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Supreme Court of India
R.M. LODHA, ANIL R. DAVE, RANJAN GOGOI, JJ.
Hansa V. Gandhi
Versus
Deep Shankar Roy & Others
Civil Appeal No. 4509 of 2007 with Civil Appeal No. 4510 of 2007 and Civil Appeal No. 4511 of 2007
Decided on : 18-04-2013
Constitution Of India,1950 - amount of installments - payment to the Developer - Appeal Nos.492, 493 and 499 of 2002, dated 24th August, 2005 by the High Court of Judicature at Bombay, these appeals have been filed by the original plaintiffs, who had filed the suits for specific performance.
2. As the facts involved in all these three appeals are similar in nature, all these appeals are being decided by this common judgment. For the purpose of clarity, we are referring to all the parties by their description as it was before the trial court. The Developer of the property, original Defendant No.1 is now respondent No. 2 in all the appeals whereas respondent no.1 is a subsequent buyer of the property in question. M/s. O.P. Co-operative Housing Society (hereinafter referred to as ‘the Society’) was the owner of the land which was being developed by the Developer.
3. The Developer had entered into an agreement to develop the property i.e. land owned by the Society and thereafter to sell the flats constructed on the land in question to the intending purchasers in accordance with the terms and conditions of the agreement –Held, Court was right in allowing the appeals and directing the Developer to return the amount of the purchase price received by it from the plaintiffs with interest at the rate of 9% p.a. from the date when the letter of cancellation was written by the Developer to the plaintiffs. In our opinion, the said direction is just and proper however, looking to the rising price and inflationary trend in the country, we partly modify the judgment by increasing the rate of interest from 9% p.a. to 12% p.a. The said amount shall be paid to the plaintiffs by the Developer within two months from today plaints that the Subsequent Buyers were not bonafide purchasers for consideration, the Subsequent Buyers could not have adduced any evidence to show that they were bonafide purchasers for consideration. Had such a plea been raised by the plaintiffs in their pleadings, the Subsequent Buyers could have adduced necessary evidence to prove their cases. In such cases, normally the burden of proof would lie on the plaintiffs unless there is a registered document so as to raise a presumption that the Subsequent Buyers had knowledge with regard to the earlier transaction. Such a burden of proof was not discharged by the plaintiffs and therefore, we are also of the view that the Subsequent Buyers were bonafide buyers for consideration – appeal dismissed
Key Points: - Plaintiffs filed suits for specific performance of flat purchase agreements with the Developer or, alternatively, refund of amounts paid with damages [1000527810001][1000527810005]. - Developer issued letters of intent reserving flats subject to payment of installments and compliance with conditions, including execution of agreement to sale upon full payment [1000527810003] (!) (!) . - Plaintiffs paid initial installments but stopped after Developer increased prices due to construction delays from litigation; Developer cancelled reservations via letter dated 19th December 1997 [1000527810005][1000527810007]. - Subsequent Buyers purchased the flats at increased prices, paid full consideration, and took possession; agreements with plaintiffs were not registered under Section 4(1) of MOFA [1000527810006][1000527810008][1000527810016]. - Trial court decreed specific performance in favor of plaintiffs; High Court reversed, ordering refund with 9% interest from cancellation date [1000527810009][1000527810011]. - No binding agreement to sell existed as letter of intent was conditional and unregistered; plaintiffs failed to fulfill payment conditions [1000527810021][1000527810022][1000527810024]. - Plaintiffs did not plead that Subsequent Buyers lacked bona fides or had notice, failing to discharge burden of proof; Subsequent Buyers held bona fide without registered document creating presumption of notice [1000527810014][1000527810025]. - Supreme Court upheld High Court, denying specific performance but modified interest to 12% p.a. from cancellation date, payable by Developer within two months [1000527810027].
Judgment :-
Anil R. Dave, J.
1. Being aggrieved by a common judgment delivered in First Appeal Nos.492, 493 and 499 of 2002, dated 24th August, 2005 by the High Court of Judicature at Bombay, these appeals have been filed by the original plaintiffs, who had filed the suits for specific performance.
2. As the facts involved in all these three appeals are similar in nature, all these appeals are being decided by this common judgment. For the purpose of clarity, we are referring to all the parties by their description as it was before the trial court. The Developer of the property, original Defendant No.1 is now respondent No. 2 in all the appeals whereas respondent no.1 is a subsequent buyer of the property in question. M/s. O.P. Co-operative Housing Society (hereinafter referred to as ‘the Society’) was the owner of the land which was being developed by the Developer.
3. The Developer had entered into an agreement to develop the property i.e. land owned by the Society and thereafter to sell the flats constructed on the land in question to the intending purchasers in accordance with the terms and conditions of the agreement dated 17th April, 1992.
4. Each plaintiff wanted to purchase one flat to be constructed by the Developer on the land belonging to the Society, so they had negotiated deals with the Developer. As per the understanding arrived at between each plaintiff and the Developer, the plaintiffs had to pay a total consideration of Rs.4,40,000/- in respect of each flat in certain installments. Accordingly, each plaintiff had started making payment to the Developer as per the amount of installments determined by the Developer. The Developer had executed a letter of intent dated 29th September, 1992, whereby the Developer had agreed to reserve a flat for each plaintiff. Reservation of the flat was subject to bye-laws of the Society. Moreover, the reservation made by the Developer for the flats was also subject to the terms and conditions which had been incorporated in the letter of intent. Initially each plaintiff had given a sum of Rs. 88,000/- to the Developer and a receipt had been executed by the Developer in respect of the said amount. Clause No. 3 of the said letter of intent dated 29.9.1992, written by the Developer and addressed to the plaintiffs is as under :
“Clause 3 :
We acknowledge and admit the receipt of Rs.88,000/- (Rupees Eighty Eight Thousand only) from you, which amount you have paid to us in view of our reserving the above mentioned flat in our proposed building on the basis of the plans shown to you, with a view to securing that on compliance of all the terms and conditions of Agreement to Lease executed between the Society and the Corporation, you shall purchase the said flat and enter into ‘Agreement to Sale’ with us.”
Thus, upon compliance of certain terms and conditions referred to in the aforestated clause and in the letter of intent, the Developer had agreed to sell the flats to the plaintiffs.
5. It was also provided in the letter of intent that the plaintiffs had to bear expenses in relation to registration of the document, stamp duty and certain other expenditure to be incurred for getting motor and electric connection etc. and it was also provided in the letter of intent that delayed payment of the installment would attract interest at the rate of 21% p.a. and if two or more installments remained unpaid, the reservation made in respect of the flat would stand cancelled.
6. In pursuance of the execution of the aforestated letter of intent, the plaintiffs had started paying installments to the Developer. It may also be noted here that due to some litigation which had taken place between some persons and the Society before the High Court, the High Court had ordered an enquiry. The said litigation went on till the end of 1996, due to which the Developer could not continue his construction activity and that resulted into delay in the construction work. According to the Developer, the said delay had resulted
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