Sarathi Estates Pvt. Ltd vs S.L. Dosaj & Ors.
2012 Latest Caselaw 4992 Del

       *       IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                      Judgment delivered on: 24.08.2012

+      CS(OS) 2040/2006

       SARATHI ESTATES PVT. LTD              ..... Plaintiff
                    Through: Mr. Paramjeet Benipal, Advocate

                   versus

       S.L. DOSAJ & ORS.                               ..... Defendants
                      Through:         Mr. Vivek Malik and Mr. Angad Mehta,
                                       Advocates for D-10 to 13.
                                       Mr. Sanjeev Sachdeva, Sr. Adv. with Mr.
                                       A.K. Mehta, Adv. for D-1 to 9.
                                       Mr. Anuj Aggarwal, Adv. for D-14
CORAM:
HON'BLE MR. JUSTICE V.K.JAIN

                            JUDGMENT

V.K.JAIN, J. (ORAL)

IA No.12064/2006 (under Section 80(2) CPC)

This is a suit for specific performance of three agreements to sell, the first

agreement alleged to have been executed by the defendants no.1 to 4, the second

agreement to sell executed by predecessor in interest by defendant no.5 to 9 and the

third executed by the predecessor of defendants no.10 to 13, in favour of the

plaintiff or sale of their respective undivided shares in the suit property bearing

number 22, Golf Links, New Delhi. It is the case of the plaintiff that the agreement

dated 26.9.2005 was executed by defendant No. 1 Shri S.L. Dosaj and late Shri

R.L. Dosaj, predecessor in interest of defendants 2 to 4 for a total consideration of

Rs.12 crore and the plaintiff paid a sum of Rs.1.20 crore to the seller at the time of

execution of the agreement. The sale consideration in respect of the second

agreement to sell dated 3.10.2005 executed by defendants 10 to 13 was fixed at

Rs.10.5 crore and the plaintiff paid a sum of Rs.1.64 crore to the seller as part sale

consideration. The sale consideration under the third agreement to sell dated

21.9.2005 executed by late Gurdial Singh, predecessor in interest of defendant No.

5 to defendant No. 9 was fixed at Rs.7.50 crore and a sum of Rs.75 lac were paid to

the seller as part consideration. The balance amount, according to the plaintiff, was

to be paid at the time of registration of sale deed after the property had been

converted from leasehold into freehold. The plaintiff had also agreed to pay 50% of

the conversion charges, including misuse charges to be paid to L&DO. An

application was also submitted to L&DO for conversion of the suit property into

freehold and a sum of Rs.43,18,500/- was deposited by the plaintiff towards

conversion charges, through defendant no.1. Since the transaction was completed,

the plaintiff approached this Court by way of the present suit.

2. The instant application has been filed by the plaintiff seeking interim

injunction during pendency of this suit restraining the defendants from creating any

third party right and interest in the suit property.

3. The case of the defendants no.1 to 9 is that one Mr. S.S. Somal, husband of

defendant no.11 showed to them an agreement purporting to be executed by

defendants no.10 to 13 in favour of the plaintiff for sale of their undivided share in

the suit property for total sale consideration of Rs.6.5 crore, whereas in fact the

agreement between them and the plaintiff was for a consideration of Rs.10.50

crore. Thus, the defendants no.1 to 9 alleged that a fraud has been played with them

by Mr. S.S. Somal in connivance with the plaintiff and the defendants no.10 to 13.

However, the execution of the agreements to sell as also receipt of the part sale

consideration has not been disputed by defendants no.1 to 9.

4. As far as defendants no.10 to 13 are concerned, they are not disputing the

transaction with the plaintiff but claim that the plaintiff had not been ready and

willing to perform its part of the consideration.

5. The question as to whether any fraud was played upon defendants no.1 to 10

by Mr. S.S. Somal and if so whether it was in connivance with the plaintiff and

defendants no. 1 to 13 or with only the plaintiff are the matters which require

investigation during trial and no firm view with respect to these allegations can be

taken at this stage. Though, there is dispute as regards the exact share of defendants

no.10 to 13 in the suit property, that again is a matter which requires to be

determined only after trial. What is important for the purpose of deciding this

application is that all the defendants admit that they/their predecessor in interest

had agreed to sell whatever share they had in the suit property to the plaintiff. They

also do not dispute the factum of execution of the agreements. They also admit

receipt of payments alleged in the plaint.

6. Since the execution of the agreement to sell as well as receipt of the part sale

consideration have been admitted, the plaintiff has been able to make out a prima

facie case in its favour. This finding further strength from the fact that the

conversion charges amounting to Rs.43,18,500/- were also paid by the plaintiff.

The balance sale consideration was not payable before the conversion of the suit

property into freehold and that stage has not arrived as yet.

7. In N. Srinivasa v. Kuttukaran Machine Tools Ltd., (2009) 5 SCC 182,

noticing that the only ground taken by the respondent was that since time was the

essence of the contract and the appellant had failed to perform his part of the

contract within the time specified in the agreement and, therefore, the question of

grant of injunction against transfer or alienation of the suit property did not arise at

all, the Supreme Court observed that it must be kept in mind that it would be open

to the respondent to transfer, alienate or create any third party interest in respect of

property in dispute before passing the award in which one of the main issues would

be whether time was essence of the contract or not. The Court was of the view that

if at the stage when application of the appellant under Section 9 of the Arbitration

and Conciliation Act was pending, if the respondent is permitted to transfer,

alienate or create any third party interest in respect of the property in dispute then

the award, if any, which may be passed in his favour would get nugatory and it

would be difficult for him to ask the respondent to execute

a sale deed when a third party interest has already been created by sale of property

in dispute and delivering the possession to the third party.

If an interim protection is not granted to the plaintiff, the defendants may

dispose of the suit property or may create third party interest therein, thereby

defeating the very object behind filing of the suit. On the other hand, the

defendants are not likely to suffer any irreparable loss in case they are restrained

from selling, assigning or transferring the suit property and from creating any third

party interest therein during pendency of the suit. They will continue to enjoy the

suit property as they are doing at present. The balance of convenience thus lies in

favour of maintaining status quo during pendency of the suit.

In view of the decision of Division Bench of this Court in Mohan Overseas

P. Ltd vs. Goyal Tin & General Industries 169 (2010) DLT 487 (DB), it would be

appropriate if the plaintiff is directed to deposit the balance sale consideration in

this Court by way of an FDR in the name of Registrar General of this Court

initially for a period of one year. Such a condition will also ensure that having

obtained an interim order, the plaintiff does not protract the trial of the case and the

final decision can be rendered at an early date.

The learned counsel for the plaintiff states that the plaintiff is ready to

furnish a bank guarantee of Rs.24,14,00,000/-,which according to it is the balance

sale consideration payable to the defendants, for completion of the entire

transaction. Mr. Sachdeva, the learned senior counsel for the defendants no.1 to 9

submits that instead of the bank guarantee, the plaintiff should be called upon to

deposit the bank guarantee for the aforesaid amount in the Court.

9. In my view, furnishing a bank guarantee with Registrar General of this Court

would serve the required purpose since on furnishing the bank guarantee, there

would be no incentive for the plaintiff to prolong the trial of the case after

obtaining an injunction order in its favour.

10. For the reasons stated hereinabove, the parties to the suit are directed to

maintain status with respect to the title and possession of the suit property bearing

number 22, Golf Links, New Delhi during pendency of this suit, subject to plaintiff

furnishing a bank guarantee amounting to Rs.24,14,00,000/-, to the satisfaction of

Registrar General of this Court within four weeks from today.

11. At present the entire suit property is let to a tenant i.e. Libyan Embassy. If

and when the suit property or any part of it is vacated by Libyan Embassy, the

same would not be let out to any person nor any third party interest would be

created therein, without prior permission of the Court. The learned counsel for the

plaintiff states that he would be filing an application for deposit of the rent being

paid by Libyan Embassy in the Court during pendency of the suit. If and when

filed, such an application would be considered at its own merits.

The application stands disposed of.

CS(OS) 2040/2006 Following issues are framed on the pleadings of the parties:

(i) Whether the plaint has been signed and the suit has been instituted by

a competent person? OPP

(ii) Whether Mr. S.S. Somal played a fraud upon the defendants no.1 to 4

and the predecessor in interest of defendants no.5 to 9, as alleged in

the written statement of defendants no.1 to 9? OPD-1 to 9.

(iii) If Issue no.(ii) is proved, whether defendant no.1 to 4 are entitled to

rescind the agreement to sell dated 26.9.2005 and defendants no.5 to 9

are entitled to rescind the agreement to sell dated 21.9.2005? OPD- 1

to 9.

(iv) Whether the suit is bad for mis-joinder of causes of action? OPD

(v) Whether the plaintiff has always ready and willing to perform its part

of the contract? OPP

(vi) Whether the plaintiff is entitled to specific performance of the

agreements to sell dated 21.9.2005, 26.9.2005 and 3.10.2005?OPP

(vii) Relief.

No other issue arises.

Affidavits by way of evidence be filed within four weeks.

On the request of the plaintiff Shri Dinesh Dayal, a former Additional &

District Judge is appointed as Local Commissioner to record the evidence of the

parties in this suit. The fee of the Local Commissioner is fixed at Rs.75,000/-,

which shall be paid by the plaintiff.

The parties are directed to appear before the Local Commissioner on

11.10.2012, for fixing dates of recording of cross examination of the witnesses.

IA No.3419/2012 (under Order 151 CPC) Heard. It is made clear that pendency of this suit will not come in the way of

L&DO converting the suit property into freehold from leasehold in favour of

lessee.

The application stands disposed of.

V.K.JAIN, J AUGUST 24, 2012 RD/BG