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High Court Of Himachal Pradesh
D.P.SOOD
H.P.FRUIT GROWERS CO-OP.MARK.PROCESSING SOCIETY LTD. - Appellant
Versus
THE HIMACHAL PRADESH HOUSING BOARD - Respondent
Civil Suit No. 29 of 1988
Decided On : 07/26/1994
LEASE - ALLOTMENT OF PLOT - PRIVITY OF CONTRACT - OUTRIGHT SALE - LEASEHOLD BASIS - PAYMENT OF PREMIUM - PENAL INTEREST - COMPOUND INTEREST - EXCESS PAYMENT - RECOVERY OF EXCESS AMOUNT - INTEREST ON EXCESS AMOUNT - NOTICE - VALIDITY - RATE OF INTEREST.
Fact of the Case:
Plaintiff, a society, and defendant, a corporate body, entered into an agreement for the allotment of a plot. The plaintiff claimed that the transaction was an outright sale, while the defendant contended that it was a leasehold allotment for 95 years. The plaintiff sought a declaration of outright sale, execution of a sale deed, and recovery of excess payment made. The defendant claimed an outstanding amount and sought to charge penal interest.
Finding of the Court:
The court held that the transaction was a leasehold allotment for 95 years based on the correspondence exchanged between the parties. The court found that there was a privity of contract between the parties and that the plaintiff was bound to execute the lease deed and get it registered. The court also held that the plaintiff was liable to pay the premium in installments and that penal interest could be charged on defaulted installments at the agreed rate of 9% per annum.
Issues: 1. Whether the transaction was an outright sale or a leasehold allotment? 2. Whether the plaintiff was entitled to specific performance of the contract by way of execution and registration of the sale deed? 3. Whether the plaintiff was liable to pay the premium in installments? 4. Whether penal interest could be charged on defaulted installments? 5. Whether the plaintiff was entitled to recover excess payment made? 6. Whether the plaintiff was entitled to interest on the excess amount?
Ratio Decidendi: 1. The court relied on the correspondence exchanged between the parties, including the draft lease agreement, to determine the nature of the transaction. The court found that the correspondence clearly indicated the intention of the parties to enter into a leasehold arrangement. 2. The court held that the plaintiff was not entitled to specific performance of the contract for an outright sale since the transaction was a leasehold allotment. 3. The court held that the plaintiff was liable to pay the premium in installments as per the agreed terms. 4. The court held that penal interest could be charged on defaulted installments at the agreed rate of 9% per annum, but not at a compounded rate. 5. The court held that the plaintiff was entitled to recover the excess payment made after adjusting it towards the principal amount. 6. The court held that the plaintiff was entitled to interest on the excess amount at the rate of 9% per annum from the date of excess payment till the date of realization.
Final Decision: The court partly decreed the suit, allowing the plaintiff to recover the excess payment made with interest. The court dismissed the plaintiff's suit with respect to the remaining reliefs. The parties were left to bear their own costs.
1. Plaintiff is a society registered under the H.P. Co-operative Societies Act 1968, which carries on its business. Defendant is also a corporate body, the prime object of which is to provide facilities of residential and commercial facilities to the general public. Pursuant to the visit of the Chief Minister of the State the defendants initially agreed to allot plot No. 7 in Sector 2 in the Industrial Estate located at Parwanoo, measuring 17, 376 square metres @ Rs. 20/- per square metres valuing Rs. 3,47,520/-, though later on finding the actual measuring to be 16,135.6 square metres, its price was reduced to Rs. 3,22,713/- instead of the original price. The plot was allotted and possession thereof was handed over on 1-12-1976. 10% of the permium out of the total price of the aforesaid plot was paid on 30-11-1976 before the delivery of its possession on the following date. Remaining balance premium was agreed to be repaid in 15 instalments along with the interest calculated @ 9% per annum. One of the conditions was that in case of default of payment of the premium instalment or interest, the plaintiff would pay penal interest at double the rate of prevailing interest to the defendant. According to the plaintiff, the aforesaid transaction was an outright sale which matured in their favour on 2-4-1987 and the defendants were obliged to get the sale deed executed and registered in their favour, there being remission of stamp duty and registration charges in relation to the transactions entered into between society etc. and the defendant. Further, the case, set up by the plaintiff is that compounding of interest was never agreed to and the defendants have been paid an excess amount of Rs. 63,779.53 paise by the plaintiffs towards the sale price of the plot in question in addition to the agreed amount which stood fully paid along with interest. The defendants claim for an amount of Rs. 1,22,948.70 paise is illegal, unwarranted and contrary to the factual position exhibited by the prolonged correspondence exchanged between the parties. Thus, the plaintiffs, through this suit, have sought declaration to the effect that the aforesaid transaction is an outright sale by the defendants in favour of the plaintiffs in lieu of Rs. 3,22,713.00 @ Rs. 20/- per square metre and as such, the plaintiffs are the absolute oweners in possession of the plot in question. In addition, relief of mandatory injunction directing the defendants to execute a sale deed and get it registered after observing the codal formalities has also been sought. Over and above, the plaintiffs claim a decree for the recovery of an amount of Rs. 77,183/- (principal Rs. 63,779.53 paise + interest 18% per annum from 3-8-1987 to 2-4-1988 + expenses of financial legal advice and notice to the tune of Rs. 5,750/ -) in their favour and against the defendants.
2. Defendants vehemently resisted and contested the suit for want of a valid notice as per law and insufficiency of requisite Court fee paid on the reliefs claimed. On merit, the factum on allotment of the plot for the price stated in the plaint and on the agreed rate of interest as alleged by the plaintiffs, is not disputed. However, it is contended that the aforesaid plot was allotted on lease hold basis for a period of 95 years in accordance with the terms and conditions mentioned in the letter dated 13th April, 1977 which was a part of the earlier activities of the defendants in handing over the possession of the plot in question. The averment qua outright sale of the plot, has been vehemently disputed. In addition to the terms of the transaction stated by the plaintiffs it is contended that the plaintiff had also to pay penal interest as per clause (iv) of the allotment letter 13-4-1977. It is contended that the defendants are entitled to charge penal interest on the instalments which were not paid in the due time by the plaintiff. Further, the defendants contend that excess payments over and above the payment by
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