Gopal Krishan Kapoor & Ors. vs R.S. Chhabra &Ors.
2009 Latest Caselaw 1737 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

+                              Date of Decision: 29th April, 2009

%                       I.A. nos. 5519/2008 &
                            14573/2007

                             IN

                     C.S. (OS) No. 691 of 2007


#     Gopal Krishan Kapoor & Ors.                    ...Plaintiffs
!                       Through: Mr.Jayant Tripathi,
                        Advocate


                               versus


$     R.S. Chhabra & Ors.                              ...Defendants
^                              Through:      Mr. Parag Chawla,
                               Advocate for defendant no.1 and
                               Mr. B.B. Gupta for defendant no.2.



      CORAM:
*     HON'BLE MR. JUSTICE P.K.BHASIN

1. Whether Reporters of local papers may be allowed to see the
   judgment?(No)

2. To be referred to the Reporter or not?   (No)

3. Whether the judgment should be reported in the digest?(No)
                                  ORDER

P.K.BHASIN, J:

This order shall dispose of I.A. No. 14573/2007 moved by the

plaintiffs under Order XXXIX Rules 1 & 2 of the Code of Civil

Procedure(in short „CPC‟) and I.A. no. 5519/2008 filed by defendant

no. 2 also under Order XXXIX Rules 1 & 2 CPC alongwith his

counter-claim.

2. Brief facts relevant for disposal of these applications need to be

noted at the very outset. The plaintiffs alongwith Smt.Sanjogta Kapoor

(since deceased), who was the mother of defendants nos. 3-6 and

sister-in-law(bhabhi) of the plaintiffs, jointly owned property bearing

no. 14-B(also known as 14-C) Bazaar Marg, Old Rajinder Nagar,

Delhi-110060 (hereinafter referred to as „the suit property‟). As per

the averments made in the plaint, the suit property was agreed to be

sold to defendant no.2 vide Memorandum of Understanding(MoU)

dated 28.2.2005 executed between the plaintiffs and late Sanjogta

Kapoor on one side and defendant no. 2 Rajesh Kumar on the other for

a total sale consideration of Rs. 5.2 crores. After having paid

Rs. 1 crore only towards the sale consideration the defendant no. 2

entered into another MoU dated 20.4.2005 with defendant no.1

R.S.Chhabra assigning his rights in the suit property, which is a lease-

hold property, under the said MoU dated 28/02/05. The plaintiffs and

Smt. Sanjogta Kapoor applied for conversion of the suit property from

lease-hold to free-hold in November,2005 but while the process for

conversion of the suit property from lease-hold to free-hold was

pending in the office of L&D.O. the defendant no. 1 allegedly wrote a

letter/complaint dated 01/03/06 to L&D.O. for stopping the conversion

process. Then on 24th February, 2006 he filed a suit for Specific

Performance of Contract( being CS(OS) 353 of 2006) in this Court

against the plaintiffs herein and late Mrs Sanjogta Kapoor, as an

assignee of defendant no.2 by virtue of the MoU dated 20/04/05

which assignment appears to have been recognized by the plaintiffs

and Smt. Sanjogta Kapoor, the vendors of the suit property. It appears

that in that suit the plaintiffs herein and Smt. Sanjogta Kapoor entered

appearance and then without filing any written statement entered into a

compromise with the plaintiff of that suit R.S.Chhabra consequent

upon which defendant no.1 herein withdrew his aforesaid

letter/complaint dated 01/03/06 to L&DO vide his letter dated

10/03/06. A joint application under Order XXIII Rule 3 CPC dated

17/03/06 was then moved by defendant no. 1 herein and the plaintiffs

herein and Smt. Sanjogta Kapoor wherein it was agreed that the

defendants 1-5 in that suit would execute a sale deed in favour of

R.S.Chhabra and also hand over the possession of the suit property to

him on payment of the balance sale consideration amount of Rs.

4,17,00,000/- by him to the said vendors. A compromise decree was

then passed on 20.3.2006.

3. It is the case of the plaintiffs that after the disposal of the

aforesaid suit of R.S.Chhabra defendant no. 2 herein Rajesh Kumar,

the original purchaser of the suit property under the MoU dated

28/02/05, who had not entered appearance in that suit by 20th

March,2006 when the suit stood disposed of, filed an application

dated 18.5.2006(being IA No.6399/06) in CS(OS) 353/2006 seeking

setting aside of the consent decree dated 20/03/06 alleging that no

assignment of his rights under the MOU between him and the

plaintiffs herein and late Sanjogta Kapoor had taken place in favour of

defendant no. 1 herein(Rajesh Kumar). It appears that by that time

some disputes had arisen between defendants 1 and 2 herein in respect

of the Memorandum of Understanding dated 20/04/05 executed

between them. The said application of R.S.Chhabra was, however,

dismissed vide order dated 05.02.08. That stand of defendant no.2

herein appears to have led the plaintiffs to file this suit seeking a

declaration to the effect that the compromise agreement dated

17.3.2006 in CS(OS) 353/2006 in the case titled as "R.S. Chhabra v.

Gopal Krishan Kapoor" was void and for setting aside the

compromise decree dated 20.3.2006. It has been alleged by the

plaintiffs that the defendant nos. 1and 2 in connivance and collusion

with each other are depriving the plaintiffs from the full enjoyment of

the property. The grounds put forth in the plaint for setting aside of

the consent decree dated 20/03/06 are that the defendant no. 1 had

fraudulently concealed in the plaint in the suit filed by him that the

alleged assignment of the MOU dated 28/02/02 in his favour by

defendant no.2 had not in fact taken place. It is further alleged that

defendant no.1 had in fact no financial capacity also to pay the sale

consideration to the plaintiffs herein and late/ Sanjogta Kapoor, the

vendors, and that is why he had been putting obstacles in the

conversion of the suit property from lease-hold to free-hold since on

that being done he would have become liable to pay the entire unpaid

sale consideration. It was also claimed that defendant no.1 herein had

played fraud not only on the plaintiffs but also on the Court in

obtaining a compromise decree in the suit filed by him. The plaintiffs

have also pleaded that they always had the intentions to honour their

commitment under the MoU dated 28/02/05 and to show their bona

fides in this regard the following averments were made in para no.40

of their plaint:

"40. That in the facts and circumstances set out herein above, it would be just, proper and equitable in case this Hon‟ble Court were to direct the Defendant No.1 and/or Defendant No.2 to make the outstanding payments in respect of the suit property forthwith, on the assurances of the plaintiffs that as and when the conversion process is complete, the required documentation such as the Deed of Sale etc. would be executed in favour of Defendant No.1/Defendant No.2. It is submitted that such a process would not only be equitable, but also test the bona-fides of the Defendant No.1 and Defendant No.2. In the alternative it is suggested that this Court sets aside the MOU-1 and MOU-2 and the compromise decree dated 20.03.2006."

On the aforesaid averments this suit was filed. In the prayer

paragraph of the plaint the prayers made by the plaintiffs were for a

decree of declaration declaring the compromise agreement dated

17.3.2006, based on which the compromise decree was passed in Suit

No. 353/2006, as unenforceable and void and also for setting aside

compromise decree dated 20.3.2006 in that suit. It was also prayed

that all the agreements between the plaintiffs and defendants be

declared as void.

4. The plaintiffs also filed I.A. no. 14573/07 alongwith the plaint

which is to be decided by this order, praying for staying the operation

of the judgment and decree dated 20.3.2006 passed in CS(OS) 353 of

2006, for the execution of which decree the defendant no.1 herein had

already filed an execution petition, and also to restrain defendants

from creating any third party interest in the suit property.

5. The suit and the application for ad interim injunction are being

contested by defendants 1 and 2 and both of them have filed separate

written statements. Defendant no.1 has contested this suit, inter-alia,

on the grounds that the plaintiffs had been blackmailing him to sell the

property to some other party due to appreciation in the value of the

property and are, therefore, creating hurdles in implementation and

enforcement of the agreement to sell as also the compromise entered

into between them. It was also claimed that there was valid assignment

of rights under the MoU dated 28/02/05 in his favour by defendant

no.2 herein and further that the compromise decree in the suit filed by

defendant no.1 was valid and lawful and no fraud had been played

either on the plaintiffs herein or on the Court for obtaining the

compromise decree and further that defendant no.1 was always ready

to pay the balance sale consideration subject to the plaintiffs

complying with their part of the agreement to sell.

6. The defendant no.2 has contested the suit on the ground that the

plaintiffs have filed this suit in collusion with defendant no.1 who had

not performed his part under MoU dated 20/04/05 between defendants

1 and 2 and so that MoU had become inoperative and unenforceable

and defendant no.1 herein had been left with no enforceable right in

the suit property based on MoU dated 20/04/05 when he filed the suit

and had obtained compromise decree in that suit at the back of

defendant no.2 herein. The defendant no. 2 also filed a counter claim

praying for a declaration that the decree dated 20.03.2006 passed in

CS(OS) 353 of 2006 is invalid, inoperative and unenforceable as also

for a decree of specific performance of agreement to sell (MoU) dated

28.2.2005 against the plaintiffs and defendant nos. 3-6 , the legal heirs

of Smt. Sanjogta Kapoor, for transferring the title in respect of the suit

property in his favour. He has averred that he was always and is still

ready to pay the balance sale consideration to the plaintiffs and the

legal heirs of late Smt. Sanjogta Kaoor, defendants 3-6 herein. In the

alternative, he has also prayed for damages to the tune of Rs.

3,50,00,000/- with interest @ 18 % per annum. I.A. no. 5519/08 has

been filed by the defendant no.2 alongwith his counter-claim praying

for restraining the plaintiffs as well as the defendant nos. 3-6, legal

heirs of late Smt. Sanjogta Kapoor, from selling or in any way

transferring or creating any third party interest(s) in the suit property.

7. I have heard the arguments advanced by the learned counsel for

the plaintiffs and the contesting defendants 1 and 2 on the two

applications under Order XXXIX Rules 1 and 2 CPC which are now

being disposed of by this common order. Before proceeding further it

may be noticed here that during the course of hearing on these two

applications counsel for the plaintiffs as well as defendant no.1 had

volunteered that till the disposal of these applications no third party

interest shall be created by them in respect of the suit property.

Counsel for defendant no.1 had also stated that defendant no.2 shall

also not proceed with his execution petition in respect of the

compromise decree dated 20/03/06.

8. From the foregoing narration of facts it is evident that the

execution of the first MoU dated 28/02/05 between the plaintiffs

herein and defendants 3-6, who are the legal heirs of Smt. Sanjogta

Kapoor who has died 16/07/06, as the vendors and defendant no.2

herein as the purchaser of the suit property is an admitted fact in this

suit. Similarly it is an admitted fact that the defendant no.2/vendee had

assigned his rights under the MoU dated 28/02/05 in favour of

defendant no.1 herein vide MoU dated 20/04/05 as also the fact that

after the said assignment defendant no.1 had paid some money also to

Smt. Sanjogta Kapoor towards sale consideration. The plaintiffs herein

and Smt Sanjogta Kapoor had recognized the assignment of the rights

by defendant no.2 in favour of defendant no.1 arising out of first MoU

dated 28/02/05. Even in the present suit the plaintiffs have maintained

that they were always willing to honour their commitments under the

MoU dated 28/02/05 and in fact, as noticed already, in the plaint they

have also pleaded that to test the bona fides of defendants no.1 and 2

should be directed to make the balance payment of the sale

consideration and then they would execute the sale deed. So, then

where is the question of plaintiffs claiming an injunction that the

defendant no.1/decree-holder should not execute the decree dated

20/03/06 passed in the suit for specific performance filed by him.

9. In my view, in view of the admitted facts noted above there is

no prima facie whatsoever in favour of the plaintiffs for the grant of

any ad- interim injunction in their favour. It is their claim that in his

suit defendant no.1 had misrepresented that he had a valid assignment

of rights as vendee of the suit property in his favour by defendant no.2

herein when, in fact, he had no valid assignment in his favour which

was evident from the fact that immediately after the disposal of his suit

as compromised defendant no.2 herein, who was defendant no.6 in that

suit, had filed an application in that case for setting aside if the decree

as the plaintiff R.S.Chhabra had no subsisting valid assignment of

rights in his favour in respect of the suit property. In my view, if the

plaintiffs had any challenged to the claim of the defendant no.1 in his

suit they should have contested that suit but they did not do that and

instead without even filing of written statement in that suit arrived at a

compromise with the plaintiff there. That shows that they had admitted

the claim of the plaintiff in that suit regarding the assignment of rights

in his favour under the MoU dated 28/02/05 and so just because now

defendant no.2 has started claiming that the MoU between him and

defendant no.1 herein had ceased to be enforceable because of some

breach of the terms committed by defendant no.1 herein the plaintiffs,

prima facie, have no justification to contend that the decree dated

20/03/06 should not be allowed to be executed which was passed on

their request also. Prima facie, there appears to be no case of fraud

made out, as has been claimed in the plaint of the present suit. When

there is no prima facie case made out there is no question of granting

any ad-interim injunction to the plaintiffs. And since they have never

challenged the MoUs dated 28/02/05 and 20/04/05 and even now are

claiming that if they are paid the balance sale consideration either by

defendant no.1 or by defendant no.2 they would execute the sale deed

they would also not suffer any loss, much less irreparable loss, if

injunction as prayed for is not granted. I am also of the view that even

balance of convenience is not in favour of grant of any injunction in

favour of the plaintiffs. For getting an ad interim injunction a plaintiff

has to make out a prima facie case, has to show that he shall suffer

irreparable loss if injunction prayed for is refused and further that

balance of convenience is also in favour of grant of injunction. All the

three conditions must be satisfied but in the present case none of them

is satisfied. So, the plaintiffs‟application under Order XXXIX Rules 1

and 2 C.P.C. is dismissed.

10. Coming now to the application of the defendant no.2/counter-

claimant for ad interim injunction I find that even he has no case for

the grant of any ad-interim injunction. It is his own case that he had

assigned all his rights under the MoU dated 28th February, 2005 with

the plaintiffs herein and the deceased Smt. Sanjogta Kapoor in favour

of defendant No.1 herein vide separate MoU dated 20th April, 2005.

Thereafter, till around March 2006 when he filed an application in the

suit of defendant No.1 herein for recalling the compromise decree in

question he does not appear to have raised any dispute with defendant

No.1 herein regarding the breach of any obligation by him under the

MoU dated 20th April, 2005. It is also the case of the defendant

No.2/counter claimant that there was a specific clause in the MoU

dated 28th February, 2005 to the effect that he could assign his

rights/interests under that MoU in favour of any third party and the

vendors could have no objection thereto. The plaintiffs herein as well

as late Smt. Sanjogta Kapoor, have also never disputed the right of

defendant No.2 to assign his rights under the MoU dated 28 th

February, 2005. Now, defendant No.2/counter claimant in his written

statement-cum- counter claim has pleaded that defendant No.1 herein

had not strictly complied with the conditions stipulated in the MoU

dated 20th April, 2005 and consequently the same had become

unenforceable, inoperative and void. However, it has not been spelt

out in the counter claim as to what were the conditions stipulated in

the MoU dated 20th April, 2005 and which of those conditions had

been breached by defendant No.1 herein. In any event, the fact

remains that till date the MoU dated 20th April 2005 between

defendants 1 and 2 has not been got cancelled by defendant No.2

herein by having recourse to legal remedies in that regard. That MoU,

therefore, cannot be avoided by defendant No.2 in the manner in

which he is seeking to avoid it in the present suit. His prayer in the

counter claim to direct the plaintiffs and the legal heirs of the deceased

Smt. Sanjogta Kapoor who execute the Sale Deed in respect of the suit

property in his favour as per the MoU dated 28 th February, 2005. In

my view, prima facie, so long as the MoU dated 20th April, 2005

between defendants 1 and 2 under which defendant No.2 has assigned

his rights under the MoU dated 28th February, 2005 which includes

even the right to claim specific performance of contract in favour of

defendant No.1 he has no right to claim specific performance of the

agreement to sale dated 28th February, 2005 and consequently he is not

entitled to an interim injunction restraining the plaintiffs and the legal

heirs of deceased Smt. Sanjogta Kapoor from transferring the suit

property to any third party which, they even otherwise cannot do so

long as the compromise decree passed in the suit of defendant No.1 is

there. Since, the defendant No.2 had within a couple of months of the

execution of MoU dated 28th February, 2005 assigned his rights under

that MoU in favour of defendant No.1 without himself making the

payment of entire sale consideration to the vendors and getting the sale

deed executed in his own name it is clear that he was really not

interested in going ahead with the purchase of the suit property and so

he would not suffer irreparable loss in case the ad interim injunction as

prayed for by him is refused. Since there is a valid decree in favour of

defendant No.1 herein the balance of convenience is also against the

grant of any injunction which would have the effect of nullifying the

decree dated 20th March, 2006. The defendant No.2 is also claiming

setting aside of the compromise decree dated 20th March, 2006 in

CS(OS) No. 353/2006 but, prima facie, the defendant No.2 has no case

for getting that relief in the present case since that decree was not

against him. That decree had been passed on the basis of the

compromise arrived at between the plaintiff of that suit (defendant

No.1 herein) and defendants 1 to 5 in that suit who were plaintiffs in

the present suit and the deceased Smt. Sanjogta Kapoor. In the joint

application under Order XXIII Rule 3 CPC filed in that suit also it had

been claimed that the suit may be decreed against defendants No.1 to 5

(plaintiffs herein) and the deceased Smt. Sanjogta Kapoor. If at all the

defendant No.2/counter-claimant was feeling aggrieved for any reason

by the compromise decree in that suit the remedy for him was to seek

appropriate relief in that suit only and not to file a separate suit for that

purpose and, therefore, prima facie relief claimed in the present

counter-claim for setting aside the compromise decree dated 20 th

March, 2006 cannot be granted to defendant No.2 in view of the

provisions of Order XXIII Rule 3 A CPC which bars filing of a suit

for setting aside of a compromise decree. Learned counsel for

defendant No.2 had submitted that he had moved an application in that

suit also but the same was rejected and so he can get that relief in the

present proceedings. In my view, if the application filed by defendant

No.2 in that suit had been rejected he could have challenged that

decision but could not have filed a separate suit in the form of present

counter claim for the setting aside of the compromise decree in view of

the bar created under Rule 3 A of Order XXIII CPC. Therefore, the

application filed by defendant No.2/counter-claimant is also dismissed.

11. It may, however be, clarified that whatever has been said in this

Order is only on a prima facie view of the matter and nothing observed

herein before would be considered as final expression of views on the

merits of the case.

APRIL 29, 2009                                       P.K.BHASIN,J
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