Citation : 2009 Latest Caselaw 1961 Del
Judgement Date : 11 May, 2009
*IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS)1894/2008 & IA.No.10992/2008(of
the plaintiff u/O 39 Rules 1 & 2 CPC)
% Date of decision: 11 May, 2009
RAVINDER SINGH & ANOTHER ....... Plaintiffs
Through: Mr.A.S. Chandhiok, Sr Advocate with
Mr Jasmeet Singh, Mr Saurabh Tiwari and
Mr Sameer Kulshreshtha, Advocates.
Versus
NARESH KUKREJA ....... Defendant
Through: Mr Sandeep Sethi, Sr Advocate for the
defendant No.1.
AND
CS(OS) 46/2009 & IA.No.342/2009(of the plaintiff u/O 39
Rules 1 & 2 CPC) IA.No. 2424/2009(of the defendant No.1
u/O 39 Rule 4 CPC) and IA.No. 4240/2009(of the
defendant No.1 u/S 151 CPC)
RAVINDER SINGH & ANOTHER ...... Plaintiffs
Through: Mr.A.S. Chandhiok, Sr Advocate with Mr
Jasmeet Singh, Mr Saurabh Tiwari and Mr
Sameer Kulshreshtha, Advocates.
Versus
MANOJ KUMAR PRUTHI AND ANR ..... Defendants
Through: Mr Sandeep Sethi, Sr Advocate for the
defendant No.1.
Mr. Amit S Chadha, Sr Advocate with Mr Kunal
Sinha, Advocate for the defendant No.2.
CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1. Whether reporters of Local papers may
be allowed to see the judgment? Not necessary
2. To be referred to the reporter or not? Not necessary
3. Whether the judgment should be reported
in the Digest? Not necessary
CS(OS) 1894/08 & CS(OS) 46/09 Page 1 of 17
RAJIV SAHAI ENDLAW, J.
1. The applications for interim relief in both suits are for
consideration. The plaintiffs in both suits are the same. The sole
defendant in the first suit (CS(OS) No.1894/2008) is the defendant
No.2 in the second suit (CS(OS) No.46/2009).
2. The first suit has been filed for specific performance of an oral
agreement to sell of 15th September, 2005 of shop No.6-A Khan
Market, New Delhi. It is inter alia the case of the plaintiffs that Shri
M.R. Kukreja, father of the sole defendant in the first suit (hereafter
called owner) was the owner of the said shop; on his demise on 9th
December, 1986 the shop devolved on his wife Smt Sheela Devi; on
demise of Smt Sheela Devi on 5th May, 1991 the owner inherited the
said shop on the basis of her Will; that the owner applied for probate
of the said Will which was granted vide order dated 10th May, 2005;
that the owner approached the plaintiffs to sell the said shop and
after detailed negotiations an oral agreement of sale and purchase of
the said shop was reached on 15th September, 2005, for a total
consideration of Rs 1 crore; that it was agreed that the owner would
get the shop converted from lease hold to free hold and obtain the
necessary permission from the L&DO; that the plaintiffs at the time
of oral agreement to sell paid the sum of Rs 4 lacs by cheque issued
on behalf of the plaintiff No.2 by his daughter Ms Gurbani Kaur and
a sum of Rs 6 lacs in cash to the owner; that the owner, however,
kept delaying the matter and on plaintiffs' inquiry handed over to the
plaintiffs correspondence exchanged with the L&DO from which it
seemed that the owner was unable to get the shop mutated in his
name in the L&DO. The plaintiffs further claim that they issued a
legal notice dated 8th May, 2008 calling upon the owner to execute
the sale deed and thereafter on 9th September, 2008 filed the suit for
specific performance.
3. Though the first suit was accompanied with an application for
ex parte interim relief but no ex parte interim relief was granted to
the plaintiffs and notice of the suit and of the application was issued
to the owner for 10th November, 2008. The owner though reported
to be served did not appear before the court on 10th November, 2008
and the suit was adjourned to 31st March, 2009 for framing of issues
and for arguments on the application. Even then no interim relief
was granted to the plaintiffs.
4. The plaintiffs instituted the second suit on 9th January, 2009. It
was stated in the plaint therein that the owner had intentionally
failed to appear before the court on 10th November, 2008 and had
inspite of the pendency of the suit for specific performance entered
into and registered an agreement to sell on 3rd December, 2008 with
the defendant No.1 in the second suit (hereafter called subsequent
purchaser) for a total sale consideration of Rs 75 lacs; that the
plaintiffs had come to know of the said agreement to sell on 24th
December, 2008. The plaintiffs thus sued for declaration that the
agreement to sell dated 3rd December, 2008 executed by the owner
in favour of the subsequent purchaser was null and void and for
restraining the subsequent purchaser who had in pursuance to the
registered agreement to sell dated 3rd December, 2008 (supra) been
put into possession of the shop from alienating, encumbering or
parting with possession thereof. In the second suit vide ex parte
order dated 13th January, 2009 the defendants therein were directed
to maintain status quo qua suit property. The said order continues
till date.
5. The owner has denied any agreement to sell with the plaintiff.
Though the receipt of cheque for Rs 4 lacs is admitted but it is
pleaded that it was for sale of certain jewellery and other antique
items to Ms Gurbani Kaur who had admittedly issued the cheque.
The receipt of Rs 6 lacs in cash is denied. It is further his case that
the shop had been let out by his father Shri M.R. Kukreja to one Shri
Balwant Rai Pruthi in the year 1973 at a rent of Rs 425/- per month.
6. The subsequent purchaser has pleaded that, he is the son of
the aforesaid Shri Balwant Rai Pruthi. He falsifies the case of
plaintiff of an oral agreement to sell and pleads himself to be a
purchaser under an agreement of a date prior to the date of
agreement alleged by the plaintiff in the following manner:-
(i) That the shop was originally owned by Sh. M. R. Kukreja
who died bequeathing the shop to his wife Smt. Sheela
Devi.
(ii) Smt. Sheela Devi died on 5th May, 1991 leaving a son
Suresh Kukreja and another son namely the owner
herein, besides another son and daughter.
(iii) Sh. Suresh Kukreja s/o Sheela Devi in September, 1991
filed a petition in the court of the District Judge Delhi for
probate of a registered Will dated 20th July, 1990 of Smt.
Sheela Devi, whereunder the said shop was bequeathed
to said Sh. Suresh Kukreja.
(iv) the owner filed objections to the said probate petition,
claiming a Will dated 21st March, 1991 of Smt. Sheela
Devi in his favour and whereunder inter-alia the shop had
been bequeathed to him.
(v) The aforesaid probate proceedings remained pending,
when on 6th March, 2000, the owner withdraw his
objections and gave no objection to the probate sought
by his brother Suresh Kukreja. The said action of the
owner is attributed to an agreement also dated 6th
March, 2000 between the owner and Suresh Kukreja to
equally divide the shop between themselves.
(vi) Sh. Suresh Kukreja vide agreement to sell dated 11th
October, 2000 agreed to sell the shop to Balwant Rai
Pruthi for Rs.37,50,000/- and received advance of Rs.2
lac by pay order, with the balance payable after grant of
probate and receipt of other clearances.
(vii) However, Suresh Kukreja died on 2nd May, 2001. The
owner on 7th August, 2001 filed application in probate
proceedings to the effect that on demise of Suresh
Kukreja the proceedings stood abated; that he had
earlier withdrawn his objections because of agreement
aforesaid with Suresh Kukreja but the widow of Suresh
Kukreja was wriggling out of the agreement and thus he
was filing fresh objections on the basis of latter Will
dated 21st March, 1991 of Smt. Sheela Devi in his favour.
(viii) The owner also filed a separate case for probate of Will
dated 21st March, 1991 of Smt. Sheela Devi.
(ix) The legal representatives of Suresh Kukreja in July, 2004
withdrew the proceedings for probate of Will dated 20th
July, 1990 of Smt. Sheela Devi and admitted correctness
of Will dated 21st March, 1991 set up by the owner.
(x) Vide judgment dated 10th May, 2005 probate was granted
of Will dated 21st March, 1991 whereunder shop was
bequeathed to the owner. Documents have been filed in
support of all the above.
(xi) The father of subsequent purchaser, seing in aforesaid
on attempt to defeat the agreement dated 11th October,
2000 of sale of shop to him, instituted in this court a suit
for specific performance being CS(OS) No.1320/2006
and which is stated to be still pending. Vide order dated
19th June, 2006 in this suit the owner was restrained from
selling, alienating or transferring the shop.
(xii) The owner himself had entered into a registered
agreement to sell dated 19th July, 2004/25th February,
2005 w.r.t. the said shop with Chawlas but the same was
repurchased by the owner on 3rd December, 2008.
(xiii) The father of subsequent purchaser having died, the
agreement dated 3rd December, 2008 was ultimately
executed by owner in favour of subsequent purchaser.
(xiv) The subsequent purchaser pleads the owner to be in
collusion with the plaintiff.
7. In the aforesaid background, the applications for interim relief
in the two suits are for consideration. The defendant No.1 has also
applied for permission to let out the property. It was stated on 30th
March, 2009 that the shop was proposed to be let out at a minimum
rent of Rs. 3 lacs per month. Since the counsel for the plaintiff had
on that date sought adjournment it was directed that the plaintiff
should file an undertaking to, in the event of the application being
ultimately allowed, compensate the defendant No.1 with rent at Rs 3
lac per month w.e.f. 30th March, 2009 and till the date of the said
application being disposed of. The said undertaking has not been
filed as yet.
8. The senior counsel for the plaintiffs has at the outset given two
proposals. It is stated that the plaintiffs are ready to pay to the
subsequent purchaser Rs 75 lacs, for which consideration he claims
to have agreed to purchase the shop, subject to being put into
possession of the shop. Alternatively it was stated that the plaintiffs
are willing to take the shop on rent at Rs.3 lac per month which they
will continue to pay to the subsequent purchaser and subject to
further orders in this suit.
9. Neither of the aforesaid proposals of the plaintiffs is
acceptable to the senior counsels for the defendants. It is contended
that the plaintiffs have no case whatsoever and thus the question of
the plaintiffs being entitled to any interim relief does not arise. It is
pointed out that though the plaintiffs have in their complaint to the
Economic Offences Wing of the Delhi Police stated that a receipt had
been executed by the owner of the sum of Rs 10 lacs and the said
receipt was kept with a property broker but neither in the notice
preceding the suit nor in the pleadings in the court any reference
thereto is made. It was argued that the same proved that the
plaintiffs are fabricating the case. The mala fides of the plaintiffs are
also sought to be established by referring to the wrong address of
the defendant No.2 given in the plaint in the first suit so as to avoid
his service and of the wrong report of service having been placed on
the file of the first suit to give an impression on 10th November, 2008
that the owner had been served and on the basis of which
impression, ex parte relief which had not been granted in the first
suit, was obtained in the second suit. It is further contended by the
senior counsel for the subsequent purchaser that the second suit is
misconceived inasmuch as the remedy, if any, of the plaintiffs
against the subsequent purchaser under Section 19 of the Specific
Relief Act is to seek specific performance against him and not to
seek declaration with respect to the documents executed in favour of
the subsequent purchaser. Reliance was also placed of the order
dated 2nd December, 2004 in CS(OS) 82/1997 titled Sardar
Gurbachan Singh Vs Sardar Avtar Singh and the order dated 3rd
January, 2007 in FAO(OS) 293/2004 titled Sardar Avtar Singh Vs
Sardar Gurbachan Singh and arising therefrom, on the aspect of
interim orders in cases of specific performance of oral agreement to
sell. It is contended that the pleadings do not show any agreement
having been arrived at even orally of all the essential ingredients of
an agreement to sell and thus the agreement to sell is unenforceable.
The senior counsel for the owner has taken me through the service
report etc to demonstrate the mischief played by the plaintiffs. It is
also argued that the jewellery, for the sale of which the cheque for
Rs 4 lacs was received from the daughter of the plaintiff No.2 is
disclosed in the letters of administration obtained by the owner. It is
further pointed out that though the plaintiffs had in their complaint
to the Economic Offences Wing referred to earlier agreement to sell
of the owner with the Chawlas but the same was suppressed from
this court.
10. The senior counsel for the plaintiffs in rejoinder relied upon:
(a) Joginder Singh Bedi Vs Sardar Singh Narang AIR 1984 Delhi
319 on the position of a purchaser pendente lite;
(b) Guruswamy Nadar Vs P. Lakshmi Ammal J.T. 2008 (6) SC
555 on the principle of lis pendens and Section 52 of the Transfer of
Property Act;
(c) Maharwal Khewaji Trust Vs Baldev Dass (2004) 8 SCC 488
on the desirability of the court not permitting the nature of the
property to be changed during the pendency of the proceedings;
(d) Bharti Televentures Ltd Vs Bell South International Asia
Pacific Incorporated 88(2000) DLT 87 on oral agreement to sell
being common and as legally efficacious as written contracts;
(e) Sanjay Gupta Vs Smt Kala Wati 2000 IV AD (Delhi) 257
holding that Section 19 (b) of the Specific Relief Act does not protect
a transferee pending litigation.
11. The senior counsel for the owner in sur rejoinder referred to
Ranjeet Combine Vs B.N. Khanna 86(2000) DLT 687 laying down
the principles for grant of interim orders.
12. The aforesaid would thus show that it is not controverted that
the shop should be let out. The question is whether it should be let
out to the plaintiffs even if the plaintiffs are willing to pay the rent
which the subsequent purchaser claims the property can fetch. The
fear of the subsequent purchaser in this regard cannot be said to be
misplaced. The subsequent purchaser is in lis with the plaintiffs as
to the title to the shop. Putting the plaintiffs in possession thereof
even if as a tenant and subject to further orders of the court, would
certainly affect the equities and possibility of the mischief on the
part of the plaintiffs cannot be ruled out. Thus even though the
plaintiffs are willing to pay the same rent, the plaintiffs would be
entitled to be so inducted as a tenant in the property only if found to
be having a prima facie good case.
13. I find the plaintiffs to have failed on this account. There does
not appear to be any explanation whatsoever as to why, if there was
an agreement to sell in favour of the plaintiffs, the same was not
documented, as is the norm. Even where the parties do not enter
into formal agreement, a receipt of advance, mentioning the total
price agreed and time for completion of sale is generally executed.
It is not the case of the plaintiffs that the owner enjoyed any position
of trust qua the plaintiffs. Ordinarily one would expect a person who
is entering into an agreement to purchase the property and who is
parting with consideration not only in cheque but also in cash to at
least take an acknowledgement or receipt of the same. In the
absence thereof, there is nothing for this court to even prima facie
frame an opinion that there was any such agreement and if so what
was the said agreement. We have only the plaintiffs' word to the
effect that the sale consideration agreed was of Rs 1 crores. Merely
because the cheque payment of Rs 4 lacs is admitted and/or merely
because the property was ultimately sold by the owner to a sitting
tenant having protection from eviction under the Delhi Rent Control
Act, would also not help the plaintiffs.
14. No relationship between the two plaintiffs has been disclosed.
Ordinarily one would expect the plaintiffs if intending to jointly
acquire the property to equally share the advance/earnest money
paid. The cheque issued is of neither of the plaintiffs but of the
daughter of the plaintiff No.2. Undoubtedly, the owner has also not
filed any document to show any sale of jewellery and antique of Rs 4
lacs having been affected to the said daughter of the plaintiff.
However, a prima facie view has to be taken of the transaction
alleged by the plaintiffs and which is the subject matter of the suit
and not of the transaction of the sale of jewellery. All that can be
said at this stage is that the possibility of transaction alleged by the
owner against which Rs 4 lacs was received cannot be ruled out and
it cannot be said to be so improbable so as to lead the court to
believe the case of the plaintiffs.
15. The senior counsel for the plaintiffs has in rejoinder also not
furnished any explanation whatsoever qua the money receipt
referred to in the complaint to the Economic Offences Wing. No
replications to the written statements have also been filed inspite of
opportunity.
16. Yet another relevant factor is that the shop was admittedly in
the possession of the subsequent purchaser/his father as a tenant.
The senior counsel for the defendants during the course of hearing
submitted that the market price of the shop today is of Rs 4-5 crores.
The senior counsel for the plaintiffs stated that the shop was agreed
to be sold to the plaintiffs for Rs 1 crore only since the same was
tenanted and the constructive possession thereof was to be delivered
to the plaintiffs as it is. However, what is significant is that the
plaintiffs did not plead the said fact in the plaint and only in response
to the arguments it has been argued that the price was with the
sitting tenant. Not only so, the plaintiffs for considerable time after
alleged oral agreement did not take any step whatsoever. Though
the senior counsel for the plaintiffs argued that the mutation and
freehold conversion was taking time and the owner had furnished
photocopies of the correspondence with the L&DO to the plaintiffs
and the owner have not offered any explanation as to how the
plaintiffs came into possession thereof but in my view, mere
possession by the plaintiffs of the copies of the correspondence of
the owner with the L&DO does not lend any credence to their claim.
Normally the purchaser of immovable property does not wait for a
period of over two and a half years for completion of transaction.
Similarly a seller of immovable property is generally not known to
enter into such a protracted agreement. The trend of price of
property in Delhi and specially in the Khan Market has in the recent
past been upwards only and it is highly improbable that the owner of
the property merely on receipt of 10% of the sale price would freeze
the price of his property. In the normal course, the owner would
have given power of attorney to the purchaser for the purposes of
mutation and freehold conversion and against execution of
registered agreement to sell, execution/registration whereof is not
dependent on mutation or freehold conversion,
received the entire sale consideration.
17. Not only do I find the claim of the plaintiffs to be improbable,
from the history of the shop disclosed by the subsequent purchaser
and borne out from the documents filed, it appears highly
improbable that the owner would have entered into an agreement or
an oral agreement to sell of the shop. The property had already been
agreed to be sold to the father of the subsequent purchaser as far
back as in 2000, though by the brother of the defendant No.2 who at
that time with the consent of the owner was exercising rights as
owner of the shop. It is not as if the father of the subsequent
purchaser had given up his rights. He pursued the agreement by
filing the suit for specific performance. The owner himself had also
agreed to sell half the shop to the Chawlas. I find it difficult to
believe at this stage that the owner in these circumstances would
have entered into an agreement to sell whereunder also he was not
to receive the entire sale consideration immediately from the
plaintiffs.
18. The plaintiffs also could not have agreed to purchase without
any investigation. A prudent purchaser would have enquired from
the tenant in possession. Such enquiries would have revealed the
agreement to sell to tenant. Enquiries at Sub-Registrar of
Assurances would have revealed the registered agreement to sell
with Chawlas. The plaintiffs have not mentioned any of the said facts.
Such conduct of plaintiffs is also found repugnant to the plea of the
plaintiffs of oral agreement.
19. The possibility of specific performance being granted to the
plaintiffs' even if plaintiffs succeed in establishing an oral agreement
is even otherwise remote, in the circumstances. Though the
registered agreement to sell in favour of subsequent purchaser is of
a date subsequent to the date of oral agreement pleaded by the
plaintiffs but the agreement in favour of subsequent purchaser has
its roots in the agreement of 11th October, 2000 which is much prior
to the agreement claimed by plaintiffs. Under Section 48 of the
Transfer of Property Act, latter rights are subject to rights previously
created, where different rights at different times are created and
where all such rights cannot coexist.
20. The counsel for subsequent purchaser has after conclusion of
hearing filed photocopies of following judgments:
(i) Mayawati Vs. Kaushlaya Devi (1990) 3 SCC 1 on
existence of valid, certain, enforceable agreement being
a precondition of grant of relief of specific performance.
(ii) Sheel Gehlot Vs. Sonu Kochar 2006 (IX) AD (Delhi)
169 on oral agreement.
(iii) M/s Aggarwal Hotels P Ltd. Vs. M/s Focus
Properties Pvt. Ltd. 63 (1996) DLT 52 on uncertain,
vague and indefinite agreement.
(iv) Sanjeev Narang Vs. Prism Buildcon Pvt. Ltd. 154
(2008) DLT 508 DB on an agreement to sell on signatures
are disputed and non production of receipt of alleged
cash payment.
(v) M/s Pelikan Estates Pvt. Ltd. Vs. Sh. Kamal Pal
Singh 113 (2004) DLT 290 on oral agreement.
(vi) Holy Health & Educational Society (Regd.) Vs. DDA
80 (1999) DLT 207 on concealment.
However, in light of above, no further discussion on these is
called for.
21. The plaintiffs having not cleared the test of prima facie are not
entitled to the interim relief. The plaintiffs are thus also not found
entitled to preference in the matter of being put into possession of
the shop as the tenant. The subsequent purchaser who has paid Rs
75 lacs for the shop in comparison to the plaintiffs who claim to have
paid Rs 10 lacs only is for this reason also found to have the balance
of convenience in his favour. In any case the plaintiffs cannot be
prejudiced by letting of the shop.
22. The next question which arises is whether the defendants
should be restrained from further alienating the shop and/or
encumbering the same. The plaintiffs having not found to have a
prima facie case, the question of restraining the defendants so also
does not arise.
23. However, that is not the end of the matter. In this case even if
there is no injunction, the principle of lis pendens enshrined in
Section 52 of the Transfer of Property Act applies. Even without any
injunction it is virtually impossible for the defendant in a suit for
specific performance to freely deal with the property. No buyer of
immovable property wants to pay good market price for the property
under litigation or with potential of litigation. I have in K.L. Sethi
Vs S. Kishan Singh in IA.No.5824/2009 in CS(OS)1185/2008
decided on 1st May, 2009 given detailed reasons of a need for this
court to in such cases ensure that the plaintiffs in such suits, in the
event of ultimately being found unsuccessful in their claim,
compensate the defendants for the losses suffered by the defendants
owing to the mere pendency of the suit. As discussed in the said
judgment, there is a need to obtain an undertaking from the
plaintiffs to pay damages to the defendants upon being unsuccessful
in the suit. The defendants cannot be compelled to litigate for
claiming damages from the plaintiffs, after the termination of the
proceedings. Obtaining an undertaking from the plaintiffs is
meaningless unless it is specific. The question which thus arises is
as to what should be the measure of damages with which the
plaintiffs in this case should compensate the subsequent purchaser
in the event of their case being found false. The subsequent
purchaser even if desirous of selling the property at the market price
today of Rs 4-5 crores would be unable to fetch the same for the
reason of pendency of the suit. However, since the subsequent
purchaser has been permitted to let out the property I feel that three
years rent or the price at which the plaintiff claims to have an
agreement to sell should furnish a good estimate of the damages
with which the plaintiffs should compensate the defendants. Thus
while dismissing the applications of the plaintiffs for interim relief
and allowing the applications of the defendants for vacation of the ex
parte order and for permitting them to let out the property, I also
direct the plaintiffs to file the undertaking in terms of the order
dated 30th March, 2009 as well as undertaking to this court, to jointly
and severally pay to the subsequent purchaser a sum of Rs 1 crore,
in the event of plaintiffs claim being found to be false and within 45
days of the dismissal of the suit and subject to any order of the
appellate court. The undertaking be filed within two weeks hereof.
24. With the consent of the counsel for the parties the two suits
are consolidated for the purposes of trial and common issues as
under are framed in the two suits with the second suit being the lead
suit and the nomenclature of the parties hereunder being as in the
second suit.
1. Whether the defendant No.2 had on 15th September, 2005
orally agreed to sell the shop to the plaintiffs and if so on what
terms? OPP
2. Whether the plaintiffs had paid advance sale consideration of
Rs 10 lacs to the defendant No.2?OPP
3. Whether the plaintiffs have been ready and willing to perform
their part of the agreement to sell?OPP
4. Whether the defendant no.2 had received the cheque for Rs 4
lacs as consideration for sale of jewellery/antiques to the daughter of
the plaintiff No.2? OPD2
5. Whether the discretion in the grant of relief of specific
performance is to be exercised in favour of the plaintiffs ? OPPr
6. To what relief, if any, are the plaintiffs entitled to against the
defendants? OPP
7. Whether the plaintiffs are entitled to the relief of declaration
with respect to the agreement to sell and other documents executed
by the defendant No.2 in favour of the defendant No.1, as null and
void? OPP
8. Relief.
No other issue arises. The parties to file their list of witnesses
within two weeks. The plaintiffs to file their affidavits by way of
examination in chief within six weeks. Evidence be recorded by the
Joint Registrar. Party shall be entitled to summon official witnesses
before the Joint Registrar.
List before the Joint Registrar on 10th August, 2009 for fixing
the dates for cross examination of the witnesses of the plaintiffs.
RAJIV SAHAI ENDLAW (JUDGE) May 11 , 2009 M
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