advocatemmmohan

My photo

ADVOCATEMMMOHAN -  Practicing both IN CIVIL, CRIMINAL AND FAMILY LAWS,Etc.,

WELCOME TO LEGAL WORLD

WELCOME TO MY LEGAL WORLD - FOR KNOWLEDGE IN LAW & FOR LEGAL OPINIONS - SHARE THIS

Wednesday, May 24, 2017

Once remedy in the form of civil suits had been resorted to, in our considered opinion, it was not at all proper exercise of power to invoke provisions under Section 30 of the Act with regard to apportionment of the compensation by directing refund of earnest money. It is not mandatory to make a reference to the civil court under Section 30 and adjudication of dispute in an appropriate case can be ordered by way of the civil suit.= a purchaser is entitled to step into the shoes of the owner to claim compensation though could not question the notification for acquisition. In our opinion even if it is held that respondent No.1 was the “person interested” within the meaning of Section 3(b) of the Act its case is not advanced so as to seek adjudication of the questions in the facts of this case in the reference under Section 30 of the Act which remedy was discretionary. - Resultantly, the appeals are allowed. The impugned judgment and order passed by the High Court is hereby set aside. The land owners are entitled for disbursement of the compensation. Obviously, it will be subject to the outcome of the civil suits in which refund of the earnest money along with interest had been sought by the respondent No.1. In case the appellants fail and refund is directed in civil suits, the landowners shall have to pay it as per the judgment and decree which may be passed. No costs.


                                                                  Reportable

                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                       CIVIL APPEAL NO. 5598  OF 2017
        (Arising out of Special Leave Petition (C) No.15383 of 2015)

RAMESH CHAND AND ORS.                    …Appellants

                                   VERSUS

M/S. TANMAY DEVELOPERS
PVT. LTD. & ORS.                               …Respondents

                                    WITH

                        CIVIL APPEAL NO. 5600 OF 2017
        (Arising out of Special Leave Petition (C) No.17007 of 2015)


rajinder singh AND ORS.                        …Appellants

                                   VERSUS

M/S. TANMAY DEVELOPERS
PVT. LTD. & ORS.                               …Respondents
                                    WITH

                       CIVIL APPEAL NO. 5601  OF 2017
        (Arising out of Special Leave Petition (C) No.17168 of 2015)

mukhtiar singh AND ORS.                        …Appellants

                                   VERSUS

M/S. capex projects
PVT. LTD. & ORS.                               …Respondents
                                     AND

                       CIVIL APPEAL NO. 5606  OF 2017
 (Arising out of Special Leave Petition (C) No. 13622  of 2017 (CC. No.12759
                                  of 2015)

mehar chand (since Deceased)
thr. lrs. AND ORS.                                  …Appellants

                                   VERSUS

M/S. TANMAY DEVELOPERS
PVT. LTD. & ORS.                               …Respondents


                               J U D G M E N T


ARUN MISHRA, J.

1.    Leave granted.
2.    The appellants-herein are aggrieved by the common judgment  and  order
passed by the High Court  of  Punjab  and  Haryana  at  Chandigarh  in  F.A.
No.1941 of 2013, dated 4th February, 2015.  The High Court by  the  impugned
judgment and order has directed refund of the earnest money by  M/s.  Tanmay
Developers Private Ltd. Five agreements to sell were  entered  into  between
the M/s. Tanmay Developers Pvt. Ltd. and  the  land  owners  on  22.07.2006,
22.07.2006,  22.07.2006,  24.07.2006  and  21.06.2006.   Out  of  the   five
agreements, earnest money of Rs.54,25,000/- was paid out of the  total  sale
consideration of Rs,4,52,81,250/- as per agreement on  22.07.2006.   As  per
agreement dated 22.07.2006, Rs.1,56,000,00/- was paid as earnest  money  out
of total sale  consideration  of  Rs.12,54,37,500/-.   As  per  yet  another
agreement on 22.07.2006, earnest money of Rs.21,00,000/- was paid out  of  a
sum of Rs.1,50,93,750/-. As per agreement dated  24.07.2006,  earnest  money
of  Rs.90,00,000/-  was  paid   out   of   total   sale   consideration   of
Rs.7,71,31,250/-.  As per  agreement  dated  21.06.2006,  earnest  money  of
Rs.2,60,000/- was paid out of a total sale consideration or  Rs.14,29,687/-.
  Period  for  performance  of  agreement  had  expired  in  the  month   of
September/October, 2006. The land-owners on failure of purchaser to get  the
sale deed executed forfeited earnest money.
3.    A notification under Section 4 of the Land Acquisition Act, 1894  (for
short, “the Act”) was issued on 18.3.2008 for acquiring the land  which  was
the subject matter of the agreements.  Three suits were filed  for  recovery
of earnest money in September, 2009 and one  suit  was  filed  for  specific
performance of agreement to sell by the respondent-  M/s.  Tanmay  Developer
in the month of March, 2008 which was decreed on 18.04.2014 and  the  appeal
filed by the land owners was pending at the time when the impugned  judgment
and order was passed by the High Court. Similarly, three other  suits  which
were filed for recovery  of  the  earnest  money  were  pending.   The  Land
Acquisition Officer has passed the award on 19.09.2008.  No reference  under
Section 18 of the Act was sought by M/s. Tanmay Developers; however,  during
the pendency of the suits/appeal the respondent had filed application  under
Section 30 of the Act for referring the  dispute  to  the  Civil  Court  for
refund of earnest money alongwith interest.  The  Land  Acquisition  Officer
accordingly referred the matter.
4.    The Reference Court on 7.12.2012 has passed  an  award  rejecting  the
prayer made by respondent No.1 on the ground that the dispute  with  respect
to the forfeiture of earnest money and whether M/s. Tanmay  Developers  Pvt.
Ltd. was entitled for specific performance could not  be  adjudicated  under
Section 30 of the Act and it would not  be  appropriate  for  the  Reference
Court to decide these disputed issues between the parties in view  of  civil
suits/appeal.  The Reference Court held that the dispute  under  Section  30
of the Act arising out of the apportionment of the compensation or any  part
thereof involved the vexed question of title or  the  civil  rights  of  the
parties arising  out  of  such  transaction  could  not  be  adjudicated  by
substituting the judicial forum into the civil court.  The  Reference  Court
could not decide question  of  refund  of  earnest  money  by  applying  the
provisions of Chapter 2 of Part II of the Specific Relief Act,  1963.   Such
powers can  be  exercised  by  the  Civil  Courts.   Aggrieved  thereby  the
respondent No.1 filed appeals before the High Court which have been  allowed
by the impugned judgment and order.
5.    The respondent No.1 had sought apportionment of the compensation  only
on the ground that agreement for sale had been  entered  into  by  the  land
owners and prayed for refund of the earnest money along  with  the  interest
at the rate of 12 per  cent  per  annum,  since  the  agreement  had  become
incapable of being specifically performed due to the  acquisition  of  land.
It was contended on behalf of the land owners that Respondent No.1  was  not
ready and willing to perform its part of the contract.  Time was essence  of
the contract.  There had been forfeiture of the earnest money on failure  of
respondent No.1 to get the sale  deed  executed  within  stipulated  period.
Respondent No.1  was not having requisite amount of money  hence  could  not
be said to be ready and willing to purchase the property. In the  facts  and
circumstances, the right of forfeiture of earnest  money  had  been  rightly
exercised.  Thus, respondent  No.1  was  not  entitled  for  refund  of  the
earnest money or apportionment of compensation particularly due to  pendency
of the civil suits/appeal.
6.    The learned counsel appearing on behalf of the appellants  urged  that
High Court erred in  directing  refund  of  the  earnest  money  along  with
interest at 6% per annum out of the compensation amount  determined  by  the
Land Acquisition Officer.  The High Court  has  not  decided  various  vital
questions. The  Reference  Court  had  rightly  declined  to  entertain  the
reference application under Section 30 of the Act seeking refund of  earnest
money under guise of apportionment of compensation. As  per  the  agreement,
earnest money had been forfeited much before the  acquisition  of  the  land
which was initiated by virtue of notification issued under Section 4 in  the
year 2008.  Civil Suits had been filed and one of the  matter  first  appeal
had been filed against one of the judgment and decree of  the  Civil  Court,
thus, those questions could not have been taken over  for  decision  by  the
Reference Court. Subsequent to filing of civil  suits  remedy  of  reference
had been sought under Section 30.
7.    On the other hand, it was contended by the learned  counsel  appearing
on behalf  of  the  respondent-developer  that  buyer  would  be  a  “person
interested” within the purview of Section 3  (b)  and  9  of  the  Act.  Any
person interested could have sought the reference which had rightly made  as
the payment of earnest money under agreements was not in dispute.  The  High
Court  has  rightly  exercised  the  power  to  apportion  compensation   by
directing refund of the earnest money along with interest.
8.    It was not rightly disputed that several civil suits with  respect  to
refund of the earnest money and for specific performance  of  the  agreement
to sale were filed by the respondent No.1 before reference was sought  under
Section 30 of the Act. Once remedy in the  form  of  civil  suits  had  been
resorted to, in our considered opinion, it was not at all   proper  exercise
of power to invoke provisions under Section 30 of the  Act  with  regard  to
apportionment of the compensation by directing refund of earnest money.   It
is not mandatory to make a reference to the civil  court  under  Section  30
and adjudication of dispute in an appropriate case can be ordered by way  of
the civil suit.  In the instant case civil suits had already been  preferred
by respondent No.1.  It was not appropriate to  decide  same  dispute  under
Section 30.
9.    In the instant case, there  were  serious  disputed  questions  as  to
whether earnest money had been rightly forfeited by the land owners  due  to
the failure of the respondent No.  1  to  obtain  the  sale  deeds  executed
within stipulated time fixed under the agreements, whether respondents  were
ready and willing to purchase the property and had  arrangement  of  balance
consideration for payment to land owner.  Whether the  power  of  forfeiture
was rightly exercised by the land owners as  claimed  by  them.   The  Civil
Court was already in seisin of  the  matter  as  such  reference  court  had
rightly rejected the reference made under Section 30 of the Act and  rightly
asked parties to await outcome of the regular civil suits.
10.   The High Court in the impugned judgment  has  not  decided   aforesaid
objections raised by the appellants/land owners without examining facts  and
circumstances of the case and due to pendency of civil  suits,  it  was  not
open to the High Court to order refund of the earnest money.
11.   A perusal of Section 18 of the Act makes it clear that  reference  can
be sought to a civil court with respect (i) the  measurement  of  the  land,
(ii) adequacy and quantum of compensation,  (iii)  persons  to  whom  it  is
payable and (iv) the apportionment thereof amongst the  persons  interested.
The application under Section 18 is required to be filed  within  stipulated
time whereas no limitation is prescribed under Section 30 of  the  Act.   It
is discretionary upon the court to refer a dispute under Section 30  of  the
Act. The same is confined to the apportionment of the compensation or as  to
a person to whom the same is payable.  The scope of Section 30  of  the  Act
is narrow as compared to Section 18 as laid down in G.H. Grant v.  State  of
Bihar AIR 1966 SC 237 and in Sharda Devi v. State  of  Bihar  (2003)  3  SCC
128.
12.   We need not go into the  question  whether   holder  of  agreement  is
“person interested” as defined in  Section  3(b)  of  the  Act.  As  we  are
satisfied that respondent No. 1 could not have resorted  to  the  remedy  of
reference for refund of the earnest money as for this very  purpose  he  had
filed civil suit earlier in point of time. In the reference petition  refund
of earnest money had been prayed with interest at the rate of  12  per  cent
per annum.  In civil suit refund had been sought with 18 per  cent  interest
per annum and in one suit specific performance was prayed.
13.   The High  Court  has  relied  upon  the  decision  of  this  Court  in
Thiriveedhi Channiah v. Gudipudi Venkata Subba Rao (Dead)  by  Lrs.  &  Ors.
(2009) 17 SCC 341, in which the appellant demanded  refund  of  the  advance
amount on the premise that due to notification under Section 4(1),  property
could not be sold whereas  the  plea  of  forfeiture  was  advanced  by  the
respondents.  This High Court had ignored and  overlooked  that  case  arose
out of the civil suit in which specific performance  of  agreement  to  sale
was  sought.   This  Court  has  found  that  parties  were  aware  of   the
notification under Section 4(1) as such right of forfeiture could have  been
exercised. The facts in the said case were different and the  said  decision
could not have been utilized by the High Court for setting  aside  the  well
reasoned award passed by the reference  court  declining  to  entertain  the
prayer made by the respondents, in view of the availing remedy of the  civil
suits.  The High Court should have  in  fairness  reflected  that  the  said
decision was rendered by this Court in the context of civil suit.  The  High
Court has referred it in the manner as if it  was  a  case  which  has  been
decided under Section 30 of the Act with respect  to  the  apportionment  of
the compensation.
14.   The learned counsel on behalf of the respondent has  relied  upon  the
decision of Bombay High Court in Mohammad  Akil  Khan  v.  Premraj  Jawanmal
Surana and Anr. AIR 1972 Bom. 217.  The decision is distinguishable  as  the
civil suit had not been filed in the said case.  Thus, we need not  go  into
the correctness of the aforesaid decision.  Reliance has  also  been  placed
on Delhi Development Authority v. Bhola Nath Sharma (Dead) by  Lrs.  &  Ors.
(2011) 2 SCC 54; and Sunderlal v. Paramsukhdas & Ors. AIR  1968  SC  366  to
contend that definition under Section 3(b) of  the  “person  interested”  is
“inclusive” definition. Reliance for this purpose has also  been  placed  on
U.P. Jal Nigam, Lucknow Through Its Chairman & Anr. v. Kalra Properties  (P)
Ltd., Lucknow & Ors. (1996) 3 SCC 124,  laying  down  that  a  purchaser  is
entitled to step into the shoes of the owner to  claim  compensation  though
could not question the notification for acquisition. In our opinion even  if
it is held that respondent No.1  was  the  “person  interested”  within  the
meaning of Section 3(b) of the Act its case is not advanced so  as  to  seek
adjudication of the questions in the facts of this  case  in  the  reference
under Section 30 of the  Act  which  remedy  was  discretionary.   The  land
owners also relied upon Coromandel Indag Products Private Limited v.  Garuda
Chit and Trading Company Private  Limited  and  Another  (2011)  8  SCC  601
wherein this Court dealt with question when time is essence of the  contract
and in what circumstances earnest money could be forfeited.   This  question
has to be gone into in civil suits.
15.   Resultantly, the appeals are allowed. The impugned judgment and  order
passed by the High Court is hereby set aside.  The land owners are  entitled
for disbursement of the compensation.  Obviously, it will be subject to  the
outcome of the civil suits in which refund of the earnest money  along  with
interest had been sought by the respondent No.1.   In  case  the  appellants
fail and refund is directed in civil suits, the  landowners  shall  have  to
pay it as per the judgment and decree which may be passed.  No costs.
                                                              …………………………..J.
                                                               (Arun Mishra)

                                        ..................................J.
                                                   (MOHAN M. SHANTANAGOUDAR)
NEW DELHI
APRIL 26, 2017

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.