IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 12.08.2008 CORAM THE HONOURABLE MR.JUSTICE M.CHOCKALINGAM AND THE HONOURABLE MR.JUSTICE M.VENUGOPAL O.S.A.NO.224 OF 2002 Koram Chand Thapar & Bros (Coal Sales) Limited, "Thapar House" No.25, Brabourne Road, Calcutta-700 001 .. Appellant/Plaintiff Vs. 1.Monaco Properties Pvt. Ltd. No.122, First Floor, T.T.K. Road, Alwarpet, Chennai-600 018. 2.Ravi N.Iyer .. Respondents/Defendants This O.S.A. has been preferred under Order XXXVI Rule 1 of O.S. Rules read with Clause 15 of Letters Patent against the judgment and decree of the learned Single Judge made in C.S.No.1806 of 1993, dated 15.05.2001. For Appellant : Mr.R.Thiagarajan for M/s.Rangarajan and Prabhakharan For Respondents: No appearance - - - - JUDGMENT (The judgment of the Court was made by M.CHOCKALINGAM, J.) This appeal challenges a common judgment of this Court made in C.S.Nos.1806 of 1993 and 1467 of 1994. 2.C.S.No.1806 of 1993 was filed by the appellant/plaintiff, seeking damages and also mandatory injunction and permanent injunction based on agreements, while C.S.No.1467 of 1994 was filed by the first respondent herein, seeking for payment by way of https://hcservices.ecourts.gov.in/hcservices/ interest for delayed payment and also for the money due to him as per the contracts. On trial, both the suits were dismissed. Aggrieved over the dismissal of C.S.No.1806 of 1993, the instant appeal is brought forth. So far as the dismissal of C.S.No.1467 of 1994, the judgment of the learned Single Judge is not appealed against. 3.The appellant, who is the plaintiff in C.S.No.1806 of 1993, sought the relief with the following pleadings: a)The plaintiff, who is engaged in the business of trading papers and computer stationery, was interested in purchasing commercial premises at Madras for carrying on business and hence he approached the second defendant. The second defendant had entered into an agreement, dated 13.10.1988 with one Fathima Bibi to purchase her property at Door No.43, Montieth Road, Madras measuring an extent of 2 grounds 2347 sq. ft. The first defendant had entered into another agreement, dated 13.10.1988 with one Abusha Marikar to purchase her property at Door No.44, Montieth Road, Madras, measuring an extent of about 4 grounds 1102 sq. ft. The plaintiff entered into an agreement, dated 23.12.1989 with the first defendant represented by the second defendant by which the plaintiff agreed to purchase the entire second floor area of 11154 sq. ft. in the said commercial building to be constructed over the schedule land. It was agreed that the building that is to be put up in the suit land would be named as "Thaper House". b)As per the agreement relating to the second floor, total cost to be paid by the plaintiff is Rs.87,00,120/-. Specifications for the commercial building were all given in 'D' schedule of the agreement. The plaintif has further agreed to pay 40% of the total consideration of Rs.87,00,120/- at the time of registration of the sale deeds for the undivided share in the suit land. The payment schedule was given in 'E' schedule to the agreement and the price was agreed to be final and not subject to any escalation. The first defendant has agreed as per the agreement, dated 23.12.1989 to complete the construction of the commercial complex within 24 months from the date of agreement barring unforeseen circumstances being civil commotion and riots, acts of God or any change in law or in case of Government or competent authority revoking any licence or permission granted. It was also agreed that in case of any delay beyond 24 months in handing over possession of the building, the first defendant is liable to pay liquidated damages at the rate of Rs.25,000/- per week, so long as the delay continues and possession of the commercial complex is not handed over. An advance of Rs.50,000/- was paid by the plaintiff. As per the agreement, the plaintiff is to be provided with car parking space for 12 cars in the basement of the building. c)The plaintif also entered into an another agreement with the first defendant, dated 5.5.1990, as per which he has agreed to purchase the entire first floor of Thapar House measuring 10,965 sq. ft. and the proposed undivided share in the land for a total consideration of Rs.87,17,175/-. The plaintiff as per this agreement https://hcservices.ecourts.gov.in/hcservices/ is entitled to car parking space for 10 cars in the basement. There was Tri-partite agreement between Fathima Bibi, the plaintiff and the first defendant, dated 1.6.1990, as per which the owner, namely Fathima Bibi, has agreed to sell the proportionate land to the plaintiff and the first defendant has been given right to get along with the construction of the building. Fathima Bibi has agreed to execute the sale deed for the proportionate share in the land in favour of the plaintiff. There were two tripartite agreements separately for the first and second floors. The plaintiff has made payments to the first defendant towards consideration totalling Rs.78,30,108/- in respect of second floor between 23.12.1989 and 13.11.1992. With regard to the agreement in respect of the first floor, the plaintiff has paid to the first defendant totally a sum of Rs.81 lakhs between 19.12.1990 and 1.6.1993. On the date of registration of the sale deeds in favour of the plaintiff in respect of undivided share in the land, i.e. on 19.12.1990, a sum of Rs.29 lakhs was made by the plaintiff. But, the sale deeds were not handed over to the plaintiff. The first defendant did not keep up the time schedule for completion and handing over possession of the first and second floors and the delay was only on the part of the first defendant. Inspite of the delay caused by the first defendant in building work, the plaintiff has totally paid a sum of Rs.1,59,30,108/-. The plaintiff has issued cheque for Rs.6 lakhs on 4.3.1993, which was returned by the first defendant. However, on 30.03.1993, the plaintiff issued another cheque for the said amount which was accepted by the first defendant. d)Regarding the second floor, the plaintiff has made full payment except 10% payment, which becomes due only on completion. With regard to the first floor, the plaintiff has paid 90% of the consideration and only Rs.6,17,175/- is due to the first defendant, which the plaintiff is ready to pay immediately provided the first defendant completes the construction in all aspects. The plaintiff has been ready and willing to perform his obligations arising out of the agreement. Though the first defendant agreed to provide car parking space for 22 cars under two agreements, he provided car parking space for only 12 cars in the basement and for remaining cars, the space for car parking was provided outside the building, but within the compound. The plaintiff came to know that the first defendant has taken a loan from the bank by creating an equitable mortgage by depositing the title deeds of the plaintiff. There were exchange of notices. There was compromise between the plaintiff and the defendants and a Memorandum of Understanding was arrived at in the meeting held on 29.05.1993. The first defendant also handed over possession of the first and second floors of Thapar House together with car parking space, but it was not completed in all aspects. The first defendant also agreed to hand over original title deeds obtained by the plaintiff and he has also assured to get a letter from the Vaisya Bank to show that there was no mortgage or encumbrance in the building and the land purchased by the plaintiff. The plaintiff was prepared to pay the balance of sale consideration on completion of the work, but the first defendant was not able to https://hcservices.ecourts.gov.in/hcservices/ finish the work even by extended time, namely 31.07.1993 and 30.09.1993. e)The plaintiff has paid a sum of Rs.5,40,000/- to the first defendant on 19.12.1990 with regard to the cost of registration of four sale deeds. By making unauthorised construction in fourth floor, the first defendant has incurred the risk of building being demolished by M.M.D.A. Since the works have not been completed even beyond the date fixed in the memorandum of understanding, the first defendant is liable to pay liquidated damages at Rs.25,000/- per week till he completes the work. The plaintiff also entitled for mandatory injunction directing the first defendant to complete the remaining work. Hence the plaintiff has filed the suit seeking liquidated damages, mandatory injunction and also permanent injunction. 4.The suit was resisted by the first defendant by filing written statement, stating that the first defendant has executed agreements, dated 23.12.1989 and 5.5.1990 in favour of the plaintiff in respect of the purchase of first and second floors; that the plaintiff is entitled to the second floor having an extent of 11,154 sq. ft. and the first floor with an area of 10,965 sq.ft.; that the plaintiff in all is liable to pay a sum of Rs.1,74,17,295/-; that the plaintiff has paid a sum of Rs.1,59,30,108/- and he is still liable to pay a sum of Rs.14,87,187/- to the defendants; that the sale deeds have been executed in favour of the plaintiff for the undivided share in the land by the owners Fathima Bibi and Abusha Marikar; that except some minor works in the first and second floors, the construction of two floors have been completed; that the defendant has also delivered the keys of first and second floors to the plaintiff; that the defendant has also delivered the sale deeds executed by the land owners and a letter from Vysya Bank to the plaintiff, stating that there is no encumbrance over the plaintiff's share in the building; that the plaintiff has taken possession of first and second floors in the premises even prior to the date stipulated and there was difficulty in handing over the car parking space only; that prior to 29.05.1993, the first defendant was not granted licence to enter the first and second floors to complete the minor remaining works; that the plaintiff cannot ask any damages in respect of common area; that the dispute with regard to actual allotment of car parking space was resolved on 29.05.1993; that the claim for damages is not sustainable; that the first defendant has constructed the building in accordance with the permission granted by M.M.D.A.; that the defendants have not interfered with the plaintiff's possession in the first and second floors; that the defendants are not liable to pay interest and that the plaintiff has not made out a case for damages or other reliefs and hence the suit was to be dismissed. 5.The plaintiff has also filed a reply statement reiterating the contentions stated in the plaint and further, he has stated that the plaintiff has taken out a commission and the Advocate Commissioner has inspected the property and he has taken an inventory of items of work not completed; that payments have been given only in accordance https://hcservices.ecourts.gov.in/hcservices/ with the progress in construction work and that the plaintiff is not able to make the final payment because the work is not completed by the first defendant and hence the plaintiff is entitled for the relief sought for. 6.On the above pleadings, 9 issues were framed. Equally, on the pleadings in C.S.No.1467 of 1994, 8 issues were framed. Both the suits were filed by the respective parties seeking the relief resting on the agreements entered into between the parties and also complaining of breach of the same against each other. Both the suits were taken up for trial jointly and they were jointly tried. On the side of the plaintiff, P.Ws.1 and 2 were examined and Exs.A-1 to A-43 were marked. On the side of the defendants, D.W.1 was examined and Exs.B-1 to B-13 were marked. On consideration of the materials available and submissions made, both the suits were dismissed, recording that the plaintiff in C.S.No.1806 of 1993 was found entitled to Rs.14,87,187/- towards the money spent by him for completing the work and damages for breach of the contract by the defendant and this amount was ordered to be adjusted against the amount due to the defendant under Exs.A-1 and A-2, i.e. a sum of Rs.14,07,187/- and thus, the claims in both the suits were partly allowed and adjusted against each other and both the suits were dismissed, leaving the parties to bear their costs and under these circumstances, this appeal has arisen. 7.The only question that would arise for consideration in this appeal is whether the plaintiff/appellant is entitled for remaining part of damages as claimed by him in the suit. 8.Advancing arguments on behalf of the appelant, the learned counsel has made the following submissions: a)The appellant has entered into two separate agreements under Exs.A.1 and A.2, dated 23.12.1989 and 05.05.1990 for construction of the buildings with proportionate undivided share in relation to the extent of the construction to be acquired by the appellant. The appellant and the respondents entered into a memorandum of understanding under Ex.A.21 dated 29.05.1993, in which the parties have resolved the dispute and the respondents had agreed to complete the building on or before 31.7.1996 and 30.09.1996 in all aspects and hand over the same to the plaintiff. It is an admitted fact that the buildings have not been completed and handed over to the appellant with all amenities. The appellant has agreed to waive the penalty under Ex.A.1 subject to the respondents fulfilling the obligations under Exs.A.1 and A.2. The respondents having failed to adhere to the terms under Ex.A.21, are bound by the original contracts entered into between the parties. The appellant has paid a sum of Rs.6,17,175/- to the Thapar House Owner's Association being the amount payable by the appellant in relation to the incomplete construction and the appellant is entitled to adjust the expenses incurred thereto from and out of the amounts payable by them under Exs.A.1 and A.2. https://hcservices.ecourts.gov.in/hcservices/ b)There had been shortfall in the constructed area allotted to the appellant under Exs.A.1 and A.2 and as such, the appellant would be entitled to Rs.15,07,740/-. The appellant shall be entitled for liquidated damages under the above two agreements. The Commissioner's report would establish the incomplete nature of work performed by the respondents and also the abandonment of the contract. The delay on the part of the respondents would dis-entitle them from claiming moneys payable under Exs.A.1 and A.2. The letter, dated 7.9.1992 from Karur Vysya Bank would indicate that the property had been mortgaged by the respondents and the appellant was required not to make payments directly to the respondents and were asked to await for further communications from them and hence it cannot be construed that the appellant had withheld payment deliberately. The respondents were given an opportunity to complete the building, but they had not availed that opportunity and had abandoned the work. Once Section 74 of the Contract Act is applicable, the court has got powers to award damages and the plaintiff need not prove the same and hence the appeal has got to be allowed. 9.Despite service of notice, no representation on the side of the respondents. From the available materials, the following would emerge as the facts admitted by the parties before the trial court. The properties in Door No.43, Montieth Road, Egmore, Madras, having an extent of 2 grounds and 2347 sq.ft. belonged to one Fathima Bibi and the adjoining property comprised in Door No.44 belonged to one Abusha Marikar. In respect of the said two properties, the first defendant entered into an agreement of sale on 13.10.1988, wherein the consideration was approximately Rs.80 lakhs. Both properties were consolidated as a single block and sought to be developed by the first defendant by putting up a multi-storeyed building. The owners of the properties permitted the first defendant to develop the property and approval was granted on 20.08.1990. An agreement, dated 23.12.1989 was entered into between the first defendant and the plaintiff in respect of the second floor and an another agreement, dated 5.5.1990 was entered in respect of the first floor. Those agreements were marked as Exs.A.1 and A-2 respectively. From a perusal of the agreements, it could be seen that the sale consideration of each floor was fixed at Rs.87,00,120/- for the second floor and Rs.87,17,175/- for the first floor. The built up area in respect of the first floor was 10,965 sq.ft. and while for the second floor, it was 11,154 sq. ft. Inter-alia, it was agreed that the first defendant builder should complete the construction of commercial premises for the plaintiff purchaser within 24 months from the date of agreements. If there was any default on the part of the purchaser to perform his part of the obligation, i.e. to pay the amount due and payable towards the cost of construction and his share of common maintenance, such outstanding shall remain and constitute a charge on his interest over the land purchased from the owners. If there was any delay on the part of the builder to construct the commercial premises and hand over the possession, the first defendant should pay liquidated damages at the rate of Rs.25,000/- per week to https://hcservices.ecourts.gov.in/hcservices/ the purchaser, so long as the delay continues and possession of commercial premises was not handed over to the plaintiff. It was agreed that the plaintiff should pay 40% of the total consideration after getting the registration of sale deeds in respect of proportionate undivided share in the land from the owners. The plaintiff should pay 10% of balance on completion of ground floor roof slab, another 10% is to be paid to the builder on completion of first floor roof slab, another 10% is to be paid at the time of second floor roof slab, yet another 10% on completion of third floor roof slab and in the remaining amount, 10% is to be paid to the builder on completion of most of the brick works and last 10% is to be paid by the plaintiff to the builder after getting possession. As agreed between the parties, the construction was not completed within a period of two years and because of the circumstances beyond control, it could not be completed. Equally, there was a delay in making payment, as per the time schedule as found in the agreement. There were exchange of letters and communications, one calling upon the other to perform their part of obligations. While the matter stood thus, there was compromise between the plaintiff and the defendants on 19.5.1993, as evidenced in Ex.A.21 minutes of the Memorandum of Understanding. From Ex.A.21, it would be quite clear that on 19.5.1993, the defendant has handed over the entire first and second floors of the buidling and premises of Door Nos.43 and 44, Montieth Road, Egmore, Madras with 22 car parking space. Under the memorandum of understanding, the first defendant undertook the completion of the first and second floors on 31.7.1993 in all aspects and Thapar House by 30.09.1993 in all aspects. The plaintiff was insisting that all 22 car parking space must be allotted to him inside the basement, but under Ex.A.21, it was resolved that the plaintiff should be allotted 15 car parking slots in the basement and remaining 7 car parking slots inside the premises, but not in the basement. 10.The defendant mortgaged the properties which were sold in favour of the plaintiff by two original owners with the bank, from whom the first defendant has raised loan. The defendant has clarified that he has not mortgaged the land purchased by the plaintiff and has also assured the plaintiff that he would get a letter to that effect. Accordingly, letter was received from the bank by the first defendant and was handed over to the plaintiff. While the matter stood thus, the plaintiff filed suit in C.S.No.1806 of 1993, alleging that there was breach of agreement on the part of defendant and the possession of the building was not handed over and as per the agreement, the defendant was liable to pay liquidated damages at Rs.25,000/- per week and thus, the plaintiff sought the relief of permanent injunction, mandatory injunction, apart from damages of Rs.45,75,000/-. 11.The defendant has not only countered the suit, but also filed the other suit, claiming that it was the plaintiff, who has breached the agreement and was liable to pay a sum of Rs.14,87,187/- as per Ex.A.21, memorandum of understanding and under these circumstances, the plaintiff should be directed to pay the same with interest. https://hcservices.ecourts.gov.in/hcservices/ 12.As could be seen above, this appeal is at the instance of the plaintiff in C.S.No.1806 of 1993, challenging the judgment, disallowing their part of the claim. Admittedly, Exs.A-1 and A-2, agreements were entered into between the parties. The agreement, dated 23.12.1989 was in respect of the second floor, where the total consideration was Rs.87,00,120/- and the agreement, dated 05.05.1990 was in respect of the first floor, where the total consideration was at Rs.87,17,175/-. It was also agreed that the entire construction must be completed within a period of 24 months from the date of the agreements. Clauses 29 and 28 of the agreements respectively are in respect of the consequences that would follow on the failure of performance of obligations in time. If there was any failure on the part of the builder in constructing the commercial premises and handing over the possession thereof in all respects to the purchaser within 24 months from the date of agreements, the builder should pay liquidated damages to the purchaser at the rate of Rs.25,000/- per week or part thereof as long as the delay continues and possession of the commercial premises is not handed over to the purchaser. The plaintiff has sought for liquidated damaged, resting his claim on clauses 29 and 28 of the agreements, respectively, and also for recovery of amount actually spent by the plaintiff for completing the construction. 13.It is not in controversy that the construction was not completed within the time stipulated under Exs.A-1 and A-2. After exchange of communications and notices, parties entered into Ex.A.21, Memorandum of Understanding, dated 29.05.1993. This Memorandum of Understanding should have been entered into by the parties, who had got clear knowledge and conscious of non completion of construction within the stipulated time and who had appraised the circumstances and reasons attendant and that too after exchange of communications and notices. From Ex.A.21, it would be quite clear that the defendants have handed over the possession of entire first and second floors of the building and premises in Door Nos.43 and 44, Montieth Road, Egmore. It could also be seen that the works in the first and second floors were almost completed, except some polishing work and minor works. Under such circumstances, the plaintiff has taken possession of the property. Hence the contention of the plaintiff that he was unable to take possession of the property and only after inspection of the properties by the Commissioner appointed by this court, he got possession of the property, has got to be rejected. 14.A perusal of the records would clearly indicate that the Commissioner appointment was sought for only for making an inspection and to file the report as to the stage of construction. The Commissioner Report Ex.C.1 was to the effect that the entire work was almost completed in the first and second floors and hence it would be quite clear that substantial part of the construction works of first and second floors were completed within the time stipulated. It is not the case of the plaintiff that the progress of construction work was lacking or it was not done within stipulated time. When a clarification was sought for by the plaintiff as to whether the https://hcservices.ecourts.gov.in/hcservices/ property purchased by him was under mortgage, the first defendant has obtained a letter from the bank to the effect that the property of the plaintiff was not mortgaged by the defendants. When each party was complaining of other as to the non performance of their respective part of obligations under Exs.A-1 and A-2, agreements, Ex.A.21, the Memorandum of Understanding was entered into. It was agreed that the first defendant should complete the