Sh. Suresh Aggarwal vs Sh. Satinder Jain
2001 Latest Caselaw 520 Del

ORDER

A.K.SIKRI.J.

1. The plaintiff has filed the instant suit for specific performance of Agreement to Sell dated 24th April, 1995 entered into between the plaintiff and defendant no.1. The Agreement to Sell is in respect of Plot No.103, Bahubali Enclave, Delhi. In the instant case as originally filed only defendant No.1 was imp leaded as party. Subsequently by order dated 10th December, 1999 defendants 2 and 3 were also imp leaded as parties.

2. Briefly stated the suit is based on the averments that the defendant no.1 had agreed to sell the aforesaid plot(hereinafter referred to as the 'suit property') to the plaintiff for a total sale consideration of Rs.26 lacs. Defendant No.1 was paid a sum of Rs.2 lacs as part sale consideration amount in part performance of the agreement to sell and was accepted by the defendant No.1 thereby leaving a balance amount of Rs.24 lacs. Balance amount was payable, as agreed in the agreement to sell, by 25th June, 1995. The plaintiff claims that this was subject to the defendant No.1 carrying out his obligations like taking permission under Chapter XX-C of the Income Tax Act in terms of Form 37-I and also to obtain necessary clearance of Income Tax so as to make defendant No.1 fit to execute a proper and requisite sale deed for passing clean and marketable title of the plot in question. It was further agreed between the parties that the defendant No.1 shall receive the balance payment as agreed and also undertake that he shall get the perpetual lease deed registered and shall hand over the possession of the plot in question. On the assurance rendered by the defendant no.1 the plaintiff signed all the necessary forms, applications, papers for moving the concerned authorities under Chapter XX-C of the Income Tax Act for seeking clearance from the appropriate authority for having clean and marketable title of the suit plot as agreed upon. The plaintiff has been approaching the defendant No.1 and it was being assured from time to time that the defendant has already taken steps not only with the co-op society, and the paramount Lesser but also they have moved the appropriate authorities under the Income Tax Act for seeking necessary clearance for executing the conveyance deed for passing clean and marketable title of the subject plot. At the initial point of time the defendant No.1 was available and has been assuring that steps have been taken and the matter will be pursued. However, he was not available subsequently. Since the defendant no.1 was avoiding to meet the plaintiff and with the intention to avoid any false plea that may be raised by the defendant No.1, on 25th June, 1995 the plaintiff was available for registration of the conveyance deed. All the funds were available with the plaintiff but the defendant no.1 did not reach over there. It is further stated that the plaintiff was always ready and willing to perform his part of the contract. It is also pleaded by the plaintiff that although the defendant No.1 has been assuring that he would obtain necessary income tax clearance and then execute the sale deed but the needful was not done. After some time he started avoiding the issue. When he was prolonging the matter on one pretext or the other, the plaintiff even served legal notice in August 1996 and also asked the defendant No.1 to be present before the Sub-Registrar, Seelampur, Shahdara , Delhi. However, the said notice was not received by the defendant no.1 and was received back by the plaintiff. Another legal notice dated 25th October, 1996 was sent to the defendant No.1 asking him to be present before the Sub-Registrar, Seelampur, Shahdara, Delhi on 4th November, 1996 but the defendant no.1 did not turn up. From the aforesaid conduct of the defendant No.1 the plaintiff nurtured the doubt that the defendant No. 1 was backing out of the contract. In these circumstances, the present suit was filed seeking specific performance of Agreement to Sell dated 24th April, 1995.

3. Along with the suit, the plaintiff also filed IA No.5789/98 under Order XXXIX Rules 1 and 2 of Code of Civil Procedure. Summons in the suit were directed to be issued on the defendant No.1 and notice in this application was also issued. The defendant no.1 filed the written statement alleging, inter alia, that it is the plaintiff who had failed to perform his part of the contract under Agreement as he failed to make balance by 25th June,1995. Thus advance money of Rs.2 lacs. paid by him was forfeited and the Agreement stood cancelled as per Clause 8 of the Agreement. Thereafter the defendant No.1 entered into Agreement to Sell of the plaintiff Plot on 18th February, 1997 with Shri Sachin Jain and Mrs.Santosh Jain.

4. On coming to know that the defendant no.1 had purportedly entered into Agreement to Sell the aforesaid with Shri Sachin Jain and Mrs. Santosh Jain, the plaintiff moved an application(IA No.11370/99) under Order I Rule 10 read with section 151 CPC and imp leaded them as defendants 2 and 3 and made necessary amendment in the plaint. The plaintiff also filed IA no.12656/99 under Order XXXIX Rules 1 and 2 CPC seeking injunction against newly added, defendants not to sell or dispose of the property further. On this application, ex-parte order dated 10th December, 1999 was passed directing that status-quo as on that date shall be maintained by defendant No.1 and both the proposed defendants 2 and 3 in respect of suit property. IA No.11370/99 under Order I Rule 10 and Order VI Rule 17 CPC was also allowed on 9th November, 2000. On being imp leaded, the defendants 2 and 3 filed written statements and also IA No.3835/2000 under Order XXXIX Rule 4 CPC seeking vacation of status-quo order dated 10th December, 1999. It is how these IAs were heard together and disposed of by this common order.

5. In so far as written statement of the defendant No.1 is concerned, as already pointed above, it is the stand of defendant no.1 that time was the essence of the contract/agreement to sell dated 24th April, 1995 in terms whereof the plaintiff was under obligatio not perform his part of the agreement on or before 26th May, 1995. The plaintiff failed to make the balance amount of Rs.24 lacs by 25th June, 1995, and therefore, the advance money of Rs.2 lacs paid by him stood forfeited and agreement in question stood cancelled as per clause 8 thereof which specifically states that time was the essence of the agreement. It is further stated that since the defendant No.1 compelled by his domestic needs to enter into an agreement to sell and accordingly on 18th February, 1997 he entered into agreement to sell of the suit property with defendants No.2 and 3. It is also stated that sale deed of the said plot was executed in favor of the defendants No.2 and 3 on 15th September, 1998 and possession of the said plot was handed over to them on the said date. Various other averments made by the plaintiff in the plaint are denied by the defendant No.1.

6. In the written statement filed by defendants No.2 and 3 apart from various preliminary objections, it is stated that the defendants No.2 and 3 are the bona fide purchasers of the suit property for which they paid the entire consideration and the suit for specific performance is not maintainable against them. They have also mentioned that agreement to sell of this suit property was entered into between the defendant No.1 on the one hand and the defendants No.2 and 3 on the other hand on 18th February, 1997 and sale deed was also executed in their favor. They further stated that they had no knowledge regarding the agreement to sell executed between the plaintiff and the defendant No.1. They came to know of this only when they received summons from the court in this suit.

7. In IA No.3835/2000(which is an application under Order XXXIX Rule 4 CPC) the defendants No.2 and 3 have stated that the plaintiff has obtained the status-quo order dated 10th December, 1999 by misleading this court and due to various reasons as enumerated herein below:

1) That there is no concluded contract as between the plaintiff and the defendant No.1 and therefore the suit itself is barred by law as specific performance of a contract which is no concluded cannot be granted.

2) That is it a settled position of law an interim order in a suit cannot be granted in which the final remedy prayed is barred by law.

3) That the court has been mislead by the plaintiff by suppression of facts to the effect that the applicant herein has become the rightful owner of the property in the eyes of laws as there is a concluded contract between defendant No.1 and defendants No.2 and 3.

8. In this application, it is also stated that the defendants No.2 and 3 bought the plot in question(suit property) in bona fide belief that the same was free from any encumbrance or claim of any third party or any litigation. After purchasing the property, the defendants applied to MCD for approval of the site plain which was given and thereafter construction was raised on the plot and completion certificate has already been obtained from the MCD. Now, therefore to dispossess or injunct the defendants No.2 and 3 from the use of the property of which they are the rightful owner would be grave injustice and against the rules of natural justice.

9. From the narration of facts mentioned above, following admitted position emerges:

Defendant No.1 who is the owner of the suit property does not dispute that agreement to sell dated 24th April, 1995 was entered into between him and the plaintiff as per which he agreed to sell the plot in question to the plaintiff for a total consideration of Rs. 26 lacs. He also does not dispute that a sum of Rs.2 lacs was paid to him by the plaintiff as earnest money/part payment towards sale consideration. Balance consideration of Rs. 24 lacs was to be paid on or before 25th June, 1995. This is so stated in the recital to the agreement itself. As per para 5 of the agreement the possession of the suit property was to be handed over by the defendant no.1 to the plaintiff at the time of full and final payment. As per para 6 the defendant no.1 was obligated to hand over the plaintiff all the original documents relating to the suit property. Para 8 of the agreement which is material reads as under :

"That in accordance with the above said terms and conditions, if the first party/seller shall not execute the documents either in the name of the second party or in the names of his/her/their nominees, then the second party shall be entitled to take the double of the advance amount paid by the second party to the first party, the first party shall have no objection in this regard and if the second party do/does not make the payment of the balance consideration amount, within the fixed time, then the advance paid by the second party shall stand forfeited and agreement shall stand cancelled and the defaulting party shall be responsible for the payment of the commission of both sides, to the dealer through which this deal has been done."

10. As per this clause in case the defendant no.1 does not execute the documents in favor of the plaintiff then the plaintiff is entitled to take the double of the advance amount paid by the plaintiff to the defendant no.1 i.e. plaintiff would be entitled to Rs. 4 lacs (as advance payment of Rs.2 lacs was made by him to defendant no.1) from the defendant no.1. On plaintiff's failure to make the balance consideration within the fixed time, the defendant no.1 was entitled to forfeit the advance amount and cancel the agreement.

11. Admittedly balance payment of Rs.24 lacs is not made by the plaintiff to the defendant no.1. There is a dispute on this aspect. The plaintiff claims that he was ready with money but the defendant no.1 did not come forward to execute the necessary sale deed. On the other hand, the defendant no.1 disputes this and stand taken by him is that the plaintiff defaulted in making the payment of the balance amount which resulted in forfeiture of the advance money paid by the plaintiff to the defendant no.1. Whether the version put forth by the plaintiff is correct or it is the defendant no.1 who is speaking the truth would be known only when the evidence is led by both the parties. However, following factors persuade me not to continue the injunction order.

1) Clause 8 of the Agreement itself stipulates the consequences of breach of the said Agreement by either party. In case there is a breach on the part of the defendant no.1 the plaintiff is entitled to double the amount of the advance money. Therefore, even it is ultimately proved that the defendant no.1 had committed breach, the plaintiff would be entitled to double the amount of the advance money. It is not stipulated in the Agreement to Sell that in such an event the plaintiff would be entitled to specific performance of the contract. It is not suggested that suit for specific performance would not be maintainable with such a clause. However, it is the cumulative effect of all these factors mentioned herein which disentitles the plaintiff from such an injunction.

ii) Agreement to Sell entered into between the plaintiff and the defendant no.1 specifically stipulates that balance consideration of Rs.24 lacs. was to be paid by the plaintiff to defendant no.1. This payment was to be made by 25th June, 1995. The payment of amount is not coupled with the condition that the execution or registration of sale deed was also to be effected. The condition was only for the handing over of the possession of the suit property as well as original documents in the possession of the defendant no.1 relating to this property. Thus plaintiff could still give the balance amount and take the possession of the suit property. He did not do so. On the other hand, the plaintiff has stated in the plaint that he was ready with the money which he wanted to hand over to defendant No.1 only on the condition that the defendant No.1 executes the sale deed of the property in question. There is no averment to the effect that he was ready to hand over the money on getting the possession of the property and it is defendant No.1 who was not willing to give the possession.

iii) Moreover against total consideration of Rs.26 lacs the plaintiff has paid a sum of Rs.2 lacs only. Worth of the property today after complete construction has been raised thereon would be substantially higher, and therefore, it would not be appropriate to injunct the defendants 2 and 3 from dealing with this property when the plaintiff has paid a sum of Rs. 2 lacs only. However, the ends of justice would be met if the defendants are directed to deposit a sum of Rs. 4 lacs in this court. The interim order dated 10th December, 1999 is accordingly vacated subject to the condition that the defendant No.1 and/or defendants 2 and 3 deposit a sum of Rs. 4 lacs with the Registrar of this court within a period of two weeks from the date of this order. IAs. 5789/98, 12656/99 and 3835/2000 are disposed of in the aforesaid terms.

iv) As per the written statements filed by the defendant no.1 as well as defendants 2 and 3, the defendant no.1 has sold the property to defendants 2 and 3. No doubt, although it is mentioned in the written statements that Agreement to Sell the suit property was entered into between the defendant no.1. on the one hand and the defendants 2 and 3 on the other on 18th February, 1997 and sale deed of the said plot was executed in favor of the defendants 2 and 3 on 15th September, 1998 but the defendants 2 and 3 could not show any such sale deed having been executed. However, fact remains that possession of the plot was handed over to the defendants 2 and 3 and the defendant no.1 has also executed documents in the form of Power of Attorney and Will etc. In favor of the defendant no.2. Moreover defendants 2 and 3 applied to MCD for approval of the site plain which was given by the MCD. Thereafter, the defendants 2 and 3 have raised the construction on the said plot. This construction was completed in October, 1999 and even completion certificate has been given by the MCD vide its letter dated 21st October, 1999.

v) With the construction land is transformed into a building on which substantial amount has been spent by the defendants 2 and 3 who may be the bonafide purchases of the property in question.

Suit No.1417/98

12. Pleadings are complete. Parties may file additional documents, if any within six weeks.

List the matter before the Joint Registrar on 9th August, 2001 for admission/denial of the documents and before the court on 19th September, 2001 for framing of issues.