Sh. Lakhbir Singh vs Sh. Arun Kumar Khanna
2014 Latest Caselaw 1973 Del

          *IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                         Date of decision: 21st, April, 2014

+                         CS(OS) No.1030/2009

       SH. LAKHBIR SINGH                                      ..... Plaintiff
                     Through:          Mr. I.S. Alag, Adv.

                                   Versus

    SH. ARUN KUMAR KHANNA                     ..... Respondent

Through: Mr. Sudhir K. Makkar & Ms. Meenakshi Singh, Advs.

CORAM :-

HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

RAJIV SAHAI ENDLAW, J

1. The following issue, of the issues framed on 05.07.2011 in this suit

for specific performance of an Agreement of Sale of immovable property

and for permanent injunction restraining the sole defendant from

transferring, alienating or encumbering the property and in the alternative for

compensation and, ordered to be treated as a preliminary issue, is for

adjudication:

"Whether the suit is barred in view of Order 2 Rule 2 (3) of the Code of Civil Procedure? OPD"

2. Arguments were heard on 06.03.2014. However neither counsel cited

the recent judgment of the Supreme Court in Virgo Industries (Eng.) Pvt.

Ltd. Vs. Venturetech Solutions Pvt. Ltd. (2013) 1 SCC 625. After inviting

attention of the counsels thereto, again opportunity was given to the counsels

to make their further submissions if any after studying the said judgment and

after further hearing, orders were reserved.

3. The plaintiff has filed the present suit on 26.05.2009, pleading:

(i) that the defendant, vide Agreement to Sell dated

18.11.2006, agreed to sell, the first floor of property No.3,

Road No.5, situated at Punjabi Bagh Extension, New Delhi

and which property was then under construction, to the

plaintiff for a total sale consideration of Rs.1,20,00,000/-

out of which a sum of Rs.12,00,000/- was paid as bayana /

advance and the balance sale consideration amount of

Rs.1,08,00,000/- was to be paid on or before 15.08.2007 i.e.

within 300 days from the date of the Agreement to Sell;

(ii) that though under the Agreement to Sell, the plaintiff was

not under obligation to pay any further amount to the

defendant till the date of delivery of possession but the

defendant requested the plaintiff for some more amount and

the plaintiff, till the institution of the suit, had paid a total

sum of Rs.72,00,000/- to the defendant towards sale

consideration;

(iii) the defendant however failed to complete the construction

work within the stipulated period of 10 months from

18.11.2006 and thus became liable to pay interest at 24%

per annum on the amount received from the plaintiff;

(iv) that though the defendant, as a counterblast to the repeated

reminders of the plaintiff, issued legal notice dated

05.07.2007 to the plaintiff but subsequently assured the

plaintiff that he will complete the construction work and on

this assurance received further sum of Rs.3,00,000/- in cash

against receipt dated 27.07.2007 from the plaintiff;

(v) that the defendant however again sent a false and frivolous

notice dated 27.07.2007 to the plaintiff and to which a reply

dated 13.09.2007 was given by the plaintiff recording that

by then a sum of Rs.72,00,000/- had been paid towards

purchase consideration;

(vi) that the plaintiff subsequently learnt that the defendant was

trying to re-sell the said first floor and create third party

rights therein;

(vii) that the plaintiff, having no other option, filed a suit for

permanent injunction before the Court of the Senior Civil

Judge, Delhi for an order of permanent injunction to restrain

the defendant from selling, alienating, disposing of or

creating any third party rights in the said first floor; the said

suit was accompanied with an application under Order 2

Rule 2(3) of the CPC for leave to allow the plaintiff to file a

suit for specific performance and damages in the event of

failure / refusal of the defendant to comply with the terms of

the Agreement to Sell dated 18.11.2006;

(viii) that in the aforesaid suit for permanent injunction, vide

order dated 26.09.2007, the parties were directed to

maintain status quo;

(ix) that the said suit was pending adjudication till the date of

institution of the present suit;

(x) the plaintiff thereafter learnt that the defendant himself had

shifted into the said first floor and which signified that the

defendant had no intention to perform his part of the

Agreement to Sell dated 18.06.2006.

Hence the suit for specific performance.

4. Summons of the suit were issued and vide ex parte ad-interim order

dated 27.05.2009, the defendant was restrained from creating any third party

interest in the property agreed to be sold.

5. The defendant contested the suit by filing a written statement, on the

grounds:

(a) that the present suit is barred by Order 2 Rule 2 (3) of the

CPC for the reason of the plaintiff having earlier filed a suit

for permanent injunction and which was pending

adjudication till the institution of the present suit and the

present suit is founded on the same cause of action as the

earlier suit for permanent injunction;

(b) that the plaintiff has admittedly not been granted any leave

by the Court of the Civil Judge for filing the present suit and

in the absence of any special leave, the present suit is not

maintainable;

(c) that the Agreement to Sell clearly stipulated that the

plaintiff shall pay a sum of Rs.15,00,000/- after every two

months starting from 21.01.2007 and the plaintiff was

accordingly liable to pay a sum of Rs.75,00,000/- within 10

months from 21.01.2007;

(d) that the plaintiff had clearly defaulted in payment of the said

amount and is not entitled to the relief of specific

performance;

(e) that the defendant had vide notice dated 21.07.2007

cancelled the Agreement to Sell;

(f) denying that the plaintiff had paid a sum of Rs.72,00,000/-

and pleading that the plaintiff had made payment of only

Rs.45,00,000/- which too was not paid in accordance with

the schedule of payments stipulated in the Agreement to

Sell;

(g) the last payment of Rs.3,00,000/- was made by the plaintiff

on 27.07.2007 after the legal notices dated 05.07.2007 and

21.07.2007 calling upon the plaintiff to make balance

payment of Rs.30,00,000/- then due;

(h) that the plaintiff was falsely claiming payment of a sum of

Rs.15,00,000/- made by one Mr. S. Manmohanpal Singh to

be in relation to the purchase price when the said amount of

Rs.15,00,000/- was received by the defendant for entirely

different transaction of proposed loan which did not fructify

and the receipt executed by the defendant therefor was to be

destroyed;

(i) that the defendant had entered into an agreement dated

09.12.2005 with the owners of the property and under which

agreement, the defendant had acquired ownership rights in

respect of the first floor of the property;

(j) that the plaintiff, on the date of signing of the Agreement to

Sell did not give any copy thereof to the defendant and

failed to give the same despite repeated reminders of the

defendant.

6. Needless to state, the plaintiff filed a replication reiterating the case in

the plaint.

7. Vide interim order dated 26.04.2010, subject to the defendant

depositing the amount of Rs.45,00,000/- admittedly received from the

plaintiff together with reasonable interest i.e. total Rs.52,00,000/-, the earlier

interim order restraining the defendant from creating any third party interest

in the property was vacated.

8. The plaintiff preferred FAO(OS) Nos.552-553/2010 against the

interim order aforesaid. However finding that the defendant had not

deposited in the Court the sum of Rs.52,00,000/- as directed and that the

effect thereof was of continuance of the earlier ex parte order, the appeal

was not pressed.

9. On 05.07.2011, as aforesaid, the following issues were framed and of

which issue no.(i) supra was ordered to be treated as a preliminary issue:

"(i) Whether the suit is barred in view of Order 2 Rule 2 (3) of the Code of Civil Procedure? OPD

(ii) Whether the plaintiff has carried out his part of the contract? If not, to what effect? Onus per party

(iii) Whether the plaintiff was ready, willing and able to perform his part of the contract on all material dates?

                   OPP

          (iv)     Relief."

10. Vide order dated 08.12.2011, finding that the defendant had not filed

the pleadings in previous suit and on the basis whereof the plea of Order 2

Rule 2 CPC has been taken and referring to Gurbux Singh Vs. Bhooralal

AIR 1964 SC 1810, the defendant was directed to file certified copies of the

pleadings in the previous suit and which have been filed.

11. The plaintiff applied for striking off the defence of the defendant

owing to the defendant having not deposited Rs.52,00,000/- in this Court.

The said application was dismissed on 10.09.2013 observing that the

vacation of the ex parte order as sought by the defendant was subject to the

said deposit and since the amount had not been paid, the interim order for

stay as sought by the plaintiff was continuing and no case for striking off

defence is made out. FAO(OS) No.463/2013 preferred against the said order

was dismissed on 28.10.2013.

12. The counsel for the plaintiff during the hearing on 06.03.2014 on the

preliminary issue, referred to:

(i) Rohit Kumar Vs. A.S. Chugh 155(2008) DLT 424;

(ii) Bengal Waterproof Ltd. Vs. Bombay Waterproof

Manufacturing Company (1997) 1 SCC 99;

(iii) Kunjan Nair Sivaraman Nair Vs. Narayanan Nair (2004) 3

SCC 277;

(iv) Ashoka Builders & Promoters Vs. Edward Keventer

(Successors) P. Ltd. 51 (1993) DLT 421;

(v) Gurbux Singh Vs. Bhooralal AIR 1964 SC 1810;

(vi) Shri Inacio Martins Vs. Narayan Hari Naik AIR 1993 SC

1756; and,

(vii) Order dated 23.11.2009 in CS(OS) No.213/2009 titled Shashi

Sharma Vs. Arun Khanna.

of which Rohit Kumar (supra) is of the undersigned, taking a view

that Order 2 Rule 2 of the CPC would have no application to such a

situation. However the Supreme Court subsequently in Virgo Industries

(Eng.) Pvt. Ltd. (supra) has taken a different view.

13. The counsel for the defendant relies on:

(i) Kamal Kishore Saboo Vs. Nawabzada Humayun Kamal

Hasan Khan AIR 2001 Delhi 220;

(ii) Shri Vishal Anand Vs. Smt. Bimla Anand 113 (2004) DLT

850 (DB);

(iii) Ashok Aggarwal Vs. Bhagwan Das Arora AIR 2001 Delhi

107; and,

(iv) Rohit Kumar (supra).

Again, in view of the recent dicta in Virgo Industries (Eng.) Pvt. Ltd.

(supra) and by which this Court is bound, need is not felt to discuss the

judgments cited by the defendant also in detail.

14. Before discussing the judgment Virgo Industries (Eng.) Pvt. Ltd., it

may be mentioned that "that the previous suit for permanent injunction filed

by the plaintiff was withdrawn by the plaintiff on 16.01.2010 giving the

reason of having filed the present suit "on the same cause of action".

15. In Virgo Industries (Eng.) Pvt. Ltd.;

(aa) the plaintiff in that case filed a suit for permanent injunction

in the Madras High Court restraining the defendant therein

from alienating, encumbering or dealing with the properties

agreed to be sold to the plaintiff to any third party other than

the plaintiff;

(bb) in the plaint in the aforesaid suit for injunction, it was stated

that as the period of six months fixed under the Agreement to

Sell for execution of the sale deed had not expired till then,

the plaintiff was not claiming the relief of specific

performance of the Agreement; the plaintiff sought leave of

the Court to omit to claim the relief of specific performance

with liberty to sue for the said relief at a later point of time, if

necessary;

(cc) the plaintiff thereafter filed in the Court of the District Judge,

a suit seeking a decree against the defendant for execution

and registration of the sale deed of the same property and for

delivery of possession thereof to the plaintiff; in the said suit,

the factum of filing of the earlier suit for permanent

injunction was mentioned and it was further pleaded that

since at the time of filing of the suit for permanent injunction,

the time for performance of the Agreement to Sell had not

elapsed and the plaintiff was under the bona fide belief that

the defendant would perform the agreement, the relief of

specific performance was not claimed in the earlier suit;

however since the defendant inspite of legal notice did not

execute the sale deed, the relief of specific performance was

being claimed;

(dd) the defendant filed a petition under Article 227 of the

Constitution of India in the Madras High Court for striking

off the plaint in the suit for specific performance, on the

ground of the same being not maintainable under the

provisions of Order 2 Rule 2 of the CPC, contending that the

cause of action for both the suits was the same viz. the refusal

or reluctance of the defendant to execute the sale deed in

terms of the Agreement to Sell and it was open for the

plaintiff to at the time of suing for permanent injunction also

claim the relief of specific performance and which relief had

not been sought and no leave had been granted by the High

Court and thus the subsequent suit for specific performance

was barred;

(ee) the Madras High Court dismissed the petition under Article

227 of the Constitution of India for the reason:

(i) that since on the date of institution of the previous suit

for permanent injunction, the time stipulated in the

agreement for execution of the sale deed had not

expired, therefore the cause of action to seek the relief

of specific performance had not accrued and the

provisions of Order 2 Rule 2 (3) CPC were not

attracted to render the subsequent suit for specific

performance non-maintainable;

(ii) that the provisions of Order 2 Rule 2 (3) CPC would

render a subsequent suit not maintainable only if the

earlier suit had been decreed and the said provision

does not apply if the first suit remains pending; and,

(iii) that the petition under Article 227 was not

maintainable and the remedy if any of the defendant

was of Order 7 Rule 11 of the CPC.

(ff) the Supreme Court, upon being approached by the defendant

against the dismissal of his petition under Article 227 of the

Constitution of India, found / held:

(A) though leave to sue for the relief of specific

performance at a later stage was claimed by the

plaintiff in the previous suit for permanent injunction,

admittedly no such leave was granted;

(B) the question for adjudication was whether the cause of

action for both the suits was one and the same;

(C) the plaintiff in the plaint in the previous suit for

permanent injunction had pleaded that the defendant

was finding an excuse to cancel the Agreement to Sell

and to sell the property to some third party and that the

defendant was attempting to frustrate the Agreement to

Sell;

(D) the aforesaid pleading in the plaint in the previous suit

for permanent injunction left no room for doubt that on

the date of institution thereof, the plaintiff‟s case was

that the defendant had no intention to honour the

Agreement to Sell;

(E) in the aforesaid situation, it was open for the plaintiff

to incorporate the relief of specific performance along

with the relief of permanent injunction that formed the

subject matter of the subsequent suit;

(F) the foundation for the relief of permanent injunction

furnished a complete cause of action to the plaintiff to

also sue for the relief of specific performance; yet the

said relief was omitted and no leave in this regard was

obtained or granted by the Court;

(G) the plea of the plaintiff, that on the date of institution

of the previous suit for permanent injunction, the relief

of specific performance was premature for the reason

of the time fixed in the Agreement to Sell for

completion of sale having not lapsed and which had

been accepted by the High Court in dismissing the

petition under Article 227, was not tenable;

(H) "a suit claiming a relief to which the plaintiff may

become entitled at a subsequent point of time, though

may be termed as premature, yet cannot per se be

dismissed to be presented on a future date. There is no

universal rule to the above effect inasmuch as "the

question of a suit being premature does not go to the

root of the jurisdiction of the Court"";

(I) that there is no provision in the Specific Relief Act,

1963 requiring a plaintiff claiming the relief of specific

performance to wait for expiry of the due date for

performance of the agreement in a situation where the

defendant may make his intentions clear by his overt

acts;

(J) the High Court had also erred in holding that

provisions of Order 2 Rule 2 of the CPC would be

applicable only when the first suit is disposed of; and,

(K) Order 2 Rule 2 of the CPC seeks to avoid multiplicity

of litigations on the same cause of action and the

legislative intent behind the same would not stand fully

subserved by holding that the provisions thereof will

apply only if the first suit is disposed of and not in a

situation where the second suit has been filed during

the pendency of the first suit; rather Order 2 Rule 2 of

the CPC will apply to both the situations.

Accordingly, the Supreme Court struck off the plaint in the suit for

specific performance.

16. Applying the aforesaid binding ratio, it is found that in the present

case;

i) the Agreement to Sell dated 18.11.2006 between the parties

provided for;

a) the balance sale consideration of Rs.1,08,00,000/- to be

paid by the plaintiff / purchaser on or before 300 days i.e.

10 months i.e. 15.08.2007;

b) the defendant / seller to deliver peaceful, vacant

possession of the first floor agreed to be sold to the

plaintiff / purchaser against receipt of balance sale

consideration within the stipulated period with all proper

documents of sale;

ii) the receipt executed by the defendant / seller of Rs.12,00,000/-

by way of earnest money / bayana at the time of Agreement of

Sell on the reverse of the second page of the Agreement to Sell,

mentions, that after every two months from 21.11.2006,

Rs.15,00,000/- will be paid and also records receipt of

Rs.15,00,000/- as second installment, leaving a balance of

Rs.93,00,000/-;

iii) the subsequent receipts filed by the plaintiff also are with

reference to the "installments";

iv) the defendant, vide legal notice dated 05.07.2007, copy of

which has been filed by the plaintiff himself, notified the

plaintiff that the plaintiff had failed to pay the balance sale

consideration in the installments agreed and called upon the

plaintiff to pay the balance then due of Rs.30,00,000/- within

seven days along with a further sum of Rs.10,00,000/- and

notified the plaintiff that if the said amount was not paid, the

defendant will have no option but to cancel the deal;

v) the defendant vide another legal notice dated 27.07.2007, copy

of which also has been filed by the plaintiff, notified the

plaintiff that the plaintiff having not paid the amounts as

demanded vide previous notice dated 05.07.2007, again called

upon the plaintiff to comply therewith and again notified the

plaintiff that if the plaintiff did not make the payment, the

defendant will cancel the deal;

vi) the time fixed in the Agreement to Sell for performance expired

on 15.08.2007;

vii) the plaintiff got sent a reply dated 13.09.2007 to the notice

aforesaid dated 27.07.2007 and which clearly shows that the

disputes and differences had arisen between the plaintiff and the

defendant pertaining to the Agreement to Sell;

viii) the plaintiff on 26.09.2007 instituted "the previous suit for

permanent injunction" and in the plaint therein inter alia

pleaded:

"4. That as per the terms of agreement to sell dated

18.11.2006 the plaintiff is liable to pay the balance

payment on or before 15th August, 2007 with a clear

understanding that the possession of the constructed

first floor shall be handed over to the plaintiff and sale

deed in respect of the first floor of the property in

question shall be executed by the defendant in favour of

the plaintiff simultaneously with the final payment of

Rs.1,08,00,000/- as mentioned in Agreement to Sell.

Despite of payment of Rs.72,00,000/- as stated above till

date the defendant has failed / neglected to complete the

construction work of first floor of the property in

question as such having no other option the plaintiff

also not paid the remaining consideration amount.

Otherwise also, the defendant is not legally entitled to

claim the same until and unless he complete the

construction of the property in question and hand over

the same to plaintiff. Not only the defendant failed to

complete the construction of above said property and

handover the same to the plaintiff and the actual owner

of the above said property, within prescribed time. The

defendant is legally liable for misrepresentation, fraud

and cheating with the plaintiff.

5. That despite of repeated requests and reminders

defendant has failed to perform his part of allegation as

per agreement dated 18.11.2006. It is submitted that the

defendant failed to complete the construction of first

floor of the above said property and handover the same

to the plaintiff and similarly the defendant failed to

construct the remaining portion of the property in

question and hand over the same to the actual owner of

the above said property within prescribed time. The

defendant despite of receiving that amount of

Rs.72,00,000/- failed to construct the property in

question and misappropriated the said amount for his

personal use whereas the same was given to the

defendant with a clear assurance that the same shall be

used only for the purpose of construction of first floor of

the property in question. This conduct of the defendant

itself sufficient to show the malafide intention of the

defendant as not only he misappropriated the above said

Rs.72,00,000/- but now trying to grab the property in

question. These facts are also sufficient to show that the

defendant not only cheated the plaintiff but also

harassing the actual owners of the property in question.

7. That when the plaintiff repeatedly approached the

defendant to complete the construction work and

handover the possession of the first floor of the property

in question, the defendant on 05.07.2007, as an after

thought send a notice to the plaintiff with a false and

frivolous pleas. However, later on the defendant

approached to the plaintiff and undertake to complete

the construction work of the property in question at the

earliest. With this assurance, he has also received sum

of Rs.3,00,000/- in cash vide receipt dated 27.07.2007

from the plaintiff. Despite of receiving the amount the

defendant again send a false and frivolous notice dated

27.07.2007 to the plaintiff with a clear intention to grab

the property in question and to resell the same at higher

price. These facts are sufficient to show the malafide

intention of the defendant that on the one hand he

received another sum of Rs.3,00,000/- in cash after the

notice dated 05.07.2007 and on the other hand again

send notice dated 27.07.2007. Having no other option,

the plaintiff send a suitable reply dated 13.09.2007 to

the defendant. Whereby, the plaintiff specifically denied

all the averments of notice dated 05.07.2007 and

27.07.2007 and state the true facts. The plaintiff also

recited in his reply that he has made a payment of

Rs.72,00,000/- as part payment to the defendant,

however, despite of receiving the said amount the

defendant failed / neglected to complete the construction

work of the property in question and hand over the same

to the plaintiff as per Agreement to Sell dated

18.11.2006. Despite of due service of reply dated

13.09.2007, the defendant failed to perform his part of

obligation as per Agreement to Sell dated 18.11.2006

and to hand over the possession of constructed first

floor of the property in question to the plaintiff and

plaintiff hereby reserves his right to file a separate suit

for specific performance and damages for the same

against the defendant and crave leave Hon'ble Court to

allow the plaintiff to file the separate suit for specific

performance and damages in this regard.

9. That the plaintiff is the proposed purchaser, having an

interest in the first floor of property no.3, road no.5,

Punjabi Bagh Extn., New Delhi-26 vide Agreement to

Sell dated 18.11.2006 and he has already paid a sum of

Rs.72,00,000/- as part payment towards the total sale

consideration of the above said property in question. If

the defendant would be succeeded to create any third

party interest in the above said property then the same

would jeopardize the interest of the plaintiff. It would

also cause irreparable injury and damages to the

plaintiff. The balance of convenience also lies in the

favour of plaintiff and in against the defendant."

17. Paras no.4, 5, 7 and 10 of the plaint in the present suit are

substantially similar to paras no.4,5,7 and 8 of the plaint in the previous suit

for permanent injunction. The plaintiff, in the cause of action paragraph of

the plaint in the present suit also has pleaded the cause of action for the relief

of specific performance to have accrued on 18.11.2006, 03.09.2007 and

lastly in April, 2009 when the defendant after completion of the suit property

instead of handing over to the plaintiff himself shifted in the suit property

and which showed his clear intention not to perform the Agreement to Sell

and rather to breach all terms of the Agreement to Sell dated 18.11.2006 and

thereby refused to perform his part of the terms and conditions of the

Agreement to Sell dated 18.11.2006.

18. Though as the aforesaid analysis of the factual position before the

Supreme Court in Virgo Industries (Eng.) Pvt. (supra) as well as in the

present case would show that the judgment of the Supreme Court is squarely

applicable but the counsel for the plaintiff, after his attention was invited to

Virgo Industries (Eng.) Pvt. sought to differentiate by contending that Virgo

Industries (Eng.) Pvt. was not concerned with a case of construction as the

present case but in my opinion the said factual difference would not allow

this Court to take a different view. Else, the ratio squarely applies. The

counsel for the plaintiff also relied on Vithalbhai (P) Ltd. Vs. Union Bank

of India (2005) 4 SCC 315 which was referred to by the Supreme Court in

Virgo Industries (Eng.) Pvt. but I am bound by the dicta of the Supreme

Court. Mention may also be made of my recent judgment in Sucha Singh

Sodhi (deceased) through LRs Vs. Baldev Raj Walia

MANU/DE/0450/2014 where also I have had an occasion to deal with the

said aspect.

19. Thus it has to be necessarily held that the claim for specific

performance is barred by Order 2 Rule 2 of the CPC. The same logic would

apply to the other reliefs claimed in the plaint also, whether as ancillary to

the relief of specific performance or in alternative to the relief of specific

performance.

20. I may record that this Court had during the hearing proposed to

prevail upon the defendant to refund the amount of Rs.52,00,000/- (supra) to

the plaintiff but the plaintiff was not agreeable to the same.

21. The preliminary issue is accordingly decided in favour of the

defendant and against the plaintiff. The suit is dismissed as barred by Order

2 Rule 2 of the CPC. However since the judgment in Virgo Industries

(Eng.) Pvt. owing whereto the suit was dismissed, is subsequent to the date

of institution of the suit and my own view in Rohit Kumar (supra) was to

the contrary, it cannot be said that the suit as filed was frivolous or

vexatious, hence no costs.

Decree sheet be prepared.

RAJIV SAHAI ENDLAW, J APRIL 21, 2014 „gsr‟..