P.J. Joseph v. Aliyar and others (RFA Nos. 266/2007 & 483/2007)

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE V.CHITAMBARESH & THE HONOURABLE MR.JUSTICE K.HARILAL FRIDAY, THE 23RD DAY OF SEPTEMBER 2016/1ST ASWINA, 1938 RFA.No. 266 of 2007 ( ) -----------------------AGAINST THE JUDGMENT IN OS 243/2005 of II ADDL.SUB COURT,ERNAKULAM DATED 19-12-2006 APPELLANT(S)/APPELLANT - PLAINTIFF: ---------------- P.J.JOSEPH, S/O.JOSEPH, PANACHIKKAL HOUSE, NO.7, ST.MARY'S ROAD, PERAMBOOR NORTH P.O., CHENNAI-600 011, AT PRESENT RESIDING AT RAJI NIVAS, T.V.CENTRE, HOUSE NO.973/11, CEPZ P.O., KAKKANAD, KOCHI-37. _**(DIED, LRs impleaded) ***_ ADDL.2. MOLLY JOSEPH, W/O.LATE P.J.JOSEPH AGED 61 YEARS, RESIDING AT NO.7, ST.MARY'S ROAD, PERAMBOOR NORTH, CHENNAI - 11. ADDL.3. CAPTAIN SONY MARIA JOSEPH D/O.LATE P.J.JOSEPH, AGED 25 YEARS 603, ASC, BN (AM), N.AREA CHANDIGARH, ARMY SERVICE CORPS. - (The legal heirs of deceased sole appellant are impleaded as Additional Appellants 2 and 3 vide order dated 3.11.2009 in I.A.No.3759/2009.) BY ADVS.SRI.V.V.SIDHARTHAN SRI.T.I.ABDUL SALAM SRI.P.J.ANTONY JOSEPH SRI.R.D.SHENOY (SR.) SRI.M.M.SHIHAB SRI.D.G.VIPIN ## RESPONDENT(S)/DEFENDANTS: - ------------------ 1. ALIYAR, S/O.KUTTY, RESIDING AT PAPPAKUDATH HOUSE, CHITTETHUKARA, KAKKANAD, COCHIN-682 037. 2. PATHUKUTTY, W/O. SRI. ALIYAR, RESIDING AT PAPPAKUDATH HOUSE, CHITTETHUKARA, KAKKANAD, COCHIN-682 037. _**(DIED)***_ **(It is recorded that R2 in the appeal died, vide memo, C.F.No. 2961/14,** _**dated 9.6.2014 as per order dated 25.6.2014.)**_ ## RFA.No.266/2007 : 2 : ADDL.R3 ABDUL LATHEEF.P.A., S/O.ALIYAR PAPPAKKUDAM HOUSE, CSEZ P.O. CHITTETHUKARA, KAKKANAD - 682 037. ADDL.R4 JESEENA.P.A., D/O.ALIYAR PAPPAKKUDAM HOUSE, CSEZ P.O., CHITTETHUKARA, KAKKANAD - 682 037. ADDL.R5. JAHAB.P.A., S/O.ALIYAR PAPPAKKUDAM HOUSE, CSEZ P.O. CHITTETHUKARA, KAKKANAD - 682 037. ADDL.R6. NAVAS P.A., S/O.ALIYAR PAPPAKKUDAM HOUSE, CSEZ P.O., CHITTETHUKARA, KAKKANAD - 682 037. *(The legal heirs of deceased R2 are impleaded as Addl. Respondents 3 to 6 vide order dated 15.7.16 in I.A.No.1584/14) R1-R6 BY ADV. SRI.K.ABDUL JAWAD R1-R6 BY ADV. SRI.MATHEW A KUZHALANADAN R1-R6 BY ADV. SMT.VINEETHA V.KUMAR THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD ON 19-09-2016, ALONG WITH RFA. 483/2007, THE COURT ON 23.9.2016 DELIVERED THE FOLLOWING: V.CHITAMBARESH & K.HARILAL, JJ. --------------------R.F.A.Nos.266/2007 & 483/2007 --------------------Dated this the 23[rd] day of September, 2016 **==> picture [136 x 14] intentionally omitted <==** ## Chitambaresh, J. The suit is one for specific performance of Ext.A1 agreement of sale dated 3.11.2004 executed by the plaintiff on the one hand and the defendants on the other hand. The sale consideration was fixed at `.82,500/- per cent for approximately 60 cents of land totalling to about ` 49,50,000/- to be finalised on the basis of the actual measurement. The plaintiff paid a sum of `.5,00,000/- by cash and another sum of `.5,00,000/- by post dated cheque to the defendants as advance sale consideration on the same day. A period of 6 months was fixed for performance of the contract and the suit was laid since the defendants allegedly did not get the sale deed executed. The suit was decreed for the alternate relief of return of the amount paid as advance however limiting the same to `.7,50,000/- on the terms of the agreement. The plaintiff has filed RFA.No.266/2007 for specific performance and in the alternative for return of the entire sum of `. 10,00,000/- with interest. The 2 RFA.Nos.266 & 483 of 2007 defendants have filed RFA.No.483/2007 to scale down the rate of interest fixed at 12% per annum and also as regards the imposition of costs. 2. The two principal questions that arise for consideration in the Regular First Appeals are as follows:- i) Whether the plaintiff is entitled to the specific performance of Ext.A1 agreement for sale in the circumstances ? ii) Whether the defendants are entitled to appropriate a sum of `. 2,50,000/- from the advance amount received ? We heard Mr.R.D.Shenoy, Senior Advocate on behalf of the plaintiff and Mr.K.Abdul Jawad, Advocate on behalf of the defendants in these appeals. 3. The period fixed for performance of the contract was 6 months which expired on 3.5.2005 and it has to be established that the plaintiff had the sufficient funds to pay the balance sale consideration. But Exts.A13, A14 and A15 certificates produced by the plaintiff showed that only a sum of `. 26,03,497.93 was RFA.Nos.266 & 483 of 2007 3 available in the Savings Bank Accounts maintained by him and that too on 3.9.2005. There was nothing to show that Ext.A16 sale agreement executed by the plaintiff with another was followed by a sale deed and a sum of `. 19,00,000/- received on that count. The mere production of Ext.A27 cheque for 90,000 dollars in favour of the plaintiff cannot also be relied on without ensuring that it would be honoured. Only Ext.A27 cheque is dated 18.4.2005 and the plaintiff has not produced his Savings Bank Account details for the period from 3.11.2004 to 3.5.2005. This is not withstanding the fact that the plaintiff was directed to prove the availability of funds with him in the order modifying interim injunction. The court below has found on evidence that the plaintiff did not take steps to get the sale deed executed despite Ext.B3 receipt acknowledging the receipt of records. The court below was justified in holding that the plaintiff did not have the wherewithal to pay the balance sale consideration at the relevant time. The contention that the property was not got measured by the revenue RFA.Nos.266 & 483 of 2007 4 officials has been rightly found to be a ruse by the plaintiff to delay the execution. The finding that it was the plaintiff who committed the breach of Ext.A1 agreement for sale by not performing his part of the contract is rested on evidence. The discretion exercised by the court below in refusing specific performance under Section 20 of the Specific Relief Act, 1963 does not call for interference. 4. It is true that Ext.A1 agreement provides for forfeiture of 25% of the amount paid as advance by the plaintiff in case of breach committed by him in the performance of the contract. It was on this premise did the court below allow the defendants to appropriate `. 2,50,000/- from the amount received as advance from the plaintiff. But such appropriation is possible only if the defendants prove legal injury warranting compensation in terms of Sections 73 and 74 of the Indian Contract Act, 1872. It has been so held in Fateh Chand v. Balkishan Das [AIR 1963 SC 1405] and Maula Bux v. Union of India [AIR 1970 SC 1955] which applies to this case on all fours. A Division Bench of RFA.Nos.266 & 483 of 2007 5 this Court followed the aforesaid decisions in State of Kerala v. United Shippers & Dredgers [1982 KLT 738] and held as follows:- “18. That the party complaining of breach of contract and claiming compensation is entitled to succeed only on proof of “legal injury” having been suffered by him in the sense of some loss or damage having been sustained on account of such breach, is clear from Sections 73 and 75 of the Act. Section 74 is only supplementary to Section 73 of the Act and it does not make any departure from the principle behind Section 783 in regard to this matter. Every case of compensation for breach of contract has to be dealt with on the basis of Section 73 of the Act. In a particular case where the contract itself stipulates for payment of a sum of money on the breach of contract or contains any other stipulation for penalty, the principle additionally propounded by Section 74 also will have to be applied and that is why irrespective of the amount stipulated in the contract, the party suffering from breach is entitled only to reasonable compensation which, however, shall not exceed the amount so stipulated in the contract. Whether it be a contract which stipulates a sum of money as being payable on breach of contract or whether it contains any other penal clause, or whether RFA.Nos.266 & 483 of 2007 6 it is a contract which does not contain any such clause, the party complaining of breach of contract cannot successfully claim compensation unless he makes out loss or damage referable to such breach. The best measure of reasonable compensation would of course be the extent of actual loss or damage sustained. If the extent of actual loss or damage sustained is capable of being proved that provides a safe guide for the court to determine the quantum of reasonable compensation. If quantification of loss or damage is not possible, the party who has suffered on account of the breach is not without remedy. He can still request the court to assess reasonable compensation on the materials available and award the same to him. The words in S.784 “whether or not actual damage or loss is proved to have been caused thereby” have been employed to underscore the departure deliberately made by Indian Legislature from the complicated principles of English Common Law and also to emphasise that reasonable compensation can be granted even in a case where extent of actual loss or damage is incapable of proof or not proved. That is why S.74 of the Act deliberately states that what is to be awarded is reasonable compensation. In a case where the party complaining of breach of the contract has not suffered legal injury in the sense of sustaining loss or damage, RFA.Nos.266 & 483 of 2007 7 there is nothing to compensate his for; there is nothing to recompense, satisfy or make amends......” 5. There is no pleading much less any proof to show that the defendants have suffered any loss or legal injury on account of breach of the contract committed by the plaintiff. The written statement merely states that several agreements were entered into by the defendants to purchase property and that the advance amount paid was forfeited. None of the agreements have been produced to substantiate the contention and Ext.A30 sale deed at best shows that the defendants have sold the adjacent property. Proof of damages is a sine qua non to claim compensation and the evidence falls below the requisite degree to allow apportionment of the advance amount. Equally unsustainable is the contention of the defendants that `.2,50,000/- mentioned in Ext.A1 agreement has to be reckoned as an earnest money deposit. The defendants have infact no such case in the written statement and what is pleaded is that they are entitled to liquidated damages to the tune of `.2,50,000/-. Such a RFA.Nos.266 & 483 of 2007 8 contention will not lie in the light of United Shippers & Dredgers's case (supra) and the amount received as advance is liable to be refunded. Moreover 25% of the amount bears a huge proportion to the total sum of money advanced and it cannot be an earnest money deposit as is attempted to be projected. It is reported that the defendants have already deposited a sum of `.7,50,000/- in the court below pursuant to the decree purportedly in satisfaction. The said amount can be withdrawn by the plaintiff (if not already done) who is entitled to the balance sum of `. 2,50,000/- also from the defendants and their assets. The said amount shall carry a nominal interest of 6% per annum from the date of the appellate decree in view of the fact that the defendants have not committed any breach. 6. The relief of specific performance is declined and the plaintiff is given a decree for realisation of the balance sum of `. 2,50,000/- from the defendants and their assets. The amount will carry interest at 6% per annum from the date of the appellate decree and the impugned decree of the court below is RFA.Nos.266 & 483 of 2007 9 modified to the above extent. The defendants shall not be burdened with the entire costs in the suit and the Regular First Appeals and it would suffice if the parties are left to suffer their respective costs throughout. The Regular First Appeals are disposed of. Sd/V.CHITAMBARESH, Judge. Sd/K.HARILAL, Judge. nj/20.09.2016