equitable if the plaintiff is called upon to pay simple interest at the rate of 6% per annum, which is the rate of interest normally awarded by the courts.
9. Therefore, the impugned judgment and decree requires to be modified and the plaintiff be called upon to pay simple interest at rate of 6% per annum from the date of the suit till the date of deposit of the balance sale consideration of `27,75,000/-, and if the plaintiff has already deposited the balance sale consideration of `27,75,000/- (as the interim order by this Court is only as regards the direction to pay interest at the rate of 10% per annum) from the date of the suit till the date of actual deposit. As such, the following order:
a) The appeal is allowed in part.
b) The impugned judgment and decree dated 15.11.2014 passed by the XVII Additional City Civil and Sessions Judge, Bengaluru in O.S.No.4315 of 2009 are modified insofar as the direction to the plaintiff to pay simple interest at the rate of 10% per annum.
c) The plaintiff is directed to pay simple interest at the rate of 6% per annum on the balance sale consideration of `27,75,000/- from the date of suit till the date of actual deposit of the said sum of `27,75,000/-.
d) No costs.
SD/- SD/-
JUDGE JUDGE SA