IMPORTANT POINT
Agreement to sell – Post-dated cheque tendered by way of sale consideration cannot be said to be a worthless cheque.

JUDGMENT :

M.R. SHAH, J.

1. Feeling aggrieved and dissatisfied with the impugned common judgment and order dated 21.02.2022 passed by the High Court of Kerala at Ernakulam in Regular First Appeal Nos. 686/2010 and 766/2010, by which, the High Court has dismissed RFA No. 766/2010 preferred by the appellant herein – original plaintiff and has partly allowed RFA No. 686/2010 preferred by the original defendant with respect to the proportionate cost, the original plaintiff has preferred the present appeals.

2. That the respondent herein – original defendant entered into an agreement to sell with the appellant – original plaintiff on 13.07.2005 for a consideration of Rs. 52,500/- per cent with respect to the property ad-measuring 9 acres 47.41 cents in Re-Survey No. 35/2/1 of Karukutty Village. Under the said agreement to sell a sum of Rs. 1 crore was paid by the appellant to the defendant towards earnest money of which Rs. 65 lakhs were paid in cash and Rs. 35 lakhs were in the form of post-dated cheque dated 25.08.2005. As per the terms of the agreement to sell the last date fixed for payment of the balance sale consideration was 12.01.2006. The post-dated cheque of Rs. 35 lakhs deposited by the defendant came to be dishonoured/returned for the reasons “payment stopped by attachment order”. At this stage, it is required to be noted that there was a raid conducted by the Income Tax Department and the bank account of which the post-dated cheque of Rs. 35 lakhs, was drawn came to be attached by the IT Department. The cheque was returned by the bank vide return memo dated 31.08.2005. The defendant through his advocate served a notice upon the plaintiff drawing the attention of the plaintiff with respect to the return/dishonour of the post-dated cheque vide notice dated 02.09.2005. According to the plaintiff immediately the same was replied on 20.09.2005 and offered to pay the amount of Rs. 35 lakhs in cash which according to the plaintiff the defendant refused to accept the same. The defendant was also called upon to accept Rs. 35 lakhs in cash and the plaintiff was prepared to handover cash. That thereafter vide notice dated 23.09.2005 the defendant terminated the agreement to sell/contract and forfeited Rs. 10 lakhs and called upon the plaintiff to take back an amount of Rs. 55 lakhs. That thereafter vide notice dated 18.10.2005 the plaintiff replied to the termination notice dated 23.09.2005 and called upon the defendant to accept the balance sale consideration within the agreed period i.e., on or before 12.01.2006. That thereafter the plaintiff served a legal notice dated 03.01.2006 and called upon the defendant to execute the sale deed after accepting balance sale consideration. The defendant was called upon to inform the plaintiff the date on which he has to pay the balance sale consideration and to execute the sale deed. As the defendant failed to act as per the legal notice dated 03.01.2006. The appellant – original plaintiff instituted a suit before the learned Trial Court for specific performance of agreement to sell dated 13.07.2005. The defendant filed the written statement repudiating the contract. The learned Trial Court framed the following issues :-

“1. Whether the plaintiff is entitled to a decree of specific performance as sought for?

2. Whether the plaintiff is entitled to return of advance paid and if so its quantum?

3. Reliefs and costs.”

2.1 It was the case on behalf of the defendant that as there was a default on the part of the plaintiff, not acting as per the terms and conditions of the agreement to sell as the balance amount of Rs. 35 lakhs was not paid as the post-dated cheque dated 25.08.2005 was returned and therefore, the defendant was justified in terminating the contract. The defendant also denied receipt of the reply to the notice dated 23.09.2005. Both, plaintiff as well as the defendant led the evidence both, documentary as well as oral. The plaintiff also produced on record the income tax returns for th