Shri Gurvinder Singh & Ors vs Mr Maninder Pal Singh & Ors
2009 Latest Caselaw 2546 Del

 *IN THE HIGH COURT OF DELHI AT NEW DELHI

+                OMP 115/2009

%                          Date of decision: 09.07.2009

SHRI GURVINDER SINGH & ORS .......                        Petitioners
                       Through: Mr Rakesh Kumar and Mr Jitendra
                                Kumar, Advocates

                             Versus

MR MANINDER PAL SINGH & ORS                       .... Respondents
                        Through: Mr Satish Kumar, Advocate.

CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

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


RAJIV SAHAI ENDLAW, J.

1. The counsel for the respondents states that the reply has

been filed. However the same is not on record. The counsel for

the petitioners confirms that advance copy of the reply had been

received by him. For the sake of expediency, a photocopy of the

reply filed by the respondents has been taken from the counsel for

the respondents in the Court, perused and kept on record.

2. The respondents had vide Agreement to Sell dated 1st May,

2007 agreed to sell and transfer property No. 7/64, South Patel

Nagar, New Delhi to the petitioners. During course of hearing it

has transpired that the typed copy of the said Agreement to Sell

filed as Annexure A-1 to the petition has certain typographical

errors particularly in Clause 10 thereof relevant for the present

purposes. The counsel for the petitioners has handed over in

Court a photocopy of the said Agreement which is also taken on

record. The said photocopy also obliterates the sale consideration

but is stated to be otherwise complete. The Agreement to Sell

aforesaid in Clause No. 11 thereof provides for reference of

disputes between the parties on any matter relating to the

Agreement or any matter incidental thereto to an arbitrator

appointed mutually by the parties. On enquiry the counsel for the

petitioners states that subsequent to the filing of this petition

notice dated 6th April, 2009 was issued to the respondents to

agree on an arbitrator but the respondents have vide their reply

dated 11th April, 2009 refused to consent to the name suggested

by the petitioners; hence an application under Section 11(6) will

be necessitated.

3. The petitioners have filed this petition contending that the

respondents have refused to sell the property to the petitioners in

spite of the respondents themselves having not complied with

their obligations under the Agreement; it is further contended

that the respondents are threatening to sell or alienate the

property to another. The petitioners claim to be entitled to

enforce the Agreement and to purchase the property and have

thus sought interim measures under Section 9 of the Arbitration

Act, 1996 of restraining the respondents from selling, alienating,

encumbering or parting with possession of the said property.

4. The petition itself states that on failure of the respondents

to, within the stipulated time fulfill their obligations under the

Agreement the petitioners had in terms of the agreement

demanded from the respondents double the amount of earnest

money paid to the respondents. In view of the said statement in

the petition itself and further in view of the dicta of this Court in

Gopal Devi Vs. Kanta Bhatia 54 (1994) DLT 541 (DB) referring

to Adeshir M. Mama Vs. Flora Sassoon AIR 1928 PC 208,

Sundarram Ayyar Vs. K. Jagdeshan AIR 1965 Madras 85 and

Ayissabi Vs. Gopala Konaa AIR 1989 Kerala, 134 and Madan

Lal Bansal Vs. Roshan Lal Singla 153 (2008) DLT 278 holding

that where plaintiff had prior to institution of suit for specific

performance issued notice claiming double the amount of earnest

money, the plaintiff is not entitled to the relief of specific

performance, it was put to the counsel for the petitioners at the

outset as to how the petitioners could be said to be having a

prima facie case for specific performance and for the reason

whereof the respondents should be restrained from dealing with

the property. It was felt that if the petitioners do not have a prima

facie case for specific performance, as held in the judgments

aforesaid, they are not entitled to the relief of injucting the

respondents from selling or dealing with the property; the only

claim of the petitioners then would be for recovery of double the

amount of earnest money.

5. The counsel for the petitioners has contended that (i) the

respondents have in their reply dated 24th February, 2009

contended that no agreement exists between the parties and the

earnest money stands forfeited. The said matter has to be

adjudicated by the arbitrator and the respondents are entitled to

the relief of declaration under Section 34 of the Specific Relief Act

from the arbitrator that the agreement subsists; (ii) the petition

under Section 9 can be filed either during pendency of the

proceedings or even after the award in the event of the

petitioners succeed in obtaining the declaration that the

agreement subsists, they would be entitled to purchase the

property and if the property is sold by the respondents the claim

of the petitioners before the arbitrator for the aforesaid

declaration would be prejudiced; (iii) the petitioners had while

making a claim for double the amount of earnest money had in the

alternative also stated that they were entitled to the relief of

specific performance also.

6. For appreciation of the aforesaid contentions of the counsel

for the petitioners it is necessary to set out Clause 1, 9 (relied

upon by the counsel for the respondents) and 10 of the

Agreement.

"1. That the total sale consideration has been fixed by both the parties at a sum of Rs. 1,95,00,000/- (Rupees one Crore and Ninety Five Lakhs Only). That the FIRST PARTY has received a sum of Rs. 20,00,000/- (Rupees Twenty Lakhs Only) from the SECOND PARTY as an Earnest Money on 1st May, 2007 for which separate Receipt has been executed and the balance amount of Rs. 1,75,00,000/- (Rupees One Crore and Seventy Five Lakhs Only) will be paid by the SECOND PARTY to the FIRST PARTY within 60 (Sixty) days of this Agreement subject to free holding of property by L&DO, New Delhi within thirty days.

9. That uptill making full and final payment the SECOND Party shall not claim any right, title or interest in the property and shall not demand possession of any part or portion of the property from the FIRST PARTY.

10. That if the FIRST PARTY infringes the terms and conditions of this agreement then FIRST PARTY will be liable to pay the double amount of the earnest money to the second party and if the balance payment as agreed above is not paid by the SECOND PARTY within scheduled time then the amount paid as Earnest Money will be treated as forfeited and the agreement shall stand cancelled."

7. At this stage, the contention in the reply of the counsel for

the respondents, of the respondents having taken steps for

conversion of the leasehold rights in the land underneath the

property into freehold and of the same having not taken place in

spite of the best efforts of the respondents and of the Agreement

having become unenforceable upon freehold conversion having

not happened, may also be noticed. It has also been contended by

the counsel for the respondents in the Court that the petitioners

in terms of Clause 9 (supra) of the Agreement without making the

entire payment cannot claim any right or interest in the property.

8. As far as the contention of the counsel for the petitioners of

the petitioners having while, claiming double the amount of

earnest money, also claimed the right of specific performance is

concerned, the same is not in terms of the letter dated 10th July,

2007 of the petitioners annexure A-5 to the petition. The said

letter is as under:-

"To Sh. Maninder Pal Singh Sh. Jivanjyot Singh Sh. Jawahar Jyoti Singh Smt. Sweety Singh

7/64, South Patel Nagar New Delhi AR-110008.

Sir, As per Agreement dated 01.05.2007, you were suppose to handover the free hold papers of Property No. 7/64, South Patel Nagar, New Delhi-110008, within 30 days from the Agreement i.e. 01.07.2007 and we were suppose to make payment within 60 days i.e. 01.07.2007, subject to receiving of free hold papers till 01.06.2007.

But till today you have not handed over the free hold papers and came forward to complete the deal. Even we reminded you vide speed post letter dated 21.06.2007.

Since you have failed to honour the Agreement, you are requested to pay the Double amount of earnest money i.e. Rs. 40,00,000 (Forty Lakhs) at the earliest, in orders to avoid moving to Court.

Thanks S/d

1. Gurvinder Singh S/d

2. Puran Chand Ahuja"

9. The counsel for the petitioners has contended that since the

petitioners have in the said letter while claiming double the

amount of earnest money amounting to Rs. 40 lacs also stated

that the said amount be paid "in order to avoid moving the Court",

the said words mean that if the amount of Rs. 40 lacs was not paid

the petitioners would sue for specific performance.

10. That does not appear to be the literal meaning of the letter.

The petitioners have in the said letter unequivocally demanded

double the amount of earnest money and the reference therein to,

else the petitioners moving the Court can only be for the purposes

of recovery of the said amount.

11. I may notice that Clause 10 of the Agreement also does not

vest the discretion in the petitioners to, upon infringement by the

respondents of the terms and conditions of the Agreement either

to claim double the amount of earnest money or to claim the relief

of specific performance. The same only provides for the liability of

the respondents to pay double the amount of earnest money in the

event of breach of the agreement by the respondents. This Court

in Suresh Aggarwal Vs. Satinder Jain 92 (2001) DLT 82 has

held that when the agreement is such, no interim relief

restraining sellers from dealing with the property can be granted.

The petitioners having taken a categorical stand in the said letter

of the respondents being in breach and of demanding the double

amount of earnest money in terms of the agreement, in view of

the law aforesaid are not entitled to injunct the respondents from

selling the property.

12. The counsel for the petitioners has also drawn attention to

the reply dated 12th July, 2007 of the respondents to the aforesaid

letter dated 10th July, 2007. In the said reply the respondents

apologized for the delay and assured the petitioners of having

taken and still willing to take all steps for freehold conversion and

also requested the petitioners not to move the Court.

13. The subsequent correspondence i.e. the letter dated 14th

October, 2008 of the petitioners and the legal notice dated 11 th

February, 2009 got sent by the petitioners may also be noticed. In

the letter dated 14th October, 2008 the petitioners communicated

to the respondents that the respondents had been unable to

complete the deal in spite of their assurances and proposed that

the respondents take the balance amount as per the Agreement

and hand over vacant physical possession without freehold

conversion. The petitioners in the legal notice dated 11th

February, 2009 in para 8 reiterated that the respondents upon

breach of agreement had become liable to pay double the amount

of earnest money to the petitioners together with the damages

suffered by the petitioners for breach of contract by the

respondents but in subsequent para 9 asserted their right to

purchase the property.

14. Section 16 of the Specific Relief Act requires the claimant of

the relief of specific performance to aver and prove that he has

always been ready and willing to perform his part of the

agreement. From the conduct aforesaid of the petitioners of

demanding double the amount of earnest money, it transpires that

the petitioners at least at one point of time were not interested in

the relief of specific performance and were interested only in

claiming double the amount of earnest money in terms of the

Agreement and prima facie the same shows the petitioners not to

be satisfying the requirement of Section 16 of the Act.

15. As far as the contention of the counsel for the petitioners of

being entitled to the relief of declaration is concerned, the

alternative efficacious remedy of specific performance being

available to the petitioners, the petitioners cannot get the relief of

declaration if they are not found to be entitled to the relief of

specific performance.

16. The ingredients required to be satisfied under Section 9 of

the Act are the same as in Order 39 Rules 1 & 2 of the CPC and

the same parameters apply. The petitioners having not found to

be having a prima facie case for specific performance are not

found entitled to the interim relief claimed. In the circumstances,

no case of irreparable injury to petitioners, also arises. The

balance of convenience is also in not injuncting the respondents

from selling the property, in as much as if the petitioners have no

right to purchase the same, the respondents will suffer more of

restrained from dealing with the property.

17. Since the parties are still to arbitrate, it is not felt necessary

to deal with the contention of respondents of the Agreement

having become infructuous or unenforceable on freehold

conversion having not happened within thirty days thereof.

18. The petition is dismissed, however with no orders as to

costs. It is clarified that any observation herein shall not affect

the final adjudication of the matter by the arbitrator.

IA No. 3217/2009

The petition having been disposed of, this application has

become infructuous and is dismissed.

RAJIV SAHAI ENDLAW, J July 09, 2009 rb