Tosh Apartments Pvt. Ltd. vs Pradeep Kumar Khanna And Ors.
1994 Latest Caselaw 230 Del

JUDGMENT

Sat Pal, J.

(1) This is an application filed on behalf of the defendant No. 1 under Order 7 Rule 11 read with Section 151 of the Code of Civil Procedure (hereinafter referred to as the Code) and in this application it has been prayed that the plaint be rejected under Order 7 Rule 11 (d) of the Code. Notice of this application was issued to the plaintiff and the plaintiff in its reply has controverter the averments made in the application. Thereafter defendant No. 1 has also filed the rejoinder to the reply filed on behalf of the plaintiff.

(2) Briefly, the facts of the case as stated in the plaint are that the defendant No.1 who is the owner of the property bearing No.21, Aurangzeb Road, New Delhi Along with defendant No. 3 approached the plaintiff-company and offered to sell the aforesaid property for a consideration of Rs.2.5 crores exclusive of unearned increase, if any, liability to be paid to L & D.O.. Thereafter the defendant No. 1 entered into agreement for sale of the aforesaid property with the plaintiff-company vide agreement for sale dated 13th September, 1988. As per terms and conditions of the said agreement the plaintiff company purchased the said property subject to the tenancy of the Sudan Embassy, but otherwise clear from any and all liens, charges, claims, demands, mortgages and encumbrances etc. for a price of Rs.2,50,00,000.00 only. Against the said total price, a sum of Rs.25.00 lacs was to be paid by the purchaser to the seller st the time of signing of the agreement for sale. It was also mentioned in the agreement that a sum of Rs-75.00 lacs would be paid against cancellation of all arrangements whatsoever in respect of the said property to the satisfaction of the purchaser including the Collaboration Agreement and Agreement to Sell alleged to between the Seller and Shri Arun Kumar Bhatia (defendant No.2) and the balance amount at the time of registration of the Conveyance in favor of the plaintiff company. Clause 4 of the agreement stipulated that the sale transaction would be completed within 45 days from the date of signing of the agreement hereof the Vendor having obtained the sanctions, consents, no objections and clearances inclusive of clearance under Section 269Uc and Section 230A of the Income Tax Act and permission under Section 27 of the Urban Land (Ceiling and Regulation) Act, 1976.

(3) Pursuant to the agreement for sale dated 13th September, 1988, the plaintiff company paid a sum ofRs.25.001acs to the defendant No. 1 at the time of execution of the agreement for sale and thereafter another sum of Rs. 10.00 lacs to the said defendant on 13.12.1988 through bankers cheque No.298613 dated 13.12.88 issued by Dena Bank, Karol Bagh, New Delhi and also paid a sum of Rs.9.00 lacs to defendant No.2 by two bankers cheques both dated 13.12.88 for an amount of Rs. 1.00 lac and 8.00 lacs.

(4) It is further stated in the plaint that the plaintiff-company entered into another agreement with defendant No.3 on the same date i.e. 13th September, 1988 and in terms of that agreement, the defendant No.3 agreed to do all acts and things necessary to obtain all consents, sanctions, no objections and permissions necessary to complete the sale transactions entered into between the plaintiff and defendant No.1 and to obtain vacant possession of the said property from Sudan Embassy and for this the plaintiff company agreed to pay a sum of Rs. 1.15 crores to the defendant No.3 as service charges. Pursuant to this agreement a sum of Rs.10.00 lacs was paid by the plaintiff to the defendant No.3 at the time of execution of the said agreement. It was also agreed that Shri Avtar Singh, the Chairman of the plaintiff-company would purchase and defendant No.3 would sell his entire share holding in the plaintiff-company to said Shri Avtar Singh on successful fulfillment of his obligations.

(5) It is further alleged in the plaint that on various occasions in the years 1988, 1990, 1991 and 1992 plaintiff-company required the defendant No. I and defendant No.3 to do all acts and things necessary to perform all their obligations in terms of the above mentioned agreement and the said defendants had been representing that unless the permission from the Competent Authority under the Urban Land (C & R) Act was obtained, no action under Chapter XX-C of Income Tax Act for the grant of no objection certificate could be taken and the matter regarding grant of no objection certificate under Section 269(U)(L) was underconsideration, it is further alleged in the plaint that about two months prior to filing of the suit. the plaintiff came to know that the defendant No. 1 had taken the vacant possession of the suit property from Sudan Embassy. Thereupon the plaintiff contacted the defendants 1 & 3 and they were informed that though the vacant possession of the property had been obtained from the Sudan Embassy, yet, despite their best efforts, necessary permissions/no objection certificates had not been obtained.

(6) It is then alleged that the defendants 1 & 3 with the evil designs were negotiating with and making efforts to sell the suit property to a third party on a much higher price than at which it was agreed upon with the plaintiff and were also intending to transfer/parting with the possession of the suit property to a third party and thereafter the present suit was filed by the plaintiff for passing a decree for specific performance of the agreement to sell dated 13.9.88 in respect of the suit property requiring the defendants1I and 3 to perform their respective agreements undertaken by them under the contracts dated 13.9.88 and to obtain the necessary permissions, no objection certificate, sanctions, approvals from the competent authorities required for the execution and registration of the sale deed and further requiring the defendant No. I to execute the sale deed and get the same duly registered in the Office of the Sub-Registrar, Delhi in favor of the plaintiff and deliver the vacant possession thereof at the time of execution and registration of the sale deed on the payment of the balance sale consideration of Rs.2.06 crores to defendant No.1 and upon payment of balance service charges of Rs. 1.5crores to defendant No.3. It is also stated in the plaint that the plaintiff has always been ready and willing and is still ready and willing to perform its part and ready to pay the balance sale consideration of Rs.2.06 crores to the defendant No. 1 and to pay a sum ofRs. 1.15 crores to the defendant No.3 being the balance service charges.

(7) Mr. Sen, learned senior counsel appearing on behalf of the defendant No. 1 submitted that the present suit was fraudulent, vexatious and did not disclose any cause of action for the plaintiff. He submitted that the alleged agreement to sell dated 13th Setpember, 1988 was not intended to be acted upon and/or to be performed by the plaintiff or defendant No. 1 and was entered into only to create a security for the two loans amounting to Rs. 25.00 lacs and Rs. 10.00 lacs advanced by Shri Avtar Singh of the plaintiff-company to defendant No. 1 to enable him to obtain cancellation of the Collaboration Agreement to Sell dated 11.7.1985 and the agreement to sell dated 26.8.85 with the defendant No.2. He further submitted that the total amount of consideration of Rs.2.5 crores mentioned in the aforesaid agreement to sell was ridiculously low as the value of the suit property was at least Rs.20.00 crores. He, therefore, contended that a person whose case was based on falsehood had no right to approach the court and his suit could be summarily thrown out. In support of his contention, learned counsel placed reliance on a judgment of the Supreme Court reported in the case of S.P. Chengulvaraya Naidu (dead) by LRs VS. Jagannath (dead) by LRs & Ors., .

(8) Learned counsel further submitted that the suit property vested in Hindu Undivided Family of which defendant No. 1 was one of the members and he had no authority to sign the alleged agreement dated 13th Setpemebr, 1988 on the basis of which the present suit had been filed.

(9) Though in para2 of the preliminary objection of the written statement filed on behalf of defendant No. 1, it has been stated that the suit was barred by limitation under Article 54 of the Limitation Act, 1961and in para 9 it has further been stated that the sale of the property in suit was required to be completed within 45 days of the execution of agreement for sale yet Mr. Sen, in his arguments admitted that in the present case time was not the essence of the contract as defendant No.1 had accepted a sum of Rs.10.00 lacs from the plaintiff on 13.12.88 i.e. beyond the period of 45 days, from the date of execution of the agreement for sale. He, however, submitted that after making the said payment ofRs. 10.00 lacs in December, 1988, the plaintiff kept complete silence for a period of 4 years and did not approach the defendant No. 1 for execution of the sale deed during the said period. He submitted that where time was not the essence of the contract, the reasonable time had to be fixed and in the present case after a lapse of period of 4 years, character of the suit property had completely changed. He submitted that the agreement to sell was subject to the tenancy of Sudan Embassy, but at the time of filing of the suit, the said Embassy had already vacated the premises. He, therefore, contended that since the plaintiff failed to fix the reasonable time for execution of contract, the present suit was not maintainable. In support of his contention, learned counsel placed reliance on a judgment of the Supreme Court in the case of M/s. Hind Construction Contractors By its sole proprietor Bhikamchand Mulchand (dead) by LRs VS. State of Maharashtra, .

(10) Learned counsel further submitted that in a suit for specific performance, the plaintiff had to plead in the plaint that he was ready and willing to perform the agreement and such a suit had to conform to the requirements prescribed in Form 47 and 48 of the 1st Schedule in the Code of Civil Procedure. He also submitted that the plaintiff had to plead in such a suit that he had approached the defendant specifically to perform the agreement pleaded by him. but the plaintiff had not done so. He, therefore, contended that since in the present suit. the plaintiff had failed to conform to the requirements prescribed in Forms 47 and 48 of the Schedule and had not pleaded that it had applied to the defendant specifically to perform the agreement to sell dated 13th September, 1988, the present suit was not maintainable. In support of this contention, learned counsel placed reliance on a judgment of the Supreme Court in the case of Ouseph Varghese VS. Joseph Aley & Ors., 1969(2) Sc 539, a judgment of Rajasthan High Court in the case of Smt. Savitri Devi VS. Laxmi Narain & Ors., Air 1966 Rajasthan 261 and a judgment of the Calcutta High Court in the case Manick Lal Seal & Anr. VS. K.P. Chowdhury, .

(11) Lastly, learned counsel drew my attention to paras 23 to 29 and para 31 of the plaint and submitted that a mere reading.of these paragraphs would show that no cause of action was disclosed against the defendant No. I and Ihe plaintiff had no clear right to sue against the defendants and as such this Court should exercise its power under Order 7 Rule 11 of the Code and dismiss the present suit. In support of this contention, learned counsel placed reliance on a judgment of the Supreme Court in the case of T. ArivandandamVS. T. V. Satyapal & Anr., Air 1977 Sc 2421 and a judgment of Rajasthan High Court in the case of Ranjeet Mat VS. Poonam Chand & Anr., .

(12) Mr. Gupta, learned senior counsel appearing on behalf of the plaintiff drew my attention to the prayer clause of the application and submitted that the defendant No.1 had prayed for the rejection of the plaint under Order 7 Rule 11 (d) of the Code which provided for rejection of the plaint on the ground that "whereof the suit appears from the statement in the plaint to be barred by any law". He also drew my attention to paras 6 and 7 of the application wherein it had been stated that the suit was barred by limitation in accordance with Order 7 Rule 11 (d) of the Code as the date was fixed for performance of the alleged contract and any action for specific performance was regulated by former part of Article 54 of the Limitation Act. He further submitted that Mr. Sen, learned senior counsel appearing on behalf of the defendant No.1 had him self conceded that the time was not the essence of the Contract in the present case and as such the first part of Article 54 of the Limitation Act was not applicable. He further submitted that second part of Article 54 of ihe Limitation Act also was not applicable in the present case as it was not the case of the defendant No. 1 that the performance was refused by the defendant after any date was fixed for performance. He, therefore, contended that the application was liable to be dismissed.

(13) Learned counsel also drew my attention to Clause 4 of the Agreement to sell dated 13th September, 1988 and submitted that in terms of the said Clause, the sale transaction was to be completed within 45 days hereof the Vendor having obtained the sanctions, consents, no objections and clearances referred to in the agreement by the defendant No. 1 executing ana getting registered in favor of the plaintiff a valid Convey ance of the suit property. He submitted that till the date of filing of the suit, the plaintiff was never informed by the defendant No. I that he had obtained the requisite sanctions, no objections and clearances and (he suit for specific performance could be filed even within three years from the date the plaintiff was informed by the defendant No. 1 that the said sanctions and no objections had been received. He, therefore, contended that the present suit was within limitation. In support of his contention, learned counsel placed reliance on two judgments of the Supreme Court in the cases of Ramesh Chandra Chandhiok & Ars. VS. Chuni Lal Sabharwal (Dead) by his L.Rs & Ors., and Rojasara Ramjibhai Dahyabhai VS. Jani Narottamdas Lallubhai (dead) by LRs. &Anr., Air 1986 Sc 1912.

(14) Learned counsel further submitted that though the other points raised by the learned counsel for defendant No. 1 were beyond the pleadings of the present application, he was making the submissions with regard to those contentions without prejudice to the contention of the plaintiff that the aforesaid points could not be raised. He submitted that for the purpose of deciding the application under Order 7 Rule 11 of the Code, only the averments and allegations made in the plaint could be looked into. He further submitted that in the plaint it had clearly been stated that an agreement for sale dated 13th September. 1988 was entered into between the plaintiff and defendant No. 1 for the sale of suit property and in terms of the Clause 4 of the said Agreement, the Vendor (defendant No. 1 ) was to obtain the sanctions, consents, no objections and clearances referred to in the Agreement and the sale transaction was to be completed within 45 days from the date, the defendant No. 1 had obtained the said sanctions and no objections. He further submitted that in para 14 of the plaint it had clearly been stated that pursuant to the said Agreement, the plaintiff had paid a sum of Rs.25.00 lacs to defendant No. 1 on 13.9.88 and in para 19 of the plaint it had further been stated that another sum of Rs. 10.00 lacs was paid by the plaintiff to the defendant No.1 on 13.12.1988. He also drew my attention to para 25 of the plaint wherein it had been stated that the defendant No. I had represented to the plaintiff that the necessary permissions, no objection certificates had not been obtained till two months prior to the filing of present suit. Learned counsel submitted that thus there was no delay on the part of the plaintiff. He also submitted that even mere delay was no ground for refusing the relief particularly when the plaintiff had stated in para 29 of the plaint that the plaintiff had always been ready and willing and was still ready and willing to perform its part of the contract and pay the balance amount of the sale consideration. He further contended that from the averments made in the plaint, it was clear that cause of action was disclosed against the defendant No. 1. In support of his contention, learned counsel placed reliance on two judgments of the Supreme Court in the cases of Gomathinayagam Pillai & Ors. VS. Palaniswami Nadar. and Smt. Indira Kaur & Ors. VS. Shri Sheo Lal Kapoor, .

(15) Learned counsel further submitted that the contention of learned counsel for the defendant No.1 that the agreement to sell dated 13th September, 1988 was only by way of security could not be gone into for deciding the present application as the said contention required evidence. He. however, submitted that by making the allegations that the said agreement to sell was not to beaded upon, the defendant No. 1 could not be permitted to raise the question that the plaintiff was not ready and willing io perform his part of the contract. Dealing with the plea made in the written statement filed on behalf of defendant No. I that Shri Avtar Singh was not authorised to execute the agreement to sell dated 13th Septmeber. 1988, learned counsel submitted that such a plea could not be raised as in pursuance of the said agreement, she plaintiff had paid a sum of Rs.35.00 lacs to the defendant No. 1 who had accepted the same without any objection. He further submitted that in any case this question was not relevant for adjudication of the present application as this also required evidence.

(16) As regards the contention of learned counsel for the defendant No.1 that since the time was not the essence of the contract, some reasonable time should have been fixed for performance of the contract, the learned counsel submitted that the plaintiff had all along been ready and willing to perform its part of the contract and in case the defendant No.1 wanted to rescind the contract, he could have fixed a date for performance of the contract by serving a notice on the plaintiff. But in fact the defendant No.1 till date had not obtained the sanctions, no objections, clearances referred to in the agreement for sale.

(17) Lastly, learned counsel for the plaintiff submitted that though in terms of the agreement for sale dated 13th September, 1988, the agreement was subject to the tenancy of Sudan Embassy but incase at the time of the execution of the sale deed, the possession was with the vendor, the Vendor was bound to put the Vendee in possession of the properly as contemplated by Section 55(1)(f) of Transfer of Property Act. He, however, submitted that pursuant to the agreement dated 13.9.88 between the plaintiff and defendant No.3, the plaintiff was still ready and willing to pay the balance amount of service charges to defendant No.3 for obtaining vacant possession of the suit property from the Sudan Embassy. In support of this contention, learned counsel placed reliance on a judgment of the Supreme Court in the case of BabuLal VS. M/s. Hazari Lal Kishori Lal, and a judgment of the Bombay High Court in the case of Lota Bandu Sanavane VS. Pundalik Nimba Koli, .

(18) I have given my thoughtful consideration to the submissions made by learned counsel for the parties and have perused the records. From the prayer clause of the present application, I find that the applicant/defendantNo.1 has prayed in this application to reject the plaint under Order 7 Rule 11(d) of the Code. A mere reading of paras 6 and 7 of the application also shows that the main ground for rejection of the plaint raised in this application is that in the present case. the date was fixed for performance of the alleged contract (i.e. 45 days from the date of the execution of the Contract) and it has been alleged that the present suit for specific performance was barred by limitation in view of the former part of Article 54 of the Limitation Act. I, however, do not find any merit in this contention as the time was not the essence of the contract in the present case. Clause 4 of the Agreement for sale dated 13th September, 1988 stipulates that" the sale transaction shall be completed within 45 (forty five) days hereof the Vendor having obtained the sanctions, consents, no objections and clearances referred to in Sub Clause (b) hereof, by the Vendor executing and getting registered in favor of the purchaser and/or his nominee(s) a valid conveyance of the said property free and clear as aforesaid". From this clause it is clear that the sale transaction was to be completed within 45 days from the date, the defendant No.1 obtained the requisite sanctions, no objections and clearances. The learned counsel for the parties admitted that the averments and allegations made in the plaint only could be looked into for deciding the present application. It has clearly been stated in the plaint that till the dale of filing of the suit, the defendant No.1 had not informed tel plaintiff that he had contained the aforesaid sanctions, no objections and clearances. On the contrary it has been staled that two months prior to the filing of the present suit. the plaintiff was informed by defendant No. I that the said sanctions, no objections, and clearances had not been obtained by him so far. Even the defendant No. 1 by his conduct had understood that the lime was not the essence of the contract and that is why he had accepted a sum of Rs.10.00 lacs from the plaintiff on 13.12.88 i.e.much after the expiry of 45 days from the date of the execution of the agreement for sale. In viev. of this, the application is liable to be rejected.

(19) Though in the prayer Clause, as staled hereinabove, the applicant has prayed for rejection of the plaint under Order 7 Rule 11 (d) only, yet in para 8 of the application it has also been stated that the suit instituted by the plaintiff is manifestly, vexatious and meritless as the plaintiff had no right to sue on the date of institution of the suit. It has also been stated in this paragraph that no cause of action accrued or has accrued to the plaintiff for execution of the suit. I do not find any merit in this contention also. In the plaint it has clearly been alleged that an agreement between the plaintiff and defendant No. 1 was entered into on 13.9.88 for the sale of the suit property and the total sale value was fixed at Rs. 2.50 crores and against the total sale value,the plaintiff had paid a sum of Rs.25.00 lacs by means of a bankers draft of Dena Bank, Karol Bagh, New Delhi at the time of execution of the agreement for sale. Thereafter admittedly the plaintiff had paid another sum of Rs. 10.00 lacs to the defendant No. 1 on 13th December, 1988 by means of bankers cheque of the same dale through Dena Bank, Karol Bagh. New Delhi. In terms of the Clause 4 of the agreement, the defendant No.1 was to obtain the sanctions, consents, no objections and clearances from the various authorities. It has also been alleged in the plaint that defendant No. 1 had not obtained the said sanctions, no objections and clearances till the filing of the suit. It has also been staled in the plaint that the plaintiff has always been ready and willing and is still ready and willing to perform its part of the contract and ready to pay the balance sale consideration of Rs. 2.06 crores to the defendant No.1 and also pay the balance amount of service charges to defendant No.3. In view of these avermenets, it cannot be said that the suit of the plaintiff is manifestly vexatious and meritless or it does not disclose any cause of action against the defendant No.1. As held by the Supreme Court in the case of T.Arivandandam (supra), the trial Court should exercise its power under Order 7 Rule 11 of the Code only if on a reading of the plaint, it is found that the suit is manifestly vexatious and meritless. Since the reading of the plaint, as stated hereinabove, clearly shows a cause of action against the defendant No.1, power under Order 7 Rule 11 of the Code cannot be exerciser in the present case.

(20) By reading the averments and allegations made in the plaint, it cannot be said that the case of the plaintiff is based on falsehood. The ratio of the judgment of the Supreme Court in the case of S.P. Chengalvaraya Naidu (Dead) by LRs(supra), therefore, shall not apply to the present case. Similarly, the ratio of the judgment of the Supreme Court in the case of M/s. Hind Construction Contractors (supra) is of no assistance to the learned counsel for the defendant No.1 as the time was not the essence of the contract in the present case. The ratio of the judgment of the Supreme Court in the case of Ouseph Varghese (supra) is again of no assistance to learned counsel of defendant No.1as in the present case it has early been averred in the plaint that the plaintiff has always been ready and willing and is still ready and willing to perform its part of contract and pay the balance sale consideration. The averments made in the written statement of defendant No. 1 that the suit property vested in Huf cannot he gone into for deciding the present application as at this stage only the averments made in the plaint can be looked into. Besides, this point cannot be decided without evidence.

(21) In view of the above discussion, the present application filed by the defendant No. 1 is dismised. The parties are, however, left to be art their own costs. With this order Ia 17/94 also stands disposed of.