Rajesh Kumar vs Gopal Krishan Kapoor & Ors
2009 Latest Caselaw 2844 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI


+     F.A.O. (OS) no. 292/2009 with CMs 9685-86 of 2009

                                Reserved on: 20th July, 2009

                               Pronounced on: 27th July, 2009.


#     RAJESH KUMAR                          ........Petitioner



!     Through:             Mr. N.N. Aggarwal, Advocate
                           With Mr. Kapil Gupta, Advocate,


                    VERSUS


$     GOPAL KRISHAN KAPOOR & ORS......Respondents


^            Through:      Mr. Sanjeev Sachdeva, Advocate
                           with Mr. Preet Pal Singh, Advocate

CORAM:-


THE HON'BLE MR. JUSTICE VIKRAMAJIT SEN
THE HON'BLE MR. JUSTICE V.K.JAIN



      1. Whether Reporters of Local newspapers may be

          allowed to see the Judgment? Yes.

      2. To be referred to the Reporter or not? Yes.

      3. Whether the Judgment should be reported in the

          Digest? Yes.




F.A.O. (OS) no. 292/2009                                  Page 1 of 13
 V.K.Jain, J.

1. This is an appeal against the order of the learned Single

Judge dated 29th April, 2009, passed in Suit No.691/2007, whereby

he has dismissed the application of the appellant/defendant No.2

under Order XXXIX Rule 1 and 2 of CPC.

2. The facts giving rise to the filing of the appeal are briefly as

follows: The appellant, vide a Memorandum of Understanding

dated 28th February, 2005, entered into an agreement to purchase

property No.14-B/14-C, Bazar Marg, Old Rajinder Nagar, New

Delhi-110060 from respondents No. 1 to 4 and late Smt. Sanjogta

Kapoor, deceased mother of respondents No. 6 to 9 (hereinfatter

referred to as „Sellers‟), for a total sale consideration of Rs. 5.2

crores and paid a sum of Rs. 55 lakhs to them as earnest money. A

second payment of Rs. 25.00 lacs was made to them on March 13,

2005 followed by another payment of Rs. 20.00 lacs.

3. On April 20, 2005, the appellant entered into a

Memorandum of Understanding with respondent No. 5 Shri R.S.

Chhabra, agreeing to sell, transfer, convey and assign the

aforesaid property to Shri R.S. Chhabra for a total consideration of

Rs. 5.20 crores on the terms and conditions as contained in the

Memorandum of Understanding dated 28th April, 2005.

Respondent No. 5 Shri R.S. Chhabra paid a sum of Rs. 80.00 lacs

to the appellant. The balance amount of Rs. 20.00 lacs was agreed

to be paid at the time of assignment of agreement by the sellers in

favour of Shri R.S. Chhabra. He also undertook to make efforts so

as to assign the agreement within a period of 10 days. No right

was to be left with the appellant, in the aforesaid property, after

receiving the balance amount of Rs. 20.00 lacs and all his rights

under the Memorandum of Understanding were to be transferred

to Shri R.S. Chhabra. The balance payment of Rs. 4.20 crores was

to be made by respondent No. 5 Shri R.S. Chhabra directly to the

sellers, before the Sub Registrar, after mutation of the property in

their name and its conversion from leasehold into freehold Under

the Memorandum of Understanding, Shri R.S. Chhabra was

entitled to get the sale deed executed from the sellers in his

favour. The possession of the property was to be handed over, by

the sellers, to Shri R.S. Chhabra, after receipt of the sale

consideration and at the time of execution and registration of the

sale deed.

4. A civil suit, being CS (OS) No. 353/06, was filed by

respondent No. 5 against the sellers as well as the appellant,

claiming assignment of rights in his favour by virtue of

Memorandum of Understanding dated 20th April, 2005 executed by

the appellant in his favour. After issue of summons to the

defendants in that suit, the matter was compromised between the

sellers and respondent No. 5 who filed the compromise, in the

court, vide I.A. No. 3182/2006. The suit was decreed, in terms of

the compromise, on March 20, 1006. After receipt of court

summons, the appellant filed an application on May 18, 2006 for

setting aside the compromise decree dated 20th March, 2006.

Later, the sellers also filed a civil suit, being CS (OS) No. 91/2007

seeking a decree for declaring the compromise decree dated 20th

March, 2006 as void. The application filed by the appellant for

setting aside the compromise decree dated 20th March, 2006 was

disposed of vide order dated February 5, 2008 holding that since

the applicant was also a party in CS (OS) No. 691/2007, the

application did not survive for any order.

5. A counter claim seeking declaration that the decree dated

20th March, 2006 passed in CS (Os) No. 3503 of 2006 was invalid

and unenforceable, as well as a decree for specific performance of

the agreement to sell/Memorandum of Understanding dated

28.2.2005 and registration of conveyance deed of the suit property

in his favour or in the alternative, a decree for damages amounting

to Rs. 3.50 crores has been filed by the appellant, who is

defendant No. 2 in civil suit No. 691 of 2007. The plaintiff in suit

No. CS (OS) 691 / 2007 sought an interim injunction against the

execution of the compromise decree dated 20.3.06, whereas the

appellant sought an ad interim injunction restraining the sellers

from selling or transferring the property in question during

pendency of the suit. The learned Single Judge vide impugned

order dated 29.04.2009, dismissed both the applications.

6. Clause VII of the Memorandum of Understanding dated 28th

February, 2005 executed between the appellant on the one hand

and respondent No. 1 to 4 and late Smt. Sanjogta Kapoor on the

other hand, shows that the appellant was specifically granted right

to nominate and assign the Memorandum of Understanding in

favour of any nominee(s) or assignee(s). Therefore, it cannot be

disputed that the appellant could have assigned his rights under

the Memorandum of Understanding, dated 28.02.2005 to

respondent No. 5.

7. A perusal of the Memorandum of Understanding dated 20th

April, 2005 executed between the appellant and respondent No. 5,

which is an admitted document, would show that vide this

document, the appellant had agreed to transfer, convey and assign

and respondent No. 5 agreed to purchase the property in question

for a total consideration of Rs. 5.20 lacs on the same terms and

conditions which were stipulated in the Memorandum of

Understanding dated 28th February, 2005 executed between the

appellant as the First Party and respondent No. 5 and late Smt.

Sanjogta Kapoor as the Second Party. The only obligation cast

upon respondent No. 5 under the agreement was to pay Rs. 1.00

crore to the appellant out of which Rs. 80.00 lacs were paid at the

time of signing of Memorandum of Understanding as

acknowledged in the documents, and the balance amount of Rs.

20.00 lacs at the time of assignment of agreement by the sellers

i.e. respondent NO. 1 to 5 and late Smt. Sanjogta Kapoor in favour

of respondent No. 5. On receipt of the balance amount of Rs.

20.00 lacs, no right in the property was to be left with the

appellant. The appellant is bound by the terms and conditions

contained in the Memorandum of Understanding dated 20th April,

2005 the same remains valid, operational and binding upon him

unless he can show that on account of some breach, committed by

respondent No. 5, the Memorandum of Understanding stands

annulled or cancelled. During the course of hearing before the

Learned Single Judge, the appellant could not point out any such

breach of Memorandum of Understanding dated 20th April, 2005

by respondent No. 5 as would result in cancellation of the

Memorandum of Understanding and would discharge the appellant

from his obligation under the Memorandum of Understanding.

During arguments before us also, the appellant could not point out

any breach of the terms and conditions of the Memorandum of

Understanding dated 20th April, 2005, by respondent No 5. He

merely claimed that since the balance amount of Rs. 20.00 lacs has

not been paid to him, no right accrued in favour of Respondent

No. 5 to get the sale deed executed in his favour and resultantly

the sellers was obliged to sell the property in question to him,

instead of selling it to the Respondent No. 5. As noted earlier, the

balance amount of Rs. 20.00 lacs was payable to the appellant only

on "assignment" of the agreement by the seller i.e. respondent No.

1 to 4 and late Smt. Sanjogta Kapoor in favour of respondent No.

5. The Respondent No. 5 could not have compelled the sellers to

assign the agreement in his favour. In fact, under the

Memorandum of Understanding dated 20th April, 2005, it was for

the appellant to make efforts to get the agreement assigned in

favour of Respondent No. 5 within 10 days. This is not the case of

the appellant that though efforts were made by him for assignment

of agreement in favour of Respondent No. 5, he could not succeed

on account of non cooperation or refusal on the part of Respondent

No. 5. If the appellant did not try to persuade the sellers to assign

the agreement in favour of respondent No. 5 or the sellers did not

assign the agreement in his favour, the blame for this cannot be

put on Respondent No. 5 and it cannot be said that he had

committed breach of the terms and conditions of the Memorandum

of Understanding dated 20th April, 2005 resulting in its

cancellation or termination. Since there was no assignment by the

purchasers in favour of respondent No. 5, there was no occasion

for payment of Rs. 20.00 lacs by respondent No. 5 to the appellant.

Had the sellers assigned the agreement in favour of respondent

No. 5, the appellant would have got Rs. 20.00 lacs from

respondent No. 5 at the time of assignment. But, having executed

Memorandum of Understanding dated 20.4.05, the appellant was

not entitled to sale of the property in question by respondent No. 1

to 5 and late Smt. Sanjogta Kapoor to him. As noted earlier, under

the Memorandum of Understanding dated 20th April, 2005, the

sellers were required to take the balance sale consideration only

from Respondent No. 5, handover vacant possession of property to

him and execute the sale deed in his favour alone. The right to get

the sale deed executed, therefore, came to be vested in respondent

No. 5, and the only right left with the appellant was to get Rs.

20.00 lacs from him.

8. The Memorandum of Understanding did not stipulate

payment of Rs. 20.00 lacs to the appellant by a particular date.

This was not the term of Memorandum of Understanding dated

20.4.05 that if the balance amount of Rs. 20.00 lacs was not paid

to the appellant by respondent No. 5 within a particular time, the

Memorandum of Understanding would stand cancelled or

terminated. The appellant specifically agreed to get balance

payment of Rs. 20.00 lacs only at the time of assignment of

agreement by the sellers in favour of respondent No. 5 and since

the stage of assignment of the agreement in favour of respondent

No.5 never came, there was no occasion for respondent No. 5 to

make the balance payment of Rs. 20.00 lacs to him.

9. The appellant chose to enter into a Memorandum of

Understanding with respondent No. 5, without making the sellers

a party to it and also agreed to receive the balance amount of Rs.

20.00 lacs, on the happening of an event, which was not in control

of respondent No. 5, but, was in the control of the sellers.

Therefore, if the sellers did not come forward to assign the

agreement to sell in favour of respondent No. 5, the appellant has

to abide by the consequences of the term agreed to by him and

respondent No. 5 cannot be made to suffer for this.

10. It was pointed out by learned counsel for the appellant that

the compromise decree was passed without waiting for the suit

summons to be served upon the appellant. In our opinion, nothing

turns on the compromise decree between the sellers and

respondent No. 5 being passed without service of suit summons

upon the appellant. Obviously, the compromise decree between

the sellers and respondent No. 5 does not bind the appellant.

There was no prohibition in law against the appellant entering into

a compromise only with the sellers, without making the appellant a

party to it, if he felt that compromise between him and the sellers

would serve his purpose. Passing of compromise decree, between

respondent No. 5 and the sellers, amounts to respondent No. 5

abandoning the suit as against the appellant. But, it cannot be said

that the compromise decree got vitiated only because the

appellant was not made a party to it.

11. In order to claim injunction against execution of sale deed in

favour of respondent No. 5, despite there being a decree of

specific performance of contract in his favour, the appellant is

required to show, at least, a reasonable prima facie case in his

favour. Since the appellant divested all his rights in favour of

respondent No. 5, the Memorandum of Understanding dated 20th

April, 2005 is specifically stipulated that respondent No. 5 shall be

entitled to get sale deed executed in his favour from respondent

No. 1 to 5 and late Smt. Sanjogta Kapoor, the balance payment

was to be made directly by respondent No. 5 to the sellers and the

possession was also to be handed over by them to respondent No.

5, and more importantly there was no breach of the terms of

Memorandum of Understanding dated 20.4.05 by respondent No.

5, the appellant, in our opinion, is not entitled, either in law or in

equity, to get the suit property sold to him under the

Memorandum of Understanding dated 28.2.2005 executed in his

favour.

12. The sellers having already entered into a compromise with

respondent No. 5, the appellant having already received Rs. 80.00

lacs from respondent No. 5 and having not made any payment to

the sellers, after executing of the Memorandum of Understanding

dated 20.4.05, the balance of convenience is also not in his favour.

13. The relief of injunction is an equitable relief. The party

seeking injunction must show equity in his favour. The appellant

having divested all his rights in favour of respondent No. 5, and

having agreed to accept the balance amount of Rs. 20.00 lacs only

at the time of assignment of the agreement in favour of respondent

No. 5 and the stage for payment of Rs. 20.00 lacs to him by

respondent No. 5 having not come as yet, there is no equity in

favour of the appellant, to get the property sold to him and not to

respondent No. 5. On the other hand, respondent No. 5 having

already paid Rs. 80.00 lacs to the appellant and there being no

default of the terms of Memorandum of Understanding dated

20.4.05 by him, followed by a compromise decree between him

and the sellers, we feel that the equity is rather in favour of

respondent No. 5 getting the sale deed executed in his favour,

though, of course, after payment of balance amount of Rs. 20.00

lacs to the appellant.

14. There is yet another reason why we would not like to

interfere with the order passed by learned Single Judge; as held by

hon‟ble Supreme Court in Wander Ltd & Anr. -vs- Antox India

Private Limited; 1990 (Suppl) SCC 727; in appeal before the

Division Bench against the exercise of discretion by Single Judge;

Appellate Court will not interfere with the exercise of discretion of

the court in the 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 has ignored the settled principle of law. The view taken by

learned Single Judge in refusing the injunction sought by the

appellant cannot be said to be arbitrary or perverse and has, in

fact, been arrived at, applying settled principles of law in the

matter of grant of interim injunction.

15. However, in all fairness, the appellant must get the amount

of Rs. 20.00 lacs before the sale deed is executed in favour of

respondent No. 5. During the course of arguments the learned

counsel for the respondent had offered to pay Rs. 20.00 lacs to the

appellant. The respondent shall remain bound by the offer.

The Appeal stands dismissed accordingly. Trial court records

be sent back forthwith.

(V.K. JAIN)

JUDGE

(VIKRAMAJIT SEN)

JUDGE

July 27, 2009.

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