2024 (2) TMI 1542 - HC - Indian Laws

Buyer gets charged decree for Rs. 12,50,000 under Section 55(6)(b) when both parties caused sale agreement failure

Ahammedkutty Bran Versus Sukumaran and Ors.

Kerala HC allowed appeal in property dispute involving advance sale consideration. Trial court's dismissal was set aside. Court held that where both buyer ... Dismissal of a suit for return of advance sale consideration - applicability of time limitation - Is the plaintiff entitled for charged decree in terms of Section 55(6)(b) of the Transfer of property Act? - HELD THAT:- Understanding the scope of the first limb of Section 55(6)(b), it is held that, where the non-performance is not due to the fault of the buyer and the seller, or where both are at blame/default, or where the default occurred at the hands of the vendor, it cannot be said that the buyer has improperly declined to accept delivery and hence he is entitled for charge over the property for the purchase price paid and interest. Of course, whether interest is to be granted and if so at what rate are all matters for determination based on the facts of each case. The defendants allege that the plaintiff did not have sufficient funds with him to get the sale deed executed. The plaintiff was evading performance of the contract, it is alleged. No evidence is adduced by the plaintiff to prove that he was possessed of sufficient means to go ahead with the transaction. This tells upon the readiness of the plaintiff to go ahead with the transaction. On appreciating the entire evidence it appears that both the plaintiff and the defendants (their predecessor Rosamma) contributed to the non-performance of Ext.A1 agreement. As held supra, in such a situation, when both the plaintiff and the defendant are at fault or were not eager in the performance of the agreement, the plaintiff is entitled for charge over the property for the sale consideration paid. A decree is liable to be granted to the plaintiff. Now coming to the grant of interest, taking note of the entire facts including the delay in institution of the suit, it is deemed appropriate that interest be declined till the date of suit. The plaintiff could be granted interest at the rate of 6% per annum from the date of suit till the date of realisation. Conclusion - The plaintiff's claim for a personal decree is time-barred, but the claim for a charged decree is within the limitation period and valid. The plaintiff is entitled to recover the advance payment with interest, charged on the property, due to mutual fault in non-performance. The decree and judgment of the trial court are set aside. The plaintiff is granted a decree for realisation of Rs. 12,50,000/- with interest at the rate of 6% per annum from the date of suit till realisation charged on the plaint schedule property - Appeal allowed. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment include:(i) Whether the relief claimed for money charged on immovable property falls under Article 62 of the Limitation Act.(ii) Whether the plaintiff is entitled to a charged decree under Section 55(6)(b) of the Transfer of Property Act.ISSUE-WISE DETAILED ANALYSISIssue (i): Applicability of Article 62 of the Limitation ActRelevant legal framework and precedents: Article 62 of the Limitation Act provides a twelve-year limitation period for suits to enforce payment of money charged upon immovable property. Article 54, on the other hand, provides a three-year limitation period for suits related to contracts.Court's interpretation and reasoning: The Court concluded that Article 54 applies to the personal decree aspect of the claim, which was barred by limitation as the suit was filed beyond the three-year period. However, for the charged decree aspect, Article 62 was deemed applicable, allowing a twelve-year period, thus rendering the suit within the limitation period.Application of law to facts: The Court determined that the claim for a charged decree over the property was timely under Article 62, as opposed to the personal decree claim, which was time-barred under Article 54.Issue (ii): Entitlement to a charged decree under Section 55(6)(b) of the Transfer of Property ActRelevant legal framework and precedents: Section 55(6)(b) of the Transfer of Property Act provides that a buyer is entitled to a charge on the property for the amount of purchase money paid, unless the buyer has improperly declined to accept delivery of the property. Relevant precedents include Kannan Menon v. Kuttikrishna Menon, Saramma v. Varghese, and Crompton Greaves Limited v. Icon Integrated Industries and Software Ltd.Court's interpretation and reasoning: The Court examined the circumstances under which a buyer is entitled to a charge. It distinguished between situations where the buyer improperly declines delivery and where non-performance is due to mutual fault or no fault of the buyer. The Court emphasized that the buyer is entitled to a charge unless the buyer improperly declined delivery.Key evidence and findings: The Court found that the inability of Rosamma, the predecessor of the defendants, to find an alternate residence contributed to the non-performance of the agreement. The plaintiff's readiness was also questioned due to a lack of evidence showing sufficient funds to complete the transaction.Application of law to facts: The Court concluded that both parties contributed to the non-performance of the agreement. Consequently, the plaintiff was entitled to a charge over the property for the amount paid.Treatment of competing arguments: The defendants argued that the plaintiff was not ready to perform the contract, while the plaintiff contended that Rosamma's inability to relocate was the cause of non-performance. The Court found both parties at fault, allowing the plaintiff's claim for a charge.Conclusions: The Court granted the plaintiff a decree for the recovery of the advance payment with interest, charged on the property, due to the shared fault in non-performance.SIGNIFICANT HOLDINGSPreserve verbatim quotes of crucial legal reasoning: 'It follows therefore that any payment made of part of purchase money at the time of the contract for sale, must, even if the blame for its breach is on the buyer, be refunded to the buyer.'Core principles established: The Court reaffirmed the principle that a buyer is entitled to recover advance payments unless the seller proves damages due to the buyer's breach. Additionally, the Court clarified the application of limitation periods under Articles 54 and 62 of the Limitation Act in the context of charged decrees.Final determinations on each issue: The Court determined that the plaintiff's claim for a personal decree was time-barred, but the claim for a charged decree was within the limitation period and valid. The plaintiff was entitled to recover the advance payment with interest, charged on the property, due to mutual fault in non-performance.