TaxTMI 
TaxTMI 
TaxTMI 
2022 (12) TMI 1556
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....t matter of the original suit was a property measuring 23 Kanals 4 Marlas bearing Khewat No. 226, Khatauni No. 225, Rect. No. 27, Kila No. 3 min (2-9), 4 min (4-15), 7(8-0), 14(4-0) situated in the revenue estate of Village Tigra, Tehsil and District Gurgaon (hereinafter, 'Concerned Property') which the Appellants jointly owned to the extent of their respective shares. 4. Two separate agreements to sell were entered between the present parties for the Concerned Property on 17.02.2004 (hereinafter, 'Sale Agreements'). In the first agreement, Appellant Nos. 1 to 4 agreed to sell their share to the extent of 4/5th of the Concerned Property while in the second agreement, Appellant No. 5 agreed to sell the remaining 1/5th share to the Respondent which accrued to her and her minor son. It must be noted that the material terms of both agreements are identical except that in the second agreement, Appellant No. 5 was contractually bound to secure the permission under The Hindu Minority and Guardianship Act, 1956 to sell the share of the minor. 5. Under the Sale Agreements, the sale consideration was set at the rate of Rs. 79,00,000/- per acre. Accordingly, the Respondent i....
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....ef of specific performance of Sale Agreements and other consequential reliefs. However, during the pendency of the suit before the Trial Court, State of Haryana initiated acquisition proceedings vide notification dated 12.12.2008 issued Under Section 4 of Land Acquisition Act, 1894. Consequently, the subject land was acquired by the State vide award dated 23.11.2011. Due to this subsequent event, the Respondent sought and was permitted by the trial court to amend the plaint. 10. In the amended plaint, the Respondent took the stand that he was always ready and willing to execute the Sale Agreements and that the Appellants were the ones who did not furnish the required documents for the necessary sanction and grant of NOCs. Apart from the relief of specific performance, he additionally prayed that a decree of permanent injunction be passed to the effect that the Concerned Property cannot be sold to any third party, possession must be granted to him along with a declaration that the Sale Agreements were still binding. In the alternative, he sought that a money decree of Rs. 2,29,10,000/- be passed in his favour on the estimated land value along with requisite interest and costs. 11.....
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....o note that time was the essence of contract as per the Sale Agreements Under Section 55 of The Indian Contract Act, 1872. (hereinafter, 'Contract Act'). He submitted that the contractual performance of Sale Agreements needed to be mandatorily effectuated by the Respondent on or before the Date of Execution. He stated that the Appellants reiterated the same stance in their legal notices dated 18.08.2004. Secondly, the High Court has completely overlooked the fact that at the relevant period of time, i.e. Date of Execution, there was no necessity to procure NOC Under Section 7A of HUDA Act. He submitted that the land was 'agricultural land' on the Date of Execution of Agreements and was first time included within the limits of Municipal Corporation, Gurugram through notification dated 02.06.2008. Thirdly, Under Clause 8 of the Sale Agreements, it was the Respondent and not the Appellants, responsible to procure relevant NOCs. Hence, the onus to prove that steps were taken to obtain NOCs Under Section 7A of HUDA Act was on the Respondent which he miserably failed to discharge. 17. The composite essence of all the above-mentioned arguments by Mr. Mittal is that non-pe....
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....ted that the Respondent on coming to know about the factum of release, had directly approached this Court against the First Appellate Court's decision via SLP (C) No. 11901 of 2022 but the same was disposed of with liberty to approach the High Court in the second appeal Under Section 100 of the Code of Civil Procedure, 1908. Rohatash Singh v. Deshraj (SLP (Civil) No. 11901 of 2022, 11 July 2022). 19. We now examine these contentions of both sides. C. Analysis C.1 Whether Time was the Essence of the Contract? 20. Before venturing into the aforementioned issue, we must highlight that throughout the entire dispute, Appellants have taken a consistent stand of time-bound performance being an essence of the contract. They have maintained that sale deed was needed to be executed necessarily on the Date of Execution as agreed between the parties. It is unfortunate that all the courts below have failed to render a finding on this aspect despite the fact that this was one of the key defenses taken by the Appellants in respect of the prayer seeking specific performance. 21. In this respect, we must now take note of Section 55 of Contract Act which stipulates the aftermath in case of ....
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.... v. S. Rajalakshmi Saradamani Kandappan v. S. Rajalakshmi (2011) 12 SCC 18. wherein it was held that defense Under Section 55 of Contract Act is valid against anyone who is seeking the relief of specific performance. The facts of the instant case make the observations in Saradamini Kandappan ibid even more pertinent, which are to the following effect - 36. The principle that time is not of the essence of contracts relating to immovable properties took shape in an era when market values of immovable properties were stable and did not undergo any marked change even over a few years (followed mechanically, even when value ceased to be stable). As a consequence, time for performance, stipulated in the agreement was assumed to be not material, or at all events considered as merely indicating the reasonable period within which contract should be performed. The assumption was that grant of specific performance would not prejudice the vendor Defendant financially as there would not be much difference in the market value of the property even if the contract was performed after a few months. This principle made sense during the first half of the twentieth century, when there was comparativ....
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....avor of the Appellants. C.2 Whether it was Proved that Appellants were Willfully Avoiding Performance of Their Contractual Obligations? 25. The courts below have harped on the inability of the Appellants to procure the necessary NOC Under Section 7A of HUDA Act, to hold that they were non-cooperative and willfully avoiding the performance of their contractual obligation. However, as the learned Counsel for Appellants rightfully pointed out, the evidence on record clearly indicates that they gave duly signed blank proformas and relevant documents to the Respondent in order to obtain any necessary sanction or NOCs. This was done in order to fulfil the obligation Under Clause 8 of the Sale Agreements which stated - 8. That the Second Party will be liable to secure all the necessary NOC and the said NOC will be intimated to the First Party by way of Registered Post before the date 16.08.2004 fixed for registration of sale deed. If the Second Party fails to secure the required NOC then this agreement to sell will be deemed to be cancelled. The cost incurred for securing the NOC will be borne by the Second Party. Under the Sale Agreements, 'First Party' refers to the present ....
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.... The High Court, therefore, ought not to have made any fact based observations especially when the records of the courts below were not requisitioned to reach an independent conclusion to hold that the said finding of fact by the two courts was contrary to the record. The re-appreciation of evidence is ordinarily impermissible and beyond the scope of a second appeal. Even otherwise, the presence of Appellants before the Sub-Registrar on the Date of Execution is not disputed. In this backdrop where time was the essence of the contract, we conclude that the Respondent has failed to prove that the Appellants were willfully avoiding the performance of their contractual obligations. C.3 Whether Respondent was Entitled to recovery of earnest money? 30. The final aspect of this dispute is with respect to the relief granted by the courts below to the Respondent in the form of recovery of earnest money with requisite interest. However, before inquesting into this issue we must take note of the following relevant clauses of the Sale Agreements - 1. That it has been decided that date of execution of this agreement to sell is 16.08.2004 [Sixteen August Two Thousand Four]. x-x-x- 4. Tha....
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....not only entitled to seek specific performance of the contract for the transfer of immovable property but he can also seek alternative relief(s) including the refund of any earnest money, provided that such a relief has been specifically incorporated in the plaint. The court, however, has been vested with wide judicial discretion to permit the Plaintiff to amend the plaint even at a later stage of the proceedings and seek the alternative relief of refund of the earnest money. The litmus test appears to be that unless a Plaintiff specifically seeks the refund of the earnest money at the time of filing of the suit or by way of amendment, no such relief can be granted to him. The prayer Clause is a sine qua non for grant of decree of refund of earnest money. Applying these principles to the facts of the case in hand, we find that the Respondent has neither prayed for the relief of refund of earnest money in the original plaint nor he sought any amendment at a subsequent stage. In the absence of such a prayer, it is difficult to accept that the courts would suo-moto grant the refund of earnest money irrespective of the fact as to whether Section 22(2) of SRA Act is to be construed dir....
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....able compensation not exceeding the amount named or penalty stipulated. The jurisdiction of the court is not determined by the accidental circumstance of the party in default being a Plaintiff or a Defendant in a suit. Use of the expression "to receive from the party who has broken the contract" does not predicate that the jurisdiction of the court to adjust amounts which have been paid by the party in default cannot be exercised in dealing with the claim of the party complaining of breach of contract. The court has to adjudge in every case reasonable compensation to which the Plaintiff is entitled from the Defendant on breach of the contract. Such compensation has to be ascertained having regard to the conditions existing on the date of the breach. (Emphasis Applied) 34. Per contra, the Appellants have heavily relied on the following passage of the decision of this Court in Satish Batra Satish Batra (n 1). to justify the forfeiture of earnest money - 15. The law is, therefore, clear that to justify the forfeiture of advance money being part of "earnest money" the terms of the contract should be clear and explicit. Earnest money is paid or given at the time when the contract is....
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....amed in the contract for such breach is genuine pre-estimate of loss which the parties knew when they made the contract to be likely to result from the breach of it, there is no question of proving such loss or such party is not required to lead evidence to prove actual loss suffered by him. Burden is on the other party to lead evidence for proving that no loss is likely to occur by such breach.... (Emphasis Applied) Hence, in a scenario where the contractual terms clearly provide the factum of the pre estimate amount being in the nature of 'earnest money', the onus to prove that the same was 'penal' in nature squarely lies on the party seeking refund of the same. Failure to discharge such burden would treat any pre-estimated amount stipulated in the contract as a 'genuine pre-estimate of loss'. 36. The Respondent in the instant case has neither pleaded for refund of the earnest money nor has he claimed any damages or penalty from the Appellants. From the perusal of the records, it is conspicuous that Respondent never raised any concern that the pre estimated amount was 'penal' in nature and instead his sole objective was to gain titular rights ov....