SC – Vendor Cannot Make Profit from Concealed Bank Mortgage – Restores Buyer’s Refund

Comments on the post of Sanjeev Kumar Goel and the Judgment  dated of the Supreme Court of India in Civil Appeal No.5405 of 2023 of Moideenkutty  Vs.  Abraham George

SC – Vendor Cannot Make Profit From Concealment of Bank Mortgage – Restores Buyer’s Refund of Advance

The respondent – defendant had executed agreement for sale of the land admeasuring 77 acres to the appellant – plaintiff for Rs.4.45 crores on 10.9.2008. The plaintiff had paid 10% of the sale consideration.  In the agreement, it was stated that the land is free from all encumbrances.  Moreover, the defendant assured the plaintiff that the original title deeds would be handed over at the time of execution of the sale deed.

Later on, the plaintiff came to know that the defendant had availed substantial Bank loan and created equitable mortgage of the land.

Upon being confronted, with this anomaly, the defendant respondent assured the plaintiff-appellant that requisite steps were being taken to discharge the outstanding debt; however, he kept on postponing the matter.

the plaintiff-appellant came to know that the defendant-respondent had not taken any effective measures to redeem the mortgage and perceived that he was being deceived. Hence, the plaintiff-appellant did not arrange funds for encashment of the post-dated cheque, which consequently came to be dishonoured for insufficiency of funds. 8. The plaintiff-appellant asserts that he had always been ready and willing to fulfil his obligations under the contract and that the defendant respondent had committed breach by his fraudulent conduct. Accordingly, the plaintiff-appellant instituted the instant suit (OS No.34 of 2010) seeking refund of the advance amount of Rs.55,00,000/- together with interest @ 15% per annum from the date of filing of the suit till realization, and further prayed that the costs be recovered from the defendant-respondent and his assets by creation of a charge over the property.

The trial Court decreed the suit.   However, the High Court remanded the suit.