Delhi High Court

Shri Sanjeev Narang vs M/S. Prism Buildcom Pvt. Ltd. on 11 July, 2008

Author: Manmohan Singh

*      HIGH COURT OF DELHI : NEW DELHI

+      FAO (OS) No.267/2008

                             Judgment reserved on : 30th May, 2008

%                            Judgment delivered on: 11th July, 2008

     Shri Sanjeev Narang
     S/o Sh. K.K. Narang,
     R/o B 26, First Floor,
     South Extension Part-1
     New Delhi-110049
                                                    ...Appellant
                                 Through      : Mr. Amit Sibal, Adv. with
                                                Mr. Rajneesh Chopra and
                                                Ms. Divya Jain, Advocates
                       Vs.

     M/s Prism Buildcon Pvt. Ltd.
     Having its registered office at :
     A-10, Vaishali Nagar,
     Jaipur, Rajasthan
     Through its Director,
     Sh. Mahipal Choudhary                           ....Respondent

                                 Through      : Mr. Sudhanshu Batra,
                                                Adv. with Mr. Bhuvan
                                                Gugnani, Adv.
Coram:

HON'BLE MR. JUSTICE MADAN B. LOKUR
HON'BLE MR. JUSTICE MANMOHAN SINGH

1. Whether the Reporters of local papers may
   be allowed to see the judgment?                         Yes

2. To be referred to Reporter or not?                      Yes

3. Whether the judgment should be reported
   in the Digest?                                          Yes

MANMOHAN SINGH, J

1. This is an appeal under Order XLIII Rule 1 read with Section

151 of the Code of Civil Procedure, 1908 against an order dated

24th April, 2008 passed by the learned Single Judge of this Court in IA

No.1475/2008 and I.A. No.4010/2008 in CS (OS) No.220/2008

whereby the Appellant's application for restraining the defendants

from selling, transferring, alienating, encumbering, executing/

registering or otherwise parting with possession of property bearing

Khewat/Khata/Khasra No.66, 67, 70, 71, 115, 116, 149 which is

approximately 03.02 bighas and Khewat/Khata/Khasra No.113/465,

134, 135, 138, 139, 140, 141, 142/463, 257/464 total admeasuring

19.78 bighas situated in the Revenue Estate of Village: Lamaye

Meval, Patwar Area: Sirohi, Tehsil: Ajmer, District: Jaipur (Rajasthan)

(hereinafter referred to as the "suit property") was dismissed and

Respondents application under Order XXXIX Rule 4 for vacation of ad

interim injunction was allowed.

2. In the plaint, it was submitted by the Appellant (Plaintiff in Suit

No.220/2008) that under assurances and representations made by the

Respondent regarding the suit property, the Appellant vide an

agreement to sell dated 9th January, 2008 agreed to buy the suit

property for a total consideration of Rs.53,40,600/- (Rupees Fifty

Three Lakh Forty Thousand and Six Hundred only) at the rate of

Rs.2,70,000/- (Rupees Two Lakh Seventy Thousand only) per bigha.

It was stated that in part payment of total sale consideration, Rs.11 lacs

was paid by the Appellant to the Respondent by two cheques bearing

Nos. 265152 and 265153, both dated 7th January, 2008 of Rs.50,000/-

each which stood encashed and credited in the account of the

Respondent and Rs.10 lac was paid in cash. The said agreement

contains the stipulation under Clause 4 and 10 that if the Respondent

fails to get the Deed of Conveyance/Sale Deed registered within the

period stipulated in the said Agreement that is valid till 30th June, 2008,

then in such an event the Appellant shall be entitled to get the Deed of

Conveyance/Sale Deed registered through the court of law by specific

performance of the said agreement. When on 11th January, 2008, the

Appellant went to execute the Deed of Conveyance and to pay the

remaining sale consideration, the Respondent refused to execute the

same and informed him that he has got a higher offer. Thus the

Appellant instituted a suit for specific performance of this agreement.

He also filed an application under Order XXXIX Rules 1 and 2 of the

Code of Civil Procedure on the same facts as given in the plaint

praying for an ex parte order restraining the Respondent to sell or

otherwise interfere in the property which was issued on 8th February,

2008.

3. The Respondent in the written statement raised a preliminary

objection that the alleged agreement dated 9th January, 2008 is a forged

and fabricated document. It was submitted that the Respondent

company has never received any payment as alleged in the said

agreement or in the suit. The Appellant mischievously deposited two

cheques of Rs.50,000/- each in the bank account of the Respondent at

HDFC Bank at Delhi although the account of the Respondent with

HDFC Bank was at Jaipur. The Appellant approached the Respondent

on or about 31st October, 2007 for purchase of the suit land at the rate

of Rs.6,50,000/- per bigha but on refusal from the Respondent to sell

the same, left the agreement signed by the Appellant but not signed by

Respondent and a cheque of Rs.9 lac. It is denied that Respondent had

entered into any agreement to sell dated 9th January, 2008. The

signature on this agreement of Sh. Mahipal Chaudhary, Director is

stated to be a forged signature. It was further stated in the written

statement that when the Respondent did not agree to sell the suit

property at the rate of Rs.6,50,000/- per bigha, how can it after around

two months agree to sell the same property at a much lower price at the

rate of Rs.2,70,000/- per bigha. The Respondent filed an application

under Order XXXIX Rule 4 of the Code of Civil Procedure praying for

vacating the ex-parte order dated 8th February, 2008 passed in favour of

the Appellant restraining the Respondent from selling and alienating

the suit property.

4. In reply to the application filed by the Respondent under Order

XXXIX Rule 4 of the Code of Civil Procedure, the Appellant

submitted that the Respondent company acting through its Director

approached the Plaintiff offering to sell the suit property on or before

31st October, 2007 representing that the suit land was situated adjacent

to NH-8. The plaintiff found the location of the suit property well

suited to his needs and thus he immediately agreed to purchase the

same. During the course of negotiations, the defendant represented to

the plaintiff that it had clear title of the suit property. The defendant

handed over to the plaintiff a copy of the deed of one of the khasra

number of the suit property which was registered in the name of sister

concerns of the defendant. The plaintiff, believing the representations

made by the defendant to be true, and the Respondent mutually

finalized the total sale consideration of Rs.21,00,000/-for the suit

property. The plaintiff on request of the defendant drafted an

agreement to sell on the basis of the land specifications provided by the

defendant at the rate of Rs.6,50,000/- per bigha and approached the

defendant with the said agreement to sell and cheque bearing

No.517971 dated 31st October 2007 for Rs.9,00,000/- as earnest money

but left the said agreement signed by him and the cheque with the

payee name blank. However, on enquiry from the Patwari of the

region it was found that the property was not located adjacent to NH-8

as represented to him by the defendant but 5 kms away from NH-8 and

also the defendant company did not have clear title on the land as

represented by the defendant. The plaintiff immediately approached

and confronted the defendant with these facts. The defendant admitted

his fault and offered to sell the land at actual prevailing market price.

The plaintiff declined to accept this representation and cancelled the

earlier agreement to sell and instructed his banker to stop payment of

the cheque for Rs.9,00,000/-. On continuous persuasion by the

defendant to buy the suit property the plaintiff around the end of

December, 2007 after conducting extensive enquiries, exercising due

diligence and finding the prevailing market rates, agreed to purchase

the property in question at Rs.2,70,000/- per bigha for a total

consideration of Rs.53,40,600/- with the same terms and conditions as

contained in the earlier agreement.

5. After taking note of the pleadings of the parties, the learned

Single Judge vacated the ex-parte ad interim order and dismissed the

application of the Appellant under Order XXXIX Rules 1 and 2 of the

Code of Civil Procedure. The learned Single Judge while vacating the

order held that it is not denied by the Appellant that the two cheques

were deposited by the Appellant in the account of the Respondent at

Delhi. If the Appellant deposited these cheques in the account of the

Respondent in Delhi, there is no reason why the Appellant did not

deposit the cash amount in the account of the Respondent at Delhi

using its account numbers etc. If the Respondent had been handed

over the cash amount as alleged, there is no reason why the bank

cheques would not have been handed over along with the cash to the

Respondent. Moreover, the learned Single Judge has also not accepted

the explanation given by the Appellant regarding his purchase of stamp

papers and has accepted the version of the Respondent as mentioned in

the written statement regarding the execution of the agreement. The

learned Single Judge has also held that the plea of the Appellant that he

had come prepared with the draft agreement at instructions of the

Respondent and handed over the cheque to the Respondent and signed

the agreement did not inspire confidence. It is also held that if the

market value of the land was much below Rs.6,50,000/- per bigha, the

Respondent would have happily signed the agreement to sell

immediately and received part consideration and created contractual

obligation on the Appellant. It is also held by the learned Single Judge

that the earlier story of the Appellant does not match with the

subsequent facts stated by the Appellant inasmuch as the Appellant had

stated that initially he had agreed to purchase this land at Rs.6,50,000/-

per bigha on the representation that the land was situated near NH-8,

but later on, on investigation, he found that the land was about 5

kilometers away from NH-8 and its true market price was

Rs.2,70,000/- per bigha as agreed between the parties. It is also held

that if the true market price on 9th January, 2008 had been what has

been stated by the Appellant, there would have been no reason for the

Respondent to turn down the receipt of entire balance consideration on

11th January, 2008. Hence, the learned Single Judge held that the case

set up by the Appellant seems to be doubtful and dismissed the

application of the Appellant.

6. The Appellant has now impugned the order of the learned Single

Judge on the grounds stated in the appeal, inter alia, contending that the

question of validity of the said agreement was to be decided at the stage

of trial, that is, at the stage of leading evidence and not at the stage of

hearing of the application under Order XXXIX Rules 1 and 2 of the

Code of Civil Procedure.

7. We have considered the pleadings, interim order and documents

and find that the crux of the matter is that the suit filed by the Appellant

before the learned Single Judge is a suit for specific performance and

permanent injunction on the basis of alleged agreement to sell dated 9 th

January, 2008. The Respondent has denied its signature and execution

of the said agreement. The Appellant has also not produced the receipt

of cash amount of Rs. 10 lakhs allegedly paid by him to the Respondent

on 7th January, 2008. The factum of earlier agreement was not disclosed

to the Court at the time of institution of the suit and so also some of the

other facts as mentioned in para 4 of our judgment. The said facts have

yet to be determined at the trial.

It appears that when the Respondent came to know that the

Appellant has deposited two cheques of Rs. 50,000/- each in its bank

account through the HDFC Bank at Delhi, and when the Appellant left

the written agreement to sell on a stamp paper duly signed by him along

with a cheque bearing no. 517971 dated 31st October, 2007 for Rs. 9

lakhs with a view to purchase the suit land at the rate of Rs. 6,50,000/-

per bigha, it did not take any steps or make any protest of the said

alleged act of the appellant.

8. Be that as it may, it is settled law that in the case of specific

performance, the agreement is the most crucial and vital document in

order to determine the real dispute between the parties which has been

denied by the Respondent as well as its signatures appearing on the said

agreement. Hence, we are of the view that in the present facts and

circumstances of the case, unless the trial in the matter is concluded, it is

not possible for the Court to grant permanent injunction at this stage.

9. But, we are making no observation regarding the validity or

invalidity of the two alleged agreements for sale. The whole

controversy rests on the enormous difference between the prices agreed

under the earlier and later agreement, that is, Rs. 6,50,000/- per bigha

and Rs. 2,70,000/- per bigha.

10. Even otherwise, the scope and extent of the power enjoyed by the

Appellate Court in interfering with a detailed order passed in exercise of

discretion by the learned Trial Judge are limited and the circumstances

in which the discretion exercised by the learned Single Judge require

consideration have been discussed by the Apex Court in the case of

Wander Ltd. vs. Antox India Pvt. Ltd.; 1990 (Suppl.) SCC 727 at page

733 wherein the Apex Court has held that in an appeal against the

exercise of discretion by the learned Single Judge, the Appellate Court

will not interfere with the exercise of discretion by the first Court except

under some limited circumstances. The relevant observation of the Apex

Court is extracted as under:

"14. The appeals before the Division Bench were against the exercise of discretion by the Single Judge. In such appeals, the Appellate Court will not interfere with the exercise of discretion of the Court of first instance and substitute its own discretion except where the discretion has been shown to have been exercised arbitrarily, or capriciously or perversely or where the Court had ignored the settled principles of law regulating grant or refusal of interlocutory injunctions. An appeal against exercise of discretion is said to be an appeal on principle. Appellate Court will not reassess the material and seek to reach a conclusion different from the one reached by the Court below if the one reached by that Court was reasonably possible on the material. The Appellate Court would normally

not be justified in interfering with the exercise of discretion under appeal solely on the ground that if it had considered the matter at the trial stage it would have come to a contrary conclusion. If the discretion has been exercised by the trial court reasonably and in a judicial manner the facts that the Appellate Court would have taken a different view may not justify interference with the trial court's exercise of discretion."

11. We are conscious of the fact that under Section 52 of the Transfer

of Property Act, 1882, in case of pending suit in which right to

immoveable property is directly and specifically in question, the

property cannot be transferred or otherwise dealt with by any party to

the suit or proceeding so as to affect the rights of any other party thereto

under any decree or order which may be made therein except under the

authority of the Court and on such terms as it may impose. Therefore, in

order to strike a balance between the parties, the Respondent is directed

to inform the purchaser about the litigation pending between the parties

in case the respondent wishes to dispose of the property during the

pendency of the suit so that innocent purchaser may be aware about the

pending litigation of the parties.