Chironji Lal Garg vs Mohan Singh Chopra
1995 Latest Caselaw 821 Del

JUDGMENT

Devinder Gupta, J.

(1) The plaintiffs in a suit for specific performance of agreement to sell dated 4th October, 1993 have in this application filed under Order 39 Rules 1 and 2 of the Code of Civil Procedure prayed for an order of injunction restraining defendants 1 and 2 from entering into agreement of sale, parting with possession or creating third party interest in respect of property No'.B-7/5, Safdarjung Enclave, New Delhi. In addition, the plaintiffs had also prayed for restraining defendant No.3 from selling by way of auction or otherwise the said property for recovery of the amount due from defendant No.1.

(2) An ad interim ex parte order of injunction, as prayed, was granted on 14th March, 1995 against defendants I and 2. In so far as defendant No.3 is concerned, the order, as prayed, was passed subject to plaintiffs' depositing a sum of Rs.50,00,000.00 in the Registry of this Court by 20th March, 1995.

(3) That on 31st July, 1995, it was stated at the bar that plaintiff had not deposited the said amount of Rs.50,00,000.00 as per order dated 14th March, 1995. It was observed that since the amount had not been deposited, the order passed on 14th March, 1995 as against defendant No.3 had become inoperative. The fact that amount of Rs.50,00,000.00 was not deposited was also confirmed by learned counsel for the plaintiff on 14th March, 1995.

(4) PLAINTIFFS' case is that the suit property is owned by defendant No.1, which has been constructed upon a plot of land granted by virtue of lease deed executed in his favor by President of India through Delhi Development Authority on 27th July, 1967. Defendant No.2 is the attorney for defendant No.1. In 1993, defendant No.1 through defendant No.2 approached the plaintiff and offered to sell the property. Plaintiff was given to understand that the ground floor of the said property was in occupation of an Indonesian National since 1989 as a tenant and the first floor was in occupation of defendant No.2 as a licensee. Because of the hindrances on the property, namely, occupation in the ground floor by a tenant and that defendant No.1 was not in a position to pay Income Tax/Wealth Tax dues, plaintiff was approached wth offer to sell the property. As per the understandng, the plaintiff was required to get the said property vacated from occupants and also to clear dues of the Income Tax Department. After long negotiations, agreement to sell in writing was entered into on 4th October, 1993. The property was agreed to sold for a total consideration of Rs.77,00,000.00 out of which Rs.5,00,000.00 was paid. As per the agreement, a power to deal with Income Tax Department in as much as in obtaining the no objection c.ertificate under the provisions of Section 269UD of the Income Tax Act, transfer certificate and other formalities were also given to the plaintiff. Time was the essence of the agreement. Plaintiff applied for requisite certificates and the same was granted on 27th December, 1993. The plaintiff was informed that there were huge outstanding demands from Income Tax Department, which were to be realised from defendant No. 1, of which the property stood attached. Plaintiff informed defendant' No.2 of the department's claim against defendant No.1. Plaintiff thereafter came in contact with defendant No. I through defendant No.2 to comply with the agreement and to execute the sale deed. It is alleged that defendants failed to abide by the terms of the agreement and cause thereafter arose for filing the suit for specific performance. The suit is vehemently opposed by the defendants. ' It has been pleaded that plaintiff No.2 is a builder and has commercial motive to make speculative gains. He had agreed to purchase the property on "as is whereis" basis out of the sale consideration plaintiff No.2 had agreed to make payment directly to Income Tax Authorities since he was aware of the fact that property was under attachment for the Income Tax dues. Defendant has given the background and the circumstances under which agreement dated 4th October, 1993 came into being reflecting therein the earlier advance payment of Rs.2,00,000.00 received by defendant No. 1 from plaintiff No.2. It is also pleaded that Income Tax/Wealth Tax dues in around October, 1993 were to the tune of Rs.36,35,96,000.00 plus interest as per certificate dated 27th November, 1990. Tax demands were disputed and bills were pending. In terms of the undertaking by plaintiff No.2, the lax dues could have been adjusted out of the balance sale consideration, since no objection had also been received from the Income Tax Authorities. Since plaintiff No.2 entered into transaction for speculative purpose and did not have care to make the payment to fhe answering defendant, it is the plaintiff who failed to perform his part of the contract and thus it is alleged that he is not entitled to decree for specific performance. It is also pleaded that plaintiff No.2 assigned the obligations under agreement to sell as well as bona fideism in favor of plaintiff No. 1 with consent of defendants, therefore, contract does not subsist and is otherwise invalid and unenforceable. Obligation to pay the balance consideration of Rs.72,00,000.00 was personal to plaintiff No.2, more particularly liability to pay off the Income Tax demands which were subsisting against defendant No.1 for which property in question have been attached. In nutshell, defendants' case is that it was plaintiff No.2 who had not been ready and willing to perform his part of the contract. Number of circumstances have been pleaded that defendant No.2 had been making regular visits to Delhi to impress upon the plaintiff to perform their part of the contract but they were not ready and. willing to perform their part of the contract. It was due to the fault of the plaintiffs that tax liability has increased many fold and now it was over Rs.80,00,000.00 . Defendant No.3 has also filed separate written statement. I have heard learned counsel for the parties.

(5) For deciding the application, it is necessary to take into account the plaintiffs' conduct at least to come to a prima faces conclusion as to whether there is a good ground made mount for grant of injunction. It is plaintiffs' own case that as per the understanding plaintiff No.2 had to clear the dues of the Income Tax Department. The total sale consideration was Rs.77,0(),000.00 out of which Rs.5,00,000.00 had been paid. It is also plaintiffs' case that requisite no objection certificate had been issued by the authorities on 27th December, 1993. Readiness and willingness to perform its part of the contract is sine qua non for grant of decree for specific performance of the contract. Assuming that plaintiff was ready and willing to perform his part of the contract as on the date of agreement, it has to be shown that thereafter also till the filing of the suit and as of today plaintiff has been ready and willing to perform his part of the contract. On record there is hardly any material even to come to prima faces conclusion about the fact of readiness and willingness to perform his part of the contract in clearing off the Income Tax dues of defendant No.1. This inference can be drawn from another circumstance when on 14th March, 1995, an order was restraining defendant No.3 from selling or auctioning the property f6r recovering his amount due from defendant No.1 subject to plaintiffs depositing a sum of Rs.50,00,000.00 in the Registry of this Court by 20th March, 1995. Till date the amount has not been deposited and there is no explanation forthcoming as' to why the amount has not been deposited. Not only prima faces case but also balance of convenience is one of the circumstances which will have to be taken into consideration as to whether the same is for grant of injunction. The present situation is that the Income Tax Authorities have again advertised the property for being auction for non-payment of the Income Tax dues, which have gone beyond Rs.80,00,000.00 . In case property is allowed to be auctioned, plaintiff will not be entitled to have his contract specifically enforced for getting the property conveyed in his favor. In case injunction is not granted, it might be possible that defendant No.1 to enter into profit negotiations for sale of the property, because of rise in prices of the property and paying off the income taxes/wealth tax dues. Allowing the injunction to continue against defendants I and 2 thus is likely to result in more loss and harm to defendants I and 2 which it will not be possible to compensate by awarding damages whereas loss or injury, if any, suffered by the plaintiff can very well be compensated in terms of money. Loss or harm, if any, likely to be occasioned due to grant of injunction to defendants land 2 would be more than what it would be in case injunction is not granted. Applying the ratio of the decision of the Supreme Court in M/s.Gujarat Bottling Co.Ltd. & others v. The Coca Cola Co. & others 1995 Jt (6) S.C. 3, it is a fit case for not granting ad interim injunction or injunction granted earlier deserves to be vacated by dismissing plaintiffs' application. Accordingly, the application is dismissed. Ex parte order of injunction is hereby vacated.