JUDGMENT

(Prayer: Civil Suit filed under Section Order IV Rule 1 of O.S. Rules read with Order VII Rule 1 of CPC., praying for a judgment and decree against the defendants :

(a) for a sum of Rs.1,00,00,000 (Rupees one crore) claimed and further interest at 18% p.a., from the date of the plaint till realization.

(b) to award the costs of the suit.

(c) To pass further order that may deem fit in the circumstances of the case.)

1. The suit is filed for recovery of a sum of Rs.1.0 crore paid as advance amount by the plaintiff to the defendant under a Memorandum of Understanding dated 23.04.2008, with future interest at 18% per annum.

The Pleadings:

2. The case of the plaintiff is follows:

* The plaintiff is a Private Limited Company engaged in the business of promoting multi-storeyed apartments and villas. It is headquartered in Mumbai. It proposed to expand its activities in Kerala, and was scouting for suitable lands there.

* The defendant is also a company registered under the Companies Act, with its registered head office at Chennai. It owns lands measuring 6.56 acres at Mamally, Feroke near Calicut. It has nominated M/s Wisma Project Management Services, another Chennai based company, (not a party to the litigation), as its agent/consultant, for negotiating the sale of the said property.

* While so, sometime in April, 2008, the plaintiff came across the defendant's agent Wisma Consultants, to whom the plaintiff has conveyed that the former was looking for lands for developing and promoting residential apartments and villas, and the agent of the defendant informed the plaintiff about the 6.56 acres land which the defendant owns in Kerala.

* The plaintiff negotiated with the agent of the defendant, M/s Wisma Project Management Services. Indeed, Wisma Consultants informed the plaintiff vide a letter dated 15.04.2008, that it is acting on behalf of the defendant. It also enclosed a draft Memorandum of Understanding (MoU) along with the said letter, and informed the plaintiff that the deal could be finalised along the lines of the draft MoU. The plaintiff was also informed that the price of the land and the other conditions stipulated in the draft MoU are non-negotiable. The price of the land was fixed at Rs.1,50,000/- per cent (which implied the total consideration for the property is around Rs.9.86 crores).

* On 23.04.2008 the MoU was executed, under which the plaintiff paid an advance of Rs.1.0 crore through a cheque. The remaining sale consideration is required to be paid in two instalments: (a) the first instalment was Rs.3.0 crores to be paid within 30 days of the date of the MoU; and (b) the second and final instalment is required to be paid on or before 60 days from the date of the MoU. In short, the MoU provided for 60 days time for the parties to complete performance of their respective contractual obligations.

* After signing the MoU, the plaintiff came to know that the subject matter of MoU was notified as 'red zone' by the Planning Authority, which implied that was notified as exclusive industrial zone, and not for residential purposes. The plaintiff was oblivious to this ground reality as their essential activities are in Mumbai. However, the defendant who is head-quartered in Kerala, though knew that the property to be transacted was notified as 'red zone', yet it did not disclose this to the plaintiff. Hence viz-a-viz the purpose for which the land could be used, there was no consensus between the parties. Indeed, the very tenor of the MoU, and the speed at which the execution of the MoU was hurried through are indicative of absence of any consensus between the parties.

* Due to unsuitability of the land for the intended use, the plaintiff could not proceed ahead to perform its obligations in the MoU. It therefore wrote to the Managing Director of the defendant on 20.05.2008, and invited him for a discussion. The defendant did not re