Agreement for Sale; Thomas Vs. Merlin Construction Company [Kerala High Court, 24-06-2016]

Civil Law – Suit for specific performance – Agreement for Sale – there was discrepancy as regards the mode of payment of consideration – does not inspire confidence in this Court and a mere look at it throws suspicion – It is unsafe to grant a decree either for specific performance or for return of the advance amount on the basis of the agreement – Suit dismissed.

# Agreement


IN THE HIGH COURT OF KERALA AT ERNAKULAM

V.CHITAMBARESH & K.RAMAKRISHNAN, JJ.

A.S.No.591 of 1998 & Cross Objections

Dated this the 24th day of June, 2016

AGAINST THE JUDGMENT & DECREE IN OS 1090/1992 of PRL.SUB COURT,THRISSUR DATED 29-08-1997

APPELLANT(S):DEFENDANTS

THOMAS AND OTHERS

BY ADVS.SRI.K.RAMACHANDRAN SRI.K.RAMACHANDRAN SRI.JOJI VARGHESE SRI.T.P.ELDHOSE SRI.D.NARENDRANATH SRI.M.HARISHARMA

RESPONDENT(S): PLAINTIFF

MERLIN CONSTRUCTION COMPANY (P) LTD.

R,R BY ADV. SRI.P.R.VENKETESH

J U D G M E N T

Chitambaresh, J.

The defendants in a suit for specific performance of an agreement for sale and in the alternative for return of the amount paid as advance are the appellants. The plaint claim is rested on Ext.A1 agreement for sale allegedly entered into between the plaintiff and the defendants in regard to 4 items of property totalling to 94.80 cents. The plaintiff asserted that a sum of ₹5,75,000/- was paid as advance to the defendants out of the total sale consideration of ₹7,00,000/- on the date of agreement itself. It is the further case that Ext.A2 series lawyer notices issued by the plaintiff were not responded to by the defendants and hence the suit for the reliefs.

2. The defendants totally denied having any transaction with the plaintiff as alleged and conceded only the receipt of a sum of ₹75,000/- as loan from one Mr.V.L.Ittiachen. The said Ittiachen was the father of the Managing Director of the plaintiff which is a company engaged in construction of buildings and incorporated at Madras. It is the case of the defendants that blank signed papers obtained by the said Ittiachen at the time of giving the loan would have been fabricated as Ext.A1 agreement. The defendants did not for a moment admit the signatures found in Ext.A1 agreement and also emphatically denied the receipt of ₹5,75,000/- as advance.

3. The brother of the Managing Director of the plaintiff was examined as PW.1 and a witness to Ext.A1 agreement was examined as PW.2 while the first defendant was examined as DW.1. The trial court though upheld the due execution of Ext.A1 agreement found that there was discrepancy as regards the mode of payment of consideration. The trial court hence declined specific performance and granted a decree for return of ₹5,75,000/- with interest in favour of the plaintiff against the defendants. The decree is challenged by the defendants in this Appeal Suit wherein the plaintiff has filed a memorandum of cross objections reiterating specific performance. We heard Mr.K.Ramachandran, Advocate on behalf of the appellants/defendants and Mr.P.R.Venkitesh, Advocate on behalf of the respondent/plaintiff.

4. Ext.A1 agreement for sale relied on does not inspire confidence in this Court and a mere look at it throws suspicion and the following infirmities are demonstrably evident:

i) There is an artificial gap in between the lines in the body of the agreement on the first page.

ii) The sum of ₹7,00,000/- recited as the total sale consideration has been interpolated in the body of the agreement.

iii) The signature of the third defendant put after her name varies from page to page in the agreement.

iv) The date and the amount of the two cheques passed on towards advance amount are written in a different ink.

v) There is a wide gap between the signatures of the executants and that of the witnesses in the agreement.

5. The plaintiff is a company engaged in the construction activity and audited accounts should be there evidencing the advance of a huge amount of ₹5,75,000/- to the defendants. None of the documents are forthcoming except that Ext.A1 agreement merely mentions two cheques for ₹5,00,000/- and ₹75,000/- totalling to ₹5,75,000/-. No documents from the Bank have been summoned or any official examined to prove the issue of the aforesaid cheques or the encashment of the same by the defendants. Even this case is given a go by in evidence when the witnesses on behalf of the plaintiff depose about the payment of advance of ₹5,75,000/- in cash. All that has been produced is Ext.A5 savings Pass Book of the Bank which reflects that a sum of ₹5,00,000/- was withdrawn from the personal account of the Managing Director. It is difficult to believe that the amount so withdrawn at 9.30 am. at Madras was paid to the defendants at 9.30 pm. at Thrissur on the same day. It is significant to note that Ext.A2 series of lawyer notices demand money on behalf of the Managing Director personally and not on behalf of the plaintiff.

6. There is no case for the plaintiff that it was short of funds to effect the payment of ₹7,00,000/- in lump when a sum of ₹5,75,000/- was allegedly paid as advance. Normally the plaintiff would be put in possession in part performance of the contract if really a major portion of the sale consideration was paid. There is no explanation as to why the plaintiff was not so put in possession of the property even after the payment of a major portion of the sale consideration to the defendants. That is a strong indication to show that Ext.A1 agreement even if genuine was not intended to be followed up by a sale deed between the parties. We take cue from the decision of the Supreme Court in

# Tejram v. Patirambhau [(1997) 9 SCC 634]

wherein the agreement was construed as one evidencing loan transaction.

7. It is unsafe to grant a decree either for specific performance or for return of the advance amount on the basis of Ext.A1 agreement and normally we would have dismissed the suit in toto. But the defendants fairly concede that a sum of ₹75,000/- was availed as loan on the date of Ext.A1 agreement from Mr.V.L.Ittiachen. The said Ittiachen was a Director of the plaintiff company along with his wife and three sons evident by Ext.A4 Memorandum of Association and Articles of Association. It is discernible from the conspectus of events that the plaintiff company was a family concern and that Ittiachen had a say in the monetary transactions. The defendants are willing to repay the sum of ₹75,000/- with interest and the plaintiff is also not averse to receive the amount in the circumstances. Therefore a judgment on admission in terms of Order XII Rule 6 of the Code of Civil Procedure, 1908 is passed for a sum of ₹75,000/- in favour of the plaintiff against the defendants. The said amount will undoubtedly carry interest at 12% per annum from the date of Ext.A1 agreement (13.9.1991) till the date of payment by the defendants. The defendants are at liberty to move appropriately for return of the documents allegedly retained by the said Ittiachen in the course of transaction.

The Appeal Suit is allowed in part and the Memorandum of Cross Objections is dismissed. No costs.

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