Delhi High Court
Mohan Overseas P.Ltd. vs Goyal Tin & General Industries on 27 November, 2009
Author: Vikramajit Sen
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ FAO(OS) 252/08 & CM 7625/08
MOHAN OVERSEAS P.LTD. ..... Appellant
Through: Mr. D.S.Narula &
Mr. A.S.Narula,
Advs.
-versus-
GOYAL TIN & GENERAL INDUSTRIES ...Respondent
Through: Mr. Harish Malhotra,
Sr. Adv. with
Mr. R.K.Modi and
Mr. Rajender
Aggarwal, Advs.
WITH
FAO(OS) No.350/09 & CM No.11704/09
C.P. SHARMA ..... Appellant
Through: Mr. Madan Gera,
Adv.
-versus-
VIRENDER KUMAR GUPTA ..... Respondent
Through: Mr. Rajesh Katyal,
Adv.
WITH
FAO(OS) 313/09 & CM No.10289/09
RAVINDER SINGH & ANR. .... Appellant
Through : Mr. Maninder Singh,
Sr. Adv. with Mr.
Saurabh Tiwari, Adv.
-versus-
MANOJ KUMAR PRUTHI & ANR. ...Respondent
Through : Mr. Sandeep Sethi, Sr.
Adv. with Mr. Sanjay
FAO(OS)252/2008 Page 1 of 47
S.Chhabra & Mr. Alok
K. Aggarwal, Advs.
for Respondent No.1
Mr. Amit S. Chadha,
Sr. Adv. with Mr. Kunal
Sinha, Adv. for
Respondent No.2
WITH
FAO(OS) No.64/09 & CM Nos.2693/09 & 3283/09
JAGDISH CHANDER KAPOOR & ORS. .... Appellant
Through : Mr. P.K. Kapoor and
Mr.V.K.Kapoor,
Appellants No.2 and 3
in person
-versus-
RUPABH DEVELOPERS PVT. LTD.. ...Respondent
Through : Mr. J.P. Sengh, Sr. adv.
with Mr. Vineet
Malhotra, Adv.
% Date of Decision : November 27, 2009
CORAM:
* HON'BLE MR. JUSTICE VIKRAMAJIT SEN
HON'BLE MR. JUSTICE V.K.JAIN
1. Whether reporters of local papers 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
VIKRAMAJIT SEN, J.
1. Courts are intended to be temples of justice, roads for
redressal, and not houses for harassment. A judge will never be
able to palate litigation being vulgarized as a vehicle of
victimization. He will scarcely stand idle when he perceives the
jural system being employed as an instrument of oppression of
an innocent citizen. Given the disturbing reality of decades of
pendency of litigation, resulting largely from an exponential
explosion of litigation in response to which the imperative of an
increase in the strength of judges is startlingly absent, the judge
must innovate; he must discover avenues which will minimize
the malaise of delay in decision even if it entails routing away
for practices which were hitherto fore commonplace. One genre
of cases which the judge increasingly countenances are suits for
specific performance of ostensible contracts for conveyance of
immovable property and this class of lis is severely clogging the
courts. Dismissing interlocutory injunction pleas in this category
of cases is not adequate amelioration, principally because of the
doctrine of lis pendens, which finds statutory expression in
Section 52 of the Transfer of Property Act, 1882 („TP Act‟ for
brevity).
2. This Appeal assails the Order of the learned Single Judge
dated 5.5.2008 passed in CS(OS) No.1528/2007. The
Appellant/Plaintiff has filed a suit for Specific Performance,
permanent and temporary Injunction in respect of immovable
property bearing No.243, Okhla Industrial Estate-III, New Delhi.
By the impugned Order the learned Single Judge has rejected IA
No.9469/2007 filed by the Plaintiff seeking an ad interim
injunction restraining the Defendant from alienating the suit
property during the pendency of the suit. IA No.13550/2007
filed by the Defendant under Order XXXIX Rule 4 for vacation of
the status quo order has been allowed. However, IA
No.13551/2007 filed by the Defendant, praying for the rejection
of the Plaint on the ground that it does not disclose a cause of
action has also been dismissed; against which no appeal has
been filed.
3. The Plaintiff‟s suit is predicated on the following
document, which is admitted:-
RECEIPT
Received from Mohan Overseas(P) Ltd., Okhla Industrial
Area, Phase-I, New Delhi through its Managing Director
Sh. Sunder Kukreja a sum of Rs.21,00,000- (Rupees
Twenty One Lacs Only) in the following manner towards
part payment of sale of property No.243, measuring
1211 sq. yards, Okhla Industrial Estate-III, New Delhi.
The total sale consideration of the subject property is
Rupees 11,90,00,000/- (Rupees Eleven Crore Ninety Lacs
Only).
Cash 5,00,000/- (Rupees Five Lacs Only)
Cheque No.615714 of Rupees 16,00,000/- (Rupees
Sixteen Lacs Only) of Standard Chartered Bank.
The brief terms of this sale are as under:
1. The total sale consideration is Rupees 11,90,00,000/-
(Rupees Eleven Crore Ninety Lacs Only).
2. The seller Goyal Tin & General Industries is partnership
firm, having its office at 39 Okhla Industrial Estate-III,
New Delhi, consisting of currently three partners,
namely 1)Sh. Ramesh Kumar Miglani s/o Sh. Uttam
Chand Miglani 2)Sh. Rajat Miglani s/o Sh. Ramesh
Kumar Miglani and 3) Sh. Rishi Miglani s/o Sh. Ramesh
Miglani, all residents of W-55, Greater Kailash-I, New
Delhi. Sh. Ramesh Miglani has represented that he is
fully authorized to finalise this sale agreement and that
his acts and deeds are binding on Goyal Tin & General
Industries and all its partners. Sh.Rakesh Miglani has
further represented that the subject property no.243
Okhla Industrial Estate-III is free from all mortgages,
lien, prior sale, gift, attachment etc.
3. The buyer or his nominee(s) shall pay the entire sale
consideration within (five) months from this date
whichever is later. The seller shall deliver all the
relevant documents to the buyer from time to time.
4. A proper agreement to sell between the parties will be
executed shortly.
4. It has not been denied that thereafter an Agreement to
Sell on a non-judicial stamp paper of Rupees 100/- had been got
prepared by the Plaintiff, the photocopy whereof bears notations
in the handwriting of the Defendant. Follow-up correspondence
has also been placed on record by learned counsel for the
Appellant along with an Agreement to Sell, also on Rupees 100/-
non-judicial stamp paper bearing the date 3.8.2007 which
appears to have incorporated changes made to the earlier draft
in the handwriting of the Defendant. It has not been denied that
the Defendant had received a sum of Rupees 5,00,000/- in cash,
along with a cheque for Rupees 16,00,000/-. Rupees
5,00,000/- has till date not been returned by the Defendant.
Although the cheque for Rupees 16,00,000/- has not been
encashed, it remains in the possession of the Defendant. The
Plaintiff has further averred that two cheques dated 3.8.2007,
drawn on Standard Chartered Bank, New Delhi for a total sum
of Rupees 1,14,00,000/-, have been tendered to the Defendant,
who has not encashed them. Balance-Sheets of the Plaintiff have
been filed with the purpose of establishing that it has always
remained in sound financial health, and that liquidity was not a
problem.
5. According to Mr.D.S. Narula, learned counsel for the
Plaintiff, the Receipt reproduced above, sufficiently evidences
the formation of a contract for the purchase of the suit property
inasmuch as (a) it mentions the total sale consideration as
Rupees 11,90,00,000/-; (b) the description of the property leaves
no room for doubt as to what was the subject matter of the
contract; and (c)there was complete certainty about identity of
the contracting parties. Considerable argument has been
generated on the fourth concomitant necessary for the
formation or emergence of an oral contract, viz. certainty as to
other terms relating to cost of conveyance, time etc. It is trite
that every document must be read holistically; the title or
heading given to the subject document does not conclusively
indicate or establish that it was not an agreement for the sale of
immovable property.
6. The learned Single Judge has applied the decision of
Single Benches of this Court in Amarjit Singh Johar & Co. -vs-
Shri Prakash Chand Brahmin, 79(1999) DLT 289 and High Way
Farms -vs- Chinta Ram, 85 (2000) DLT 355, all of which fall in
line with the decision of the Supreme Court in Mool Chand
Bhakru -vs- Rohan, (2002) 2 SCC 612 in which it was opined
that an oral Agreement to Sell must spell out and cover
all the essential terms of the Sale including the time-frame
within which the Sale Deed has to be executed and as to
who would be liable to pay the registration charges etc. In
this regard, it seems to us to be of importance to
highlight Section 29 of the Stamp Act, 1899 which
prescribes that in the absence of an agreement to the
contrary, liability for payment of duty rests on the
lessee in respect of a lease deed, and on the grantee in
the context of a Conveyance. Kollipara Sriramulu -vs- T.
Aswathanarayana, AIR 1968 SC 1028 must be kept in mind.
The law has been explained by their Lordships in the
following paragraph:-
We proceed to consider the next question raised in
these appeals, namely whether the oral agreement was
ineffective because the parties contemplated the
execution of a formal document or because the mode of
payment of the purchase money was not actually agreed
upon. It was submitted on behalf of the appellant that
there was no contract because the sale was conditional
upon a regular agreement being executed and so such
agreement was executed. We do not accept this
argument as correct. It is well-established that a mere
reference to a future formal contract will not prevent a
binding bargain between the parties. The fact that the
parties refer to the preparation of an agreement by
which the terms agreed upon are to be put in a more
formal shape does not prevent the existence of a
binding contract. There are, however, cases where the
reference to a future contract is made in such terms as
to show that the parties did not intend to be bound until
a formal contract is signed. The question depends upon
the intention of the parties and the special
circumstances of each particular case. As observed by
the Lord Chancellor (Lord Cranworth) in Ridgway v.
Wharton 6 H.L.C. 238 the fact of a subsequent
agreement being prepared may be evidence that the
previous negotiations did not amount to a concluded
agreement, but the mere fact that persons wish to have
a formal agreement drawn up does not establish the
proposition that they cannot be bound by a previous
agreement In Von Hatzfeldt-Wildenburg v. Alexander
[1921] 1 Ch. 284 it was stated by Parker, J. as follows :
"It appears to be well settled by the authorities that if
the documents or letters relied on as constituting a
contract contemplate the execution of a further contract
between the parties, it is a question of construction
whether the execution of the further contract is a
condition or term of the bargain or whether it is a mere
expression of the desire of the parties as to the manner
in which the transaction already agreed to will in fact go
through. In the former case there is no enforceable
contract either because the condition is unfulfilled or
because the law does not recognize a contract to enter
into a contract. In the latter case there is a binding
contract and the reference to the more formal document
may be ignored."
In other words, there may be a case where the signing
of a further formal agreement is made a condition or
term of the bargain, and if the formal agreement is not
approved and signed there is no concluded contract. In
Rassier v. Miller 3 A.C. 1124 Lord Cairns said :
"If you find not an unqualified acceptance subject to
the condition that an agreement is to be prepared and
agreed upon between the parties, and until that
condition is fulfilled no contract is to arise then you
cannot find a concluded contract."
In Currimbhoy and Company Ltd. v. Creet 60 I.A. 297
the Judicial Committee expressed the view that the
principle of the English law which is summarised in the
judgment of Parker, J. in Van Hatzfeldt-Wildenburg v.
Alexander [1912] 1 Ch. 284 was be applicable in India.
The question in the present appeals is whether the
execution if a formal agreement was intended to be a
condition of the bargain dated July 6, 1952 or whether it
was a mere expression of the desire of the parties for a
formal agreement which can be ignored. The evidence
adduced on behalf of respondent No. 1 does not show
that the drawing up of a written agreement was a pre-
requisite to the coming into effect of the oral
agreement. It is therefore not possible to accept the
contention of the appellant that the oral agreement was
ineffective in law because there is no execution of any
formal written document. As regards the other point, it
is true that there is no specific agreement with regard
to the mode of payment but this does not necessarily
make the agreement ineffective. The mere omission to
settle the mode of payment does not affect the
completeness of the contract because the vital terms of
the contract like the price and area of the land and time
for completion of the sale were all fixed.
7. We are fully mindful of the comparatively constricted
confines of the jurisdiction of appellate courts before whom a
challenge to an interlocutory order has been brought. The
parameters have been penciled out by the Supreme Court in
Wander Ltd. -vs- Antox India P. Ltd., 1990(Supp) SCC 727 and
Ramdev Food Products (P) Ltd. -vs- Arvindbhai Rambhai Patel,
(2006) 8 SCC 726. In Wander Ltd. their Lordships had analysed
the powers of the Appellate Court in suchlike matters as follows
- "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 fact that the appellate court would
have taken a different view may not justify interference with the
trial court's exercise of discretion". This decision has been
followed very recently in Seema Arshad Zaheer -vs- Municipal
Corpn. of Greater Mumbai, (2006) 5 SCC 282. The City Civil
Court had granted a temporary injunction against the
Corporation which was challenged before the Bombay High
Court. Speaking for the Bench His Lordship R.V. Raveendran
made the following pithy observations:-
32. Where the lower court acts arbitrarily, capriciously
or perversely in the exercise of its discretion, the
appellate court will interfere. Exercise of discretion by
granting a temporary injunction when there is "no
material", or refusing to grant a temporary injunction
by ignoring the relevant documents produced, are
instances of action which are termed as arbitrary,
capricious or perverse. When we refer to acting on "no
material" (similar to "no evidence"), we refer not only to
cases where there is total dearth of material, but also to
cases where there is no relevant material or where the
material, taken as a whole, it is not reasonably capable
of supporting the exercise of discretion. In this case,
there was "no material" to make out a prima facie case
and therefore, the High Court in its appellate
jurisdiction, was justified in interfering in the matter
and vacating the temporary injunction granted by the
trial court.
8. In Ramdev the Supreme Court has taken into
consideration both Wander Ltd. and Seema Arshad Zaheer.
His Lordship, S.B. Sinha, J., has perspicuously propounded the
law in these words:
The grant of an interlocutory injunction is in
exercise of discretionary power and hence, the appellate
courts will usually not interfere with it. However, the
appellate courts will substitute their discretion if they
find that discretion has been exercised arbitrarily,
capriciously, perversely, or where the court has ignored
the settled principles of law regulating the grant or
refusal of interlocutory injunctions. This principle has
been stated by this Court time and time again. [See for
example Wander Ltd. v. Antox India P. Ltd., 1990 (Supp)
Supreme Court Cases 727, Laxmikant V. Patel v.
Chetanbhai Shah, (2002) 3 SCC 65 and Seema Arshad
Zaheer -vs- Municipal Corpn. of Greater Mumbai, (2006)
5 SCC 282].
The appellate court may 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.
However, in this case the courts below proceeded
on a prima facie misconstruction of documents. They
adopted and applied wrong standards. We, therefore,
are of the opinion that a case for interference has been
made out.
9. We would be loathe to reverse or alter the impugned
Order had we not arrived at the conviction that the learned
Single Judge has misapplied the law. We are unable to overlook
the fact that a sum of Rupees 21,00,000/- had been tendered by
the Appellant to the Defendant, as evidenced in the Receipt
dated 12.5.2006. Out of these monies, the sum of
Rupees 5,00,000/- received in cash has not been returned to the
Plaintiff; even the formality of returning the cheque for
Rupees 16,00,000/- has also not been ventured upon by the
Defendant. This, prima facie, is indicative of the Defendant‟s
resolve and mental make-up, viz., that the Agreement arrived at
in terms of the said Receipt had not been cancelled by him.
10. When a court is called upon to grant an ad interim
injunction, ex parte or otherwise, it is trite that it must be
satisfied of the existence of a prima facie case in favour of the
Plaintiff, namely, that the suit is more than likely to be decreed.
The balance of convenience must also lie in favour of the
Plaintiff; and it should be manifestly clear that unless the
protection of the Court is granted the Plaintiff will suffer
irreparable loss and injury. A new dimension or consideration
has now come to be recognized, as is evident from a reading of
the following paragraphs in Mahadeo Savlaram Shelke -vs-
Pune Municipal Corporation, (1995) 3 SCC 33:-
12. In "Modern Law Review", Vol 44, 1981 Edition, at
page 214, R.A. Buckley stated that "a plaintiff may still
be deprived of an injunction in such a case on general
equitable principles under which factors such as the
public interest may, in an appropriate case, be
relevant. It is of interest to note, in this connection,
that it has not always been regarded as altogether
beyond doubt whether a plaintiff who does thus fail to
substantiate a claim for equitable relief could be
awarded damages". In "The Law Quarterly Review" Vol
109, at page 432 (at p. 446), A.A.S. Zuckerman under
Title "Mareva Injunctions and Security for Judgment in
a Framework of Interlocutory Remedies" stated that "if
the plaintiff is likely of suffer irreparable or
uncompensable damage, no interlocutory injunction
will be granted, then, provided that the plaintiff would
be able to compensate the defendant for any
unwarranted restraint on the defendant's right pending
trial, the balance would tilt in favour of restraining the
defendant pending trial. Where both sides are exposed
to irreparable injury ending trial, the courts have to
strike a just balance". At page 447, it is stated that the
court considering an application for an interlocutory
injunction has four factors to consider : first, whether
the plaintiff would suffer irreparable harm if the
injunction is denied; secondly, whether this harm
outweighs any irreparable harm that the defendant
would suffer from an injunction; thirdly, the parties'
relative prospects of success on the merits; fourthly,
any public interest involved in the decision. The central
objective of interlocutory injunctions should therefore
be seen as reducing the risk that rights will be
irreparably harmed during the inevitable delay of
litigation".
13. In "Injunctions" by David Bean, 1st Edn, at page 22,
it is stated that "if the plaintiff obtains an interlocutory
injunction, but subsequently the case goes to trial and
he fails to obtain a perpetual order, the defendant will
meanwhile have been restrained unjustly and will be
entitled to damages for any loss he has sustained. The
practice has therefore grown up, in almost every case
where interlocutory injunction is to be granted, of
requiring the plaintiff to undertake to pay any damages
subsequently found due to the defendant as
compensation if the injunction cannot be justified at
trial. The undertaking may be required of the plaintiff
in appropriate cases in that behalf. In "Joyce on
Injunctions" Vol. 1 in paragraph 177 at page 293, it is
stated "Upon a final judgment dissolving an injunction,
a right of action upon the injunction bond immediately
follows, unless the judgment is superseded. A right to
damages on dissolution of the injunction would arise at
the determination of the suit at law".
11. What is so often glossed over is the fact that wherever
immovable property is at the fulcrum of the fight, Order XXXIX
prescribes the passing of a temporary injunction during the
pendency of the suit. It is platitudinous that the issuance of
injunctions is not circumscribed by the Code of Civil Procedure,
1908 („CPC‟ for short). It is equally vapid that where a statutory
provision is available, the Judge should adhere to its dictates.
Rule 1 of Order XXXIX of the CPC covers cases in which
temporary injunctions may be granted. It states, inter alia, that
where in any suit it is proved by affidavit or otherwise that the
property in dispute in the suit is in danger of being alienated by
any party to the suit, the Court may by an order grant a
temporary injunction to restrain such act or make such other
order for the purpose of staying or preventing the alienation of
the property as the Court thinks fit, until the disposal of the suit
or until further orders. It may be argued that the Code employs
the word „may‟ instead of „shall‟, but in our view, in cases of this
genre, the word „may‟ would more often than not mandate the
grant of an ex parte ad interim injunction. Furthermore, Section
10 of the Specific Relief Act, 1963 („SR Act‟ for short) lays down
that when a Court is confronted with a prayer for the specific
performance of a contract to transfer immoveable property, it
shall presume that its breach cannot be adequately relieved by
compensation in money; hence the prayer may, in its discretion,
be allowed. In M.L. Devender Singh -vs- Syed Khaja, (1973) 2
SCC 515 the agreement to sell a commercial property contained
a clause to the effect that if the Vendor failed to complete
the sale transaction, the liquidated sum of Rupees 20,000/-
would become payable as damages. The Vendor breached the
contract but their Lordships declined to grant damages alone, in
view of the provisions of Section 23 of the SR Act. In such a
situation, there is added compulsion to grant interlocutory
relief.
12. The doctrine of lis pendens fortifies and strengthens this
interpretation of the law which is to be found in Section 52 of
the TP Act. It contemplates that during the pendency in any
Court of any suit or proceedings which is not collusive and in
which any right to immovable property is directly and
specifically in question, the suit 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 thereto except under the
authority of the Court and on such terms as it may impose. The
impact of the doctrine of lis pendens has been analysed by the
Supreme Court very recently in Guruswamy Nadar -vs- P.
Lakshmi Ammal, AIR 2008 SC 2560 ; the field of operation and
interaction of Section 19 of the SR Act and Section 52 of the TP
Act have been discussed. Section 19 deals with the availability
of the relief of specific performance against a person claiming
subsequent title to the property; this relief being unavailable in
instances where the subsequent purchaser has paid valuable
consideration for the purchase without having any notice or
knowledge of the earlier or original contract. Section 52 of the
TP Act, it has already been seen, stipulates broadly that where a
suit has already been filed in respect of a property it cannot be
transferred or dealt with to the detriment of the Plaintiff. Thus,
let us conceptualize a case where on 1st April, 2009 A enters into
an agreement to sell a house with B, and on the refusal or
failure by A to complete the deal, B is constrained to initiate an
action for specific performance against A on 1st May, 2009. Any
endeavour of A to transfer the suit property after the latter date
shall not defeat the rights of Plaintiff B, this being the doctrine
of lis pendens. However, if A had sold for value the said
property to C in the month of April, 2009 itself, then if C had no
knowledge or notice of the agreement between A and B, A
would not be able to enforce the relief of specific performance
against C, as per Section 19 of the Specific Relief Act. Notice or
knowledge should be actual; but it can also be constructively
assumed as where the second purchaser fails even to ascertain
who is in possession (See R.K. Mohammad Ubaidullah-vs- Hajee
C. Abdul Wahab, AIR 2001 SC 1658). The two provisions, thus,
operate in different fields albeit these may be located
contiguous or close to each other. In Nadar the Defendant
Lakshmi had contracted to sell her house for Rupees
30,000/- on 4.7.1974 but the entire price was not paid as per
contract by 31.7.1974. Lakshmi thereafter sold the house to
Nadar for Rupees 40,000/- on 5.5.1975, the dealings being bona
fide, that is, NADAR who had been put in possession had no
notice of the previous agreement. The Apex Court held that
since the second transaction of sale took place after the filing of
the suit on 3.5.1975 predicated on the earlier sale agreement,
the doctrine of lis pendens would take effect. In Nadar two
points came to the fore - (a) that the pendency of a suit for
specific performance will invariably act as a clog on property
transactions and in unsustainable cases will therefore
tantamount to an abuse of the legal process; (b) despite the
operation of lis pendens, in a genuine case, the Defendant
should be injuncted from creating third party rights in the
interest of an innocent third party.
13. In a manner, therefore, the passing of protective orders
under Rule 1 of Order XXXIX of the CPC may well be seen as
otiose and superfluous since the lis pendens doctrine may be
thought to have same legal consequence. Even so, when orders
are passed by a competent court, it invariably has the effect of
restraining the parties from acting against the grain of lis
pendens for fear of having to face Contempt of Court
proceedings; and thus third parties are protected from the
machinations of unscrupulous litigants.
14. Even if the court has still to find a prima facie case in
favour of the Plaintiff before it grants an ad interim injunction in
the mould of Order XXXIX Rule 1, it seems plain to us that if the
Court has dismissed an application under Order VII Rule 11, it is
but congruous that it must grant an injunction. It is for the
simple reason that an action under Order VII Rule 11 is
defeated if the plaint discloses triable issues. Once this is so, it
cannot but lead to the conclusion that a prima facie case has
been pleaded by the Plaintiff. It was for this reason that we have
inquired from learned counsel for the Respondent as to whether
an appeal had been preferred against that part of the impugned
Order which dismissed their application under Order VII Rule
11. It is indeed significant that no appeal has been filed. In
other words, the Defendant has become convinced that the
plaint is not liable for rejection at this stage of the litigation
because it in fact discloses a cause of action. We are aware that
in M. Gurudas -vs- Rasaranjan, (2006) 8 SCC 367 their
Lordships have opined that -"At the stage of grant of injunction,
however, the effect of dismissal of an application under Order 7
Rule 11 of the Code of Civil Procedure would not be of much
significance. The plaint in question could not have been rejected
under Order 7 Rule 11 of the Code of Civil Procedure. The court
at that stage could not have gone into any disputed question of
fact but while passing an order on grant of injunction
indisputably it can."
15. It is commonplace that if the suit is perceived by the Court
to manifest an abuse of judicial process, it is likely to be
dismissed forthwith. Reliefs of injunctions as well as specific
performance are essentially discretionary in nature. It is always
open to the Court to decline specific performance and instead
grant damages. If damages have, in fact, been prayed for, or
courts decline to grant the prayer for specific performance,
the suit is perforce metamorphosed into one for recovery of
money. In such an event, Order XXXIX Rule 1 would not come
into play. Section 20 of the SR Act spells out that the Court
has discretion in the matter of decreeing the specific
performance of a contract.
16. We recall that in Parakunnan -vs- Nedumbara, AIR 1987
SC 2328 : 1987 Supp. SCC 340 the Supreme Court opined that -
"Section 20 of the Specific Relief Act, 1963 preserves
judicial discretion to Courts as to decreeing specific
performance. The Court should meticulously consider all facts
and circumstances of the case. The court is not bound to
grant specific relief merely because it is lawful to do so.
The motive behind the litigation should also enter into the
judicial verdict. The Court should take care to see that it is not
used as an instrument of oppression to have an unfair advantage
to the plaintiff. The High Court has failed to consider the
motive with which Varghese instituted the suit. It was instituted
because Kuruvila could not get the estate and Mathew was not
prepared to part with it. The sheet anchor of the suit by
Varghese is the agreement for sale Ex.A1. Since Chettiar had
waived his rights thereunder, Varghese as an assignee could not
get a better right to enforce that agreement. He is, therefore,
not entitled to a decree for specific performance". There is a
plethora of precedents on this aspect of law but we shall
mention only Kanshi Ram -vs- Om Prakash Jawal, AIR 1996 SC
2150 where their Lordships reiterated that the passing of a
decree of specific performance should not be automatic, and the
Court should constantly "be guided by justice, equity, good
conscience and fairness to both parties. Considered from this
perspective in view of the fact that the respondent himself had
claimed alternative relief for damages, we think that the Courts
would have been well justified in granting alternative decree for
damages, instead of ordering specific performance which would
be unrealistic and unfair".
17. Our study would be more comprehensive once it contains
a consideration of the provision of Order XXII Rule 10 of the
CPC. On a plain reading of this provision, it is evident that the
situation that is in contemplation therein is the pendency or
continuance of a suit in which the assignment, creation or
devolution of any interest pertaining to the suit property has
taken place. Where the Plaintiff assigns his rights to an
assignee, he would ordinarily encounter little difficulty in
getting impleaded. The position is totally different where a
Defendant assigns his rights because Order XXII Rule 10 may
not apply for the simple reason that it is not the Defendant who
"continues the suit". Independent of the provision, it is apparent
that an assignment by the Defendant would never fall in the
same category as that of an assignment by the Plaintiff since in
almost every case such an assignment would have the effect of
destabilizing or jeopardizing the interest of the Plaintiff who has
approached the Court for redressal. Where an assignee of the
Defendant is desirous of being impleaded, the proper recourse
to be adopted would be under Order I Rule 10 of the CPC. Amit
Kumar Shaw -vs- Farida Khatoon, (2005) 11 SCC 403 was
decided ex parte the Plaintiff. Even then their Lordships had
clarified that the transferee is not entitled, as of right, to be
made a party to the suit, though the Court has a discretion to
make him a party; the transferee can be added as a proper party
if his interest in the subject-matter of the suit is substantial. The
Supreme Court had carried out a conjoint reading of Order I
Rule 10 as well as Order XXII Rule 10. What was not discussed
was whether Order XXII Rule 10 enures only to the benefit of
the Plaintiff who, we may reiterate, was not represented in that
case. In stark contrast, sub-rule (2) of Order I Rule 10 clarifies
that an application can be brought by either party.
18. In this analysis, it seems to us that there are myriad
alternatives which the Court can adopt in suits for specific
performance. If it is satisfied that it would be unconscionable or
unfair for the Defendant to transfer or create any third party
interest in the immovable property which is the subject-matter
of a concluded contract the Court can pass an injunction.
Keeping in mind that specific performance orders are essential
equitable reliefs, the Court will not allow the pendency of a suit
to work inequities against the owners of the property. The mere
rejection of a temporary injunction does not remove this
imbalance since the very pendency of the suit has the effect of
jeopardizing the title of the Defendant/Owner. Broadly speaking,
we are of the opinion that in most cases, directing the Plaintiff
to deposit the sale consideration in the Court, would have the
effect of placing the parties on equal footing. Obviously, this is
the rationale behind the First Explanation to Section 16(c) of the
SR Act which preserves the power of the Court to make such
direction. There may be cases where at the pre-trial stage the
Court comes to a prima facie conclusion that a contract had not
been concluded or that the contract was such as would make it
appropriate to decline the grant of the equitable reliefs of
specific performance. We see no impediment in the Court
declining at that stage itself the relief of Specific performance,
leaving it to the Trial to determine whether any damages should
be awarded, and if so, for what amount. If the Defendant wants
to sell the property under litigation or deal with it in any legally
permissible way, Section 52 of the TP Act itself permits him to
seek such relief from the Court and the Court would be justified
in granting it, if the Plaintiff fails to prima facie show merit in
his case. We should not be understood to have digressed or
departed from the well-entrenched position of law to the effect
that in any interlocutory stage of a suit the averments made in
the pleadings will have to be taken at face value. In other words,
if a plaint is to be rejected or returned, the asseverations made
in the plaint will have to be taken as correct. Similarly, a suit
can only be decreed taking all the averments pleaded in the
Written Statement to be correct. Further, since the relief of
specific performance is essentially discretionary and equitable
in nature, we can think of no impediment in circumscribing the
contours within which the discretion is to be exercised. In fact,
the discretion of a judge cannot be fettered or regulated.
19. Returning to the facts in FAO(OS) No.252/2008, it will be
recalled that Mr. Narula, learned counsel for the Appellant, has
stated that the Appellant is ready and willing to deposit the
entire sale consideration. The arguments before us have
essentially touched upon the absence of a concluded contract. It
has not been contended that the consideration for the sale of the
property was inadequate or unrealistic at the time when the
negotiations were taking place. The Defendant has not appealed
against the Order rejecting his application under Order VII Rule
11. Therefore, the Suit in respect of relief for specific
performance as well as damages, if and when claimed, would
continue. It is in these circumstances that we direct the
Appellant to deposit the balance sale consideration with the
Registrar-General of this Court within sixty days from today.
The Registrar-General shall invest the said sum of money in a
Fixed Deposit with a nationalized bank initially for a period of
one year with automatic renewals on the most beneficial terms.
On the deposit being made, the Respondent shall be restrained
from creating any third party interest or rights in the suit
property without leave of the Court.
20. FAO(OS) No.252/2008 along with CM No.7625/2008
stands disposed of accordingly.
FAO(OS) No.350/2009
21. Mr. Madan Gera, learned counsel for the Appellant in
FAO(OS) No.350/2009, has sought support from the
observations of the Division Bench occurring in FAO(OS)
No.19/2009 titled Vinod Seth -vs- Devinder Bajaj and
FAO(OS) No.66/2009 between the same parties who are
presently before us, both of which had been dismissed on
27.1.2009. The issue before our learned brothers was whether
the Trial Court was competent to direct the Plaintiff to furnish
an undertaking to the effect that in the event of the suit failing
the Plaintiff would be liable to pay the Defendant a sum of
Rupees 25,00,000 by way of damages. The Division Bench found
that this course adopted by the Trial Judge was "not without the
sanction of law looking to the ground realities..." Our learned
Brother had specifically adverted to Order XXV of the CPC
which postulated just this. The law in India expects damages to
be proved, and that payments by way of penalties, cannot be
automatically allowed. Therefore, undertakings, as a form of
security to pay costs may be called for, so long as the stated
sum does not have the trappings of „damages‟.
22. FAO(OS) No.66/2009 was filed by the Appellant against
the Respondent before us assailing the Order of the learned
Single Judge passed on 18.12.2008 directing the
Plaintiff/Appellant (a) to deposit the balance sale consideration
of Rupees 29,60,000/- and (b) to file an undertaking to the effect
that in the event of the Plaintiff failing in the suit he would pay
damages to the Defendant to the tune of the then prevailing
market value of the suit property. That Appeal was decided on
24.2.2009 affirming both these directions. Our learned Brothers
went on to opine that the consequences of failure to make the
money deposit would reflect on the ability and willingness of the
Plaintiff/Appellant to pay the balance sale consideration which
would be examined in trial. When the suit was heard on
10.7.2009, our learned Brother, S. Muralidhar, J. noted that the
affidavit/undertaking ordered on 18.12.2008 to be filed by his
predecessor and our learned Brother, Rajiv Sahai Endlaw, J. had
not been filed. By the impugned Order, Muralidhar, J. has
dismissed the suit, indirectly indicating that he was in complete
agreement with the view taken by Rajiv Sahai Endlaw, J. The
only caveat that the Division Bench had articulated was that if
there was non-compliance with the direction for depositing the
balance sale consideration, the Court would consider whether or
not to dismiss the suit. In our view, the mention of the stage of
trial by the Division Bench cannot be construed as an
unequivocal view that such a conclusion can only be arrived at
„at the trial‟. Rejecting a prayer for specific performance is an
exercise of discretionary powers which the Appellate Courts
have never regulated.
23. Reliance has also been placed by learned counsel for the
Appellant on Abdul Gafur -vs- State of Uttarakhand, (2008) 10
SCC 97, which, in our analysis, has no relevance to the
conundrum concerning us. In Abdul Gafur a writ petition was
filed by one Tek Chand challenging the acquisition of land which
came to be dismissed consequent upon the clarification by the
Government that the road in question was not going to be used
exclusively by the Hospital. This apparently did not assuage the
fears of Tek Chand who thereafter filed two suits against the
Hospital in which judgment was reserved. Undaunted, Tek
Chand filed yet another writ petition in the course of hearing of
which the High Court summoned the two pending suits to the
file of the High Court. These two suits were thereupon
dismissed by the High Court. It was in those circumstances that
the Supreme Court observed that Section 9 bestowed on civil
courts inherent jurisdiction, which could be whittled or watered
down only by specific statue and, therefore, a suit could not be
dismissed on the ground of it being frivolous. Their Lordships
were, in no manner, desirous of diluting earlier observations
made by the Supreme Court calculated to bring an expeditious
and early conclusion of litigation, including civil suits. This is
obvious from a reading of paragraph 20 of the Judgment which
is reproduced below:-
20. Having considered the matter in the light of the
aforestated legal position, we are of the opinion that
the impugned order cannot be sustained. It is true that
under Section 24 of the Code, the High Court has
jurisdiction to suo motu withdraw a suit or appeal,
pending in any court subordinate to it, to its file and
adjudicate itself on the issues involved therein and
dispose of the same. Unless the High Court decides to
transfer the suit or the appeal, as the case may be, to
some other court or the same court, it is obliged to try,
adjudicate and dispose of the same. It needs little
emphasis that the High Court is competent to dispose
of the suit on preliminary issues, as contemplated in
Order 14 Rules 1 and 2 of the Code, which may include
the issues with regard to maintainability of the suit. If
the High Court is convinced that the plaint read as a
whole does not disclose any cause of action, it may
reject the plaint in terms of Order 7 Rule 11 of the
Code. As a matter of fact, as observed by V.R. Krishna
Iyer, J. in T. Arivandandam -vs- T.V. Satyapal, (1977) 4
SCC 467, if on a meaningful -not formal- reading of the
plaint, it is manifestly vexatious, and meritless, in the
sense of not disclosing a clear right to sue, the court
should exercise its power under the said provision. And
if clever drafting has created an illusion of a cause of
action, it should be nipped in the bud at the first
hearing by examining the party searchingly under
Order 10 CPC. Nonetheless, the fact remains that the
suit has to be disposed of either by the High Court or
by the courts subordinate to it in a meaningful manner
as per the procedure prescribed in the Code and not on
one‟s own whims.
24. So far as FAO(OS) No.350/2009 is concerned, we have
already mentioned that Mr. Gera has contended that the
direction for deposit of the entire sale consideration is an
onerous one. Even if it be so, it is as onerous as the freezing of
the ownership of the property in the hands of the
Defendant/Owner. It makes no difference that the Appellant is in
possession of the property by virtue of his tenancy. The second
submission of Mr. Gera that the Plaintiff may have to borrow
monies to make the deposit appears to be fatal to the Plaintiff‟s
case since it is indicative of the fact that the Plaintiff was not
possessed of sufficient funds in order to complete the contract
and hence was not entitled to the grant of the discretionary
relief of specific performance. That, in itself, would be a reason
to dismiss the suit so far as the relief of specific performance is
concerned. FAO(OS) No.350/2009 is dismissed. Pending
Application also stands dismissed
FAO(OS)313/2009
25. This Appeal has been preferred against the Order dated
11.5.2009 passed by the learned Single Judge in CS(OS)
No.1894/2008 and CS(OS) No.46/2009. By the consent of
parties, both the suits had been heard together and the pending
applications had been decided by the said common impugned
Order dated 11.5.2009. The Plaintiffs/Appellants have not filed
any Appeal in CS(OS) No.1894/2008, as a consequence of
which a neat question of law has arisen, namely, that the
Plaintiffs/Appellants have accepted the Order, whereby they
were declined any interim relief against Shri Naresh Kukreja,
the owner of the shop in question. The anomalous position is
that once ad interim finality attaches to such a pendente lite
arrangement, so far as the rights of the Plaintiffs in the suit
shop are concerned, he would automatically be ineligible and
incompetent to take legal cudgels against what he asserts was a
subsequent contract entered into between the owner and the
sitting tenant, namely, Manoj Kumar Pruthi. Ordinarily, we
would have considered this situation to be sufficient reason to
dismiss the Appeal on merits. However, we refrain from
disposing of the matter on technicalities.
26. The facts, as set-out by the Plaintiffs/Appellants, are that
on 15.9.2009 they had entered into an oral Agreement to Sell
with the owners of Shop No.6-A, Khan Market, New Delhi
for a consideration of Rupees 1,00,00,000/-. A sum of
Rupees 4,00,000/- was paid by the daughter of Plaintiff No.2 by
cheque and a sum of Rupees 6,00,000/- was paid in cash to the
Defendants. However, no written document or receipt for
either the sum of Rupees 4,00,000/- or for the sum of Rupees
6,00,000/- allegedly paid in cash was given. According to the
Plaintiffs, it had been agreed between the parties that the shop
would be converted into freehold.
27. The Defendant/owner has denied the oral agreement as
well as receipt of any sum of money from the Plaintiffs. So far as
the cheque for Rupees 4,00,000/- is concerned, the owner has
stated that it was towards payment for jewellery etc. purchased
by the daughter of Plaintiff No.2 from the Defendant. The cash
payment of Rupees 6,00,000/- has been denied outrightly.
28. In the second suit, the grievance of the Plaintiffs is that
the owner (Defendant No.2) had, on 11.10.2000, entered into an
Agreement to Sell the said shop to Manoj Kumar Pruthi
(Defendant No.1), who was the sitting tenant.
29. The learned Single Judge has found no credence in the
case pleaded by the Plaintiffs. He has disbelieved that a
transaction of this magnitude would have rested only on oral
parleys and agreements; that if any amounts had been paid
towards the Agreement to Sell by the Plaintiffs to the owner,
that would have been evidenced by the execution of documents,
receipts or otherwise; that the sum of Rupees one crore did
not reflect the market price; that even as per the averments
made in the plaint an agreement with the father of Defendant
No.2 for purchase of the shop had been entered into as far back
as on 11.10.2000. The learned Single Judge has concluded that
in these circumstances the owner would not have entered into
any other agreement, especially since the price allegedly agreed
to with the parties was nowhere near the market price which
undeniably was between Rupees four and five crores. We find
no perversity in the approach of the learned Single Judge, as
has been articulated in the impugned Order.
30. It would be advantageous to reflect on the
pronouncements of the Hon‟ble Supreme Court so far as
exercise of appellate powers in respect of discretion is
concerned as expounded and clarified in Wander Ltd. and
Manjunath Anandappa -vs- Tammanasa, (2003) 10 SCC 390.
The ratio of these Judgments has, in fact, pervaded our
reasoning in all the matters before us which we have decided by
this common Judgment. The role of the Appellate Court in
interlocutory matters invariably involves the exercise of
discretion. As has been spelt out in Wander Ltd. and
Manjunath the Appellate Court would be ill-advised to
substitute its understanding or appreciation of the factual
matrix with that of the original forum. The opinion of the Apex
Court to this effect is evident from the following passage from
Ramdev :-
128.The grant of an interlocutory injunction is in
exercise of discretionary power and hence, the
appellate courts will usually not interfere with it.
However, appellate courts will substitute their
discretion if they find that discretion has been
exercised arbitrarily, capriciously, perversely, or
where the court has ignored settled principles of law
regulating the grant or refusal of interlocutory
injunctions. This principle has been stated by this
court time and time again. (See for example Wander
Ltd. V. Antox India P. Ltd., (1990) Supp SCC 727,
Lakshmikant V. Patel v. Chetanbhai Shah, (2002) 3
SCC 65 and Seema Arshad Zaheer v. MC of Greater
Mumbai, (2006) 5 SCALE 263).
129.The appellate court may 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 it had considered the
matter at the trial stage it would have come to a
contrary conclusion.
These precedents proscribe interference in Appeal except where
the discretion has been exercised in a perverse manner, that is,
which no reasonable man would adopt. The impugned Order
does not manifest any aberration of these perverse proportions.
All that has to be seen is that the Order should not run contrary
to law.
31. We affirm that no prima facie case to justify restraining
the Defendants from alienating or encumbering the suit shop
has been made out as has been rightly concluded by the learned
Single Judge. We, therefore, need not delve on the intricacies of
the proposal by the tenant to bring in a fresh tenant at monthly
rental of Rupees three lacs since the injunction prayed for by
the Plaintiff has been declined.
32. The issue that also has been argued before us in detail
pertains to the legality of the directions of the learned Single
Judge, calling upon the Plaintiffs to file an undertaking to pay
damages to the Defendants upon being unsuccessful in the suit.
The learned Single Judge had found it expedient to make this
direction, keeping Section 52 of the TP Act in perspective. The
principle of lis pendens has agitated the minds of several of our
learned Brothers for the reason that this principle works
hardship on the owner inasmuch as it creates a clog on the
property in litigation. We have already expanded on this legal
nodus and, therefore, shall not reiterate these jural concerns.
The learned Single Judge noted that the current market price
of the shop was between Rupees four and five crores and
since the purchaser/tenant had been permitted by him to let out
the property, "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". These concerns would not have
vexed the learned Single Judge had he thought it expedient and
appropriate to dismiss the suit so far as the claim for specific
performance of the contract was concerned, leaving it open for
the plaintiffs to prove damages if so advised. Mr. Maninder
Singh, learned Senior Counsel appearing for the Appellant,
submits that the learned Single Judge did not possess
jurisdiction to make these direction and he should have
traversed no further than dismissing the interim application for
injunction. Perhaps, it is for this reason that the
Plaintiffs/Appellants have not considered it necessary to
challenge the impugned Order in the context of CS(OS)
No.1894/2008. Reliance has been placed on a recent Judgment
of the Supreme Court in Ashok Kumar Mittal -vs- Ram Kumar
Gupta, 2009(234) ELT 193(SC) : 2009(2) SCC 656. We are
unable to appreciate any manner by which this decision would
be of any assistance to the arguments raised before us. Their
Lordships in that case had imposed exemplary costs of
Rupees 1,00,000/- each which were to be deposited with the
Delhi High Court Legal Services Committee by both the parties.
It was in that context that Sections 35 and 35A of the Code of
Civil Procedure Code, 1908 were adverted to which stipulates a
ceiling of Rupees 3,000/-. Their Lordships had recommended
amendments to these provisions to make them relevant. The
previous decision of a Three-Judge Bench in Salem Advocate Bar
Association -vs- Union of India, (2005) 6 SCC 344 was not
specifically adverted to.
33. As we see it, this device of furnishing an undertaking was
found appropriate by the learned Single Judge to balance the
equities between the parties so that the very entertainment of
equitable relief could be considered. Even though it is our
analysis that the prayer for specific performance can be
declined in a given set of circumstances, we should not be
understood to say that this should be done in every case. It is
impossible to circumscribe the exercise of discretionary power
and it must be left to the trial Court in every case to work out a
balance which would ensure that litigation is not raised as a tool
of oppression. In this case, this is precisely what the learned
Single Judge has endeavoured to do. This device has already
received the imprimatur of the Division Bench in Vinod Seth. It
is a matter of judicial pride that the judges think long and hard
for creating a situation where the judicial process is not reduced
to one causing oppression. However, this balancing act must be
done within the confines of law. We have already mentioned
that in India damages have to be proved before they can be
claimed. Penalties cannot be made payable merely because they
find mention in the contract. Pre-determination of the costs
likely to be incurred can legitimately be presented to the Court.
As and when so done, the Court can direct the party to give an
undertaking by exercising the powers contained in Order XXV
Rule 1 of the CPC.
34. It is in these circumstances that the Appeal is allowed
with a clarification that the learned Single Judge may direct the
furnishing of an undertaking with a view to securing the costs
likely to be incurred in the course of litigation. Liberty is
granted to the Defendant to move an application for this
purpose. Pending Application also stands disposed of.
FAO(OS) No.64/2009
35. In this case an Agreement to Sell dated 4.2.2004 has
uncontrovertedly been executed between the parties, the salient
terms of which were that the sale consideration was fixed at
Rupees 1.77 crores, out of which Rupees 18 lacs was paid as an
advance; the purchaser/Plaintiff was also obligated to pay a
further sum of Rupees 35 lacs on or before 7.3.2004; possession
was to be handed-over to the purchaser at the time of the
execution of the Sale Deed. It appears that the
Appellants/Defendants addressed a letter dated 13th -15th March,
2004, reminding the Plaintiffs/Respondents that they had
committed default with regard to this obligation. In response
thereto the Plaintiffs asked the Defendants to collect the
payment of Rupees 35 lacs or collect the full payment and give
possession of the entire property. By their letter dated
29.3.2004 the Appellants reiterated that the Plaintiffs had
committed a breach of the Agreement in not paying the sum of
Rupees 35 lacs. What is important is that the Plaintiffs
were granted another opportunity to pay within two days the
said amount of Rupees 35 lacs vide letter dated 29.3.2004. As
this amount was not paid, the contract was cancelled by the
Appellants/Defendants‟ vide letter dated 7.4.2004. It is relevant
to recall that the legal principle is that it is the debtor who is
bound to find the creditor and, therefore, it may not have been
open to the Plaintiffs to ask the Defendants to collect payment.
After an exchange of legal notices, the suit for Specific
Performance was filed on 2.9.2005.
36. On the first date of hearing learned counsel for the
Defendants volunteered that the Defendants would not alienate,
mortgage, transfer or part with the possession of the suit
property. The learned Single Judge directed the Plaintiffs to file
a Statement of Accounts to show that they were possessed of
requisite funds. The Bank Statement appears to have been filed
around September, 2005, in response to which learned counsel
for the Defendants had insisted that Statement of Account
should have pertained to March, 2004, which was the period
when the Plaintiffs ought to have been possessed of necessary
funds. This, in our view, would have been either Rupees 35 lacs
or the entire balance sale consideration. After several
intervening hearings, the suit was listed on 25.5.2006 when it
was stated that the volunteered undertaking not to create third
party interest would continue provided the Plaintiffs deposit the
balance sale consideration of Rupees 1.59 crores. It was in
these circumstances that this sum came to be deposited by the
father of the Plaintiff/Director, who had also undertaken to the
Court that he would not claim this money on the ground that he
was not a party to the suit. The question of whether it was open
to the father of the Plaintiff/Director to make this deposit
instead of the Plaintiff before us, had been argued by learned
counsel for the Defendant before the successor Court on
subsequent hearings. We have perused the records and find that
repeated adjournments had been consumed by the Plaintiffs and
nevertheless its evidence remains incomplete till date. No fault
for delay can be laid on the Defendants/Appellants.
37. The impugned Order has been passed by the second
successor Court. We have pointed this out for the reason that
the initial Order directing the Plaintiffs to make deposit the
balance sale consideration was a discretionary order which
ordinarily would not be open to modification by a successor
Court, unless circumstances had changed to such an extent that
modifying the initial Order would be necessitated in the interest
of justice. It could have been assailed in Appeal, but since this
was not done, the ad interim arrangements had become
unalterable during the pendency of the suit. In fact, it is the
Plaintiffs who had taken several adjournments and they could
not, therefore, make a grievance that the amounts deposited
were not available to the Plaintiffs because of willful defaults of
the Defendants.
38. The Appellants have appeared in person. They state that
they had to discharge their Advocates since they are not
possessed of sufficient funds to pay further legal fees. They have
also submitted before us that they had planned to buy separate
properties in 2004 itself, on the receipt of the total sale
consideration as per the Agreement. They justifiably contend
that today it is not possible for them to purchase separate
residences for themselves from the sale consideration owing to
the sharp escalation in the price of real estate. They have also
stressed on the fact that they are from a service background,
whereas the Plaintiffs are in the property business.
39. In support of the impugned Judgment, whereby the second
successor Court has reversed the initial Order directing the
Plaintiffs to deposit the balance sale consideration, Mr. J.P.
Sengh, learned Senior Counsel appearing for the Respondents,
has relied heavily on the Order in Sukhbir Singh -vs- Brij Pal
Singh, JT 1996 (6) SC 389 : 1997 (2) SCC 200. This Order,
however, does not advance the case of the Plaintiffs. What their
Lordships clarified was that it was not necessary for the
purchasers to carry money with them from the date of the suit
till the date of the decree. Their Lordships noted that the
purchaser was present at the sub-Registrar‟s Office (leading to
the inference that they were possessed of sufficient funds) and,
therefore, the suit for specific performance had been rightly
decreed. In the case in hand, an appeal against the order of the
learned Single Judge directing the deposit of the balance sale
consideration of Rupees 1.59 crores has not been preferred by
the Plaintiffs at any stage. It is noteworthy that the Plaintiffs
had not made this deposit themselves which can legitimately
lead to the inference that they were not possessed of sufficient
funds, not only at the relevant time, that is, when payments
were to be made as per the terms of the contract, but also
subsequent to complying with the Orders of the learned Single
Judge. Learned Senior Counsel has also sought support from the
decision of the Division Bench in Ansal Properties
Industries(Pvt.) Ltd. -vs- Rajinder Singh, 1990(19) DRJ 17 :
41(1990) DLT 510 which has subsequently been followed by a
Single Bench. In Ansal the sequence of events are peculiar and
unique. At the initial hearing, the trial Court had held that the
suit was for part performance of the Agreement to Sell and such
a suit would be maintainable after the party suing pays or has
paid the consideration for the whole contract reduced by the
consideration for the part that must be left unperformed. It was
in that context that reference was made to Section 12 of the SR
Act. It is Section 16 which is relevant for our purposes. It is not
open to learned counsel to rely only on the observations that a
direction for payment of consideration can be issued only at the
time when initial decree is passed. This was obviously in the
context of Section 12 and not Section 16 of the SR Act. Be that
as it may, the Bench had earlier clarified that an Order directing
the party to deposit the sale consideration "should be adopted
rarely and only when the Court is of the opinion that the
averment of the plaintiff being ready and willing to perform the
contract may not be quite true".
40. We are of the opinion that the impugned Order must be
set aside on two grounds. Firstly, it should be disclosed to the
Court that circumstances have so drastically and significantly
changed that continuing with the prevailing interim
arrangement would indisputably lead to injustice so far as the
Appellant is concerned. If interim orders are incorrect or
inappropriate, it is for a party to castigate them in appeal.
Secondly, we cannot find any flaw in the direction calling upon
the Plaintiffs to deposit the balance sale consideration. This
additionally assumes relevance and importance because it is not
the Plaintiffs who had made the deposit and it is only their
financial capacity at the relevant time which is the focal issue.
The correspondence between the parties, prima facie, shows
that the Plaintiffs had not performed their obligations under the
Agreement to Sell. If despite this fact the Plaintiffs, who are in
the property business, are permitted to freeze transactions of
the suit property, it would cause an equitable imbalance. As has
already been observed, the reality is that regardless of whether
an injunction has been passed or not, the
Appellants/Owners/Defendants would not be in a position to sell
their property at the market rate while the suit is pending.
Therefore, the Order directing the Plaintiffs to deposit the
balance sale consideration was essential and was, therefore,
rightly passed. We are unable to concur with the reasoning in
the impugned Order that the deposited amount should be
returned because the Defendants are not agreeing for the sale
to go through. The corresponding consideration is that the
Plaintiffs should also not be permitted to utilize the sale
consideration for deriving profit, which the Defendants are
foreclosed from earning. Prima facie, it appears to us to be
unfair to compel a party to sell their property at an
achronistically low price. The learned Single Judge had
properly exercised discretion at the initial stage, and the
successor Judge had not been shown sufficient reason to change
the situation.
41. In these circumstances, the Appeal is allowed. The
impugned Order dated 17.2.2009 is set aside and the previous
Order passed on 25.5.2006 is restored. Pending Applications
stand disposed of.
42. Parties to bear their respective costs.
( VIKRAMAJIT SEN )
JUDGE
November 27, 2009 ( V.K. JAIN )
tp JUDGE
