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IN THE HIGH COURT OF KERALA AT ERNAKULAM
A. Muhamed Mustaque, Kauser Edappagath, JJ.
Crompton Greaves Limited and Ors. – Petitioners
Versus
Icon Integrated Industries and Software Ltd. – Respondent
RFA.No.203 OF 2008
Decided On : 09-04-2021
Transfer of Property Act – Section 55 – Code of Civil Procedure, 1908 – Sections 15 to 20, 35, Order XXXVI – Kerala Court Fees and Suits Valuation Act, 1959 – Sections 33, 22 – Indian Contract Act, 1872 – Sections 73, 75 – Indian Partnership Act – Return for Advance paid for sale – Jurisdiction – Whether court below lacked territorial jurisdiction to entertain and try the suit – Whether the advance amount paid by the plaintiff towards sale consideration is liable to be forfeited on the mere allegation of breach of contract without proof of sufferance of actual loss or damage and in the absence of determination and quantification of the actual loss/damage alleged to have suffered by the defendants –
Finding of the Court:
Burden is on defendants to show that court lacked jurisdiction and consequent to exercise of jurisdiction, failure of justice had taken place – Defendants have not shown how failure of justice resulted from the suit being instituted in the Court below. – In grounds of appeal, the appellants/defendants have not even raised a ground that there was a failure of justice consequent upon a wrong Court assuming jurisdiction. – No argument was also advanced before court as to so called failure of justice. – Not only was no attention paid to this aspect of matter but no material exists on the record from which such failure of justice may be inferred. – In Kiran Singh (supra), it was held that prejudice envisaged by Section 21 must be something other than suit being heard in a different forum. – Record would show that defendants vehemently contested the suit on merits and suffered a decree. – Defendants miserably failed to establish failure of justice. – Plea of want of jurisdiction for trial Court to try suit raised by defendants, deserves to be rejected – Sub-sec.(2) of S.35 of C.P.C. indicates that costs shall follow the event and where Court directs that costs shall not follow, then Court shall state its reasons in writing. – Apex Court in Sanjeev Kumar Jain v. Raghubir Siran Charitable Trust and Others (2011 KHC 4966) deprecated practice followed in Courts in country in not following mandate of sub-section (2) of S.35 and directed its strict enforcement – No reason as contemplated under sub-section (2) of S.35 has been stated. – When a plaintiff succeeds in a litigation, for which he was not responsible and he was not guilty of misconduct, he ought not to be deprived of his legitimate costs. – Plaintiff made a demand through notice to return advance amount prior to institution of suit, but amount was not paid. – Plaintiff had no other go but to file the suit. – Plaintiff did not raise any false claim and its claim was allowed. – Plaintiff was not guilty of any misconduct. – Court is of opinion that Court below committed an error in not awarding costs and in court view, plaintiff is entitled to costs of suit. – Court see no reason to disallow costs of proceedings in cross objection. – Cross objection is allowed in part – Impugned decree and judgment to extent deducting Rs.72 lakhs from advance amount and declining costs of suit are set aside –
Result: Appeal Dismissed
JUDGMENT :
KauserEdappagath,J.
This appeal and cross objection arise from the judgment and decree in OS No.137/2002 dated 30th October, 2007 on the file of the Principal Sub Judge, North Paravur.
2. The suit was one for return of the amount paid as advance pursuant to Exts. A1 to A6 and A9 sale agreements. The defendants before the Court below are the appellants. The plaintiff is the respondent. The parties are referred to as shown in the Original Suit unless otherwise stated.
3. The plaintiff, Icon Integrated Industries and Software Limited, is a public limited company registered under the Indian Companies Act having its registered office originally at Athani, Aluva, which is within the jurisdiction of the Court below. Originally, Icon Industries was a partnership firm registered under the Indian Partnership Act. The partnership was converted into a public limited company in the name and style ‘Icon Integrated Industries and Software Limited’ later on. The first defendant is a public limited company having its Head Office at Mumbai. It owns its division at Athani, Aluva known as ‘Kerala Electric Lamp Works Division’ (KELW Division), which is arrayed as the second defendant.
4. Icon Industries, the erstwhile partnership firm, and the first defendant entered into a sale agreement dated 17/07/1999 (Ext. A1) by which the first defendant agreed to sell its KELW Division (second defendant) situated at Athani including land, buildings and structure erected on the said land along with all the movable assets belonging to KELW Division more particularly described in the schedule of the plaint for a total consideration of Rs.4 crores. As per Ext. A1 sale agreement, a sum of Rs.10 lakhs was paid by way of advance. When the partnership firm was converted into limited company, the assets and liabilities of the firm were transferred to the plaintiff company and accepting the original sale agreement (Ext. A1), a supplemental agreement was entered into between the plaintiff and the first defendant on 14/04/2000 (Ext. A9). As per Ext. A9, the total consideration of Rs.4 crores was fixed as the sale consideration and it was agreed to complete the sale within 120 days of Ext. A9. As per the supplemental agreement, a sum of Rs.125 lakhs was given to the first defendant as advance amount. It was stipulated in Ext. A9 that if the transaction of sale was completed on or before 30/04/2000, the sale consideration would be revised to Rs.500 lakhs and if the transaction of sale was completed between 01/5/2000 to 31/05/2000, the sale consideration would be Rs.515 lakhs and the advance amount shall be increased by another Rs.75 lakhs. The advance amount was stipulated to be paid by the plaintiff to the first defendant on or before 02/05/2000. Pursuant to that, an amount of Rs.75 lakhs was paid by the plaintiff to the first defendant on 02/05/2000. Thus, total consideration of Rs.522.50 lakhs was fixed as sale consideration on the terms and conditions mentioned in Exts. A1 and A9. Again, as per mutual consent, five more supplemental agreements were entered into between the parties which were marked as Exts. A2 to A6 and the date for performance was extended till 31/07/2001 retaining all other terms and conditions of the original agreement. Another sum of Rs.55 lakhs was paid by the plaintiff to the first defendant on 07/11/2000 towards further advance sale consideration. Thus, a total sum of Rs.255.25 lakhs was paid by the plaintiff to the first defendant towards part payment of sale consideration out of the total sale consideration of Rs.522.50 lakhs.
5. According to the plaintiff, it was ready and willing to perform its part of the contract within the extended period of performance, but, the defendants were not ready and willing to perform their part of the contract. It is alleged that before the stipulated period mentioned in the last supplemental agreement, the first defendant did not perform various obligations cast on it. The plaintiff asserted that the fi
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