Sushil Kumar Agarwal Vs Meenakshi Sadhu

Name: Sushil Kumar Agarwal vs Meenakshi Sadhu

Date of judgement: October 09, 2018

Citation: CIVIL APPEAL NO. 1129 OF 2012

Appellant: Sushil Kumar Agarwal

Respondent: Meenakshi Sadhu

Relevant Case: Ashok Kumar Jaiswal v Ashim Kumar Kar17

Facts:

1. The agreement recites that the Respondents had approached the Appellant for construction of a building on the land. The Appellant shall deposit with the Respondent an amount of Rs. 4,00,000/- without interest which shall be refundable upon the completion of the building
2. The Respondent shall retain 42% of the total constructed area as `sole owned’ and the balance 58% of the total constructed area shall remain secured for due payment of the construction costs. The total construction cost shall not exceed the value of 58% of the constructed area.
3. The Appellant alleged that upon the execution of the agreement, he found that there were arrears of municipal tax and electricity dues, besides which there were labour and industrial disputes and factory closure problems. The Respondent is alleged to have requested the Appellant to make payments and assured that he will reimburse him before the sanction of the building plan was obtained. Accordingly, the Appellant claims to have made a payment of Rs. 7,03,000.
4. The Appellant issued to the Respondent a notice for payment of his share of the sanctioned fees. The owner wrote a letter to the Appellant, denying the contents of the notice on the ground that he had by a notice dated cancelled the agreement and requested the Appellant to return all documents and collect the deposit.
5. The Appellant instituted a suit in the City Civil Court seeking a declaration that the cancellation of the agreement by the Respondent was invalid and a permanent injunction restraining the Respondent from entering into any agreement with a third party for sale of the premises.
6. The City Civil Court dismissed the Suit. Aggrieved by the judgment and order of the said Court, the Appellant preferred an appeal before the High Court of Calcutta.

Issue involved:

• Whether the cancellation of the agreement by the Respondent was invalid or not?

Reasoning:

1. “Section 14(3) (c) in the Specific Relief Act, 1963:- 

(c) 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: Provided that the following conditions are fulfilled, namely:—

(i) 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;

(ii) 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; and

(iii) The defendant has, in pursuance of the contract, obtained possession of the whole or any part of the land on which the building is to be constructed or other work is to be executed.”

The court states in order to fulfil the provisions of section 14 (3) (c) of specific relief act, it is essential to determine whether the developer, pursuant to the development agreement, has an interest in the land.

2. It was held that, the Appellant was permitted to carry out the construction of the building and in consideration, was to be paid remuneration by the Respondent. It was also noted that the Appellant did not have any interest in the land. The security interest so created was merely to secure payment of the remuneration. Moreover the remuneration was paid to the Appellant, no security would arise.

3. In Ashok Kumar Jaiswal v Ashim Kumar Kar 17, Calcutta High Court held that, “conditional sale of the premises in question will also be an agreement for sale subject to certain conditions. While deciding whether a suit at the instance of a developer is maintainable in view of Section 14(3) (c), the absence of a definition of “developer” or “development agreement” the nature of the agreement which is the subject-matter of a suit must be considered in order to determine whether it is an agreement to provide construction of a building or whether the developer has obtained a share of, and interest in, the developed property.”

4. The exact amount of remuneration payable by the owner to the contractor is not to be found in the agreement. The agreement between the parties was unclear. Therefore the court cannot determine the exact nature of the building or work. The first condition in Section 14(3) (c) (i) is not fulfilled.

Judgement:

On the basis of above mentioned facts, it was held that specific performance cannot be granted.

Conclusion:

Appellant entered into a contract with the Respondents in order to construct a building on the land held by the Respondents. On completion of this construction, Appellant will be entitled to remuneration. On the arrear of said payment, 58% of the total constructed area shall remain secured for due payment of the construction costs. Later the Respondent cancelled the Agreement and requested the Appellant to return all documents and collect the deposit.

On the basis of precedents, Supreme Court in these matter stated that, since the Appellant did not have any interest in the land and first condition in Section 14(3) (c) (i) was not fulfilled, order for specific performance cannot be granted. Hence, dismissed the appeal.

Drafted By: Param Mansinghka

Edited By: Tanvi Mahajan, Publisher, Law Insider

Published On: February 19, 2022 at 22:00 IST