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IN THE HIGH COURT OF JUDICATURE AT MADRAS
G. JAYACHANDRAN, J.
V. Ramalingam & Another - Appellant
Versus
K.S. Sundaram & Others - Respondent
C.S. No. 374 of 2016
Decided On : 28-02-2020
BREACH OF CONTRACT - DEVELOPMENT AGREEMENT - [Order IV Rule 1 of Original Side Rule read with Order VII Rule 1 of C.P.C., 1908] - [Clause 12, 13] - The plaintiffs entered into a development agreement with the defendants for the development of a property into plots. The plaintiffs failed to adhere to the payment schedule and breached the covenant dated 24.05.2014. The defendants authorized and permitted the plaintiffs to carry on all the official work, and there was no element of breach on the part of the defendant. The agreement specifically mandates the time schedule and consequence of non-payment, making time the essence of the contract. The plaintiffs never showed readiness and willingness to perform the contract. The terms of the agreement did not cast any obligation on the defendant to perform. Under clause 12 and 13, in case of default, the defendant has to forfeit the money advanced.
Fact of the Case:
The plaintiffs entered into a development agreement with the defendants for the development of a property into plots. The plaintiffs failed to adhere to the payment schedule and breached the covenant dated 24.05.2014. The defendants authorized and permitted the plaintiffs to carry on all the official work, and there was no element of breach on the part of the defendant. The agreement specifically mandates the time schedule and consequence of non-payment, making time the essence of the contract. The plaintiffs never showed readiness and willingness to perform the contract. The terms of the agreement did not cast any obligation on the defendant to perform. Under clause 12 and 13, in case of default, the defendant has to forfeit the money advanced.
Finding of the Court:
The plaintiffs failed to adhere to the payment schedule and breached the covenant dated 24.05.2014. The defendants authorized and permitted the plaintiffs to carry on all the official work, and there was no element of breach on the part of the defendant. The agreement specifically mandates the time schedule and consequence of non-payment, making time the essence of the contract. The plaintiffs never showed readiness and willingness to perform the contract. The terms of the agreement did not cast any obligation on the defendant to perform. Under clause 12 and 13, in case of default, the defendant has to forfeit the money advanced.
Issues: Breach of contract by the plaintiffs, authorization and permission by the defendants, time as the essence of the contract, readiness and willingness to perform the contract, obligation on the defendant to perform, and forfeiture of the money advanced.
Ratio Decidendi: The plaintiffs failed to adhere to the payment schedule and breached the covenant dated 24.05.2014. The defendants authorized and permitted the plaintiffs to carry on all the official work, and there was no element of breach on the part of the defendant. The agreement specifically mandates the time schedule and consequence of non-payment, making time the essence of the contract. The plaintiffs never showed readiness and willingness to perform the contract. The terms of the agreement did not cast any obligation on the defendant to perform. Under clause 12 and 13, in case of default, the defendant has to forfeit the money advanced.
Final Decision: The suit claim and counter claim are dismissed. No order as to costs.
JUDGMENT
(Prayer: Plaint is filed under Order IV Rule 1 of Original Side Rule read with Order VII Rule 1 of C.P.C., 1908.
a. For recovery of a sum of Rs.1,34,50,000/- with future interest at 18% per annum on 1,00,00,000/- from the date of plaint till date of realisation.
b. For recovery of a sum of Rs.56,53,700/- as damages arising out of the breach of the essential terms of the contract dated 28.05.2014 entered into between the plaintiffs and the defendants with future interest at 18% on Rs.43,49,000/- from the date of plaint till date of realisation.
c. Grant further or other reliefs and
d. For costs of the suit.)
1. Case of the Plaintiffs:
The plaintiffs are promoters, who have entered into a development agreement dated 24.05.2014 with the 1st defendant, who is the Managing Director of the 2nd and 3rd defendant’s Company. The 2nd and 3rd defendants are owners of the suit property. As per the development agreement entered between the parties, the plaintiff offered a sum of Rs.6,15,00,000/- (Rupees Six Crores and fifteen lakhs only) as total consideration for the land more fully described in the plaint schedule payable in the following manner:-
| (a). | Amount remitted into the owner’s bank account to show the plaintiff’s willingness | Rs.10,00,000.00 |
| (b). | Amount to be paid on or before 07.06.2014 | Rs.40,00,000.00 |
| (c). | Amount to be paid on or before 01.08.2014 | Rs.1,28,75,000.00 |
| (d). | Amount to be paid on or before 01.11.2014 | Rs.1,28,75,000.00 |
| (e). | Amount to be paid on or before 31.01.2015 | Rs.1,28,75,000.00 |
| (f). | Amount to be paid on or before 15.03.2015 | Rs.1,28,75,000.00 |
| Total | Rs.6,15,00,000.00 |
2. The plaintiffs have paid a total sum of Rs.1,00,00,000/- in three installements as on 05.06.2014. The defendants were running a chemical and paints company, in the property offered to the plaintiffs for development agreement. Besides they were standing sugar cane crops on the date of agreement. To compensate the standing sugar cane crop, the plaintiffs paid a sum of Rs.20,000/- as compensation to the defendants to cut the standing sugar cane crop prematurely, to enable the plaintiffs to clear the site and form a tentative layout. Accordingly, a layout was prepared for approval by the Puducherry Development Authority. The plaintiffs was unable to make payment as per the contract schedule under the clause (8) since the defendants who are duty-bound to disclose encumbrance/dispute in the suit schedule property failed to truly and faithfully disclose the same. The defendants were confronted with insurmountable difficulties in applying for promotion and development for layout approval. The plaintiffs physically formed the layout in the site and laid stones for the plots. Since the defendants were confronted with insurmountable difficulties in offering the entire property, free from all encumbrance, the plaintiffs were unable to physically measure the property and proceed with the formation of the layout as originally envisaged. The workers of the 2nd and 3rd defendants residing in and around the factory premises which is part of the suit schedule property, gathered in front of the factory gates every day to disturb the peaceful business of the plaintiffs and the layout formation activities. When the plaintiffs tried to effect division of the properties, as per the intended formation of layout, the labourers who were working with the 2nd and 3rd defendants, barged into the suit property and prevented the plaintiffs from measuring or proceeding with the development. The 2nd and 3rd defendants have not settled their wages and salary dues in accordance with law therefore, the labourers threatened the plaintiffs that they would dispossess the plaintiffs from the suit schedule property and prevent them from forming and developing the property into approved layout. The plaintiffs have made all preliminary arrangement for the layout formation by removing
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