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2024 Supreme(Online)(Chh) 19102

IN THE HIGH COURT OF CHHATTISGARH AT BILASPUR
Rajani Dubey, Sanjay Kumar Jaiswal, JJ
Priyabratta Choudhary – Appellant
Versus
Jayshankar Sahu – Respondent
FA No. 427 of 2018

Advocates:
For the Appellants/Petitioners: Manoj Paranjpe, Anurag Singh
For the Respondents: Siddharth Rathod, Kishan Lal Sahu

In a suit for specific performance, if the claim for enforcement is dismissed, the court may invoke the doctrine of restitution or unjust enrichment to direct the defendant to refund any part-payment received towards consideration to prevent the unjust retention of benefits at the plaintiff's expense.

Headnote:(A) Specific Relief Act, 1963 - Sections 16 and 20 - Suit for specific performance - Dismissal of suit - Whether part payment made towards consideration can be retained by defendant upon failure of contract - Retention of money or property of another against fundamental principles of justice or equity constitutes unjust enrichment - Doctrine of restitution applies to pre-suit and post-suit stages - Defendant cannot be permitted to benefit from unjust enrichment. (Paras 13, 14, 15)

(B) Contractual Dispute - Oral vs. Written Agreement - Primacy of written agreement - Admissibility and evidentiary value - Oral agreement cannot prevail over written contract - Suit for specific performance failing on merits still allows for recovery of paid amounts to prevent unjust enrichment. (Paras 4, 9, 12)

Facts of the case:
The appellants filed a suit for specific performance regarding a property sale agreement. While the written agreement specified a certain purchase consideration, the seller claimed a higher oral sum and refused to transfer the property. The suit for specific performance was dismissed by the trial court, which accepted the defendant's version of the higher consideration. However, it was admitted that a significant portion of the total consideration had already been paid by the purchasers to the seller, and the seller continued to retain this amount after the contract failed.

Findings of Court:
The court determined that even if the primary suit for specific performance is dismissed, a defendant cannot unjustifiably retain money received from the purchaser towards part consideration. Principles of restitution and the prevention of unjust enrichment apply, requiring the return of the funds with interest, as the defendant had benefited from the receipt of these funds to clear existing mortgages on the property.

Issues: The main issues were whether the trial court correctly evaluated the total agreed consideration conflicting between written and oral terms, and whether the defendant is entitled to retain the part-payment received despite the failure of the sale agreement.

Ratio Decidendi: If a property sale transaction fails but the seller has retained a substantial advance amount belonging to the purchaser, the principle of restitution and prevention of unjust enrichment mandates the refund of such amount with interest, regardless of the failure to satisfy the requirements for specific performance of the contract.

Result: Appeal partly allowed; respondent directed to return the paid consideration amount with 6% interest from the date of filing the suit.

Table of Content
1. factual background regarding property sale dispute and initial trial proceedings. (Para 1 , 2 , 3 , 7)
2. appellate contentions regarding evidentiary evaluation and binding nature of written agreements. (Para 4 , 5)
3. judicial assessment of conflicting claims regarding total sale consideration amount. (Para 6 , 8 , 9 , 10 , 11 , 12)
4. application of restitutionary principles to prevent unjust enrichment upon contract failure. (Para 13 , 14 , 15 , 16)

AFR

C A V Judgment

Per Rajani Dubey, J.

1. The appellants have filed the instant appeal against the judgment and decree dated 30.04.2018 passed by the 6th Additional District Judge, Durg, District- Durg Chhattisgarh in Civil Suit No. 6388A/2013 whereby the suit filed by the appellants/plaintiffs for grant of decree of Specific Performance of Contract has been dismissed.

2. Brief facts of the case as mentioned in the appeal are that the the appellants/plaintiffs filed a civil suit for Specific Performance of Contract in respect of the property i.e. the building block No.88, plot No.10 Motilal Nehru Nagar (East) Bhilai, Tahsil and District Durg. The claim in the suit was based on the ground that the plaintiffs are the permanent resident of Bhilai District Durg. The plaintiff No.1 is a Software Engineer working at Bangalore and he is earning a very handsome salary i.e. Rs. 1 lakh/month. The plaintiff No.2 is holding the degree of MBBS and at the relevant time was prosecuting his studies at Bangalore. The father and power of attorney holder of the plaintiffs was Assistant General Manager in Bhilai Steel Plant who retired from the said post in the year 2010 and he has obtained Rs.60 lakhs towards the retiral benefits. The plaintiffs are capable of purchasing the property in question.

The agreement dated 08.03.2013 was executed by defendant No.1 in favour of the plaintiffs for sale of the property in question for a consideration of Rs.45 lakhs. The property was mortgaged with the HDFC Bank and the original papers of the property were lying with the HDFC Bank and for releasing/redemption the said property, the defendant No.1 was dire need of money and therefore the plaintiffs have paid Rs.5 lakhs on 03.10.2012, Rs.10 lakhs on 05.10.2012, Rs.5 lakhs on 08.03.2013 and Rs.15.70 lakhs on 09.04.2013, total Rs.35.70 lakhs were paid towards the part performance. The agreement was executed on 08.03.2013. Despite of repeated requests, the sale-deed was not executed by defendant No.1. After payment of the said amount the defendant No.1 got released the mortgaged property from the HDFC Bank. After releasing the property from mortgage, defendant No.1 obtained the original documents from the Bank and an application for transfer of the property in favour of the plaintiffs was moved before the Corporation on 28.02.2013 and in the said application, the defendant No.1 submitted his affidavit to the effect that he has entered into an agreement to sale the property in favour of the plaintiffs for a consideration of Rs.45 lakhs. The plaintiffs vide cheque No. 488598 dated 28.06.2013 has paid an amount of Rs.3.99,465/- towards the transfer charge to Municipal Corporation, Bhilai. After completion of all the formalities, an NOC was issued by the Corporation on 19.08.2013 and thereafter, the agreement dated 08.03.2013 was executed for sale of the property in question. An amount of Rs.35,70,000/- has already been paid out of Rs.45 lakhs, but despite repeated requests, defendant No.1 did not execute the sale-deed, therefore the notice was served on the defendant No.1 on 22.05.2013 and in response to the said notice, the defendant No.1 has admitted the payment of Rs.35,70,000/- and also admitted the total amount of consideration i.e. Rs.45 lakhs. In the said reply dated 22.10.2013 (Ex. D/3), the defendant No.1 with malafide intention alleged that the total amount of consideration was Rs.72 lakhs and refused to execute the sale-deed. Therefore, the plaintiffs filed the civil suit for g

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2024 Supreme(Online)(Chh) 19102

IN THE HIGH COURT OF CHHATTISGARH AT BILASPURRajani Dubey, Sanjay Kumar Jaiswal, JJPriyabratta Choudhary – AppellantVersusJayshankar Sahu – RespondentFA No. 427 of 2018

Cases Referred (2)

IN THE HIGH COURT OF CHHATTISGARH AT BILASPUR
Rajani Dubey, Sanjay Kumar Jaiswal, JJ
Priyabratta Choudhary – Appellant
Versus
Jayshankar Sahu – Respondent
FA No. 427 of 2018