AS/630/2009 of M/S.TULASI BUILDERS REP.BY SOLE PROPRIETRIX NALLKUNTA HYD Vs P.SRINIVASA RAGHUVEER ASHOKNAGAR HYDERABAD & 6 OTHERS on 31 December 2024

JUDGMENT:

1. Plaintiff is the appellant. Plaintiff impugns the judgement dated 05.08.2009 of learned V Additional Senior Civil Judge, Guntur in O.S.No.400 of 2001. By the said judgement, the learned trial court refused to grant specific performance of an agreement and other reliefs prayed by the plaintiff and dismissed the suit. Therefore, this appeal is filed under section 96 read with order 41 rule 1 CPC.

2. Respondents in this appeal are the defendants in the suit.

3. Sri P.Veera Reddy, the learned senior counsel representing learned advocate on record Sri K.C.Venkata Reddy submitted arguments and cited precedent. For respondents, a counter was filed and written arguments were filed. Sri S.Raja Gopalan, the learned counsel appearing for respondents submitted arguments and cited precedent.

4. Before adverting to the pleadings and evidence, a few undisputed facts are required to be noticed.

465 square yards of land situated at 1/17 Brodipet, Guntur, Andhra Pradesh in old Ward No.2, New Ward No.5, Block No.6, in T.S.No.4-00 is the property owned by five persons who are arrayed as defendant Nos.1 to 5 in the suit. Along with them, Smt. Kanupathi Vardhanamma had a life estate over that property. She died sometime in the year 1999 or 2000. She had two sons who are arrayed as D6 and D7. Be it noted, on death of life estate holder, nothing was succeeded by D6 and D7 over the above referred property. D1 to D5 along with the life estate holder executed a registered General Power of Attorney in favour of D7 on 09.11.1994 evidenced by Ex.A2. By virtue of this GPA, D7 was entitled to do everything with reference to this property including sale of it.

5. On behalf of land owners, their GPA holder/ D7 and the plaintiff which is a sole propriety firm represented by sole proprietrix Smt.K.Tulasi entered into a development agreement dated 06.08.1997. This bilateral agreement was signed by D7/ GPA Holder and Smt.K.Tulasi/ the proprietrix for Tulasi builders.

6. It is to be recorded here that the defendants would be referred as land owners and the plaintiff would be referred as builder.

7. The terms and conditions of this development agreement/ Ex.A1 = Ex.A20 read as below:

Whereas the vendors were approached by the builders and offered to develop the open plot or land by building residential portions on the said plot of land and the vendors having agreed to the same on the following terms and conditions:- NOW THIS INDENTURE WITNESSTH AS FOLLOWS:-

1. The builders shall construct a stilt and two storeyed building at their own cost on the scheduled plot of land as per the sanctioned by the Guntur Municipal Corporation.

2. Out of the three storeyed building, the builders shall hand over possession of the 1/3 of the total constructed plinth area and the parking space meant for the portions in the three floors, which will be in lied of the consideration of the land value, by permitting the building to be constructed over the scheduled plot of land, by handing over possession of the same plot of open land. The area to be allotted by the builders to the vendors out of the total constructed building shall be divided equally in the same proportion on all the floors and shall be one portion on each floor on the southern side

3. Whereas the municipal water connection, electricity, transformer, deposit with the APSEB, new connections, if any, expenditure will be borne by the owners and possession of the portions shall be 18 months from the date of the development agreement

4. That the builders shall be entitled to deal with the remaining 2/3 share of the constructed area in any manner the like.

5. That the indivisible portion of the constructed area as per this agreement shall be adjusted by way of compensation in terms of cash payment or otherwise.

6. The vendors shall execute and register all such documents as are necessary for transferring the 2/3rds share of the building in the name of the builders of their nominees. The vendors shall join the builders to enter into agreements of sale with the purchasers for sale of portions and authorise the builders solely and exclusively to receive the money for constructions of the portions from the purchasers. The builders shall arrange with the vendors for registration of the portions in favour of the purchasers. The stamp duty and the registration charges in this regard shall be borne by the purchasers

7. The vendors assure the builders that their title is subsisting and the General Power of Attorneys is valid on the date of this agreement.

8. That the builders shall complete the construction of the total building on or before 10 months from the date of this agreement. However, the builders shall ensure that there is no inordinate delay in completion of the building in all its aspects. It is agreed between the parties to the agreement that the time for construction is the essence of the contract and can be extended only with the consent of either parties only on conditions which are beyond the control of the parties more so, the builders, due to the factors such as non-availability of material etc.

9. The builders hereby assure the vendors that the materials used by them for construction of the building shall be of good quality, and or specification mentioned The builders shall be responsive for technical and non-technical staff, supervisors etc., to be engaged by them for the construction work and the vendors shall not be liable for any contingencies arising out of such engagement.

10. It is also agreed between the parties that the builders shall not make any demand for finance of raw materials from the vendors. The vendors shall execute all such documents as are necessary for the expeditious completion of the building

11. The parties agree to sign any agreement that may have to be executed by the nominees, of both the parties to enable them to raise any loans or finances from the financial institutions of third parties in connection with the allotment of the portions.

12. The vendors shall indemnify the builders in the event of any direct in the title to the schedule mentioned property to the extent of the expenditure incurred by them for the restoration of the title.

13. That the vendors shall at the request of the builders perform such acts of this as are necessary for the erective implementation of this agreement

14. That the vendors have handed over vacant possession of the schedule mentioned property to the builders subject to the provisions of this agreement as earlier mentioned

15. That the builders hereby agreed with the vendors that the terrace rights of the buildings shall be divided in the same proportion between both the parties.

16. That the builders have paid to the vendors an amount of Rs.2.5lakhs as advance for handing over possession of the open plot of land for construction purposes as per this agreement with is acknowledged by the vendors and this amount shall be adjusted towards the vendors' share of 1/3 share of the completed building at the time of handing over possession of the constructed portions.

17. That the jurisdiction of this agreement shall be restricted to Hyderabad.

8. The builder/plaintiff filed O.S.No.400 of 2001 before the trial court and the prayers made in the plaint read as below:

“The plaintiff prays that the Hon'ble Court may be pleased to pass the judgement and decree in their favour and against the defendants as under: -

a) for a direction to the defendants to execute the sale deed jointly and severally in favour of the plaintiff or their nominees in respect of the 2/3nd share of the suit schedule property as per the agreement dated 6-8-1997.

ALTERNATIVELY,

If the defendants fail to execute the sale deeds as mentioned supra a) of the prayer, this Hon'ble Court is prayed to execute the sale deed in favour of the plaintiff or their nominees on behalf of the defendants.

b) for a direction to the defendants to refund a sum of Rs.2,50,000/- to the plaintiff towards repayment of the advance amount (refundable) together with interest at the rate of 24% p.a. from the date of the suit till the date of realisation.

c) that the defendants be restrained by permanent injunction not to alienate the suit schedule property in favour of third parties.

d) that the defendants shall be restrained by permanent injunction not to interfere with the peaceful possession and constructions on the suit schedule property of the plaintiff's 2/3d share of the suit schedule property.

e) to award costs of the suit.

f) To pass such other further order or orders as the Hon'ble Court may deem fit and proper in the interest of justice.”

9. The essence of the case of the plaintiff is that plaintiff has always been ready and willing to perform its part of the contract but it was the defendants who by their conduct put all obstructions to the plaintiff and prevented it from accomplishing the objective of the contract and that forced the plaintiff to file the suit with the prayers referred above.

10. The plaint refers to the ownership of the property and the terms of the above referred development agreement. A reading of the plaint would also indicate that on ground all the works were attended to by Sri KSR Murthy who is the husband of Sri K.Tulasi/ Proprietrix. The pleaded case of the plaintiff is that D6 and D7 approached the plaintiff stating that they did not have enough funds but they owned 465 square yards of plot of land

and they were looking forward for a suitable builder to build the plot and it is at their request the plaintiff agreed to invest and develop the property. Plaintiff gave Rs.1,15,000/- to D7 to meet the expenses for obtaining a sanctioned plan from Guntur Municipal Corporation. He accordingly obtained sanctioned municipal plan which allows a period of 12 months for construction. It is further pleaded that ten house portions spread in three floors were agreed to be constructed. D7 claimed to be competent in looking after construction works used to attend the works that were being carried out by the plaintiff. However, D7 was found not component to handle the work and in fact, his incompetence caused unnecessary expenditure for the plaintiff in carrying out the constructions leading to substantial loss to the plaintiff. Therefore, the services of D7 were dispensed with by the plaintiff. It is then pleaded that plaintiff had invested about Rs.12 lakhs and made brisk construction work and completed construction of two house portions in all respects. According to plaintiff, these two house portions would account for one-third of the constructed area which was to be given to land owners and the plaintiff has no objection for allotting those two house portions to the defendants. The rest of the two-third portions belonged to the plaintiff and therefore defendants shall be directed to register the same in favour of the plaintiff. The other facts pleaded in the plaint are to the affect that plaintiff made constructions in two floors and approached D7 in March 1998 stating that there were buyers and these two house portions could be sold to them. However, D7 refused to register those two house portions in favour of the prospective buyers Smt. M. Vasanthalakshmi. The municipal sanctioned plan elapsed in June, 1998. D7 did not cooperate and did not obtain renewal. At paragraph No.15 of the plaint, it is stated that in such circumstances, plaintiff was reluctant to invest further money since defendants failed to perform their part of the contract. Then the plaint refers to exchange of notices between the parties and the caveats filed by the defendants. It then refers to a meeting of elders where it was agreed between the parties that the defendants/ land owners would convey their one-third share to the builder/ plaintiff for a sum of Rs.5 lakhs and it was agreed that the builder would pay Rs.2 lakhs by way of demand draft and Rs. 3 lakhs within a month thereafter. Acting upon that, plaintiff obtained a demand draft for Rs.2 lakhs but the defendants refused to sign the agreement so entered into between the parties before elders. It is also pleaded that defendants sold out two house portions and executed registered sale deed in favour of third parties. In fact, it was at the instigation of D7, Sri G.Hanimi Reddy and K.S.Nagendra are interfering with the work of the plaintiff/ builder and that forced the builder to sue them by way of O.S.No.844 of 1999 before learned II Additional Junior Civil Judge, Guntur. It is in the above referred circumstances, plaintiff claimed the reliefs in the suit as mentioned earlier.

11. The land owners/ D1 to D5 and their GPA holder/ D7 filed a common written statement and D6 filed a memo adopting it. In their written statement, the land owners admitted execution of development agreement and claimed that builder was totally inefficient and was not having funds and it was unable to complete the work within the stipulated time and despite the best efforts of the land owners, the builder was unable to complete the work and the builder abandoned the project and that forced the land owners to take up the task of completion of the work with their own funds and that caused great deal of inconvenience to the land owners. That the agreement for sale is insufficiently stamped and therefore cannot be enforced. The suit mentioned claims cannot be granted. They sought dismissal of the suit.

12. On these rival pleadings, the trial court settled the following issues for trial:

1. Whether the plaintiff is entitled for the specific performance of development agreement dated 06-08-1997, for 2/3d of the suit schedule property executed by DI to D5 and Vardhanamma, mother of the D6 and D7? of development agreement dated 06-08-1997, for 2/3d of the suit schedule property executed by DI to D5 and Vardhanamma, mother of the D6 and D7?

2. Whether the plaintiff is entitled for the refund of Rs.2,50,000/- with interest @24% p.a. as an alternative? Rs.2,50,000/- with interest @24% p.a. as an alternative?

3. Whether the plaintiff is entitled for the injunction restraining the defendants from alienating the schedule property? the defendants from alienating the schedule property?

4. To what relief?

At the trial, there was evidence of PW.1 and 2 and Exs.A1 to A21 for plaintiff. There was evidence of DW.1 and 2 and Exs.B1 to B4 for defendants.

13. After making a detailed analysis of the evidence and the arguments advanced and both sides, the trial court recorded that the builder failed to complete the project in terms of the agreement entered into between the parties and the fault lies with the builder/ plaintiff and one who did not perform their part of the obligations are not entitled for the relief of specific performance and held the issue No.1 against the builder/ plaintiff. In the process of discussion, the trial court also stated that the agreement for sale was insufficiently stamped and could not be read in evidence. There was some discussion about the validity of the evidence of PW.1 and the trial court held that evidence of PW.1 was validly adduced and that could be considered. With reference to issue No.2 for Rs.2,50,000/- it held that since the builder/ plaintiff did not construct the building completely within the time prescribed, it was not entitled for refund of money and thus held the issue No.2 against the plaintiff. Since both the main reliefs were not granted, it found the reliefs for injunction claimed in the plaint could not be granted. Finally, it dismissed the suit.

14. Aggrieved by that, the present appeal is filed. The grounds urged in the appeal would reiterate the various pleadings and evidence adduced by both sides and as to how the trial court failed to appreciate them. Thus, the main contention raised in the appeal is failure of trial court in properly appreciating the evidence and failure of the trial court in exercising its discretion in a judicious manner. Therefore, the various details mentioned in the grounds of appeal would conveniently be discussed at relevant place.

15. Respondents/ land owners by their counter protested the grounds urged in the memorandum of grounds of appeal and stated that the judgement of the court below is correct on facts and law and does not require any interference.

16. The following points fall for consideration

1. Whether the evidence and facts and circumstances entitle the builder for specific performance of development agreement dated 06.08.1997 but the learned trial court failed in noticing the relevant aspects and failed to exercise judicious discretion and committed error? agreement dated 06.08.1997 but the learned trial court failed in noticing the relevant aspects and failed to exercise judicious discretion and committed error?

2. Whether the builder is entitled for refund of Rs.2,50,000/- with 24% interest per annum?

3. Whether there was legally valid evidence on behalf of the builder and whether the trial court committed any error? builder and whether the trial court committed any error?

Point No.1

17. One who sues for specific performance is obliged to plead and prove his readiness and willingness to perform the essential terms of his part of the contract as per Section 16(c) of Specific Relief Act, 1963.

In such suits for specific performance, the plaintiff must be truthful and must make factually accurate assertions and should not make false averments which could mislead a court. Since jurisdiction at equity is to be exercised by the court, the plaintiff is obliged to come with clean hands. While considering a case for specific performance, among other principles, the mandate in section 20 of Specific Relief Act is required to be kept in mind. In cases where a development agreement is sought to be specifically enforced, Section 14 of the Specific Relief Act falls for consideration and the case of the builder has to be decided on the parameters prescribed by the principles contained in Section 14 of the Act, 1963.

18. From the material placed before this court, one could notice that in the plot of land where the development was to take place an approved building plan dated 31.05.1997 was obtained. The pleaded case on both sides shows that it was obtained by D7. According to builder, it funded money to D7 to obtain the said permission. Subsequent to obtaining this approved building plan, the development agreement was entered into between the parties on 06.08.1997. As the permission would indicate the project should be completed within 18 months from the date of the agreement. That 18 months would expire by 06.02.1999.

19. As the agreed terms would indicate in term No.1, the builder was the one to construct a stilt and two storeyed building at its own cost in terms of the sanctioned building plan. On completion of such building, as per term No. 2 - one third of the total construction in the plinth area and the parking space allocated for that one third must go to the land owner and such one third share must to go to the land owner spreading in all the three floors. As per term No.4, the builder shall be entitled to deal with the remaining two third share of the constructed area and the builder is entitled to deal with it in any manner it likes.

20. Therefore it is incumbent on the builder/ appellant to prove that it has performed all the essential terms of the contract. It is also obliged to show that it has always been ready and willing to perform essential terms of the contract which are to be performed by it. It is further entitled to show that it need not perform those terms, the performance of which has been prevented by the land owner or waived by the land owner as provided in section 16 of the Specific Relief Act, 1963.

21. In the case at hand, at para No.21 of the plaint, it is stated that plaintiff/ builder/ appellant completed the construction of two house portions in all respects which account for one third of the constructed area. It by itself indicates that though according to appellant it has to build ten such house portions, it was able to complete only two such house portions. Thus, the remaining construction as agreed in the development agreement was not completed even by the time of filing of the suit. One who has not completed ones own obligations was not entitled to seek Specific Performance. However, if the appellant/ builder was able to demonstrate that its’ failure was not out of its own volition but it was either waived or objected by the land owner then it could seek some relief. According to the appellant, it has always been ready but it was prevented by the acts of the land owners in completing the project. One of the submissions on behalf of the learned senior counsel appearing for the appellant is that given a chance appellant is even today ready to bear the escalated costs and complete the project within a reasonable time that may be fixed by this court. Before considering this fair submission of the learner senior counsel it is for the appellant to demonstrate as to how and in what circumstances the development agreement failed. If the cause of failure lies with the land owner, then the submissions of the appellant in the manner argued by the learned senior counsel would fall for consideration.

22. From the pleadings and the evidence on behalf of the builder the following aspects are seen as the causes that scuttled the development agreement. It is averred in the plaint and there is the evidence of PW.1 that D7 who executed the development agreement on behalf of the land owners is an electrical engineer and claimed for himself that he had lot of skill in attending building constructions and he interfered in the construction carried out by the builder and in the process he made the builder to incur

unnecessary expenditure and caused loss to the builder and consequently builder dispensed with his services. This is one reason for failing to complete the project within the stipulated time. According to the land owners, the builder was using substandard material and was not alive to the fact that plot of land was at a distance of 100 yards from the Railway Track and because of substandard construction even when one single train passes, it would create tremors in the structure and that was objected to by D7 but was not heeded to by the builder. In the light of the contention raised by the builder/ appellant that D7 was responsible for unnecessary expenditure, it was for the builder to disclose by evidence as to what was the unnecessary expenditure that was suffered by the builder. Absolutely no details were furnished with reference to that. No other evidence was produced to disclose how much was that unnecessary expenditure causing drain to the pocket of the builder. It was in the knowledge of both sides that the development was to be carried out on the plot of land which was just at a distance of 100 yards from the railway track. For the apprehensions ventilated by the land owners about the tremors that would be experienced by the construction and the measures that were to be taken to obviate such tremors, it is for the builder to demonstrate its technical skills and the kind of inputs that would be induced in raising the construction. There has been no answer from the builder either through the pleadings or through the evidence. In the light of this discussion, it has to be recorded that the appellant failed to prove its contention about unnecessary expenditure suffered by it because of the conduct of D7. Therefore, that contention is not a ground that relieves the builder in completion of the project.

23. The thrust of the case of the builder is that (Paragraph No.13 of the plaint) after development agreement dated 06.08.1997, work commenced briskly and by March, 1998, it completed construction of two floors and it approached D7 that the two house portions could be sold out. In fact, the builder entered into agreement for sale with Smt.N. Vasantha Lakshmi and obtained Rs.43,000/- by way of advance. However, D7 refused to accede to this request and refused to register the two house portions in favour of the prospective buyer. During cross-examination of PW.1, the witness admitted that D7 had put his signatures on agreement for sale. Then the witness stated that when it came for registration he refused to cooperate with the registration. That was denied by DW.1 in his evidence. Therefore, it was for the builder to produce those agreement for sale and produce the evidence of the said prospective buyer to sustain its contention that the fault lies with D7 and not with the builder

24. In continuation of what is referred in the above paragraphs, the following aspects are to be considered.

The proposal for sale referred above was during March, 1998. It is undisputed that by then the total construction was not completed. Even by the outer date of 06.02.1999 the total construction was not completed. As per the agreed terms of the development agreement the right of alienations would fall for consideration only on completion of the total construction. There is no mention in the development agreement that even before completion of total construction the builder was entitled to ask the land owner to participate in sales of those portions which were constructed. According to PW.1, there was an oral understanding between the parties enabling such sales. PW.1 admitted in cross examination that in the development agreement there is no clause that the portions could be sold to purchasers and on getting money from that the project would be completed. Thus in terms of the written development agreement the builder did not act and the builder was contending about oral understanding which oral understanding even if accepted failed and the builder failed to demonstrate that the failure was because of D7.

25. The pleaded case of the builder and evidence of PW.1 is that by June 1998 the approved building plan time elapsed and D7 refused to renew it. In such circumstances, the work could not progress and therefore builder was reluctant to invest further. According to the land owner, the builder abandoned the project as it failed to meet the standard construction requirements and is throwing the blame on the land owners. Be it noted, in the development agreement there is no mention as to who should obtain the building sanction plan. Further there is no mention as to who should obtain a renewal of the sanction plan. Since the sanction plan expired in June 1998 what happened there after has to be seen.

The first notice was from the builder to the land owner and that was adduced in evidence by the land owner as per Ex.B1 dated 21.10.1998. The advocate by name Sri N.Satyanarayana Rao of Guntur got the notice issued on behalf of the builder addressed to D7. A reading of the contents of it perplexes anyone. It refers to the development agreement and then states that D7 has to develop the plot and he should build the building at his own cost. It mentions that time is the essence of the contract. Then it mentions that the builder was making efforts to execute agreement for sale but D7 was refusing to sign them. It then mentioned that D7 was not coming forward to renew the municipal plan and then it states that D7 is liable to pay damages. Thus, this notice changes the position of parties. It calls the land owner as builder and all the obligations were on the builder including renewal of municipal plan. With such clumsiness the said notice was issued four months after expiry of the time given in the sanctioned building plan. The reply notice from D7 is Ex.B2 dated 11.11.1998. While narrating the clumsiness of the notice received this reply puts the matter in perspective and then it stated that the builder failed to complete the project within the stipulated time and in fact there was a nice opportunity to regularize the construction under the Building Regulation Scheme which was necessary since the builder indulged in large scale deviations against the sanctioned plan. It further mentioned that

for violation of G.O.Ms.No.419 dated 30.07.1998 even that part of the structures which were raised by the builder were likely to be demolished. It then mentioned that builder stopped the construction activity because of paucity of funds and other resources and was trying to get rid of vendor and trying to introduce third parties for construction. It then mentioned that the land owners were ready to accept intervention of a third party for completion of the project. It then requested the developer/ builder to complete the project within the stipulated time while land owner expressed their willingness to give full cooperation. As one would notice from the evidence of DW.1 and Ex.A8 letter of under taking given to the Commissioner of Guntur Municipal Corporation and Ex.A9 indemnity bond dated 29.11.1998 and Ex.A10 which was a demand draft for Rs.10,000/- signed by both sides would indicate the mutual participation of both sides in trying to take the project further and have the construction regularized. It is in the context of such fact situation, the builder/ appellant was to disclose to the court as to whether it made constructions in accordance with the sanctioned plan and that there was no deviation from sanctioned plan and about the availability of its funds to complete the project. At paragraph No.15, the very pleaded case of the plaintiff was that it was reluctant to invest further money in the project. Thus, the builder demonstrated for itself about its reluctance to proceed further. It adduced no further evidence to show what efforts it put to see that the project was accomplished and further renewal of plan was obtained. The fact remains, as per Exs.A8 and A10 showed violations of sanctioned plan in the construction carried out by the builder. Builder did not adduce evidence as to rectification of such violations. Builder did not disclose the availability of necessary funds to complete the project. Builder was only expecting a piece meal sale of constructed areas and gaining money from that and then proceed further with the construction. If that be the case it cannot be said that builder was ready and willing to complete its obligations under the development agreement. Nothing prevented the builder to have revised the terms of the development agreement with the land owners. Nothing happened in that regard. The efforts of the builder to raise funds by sale of those plots which were constructed was not scuttled by D7 as D7 elicited through cross examination of PW.1 that he participated in signing the agreements for sale. All these circumstances, would demonstrate that the builder was only trying to avoid its obligations and in the process, contending that renewed municipal sanction plan was not obtained by D7. Learned trial court rightly considered all these aspects.

26. The next contention on behalf of the appellant is that the two constructed portions were sold out by land owners to Sri G.Hanimi Reddy and Sri K.S.Nagendra. This was admitted by DW.1. A few things are to be noticed here. According to the builder, these two portions were completely constructed with all amenities and without the participation of the builder, unlawful sales were done by D7 in favour of those two purchasers. One such purchaser by name Sri K.S.Nagendra testified as DW.2 and stated that by the time of obtaining sale deeds, the remaining property was only a skeleton structure. He further stated that by the time he purchased, his flat was only a skeleton. PW.1 in his cross-examination stated that as against Sri Hanimi Reddy and other purchaser, Sri K.S.Nagendra, he had filed O.S.No.844 of 1999 and those two portions which they purchased were semi-finished and after purchase, those purchasers got the work completed and finished and then they started living in those portions. The above discussion would show that the pleadings of

the builder that it completed two portions completely is incorrect as they were semi-finished. At one point of time, builder wanted to sell them to Sri K.Vasantha Kumar and Sri V.Venkateswararao and failed in that effort. As the construction was not progressing and as the builder was reluctant to invest further, the land owners assumed that the builder having failed to complete the project within the prescribed time and abandoned it, they indulged in sale of those two semi-finished flats. Plaint avers fully finished flats which is found to be incorrect pleading. Thus, known falsehood was pleaded by plaintiff.

27. The strength the builder claims in pursuing his remedy by way of specific performance instead of damages is rested on the fact that the land owner indulged in sale of a portion of a construction and thus entered into possession of property and prevented the builder from continuing construction and therefore the builder who invested Rs.12 lakhs so far on the project must be granted its two-third share in the property. The virtue of this has to be examined now. The estimated building value according to PW.1 was Rs.35,47,500/-. According to PW.1 so far it spent only Rs.12,00,000/- on the construction. The plaintiff does not make an averment that it is ready and willing to spend two-third of the estimated building value so as to seek its two-third share in the property. Thus there is complete failure of part of the builder in performing essential aspects of the contract.

28. The facts of the case are to be seen through section 14A(3)(c) of the Specific Relief Act, 1963 as it stood prior to its amendment by Act 18 of 2018. Where the suit is for the enforcement of a contract for the construction of any building or the execution of any other work on land such contracts cannot be specifically enforced. However, there are exceptions to it as provided in the proviso to the above referred provision. One of the rulings cited at the bar is Sushil Kumar Agarwal V. Meenakshi Sadhu [1]. Their Lordships gave purposive interpretation permitting the developer to sue for specific performance and held at paragraph No.27 that the developer has to satisfy the following twin conditions:

1. The building or other work is described in the contract in terms sufficiently precise to enable the court to determine the exact nature of the building or work;

2. The plaintiff has a substantial interest in the performance of the contract and the interest is of such a nature that compensation in money for non-performance of the contract is not an adequate relief; Failure to fulfill these conditions disentitle the developer from seeking specific performance. There shall be necessary pleadings and necessary evidence satisfying the twin conditions. In the case at hand, the agreement between parties has failed to incorporate all those details that are required in terms of condition No.1 mentioned above. The pleadings and evidence led by the plaintiff/ appellant omitted to establish what is required for condition No.2 mentioned above.

30. For the reasons mentioned above, it is clear that the appellant failed in establishing its right to have specific performance of the agreement. The findings of the trial court are right on facts and law. There are no merits in this appeal to persuade this court to take a different view. Therefore, point No.1 is held against the appellant.

POINT No.3

31. As per the record, on behalf of the plaintiff/ appellant during trial, the evidence of PW.1 and 2 was tendered. It is undisputed that PW.2 did not appear for cross-examination and therefore the trial court itself eschewed the evidence of PW.2. That is not challenged in this appeal and thus, that became final.

32. Then there is the evidence of PW.1. Examination – in – chief by way of affidavit of Smt.K.Tulasi was filed before the trial court. She was expected to appear for facing cross-examination. She did not appear. On 25.06.2008, her husband Sri KSR.Murthy attended the trial court and through him the examination in chief affidavit of Smt.K.Tulasi was accepted and he was cross-examined. This court has never seen or heard such a practice. Sri KSR Murthy did not testify in chief but he was cross-examined. Smt.K.Tulasi never stood for cross-examination but her evidence was considered. This is all against the principles of law. This was raised before the trial court. The astonishing view taken by the trial court is that the husband and the wife are one and the same and therefore it intended to consider the evidence and accordingly considered the evidence. In this appeal, this question re appeared. The response of the learned senior counsel for appellant is that for the folly of the trial court appellant cannot be found fault with. In the opinion of this court, this argument does not cure the serious legal lapse. It shall certainly be stated that what was considered as evidence of PW.1 by the trial court ought not to have been considered as valid evidence in the eyes of law. In that view of the matter, it shall be recorded that there was no legally valid oral evidence available before the trial court in support of the case of the appellant/plaintiff. Hence, this point is answered against the appellant.

POINT No.2

33. From the pleadings on both sides, it clearly emerged that plaintiff paid and defendants/land owners received Rs.2,50,000/-. As found earlier, two semi-constructed house portions were taken over by the land owners and they also sold them out and received sale consideration. Now they have their own land, sale consideration of those two house portions and also the money received from the builder. As against that, the builder has no property now and he spent money for developing the project and is found ineligible for specific performance. In such circumstances, builder is right in seeking refund of this Rs.2,50,000/-. Trial court refused to grant it on the premise that the builder failed to complete the project. There is no term in the contract nor there is any subsequent contract between the parties enabling the land owner to forfeit the above money. Therefore, in terms of law and equity, the land owner shall be directed to refund it. To this extent, the judgment of the trial court has to be set aside. Hence, this point is answered in favour of the appellant.

34. In the result, this appeal is allowed in part. Consequently, the impugned judgment dated 05.08.2009 of learned V Additional Senior Civil Judge, Guntur in O.S.No.400 of 2001 is set aside to the extent that it refused to grant the relief of refund of money. The said suit stand decreed in the following terms: The builder/appellant is entitled for a refund of Rs.2,50,000/- with 6% interest per annum from the date of filing of the suit till the date of realization. There shall be no order as to costs.

As a sequel, miscellaneous applications, pending, if any, shall stand closed.

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Dr. V.R.K.KRUPA SAGAR, J

Date: 31.12.2024 Dvs

Dvs

THE HON’BLE JUSTICE Dr. V.R.K.KRUPA SAGAR

APPEAL SUIT No.630 of 2009

Date: 31.12.2024