Yahoo Properties Pvt. Ltd. vs Bhai Manjit Singh And Anr
2012 Latest Caselaw 6409 Del

$~24
*      IN THE HIGH COURT OF DELHI AT NEW DELHI
+      CS(OS) 510/2005
       YAHOO PROPERTIES PVT. LTD.                      ..... Plaintiff
                              Through Mr. S P Kalra, Sr. Adv. with Mr.
                              Rajiv Kapoor, Mr. Avinash Mishra, Adv.
                       versus
       BHAI MANJIT SINGH AND ANR.             ..... Defendant
                              Through Mr. Amit S Chadha, Sr. Adv. with
                              Mr. Alok Kumar Aggarwal and Mr. Kunal
                              Sinha, Adv.
                              Mr. Neeraj Chaudhari, Adv. for CGSC
                              with Ms. Neha Singh, Adv. for D-9
       CORAM:
       HON'BLE MR. JUSTICE KAILASH GAMBHIR

                 ORDER

%                01.11.2012

IA No 13108/2012

By this application filed under Order 14 Rule 2(2) (b) moved by

defendant nos. 1 to 4, they seek direction to treat issue no. 7 as a

preliminary issue.

Addressing arguments on this application, Mr. Amit Chadha, learned

Senior Advocate appearing for the defendant nos.1 to 4 submit that vide

order dated 9.12.2005, this Court had framed the issues arising out of the

pleadings of the parties and one of the issues framed was issue no. 7, onus

of which was placed on the plaintiff to prove that the plaintiff was always

ready and willing to perform its part of the contract. Counsel also submits

that under Section 16 (c) of the Specific Relief Act 1963, the plaintiff has

not merely to plead but prove the said fact in evidence that he has always

been ready and willing to perform the contract. Counsel further submits

that since in the present case, plaintiff has failed to prove issue no. 7 and

on its failure to lead any evidence on the said issue, therefore, the plaintiff

as per the mandate of Section 16 (c) of the Specific Relief Act 1963, would

fail in the present suit on this sole ground. Counsel for the defendants also

submit that on the failure of the plaintiff to lead any evidence on the said

issue, the relief sought by the plaintiff for specific performance of the

contract has become barred by law and once, the remedy of the plaintiff has

become barred by law, then, as per the mandate of Order 14 Rule 2 (2) (b )

of the of Code of Civil Procedure, 1908, the issue no. 7 is required to be

treated as preliminary issue, so that without dissipating the precious time of

this Court any further, the present case itself can be disposed of, after

hearing arguments on the issue no. 7. Counsel for the defendants further

submit that Order 14 Rule 2(2) (b) mandates that if the case or any part

thereof can be disposed of on an issue of law, which relates to a bar to the

suit created by any law for the time being in force such issue may be

treated as preliminary issue. Counsel also placed reliance on Order 15 Rule

3 of Code of Civil Procedure, 1908 to support his argument that where after

framing of the issues the court is satisfied that no further arguments or

evidence is required to be adduced on such issues which may be sufficient

for the decision of the suit then in such like state, the discretion vests with

the Court to proceed to determine such an issue and give its final verdict.

The learned Senior Counsel also submits that from a bare reading of

the plaint, it would be manifest that whatever amounts the defendants had

paid under the Memorandum of Understanding (MOU), the plaintiff had

taken post-dated cheques for the equivalent amount which was inclusive of

the interest amount calculated @ 15% p.a. Therefore, in this regard the

Counsel raised a contention that with the acceptance of the said post-dated

cheques by the plaintiff, the plaintiff lost its right to claim specific

performance of the Contract.

Counsel for the defendants placed reliance on the following

judgments to support his arguments:

1. Man Kaur (DEAD) by LRS. V. Hartar Singh Sangha, (2010) 10 SCC 512

2. Bal Krishna & Anr V. Bhagwan Das( Dead) by LRS and others, (2008) 12 SCC 145

3. Manjunath Anandappa URF Shivappa V. Tammansa & othrs, (2003) 10 SCC390

4. N.P. Thirugnanam (Dead) by LRS. V. Dr. R.Jagan Mohan Rao and others, (1995) 5 SCC115

This application has been strongly opposed by Mr. S P Kalra Senior

Advocate appearing for the plaintiff. Mr. Kalra submits that issues in this

matter were framed way back in December, 2005, and the plaintiff closed

its evidence in affirmative on 4.3.2008. Counsel for the plaintiff further

submits that the defendants in the past 4 years have only examined one

witness, while the total number of witnesses sought to be examined by the

defendants are just two in number. Counsel for the plaintiff also raised a

contention that the purpose of filing the said application by the defendants

at such an advance stage is only with an oblique motive to cause further

delay in the matter. Counsel further submits that this is not the stage for

this Court to frame a preliminary issue as the matter has almost reached

the final stage. Counsel also submits that the plaintiff has placed sufficient

material on record which is not in dispute between the parties, to show that

the plaintiff has always been ready and willing to fulfill its part of the

obligation. Counsel for the plaintiff further submits that an amount of Rs.

1.51 crores was paid by the plaintiff at the time of the execution of the MOU

dated 21.10.2003. Counsel further submits that an additional amount of Rs.

50 lacs was also paid by the plaintiff, out of the remaining sale

consideration amount. Counsel also submits that in the Suit No. 826/2011

filed by Mitsui & Co. Ltd., against the defendants, the present plaintiffs had

agreed to pay an amount of Rs. 15 crores to Mitsui & Co. Ltd., on behalf of

these defendants and in fact, the plaintiffs had brought a bank draft/cheque

for the said amount of Rs. 15 crores, so as to get the premises vacated from

Mitsui & Co Ltd. Counsel further submits that the plaintiffs were always

ready and willing to fulfill their part of contract to pay the balance

consideration amount and the plaintiffs are in a position to satisfy this Court

on the said fact on the strength of material already available on record.

Counsel also submits that this Court will have to go into the factual aspect

of the case in deciding issue no. 7 if the same is framed as a preliminary

issue. Lastly, the Counsel submits that the application moved by the

defendants is highly belated and therefore, the same deserves outright

rejection on this sole ground.

In support of his arguments, counsel for the plaintiff placed reliance

on the following judgments:

1. Mohammaed Yasin V. Abdul Kalam & others, 32 (1987) DLT 143

2. Madhabananda Ray And Anr. vs Spencer And Company Ltd. AIR 1988 ORISSA 35

3. Dhirendranath Chandra vs Apurba Krishna Chandra And Ors AIR 1979 PATNA 34

4. Usha Sales Ltd. V. Malcolm Gomes and others AIR 1984 BOMBAY 60

I have heard learned counsel for the parties at considerable length

and given my thoughtful consideration to the arguments advanced by them.

The plaintiff has filed the present suit for Specific Performance of a

Contract, mainly on the allegations that in or around middle of October,

2003, defendant nos.1 to 5 had represented to the plaintiff that the

defendant no.1 was the exclusive and absolute owner of the property

situated at 28A Prithvi Raj Road, New Delhi. It is also the case of the

plaintiff that the defendant nos. 1 to 5 had offered to sell the same for a

total sale consideration amount of Rs.29 crores, and an Agreement to Sell

dated 21.10.2003 was duly executed by the defendant no.2 in her capacity

as karta of defendant no.1 in favour of the plaintiff. It is also the case of the

plaintiff that a sum of Rs.1.51crores was paid by the plaintiff by means of

cheque no 681234 dated 21.10.2003 drawn on Bank of Rajasthan, Janpath,

New Delhi and receipt thereto was duly acknowledged by defendants no. 1,

2 and 3 in the said Agreement to Sell itself. It is also the case of the

plaintiff that the defendant nos. 1 to 7 had assured the plaintiff that they

would complete the said transaction within a period of 90 days from the

date of execution of the Agreement to Sell and the balance sale

consideration amount shall be paid by the plaintiff at the time of final

execution and registration of the Sale Deed and handing over of the vacant

and peaceful possession of the property in question to the plaintiff. The

other facts as set out by the plaintiff in the plaint may not be relevant for

the purpose of deciding the present application.

Contesting the present suit the defendant in their written

statement raised a principal objection that no Agreement to sell was ever

executed or entered into between the defendant no.1 and the plaintiff at any

point of time. It is also the case of the defendants that whatever amount,

the plaintiff had paid under the MOU, the post-dated cheques for the

equivalent amounts were accepted by the plaintiff along with the interest

amount @ 15% per annum. The defendants have also averred that there

was no concluding contract between the parties, specific performance of

which can be sought by the plaintiff. This Court does not find the necessity

of narrating the entire defense as raised by the defendants in so far as to

deal with the controversy involved in the present application is concerned.

Based on the pleadings of the parties, this Court framed the following issues

on 09.12.2005:-

1. "Whether there was no concluded contract of sale of property in suit between the plaintiff and the defendant no 1 to 6?

2. Whether the memorandum of understanding dated 21.10.2003 was superseded by the subsequent understanding as contained in the joint application being the IA No. 7145 of 2004 filed in suit No. 826 /04?

3. (a) Whether the understanding contained in the said application, being IA No. 7145/2004 came to an end on the expiry of 1.12.2004?

(b) What is the effect of IA No. 7145/2004 not being allowed by the court on the relief claimed in present suit?

4. Whether the suit for specific performance for transfer of immovable properties in furtherance to the memorandum dated 21.10.2003 is maintainable in the face of clause (c ) of the said Agreement? If so, to what effect?

5. whether the total consideration/price to be paid by the plaintiff or purchase of the property in suit was to be fixed by the parties after obtaining the permission from the court and after removing the encumbrances?

6. Whether the suit is bad by misjoinder of the parties as alleged in Para 12 of the written statement filed by the defendant no. 1 to 6?

7. Whether the plaintiff has always been and is willing to perform its part of the contract?

8. to what relief is plaintiff entitled and against which of the defendants?

9. What is the effect of the property being mortgaged to defendant No. 10 on the relief claimed by the plaintiff?

10. Relief"

At the time of the framing of the issues, none of the defendants raised

any plea for framing the issue no. 7 as a preliminary issue. The onus of

proving issue nos. 1 to 6 was placed on the defendants, while onus of

proving issue nos. 7 and 8 was placed on the plaintiff. The plaintiff closed its

evidence in affirmative on 4.03.2008 and since then, matter has been fixed

for the evidence of the defendants.

It is not in dispute that for the past four years, the defendants have

examined only one witness and as per the list of witnesses filed by them,

only one more witness is required to be examined by them. Undeniably, the

matter has reached at the final stage and this application has been moved

by the defendants at a stage when the case is almost ripe for final hearing.

Before I deal with the contentions raised by the counsel for the

parties, it would be appropriate to re-produce Order 14 Rule 2(2) and

order 15 Rule 3 of the Code of Civil Procedure 1976, which reads as

under:-

"ORDER XIV. SETTLEMENT OF ISSUES AND DETERMINATION OF SUIT ON ISSUES OF LAW OR ON ISSUES AGREED UPON

"2. Court to pronounce judgments on all issues -

(1) Notwithstanding that a case may be disposed of on a preliminary issue, the court shall subject to the provisions of sub- rule (2), pronounce judgment on all issues.

(2)where issues both of law and of fact arise in the same suit, and the court is of opinion that the case or any part thereof may be disposed of on an issue of law only, it may try that issue first if that issue relates to-

(a) The jurisdiction of the court, or

(b) A bar to the suit created by any law for the time being in force,

and for that purpose may, if it thinks fit , postpone the settlement of the other issues until after that issue has been determined, and may deal with the suit in accordance with decision on that issue"

(Subs by CPC (Amendment)Act 104 of 1976, for Rule 2( w.e.f 1-2-1977) Before inculcating the said amendment Rule 2 was read as under:

"R.2. Issues of law and of fact-

"Where issues of both law and of fact arise in the same suit , and the Court is of the opinion that the case or any part thereof may be disposed of on the issues of law only, it shall try those issues first, and for that purpose may, if it thinks fit, postpone the settlement of the issues of the fact until after the issues of law have been determined."

"ORDER XV . DISPOSAL OF THE SUIT AT THE FIRST HEARING

3. Parties at issue (1) Where the parties are at issue on some question of law or of fact, and issues have been frame by the Court as herein before provided, if the Court is satisfied that no further argument or evidence than the parties can at once adduce is required upon such of the issues as may be sufficient for the decision of the suit, and that no injustice will result from proceeding with the suit forthwith, the Court may proceed to determine such issues, and , if the finding thereon is sufficient for the decision, may pronounce judgment accordingly, whether the summons has been issued for the settlement of issues only or for the final disposal of the suit:

Provided that, where the summons has been issued for the settlement of issues only, the parties or their pleaders are present and none of them objects.

(2) Where the finding is not sufficient for the decision, the Court shall postpone the further hearing of the suit, and shall fix a day for the production of such further evidence, or for such further argument as the case requires."

The provisions of Order 14 Rule 2 came up for consideration before the Hon'ble Supreme Court

in the case of Major S.S. Khanna vs. Brig. F.J. Dillon AIR 1964 SC 497, wherein it was held

as under:-

"Under O. 14 R. 2 where issues both of law and of fact arise in the same suit, and the Court is of opinion that the case or any part thereof may be disposed of on the issues of law only, it shall try those issues first, and for that purpose may, if it thinks fit, postpone the settlement of the issues of fact until after the issues of law have been determined. The jurisdiction to try issues of law apart from the issues of fact may be exercised only where in the opinion of the Court the whole suit may be disposed of on the issues of law alone, but the Code confers no jurisdiction upon the Court to try a suit on mixed issues of law and fact as preliminary issues. Normally all the issues in a suit should be tried by the Court: not to do so, especially when the decision on issues even of law depends upon the decision of issues of fact, would result in a lop-sided trial of the suit." Though there has been a slight amendment in the language of Order XIV Rule 2 CPC by the Amending Act, 1976, but the principle enunciated in the above quoted decision still holds good and there can be no departure from the principle that the Code confers no jurisdiction upon the Court to try a

suit on mixed issue of law and fact as a preliminary issue and where the decision on issue of law depends upon decision of fact, it cannot be tried as a preliminary issue.

In Estrela Batteries v. Modi Industries (AIR 1976 All 201), it was held

that in a case where a preliminary issue as to jurisdiction of the Court to

entertain the suit raised is not a pure question of law but is one involving

mixed question of law and fact, the finding of the trial Court that such issue

cannot be decided as a preliminary issue under Order 14, Rule 2 was held

to be not vitiated by any error. A Full Bench of the Madhya Pradesh High

Court (Indore Bench) considered the scope and effect of Rule 2 of Order 14

in Ramdayal Umraomal v. Pannalal Jagan-nathji, (AIR 1979 Madh Pra

153 (FB)), wherein it was held by the Full Bench after reviewing the entire

case law on the point that under Order 14, Rule 2 of the C P. C., an issue

relating to jurisdiction of the Court can be tried as a preliminary issue only

if it can be disposed of without recording any evidence. If the issue about

jurisdiction is a mixed question of law and fact requiring recording of

evidence, the same cannot be tried as a preliminary issue.

The Hon'ble Supreme Court in Ramesh B. Desai v. Bipin Vadilal

Mehta,(2006) 5 SCC 638, has laid down that Order 14 Rule 2 of CPC

confers no jurisdiction on a Court to decide the mixed questions of fact and

law as a preliminary issue. It is clearly held in this judgment that where for

a decision on an issue of law (such as a suit being barred by a particular

law) depends upon the decision on disputed fact then the issue cannot be

tried as a preliminary issue. The Supreme Court has therefore made it clear

that once there are disputed questions of facts which require trial, the issue

cannot be decided as a preliminary issue. Para 13 of this judgment

isrelevant and the same read as under:-

"13. Sub-rule (2) of Order 14 Rule 2 CPC lays down that where issues both of law and of fact arise in the same suit, and the court is of the opinion that the case or any part thereof may be disposed of on an issue of law only, it may try that issue first if that issue relates to (a) the jurisdiction of the court, or (b) a bar to the suit created by any law for the time being in force. The provisions of this Rule came up for consideration before this Court in Major S.S. Khanna v. Brig. F.J. Dillon and it was held as under: (SCR p.

421) "Under Order 14 Rule 2, Code of Civil Procedure where issues both of law and of fact arise in the same suit, and the court is of opinion that the case or any part thereof may be disposed of on the issues of law only, it shall try those issues first, and for that purpose may, if it thinks fit, postpone the settlement of the issues of fact until after the issues of law have been determined. The jurisdiction to try issues of law apart from the issues of fact may be exercised only where in the opinion of the court the whole suit may be disposed of on the issues of law alone, but the Code confers no jurisdiction upon the court to try a suit on mixed issues of law and fact as preliminary issues. Normally all the issues in a suit should be tried by the court; not to do so, especially when the decision on issues even of law depend upon the decision of issues of fact, would result in a lopsided trial of the suit."

Rule 2 was amended by the Code of Civil Procedure (Amendment) Act,

1976. The object of the amendment of 1976 was that the Court should

decide all issues together and there should not be piecemeal decisions on

separate issues, unless the issue is an issue of law pertaining either to the

suit being barred by law or pertains to the jurisdiction of the Court. A plain

reading of Rule 2 will show that even where the Court finds that the case

can be disposed of on a preliminary issue, still the Court has been mandated

to pronounce judgment on all the issues. Thus, Sub-Rule 2 is again subject

to fulfillment of two other conditions laid down in Rules (a) & (b) of the Sub-

Rule -2 of Rule-2. Sub-Rule 2(a) relates to the issue of jurisdiction of the

Court and Sub-Rule 2(b) relates to a bar to the suit created by any law for

the time being in force. Sub Rule 2 further provides that in the said two

eventualities, the Court if it thinks fit, may postpone the settlement of the

other issues until determination of the preliminary issue and thereafter,

may deal with the suit in accordance with the decision on such a

preliminary issue. Certainly, both the eventualities envisaged in Sub-Rule 2

(a) and (b) are dissects of law. There is thus, no scope to frame a

preliminary issue wherever decision on such a preliminary issue cannot be

decided without appreciating the factual controversy involved in a suit. The

decision on the factual controversies can be arrived at only after the parties

are given a chance to adduce their respective evidence.

It is also evident from the language of Sub Rule 2 of Rule 2, Order 14

that it is not obligatory on the Court to decide a issue relating to jurisdiction

or legal bar to a suit as preliminary issue as the language of Rule 2 (2) of

Order 14 clearly indicates that discretion is given to the Court and no such

duty is imbued upon the Court to decide any issue as a preliminary issue.

Wherever the Court finds that the issue is such which necessitates

investigation into the facts after the evidence is led by the parties, then in

such a case even where the issue relates to the jurisdiction of the Court or

the issue being barred under any law, will be decided by the Court only

after the trial and not by framing a preliminary issue.

Thus the principle enunciated under Order 14 Rule 2 CPC by the amending

Act, 1976, there can be no departure from the fact that the Code confers no

jurisdiction upon the court to frame a preliminary issue on mixed issues of

law and fact and where the decision on issue of law depends upon decision

of fact, it cannot be tried as a preliminary issue.

Although going by the contentions raised by the parties, there can be

no quarrel with the legal proposition canvassed by Mr. Amit Chadha,

learned senior counsel for the defendant and the judgments cited by him so

far the mandate of Section 16 (c) of the Specific Relief Act is concerned.

Undoubtedly to seek Specific Performance of a contract, the plaintiff has to

plead and prove that he was always ready and willing to perform his part of

the contract. Having said this, it cannot be disputed that for proving any

facts in a case, the same can be proved either by admission in the pleadings

or based on the admission of the documents of either of the parties and

finally with the help of evidence. Therefore, it cannot be said that simply

because the plaintiff has not entered

the witness box, the same by itself should non-suit the plaintiff as argued by

learned counsel for the defendants. The effect of the plaintiff not entering into the

witness box certainly will be taken into consideration at the time of final decision

of this case and, therefore, this Court would be hesitant to embark upon this fact

finding enquiry at this stage. As already discussed above, prior to the amendment

in Order 14 Rule 2 C.P.C all the legal issues on which the suit could be disposed of

were to be tried as preliminary issues. But after the amendment, the preliminary

issue may be framed by the Court only when the issue relates to a jurisdiction of

the Court or when a bar under any law is created to the maintainability of a suit.

The other departure brought out in the amendment is that under S.14 (2) (ii), the

expression 'shall' has been substituted by the expression 'may' and therefore, it is

now left to the discretion of the Court to frame the preliminary issues even if such

issue may relate to the jurisdiction of the Court or a bar to the suit created by any

law. For excusing a decision in such like case, relevance can be placed on the

judgment of this Court in Mohammad. Yasin Vs. Abdul Kalam & Another,

reported in 32(1987) DLT 143 where the court took a view that once the issues are

settled then the Court would not be justified, especially after a lapse of six years to

order one of the issues to be tried as a preliminary issue. The relevant part of the

said paragraph is reproduced as under:-

"(7) .... It is no doubt true that in the written statement it was stated that this should be treated as a preliminary issue but the court, while framing the issues in 1979, did not exercise its discretion in favor of the respondents/defendants. The question which arises is whether the trial court was justified in directing, six years after the issues had been framed, that one of the issues tried as a preliminary issue. The words "and for that purpose may, if it thinks fit, postpone the settlement of the other issues......" occurring in Order 14 Rule 2(2) seems to indicate that the trial court has to decide the question as to whether to treat an issue as a preliminary issue or not at the time of settlement of issues. Once the issues are settled, then ordinarily under Order 14 Rule 2(1) together. The discretion which is given to the trial court under sub-rule(2) of all the

issues are to be disposed of together. The discretion which is given to the trial court under sub-rule (2) of order 14 rule 2 is firstly whether to frame a preliminary issue or not and, secondly to postpone the settlement of other issues. It is open to the trial court to frame all the issues but still say, at the time of framing of the issues, that a particular issue will be treated as a preliminary issue provided, of course, that that issue pertains to the jurisdiction of the court or to the maintainability of the suit. The intention of the Legislature being that the disposal of the suit should be expedited, it would not be proper to construe the provision in such a way as to give an opportunity to the defendant to approach the court after a number of years and apply for treating one particular issue as a preliminary issue. This is precisely what has been done by the respondents in the present case. The proper time for insisting that a preliminary issue be framed was in 1979 when the issues were originally settled. Once the issues are settled then the court would not be justified, especially after lapse of 6 years, to order that one of the issues should be tried as a preliminary issue. The trial court, Therefore, erred in the present case in exercising its discretion in directing the issue with regard to jurisdiction to be regarded as a preliminary issue."

In the light of the aforesaid legal position, this Court is not inclined to

exercise the discretion in favour of framing any preliminary issue at this stage after

a long gap of seven years from the date of framing of the issues and that too when

the matter has almost reached the final stage. Hence, there lies no merit in the

present application and the same is accordingly dismissed.

KAILASH GAMBHIR, J

NOVEMBER 01, 2012 p