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2010 Supreme(Mad) 774
High Court of Judicature at Madras
THE HONOURABLE MRS. JUSTICE R. BANUMATHI & THE HONOURABLE MR. JUSTICE M.M. SUNDRESH
A. Ramadas Rao
Versus
M/s. J.P. Builders, rep.by its Proprietor, J. Paramanandam, Managing Director
A.S.No.708 of 2008 and 946 of 2009 and W.P.No.23405 of 2009 and M.P.Nos.1 and 2 of 2008 and M.P.Nos.1 of 2009 (3 Nos.)
Decided on: 23-02-2010
For the Appearing Parties:R. Thiagarajan, Nalini Chidambaram, Senior Counsel for Ms.C.Uma, Jayesh B. Dolia for M/s.Aiyar & Dolia, Advocates.
The right of marshalling is available to a decree holder in a suit for specific performance.
Headnote:
The Court held that the plaintiff was entitled to a decree for specific performance of the agreement of sale, subject to the mortgage in favor of the third defendant bank. The Court also held that the plaintiff was entitled to the right of marshalling and directed the bank to proceed against other properties of the defendants before proceeding against the suit property. The Court further held that the plaintiff was entitled to costs.
Fact of the Case:
The plaintiff entered into an agreement to purchase a property from the defendants. The agreement was subject to the defendants obtaining a confirmation letter from the bank that it would release the original title deeds to the property upon payment of the outstanding loan amount. The defendants were unable to obtain the confirmation letter, and the bank subsequently brought the property to auction. The plaintiff filed a suit for specific performance of the agreement of sale, and the trial court granted the decree subject to the mortgage in favor of the bank. The defendants appealed, and the plaintiff filed a writ petition seeking to restrain the bank from bringing the property to auction.
Finding of the Court:
The Court held that the plaintiff was entitled to a decree for specific performance of the agreement of sale, subject to the mortgage in favor of the third defendant bank. The Court also held that the plaintiff was entitled to the right of marshalling and directed the bank to proceed against other properties of the defendants before proceeding against the suit property. The Court further held that the plaintiff was entitled to costs.
Issues: (i) Whether the trial Court is right in passing the decree for specific performance subject to mortgage in favour of 3rd Defendant Bank? (ii) Whether the contract is a contingent contract and whether it cannot be implemented? (iii) Whether Plaintiff is right in insisting upon grant of mandatory injunction to direct Defendants No.1 and 2 to discharge the liability proportionately? (iv) Whether the right of marshalling is available to a decree holder in a suit for specific performance? (v) Whether the trial Court was justified in deviating from the normal rule “costs shall follow the event”? (vi) To what relief the plaintiff is entitled to?
Ratio Decidendi: The Court held that the plaintiff was entitled to a decree for specific performance of the agreement of sale, subject to the mortgage in favor of the third defendant bank. The Court also held that the plaintiff was entitled to the right of marshalling and directed the bank to proceed against other properties of the defendants before proceeding against the suit property. The Court further held that the plaintiff was entitled to costs.
Final Decision: The Court held that the plaintiff was entitled to a decree for specific performance of the agreement of sale, subject to the mortgage in favor of the third defendant bank. The Court also held that the plaintiff was entitled to the right of marshalling and directed the bank to proceed against other properties of the defendants before proceeding against the suit property. The Court further held that the plaintiff was entitled to costs.
Being aggrieved by the declining of mandatory injunction and also declining cost of Rs. 47,31,931.50ps, the Plaintiff in O.S.No. 336 of 2006 has preferred A.S.No. 708 of 2008.
2. Alleging that agreement of sale is a contingent contract and being aggrieved by grant of decree for specific performance and directing item to execute the sale deed subject to mortgage, Defendants in O.S.No. 336 of 2008 have filed A.S.No. 946 of 2009 seeking a direction for bearing the Bank from bringing the schedule property, subject matter of the decree in O.S.No. 336 of 2006 from bringing it in public auction by Indian Bank – 3rd Defendant in O.S.No.336 of 2006.
3. The Plaintiff has filed W.P.No.23405 of 2009 for issuance of writ of mandamus for bearing the respondents from bringing the petition scheduled property and forming the subject matter of the decree in O.S.No.336 of 2006 on the file of the Principal District Judge, Chenglepet to auction and for a direction to the 2nd respondent to accept the payment of Rs.4,80,000 being the remaining sale consideration as per the decree made in O.S.No.336 of 2005 dated 30.04.2008 and for other reliefs.
4. Since both the Appeals arise out a common judgment and the points raised in the Writ Petition are also connected with the Appeals, the Writ Petition was heard along with the Appeals and the Appeals and Writ Petition stand disposed of by this common judgment.
5. For convenience, the parties are referred to as arrayed in the suit. The facts are not in dispute. The subject matter of the suit is a total extent of 30 acres 86 cents in Senthamangalam Village, Sriperumbudur Taluk. Kancheepuram District comprised in 38 items. Defendant Nos. 1 and 2 are the owners of the suit property, which they acquired under various sale deeds. The sister concern of Defendant No. 1 viz., M/s Anand Agency has availed certain financial assistance from 3rd Defendant – Indian Bank and for the facility so extended to M/s Anand Agency, Defendant Nos.1 and 2 have offered their various properties including the suit property as security for due repayment of the principal as well as interest payable by M/s. Anand Agency of which Defendant No.2 – Paramanandam is the sole proprietor. After negotiations.Ex.A2 – Memorandum of Understanding (MOU) was entered into at Chennai on 18. 2005 for sale of suit property by Defendant Nos.1 and 2 in favour of Plaintiff for a consideration of Rs.14,00,000/-per acre and a sum of Rs.1,00,000/- was paid as advance by way of Cheque dated 18. 2005 drawn in favour of 1st Defendant for sale of suit property by Defendant Nos.1 and 2 in favour of Plaintiff for a consideration of Rs.14,00,000/-Balance sale consideration was to be paid within three months from the date of obtaining confirmation letter from the Indian Bank, Chennai. Subsequently, Ex.A.3 agreement of sale was entered into at Chennai on 2. 2006 between the Plaintiff and Defendant Nos.1 and 2 incorporating the terms and conditions governing rights and obligations of the parties. The sale price of Rs.14,00,000/- per acre was enhanced Rs.18,00,000/- per are and the Plaintiff had paid a sum of Rs.24,00,000/- as further advance by Cheque bearing No.513479 dated 2. 2006 drawn on Indian Overseas Bank, Sowcarpet Branch, Chennai and a sum of Rs.25,00,000/- was paid as advance. The Plaintiff has made further payment of Rs.50,00,000/- by cash on 14. 2006.
6. Thecase of Plaintiff is that Defendants agreed to retrieve the original documents relating to suit property and agree to complete the transaction within six months from the date of production of the original documents by Defendant Nos.1 and 2. Further case of Plaintiff is that even though he has paid Rs.75,00,000/- and ready to pay the balance sale consideration, Defendant Nos.1 and 2 committed breach of contract and that they have not discharged the mortgage in favour of the Bank and they have failed to perform their part of the obligations arising out of Ex.A3 – agreement of sale. According t
