2012 (8) TMI 1151 - HC - Indian Laws

Summary

Issues Involved:
1. Entitlement to specific performance.
2. Entitlement to damages for alternative recovery.
3. Suit's timeliness.
4. Entitlement to refund of earnest money with interest.
5. Bar of res judicata/constructive judicata.

Summary:

1. Entitlement to Specific Performance:
The court examined whether M/s. Kailash Nath & Associates was entitled to specific performance of the contract. The original contract required the balance bid amount to be paid by May 18, 1982, which was extended to October 28, 1982. DDA's letter dated December 01, 1987 (Ex. P-19) indicated a willingness to consider further extension but was marked "WITHOUT PREJUDICE" and explicitly stated it did not carry any commitment. The court held that DDA's willingness to consider an extension did not constitute a waiver of the original deadline, and thus, M/s. Kailash Nath & Associates was not entitled to specific performance.

2. Entitlement to Damages for Alternative Recovery:
The court noted that the plot was re-auctioned in 1994 for ` 11.78 crores, significantly higher than the original bid. However, the court emphasized that damages should be computed based on the breach date, not the re-auction date. The court referenced the Supreme Court decision in Shree Hanuman Cotton Mills & Anr. vs. Tata Aircraft Ltd., which allows forfeiture of earnest money as per contract terms. Therefore, M/s. Kailash Nath & Associates was not entitled to damages for alternative recovery.

3. Suit's Timeliness:
The court found the suit to be filed within the limitation period. However, this did not affect the outcome regarding the entitlement to specific performance or damages.

4. Entitlement to Refund of Earnest Money with Interest:
The court initially ruled in favor of M/s. Kailash Nath & Associates, ordering a refund of ` 78 lakhs with 9% interest per annum from February 17, 1994, until realization. However, this was overturned on appeal, with the court holding that DDA was entitled to forfeit the earnest money as per the contract terms.

5. Bar of Res Judicata/Constructive Judicata:
The court held that the principle of res judicata did not apply since the earlier writ petition was dismissed as not maintainable and not on merits.

Conclusion:
The appeal succeeded, and the impugned judgment and decree dated September 10, 2007, were set aside. The suit filed by M/s. Kailash Nath & Associates was dismissed, and the amount deposited by DDA under the Division Bench's orders was to be returned to DDA with accrued interest. The parties were directed to bear their own costs.