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M.R. Rajkumar v/s M/s. Allied Estates, Rep. by its Partner, Mohammed Arshad & Others

    C.S. No. 470 of 2012

    Decided On, 11 February 2021

    At, High Court of Judicature at Madras

    By, THE HONOURABLE MR. JUSTICE C.V. KARTHIKEYAN

    For the plaintiff: M.S. Krishnan, Senior Counsel for M/s. Sarvabhuaman Associates, Advocates. For the Defendants: D1 & D2, K. Sukumaran, Advocate, D3 & D5, Set Exparte, D4, D6 & D7, No appearance.



Judgment Text

(Prayer: This Civil Suit is filed under Order VII Rule 1 of the Civil Procedure Code read with Order IV Rule 1 of the O.S. Rules, for a Judgment and Decree against the defendants for the following reliefs:(a) direct the defendants herein to pay a sum of Rs.1,10,00,000/- (Rupees One Crores Ten Lakhs only) and together with interest at 12% p.a., on Rs.1,00,00,000/- (Rupees One Crores) from 18.01.2010 till date of payment;(b) to pay all costs of the suit to the plaintiff.)1. The suit had been filed by the plaintiff M.R.Rajkumar against the defendants seeking a Judgment and Decree to pay a sum of Rs.1,00,00,000/- together with interest at 12% p.a., on Rs.1,00,00,000/- from 18.01.2010 till the date of payment and for costs of the suit.2. It had been stated in the plaint that the plaintiff is carrying on business in constructing and selling residential / non-residential complexes, houses etc. The plaintiff was on the lookout for housing plots/sites to construct independent houses in the suburbs of Chennai. The defendant firm had offered to sell its lands measuring an extent of 50 acres in Mangalam and Echenkarani Village of Soorakuppam Village in Thirukalukundram. It had been further stated that after negotiations, a Memorandum of Understanding had been executed on 24.05.2008. The total sale consideration was fixed at Rs.55,00,000/- (Rupees Fifty Five Lakhs) per acre subject to final survey measurements and the property being free from encumbrances. The plaintiff had paid a sum of Rs.1,00,00,000/- to the first defendant as advance on 24.05.2008. It had been further stated that the first defendant should make available the title deeds and all other documents relating to the property as and when required by the plaintiff or his counsel. When ever legal clearance was given, the plaintiff had agreed to pay an additional amount of Rs.5,00,00,000/- (Rupees Five Crore). The first defendant had agreed not to enter into any other agreement with respect to the properties or encumber or create a charge or otherwise deal with the properties.3. It is the contention of the plaintiff that the defendants did not furnish the copies of the title deeds. The sale was to be completed on or before 23.08.2008. The plaintiff demanded the title documents for scrutiny. Though the defendants assured the plaintiff that they would be furnished, they were not done.4. In the plaint, it had been specifically stated that in December 2009, the plaintiff came across an advertisement inserted by Chennai Metropolitan Co-operative Housing Society Limited offering the same properties for sale. The plaintiff states that they realised that the defendants had breached the terms of the Memorandum of Agreement. The plaintiff then demanded refund of the advance amount paid. This was in accordance with clause 7 of the Memorandum of Understanding. A legal notice was issued on 18.01.2020. The defendants did not reply to the notice. It is under these circumstances that the suit had been filed for recovery of the advance amount paid together with interest and costs.5. The second defendant filed written statement. In the written statement, it had been specifically stated that the suit is barred by limitation. It was also stated that the suit suffers owing to non impleading as defendants the other partners of the first defendant. It was also stated that the second defendant had retired from the partnership firm even in the year 2010 much prior to institution of the suit. It was stated that one of the partners of the first defendant, Mr. Mohammed Arshad had signed the Memorandum of Understanding. The names of the other partners were also given in the written statement. The Memorandum of Understanding was admitted. It was stated that the plaintiff had a commitment to pay Rs.6 crores as advance out of which Rs. 1 crore had to be paid at the time of signing the Memorandum of Understanding and Rs. 5 Crores to be paid on or before 23.06.2008. The balance sale consideration of Rs.21,58,80,000/- would have to be paid within 120 days from the date of signing the agreement of sale. It was stated that the balance advance amount of Rs.5 crores had not been paid. The agreement of sale was not executed on or before 23.06.2008. The suit was filed only in March 2012. It was claimed that the suit was barred by limitation. It was also stated that the plaintiff had not honoured the terms of the agreement to pay the balance advance amount by 23.06.2008. It was stated that the averment that copies of title deeds and documents had not been handed over was a false averment. It was stated that there was also no demand from the plaintiff seeking furnishing of the title deeds. They were already in the possession of the plaintiff. The issuance of legal notice has also been denied and it was stated that the defendants had not received any such notice. It was stated that the suit is barred by limitation and therefore, has to be dismissed.6. Since the names of the other partners had been mentioned, the plaintiff also impleaded them as defendants 3, 4, 5, 6 and 8. They were impleaded by order of the Court. The said defendants were set ex-parte, since they did not answer the summon issued by the Court.7. The third defendant and the fifth defendant were set ex-parte on 28.02.2017. The jurisdiction of the Commercial Division had been assumed on 16.08.2019. The defendants 1, 4, 6 and 7 were directed to file their written statement on or before 04.09.2019. They had not filed their written statement.8. On the basis of the above pleadings, the following issues were framed on 30.09.2019:-“(i) Whether the plaintiff is entitled for the suit claim as against the second defendant?(ii) Whether the plaintiff strictly adhered the terms of the clauses 4 and 5 of the memorandum of understanding executed on 24.05.2008 between the first defendant and the plaintiff?(iii) Whether the suit is barred by limitation?(iv) To what relief the plaintiff is entitled?”9. The plaintiff M.R.Rajkumar was examined as PW-1. He filed Exs. P1 to P9. Ex.P-1 dated 24.05.2008 was the original Memorandum of Understanding, Ex.P-2 which is not dated was the copy of the plan issued by the Chennai Metropolitan Housing Society Limited, Ex.P-3 was a copy of the legal notice said to have been issued on 18.01.2010, Ex.P-4 was a copy of the phamplet issued by Chennai Metropolitan Housing Society Limited, Exs. P-5 to P-9 were certified copies of sale deeds executed with respect to the same property to various other parties. The defendant examined J.Mohammed Arshad as DW-1. He did not mark any documents.10. Heard arguments advanced by Mr. M.S.Krishnan, learned Senior Counsel for M/s.Sarvabhuaman Associates, learned counsel on behalf of the plaintiff and Mr.K.Sukumaran, learned counsel for the first and second defendants.11. Both Mr.M.S. Krishnan, learned Senior Counsel for the plaintiff and Mr.K.Sukumaran, learned counsel for the defendants 1 & 2 stated that the issue to be adjudicated would narrow down to a finding on the issue on limitation. Mr.M.S.Krishnan, claimed that the starting period of limitation was December 2009 when the plaintiff came to know about the advertisement issued by the Chennai Metropolitan Co-operative Housing Society Limited and it was only then that the plaintiff came to know that the defendants had breached the agreement and that the period of limitation would commence only from December 2009.12. The learned Senior Counsel stated that the suit had been presented on 19.04.2012 within a period of three years from December 2009 and therefore stated that the suit had been filed within the period of limitation. The learned Senior Counsel stated that Article 113 of the Limitation Act, 1963 alone would apply which provided for a period of three years to institute the suit. The learned Senior Counsel pointed out that even otherwise the plaintiff had issued a notice on 18.01.2020 which copy had been marked as Ex.P-3. The learned senior counsel fairly stated that the acknowledgement card was not available. The learned Senior Counsel insisted that the suit was still within the period of limitation.13. The learned Senior Counsel pointed out that the defendants have not denied execution of the Memorandum of Understanding and therefore if it is held that the suit is within the period of limitation, then a decree as prayed for would automatically would follow. The learned Senior Counsel also stated an alternate argument that Article 62 of the Limitation Act would apply which would again indicate that the suit had been filed well within the time.14. These statements were seriously disputed by Mr. K.Sukumaran, learned counsel for the first and second defendants, who pointed out that it was Article 23 which would come into play and stated that the starting period of the limitation was on 24.05.2008, the date of execution of the Memorandum of Understanding or on 23.08.2008 by which time, the sale had to be completed and it had become evident to the plaintiff that the defendant had committed breach and even if either one of the two days are taken into consideration, still the suit was barred by limitation.15. I have carefully considered the arguments advanced and the materials on record.Issue No.3:16. This issue is whether the suit is barred by the law of limitation. This issue is taken up first for consideration.17. The plaintiff N.R. Rajkumar claims to be carrying on business in constructing and selling residential/non-residential complexes, houses. He was on the look out for housing plots/sites to construct independent houses in the suburbs of Chennai. He had entered into an agreement termed as Memorandum of Understanding on 24.05.2008 with the first defendant M/s. Allied Estates, represented by its partner Mr.Mohammed Arshad. Even before proceeding further, a reasonable presumption can be drawn by any prudent person that the plaintiff who claims to be a business man, constructing and selling residential/non-residential complexes, houses etc., would have basic and fundamental knowledge of the documents to be executed with respect to purchase and sale of property and that any registered document would be reflected in an encumbrance certificate and that every registered document is a public document. This fact is stated because the Memorandum of Understanding dated 24.05.2008 was with respect to extensive lands measuring 50 acres in Mangalam and Echemkarani Village of Soorakuppam Village in Thirukkalukundram.18. Ex.P-5 is a certified copy of the sale deed registered as Document No.700 of 2008 on the file of the Sub Registrar Office, Thirukkalukundram, dated 14.02.2008 even prior to the Memorandum of Understanding dated 24.05.2008. In the Memorandum of Understanding and by way of an annexure, the survey numbers of the lands and their extent had been given.19. In Ex.P-5, K.Vijaya and her son, K.Kamalakannan, K.Ravichandran and K.Sasikumar, all represented by their Power of Attorney Agent V.Rajendra Prasad and V.Rajendra Prasad had conveyed to A.Jawakar, 0.16 acres in S.No. 167/2 and 0.10 acres in S.No. 167/2 in Mangalam Village, Thirukkalukundram Taluk, measuring totally 0.26 acres. These two specific lands have been mentioned in S.Nos. 44 & 45 in the Annexure to the Memorandum of Understanding.20. It is thus seen that the claim of the plaintiff that he had bona fide enter into the Memorandum of Understanding cannot be accepted particularly since he claimed to be a business man dealing with properties. The plaintiff should have undertaken due diligence and the basic exercise is determining whether the properties for which he had entered into a Memorandum of Agreement were actually available for him to purchase. Atleast the above survey numbers and the lands mentioned therein were not available. They had already been sold. They had been sold and purchased by strangers to the Memorandum of Understanding.21. Be that as it may, the plaintiff also filed as Ex.P-6 certified copy of sale deed registered as Document Nos. 5503 of 2008 on the file of the Sub Registrar Office, Thirukkalukundram dated 06.09.2008. By this document, A.M. Farook, I.Kennedy and M.Narendra Sakariya had conveyed to the Chennai Metropolitan Co-operative Housing Society Limited, the lands which had been given in the schedule to the document for a total consideration of Rs.4,10,79,680/-. It must be mentioned that A.M.Farook had also been described in the document as Managing Partner of M/s. Allied Estates, the first defendant herein. The lands conveyed included practically all the survey numbers mentioned in the Memorandum of Understanding. Thus, the properties for which the plaintiff had entered into a Memorandum of Understanding on 23.06.2008 had been practically conveyed by Ex.P-7 on 06.09.2008. Subsequent conveyances were also effected and the plaintiff filed Exs. P-7, P-8 and P-9, the certified copies of the sale deeds. Ex.P-1 was dated 06.10.2008, Ex.P8 was also dated 06.10.2008 and Ex.P-9 was dated 04.06.2009. Therefore, the defendants either directly or indirectly had dealt with the lands mentioned in the Memorandum of Understanding even prior and later subsequently to the date of execution of that document. The breach of the agreement first occurred on 06.09.2008, when Ex.P-6 was executed. The plaintiff cannot claim ignorance about the registration of the sale deed since it is a public document.22. The arguments advanced by the learned Senior Counsel that the plaintiff came to know about the transactions only from Ex.P-2 which is an advertisement issued by the Chennai Metropolitan Co-operative Housing Society Limited cannot be accepted since the said document itself being a Xerox copy is inadmissible in evidence. Moreover while calculating the limitation period, there must be a date on which the limitation starts. In an agreement of sale, if there is a breach, the plaintiff can either seek return of the money advanced or enforcement of the terms of the agreement.23. The arguments put forth that Article 62 will apply is rejected by me since on the date when the advance had been paid, portions of the property had already been conveyed and therefore, there cannot be a charge relatable to the properties mentioned in the Memorandum of Understanding. Further, parts of the property were sold on 06.09.2008, 6.10.2008, again on 06.10.2008 and on 4.06.2009. The plaintiff had not taken any effective steps questioning such sale deeds.24. The claim of the plaintiff that he was waiting for the title deeds to be given will have to be straight away rejected because a portion of the property had already been sold to third parties by third parties and there can be no question of title deeds being handed over by the defendants to the plaintiff. Even otherwise, during his cross examination, a very specific question was asked:-“Q5: In this suit have you filed any document to show that you have demanded the copies of the title deeds or other connected papers from the defendant?A: I have not filed.”25. Further Q-8, Q-11 & Q-12 are also relevant:-“Q8: Ex.P-1 is shown to the witness. In Ex.P-1 clause 2 on payment schedule which states that Rs. 5 Crores to be paid on or before 23.06.2008 and further state Rs.21,58,80,000/- to be paid within 120 days of signing the agreement of sale that is 21.09.2008. Have you made the above payments?A: We have not made any payments after initial advance of 1 Crore.Q11: Ex.P-4 is shown to the witness. Is it correct to state that Ex.P4 the alleged advertisement is only a photocopy?A: Yes.Q12: Have you filed Ex.P-4 at the time of filing of the suit or after filing of the suit?A: We filed Ex.P4 after filing of the suit.”26. The above would clearly indicate that the plaintiff had not filed any document to show that he demanded the title deed from the defendants. It is indeed a wonder how the plaintiff who claims to be knowledgeable with dealings in properties would pay a huge advance of Rs.1/- crore for properties, portions of which had already been conveyed and further portions were freely conveyed immediately thereafter. The plaintiff has to fall and must place the burden on his own inactions.27. In the instant case, the plaintiff who claims to be in the business of dealing with properties, should have taken a basic step to verify the encumbrance of the survey numbers for which he had entered into a Memorandum of Understanding. He cannot claim ignorance and innocence. I hold that he was a speculative purchaser.28. The learned Senior Counsel for the plaintiff then relied on Ex.P-3, the notice issued on 18.01.2010. The cross examination on the same was as follows:-“Q13: Ex.P-3 is shown to the witness. Ex.P-3 is the alleged legal notice dated 18.01.2010 issued by you to the defendant. Is it correct?A: Yes.Q14: Whether there is any acknowledgement by the defendants in Ex.P3?A: NoQ: Have you filed any proof that you had sent the notice to the defendants and they have acknowledged the same?A: I have not filed.”29. The plaintiff was also cross examined with respect to alleged acknowledgement made by the defendants this is was his answer.“Q19: Have you filed any document where the defendants had acknowledged their liability?A: No. Witness Adds: All the commitments were verbely made by the defendants. We are trying to search the e-mails sent by Mohammed Arshad.”30. He was further cross examined on the same aspect, and the same is extracted below:-“Q21: I put it to you that the defendants have not made any oral commitment.A: I deny. They have made it through mediator who was known by both parties.Q22: I put it to you that nowhere in the pleadings you have averred about the above fact.A: Yes.”31. It is thus seen that the plaintiff had deviated from the pleadings to a large extent. Nowhere in the pleadings had he stated about any mediator acting between him and the defendants.32. The witness for the defendants/DW-1 was questioned about an advertisement which he had mentioned in paragraph 6 of his proof affidavit. The questions and the answers were as follows:-“Q34: So, I put it to you, you are clearly stated in your proof affidavit in paragraph No.6 that you have issued a advertisement for selling the suit schedule property since the plaintiff has not honoured the terms of MOU. Is it correct?A: Yes.Q: So, I state that you have issued this advertisement way back before June, 2008. Is it correct?A: Yes.”33. It is thus seen that the plaintiff had also proceeded on the basis that the breach of the Memorandum of Understanding was in June 2008. Even in Question Nos. 46 & 47, the cross examination was that the defendants committed breach by Ex.P-6 on 06.09.2008 itself. In effect, the plaintiff case is not based on Ex.P2 the alleged advertise

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ment in December 2009. This advertisement had been denied by the defendants, who claimed that they have not issued the said advertisement.34. The learned Senior Counsel for the plaintiff claimed that Article 113 of the Limitation Act, 1963 would apply and that the period of limitation would be three years from the date when the right to sue accrues. The right to sue had accrued when the defendants committed breach of the agreement.35. In the instant case, even if it is to be taken that the Memorandum of Understanding is binding on both the parties, the breach occurred on 06.09.2008 by way of Ex.P-6. The suit had been presented only on 19.04.2012 far beyond the period of limitation. The right to sue occurred on that particular date when the defendants committed breach of the agreement, when Document No. 5503 of 2008 was registered. By this document, lands in practically most of the survey numbers had been conveyed, by among others, A.M.Farook, the Managing Partner of Allied Estates, the first defendant herein. The plaintiff cannot disclaim knowledge since the right to sue had occurred by way of a public document. Therefore, I hold that even if Article 113 were to apply, the suit is hopelessely barred by limitation.36. Article 62 of the Limitation Act, 1963 would not be applicable in the facts of this case, since portions of the property had already been conveyed even prior to Ex.P-2 and consequently, the advance paid cannot create a charge over the properties already conveyed.37. This issue is answered against the plaintiff and I hold that the suit is barred by the law of limitation.Issue Nos. 1 & 2:38. These issues pale into insignificance owing to the answer to issue No. 3 that the suit is barred by limitation. It is therefore held that the plaintiff is not entitled for the suit claim against the second defendant.Issue No. 4:39. In the result, the suit is dismissed. However, since as a fact the plaintiff had advanced a sum of Rs.1/- crore to the first defendant, I am not inclined to order costs.40. The suit is dismissed. No order as to costs.
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