K. Alagar v. M.I. Kumaran

IN THE HIGH COURT OF JUDICATURE AT MADRASDATE: 21-07-2009CORAM: THE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIAN ANDTHE HONOURABLE MR.JUSTICE P.P.S.JANARTHANA RAJAO.S.A.Nos.389 of 2001, 316 of 2002 and 115 of 2004 andC.M.P.Nos.11645 of 2002K.Alagar .. Appellant in all appeals /PlaintiffVersus1. M.I.Kumaran2. MK.Ramachandran3. M.K.Janaki .. Respondents in all appeals/ DefendantsFor Appellant :: Mr.R.Krishnasamy,in all appeals Sr.Counsel for Mr.C.RameshFor Respondents :: Mr.T.V.Ramanujam,Sr.Counselin all appealsfor Mr.T.V.KrishnamachariPrayer: Original Side Appeals in O.S.A.No.389 of 2001, 316 of2002 and 115 of 2004 are filed under order XXXVI Rule 1 of O.S. Rulesread with Sec. 15 of Letters Patent against the judgment and decreeof this Court dated 27.2.2001 made in Tr.C.S.Nos.432 of 1997, 2113 of1995 and Tr.C.S.No.1356 of 1995 respectively. JUDGMENTK.RAVIRAJA PANDIAN,J.The Original Side Appeals in O.S.A.No.389 of 2001, 316 of 2002and 115 of 2004 are filed against the common judgment and decreedated 22.7.2001 made in Tr.C.S.No.432 of 1997, C.S.No.2113 of 1995and C.S.No.1356 of 1995 respectively. 2. The suit in Tr.C.S.Nos.432 of 1997 was originally filed asO.S.No.3922 of 1994 on the file of the City Civil Court, Madras bythe appellant - K.Alagar against the respondents – M.I.Kumaran,M.K.Ramachandran and M.K.Janaki seeking for a permanent injunctionrestraining the them from cancelling the agreement dated 18.3.1993 orencumbering the suit property or dispossessing the plaintiff from thesuit property. The other suit in C.S.No.2113 of 1995 is also filedby the appellant – K.Alagar against the very same respondents forspecific performance of the agreement dated 18.3.1993. The suit inC.S.No.1356 of 1995 was filed by the respondents herein against the https://hcservices.ecourts.gov.in/hcservices/ appellant - K.Alagar for a declaration declaring the appellant –K.Alagar has committed breach of the agreement dated 18.3.1993 andfor direction directing K.Alagar to pay damages of Rs.5 lakhstogether with subsequent interest at 24% per annum and for permanentinjunction restraining K.Alagar from interfering with therespondents' peaceful possession and enjoyment of the suit property. 3. For the sake of convenience, the parties are hereinafterreferred to as arrayed in the suit for specific performance filed inC.S.NO.2113 of 1995.4. The learned single Judge by judgment and decree impugnedherein non-suited the plaintiff for the relief of specificperformance, however, liberty was given to the plaintiff to withdrawthe amount of Rs.9,20,000/- deposited by the defendants as per theorder dated 27.6.1996 made in O.A.Nos.14369 and 1370 of 1995 inC.S.No.2113 of 1995. The learned single Judge also non-suited theplaintiff for the relief of permanent injunction restraining thedefendants from cancelling the agreement dated 18.3.1993 orencumbering the suit property or dispossessing the plaintiff from thesuit property. The learned single Judge decreed the suit inC.S.No.1356 of 1999 declaring that the plaintiff has committed breachof the agreement dated 18.3.1993 and granted the relief of permanentinjunction restraining the plaintiff from in any way interfering withthe peaceful possession and enjoyment of the suit property, howeverthe relief of damages has been negatived. For granting such relief,the learned single Judge found that the plaintiff has committedbreach of agreement and therefore not entitled to the equitablerelief of specific performance and for the very same reasoning and onfinding that the plaintiff has not established his possession, therelief of injunction sought for by the plaintiff in C.S.No.432 of1997 was also rejected and on the very same reasonings granted therelief in favour of the defendants declaring that the plaintiff hasno enforceable right under the said agreement dated 18.3.1993 andgranted the relief of permanent injunction. 5. The correctness of the above judgment is put in issue inthese appeals by the plaintiff on the ground that the learned singleJudge having found that the defendants did not even make any attemptto hand over the original documents to the plaintiff for inspectingthe documents, ought to have held that it was only the defendantswho committed breach of the terms of the agreement. The judgment isnot correct in holding that the defendants have committed breach ofessential terms of the agreement. The act of the plaintiff takingpossession of the property, which is in accordance with theconditions of the agreement has been put against the plaintiff. Theagreement specifically provided about the right of the plaintiff toenter into the property, which factum has been totally lost sight ofby the learned single Judge. Having found that the plaintiff wasready and willing to perform his part of the obligation under theagreement on the crucial date, yet, the relief of specificperformance was denied. The reasoning of the learned Judge thatpossession of the suit property by the plaintiff in the absence ofany written instrument amount to unlawful and without permission of https://hcservices.ecourts.gov.in/hcservices/ the defendants is erroneous on the face of the covenants contained inthe agreement giving right to the plaintiff to enter into the suitproperty. The factum that the defendants vacated the suit premisesand occupied tenanted house for which the plaintiff has paid theadvance and paying the rent, clinchingly prove that possession hasbeen given to the plaintiff legally.6. On behalf of the defendants, it was contended that theagreement is not specifically enforceable. As per the agreement,thedefendants have to hand over possession after demolishing thesuperstructures. The sequence of events to be performed by theparties has been stated in the agreement. Hence allowing theplaintiff to put up his sign board would not amount to handing overof the possession. The factum of alleged taking over possession ofthe suit property by the plaintiff has been explicitly admitted bythe plaintiff in the counter filed in the suit filed by thedefendants for damages. The plaintiff having come forward with thesuit on a persisted false case of possession, which is found to benot established, cannot claim the equitable discretionary relief ofspecific performance. It was also contended that a joint developmentagreement cannot be specifically enforced.7. The brief facts of the case culled from the pleadings are asfollows:The plaintiff is a promoter and property developer. Thedefendants acquired the subject property by three sale deeds dated31.7.1987, 19.6.1982 and 21.6.1993 through competent civill Court, inan application filed under Section 9 of City Tenants Protection Actin ejectment suit No.129 of 1982, 8 of 1985 and 109 of 1987 filed bythe temple, the original owner of the property against thedefendants. The plaintiff and defendants entered into an agreement on18.3.1993 for development of the property on certain terms andconditions. According to the plaintiff, the defendants breached theagreement and sought to sell away or encumber the properties. Hencethe plaintiff filed a suit in O.S.No.3922 of 1994 before the CityCivil Court for injunction against the defendants. The said suit wastransferred to this Court and numbered as Tr.C.S.No.432 of 1997. Thedefendants filed C.S.No.1356 of 1995 on the ground that the plaintiffcommitted breach of agreement and also filed a false case forinjunction and prayed for declaration to declare that the plaintiffshall not enforce the agreement and injunction for possession.Thereupon the plaintiff filed the suit in C.S.No.2113 of 1995 forspecific performance on the grounds which are stated in theinjunction suit. With the above pleadings, the parties went on trial.A joint trial was conducted and the suits were disposed off asstated in the preamble portion of this judgment. 8. Now let us consider the dispute. 9. A property development agreement dated 18.3.1993 was enteredinto between the plaintiff and defendants in respect of landmeasuring 4 grounds or thereabout at block NO.7, T.N.Nos.10 and 11,Door Nos.11 and 12 of Sannithi Street, Vadapalani under Ex.P.1. The https://hcservices.ecourts.gov.in/hcservices/ total consideration was fixed to Rs.47.40 lakhs at the rate ofRs.493.75ps per sq.ft., and a sum of Rs.5,00,001/- has been paid bythe plaintiff to the defendant on the date of Ex.P.1. A further sumof Rs.4,00,000/- was paid on 26.10.1993 under Ex.P.2. There areseveral reciprocal obligations contained in the developmentagreement. The material terms are that the total consideration isRs.47,40,000/-. Out of the total construction to be put up by thebuilder-the plaintiff in an extent of 16,000 sq.ft., four deluxeflats in an extent of 4000 sq.ft. has to be given to the defendants.The construction cost and the cost of undivided share of land overwhich the flat to be constructed was arrived at Rs.24 lakhs and itwas agreed that the plaintiff could retain the said sum of Rs.24lakhs and pay the balance sum of RS.23,40,000/-. Another advance sumof Rs.5,40,000/- was agreed to be paid on the defendant producing thesale deeds and entering into a supplemental agreement. On receipt ofRs.5,40,000/- as aforesaid, the defendants have to execute a generalpower of attorney in favour of the plaintiff for the purpose offiling necessary documents before the appropriate authorities for thedevelopment of the land. Within three months from the date of receiptof the said sum of Rs.5,40,000/-, the defendants have to produceother documents such as patta, no due certificate from the statutorybodies, receipt for payment of electricity consumption, certifiedcopies of the parent documents and encumbrance certificate. Thedefendants have to demolish the existing structure leaving 15x11 ftof flooring, 10x11 ft room for watchman and another 20x11 ft forstoring the building material and the electricity connection. Thedefendants are entitled to sell and appropriate the cost of thedemolished materials. After the plaintiff obtained the buildingsanction plan and making payment of the balance amount ofRs.12,99,000/-, the defendants have to deliver vacant possession ofthe property. If the plaintiff put up additional construction overand above 16000 sq.ft., the defendants are entitled to 1/4th of theadditional construction at the rate of Rs.400/- per sq.ft. Till theflats are constructed within a period of 18 months and handed overto the defendants, in order to facilitate the defendants to have arental residence, the plaintiff agreed to pay a sum of Rs.2,000/-per month to the defendants.10. It appears some dispute arose. On 9.5.1994, the defendants 1and 2 caused a notice under Ex.P.4 through advocate informing thatall the documents are available with them and called upon theplaintiff to inspect the document as per the agreement and proceedfurther and pay the balance amount by giving one week time. It wasfurther informed that if any delay is caused by the plaintiff theagreement would have to be cancelled. The plaintiff under Ex.P.5issued a reply notice stating that in pursuance of the agreement thedefendants vacated the premises and gave vacant possession to theplaintiff. The defendants are not cooperating with the plaintiff forcompleting the venture, despite the fact the plaintiff is paying rentin a sum of Rs.2,000/- for the rental premises occupied by thedefendants. The plaintiff immediately filed a suit on 18.5.1994 inO.S.No.3922 of 1994 on the file of the City Civil Court, Madrasseeking for the relief of injunction as aforesaid by contending thatthe possession of the disputed land has been handed over by the https://hcservices.ecourts.gov.in/hcservices/ defendants at the time of execution of the agreement and obtained anorder of status quo. Subsequently that order was vacated. Against theorder of vacating status quo, an appeal in C.M.A.No.33 of 1995 on thefile of the VII Assistant City Civil Court, Madras has been filed.The C.M.A. was disposed of on 13.1.1996 by observing that both theparties to maintain status quo till the disposal of the suit inO.S.No.3922 of 1994. The defendants on their part filed C.S.No.1356of 1995 for declaration declaring that the plaintiff committed breachof agreement dated 18.3.1993 and as such the plaintiff has noenforceable right under the said agreement and for damages andpermanent injunction from interfering with their peaceful possessionover the suit property and obtained an interim order. While thatbeing so, the plaintiff filed C.S.No.2113 of 1995 seeking specificperformance. In that suit, application Nos.1369 and 1370 of 1995 weretaken out by the plaintiff seeking for injunction restraining thedefendants from alienating and dealing with the property andinterfering with the defendants peaceful possession and enjoyment ofthe suit properties respectively. The trial Judge taking note of theinjunction granted in favour of the defendants in the suit filed bythem protecting their possession, dismissed the application. Thatorder was carried on appeal before a Division Bench in O.S.A.Nos.226,227 and 247 of 1996, wherein also the Division Bench held against theplaintiff. Though such an order has been passed based on thedocuments produced pending suit, even after full-fledged trial, thecase of the plaintiff has, in our view, not been improved. The pleaof taking over possession of the property by the plaintiff has beenconsidered by the earlier Division Bench with reference to thedocuments. After extracting the relevant clause contained in Ex.P.1dated 18.3.1993 and also after referring to the averments of theaffidavit filed by the plaintiff in I.A.No.9482 of 1994 inO.S.No.3922 of 1994 before the City Civil Court, the Division Benchof this Court by observing that the plaintiff has not furnished anyparticulars for grant of injunction and the averments of theplaintiff in the affidavit filed in support of the injunctionapplication were very vague, that the plaintiff put forthinconsistent pleas, in the sense, that in the plaint, it was statedpossession was handed over on the date of execution of the agreement,however in the reply notice dated 14.5.1994, it was stated that thedefendants themselves vacated the premises and are residingseparately by paying monthly rent of RS.2,000/" and ultimately heldthat the plaintiff miserably failed to establish that he was inpossession of the suit property, but found that the defendants werecontinued to be in possession of the suit property. 11. The same inconsistency prevailed in the evidence of P.W.1.In the chief examination, he stated that after six months of theexecution of the agreement the first defendant handed over vacantpossession, which is not in consonance with the pleadings, wherein itwas stated that pursuant to the agreement the plaintiff was inpossession. The plaintiff is also not specific about the date ormonth or year in which the possession has been handed over, which isnot only evident from Ex.P.5 reply notice but also from the avermentsin the plaint in O.S.No.3322 of 1994. He further conceded that inEx.P.5 reply notice also such particulars were not available. His https://hcservices.ecourts.gov.in/hcservices/ evasiveness is clear from his further evidence to the effect thatdefendants handed over possession of the suit property in 1994 and hedid not remember the month and date of the same. In addition tothat, in the cross examination, it was elicited from him that thedefendants did not hand over possession of the property. He alsoadmitted such handing over has not been reduced in writing or anendorsement has been obtained in the agreement. But very innocuouslyhe has spoken in his evidence that it was true that after Ex.P.4notice in June 1994, the defendants came back to the suit property.It is common knowledge that the evidence has to be adduced inconsonance with the averments contained in the pleadings. But asalready stated, the evidence is not only evasive but also notbringing home the case pleaded in the plaint and is also against theterms of agreement regarding handing over of possession.12. On receipt of Ex.P.4 notice from the defendants in which theplaintiff was called upon to inspect the documents, the plaintiffwould have inspected the original documents and proceeded further asper the terms of Ex.P.1 agreement. Instead, he has taken a curiousstand of being in possession of the property under Ex.P.5 replynotice, which he was not able to establish before this Court eitherbyway of documents or by way of oral evidence. Even in Ex.P.5, theplaintiff has not stated that he is ready and willing to perform hispart of obligation. Even in the evidence, in order to establish hiscapacity, it is stated that the plaintiff is a builder of reputehaving several popular constructions on his credit and need notestablish his capacity to pay the amount. We are afraid to accept bysaying so the plaintiff established his capacity. Apart from that,in order to build up and support his false claim he manipulated andproduced receipt for payment of property tax and electricityconsumption charges for the properties. As per the agreement thedefendants have to give possession after demolish the structures inthe property after the balance consideration of Rs.23,40,000/- beingpaid and it was also agreed that the defendants are entitled to theproceeds of the old materials on demolition. It is a fact that thestructures are still available without demolition in the suitproperty and the balance consideration was not paid. The aboveattitude and stand of the plaintiff only lead us to conclude thatthe plaintiff has not only breached the material terms of theagreement but also abused the process of law by filing false cases.13. It is well established principle of law that the person whoseeks the equitable and discretionary relief must come to the Courtwith clean hands. The relief of specific performance being adiscretionary and equitable relief the plaintiff who has come forwardwith false case with inconsistent and conflicting plea is notentitled to the relief. Useful reference can be had to the judgmentof this Court in the case of PANKAJAM PARTHASARATHY VS. KASTURI GUNASINGH reported in 2001(1) CTC 200. 14. Admittedly, the agreement, which formed the basis for allthese suits is a profit making commercial venture of constructing andselling residential complexes to the public. The question as towhether such a commercial venture reduced in the form of development https://hcservices.ecourts.gov.in/hcservices/ agreement can be specifically enforced came up for consideration inthe cases of DEWAN CHAND SABBARWAL VS. UNION OF INDIA, (AIR (38) 1951PUNJAB 426), UNION CONSTRUCTION COMPANY VS. CHIEF ENGINEER, EASTERNCOMMAND, (AIR 1960 ALLAHABAD 72) and in an unreported judgment of theBombay High Court in the case of PANCHAMI MOOLOOR VS. NAMEDO PATILAND OTHERS in Suit No.2607 of 1983 and was held that if an agreementunder which both the parties have agreed to collaborate for thedevelopment of land which is purely commercial in nature, any breachof the agreement would not ordinarily be entitled to a specificperformance of agreement.15. In GAJANAN NARAYAN MALLIK VS. KOLTE PATIL DEVELOPERSreported in 1999(2) Bombay C.R. 118, the Bombay High court held asfollows:"This Court has consistently taken a view that theDevelopment Agreement cannot be specifically enforced andthat damages are an answer except where the Developer hasinvested substantial money and altered his position bycreating third party rights."We are in complete agreement with the above said judgments. Onthe facts of this case also, except the payment of advance, nothingwas invested by the plaintiff and no third party right has beencreated by entering into an agreement. Not even the project has beencommenced by obtaining sanction order of the competent authority.16. Inasmuch as we have concluded that the plaintiff hasbreached the agreement and not entitled to have the relief ofspecific performance, the natural corollary is that the plaintiff isnot entitled to legally enforce the agreement. The defendants, beingthe owners of the property, being in possession and the plea oftaking over possession by the plaintiff has already been rejected byus, the defendants are entitled to the relief granted by the trialCourt. 17. The following decisions were pressed into service on behalfof the plaintiff:(1) NIRMALA ANAND VS. ADVENT CORPORATION (P) LTD (2002(4) CTC624) (2) ANIGLASE YOHANNAN VS. RAMLATHA (2005(5) CTC 800)(3) P.D'SOUZA VS. SHONDRILO NAIDU (2004(4) CTC 150)(4) V.UDAYAKUMAR VS. L.NAVANEETHAMMAL (2002(1) M.L.J. 519) 18. In the first cited case reported in 2002(4) CTC 624, thepurchaser entered into an agreement for purchase of flat in Bombayand paid advance sale consideration of RS.35,000/- leaving a balanceof Rs.25,000/- alone. The seller committed breach of contract and didnot complete the construction of flat. The purchaser filed a suitfor specific performance and agreed to purchase the incomplete flat https://hcservices.ecourts.gov.in/hcservices/ on payment of higher price. In the said facts, the Supreme Court heldthat the specific performance is an equitable and discretionaryremedy. The Court can in exercise of such discretion impose anyreasonable condition directing one party to pay additional amount toother party while granting or refusing decree of specificperformance. Such directions would depend upon facts andcircumstances of each case. Normally relief of specific performancecannot be denied merely because of phenomenal increase in priceduring pendency of litigation. 19. In the second cited case reported in 2005(5) CTC 800, theSupreme Court held that the basic principle behind the provisions ofSection 16(c) of the Specific Relief Act was that any person seekingbenefit of specific performance of contract must establish that hisconduct is blemishless through out entitling him to specific reliefand Court has to grant relief based on conduct of person seekingrelief on perusal of plaint.20. In the third cited case reported in 2004(4) CTC 150, thepurchaser agreed to purchase the property for a specifiedconsideration within a stipulated time the vendor agreed to producethe original title deed within specified time and agreed to redeemthe mortgage in respect of the property, but failed. In thosecircumstances, the contention of the vendor that the purchasers werenot ready and willing has been rejected by the Supreme Court.21. In the fourth cited case reported in 2002(1) M.L.J. 519, itwas emphasized by this Court that the readiness and willingness withreference to Section 16(c) of the Specific Relief Act has not onlybeen pleaded but should be also established.22. Our answer to the reliance placed on by the plaintiff isthat the reliance of the judgments on behalf of the plaintiff ratherstrengthen the case of the defendants instead of advancing the caseof the plaintiffs and is a misplaced reliance. 23. For the foregoing reasons, all the original side appeals aredismissed confirming the judgment and decree of this Court dated27.2.2001 made in Tr.C.S.Nos.432 of 1997, 2113 of 1995 andTr.C.S.No.1356 of 1995 respectively. However, there is no order asto costs. Consequently, the connected C.M.P.No.11645 of 2002 is alsodismissed. Sd/- Asst.Registrar/true copy/ Sub Asst.Registrar usk https://hcservices.ecourts.gov.in/hcservices/ ToThe Sub Assistant Registrar,Original Side,High Court, Madras.+3 cc to Mr.C.Ramesh, Advocate, SR.No.32944 to 32946+1 cc to Mr.T.V.Krishnamachari, Advocate, SR.No.33505 Judgmentin O.S.A.NO.389 OF 2001,316 of 2002 and 115 of 2004PKB {CO}TP/19.8.2009.