Defendants, including directors of a company, can be held personally liable for the payment of sale consideration in a property transaction. The rate of interest awarded by the court should be reasonable and in line with commercial transactions.

JUDGMENT :

C.M. POONACHA, J.

1. The above first Appeal is filed by the Defendant Nos. 1 to 4 under Section 96 of Code of Civil Procedure, 1908 (for short ‘CPC’) challenging the Judgment and Decree dated 06.08.2013 passed in O.S. No. 326/2002 by the XIV Addl. City Civil Judge, Bangalore (CCH-28).

2. For the sake of convenience, the parties will be referred to by their rank before the Trial Court.

3. The case of the Plaintiff in brief is that he is the owner of property bearing No. 36/3 situated at 4th Main Road, RPC Layout, Corporation Division No. 30, Vijayanagara, Begaluru-560040 measuring East-West 129.9 feet and North-South 71 feet (hereinafter referred to as ‘suit property’). That, based on the representations made by the Defendant Nos. 2 to 4 who are the Directors of Defendant No. 1, Plaintiff entered into an Agreement of Sale Deed dated 05.05.1992 with the Defendant No. 1, whereunder, he agreed to sell the suit property at Rs. 235/- per square feet and an advance of Rs. 3,50,000/- was paid. The balance sale consideration was to be paid at the time of registration of the Sale Deed.

3.1 It is the further case of the Plaintiff that on the request of Defendant No. 1 represented by Defendant Nos. 2 to 4, to enable the Defendants to develop the suit property, the Plaintiff entered into a Development Agreement dated 07.07.1992, whereunder, the Defendant Nos. 1 to 4 agreed to purchase the suit property for a sale consideration of Rs. 21,65,000/- and the possession of the suit property was handed over to the Defendant No. 1. The advance amount paid under the Agreement dated 05.05.1992 was treated as advance amount under the Development Agreement. Defendant No. 1 undertook to construct residential apartments on the suit property after sanction of plan from the Corporation of City of Bengaluru and the Plaintiff agreed to sell the suit property to Defendant No. 1 or its nominees/s in full or in parts. The Plaintiff also executed General Power of Attorney (hereinafter referred to as ‘GPA’) dated 09.07.1992 in favour of Defendant No. 1 to negotiate for sale of flats.

3.2. That there were certain litigations which were contested and dismissed. That the Defendant No. 1 put up construction of the residential flats in the suit property and the Plaintiff executed a GPA dated 30.04.1997 in favour of Defendant No. 4 empowering him to sell the undivided share in the suit schedule property to the purchasers. At the request of the Defendant No. 1, Plaintiff executed a registered Sale Deed dated 25.05.1998 in favour of Smt. S. Revathi in respect of flat No. G-4 for a sale consideration of Rs. 80,000/-.

3.3. It is the further case of the Plaintiff that Defendant Nos. 1 to 4 failed to pay the balance sale consideration of Rs. 20,85,000/- as agreed by them. That the Defendant No. 4 as a GPA holder, executed the Sale Deeds in favour of intending purchasers of the flats. The purchasers of the flats entered into Construction Agreements with the defendants. The Defendant Nos. 1 to 4 have received consideration from the purchasers towards undivided share of the land as well as for construction of the flats. However, they failed to pay the balance sale consideration to the Plaintiff.

3.4 It is the further case of the Plaintiff that Defendant No. 4 purported to execute a mortgage by deposit of title deeds on behalf of the Plaintiff and a sum of Rs. 50 lakhs by way of loan was availed by the Defendant No. 1 from the Karnataka Bank Limited for the purpose of construction. That the said mortgage was executed on the basis of GPA dated 04.02.1998 allegedly executed by the Plaintiff in favour of Defendant No. 4. It is only when the Plaintiff received notice of O.A. No. 279/2001 filed by Karnataka Bank Limited before the Debt Recovery Tribunal, Bengaluru, impleading the Plaintiff, that he realised that the Defendant Nos. 1 to 4 intended to cheat the Plaintiff.

3.5. It is the further case of the Plaintiff that he got issued legal notice dated 11.07.2001 calling upon the D