Delhi High Court

Shri Bal Krishan Gupta & Anr. vs Shri Vikas Aggarwal & Anr 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) 239/2014

       SHRI BAL KRISHAN GUPTA & ANR.         ..... Appellants
                     Through: Mr. P.D. Gupta & Mr. Abhishek
                              Gupta, Adv.
                Versus

    SHRI VIKAS AGGARWAL & ANR                 ..... Respondents
                  Through: Mr. Arvind Nayar, Adv. with Mr.
                           Anwesh Madhukar & Mr. Suryajyoti
                           Singh Paul, Advs. for R-1.
CORAM :-
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

RAJIV SAHAI ENDLAW, J.

Caveat No.433/2014

1. The counsel for the respondent no.1 caveator has appeared.

2. The caveat stands discharged.

C.M.No.8541-42/2014 (exemptions)

3. Allowed, subject to just exceptions.

4. The applications are disposed of.

FAO(OS) No.239/2014 & CM No.8540/2014 (for stay)

5. The appeal impugns the order dated 02.05.2014 of the learned Single

Judge of this Court (exercising original civil jurisdiction in CS(OS) 2353/2013)

of allowing the application being IA No.4955/2014 of the respondent no.1 /

plaintiff and permitting to the respondent no.1 / plaintiff return of Rs.6.24

crores deposited by the respondent no.1 / plaintiff in this Court together with

interest accrued thereon.

6. We have, with consent, heard the counsels finally at the stage of

admission.

7. The respondent no.1 / plaintiff instituted the suit from which this appeal

arises, for a decree for specific performance of an agreement dated 01.02.2013

of sale by the appellants/defendants to the respondent no.1 / plaintiff of land

situated within the revenue estate of village Bakhtawar Pur, New Delhi, for a

total sale consideration of Rs.9.24 crores out of which a sum of Rs.3 crores was

stated to have been paid.

8. The suit and the application for interim relief came up before the learned

Single Judge first on 06.12.2013 when the counsel for the respondent no.1 /

plaintiff offered to deposit the balance sale consideration of Rs.6.24 crores in

this Court to show the readiness and willingness of the respondent no.1 /

plaintiff. Accordingly, while issuing summons of the suit and notice of the

application for interim relief and directing status quo to be maintained qua the

title and possession of the land, the respondent no.1 / plaintiff was also directed

to deposit Rs.6.24 crores in the Court.

9. The respondent no.1 / plaintiff however sought variation of the order, by

offering to furnish a bank guarantee for the sum of Rs.6.24 crores instead of

depositing the said amount in this Court. The same was not acceded to by the

learned Single Judge and which led to the filing of FAO(OS) No.23/2014 by the

respondent no.1 / plaintiff. During the pendency of the appeal, the respondent

no.1 / plaintiff deposited the sum of Rs.6.24 crores in this Court.

10. The aforesaid appeal was finally disposed of vide order dated 20.02.2014

of the Division Bench, vide which the appellants / defendants were directed to

maintain status quo as regards to title and possession of the land aforesaid

during the pendency of the suit and giving liberty to the respondent

no.1/plaintiff to move an application before the learned Single Judge for

withdrawal of the deposited amount and it was further directed that if such an

application is made, the learned Single Judge would decide the same in

accordance with law.

11. It is in the aforesaid background that IA No.4955/2014 (supra) came to

be filed by the respondent no.1 / plaintiff and which has been allowed.

12. The learned Single Judge has in the impugned order,

found/observed/held:

(i) that the respondent no.1 / plaintiff out of the total agreed sale

consideration of Rs.9.24 crores had already paid a sum of Rs.3

crores to the appellants / defendants;

(ii) that as per the agreement to sell, the appellants / defendants were

to receive the No Objection Certificate (NOC) from the

Government authorities for execution of sale deed of the land in

favour of the respondent no.1 / plaintiff;

(iii) there was no material on record to show that the appellants /

defendants had ever informed the respondent no.1 / plaintiff of

having received the said NOC;

(iv) that the appellants / defendants should have informed the

respondent no.1 / plaintiff in writing that NOC has been received

and the respondent no.1 / plaintiff should pay the balance sale

consideration against execution of sale deed; and,

(v) no notice, telegram, e-mail or SMS was sent by the appellants /

defendants to the respondent no.1/plaintiff calling upon the

respondent no.1 / plaintiff to pay the balance sale consideration.

(vi) that prima facie, the respondent no.1 / plaintiff could not be said to

be in default of his obligations under the agreement to sell;

(vii) that the Division Bench of this Court vide order dated 20.02.2014

in the appeal earlier preferred by the respondent no.1 / plaintiff has

expressly permitted the respondent no.1 / plaintiff to apply for

refund;

(viii) that as per explanation (1) to Section 16(c) of the Specific Relief

Act, 1963, it is not essential for plaintiff in a suit for specific

performance to actually deposit any amount in the Court;

therefrom, it follows that the deposit of balance sale consideration

is not a mandatory requirement;

(ix) the judgment of the Division Bench of this Court in Mohan

Overseas P. Ltd. Vs. Goyal Tin & General Industries 169 (2010)

DLT 487 relied upon by the counsel for the appellants / defendants

is not applicable to the facts of the present case;

13. The counsel for the appellants / defendants has drawn our attention to

paras 35 & 40 of Mohan Overseas P. Ltd. (supra) to contend that it was for the

respondent no.1 / plaintiff to tender the balance sale consideration to the

appellants / defendants and that once the balance sale consideration had been

deposited in this Court and on the basis whereof the appellants / defendants had

been directed to maintain status quo qua title and possession of the land, the

said amount could not be permitted to be withdrawn without the circumstances

having drastically and significantly changed and from which it could be said

that continuing with the prevailing interim order would be inappropriate.

Attention in this regard is invited to para 11 of the application for withdrawal of

the deposited monies to contend that the only ground pleaded in the application

is of the long time which the adjudication of the suit will take.

14. One of us (Rajiv Sahai Endlaw, J.) recently in Rakesh Kumar Vs.

Kalawati 206 (2014) DLT 363 had an occasion to consider the aspect of

issuance of direction to the plaintiff in suits for specific performance of

agreements of sale of property to deposit the balance sale consideration, and it

was inter alia held as under:

"14. Otherwise merit is found in the contention of the counsel for the appellant/plaintiff that as per the Agreement to Sell, the appellant/plaintiff was entitled to part with the balance sale consideration only against delivery of title and physical possession of the land to him. To make the appellant/plaintiff part with the balance sale consideration without delivery of title and possession of the land to him, would be contrary to the agreement and the jurisdiction of specific performance thereof. To hold, that though as per the Agreement, the appellant/plaintiff 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. I may however add that in a given case where the Court entertains doubts about the readiness and willingness of the appellant/plaintiff till the date of institution of the suit itself, the Court may to test the readiness and willingness, direct such deposit. However in the present case, finding of the learned ADJ is of the appellant/plaintiff being ready and willing till coming to the Court.

15. The Division Bench of this Court in Ansal Properties Vs. Rajinder Singh 41 (1990) DLT 510, referring to the Explanation to Section 16(c) of the Specific Relief Act held that normally no money is to be tendered and it is only in cases where the Court feels that though an averment as postulated in Section 16 is made but the plaintiff may not actually have the money to pay the consideration, can the Court to satisfy itself about the truthfulness of the averment, direct to deposit money in Court. It was however held that this course should be adopted rarely. It was yet further held that the

question of payment would arise only after the trial of the suit and when the rights of parties are determined and such a direction should be issued when the final decree is passed and not at an earlier point of time."

15. We may mention that besides Ansal Properties supra, another Division

Bench of this Court in R.K. Goel Vs. Amrit Singh 80 (1999) DLT 331 held that

where the three conditions of prima facie case, irreparable injury and balance of

convenience which are the pre-requisites for the grant of ad-interim injunction

in favour of the plaintiff are found to exist, there is absolutely no occasion to

burden the plaintiff with the onerous condition of deposit of the balance sale

consideration in the Court. The Division Bench accordingly set aside the

direction of the learned Single Judge of this Court to the said effect as a

condition for the grant of the interim relief in a suit for specific performance of

an agreement of sale of immovable property.

16. To the same effect is the judgment of another Single Judge of this Court

in Rajesh Kumar Vs. Manoj Jain MANU/DE/1183/1998, allowing refund of

the balance sale consideration deposited in the Court, by observing that the

plaintiff by making the said deposit had prima facie shown his financial

position and capacity to finance the project and his readiness and willingness

but since the defendant was not ready and willing to complete the sale, the

plaintiff should not be burdened with the condition that he should part with the

balance sale price at that stage only. It was further held that the course of

deposit is normally not necessary and should be adopted only when the Court is

of the opinion that the averment, of the plaintiff being ready and willing to

perform the contract, may not be quite true. Finding that it was not so in the

facts of that case and further finding that the suit was likely to take time to

reach its finality and holding that the plaintiff in the meanwhile cannot be

deprived of the use of his money as well as the enjoyment of his property, the

refund was allowed.

17. Undoubtedly, the Division Bench of this Court in Mohan Overseas P.

Ltd. (supra) struck a different note and held; i) that specific performance orders

being essentially equitable reliefs, the Court will not allow the pendency of a

suit to work inequities against the owners of the property and that mere

rejection of a temporary injunction does not remove this imbalance since the

very pendency of the suit has the effect of jeopardizing the title of the

defendant / owner; ii) that in most cases directing the plaintiff to deposit the

sale consideration in the Court would have the effect of placing the parties on

equal footing; iii) that wherever the Court, at the pre-trial stage, comes to a

prima facie conclusion that there is no concluded contract or that it would be

appropriate to decline the grant of equitable relief of specific performance, the

Court should decline the same at that stage itself, leaving it to the trial to

determine whether any damages should be awarded; and, iv) that though the

direction for deposit of the entire sale consideration is onerous one, it is as

onerous as the freezing of the ownership of the property in the hands of the

defendant / owner.

18. But it has to be remembered that the Division Bench in Mohan Overseas

P. Ltd. (supra) was concerned with a number of appeals against interim orders

in suits for specific performance of agreements of sale of immovable property

and with the issue of, the very pendency of a suit for specific performance,

even if there were to be no order restraining the defendant from alienating,

encumbering or selling the property, attracting the clog imposed by Section 52

of the Transfer of Property Act, 1882 on the property, in effect preventing the

defendant from dealing with the property, causing grave prejudice to the

defendant. It was in this context that the Division Bench held that the relief of

specific performance can be declined on a prima facie view of the matter itself

and the suit to be continued only for the relief of damages. The observations

aforesaid of the Division Bench have thus to be considered in the said context.

19. It is also worth mentioning that the issue aforesaid, in the context of

which the aforesaid observations on which the counsel for the appellants /

defendants relies were made, ultimately reached the Supreme Court in Vinod

Seth Vs. Devinder Bajaj (2010) 8 SCC 1. The Supreme Court though did not

hold that the relief of specific performance can be declined on a prima facie

view of the matter, held that the operation of the bar under Section 52 supra is

subject to the power of the Court to exempt the suit property from the operation

of Section 52. Thus the observations in Mohan Overseas P. Ltd. to the effect

that since pendency of a suit for specific performance works inequities for the

seller, the direction for deposit by the purchaser, of the balance sale

consideration in the Court acts as a balancing feature, is no longer a relevant

factor in as much as wherever the Court finds the mere pendency of suit to be

iniquitous to seller, the Court can direct that Section 52 will not apply.

20. This becomes quite evident from another judgment of the Division

Bench of this Court in Sanjay Passi Vs. Iqbal Chand Khurana

MANU/DE/2089/2010 authored by the same Hon'ble Judge who authored

Mohan Overseas P. Ltd., where it is explained that the original side of this

Court has seen an explosion of dockets pertaining to actions for specific

performance of contracts for sale of immovable property and that keeping in

perspective the application of the principle of lis pendens, it would be in the

interest of justice and equity that the purchaser should be asked to deposit the

entire sale consideration. Nevertheless, finding that the purchaser was not

pressing for interim injunction restraining the seller from selling the property to

others, it was held that no direction for deposit of entire sale consideration in

Court could have been issued as a sine-qua-non for considering the relief for

specific performance. It thus appears that direction for such deposit, as per the

said Division Bench also, can be made only as a condition for grant of interim

relief restraining the defendant / seller from dealing with the property and not to

test the readiness and willingness of the plaintiff / purchaser.

21. It is not as if the Division Bench in Mohan Overseas P. Ltd. was

oblivious of Ansal Properties supra. The Division Bench noticed the earlier

judgment in Ansal Properties (supra) which is categorical on the question

before us and did not express any difference of opinion from that. Mohan

Overseas P. Ltd. cannot thus be said to have taken any view different from that

taken by the earlier Division Bench in Ansal Properties and R.K. Goel (supra).

22. We will however be failing in our duty if do not mention another

judgment of Division Bench of this Court in Sabh Infrastructures Ltd. Vs.

Jayshree Bagley MANU/DE/3377/2009 authored by the same Hon'ble Judge

who authored the judgment in Mohan Overseas P. Ltd. The judgment of the

Bombay High Court in Gaurishankar Govardhandas Todi Vs. Evershine

Homes Pvt. Ltd. MANU/MH/1473/2008 to the effect that if the plaintiff is to

deposit the balance sale consideration he would, in effect have performed all

his obligations without receiving the benefits of the Agreement was disagreed

with and Mohan Overseas P. Ltd. reiterated. Unfortunately Ansal Properties

supra was not noticed, though another judgment by the same name was noticed

but which was on another aspect.

23. Though it may appear that there is a inconsistency in the views of the

Division Benches of this Court in Ansal Properties supra and Sabh

Infrastructure Ltd. supra but it is not so. While Ansal Properties supra deals

with a direction to the plaintiff / purchaser to deposit the balance sale

consideration as a condition to the maintainability of a suit for specific

performance, Sabh Infrastructures Ltd. supra deals with the issuance of a

direction to the plaintiff / purchaser to deposit the balance sale consideration as

a condition for grant of interim order restraining the defendant / seller from,

during the pendency of the suit, dealing with the property or as a condition for

applicability of Section 52 of the Transfer of Property Act.

24. As far as the view in Ansal Properties is concerned, the same finds

support from the judgment of the Supreme Court in Boramma Vs. Krishna

Gowda (2000) 9 SCC 214. The Supreme Court, in the said judgment though

was not directly concerned with the issue, but repelled the challenge to a

decree for specific performance on the ground of the finding returned of the

purchaser being ready and willing to perform his part of the contract being

erroneous for the reason of having admitted in cross examination that the

balance sale consideration had not been deposited in the Court and being not

in a position to then deposit the balance sale consideration in the Court,

holding that in view of Section 16(c) supra, no inference of being not ready

and willing can be drawn from such admissions in cross-examination.

25. It may further be stated that in R.K.Goel and Rajesh Kumar supra,

the principle laid down in Ansal Properties in the context of deposit of

balance sale consideration as a condition for maintainability of a suit for

specific performance was extended to direction for such deposit as a

condition for the grant of interim relief. However, in subsequent judgments

in Mohan Overseas P. Ltd., Sabh Infrastructures Ltd. and Sanjay Passi

supra, all concerned with direction for deposit of balance sale consideration

as a condition for grant of interim relief, Ansal Properties was not followed;

however for the reasons aforesaid which, in view of Vinod Seth supra have

seized to exist.

26. We have considered whether such a direction for deposit of balance

sale consideration can be made routinely as a condition for grant of interim

relief or for continued application of Section 52 in suits for specific

performance. In our opinion, no. The reasoning given in Ansal Properties of

the same amounting to making a new contract for the parties would apply.

To ask a plaintiff / purchaser who on a prima facie view of the matter has

been ready and willing to perform his part of the Agreement to Sell, to as a

condition for grant of interim relief restraining the defendant / seller from

dealing with the property deposit the balance sale consideration would

indeed amount to asking him to do something which he under the

Agreement to Sell was not required to do. It cannot be lost sight of that the

applicability of the principle of lis pendens is a creation of law and not of the

own making of the parties. The law, while putting a clog of Section 52 on

the property has not required the purchaser seeking specific performance to

as a condition therefor deposit the balance sale consideration in the Court.

The law having placed the two in such a position, the Courts would interfere

therewith only in exceptional cases where the plaintiff / purchaser on a

prima facie view of the matter is in default and / or where the averments

though made of readiness and willingness have an echo of hollowness. To

hold otherwise would mean doing in the guise of a condition for grant of

interim relief i.e. indirectly what Section 16(c) prohibits to be done and

which in our opinion would not be correct.

27. The position in law, on the subject of issuance of direction to a plaintiff /

purchaser in a suit for specific performance of an Agreement to Sale of

immovable property to deposit the balance sale consideration in Court can thus

be culled out 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.

28. Applying the aforesaid principles, neither any error can be found in the

impugned order nor has any error been argued by the counsel for the appellants

/ defendants. The learned Single Judge on consideration of the facts of the case

has held that it prima facie cannot be said that the plea of the respondent no.1 /

plaintiff having been ready and willing is unbelievable and has not found any

reason to test the respondent no.1 / plaintiff to the said extent.

29. As far as the argument of the counsel for the appellants / defendants of

there being no change in circumstance is concerned, the said observation came

to be made in the peculiar facts of Mohan Overseas P. Ltd. (supra). In that

case, the direction for deposit had been issued finding the plaintiff to be prima

facie in default of his obligations under the agreement to sell.

30. That being the position, the occasion for directing the respondent no.1 /