Delhi High Court

Bhupinder Narain Bhatnagar vs Mahesh Singhal on 16 May, 2014

Author: Rajiv Sahai Endlaw

          *IN THE HIGH COURT OF DELHI AT NEW DELHI
%                                           Date of decision: 16th May, 2014

+                         FAO(OS) No.89/2014

       BHUPINDER NARAIN BHATNAGAR                ..... Appellant
                   Through: Mr. Sanjay Katyal, Adv.
                                   Versus
       MAHESH SINGHAL                                    ..... Respondent
                   Through:            Mr. Rajshekhar Rao & Mr. Yogesh
                                       Raavi, Advs.
CORAM :-
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
RAJIV SAHAI ENDLAW, J.

1. The appeal impugns the order dated 06.12.2013 of the learned Single

Judge (exercising Ordinary Original Civil Jurisdiction) of allowing IA

No.22691/2012 of the respondent / plaintiff and thereby permitting the

respondent / plaintiff to take back the amount of Rs.3.73 crores deposited in this

Court together with interest accrued thereon. The appeal was accompanied

with an application for condonation of 18 days delay in filing thereof.

2. We have without hearing the counsels on the aspect of delay, heard them

on the merits of the appeal. Resultantly, for the sake of record, the delay in

filing the appeal is condoned.

3. The respondent / plaintiff instituted the suit from which this appeal arises

for the relief of specific performance of an Agreement of Sale of property

No.213, Dayanand Vihar, Delhi-110 092 by the appellant / defendant to the

respondent / plaintiff for a total sale consideration of Rs.3.83 crores out of

which a sum of Rs.10 lacs was paid as earnest money and the balance Rs.3.73

crores was to be paid on or before 15.01.2012.

4. The suit along with the application for interim relief came up before the

learned Single Judge first on 13.02.2012 when the counsel for the respondent /

plaintiff made a statement that the respondent / plaintiff was ready and willing

to deposit the balance amount of Rs.3.73 crores in the form of fixed deposit in

this Court. Accordingly, subject to the said deposit, the appellant / defendant

was restrained from creating any third party interest in or transferring the

possession of the said property in favour of any third person. The said

application for interim relief is still pending consideration.

5. The respondent / plaintiff filed IA No.22691/2012 (supra) seeking to

withdraw the deposit pleading; (i) that the respondent / plaintiff by making the

deposit had already demonstrated his bona fides; (ii) that the appellant /

defendant had been delaying the matter and had avoided filing of written

statement on one pretext or the other; (iii) that in the meanwhile, the respondent

/ plaintiff was suffering as he had borrowed the said sum of Rs.3.73 crores

deposited in this Court and was paying commercial rate of interest thereon; (iv)

an undertaking was also given to re-deposit the money in the Court as and when

called upon to do so.

6. Surprisingly, the appellant / defendant instead of arguing on the

application for interim relief contested the aforesaid application.

7. The learned Single Judge has allowed the respondent / plaintiff to

withdraw the said amount observing that no purpose would be served in having

the same lying in Court and on the condition of expediting the trial and

accepting the undertaking of the respondent / plaintiff to re-deposit the amount

in the Court as and when directed.

8. We have today in our judgment in FAO(OS) No.239/2014 titled Bal

Krishan Gupta Vs. Vikas Aggarwal also dealt with the aspect of issuance of a

direction to the plaintiff in a suit for specific performance of an Agreement of

Sale of immovable property for deposit of balance sale consideration in the

Court and have on a conspectus of the judgments in this regard culled out the

position in law as under:-

(i) Section 16(c) of the Specific Relief Act, 1963 provides that

specific performance of a contract cannot be enforced in favour of

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. It is thus necessary for

a plaintiff in a suit for specific performance, to aver and prove that

he, on the stipulated date, was in a position to pay the balance sale

consideration and had tendered or was ready and willing to tender

the same to the seller;

(ii) however the Explanation (i) of Section 16(c) supra provides that

where the contract involves the payment of money, it is not

essential for the plaintiff to actually tender to the defendant or to

deposit in the Court any money except when so directed by the

Court. Thus the plaintiff in a suit for specific performance, is not

required to as a matter of routine and as a condition to the

maintainability of the suit, deposit the balance sale consideration in

the Court, though the Court is empowered to direct the plaintiff to

do so;

(iii) if as per the agreement of which specific performance is sought,

the plaintiff / purchaser was required to part with the balance sale

consideration only against delivery of title and physical possession

of the property, to make such a plaintiff / purchaser part with the

balance sale consideration without delivery of title and possession

to him would be contrary to the agreement and the jurisdiction of

specific performance thereof;

(iv) to hold that though as per the agreement the plaintiff / purchaser is

liable to part with the balance sale consideration only against the

delivery of title and possession but to test his readiness and

willingness, he can be directed to part therewith even without

delivery of title and possession, would amount to the Court making

a new contract and which is beyond the scope of jurisdiction of

specific performance;

(v) a direction to the plaintiff / purchaser to deposit balance sale

consideration in the Court as a condition to maintainability of the

suit for specific performance can be made only where the Court,

for reasons to be recorded, entertains a doubt about the readiness

and willingness of the plaintiff / purchaser. Only where the Court

feels that though an averment as postulated in Section 16(c) is

made, but the plaintiff may not have the money to pay the balance

consideration, can the Court, to satisfy itself about the truthfulness

about the averment, direct to deposit the money in Court. This

course is however to be adopted rarely;

(vi) the question of payment otherwise would arise only after the trial

of the suit and when the rights of the parties are determined and

such a direction should be issued when the final decree is passed

and not at an earlier point of time; and

(vii) direction to the plaintiff / purchaser to deposit the balance sale

consideration in the Court can also be made as a condition for

granting interim relief sought of restraining the defendant / seller

from, during the pendency of the suit, dealing with the property

agreed to be sold or to balance the equities in appropriate cases but

again, not as a matter of routine i.e. only where the readiness and

willingness of the plaintiff / purchaser is in doubt and again, rarely;

the effect of non-deposit inspite of such direction in such cases will

only be vacation of the interim order or applicability of Section 52

supra and not to ipso-facto presume the plaintiff / purchaser to

have been not ready and willing.

9. As far as the facts of the present case are concerned, the stage for the Suit

Court to judge whether the plea of the respondent / plaintiff in Section 16(c) is

reliable or not has not reached as the application for interim relief is still

pending consideration and has not been disposed of. The balance sale

consideration came to be deposited in the Court on the own offering of the

respondent / plaintiff and without the Court returning any finding or prima facie

finding of the respondent / plaintiff being in default or being not ready and

willing. Just like the respondent / plaintiff had on an earlier occasion

volunteered to deposit balance sale consideration, the respondent / plaintiff

subsequently sought withdrawal thereof. The impact of such actions of the

respondent / plaintiff has also not been discussed. We find it strange that the

appellant / defendant instead of urging that owing to the respondent / plaintiff