Sardar Balvinder Singh & Anr vs P.N Malhotra & Ors
2013 Latest Caselaw 1919 Del

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*       IN THE HIGH COURT OF DELHI AT NEW DELHI

+       I.As. 14393/2011 and 14387/2011 in CS(OS) 1742/2011

        SARDAR BALVINDER SINGH & ANR             ..... Plaintiffs
                    Through: Mr. Mohit Chaudhary, Advocate with
                             Ms. Pragya Singh, Advocate.

                           versus

        P.N MALHOTRA & ORS                          ..... Defendants
                     Through: Mr. Jitender Chaudhary, Advocate for
                              defendants No.1 to 3.
                              Ms. Shilpa Chohan, Advocate for
                              defendant No.4.


                                    Reserved on: 12th April, 2013.
%                                   Date of Decision: 29th April, 2013.

CORAM:
HON'BLE MR. JUSTICE MANMOHAN
                              JUDGMENT

MANMOHAN, J:

1. Present applications have been filed by defendants under Order 39 Rule 4 CPC for vacation of the ad interim injunction order dated 22nd July, 2011.

2. Ms. Shilpa Chohan, learned counsel for defendant No.4 contended that plaintiffs had falsely stated at the time of passing of the interim order dated 22nd July, 2011 that the entire suit property bearing No. L-II-80, Lajpat Nagar-II, New Delhi-110024 was a subject matter of the Agreement to Sell dated 28th July, 2008. She pointed out that the Agreement to Sell dated 28th July, 2008

only dealt with eighty per cent of the suit property and twenty per cent of the suit property belonging to defendant No.4 was never a part of the Agreement to Sell. Consequently, she submitted that the injunction order dated 22 nd July, 2011 needed to be vacated.

3. Mr. Jitender Chaudhary, learned counsel for defendants No. 1 to 3 stated that the present suit had been filed on the basis of fabricated documents and false averments. He pointed out that the plaintiffs at the time of arguing the injunction application being I.A. 11386/2011 had falsely stated that plaintiffs had made payment of Rs.50,00,000/- to the defendants. He contended that cheque of Rs.34,79,000/- dated 12th May, 2011 was never tendered to the defendants. He stated that the plaintiffs falsely averred that the cheque of Rs.34,79,000/- had been encashed, even though on the said date they had zero bank balance.

4. Mr. Jitender Chaudhary, learned counsel also contended that the plaintiffs had wrongly stated that a draft sale deed was exchanged between the parties by E-mails dated 13th May, 2011 and 16th May, 2011. He stated that the aforesaid E-mails are fabricated. In support of his contention, he relied upon the report of Local Commissioner appointed by this Court, who opined that the aforesaid E-mails were sent from an I.D. which was not created from the defendants' address, but was created from E-35, Lajpat Nagar-I, New Delhi-110024.

5. Mr. Jitender Chaudhary, learned counsel further stated that plaintiffs had erroneously stated in para 18 of the plaint that the suit property was on lease and that plaintiffs had paid Rs.5,00,000/- to the defendants' tenant to vacate. He pointed out that there was no tenant in the property since last fifty years and, therefore, there was no question of paying Rs.5,00,000/- to

any alleged tenant.

6. Mr. Jitender Chaudhary, learned counsel stated that plaintiffs had mischievously averred that they had made an additional payment of Rs.10,00,000/- on 14th May, 2009. He stated that though the receipt dated 14th May, 2009 bore the signatures of the defendants, its content were fabricated. According to him, the receipt dated 14th May, 2009 pertained to a separate loan transaction, whereas the present Agreement to Sell was cancelled on 31st August, 2008. In support of his contention that there were a number of loan transactions between the parties, he referred to another Cheque bearing No.08273 dated 13th January, 2009 which was given to defendant No.1 by the plaintiffs towards discharge of a friendly loan, which bounced due to 'insufficient funds'. Mr. Chaudhary stated that plaintiffs had mischievously clubbed the friendly loan transaction cheque with the Agreement to Sell dated 28th July, 2008.

7. On the other hand, Mr. Mohit Chaudhary, learned counsel for the plaintiffs submitted that in the application filed by the defendants, there was an admission to the extent that the Agreement to Sell dated 28th July, 2008 was executed by defendants No. 1 to 3 holding eighty per cent shares in suit property in favour of the plaintiffs and that an advance of Rs. 5,21,000/- had been paid by the plaintiffs. He submitted that the Agreement to Sell was irrevocable and that onus had been cast upon the defendants to get the suit property converted from leasehold to freehold. In this connection, he relied upon clauses 7 and 8 of the Agreement to Sell.

8. Mr. Mohit Chaudhary stated that as the defendant no. 1 was neither able to get the tenant evicted nor to get the suit property converted into freehold, the initial time for completing the transaction that means 31 st

August, 2008 was waived by the defendants No. 1 to 3 by accepting additional payment of Rs. 10,00,000/- on 14th May, 2009.

9. Mr. Mohit Chaudhary pointed out that it was in this context that draft sale deeds had been exchanged between the parties on 13th and 16th May, 2011.

10. Mr. Mohit Chaudhary contended that the Local Commissioner's report offered no assistance to the defendants as just because the E-35, Lajpat Nagar-I, New Delhi premises was used as an internet shop, did not mean that the drafts had been manufactured in any manner by the plaintiffs. He submitted that as the application was at the pre-evidence stage the allegations of the defendants with regard to fabrication of the emails could not be accepted.

11. Mr. Mohit Chaudhary pointed out that in the absence of a written loan agreement and without any pleading as to when and how the loan was advanced, the 'loan theory' suggested by the defendants should be rejected.

12. Mr. Mohit Chaudhary submitted that the payment of Rs. 15,21,000/- proved that the time for performance of the Agreement to Sell had been extended by the defendants.

13. He submitted that his statement on 21st July, 2011 that plaintiffs had made payment of Rs. 50,00,000/- was immaterial and inconsequential. He stated that the plaintiff was now ready and willing to deposit the balance sale consideration with this Court. According to him, the defendants having accepted the sum of Rs.15,21,000/- out of total consideration of Rs.51,00,000/- would still entitle the plaintiffs to a relief of injunction. In support of his submission, he relied upon the judgment of Mayar (H.K.) Ltd. v. Owners & Parties, Vessel M.V. Fortune Express, (2006) 3 SCC 100

wherein it has been held as under:-

"18. .............. The expression "material facts" has not been defined anywhere, but from the wording of Order 6 Rule 2 the material facts would be, upon which a party relies for his claim or defence. The material facts are facts upon which the plaintiff's cause of action or the defendant's defence depends and the facts which must be proved in order to establish the plaintiff's right to the relief claimed in the plaint or the defendant's defence in the written statement. Which particular fact is a material fact and is required to be pleaded by a party, would depend on the facts and circumstances of each case................."

xxxx xxxx xxxx xxxx

20. In S.J.S. Business Enterprises (P) Ltd. v. State of Bihar [(2004) 7 SCC 166] this Court has accepted the principle that the suppression of a material fact by a litigant disqualifies such litigant from obtaining any relief. This rule has been evolved out of the need of the courts to deter a litigant from abusing the process of court by deceiving it. But the suppressed fact must be a material one in the sense that had it not been suppressed it would have had an effect on the merits of the case. It must be a matter which was material for the consideration of the court, whatever view the court may have taken."

14. Having heard the learned counsel for parties and having perused the paper book, this Court finds that the learned counsel for plaintiffs on 22nd July, 2011 while arguing the injunction application had wrongly stated that the plaintiffs had made payment of Rs.50,00,000/- against the total sale consideration of Rs.51,00,000/-.

15. Further in paras 21 and 31 of the plaint, details of alleged payment by the plaintiffs to defendants totalling to Rs.50,00,000/- has been wrongly given.

16. In para 20 of the plaint, it is also wrongly stated that plaintiffs made further payment of Rs.34,79,000/- vide cheque dated 12th May, 2011 and it

was in pursuance to the said payment that draft sale deed was exchanged between the parties on 13th May, 2011. The relevant portion of the order dated 22nd July, 2011 as well as paras 20, 21 and 31 of the plaint are reproduced hereinbelow:-

ORDER DATED 22nd July, 2011

"15. .......According to the plaintiff, he has made payment of an amount of Rs.50 lakhs as against the total sale consideration of Rs.51 lakhs. The plaintiff has contended that he has been ready, willing and able to perform his part of the agreement but the defendants have dishonestly started avoiding to carry out their part of the agreement.

16. Having heard learned counsel for the plaintiff and having perused the application, I am satisfied that the plaintiff has made out a prima facie case for grant of ad interim injunction......."

PARAS 20, 21 AND 31 OF THE PLAINT

"20. .........At that stage further payment of Rs.34,79,000, vide dated 12.5.2011, drawn on Axis Bank was made to the Defendants.

Thus on 13.5.2011, the draft sale deed was exchanged by the parties. Acknowledgement of which was made by the Defendant No.1 on 16.5.2011................

21. ...................At this stage it is pertinent to note that till this date the plaintiff had paid following amounts to the Defendants, viz.

A. Rs. 21,000/- Cash on 21.7.2008 against receipt. B. Rs.5,00,000/- vide Cheque on 21.7.2008.

C. Rs. 5,00,000/- Cash on 14.5.2009 against hand written receipt.

D. Rs. 5,00,000/- vide Cheque on 21.5.2009.

E. Rs.34,79,000/- vide Cheque on 12.5.2011 Total Rs. 50,00,000/-

Apart from the above, the plaintiffs have paid and spent a sum of Rs.5,00,000/- towards getting the property vacated from the tenant.

xxx xxx xxx

31. .....................Earlier to this, the cause of action to institute the present case has arisen in favour of the plaintiff and against the defendants on various dates on which the plaintiff had paid amounts to the Defendants, viz.

A. Rs.21,000/- Cash on 21.7.2008 against receipt. B. Rs. 5,00,000/- vide Cheque on 21.7.2008.

C. Rs.5,00,000/- Cash on 14.5.2009 against hand written receipt.

D. Rs.5,00,000/- vide Cheque on 21.5.2009.

E. Rs.34,79,000/- vide cheque on 12.5.2011. Total Rs.50,00,000/-"

(emphasis supplied)

17. Since the case of the defendants was that the cheque of Rs.34,79,000/-

was never tendered leave alone encashed and on the date the cheque was issued the plaintiffs had zero bank balance, this Court directed the plaintiffs to file copies of their bank statements/passbooks. Though the bank statements/passbooks was initially not filed despite number of adjournments, the plaintiffs ultimately filed an affidavit dated 06th February, 2013 stating "that the plaintiffs maintain zero balance accounts in Axis Bank. That the modes operandi of plaintiffs, in usual course of business is that the cheques, which are issued and are to be paid, they are asked by the holder to put after

verifying the same from the plaintiffs. That plaintiffs have business relation with one M/s Savera Reality (P) Ltd. and with Mr. Anil Khera. That the plaintiffs have an access to the finances from said sources. That the said sources independent of each other had enough balance(s) in their respective Bank accounts, so as to pay a sum of Rs.35 lakhs into the account of plaintiff which could have been cleared to Mr. Malhotra".

18. In the opinion of the Court, the aforesaid explanation offered by the plaintiffs in their affidavit cannot be accepted as no bank gives advance notice to any customer to arrange for funds after the cheque has been presented. Consequently, the position that emerges is that the plaintiffs on the date of issuance of the cheque dated 12th May, 2011 had zero bank balance. This clearly proves that the plaintiffs were not ready and willing to perform their obligations under the Agreement to Sell dated 28th July, 2008.

19. Zero bank balance also proves that false and misleading statements and averments were made not only in paras 20, 21 and 31 of the plaint, but also before this Court on 22nd July, 2011.

20. This Court is also of the opinion that the averments in paras 20, 21 and 31 of the plaint as well as before this Court on 22nd July, 2011 were neither immaterial nor inconsequential. In fact, this Court is of the view that the aforesaid statements were deliberately made to show that plaintiffs were all throughout ready and willing to execute the Agreement to Sell and the last date for executing the sale deed had been repeatedly extended by the parties. Upon a reading of para 20 of the plaint, it is apparent that it is the plaintiffs own case that because of payment of Rs.34,79,000/-, a draft Sale Deed dated 13th May, 2011 was exchanged between the parties. The plaintiffs' offer to now deposit the balance sale consideration is irrelevant.

21. The submissions of the plaintiffs that the Agreement to Sell was irrevocable, is not correct. Clause 8 of the Agreement to Sell relied upon by the plaintiffs reads as under:-

"8.That this Agreement to Sell is irrevocable. "THE VENDORS" are hereafter bound to execute the sale deed in favour of "THE PURCHASERS, at any time when they are called the "THE PURCHASERS" before the expiry of the execution of the present Agreement i.e. by 31.08.2008, upon payment of the full and final payment from Purchaser or her legal heirs successors, beneficiaries, agents and assignees etc."

22. Thus, the Agreement to Sell was irrevocable only till 31st August, 2008 and that too if the plaintiffs were ready, able and willing to pay the balance sale consideration on or before the said date.

23. In the opinion of the Court, the contention of the plaintiffs that a tenant was in occupation of the suit property is a bogey. The issue of a tenant was neither mentioned in the Agreement to Sell nor in any of the contemporaneous correspondence exchanged between the parties. No receipt of payment by any tenant has been placed on record by the plaintiffs.

24. In any event, in view of Sections 91 and 92 of the Indian Evidence Act, the plaintiffs are prohibited from leading oral evidence contrary to a written Agreement to Sell.

25. Further, the submission of the plaintiffs that defendants failed to convert the suit property into free hold, is also not correct. Clause 7 of the Agreement to Sell relied upon by the learned counsel for plaintiffs is reproduced hereinbelow:-

"7. It has also been agreed between the parties that only Mr. Pran Nath Malhotra will go to the office of L & D. O office only to sign on his behalf and on behalf of other SELLERS as authorised by them in the G.P.O. for getting the property free hold. None of the other two

sellers will go or asked to go to any office of the government including L. & D.O. Office.

26. In the opinion of this Court, the aforesaid Clause does not cast a duty upon the defendants to get the property converted into free hold. In fact, the conversion of the suit property was not a condition precedent for executing the Sale Deed. Clause 7 only clarifies that amongst the defendants, Mr. P.N. Malhotra would follow up the issue of conversion amongst the defendants with the office of L&DO.

27. In any event, even if the defendants submissions are to be believed, then also there would be two competing claims before this Court, namely, on the one hand, defendants failed to get the property vacant as well as converted into free hold and on the other hand that plaintiffs failed to pay the balance sale consideration.

28. Since this Court has reached the conclusion the plaintiffs were not ready and willing to perform their obligations, the plaintiffs would not be entitled to any relief. In fact, the Supreme Court in Man Kaur v. Hartar Singh Sangha, 2010 (I) SCALE 523 has held as under:-

"23. The learned counsel for the respondent contended that in terms of the agreement, the defendant had to furnish an NOC from Chandigarh Administration, as also ULC clearance and income tax clearance required for the sale and there was nothing to show that she had obtained them, and therefore the question of the plaintiff proving his readiness and willingness to perform his obligations did not arise. This contention has no merit. There are two distinct issues. The first issue is the breach by the defendant vendor which gives a cause of action to the plaintiff to file a suit for specific performance. The second issue relates to the personal bar to enforcement of a specific performance by persons enumerated in Section 16 of the Act. A person who fails to aver and prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him (other than the terms the

performance of which has been prevented or waived by the defendant) is barred from claiming specific performance. Therefore, even assuming that the defendant had committed breach, if the plaintiff fails to aver in the plaint or prove that he was always ready and willing to perform the essential terms of contract which are required to be performed by him (other than the terms the performance of which has been prevented or waived by the plaintiff), there is a bar to specific performance in his favour. Therefore, the assumption of the respondent that readiness and willingness on the part of the plaintiff is something which need not be proved, if the plaintiff is able to establish that the defendant refused to execute the sale deed and thereby committed breach, is not correct. Let us give an example. Take a case where there is a contract for sale for a consideration of Rs. 10 lakhs and earnest money of Rs. 1 lakh was paid and the vendor wrongly refuses to execute the sale deed unless the purchaser is ready to pay Rs. 15 lakhs. In such a case there is a clear breach by the defendant. But in that case, if the plaintiff did not have the balance Rs. 9 lakhs (and the money required for stamp duty and registration) or the capacity to arrange and pay such money, when the contract had to be performed, the plaintiff will not be entitled to specific performance, even if he proves breach by the defendant, as he was not "ready and willing" to perform his obligations.

(emphasis supplied)

29. This Court is also in agreement with the submission of defendant No.4 that from the very beginning the said defendant was not interested in selling his twenty per cent share of the property as plaintiffs have not annexed a single document which mentions that defendant No.4 ever promised or contemplated to sell his share of the property or was a part of the Agreement to Sell or received any consideration thereof.

30. In view of the aforesaid findings, this Court is of the view that plaintiffs had executed the Agreement to Sell only to gain a foothold in the suit property with an intent to block its future sale. Consequently, the ad interim stay order dated 22nd July, 2011 is vacated and it is clarified that

even lis pendens shall not apply to the present proceedings. Accordingly, present applications stand disposed of.

I.A. 11386/2011 in CS(OS) 1742/2011 [U/o. 39 Rules 1 & 2 CPC] In view of the order passed today in I.As. 14393/2011 and 14387/2011, present application is dismissed.

CS(OS) 1742/2011 and I.As. 15827-15828/2011, 16789/2011, 18500/2011 & 18931/2011

List the pending applications for hearing on 02nd May, 2013.

MANMOHAN, J APRIL 29, 2013 js/rn