Bombay High Court
Sunil S/O Maniklal Mutha And Anothers vs M/S Peak Realty A Partnership Firm ... on 6 September, 2024
Author: M. W. Chandwani
Bench: M. W. Chandwani
2024:BHC-NAG:10227
1 ao-16-24j.odt
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH, NAGPUR
APPEAL AGAINST ORDER NO. 16 OF 2024
1. Sunil S/o. Maniklal Mutha,
Aged about 60 years, Occ. Agriculture
2. Gurav S/o. Sunil Mutha,
Aged about 32 years,
Both R/o. 12, East High Court Road,
Ramdaspeth, Nagpur- 440 010. . . . APPELLANTS
// V E R S U S //
M/s. Peak Realty, a Partnership Firm duly
Registered under the provisions of the
Partnership Act, 1932, through its Partner-
Shri Harsh S/o. Omprakash Agrawal,
Aged about 47 years having Office at
Wardhman Nagar, Nagpur-440 008. . . . RESPONDENT
------------------------------------------------------------------------------------------------
Shri Rohit Joshi, Advocate for appellants.
Shri H. R. Gadhia, Advocate for respondent.
-----------------------------------------------------------------------------------------------
CORAM :- M. W. CHANDWANI, J.
RESERVED ON :- 19.08.2024
PRONOUNCED ON :- 06.09.2024
JUDGMENT :
-
Heard.
2. Admit. The matter is heard finally by consent of the
learned counsel for the parties.
2 ao-16-24j.odt
3. This appeal takes an exception to the order dated
20.06.2024 passed by 12th Jt. Civil Judge Senior Division, Nagpur in
Special Civil Suit No. 974/2021, thereby allowing the application
(Exh. 5) filed by the respondent for restraining the appellants from
alienating and creating third party interest in the suit property till final
disposal of the suit.
4. The facts giving rise to the present appeal can be
summerised as under:-
i) The respondent has filed a suit for specific performance
alleging that deceased- Maniklal Mutha was owner of the agricultural
land bearing Khasra No. 77 of Village- Tarodi (Khurd), Tahsil Kamptee,
District Nagpur, admeasuring 3.61 HR i.e. 8.92 acres (hereinafter
referred to as " the suit property") and he agreed to transfer the
leasehold right in the suit property to the respondent, through his
power of attorney holder i.e. respondent no. 1, @ Rs.65 lakhs per acre.
A token agreement dated 13.04.2021 came to be executed by paying a
token amount of Rs.5 lakhs; the detailed agreement was to be
executed within 30 days and the sale deed was to be executed within
15 months from the date of the said agreement. The respondent
prepared a draft agreement to sale and forwarded the same to the
appellants. However, the appellants failed to execute the agreement,
3 ao-16-24j.odt
therefore, a notice dated 19.07.2021 came to be issued. Despite the
notice, appellant no. 1 refused to execute the agreement. Maniklal
died, bequeathing the suit property to appellant no. 2, his grandson.
Therefore, a suit came to be filed by the respondent for specific
performance of contract and for a decree directing the appellants to
execute the sale deed in favour of the respondent. The appellants
resisted the claim of the respondent inter alia contending that the
agreement to sale cannot be specifically enforced as there is no
concluding contract and the terms of agreement were to be settled
between the appellants and the respondent, therefore, a decree for
specific performance of contract cannot be granted on the basis of a
token agreement.
ii) Along with the suit, the respondent has also filed an
application (Exh. 5) for grant of temporary injunction requesting the
Court to issue directions to the appellants not to create a third party
interest in respect of the suit property. The learned Trial Court, after
hearing both the parties, passed the impugned order restraining the
appellants from alienating and creating third party interest in the suit
property pending the suit. Feeling aggrieved with this, the present
appeal came to be filed.
4 ao-16-24j.odt
5. Mr. Rohit Joshi, learned counsel for the appellants would
submit that after the token agreement, draft agreements were
exchanged. However, the terms could not be settled and the
agreement could not be finalized. In that scenario, the agreement
cannot be said to be a concluded contract and therefore, it is not
enforceable. He submitted that the last draft agreement, which was
forwarded by the respondent alongwith notice, goes to show that the
application for renewal of lease agreement was to be filed by the
purchaser i.e. the respondent and the appellants would only co-operate
in the matter. Likewise, for change of use of the land, it was the
respondent who had to take steps, whereas, the pleadings are contrary
to the draft agreement sent by the respondents. Therefore, it is a case
of non-concluding contract, which has not been considered by the Trial
Court. He further submitted that the property worth Crores has been
withheld by paying just a token amount of Rs.5 lakhs, which is not
permissible under the law. The learned Trial Court did not consider
this aspect and erroneously allowed the application (Exh.5) restraining
the appellants from creating a third party interest in the suit property.
It is submitted that the learned Trial Court hastily allowed the
application for temporary injunction, which is erroneous and therefore,
is required to be set aside.
5 ao-16-24j.odt
6. Conversely, Mr. H. R. Gadhia, learned counsel for the
respondent vehemently submitted that, once the appellants have
accepted the token amount towards sale of the agricultural land, they
are bound by the said written token agreement. According to him, the
respondent was ready and willing to perform its part of contract but, it
is the appellants, who had, on one pretext or another, denied to
execute the sale deed. According to him, on execution of token
receipt, a public notice was also given regarding the transaction. The
draft agreement was sent to the appellants, however, they deliberately
avoided the execution of the agreement just to avoid the contract.
There is a likelihood of nature of property being changed through
alienation or transfer. Unless and until a case of irreparable loss is
made out by the appellants, the Court should not allow to change the
status-quo. He submitted that the order passed by the learned Trial
Court is correct and well-reasoned. A specific draft was prepared
stating the conditions which were agreed upon, therefore, the
appellants cannot just avoid the performance of the contract. No
perversity appears in the order passed by the learned Trial Court. He
supported the impugned order and seeks dismissal of the appeal.
According to him, the suit can be directed to be tried expeditiously
without interfering with the impugned order passed on application
(Exh.5).
6 ao-16-24j.odt
7. It is matter of record that appellant no. 1 agreed to sell the
suit property to the respondent @ Rs.65 lakhs per acre. A token
amount of Rs.5 lakhs was accepted by the appellants and accordingly,
the token receipt was issued. A detailed agreement, mentioning the
terms and conditions, was to be executed within 30 days and the sale
deed was to be executed after 15 months. The copy of notice, along
with annexures and draft agreement to sale were issued by the
respondent asking the appellants to execute detailed agreement to sale
of the property as per the draft annexed with the said notice. Thus, it
appears that the agreement to sale, with respect to other essential
conditions on which the property was to be sold to the appellants, is
not executed till date. Though, in the draft agreement sent by the
respondent to the appellants, the responsibility of getting the lease
renewed and conversion of use of land was cast on the respondent
however, the plaint depicts that it is the appellants, who have to obtain
renewal of lease of the suit property. The conversion of use of the land
from agricultural to residential one is also to be made by the
appellants. These aspects prima facie go to suggest that the terms of
agreement were not concluded between the parties. The exchange of
notices suggests that there were ongoing negotiations between the
parties, which reflects that the matter was still in the embryo stage.
Thus, the respondent has failed to establish that there was mutuality
7 ao-16-24j.odt
between the parties on important terms of the agreement. Rather,
whether there exists a concluded contract between the parties, is itself
is a matter of trial, which is to be decided on the basis of evidence that
may be led in the trial.
8. Section 36 of the Specific Relief Act, 1963 provides for
grant of preventive relief. Section 37 of the Act provides that
temporary injunction in the suit shall be regulated by the Civil
Procedure Code, 1908. Grant of relief for specific performance of
contract is itself a discretionary relief. The plaintiff seeking temporary
injunction for specific performance has to establish a strong and prima
facie case on the basis of undisputed facts. The conduct of the plaintiff
will also to be a relevant consideration for the purpose of grant of
injunction. The discretion, at this stage, is not to be exercised
arbitrarily.
9. Further, in matters of grant of injunction particularly, at
the interim stage, satisfaction regarding there being a prima facie case
by itself is not sufficient. The Court, therefore, has to satisfy itself that
irreparable injury will be caused to the plaintiff and balance of
convenience lies in favour of the plaintiff. For that purpose, the Court
has to ascertain that there is an element of mutuality in the contract
8 ao-16-24j.odt
and if there is an absence of mutuality, the Court shall not exercise
discretion in favour of the plaintiff.
10. A reference can be made to para no. 14 of the decision of
the Supreme Court in the case of M. P. Mathur Vs. DTC 1, which reads
thus:-
"14. The present suit is based on equity.. . . . .
In the present case, the plaintiffs have sought a remedy which is
discretionary. They have instituted the suit under Section 34 of
the 1963 Act. The discretion which the Court has to exercise is
a judicial discretion. That discretion has to be exercised on well-
settled principles. Therefore, the Court has to consider - the
nature of obligation in respect of which performance is sought,
circumstances under which the decision came to be made, the
conduct of the parties and the effect of the of the Court
granting the decree. In such cases, the Court has to look at the
contract. The Court has to ascertain whether there exists an
element of mutuality in the contract. If there is absence of
mutuality the Court will not exercise discretion in favour of the
plaintiffs. Even if, want of mutuality is regarded as discretionary
and not as an absolute bar to specific performance, the Court
has to consider the entire conduct of the parties in relation to
the subject-matter and in case of any disqualifying
circumstances the Court will not grant the relief prayed for
[Snell's Equity, 31st Edn., page366]. . . ."
11. In the case of V. R. Sudhakara Rao Vs. T. V. Kameshwari 2,
the Supreme Court, in para no. 16 of the judgment, has observed as
under:-
"16. The High Court has rightly concluded that there is no
clear proof relating to the other terms of condition. The relief of
specific performance is discretionary relief and except the oral
evidence, there is no clear evidence to prove several of the
essential terms which have been taken note of by the High
Court. The High Court, on analyzing the evidence, has come to
hold that except Exhibit B-1 and the oral evidence of DW1 and
DW2, there is no other clear proof relating to the other terms
1 (2006) 13 SCC 706
2 (2007) 6 SCC 650
9 ao-16-24j.odt
and conditions of the contract which can be termed as essential
conditions like delivery of possession and also the obtaining of
permission from the Urban Land Ceiling Authorities and
therefore, it cannot be said that all the essential terms and
conditions of a well concluded contract had been established in
the case at hand."
12. There is no doubt that even oral agreement to sale of
immovable property can be specifically enforced as well as execution
of token 'Bayana' binds the executant. However, while assessing a
prima facie case in a suit for specific performance of contract in a fully
concluded written agreement to sale, the terms of contract and
essential conditions are required to be interpreted and that will be the
basis for the Court to come to the conclusion of there being a prima
facie case. This advantage is not available in a suit based on a mere
token agreement. In a case where the remaining conditions of the
contract were yet to be settled, averments made in the plaint carry
great value and are required to be strictly construed. Heavy burden
lies on the plaintiff to establish consensus ad idem. The Court has to
proceed cautiously and read the averment minutely to understand the
nature of the case to find out whether a prima facie case is made out or
not. The averments made in the plaint must inspire confidence in the
Court regarding credibility and truthfulness of the averments. Any
inconsistency made in the averments in the plaint like that of a
material fact, vagueness and unspecific averments in the plaint shall be
considered against the plaintiff while making a prima facie case.
10 ao-16-24j.odt
13. In the present case, as referred above, there is
inconsistency in the draft agreement, which according to the
respondent, was sent alongwith the notice and it has been claimed that
the liability of getting the lease of the suit property renewed would be
with the appellants, apart from the liability of conversion of use of that
land; whereas, the plaint depicts contrary conditions to the one
contained in the draft agreement which prima facie suggests that other
essential conditions of the contract were not concluded. That apart, it
is not a case where substantial amount of consideration has been paid.
The deal was worth more than Rs.5 crores and on a token amount of
Rs.5 lakhs, an injunction is sought not to create third party interest.
Further, it is to be noted that in the present case, whether there was a
concluded contract between the parties or not is itself the question,
which is to be gone into during Trial. These aspects have not been
considered by the Trial Court and it has erroneously given the finding
that balance of convenience lies in favour of the plaintiff.
14. So far as the decision in the case of Kamal Kumar Vs.
Premlata Joshi 3 of the Supreme Court is concerned, in the said
decision itself it is observed that a Court has to first consider whether
there exists a valid and concluded contract between the parties for sale
and purchase of the property apart from other conditions set out in
3 (2019) 3 SCC 704
11 ao-16-24j.odt
para no. 7 of the said judgment. Therefore, this decision will not be
helpful to the respondent.
15. The decision in the case of Maharwal Khewaji Trust
(Regd), Faridkot Vs. Baldev Dass 4 relied upon by the learned counsel
for the respondent observing that until and unless a case of irreparable
loss or damage caused to the parties of a suit is made out, the Court
should not permit the nature of the property to be changed, which also
includes alienation or transfer of the property. The said suit was for
possession on the basis of interest created in the suit property,
whereas, the present case in hand is a suit for specific performance of
contract, where the interest of the appellants in the suit property is yet
to be transferred in favour of the respondent, therefore, this case is not
applicable to the fact of the present case.
16. In the case of Haren Kirshnakumar Mehtra Vs. Kamla
Pribhdas Nebhanani 5, the seller had acted on the agreement and even
took an initiative to make the purchaser a Member of the Society and
thereafter, he resiled from the agreement and therefore, in that
scenario this Court has held that mere returning of amount of earnest
money being illegal and improper and could not affect the agreement,
whereas the factual scenario in the present case is different.
4 (2004) 8 SCC 488
5 AIR 2001 BOM 197
12 ao-16-24j.odt
17. Sofaras, the case of P. Ramasubbamma Vs. V.
Vijayalakshmi6 is concerned, in the said case the execution of
agreement to sale and the payment of advance of substantial sale
consideration is admitted by the vendor, whereas in the present case,
whether there exists a concluded contract between the parties or not is
a matter of trial and only Rs.5 lakhs have been given out of
consideration of more than Rs.5 crores. Therefore, the cited case will
not assist the respondent.
18. To conclude, the Trial Court did not consider the vital
aspects of the case referred above and proceeded to grant temporary
injunction, which is not sustainable and is required to be set aside.
Resultantly, I proceed to pass the following order:-
i) The appeal is allowed.
ii) The impugned order dated 20.06.2024 passed on
application (Exh.5) by 12th Jt. Civil Judge Senior Division, Nagpur in
Special Civil Suit No. 974/2021, is hereby quashed and set aside.
iii) The application (Exh. 5) is dismissed.
(M. W. CHANDWANI, J.)
6 2022 (7) SCC 384
13 ao-16-24j.odt
19. At this stage, the learned counsel for the respondent
requested that the effect and operation of this order be stayed for a
period of eight weeks from today to enable the respondent to get the
order tested before the Supreme Court.
20. Considering the submission of the learned counsel for the
appellants as well as the learned counsel for the respondent, the effect
and operation of this order is stayed for a period of four weeks from
today.
(M. W. CHANDWANI, J.)
RR Jaiswal
Signed by: Mr. Rajnesh Jaiswal
Designation: PA To Honourable Judge
Date: 10/09/2024 19:17:47
