THE HON'BLE SRI JUSTICE P.S.NARAYANA C.C.C.A.No.43 of 1992 20th April, 2010 Between :- K.Suryanarayana Maiya .. Appellant And Smt.Shaik Sayeedabi & others .. Respondents THE HON'BLE SRI JUSTICE P.S.NARAYANA C.C.C.A.No.43 of 1992 JUDGMENT:- Heard the Counsel on record. 2. The main controversy which had been argued in elaboration in this appeal is relating to the awarding of interest though incidentally the other submissions had been made. 3. Sri Ravindra Bharati, the learned Counsel representing the appellant had taken this Court through the respective pleadings of the parties, the evidence available on record and the findings recorded by the Trial Court and would maintain that inasmuch as the amount already had been deposited, granting of interest at 12% per annum definitely cannot be sustained. The learned Counsel also had taken this Court through several grounds raised in the Memorandum of Grounds of Appeal and would maintain that in the light of the clauses in the agreement of sale, the very ordering of the refund of the amount being bad in law, further granting of interest on such amount definitely is not just and proper. 4. On the contrary, the learned Counsel representing the respondents had taken this Court through the findings recorded by the learned Judge and would maintain that in the light of the convincing reasons recorded, this is not a fit matter to be interfered with. 5. Before taking up the points which arise for consideration in this appeal and further recording findings thereon, it would be just and proper to have a glance at the respective pleadings of the parties, the issues settled, the evidence available on record and the findings recorded by the Trial Court, in nutshell. Respective pleadings of the parties:- 6. The parties hereinafter would be referred to as plaintiffs and defendant as shown in O.S.No.404/82 on the file of the V Addl. Judge, City Civil Court, Hyderabad. The unsuccessful defendant in the suit is the appellant. 7. It was pleaded in the plaint as hereunder:- “Defendant as the owner of the house No.3-4-484/9, Lingampally, Hyderabad, admeasuring 865.42 sq.feet or 80.5 sq.meters entered into an agreement with the plaintiffs for the sale of the house on 31-10-1981 for consideration of Rs.1,45,000/-. Out of the total consideration, the plaintiffs paid to the defendant Rs.10,000/- on 29-10-1981, and Rs.40,000/- by way of Demand Draft No.090/12477, dt.30- 10-1981 of the Andhra Bank, Charminar Branch, Hyderabad, drawn in favour of the defendants as the earnest money. The agreement contain certain clauses. The 1st one among them is that “the balance of the consideration of Rs.95,000/- should be paid by the purchasers (plaintiffs) to the Vendor (defendant) before the Sub-Registrar at the time of the registration of the sale deed on or before 1-2-1982. If the purchasers do not pay the same on or before that day, they shall forfeit the amount. But if the vendor does not execute and regisrter the sale deed on or before 1-2-1982, he should refund the earnest money of Rs.50,000/- with interest at 12% per annum. All the terms and conditions of the bargain were fully incorporated in the agreement of sale, dt.31-10-1981. The plaintiffs caused a notice dt.23-1-1982 calling upon him to produce the documents of title and other documents for being examined, and expressed their readiness and willingness to pay the balance of consideration, and to perform their part of contract. The defendant received the said notice and issued a reply dt.27-1-1982 stating that the documents had already been examined by the plaintiffs prior to the date of the agreement of sale and also stating that the plaintiffs should handover a draft sale deed to the defendant for obtaining an Income Tax Clearance Certificate and that they should deposit the balance of consideration in the Bank or show the same by way of Demand Draft for getting the Income Tax Clearance Certificate, and that in default, the entire responsibility would be on the plaintiffs, and the defendant would be entitled to forfeit the advance amount. The responsibility for obtaining an Income Tax Clearance Certificate was on the defendant. In fact, a draft sale deed was got prepared on the basis of the Agreement of sale by the plaintiffs and the same was handed over to the defendant much earlier to the reply notice. The plaintiffs got issued a Telegraphic Notice dt.30-1-82 to the defendant stating that the money was ready and that the draft sale deed had already been given and requiring the defendant to be ready for execution and registration of the sale deed on 4-2-1982. The defendant perform his part of contract, and failed to register the sale deed. Thus, the defendant committed breach of agreement of sale. The plaintiffs also issued another telegraphic notice dt.1-2-1982 calling upon the defendant to perform his part of agreement. The defendant having received the sale telegraphic notice, issued reply telegraphic notice on 3-2- 1982 cancelling the agreement of sale and forfeiting the advance amount on the false pretext of an alleged breach of agreement by the plaintiffs. The plaintiffs received another notice dt.5-2-1982 issued by the defendant suppressing the telegraphic notice dt.3-2- 1982, and falsely stating that notwithstanding the default committed by the plaintiffs, the time of performance was extended upto 10-2-1982 at the alleged request of the plaintiffs. After receipt of the said notice dt.5-2-1982, the plaintiffs approached the defendant and asked about the cancellation of the agreement, and demanded immediate payment of the earnest money of Rs.50,000/-. In view of the breach of the agreement committed by the defendant, the defendant agreed to give up his unsustainable claim of forfeiture of the advance, and to refund the amount of Rs.50,000/- immediately provided interest was not claimed by the plaintiff. A draft acquaintance letter was drawn up under the instructions of the defendant by his Counsel Sri N.Seshachary in his own handwriting and handed over the 2nd plaintiff for being engrossed on non-judicial stamp paper value of Rs.5/-. After get it done in the non-judicial stamp paper, as asked, and approached the defendant, offering to execute the document though it contained some untrue statements regarding the responsibility for breach of the contract, and to hand it over to the defendant, if the advance amount of Rs.50,000/- without interest was paid immediately. The defendant asked for time for payment till the end of February, 1982. The plaintiffs agreed for extension of time till the end of February. Even after expiry of time, the defendant did not pay the amount. Hence the plaintiffs got issued notice dt.7-3-1982 in reply to the earlier notice of the defendant dt.5-2-1982 demanding payment of Rs.50,000/- together with interest as stipulated under the agreement. The defendant after receipt of the above notice, caused reply notice dt.12-3-1982 with untenable and incorrect pleas. The suit is within time. The defendant is under law bound to restore the amount back to the plaintiffs.” 8. The defendant filed his written statement denying several allegations. The defendant pleaded in his written statement as hereunder:- “That the defendant is a medical practitioner. The defendant also admits part of the statement made in para 7 of the plaint to the extent of the terms and conditions of the agreement of sale entered into between the plaintiffs and the. The plaintiffs entered into agreement of sale after verifying the title deeds of the house under the agreement. The plaintiffs inspected the title deeds with the assistance of one Sri Jagannatha Charyulu, retired Judge. After signing the agreement, they obtained Xerox copies of all the documents from the defendant. It is true that the plaintiffs got issued a legal notice dt.22-1-1982 and the same was duly replied. The plaintiffs have no sufficient funds to purchase the house and are interested to avoid the purchase of the house. The defendant categorically informed the plaintiffs that he is ready with all the documents and he will obtain the income tax clearance certificate also within two days from the date of giving the sale deed by the plaintiffs. It is true that the plaintiffs have issued two telegraphic notices and the same have been duly replied. The plaintiffs and their brother-in-law approached the defendant’s Counsel expressing their inability and refund the earnest money. If really the plaintiffs were in possession of money, there was no necessity to run hither and thither and to run after defendant for refund of money. They could have filed suit for specific performance and got the sale deed registered. As regards the allegation that the defendant committed breach of agreement of sale is false and baseless, hence denied. The defendant was ready to perform his obligation, but the plaintiffs failed to adhere to the conditions of agreement of sale, hence not entitle to ask for refund of the advance amount. In fact, consequent to the acts of plaintiffs, the defendant neither could sell the house to anybody nor purchase the house for which advance amount was paid. Thus, the defendant suffered loss in both ways.” 9. It is also stated that even in the counter submitted by him in I.A.No.845/82 in the suit, he had categorically stated that even on 18-5- 82, he was prepared to sell the house to the plaintiffs and prayed the Court to direct the plaintiffs to deposit the money in the Court, but the plaintiffs have failed to do so. There is no cause of action to file the suit for the plaintiffs. Since the plaintiffs committed breach of the agreement, they are not entitled to seek any relief as prayed for. 10. Issues settled by the Trial Court:- 1) Whether defendant is entitled to recover the suit amount from the defendant with interest? 2) To what relief? 11. Evidence adduced by the parties, both oral and documentary:- For plaintiffs:- P.W.1 :- Qamar Sultana P.W.2 :- Shaik Subhan P.W.3 :- S.Madhukar For defendant:- D.W.1 :- K.Sooryanarayana Maiya Exhibits marked on behalf of plaintiffs:- Ex.A.1 :- Agreement of sale of house entered into between the defendant and the plaintiffs dt.31-10-1981. Ex.A.2 :- Office copy of the notice dt.23-1-1982 issued by the plaintiffs to the defendant. Ex.A.3 :- Registered notice dt.27-1-1982 issued by the defendant to the Counsel for the plaintiffs. Ex.A.4 :- Office copy of Telegraphic notice issued to the defendant by the Counsel for the plaintiffs. Ex.A.5 :- Draft letter in the handwriting dt.31-1-82 for phonogram. Ex.A.6 :- Draft letter in the handwriting dt.1-2-82 for phonogram Ex.A.7 :- Telegram letter Ex.A.8 :- Notice dt.5-2-82 issued by the Counsel for the plaintiffs to the defendant’s Counsel. Ex.A.9 :- Draft document dt.2-2-1982. Ex.A.10:- Ex.A.9 typed on a non-judicial stamp paper of Rs.10/-. Ex.A.11 :- Office coy of notice dt.7-3-82 issued by the plaintiffs’ Counsel to the defendant’s Counsel. Ex.A.12 and Ex.A.13:- Postal acknowledgments dues. Ex.A.14:- Returned postal envelop with acknowledgment due. Ex.A.15:- Legal notice issued by the plaintiffs to the defendant dt.12-3-1982. Exhibits marked on behalf of defendant:- Ex.B.1 :- Telegram issued by the plaintiffs’ Counsel to the defendant dt.21-2-1982. Ex.B.2 :- Certified copy of sale deed, dt.21-6-1982 executed by the defendant in favour of Sri Digamber Rao Pawar. 12. Findings recorded by the Trial Court in nutshell:- The Trial Court on appreciation of the evidence of P.Ws.1 to 3 and D.W.1, and Ex.A.1 to Ex.A.15 and Ex.B.1 and Ex.B.2, while answering issue No.1, recorded reasons at paras 9 to 18 and came to the conclusion that the plaintiffs waited at the Registration Office for the purpose of registration and as the defendant had not gone to the Registrar’s Office, as he does not know the place of registration and also in the light of Ex.A.9 and Ex.A.10, the Court was of the view that in view of the interest of justice, the plaintiffs are entitled to recover the advance amount paid to the defendant and accordingly decreed the suit with costs as prayed for. Aggrieved by the same, the present appeal had been preferred. 13. In the light of the submissions made by the Counsel on record, the following points arise for consideration in this appeal:- 1) Whether the findings recorded by the Trial Court in any way to be disturbed or to be confirmed in the facts and circumstances of the case? 2) If so, to what relief, the parties would be entitled to? 14. Point No.1:- The plaintiffs filed the suit for recovery of Rs.52,600/- together with interest at 12% per annum. The respective pleadings of the parties already had been referred to above. 15. P.W.1, the 2nd plaintiff in the suit, deposed that the 1st plaintiff is her mother and the 3rd plaintiff is her sister. They wanted to purchased the house in question at Lingampally, Hyderabad belonging to the defendant. This witness also deposed that the defendant agreed to sell the same for sale consideration of Rs.1,45,000/- and accordingly they entered into an agreement dt.31- 10-1981, which is Ex.A.1. The defendant received Rs.10,000/- and Rs.40,000/- towards advance of sale. As per the agreement, the defendant has to execute the sale deed in their favour. At the time of agreement, or at the time of inspecting the premises or before payment of money, the plaintiffs have not inspected the title deeds of the defendant. They demnded the defendant to produce the title deeds for verification prior to the expiry of the stipulated time. So, they got issued Ex.A.2 notice dt.23-1-1982 to the defendant. They wanted to dispose of their house at Yakatpura and to invest the same for purchase of the suit house. The defendant is aware of the same. They have arranged the remaining sale consideration in the even of necessity, her father’s friend Sri Madhukar promised to arrange necessary funds for purchasing the suit house. The defendant got issued reply notice vide Ex.A.3 with false allegations stating that they have inspected the documents prior to their entering into agreement under Ex.A.1. There is no condition stipulated under Ex.A.1 for depositing the balance sale consideration into Bank or show the same by way of Draft as a condition to get the Income Tax Clearance Certificate by the defendant. Before the receipt of Ex.A.3, a draft sale deed was handed over to the defendant. After receiving Ex.A.3 notice, the plaintiffs got issued telegraphic notice vide Ex.A.4 dt.30-1-82. As they have not received any reply from the defendant, again they got issued another telegraphic notice under Ex.A.5. The plaintiffs received telephonic message from the defendant stating that the defendant would register the sale deed if sale consideration is mentioned at Rs.50,000/- only. Since the plaintiffs doubting the completion of the transaction, she informed her sister and brother-in-law Sri Subhan, the whole day they waited at the Registrar’s Office expecting the defendant would come to there, but the defendant did not turn up, on that day at 8.30 p.m., they informed the defendant about the fact that they waited at the Register’s Office by way of phonogram vide Ex.A.6. On 2-2-82 P.W.1 went along with her brother-in-law to the house of one of the Junior Advocates of Sri Veerabhadra Rao, who is the Counsel of the defendant. The defendant was present in the Office of the Advocate. The defendant did not ask them for any draft sale deed and he did not ask to furnish their financial capacity. The defendant requested for 10 days time for getting the clearance certificate from the Income Tax department, for which they agreed. On 3-2-82, the defendant sent a telegraphic notice stating that the agreement was cancelled and the advance amount was forfeited vide Ex.A.7. Subsequently, the defendant sent a notice dt.5-2-1982 stating that he would prepare to extend the time for 10 days, vide Ex.A.8. The plaintiffs demanded the advance amount of Rs.50,000/- from the defendant and he agreed to pay the same within 10 days time. The plaintiffs agreed to waive the interest, in case the defendant pays the amount within ten days. On 20-2-82, the defendant requested the plaintiffs to come over to his Advocate’s house for drafting a document of acquaintance. Accordingly, herself and her brother-in-law and 3rd plaintiff went to the office of the defendant’s Advocate. On the instructions of the defendant, his Counsel prepared the document which is Ex.A.9. They have agreed for the recitals of Ex.A.9, since they had to sign the document only after receiving back the entire advance amount. The plaintiffs were not paid any amount under Ex.A.10. The defendant has not paid the amount beyond February as promised. In the first week of March,1982, they have received a telephone from Sri Ram Reddy ascertaining about the plaintiffs objection, if any, for the purchase of the suit house by him. On 7-3- 1982, the plaintiffs sent a reply notice to the defendant vide Ex.A.11 and also a copy to Ram Reddy. Ram Reddy did not receive the notice. The defendant gave reply vide Ex.A.15. They never informed the Advocate of the defendant that they have compromised with the defendant. As the defendant failed to execute the registered documents, the plaintiffs filed the suit for recovery of money. 16. P.Ws. 2 and 3 also supported the version of P.W.1. P.W.3 deposed that he paid Rs.80,000/- to the plaintiffs and after two or three days they returned the said amount representing that the registration could not be completed. 17. D.W.1 admitted the suit transaction and received the earnest money of Rs.50,000/- from the plaintiffs under Ex.A.1 and further deposed that the sale deed could not be executed as per the terms of Ex.A.1, as the plaintiffs did not provide a draft sale deed and therefore, he has not obtained the Income Tax Clearance Certificate and the transaction could not be completed. D.W.1 admitted the receipt of Ex.A.3 and Ex.A.6 notices from the plaintiffs. He further deposed that the plaintiffs have not mentioned in which Register’s Office they were waiting. As the place was not mentioned, he did not go to the Office. On 3-2-82, he got issued a telegraphic notice stating that the plaintiffs have committed breach and the amount paid is forfeited. On 4-2-82 between 9.00 or 9.30 a.m., the plaintiffs 1 and 2 came to his house and asked him for some time stating that they are intending to purchase the house. Then he told them to contact his Advocate. On 5-2-82, he got issued another notice through Veera Bhadra Rao, Advocate and informed that though legally forfeited the amount, but on humanitarian grounds, he is giving time upto 10-2-82 for getting the sale deed registered. He also asked them a copy of the sale deed to obtain Income Tax Clearance Certificate. They did not give him. He never promised them that he will repay the advance amount of Rs.50,000/-. On 24-2-82, the plaintiffs approached his Advocate and informed him that they are not in a position to purchase the house due to their domestic difficulties and requested to refund the advance amount. Ex.A.9 is the copy of Ex.A.10. He did not know the contents of Ex.A.9 and his Advocate did not inform him regarding the approach of the plaintiffs to him after 20-2-1982. He does not know regarding Ram Reddy who alleged to have telephoned to the plaintiffs that he is purchasing the house. In the month of May, the plaintiffs have filed the suit. 18. In I.A.No.485/82 the defendant was permitted to dispose of the suit house and deposit the amount. Accordingly, he sold the suit house to one Digambar Rao for Rs.1,00,000/- vide Ex.A.2. 19. The learned Judge appreciated the evidence of P.W.1 and also P.Ws. 2 and 3 and D.W.1 and further appreciated Ex.A.1 to Ex.A.15 and Ex.B.1 and Ex.B.2 and the clauses specified in Ex.A.1 as well and further discussed in detail – Ex.A.2, Ex.A.3, Ex.A.4, Ex.A.8 and also discussed – Ex.A.5, Ex.A.6, Ex.A.7, Ex.A.9, Ex.A.10, Ex.A.11, Ex.A.12, Ex.A.13, Ex.A.14, Ex.A.14 and further discussed Ex.B.1 and Ex.B.2 as well and came to the conclusion that in the facts and circumstances the refund to be ordered. 20. In the light of the convincing findings recorded especially in the light of certain admissions made by D.W.1 as well, it cannot be said that the ordering of the refund in the facts and circumstances is in any way bad in law. Hence, these findings are hereby confirmed. But, however, in the light of the exchange of notices and taking the respective stands of the parties and also taking into consideration the conduct of the parties as well and in the light of the fact that permission was given to the defendant to sell the house and deposit the amount, this Court is of the considered opinion that ordering refund of the amount at 12% per annum interest as prayed for may not be just and proper and hence the refund of amount is hereby confirmed but however the interest at 12% per annum is modified to 6% per annum from the date of suit till the date of realisation. It is no doubt stated that the deposited already had been made. The same to be verified and in the event of such deposit is being made, the interest at 6% per annum on the suit amount be calculated from the date of suit till the date of realisation. Accordingly, the appeal is allowed partly to the extent indicated above. 21. Point No.2:- The findings recorded on all respects by the Trial Court are hereby confirmed but however the interest part is modified to 6% per annum from the date of suit till the date of realization. The parties to bear their own costs. ______________________ Justice P.S.Narayana 20th April, 2010 smr