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TMI Blog2017 (5) TMI 1837X X X X Extracts X X X X X X X X Extracts X X X X ..... ransaction shall be completed within six months from the date of agreement. The plaintiffs are always ready and willing to perform their part of contract from the date of the agreement itself. But the defendants neglected to perform their part of the contract by giving evasive replies. (ii) Subsequently, the plaintiffs came to know that the defendants 1 to 11 have executed a sale deed in favour of the 12th defendant for a sum of Rs. 3,29,700/- which is grossly in adequate. The execution of the aforesaid sale was a fraudulent act of the defendants 1 to 12. Therefore, the plaintiffs issued a legal notice dated 30.06.2005 to the defendants 1 to 12 calling upon to pay the advance amount with interest at the rate of 12% p.a. However, the defendants sent a reply with false allegations for which the plaintiffs also sent a rejoinder dated 26.8.2005. Again on 15.9.2005, the 12th defendant sold the property in favour of 13th defendant. Thereafter, on 25.10.2007, the 13th defendant have executed the sale in favour of 14th and 15th defendant. According to the plaintiffs all the sale deeds are sham and nominal. The plaintiffs are entitled to recover a sum of Rs. 5,00,000/- (Rupees Five lakhs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 respectively and Exs. B1 to B5 were marked. 6. After appreciating the oral and documentary evidence available on record, the trial Court has dismissed the suit on the ground that the suit is barred by limitation and that, no charge has been created over the suit properties. Aggrieved over the same, the present appeal came to be filed. 7. Learned counsel for the appellants/plaintiffs has submitted that a sum of Rs. 5,00,000/- was paid on the date of agreement itself towards sale consideration but the sale could not be completed within the time as agreed between the parties. It is the contention of the learned counsel that the moment sale price is paid, statutory charge is created over the property towards purchase money in favour of the buyer and such a suit shall be governed by Article 62 of the Limitation Act. Therefore, it is the contention of the learned counsel that unless the conditions set out in Section 55(6)(b) of the Transfer of Property Act are established, a statutory charge created on the basis of the agreement will not be lost. Therefore, plaintiffs (buyers) are entitled for refund of the advance amount on the basis of principle governed under Section 55(6)(b) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal notice requesting the plaintiffs to pay the remaining consideration and to get the sale deed registered in their favour. Even at that point of time also, the plaintiffs did not show their readiness to take the property. Hence, according to the learned counsel, default has been committed by the plaintiffs alone as they have failed to perform their part of the contract. Therefore, now they cannot contend that the statutory charge is continuing and that they could enforce the same at any point of time. It is the contention of the learned Senior counsel that suit itself is filed only on 27.11.2007. The above aspect would clearly show that the suit is not maintainable for recovery of amount. Hence, submitted that the judgment and decree of the trial Court is well balanced and it does not require any interference. 11. In support of his arguments, the learned Senior counsel has placed reliance on the judgments reported in 1993 (1) SCC 519 (Chand Rani v. Kamal Rani); AIR 1970 SCC 1955 (1) (Maula Bux v. Union of India); and 2013 (1) TNCJ 426 (SC) (Satish Batra v. Sudhir Rewal). 12. In the light of the above submissions, now the points that arise for consideration in this appeal are: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion and not towards earnest deposit as pleaded by the defendants. A specific clause contained in the agreement is that that if the sale has not been finalised within six months as agreed between the parties, the advance amount shall be forfeited and the contract cannot be enforced. 15. The contention of the defendants that the amount of Rs. 5,00,000/-, which has been paid towards earnest money on the date of agreement, was forfeited, cannot be countenanced in view of the judgment of the Hon'ble Apex Court in Satish Batra v. Sudhir Rewal (cited supra) because in the agreement itself, it is clearly agreed between the parties that the amount has been received as advance towards sale consideration. In the aforesaid judgment, since the earnest money was primarily a security for due performance of the agreement, the Hon'ble Supreme Court has held that the buyer is entitled to forfeit the entire deposit. In other words, if the payment is made only towards part payment of consideration and not intended as earnest money then the forfeiture clause will not apply. 16. In the above background, when the agreement Ex. A1, is carefully read, the parties have, in fact, concluded the sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cross examination, P.W. 1 has admitted that she does not know whether they have taken any steps to get the approval from the Government to convert the suit properties as flats. P.W. 1 also admitted that on 06.8.1996 itself, the defendants were ready and willing to sell the property and they also issued legal notice on that aspect. 19. From the evidence of P.W. 1, it could be easily seen that, after entering into contract on 28.11.1995 and paying a sum of Rs. 5,00,000/- as advance towards the sale consideration, the plaintiffs have not taken any steps to perform their part of the contract. They never shown their readiness and willingness during the relevant period. Whereas the defendants have issued legal notice, Exs. B1, dated 11.09.1996 showing their readiness to execute the sale deed in favour of the plaintiffs. But the plaintiffs except sending legal notice under Ex. B1, have not taken any steps to get the sale registered in their favour. Whereas for the first time, under Ex. A6 dated 30.6.2005, almost after a lapse of 10 years, the plaintiffs have issued notice to the defendants for return of Rs. 5,00,000/-, which has been paid on the date of agreement, and the same was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atutory charge in favour of a buyer and is different from contractual charge to which the buyer may become entitled to under the terms of the contract, and in substance a converse to the charge created in favour of the seller under Section 55(4)(b). Consequently, the buyer is entitled to enforce the said charge against the property and for that purpose trace the property even in the hands of third parties and even when the property is converted into another form by proceeding against the substituted security, since none claiming under the seller including a third party purchaser can take advantage of any plea based even on want of notice of the charge. The said statutory charge gets attracted and attaches to the property for the benefit of the buyer the moment he pays any part of the purchase money and is only lost in case of purchaser's own default or his improper refusal to accept delivery. So far as payment of interest is concerned, the section specifically envisages payment of interest upon the purchase-money/price prepaid, though not so specifically on the earnest money deposit, apparently for the reason that an amount paid as earnest money simplicitor, as mere security fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(b) is a statutory charge and differs from a contractual charge. 24. In K. Shamugam and another v. C. Samiappan and others (cited supra), the learned single judge of this Court by relying upon the judgment of the Hon'ble Supreme Court referred above, has held that as regards the charge, Art. 62 of the Limitation Act is applicable. 25. In (P. Muthusamy v. K. Arumugam) the learned single judge of this Court, after taking into consideration the ratio laid down by the Hon'ble supreme Court in the judgment referred above, has held that limitation to enforce charge is 12 years and for recovery of refund of advance amount would be governed under Article 62 of the Limitation Act. 26. In Saidun Nessa Hoque and others v. Calcutta Vyapar Paratisthan Ltd., the High Court of Calcutta, in paragraph 44, has held as follows: 44. It seems to me that under S. 55 of the T.P. Act the moment earnest money is paid it forms a charge on the immovable property. This is the position under the Indian Law. It follows that it is a charge for repayment of the earnest money. If that is so, how far this is consistent with the right of forfeiture of deposit as laid down in the judgment in the English ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... informed the same to the seller by telegram. On the admitted facts of that case, the transaction failed due to default or failure of the purchaser. So, no question of charge under S. 55 (6) of the T.P. Act arose or could arise under the facts of that case....." 27. In Mst. Anchi and Others v. Maida Ram, the High Court of Rajasthan has taken a similar view. In paragraph 9, it has been held as follows: 9.. Section 55 of the Transfer of Property Act deals with rights and liability of buyer and seller and Sub-clause (b) of Sub-section (6) while dealing with the rights of buyer lays down that "unless he has improperly declined to accept delivery of the property, to a charge on the property, as against the seller and all persons claiming under him, to the extent of the seller's interest in the property, for the amount of any purchase-money properly paid by buyer in anticipation of the delivery and for interest on such amount; and, when he properly declines to accept the delivery, also for the earnest (if any) and for the costs (if any) awarded to him of a suit to compel specific performance of the contract or to obtain a decree for its rescission"....." A conjoint reading of abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that they are ready and willing to deliver the property to the buyer (plaintiffs) at the relevant time. Despite the fact of the readiness shown by the respondents herein i.e. defendants not only to execute the sale deed but also delivery of the property, the appellants herein (plaintiffs) improperly declined to accept the sale deed and delivery at the relevant time. 30. Thus, it is crystal clear that only the plaintiffs have committed default and for the first time, in the year 2005 only they sent a legal notice. Therefore, this Court is of the view that even though statutory charge has been created in respect of the agreement, it has been lost due to subsequent default by the plaintiffs. In fact, they failed to get the sale deed executed in their favour and take delivery, in spite of readiness shown by the respondents. Therefore, it is clear that due to their (plaintiffs) own default, the statutory charge attached with the property has been lost. Therefore, the plaintiffs cannot now contend that they are entitled to recover the amount paid by them. 31. Having regard to the above settled position of law and taking into consideration the factual situation of this case, this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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