Delhi High Court
R.S.Chhabra vs Gopal Krishan Kapoor on 6 May, 2015
Author: Indermeet Kaur
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on :29.4.2015
Judgment delivered on : 06.5.2015
+ I.A.Nos.2286/2010, 1460/2014, 5310/2014 in CS(OS) 353/2006
R.S.CHHABRA
..... Plaintiff
Through Mr.Sandeep Sethi, Sr. Advocate
with Mr.Chaman Lal Sachdeva,
Mr.Preet Pal Singh and
Ms.Priyam Mehta, Advocates.
versus
GOPAL KRISHAN KAPOOR
..... Defendant
Through Mr.Pritesh Kapoor, Miss.
Radhika Sharma and Ms.Bina
Gupta, Advocates.
+ EX.P. 232/2007 & EX.APPL. (OS) 35/2010
SHRI R.S. CHHABRA
..... Decree Holder
Through Mr.Sandeep Sethi, Sr. Advocate
with Mr.Chaman Lal Sachdeva,
Mr.Preet Pal Singh and
Ms.Priyam Mehta, Advocates.
versus
SHRI GOPAL KRISHAN KAPOOR AND OTHERS
..... Judgement Debtors
Through Ms.Bina Gupta, Mr.Pritesh
Kapoor and Miss. Radhika
Sharma and, Advocates.
CS (OS) No. 353/2006 & Ex. P. No. 232/2007 Page 1 of 38
CORAM:
HON'BLE MS. JUSTICE INDERMEET KAUR
INDERMEET KAUR, J.
1. These are three applications filed by the judgment debtor.
I.A. No. 2286/2010 (under Order XXIII Rule 3 of the Code)
2 This is an application filed by the judgment debtor under Order
XXIII Rule 3 of the Civil Procedure Code, 1908 (hereinafter referred to
as the „Code‟); reliance has been placed upon the proviso; submission
being that the consent decree passed by the Court on 20.03.2006 in CS
(OS) No. 353/2006 was obtained under a mis-representation and fraud;
submission of the plaintiff (R.S. Chhabra) in those pleadings that he was
a valid assignee of Rajesh Kumar (defendant No. 6 in that suit) was a
false and fraudulent averment; there was no valid assignment by
defendant No. 6 in favour of the plaintiff. In the instant case, the deed of
assignment dated 20.04.2005 was only an agreement which was yet to
be followed up by another document and not being a complete deed of
assignment and the whole case of the plaintiff being premised on this
document and this being fully known to the plaintiff, he is guilty of mis-
representation within the meaning of Section 18 of the Indian Contract
Act. The consent decree passed on 20.03.2006 premised on this
assignment deed suffering from a mis-representation is a voidable
contract and the defendant accordingly seeks setting aside of this decree.
His second submission on the agreement dated 20.04.2005 is based on
the averments that a person holding a back to back agreement to sell
with the original proposed buyer would not be entitled to sue on the first
agreement in the absence of a valid and a complete assignment in his
favour. There being no complete assignment in favour of the plaintiff,
the present suit was not maintainable. On this ground also, the decree
dated 20.03.2006 is liable to be set aside. This fact was learnt by the
judgment debtors only when defendant No. 6 filed an application before
the Division Bench seeking setting aside of the consent decree dated
20.03.2006. Submission being that the dispute between the parties had
in fact travelled right up to the Supreme Court and the Apex Court vide
its order dated 20.11.2009 had granted liberty to the present
applicant/judgment debtor to move an appropriate application under
Order XXIII Rule 3 of the Code pursuant to which this present
application has been filed. Learned counsel for the applicant has placed
reliance upon an extract from the text of "Chitty on Contracts" as also
"Halsbury‟s Laws of England" to argue as to what is a „mis-
representation‟. Submission being that a statement of fact, past or
present, which is unfounded and which is known to the plaintiff to be a
wrong is a „mis-representation‟. Reliance has also been placed upon the
judgment of the Apex Court in (1968) 2 SCR 797 Ningawwa Vs.
Byrappa Shiddappa Hireknrabar and Others to support this submission.
Submission being that where a contract is based on fraud or mis-
representation, it is voidable.
3 Reply has been filed opposing the application. It is pointed out
that the decree dated 20.03.2006 has attained a finality and as per the
version of the applicant/judgment debtor while dismissing the SLP on
20.11.2009, the Supreme Court had refrained from interfering with the
orders of the Court below which included the consent decree dated
20.03.2006. Submission being that the application is even otherwise
barred by law of limitation; under Article 137 of Schedule I of the
Limitation Act, an application seeking setting aside of the decree which
is based either on fraud or mis-representation has to be filed within a
period of three years which period has to be counted from the date of
knowledge of this fraud or mis-representation. Even as per the case of
the applicant, he learnt about this fraud or mis-representation when
defendant No. 6 filed an application before the Division Bench on
18.05.2006. The present application filed in December, 2010 is barred
by limitation. Attention has been drawn to the memorandum of
understanding dated 28.02.2005 executed between the plaintiff and
defendant No. 6 wherein Clause 7 gave a specific right of assignment to
defendant No. 6. Averment being that on 20.04.2005, there was a valid
assignment made by defendant No. 6 in favour of the plaintiff and this
fact was also well within the knowledge of the plaintiff as this document
dated 20.04.2005had been filed by the plaintiff along with his suit. Even
otherwise, in view of the judgment of the Apex Court reported as AIR
2004 SC 348 Shyam Singh Vs. Daryao Singh (dead) by Lrs and Ors.
even in the absence of any words or expressions in a document where
there is prohibition of an assignment or transfer, the implied prohibition
cannot be read into such a document. The document dated 20.04.2005
was a valid assignment. This application on all counts is liable to be
dismissed.
I.A. No. 1460/2014 (under Section 28 of the Specific Relief Act)
4 This is an application filed by defendants No. 1 to 4 under Section
28 of the Specific Relief Act (hereinafter referred to as the „said Act‟).
Submission being that the Court even after passing a decree in a suit for
specific performance is not functus officio; the decree being only a
preliminary decree; the Court is still in seizen of the matter. Where the
timeline laid down by the Court had not been adhered to by the decree
holder as is so in the present case and the decree holder having failed to
deposit the balance amount in terms of the direction contained in the
order of the executing Court dated 31.08.2009 and it being clear that the
decree holder in fact did not have the money to deposit the balance sum
of Rs.4.20 crores, it is a clear case where equitable consideration should
not lie in favour of such a decree holder and the decree dated 20.03.2006
is liable to be set aside. For this proposition he has placed reliance upon
69 (1997) DLT 996 Parvesh Kumar Gulati Vs. Darshan Singh Gulati.
Reliance has also been placed upon (1999) 4 SCC 702 V.S. Palanichamy
Chettiar Firm Vs. C. Alagappan and Another and (2009) 8 SCC 766
Bhupinder Kumar Vs. Angrej Singh.
5 Reply has been filed opposing the application. It is pointed out
that there was no timeline laid down by the Court which was contained
in the order dated 20.03.2006. The executing Court in its order dated
31.08.2009 had laid down certain directions about the terms of payment
and the obligation on the part of the decree holder to make payment
would have arisen only 15 days after the date of execution of the
conveyance deed which was to be executed in favour of the judgment
debtor. The conveyance deed has not yet been executed in favour of the
judgment debtor. This is all because of the fault of the judgment debtor
and this is clear from the report of the Local Commissioner (J.K.
Aggarwal) who had been appointed by the executing Court vide its
order dated 31.08.2009. Attention has been drawn to the three interim
reports filed by the Local Commissioner. Submission being that it does
not now lie in the mouth of the judgment debtor to press his prayer in
terms of Section 28 as the whole fault lies with the judgment debtor.
Reliance has been placed upon AIR 1970 SC 546 Nathulal
Vs.Phoolchand and 2005 (5) ALLMR (SC) 15 P. D'Souza Vs. Shondrilo
Naidu to support an argument that where it is clear from the documents
on record that there were obligations on the part of the defendant to
perform his part of the agreement and when he had not done so, the
question of plaintiff‟s readiness and willing to perform his part of the
contract would not arise. Reliance has also been placed upon (1972) 3
SCC 684 Hungerford Investment Trust Limited (In Voluntary
Liquidation) Vs.Haridas Mundhra and Others to put forward an
argument that this Court has a limited power to grant relief under the
provisions of Section 28 of the said Act. It is not an unlimited power; it
is only where the vendor alleges that the vendee has failed to perform
his part of the obligation, is the vendor entitled to get relief which prayer
is clearly not available to the applicant in the instant case.
I.A. No. 5310/2014 (under Order 11 Rule 12 of the Code)
6 This third application has been filed by the judgment debtor under
Order 11 Rule 12 of the Code. Submission being that the bank statement
for the period w.e.f. June, 2009 till date along with income tax returns
(for the year 2006-2007) of the decree holder/plaintiff should be called
upon by the Court to establish the submission made by the judgment
debtor/applicant that the decree holder in fact had no money to comply
with the directions contained in the order dated 20.03.2006; the decree
holder not having any funds was the reason why he did not pay the
balance sum of Rs.4.20 crore; he is not entitled to any equitable
consideation; the decree dated 20.03.2006 is accordingly liable to be set
aside.
7 Reply has been filed opposing the aforestated application.
Submission is that the application has been filed with a malafide
intention and only to delay the proceedings in the Court; the obligation
was upon the judgment debtor/applicant who had to comply with the
directions contained in the order dated 31.08.2009 (passed by the
executing Court) and the obligation on the part of the decree holder to
pay the balance amount would have arisen only after the execution of
the conveyance deed in favour of the defendant which was not executed
in their favour all because of the fault of the judgment debtor. The
application even otherwise could only have been filed in a pending suit
and admittedly in the instant case, the suit proceedings already stand
disposed of in terms of a consent decree dated 20.03.2006.
8 Arguments have been heard on all the aforenoted applications.
The following factual matrix emerges:
(i) CS (OS) No. 353/2006 was filed by the plaintiff (R.S. Chhabra)
against six defendants of whom defendants No. 1 to 5 were the persons
with whom defendant No. 6 had entered into an agreement to sell dated
28.02.2005 qua a property bearing No. 14-B (also known as 14-C),
Bazaar Marg, Old Rajender Nagar (hereinafter referred to as the „suit
property). Total consideration was Rs.5.20 crores. In terms of Clause 7
of this agreement, there was a specific stipulation which was to the
effect that defendant No. 6 for his bonafide need had the right to assign
his rights in favour of a third party.
(ii) Vide a subsequent MOU dated 20.04.2005, defendant No. 6
assigned his right in favour of the plaintiff. This was for consideration of
Rs. 1 crore. The plaintiff on the strength of this deed of assignment
executed by defendant No. 6 in favour of the plaintiff has filed the
present suit. His contention was that he was ready and willing to
perform his part of the agreement and was willing to pay the entire
balance consideration to the defendants but the defendants were not
ready to execute the sale deed in his favour.
(iii) The suit was filed by the plaintiff on 24.02.2006. A decree of
specific performance in terms of the agreement to sell dated 28.02.2005
was prayed for.
(iv) Within less than one month of the filing of the suit on 20.03.2006,
a compromise was arrived at between the parties. This was a
compromise arrived at between the plaintiff and defendants No. 1 to 5;
defendant No. 4 was present in person. In terms of this compromise, the
decree was passed. The compromise application (I.A. No. 3182/2006)
was a part of the decree dated 20.03.2006. The schedule of payments
was drawn up. It was agreed that the property which was leasehold
would be converted into freehold within a period of 15 days; joint
statement of the parties was recorded. The suit was disposed of. Decree-
sheet was drawn up.
(v) I.A. No. 6399/2006 was thereafter filed on 18.05.2006 by
defendant No. 6 in CS (OS) No. 353/2006 seeking setting aside of the
decree dated 20.03.2006.
(vi) I.A.No. 8638/2006 was filed by the plaintiff for direction to
defendants No. 1 to 5 to implement the decree dated 20.03.2006.
(vii) These applications were disposed of on 05.02.2008 by a Single
Judge of this Court. The Court noted that a separate substantive suit has
been filed by defendants No. 1 to 4 i.e. CS (OS) No. 691/2007 seeking
setting aside of the decree dated 20.03.2006; these applications where all
the respective persons were parties could be decided in that suit; these
applications were accordingly disposed of.
(viii) In CS(OS) No.691/2007 filed by defendants No. 1 to 4
(challenging the consent decree dated 20.03.2006) an interim application
(I.A. No. 14573/2007) was filed by defendants No. 1 to 4.
(ix) I.A. No.55198/2008 was filed by defendant No. 6 in the same suit
i.e. in CS (OS) No. 691/2007.
(x) Both these applications sought interim relief against the consent
decree dated 20.03.2006; a stay of the decree had been sought. These
applications were dismissed by a single Judge of this Court on
09.04.2009. The statement made by the respective parties that a fraud
had been played upon them in obtaining the consent decree dated
20.03.2006 as there appeared to be no valid assignment by defendant
No. 6 (Rajesh Kumar) in favour of the plaintiff was negatived.
(xi) Appeals were filed separately by defendants No. 1 to 4 and
defendant No. 6 respectively. The Division Bench on 27.07.2009
dismissed the appeal of defendant No. 6 (Rajesh Kumar) noting the
submissions made by him that the decree dated 20.03.2006 is liable to
be set aside as it is vitiated by fraud is incorrect. It was agreed that the
balance sum of Rs. 20 lacs would be paid by the plaintiff to defendant
No. 6 which was thereafter paid before the Single Judge on 23.08.2012.
(xii) On 20.08.2009, the Division Bench dismissed the appeal filed by
defendants No. 1 to 4 on the same premise. This order was passed
against the order of the Single Judge dated 09.04.2009 (in CS (OS)
No.691/2007). The Division Bench on 20.08.2009 reiterated that even if
a proposition is pressed that a party whose consent to a compromise has
been obtained by fraud yet in the factual matrix of the instant case, no
fraud appears to have been played upon defendants No. 1 to 5; no prima-
facie case had been made out in their favour. The Division Bench noted
that defendant No. 6/Rajesh Kumar had already entered into an
agreement dated 20.04.2005 with the plaintiff (R.S. Chhbra) who had
paid a sum of Rs. 1 crore to Rajesh Kumar; the possession of the suit
property was continuously being enjoyed by defendants No. 1 to 4.
Relief of injunction was not available to the parties. The Division Bench
dismissed this appeal.
(xiii) The matter did not rest here. Both defendants No. 1 to 5 and
defendant No. 6 filed separate Special Leave Petitions before the
Supreme Court.
(xiv) The Supreme Court on 20.11.2009 passed separate orders in the
two separate SLPs against the orders of the Division Bench (dated
27.07.2009 and 20.08.2009).
9 The orders passed by the Apex Court on the SLP of defendants
No. 1 to 5 reads herein as under:-
"We find no reason to interfere. Special leave petition is dismissed. However, this
will not come in the way of the petitioner challenging the order dated 5.2.2008,
whereby the petitioner's application under Order 23 Rule 3 (proviso) CPC was
dismissed, in accordance with law."
10 The Supreme Court reiterated that it had no reason to interfere
with the order passed by the Division Bench. The petitioner was
however not precluded from challenging the order dated 05.02.2008
wherein his application under Order XXIII Rule 3 of the Code was
dismissed. I.A. No. 2286/2010 was thereafter filed.
11 The argument of the learned counsel for the applicant in all the
aforenoted applications is that the compromise was largely on the
ground of misrepresentation and fraud. Attention has been drawn to the
assignment deed dated 20.04.2005. Submission being that this was not a
valid assignment; being only an agreement to assign; the whole case of
the plaintiff is based on this invalid document; had he not got a valid
assignment in his favour, the suit would not be maintainable. The
judgment debtor learnt about this fraudulent assignment deed only when
defendant No. 6 chose to file an application seeking setting aside of the
decree dated 20.03.2006 which was on 18.05.2006. The whole
transaction being vitiated by a mis-representation and fraud, it is
voidable and liable to be set aside.
12 His second argument is premised on Section 28 of the said Act.
Submission being that this Court is not powerless to rescind the contract
if the timeline laid down by the Court had not been adhered to, the Court
is well within its powers to rescind the contract. Submission being that
the decree for specific performance is in the nature of preliminary
decree and the suit is deemed to have been pending in the Court. Section
28 makes it clear that the Court does not lose its jurisdiction even after
grant of decree for specific performance; it does not become functus
officio where the timeline laid down by the Court had not been adhered
to by the plaintiff/decree holder as in the instant case, equitable
considerations are not to be considered in his favour; the decree is liable
to be rescinded.
13 His third submission (in terms of his application under Order 11
Rule 12 of the CPC) is that the decree holder did not have sufficient
funds to make the payment and that is why he did not pay the money to
the judgment debtor. This can be deciphered by calling his income tax
returns.
14 Needless to state that all these submissions have been refuted.
15 This Court has noted that submissions and counter submissions of
the respective parties.
16 Section 28 of the Specific Relief Act reads herein as under:-
"28. Rescission in certain circumstances of contracts for the sale or lease of
immovable property, the specific performance of which has been decreed.--
(1) Where in any suit a decree for specific performance of a contract for the sale or
lease of immovable property has been made and the purchaser or lessee does not,
within the period allowed by the decree or such further period as the court may
allow, pay the purchase money or other sum which the court has ordered him to
pay, the vendor or lessor may apply in the same suit in which the decree is made, to
have the contract rescinded and on such application the court may, by order,
rescind the contract either so far as regards the party in default or altogether, as the
justice of the case may require.
(2) Where a contract is rescinded under sub-section (1), the court--
(a) shall direct the purchaser or the lessee, if he has obtained possession of the
property under the contract, to restore such possession to the vendor or lessor, and
(b) may direct payment to the vendor or lessor of all the rents and profits which
have accrued in respect of the property from the date on which possession was so
obtained by the purchaser or lessee until restoration of possession to the vendor or
lessor, and if the justice of the case so requires, the refund of any sum paid by the
vendee or lessee as earnest money or deposit in connection with the contract.
(3) If the purchaser or lessee pays the purchase money or other sum which he is
ordered to pay under the decree within the period referred to in sub-section (1), the
court may, on application made in the same suit, award the purchaser or lessee such
further relief as he may be entitled to, including in appropriate cases all or any of
the following reliefs, namely:--
(a) the execution of a proper conveyance or lease by the vendor or lessor;
(b) the delivery of possession, or partition and separate possession, of the property
on the execution of such conveyance or lease.
(4) No separate suit in respect of any relief which may be claimed under this section
shall lie at the instance of a vendor, purchaser, lessor or lessee, as the case may be.
(5) The costs of any proceedings under this section shall be in the discretion of the
court."
17 There is no doubt to the settled legal proposition as submitted by
the learned counsel for the plaintiff that even after passing of a decree
under the Specific Relief Act, the Court does not become functus
officio; it retains its powers and being in the nature of a preliminary
decree and where the purchase money has not been paid as per the
schedule; the contract may be rescinded on the application made by the
vendor/lessor.
18 The factual matrix of each case however has to be examined in its
individual context for the application of this legal proposition. In the
instant case, the compromise decree was passed on 20.03.2006 . This
was a consent decree between the plaintiff and defendants No. 1 to 5
where defendant No. 4 was present. This decree was passed within less
than one month from the date of filing of the suit which suit had been
filed by the plaintiff on 24.02.2005. This suit was premised on a deed of
assignment dated 20.04.2005 executed by defendant No. 6 (Rajesh
Kumar) in favour of the plaintiff. The rights of the plaintiff had
emanated from this assignment deed. Not happy with this consent
decree, defendant No. 6/Rajesh Kumar moved an application seeking
setting aside of this consent decree. So also defendants No. 1 to 5. They
also filed a separate application seeking setting aside of the consent
decree dated 20.03.2006. These applications were disposed of by the
learned Single Judge on 05.02.2008. The Single Judge had noted that a
separate substantive suit i.e. CS (OS) No.691/2007 has been filed by
defendants No. 1 to 4 seeking the same relief i.e. seeking setting aside of
the decree dated 20.03.2006. Accordingly, these applications could be
dealt with in the substratum of the said suit.
19 In CS (OS) No. 691/2007, two separate applications (as noted
supra) were filed by defendants No. 1 to 5 and defendant No. 6. Both of
them sought setting aside of the decree of 20.03.2006. They were both
dismissed by a speaking order of the Single Judge dated 09.04.2009.
The Single Judge had noted that no prima-facie case is made out in
favour of the party to grant them the relief of stay of decree dated
20.03.2006. This was upheld by the Division Bench by two separate
orders dated 27.07.2009 and 20.08.2009. At the cost of repetition, the
Division Bench had noted that the plea of fraud as set up by the
defendants (that the assignment deed dated 20.04.2005 executed by
defendant No. 6 in favour of the plaintiff is vitiated being based on a
fraud) is prima-facie not made out. The orders were passed on the two
separate appeals filed by defendants No. 1 to 4 and defendant No. 6
respectively.
20 Since the contesting parties before this Court are defendants No. 1
to 4, it would be relevant to extract the order passed by the Division
Bench on 20.08.2009 (on the application of defendants No. 1 to 4). It
reads herein as under:-
"10. If the Plaintiffs/Appellants were aware of the contents of the Memorandum of
Understanding dated 20.4.2005 as is evident from the fact that the original
document was annexed to the plaint in CS(OS) No.353/2006 and a copy of the same
was filed by them as AnnexureP-2 to the Writ Petition, it cannot be said that a
material fact was withheld from them or a fraud was played upon them. Whether the
Memorandum of Understanding dated 20.4.2005 executed between Defendant No.1
and Defendant No.2 amounted to assignment of the M.O.U. dated 20.4.2005 in
favour of Defendant No.1 or it only gave a right to Defendant No.1 to get it assigned
in his favour at a later date is a matter of interpretation of document. If the
Plaintiffs/Appellants after considering the Memorandum of Understanding dated
20.4.2005 and consulting their Advocate agreed with the contention of Defendant
No.5 that by virtue of Memorandum of Understanding dated 20.4.2005, the earlier
M.O.U. dated 28.2.2005 stood assigned in his favour. It cannot be said that a fraud
was played upon them by Defendant No.1. There can be a genuine difference of
opinion on the legal interpretation of a document. But since long as the document
itself was made available to them, it cannot be said that there was a fraud upon the
Plaintiffs/Appellants merely because Defendant No.1 interpreted it to mean as
assignment of the first M.O.U. in his favour and the Plaintiffs/Appellants agreed
with him and that too after consulting their Advocate. In such circumstances, neither
there was any concealment nor any fraud.
11. As noted by us, while dismissing the appeal filed by respondent No. 2, Rajesh
Kumar, Clause 7 of the Memorandum of Understanding dated 28th February, 2005
executed between him, on the one hand, and the appellant and late Smt. Sanjogta
Kapoor, on the other hand, shows that Respondent No. 2 Shri Rajesh Kumar was
specifically granted right to nominate and assign Memorandum of Understanding in
favour of any nominee(s) and assignee(s). As further noted by us, since Shri Rajesh
Kumar had divested all his rights in favour of Shri R.S. Chhabra (Respondent No. 1,
herein). The Memorandum of Understanding dated 20th April, 2005 specifically
stipulated that he (Respondent No. 1, Shri R.S. Chhabra) shall be entitled to get the
sale deed executed in his favour, balance payment was to be made directly to the
sellers and the possession was also to be handed over by them to Shri R.S. Chhabra.
After execution of the second Memorandum of Understanding, Respondent No. 2
Shri Rajesh Kumar was not entitled, either in law or in equity, to get the suit
property sold to him under the Memorandum of Understanding dated 28th
February, 2005. Therefore the appellants having compromised with respondent No.
1, after examining the terms and conditions of Memorandum of Understanding
dated 20th April, 2005 and after consulting their advocate, it cannot be said that a
fraud was played upon them by respondent No. 1 by claiming that the Memorandum
of Understanding dated 28th February, 2005 had been assigned in his favour.
Respondent No. 1 may have bonafidely interpreted the Memorandum of
Understanding dated 20th April, 2005 to mean that the earlier Memorandum of
Understanding dated 28th February, 2005 stood assigned in his favour. But that by
itself would not constitute a fraud upon the appellants, particularly, when the
Memorandum of Understanding was very much in the knowledge of the appellants.
In fact, we failed to appreciate what difference it would have made to the appellants
had the Memorandum of Understanding dated 20th August, 2005, actually assigned
the previous Memorandum of Understanding dated 28.2.05 to Respondent No.1,
instead of only giving him a right to get the previous Memorandum of
Understanding assigned in his favour at a later date. For them what was material
was that they had entered into a Memorandum of Understanding with respondent
No. 2 Rajesh Kumar on 28th February, 2005 and under that documents they had
given special right to him to assign his rights under the Memorandum of
Understanding in favour of any nominee or assignee and Respondent No.2, Shri
Rajesh Kumar, by signing the Memorandum of Understanding dated 20.4.05 with
respondent No.1, has already divested him of all his rights under the MOU dated
28.2.2005. For them what is material is that they are getting agreed consideration
from respondent No. 1 and are not committing any breach of the terms and
conditions contained in the Memorandum of Understanding executed on 28th
February, 2005 between them and Respondent No. 2, Rajesh Kumar. They have
nothing to lose by executing the sale deed in favour of Respondent No. 1. It is more
so when not only the application filed by Shri Rajesh Kumar for grant of interim
injunction against execution of the compromise decree dated 28th March, 2006
passed in CS (OS) No. 353 of 2006 has been dismissed, the appeal filed by him has
also been dismissed by this court."
..................................
16. Even if we proceed on the proposition that a party whose consent to the
compromise resulting in passing of compromise decree was obtained by fraud, is
entitled to file a suit for setting aside such a compromise decree, we find that in the
facts and circumstances of the present case, no fraud actually appears to have
been played upon the appellants. Therefore the appellants have failed to make out a
prime facie case in favour of setting aside the compromise decree dated 28th March,
2006."
21 This order of 20.08.2009 has attained a finality before the
Supreme Court (quoted supra). The Supreme Court had categorically
stated that there is no reason to interfere with the orders passed by the
Courts below. Defendants No. 1 to 5 were however not precluded from
seeking setting aside of the order dated 08.02.2005 by moving an
application under the provisions of Order XXIII Rule 3 of the Code.
22 Order XXIII Rule 3 of the Code reads herein as under:-
"3. Compromise of suit.- Where it is proved to the satisfaction of the court that a
suit has been adjusted wholly or in part by any lawful agreement or compromise in
writing and signed by the parties, or where the defendant satisfies the plaintiff in
respect of the whole or any part of the subject matter of the suit, the court shall
order such agreement, compromise or satisfaction to be recorded, and shall pass a
decree in accordance therewith so far as it relates to the parties to the suit, whether
or not the subject matter of the agreement, compromise or satisfaction is the same
as the subject matter
of the suit: -
Provided that where it is alleged by one party and denied by the other than an
adjustment or satisfaction has been arrived at, the court shall decide the question;
but no adjournment shall be granted for the purpose of deciding the question, unless
the court, for reasons to be recorded, thinks fit to grant such adjournment.
Explanation : An agreement or compromise which is void or avoidable under the
Indian Contract Act, 1872 (9 of 1872), shall not be deemed to be lawful within the
meaning of this rule."
23 The Explanation to this Section postulates that a consent decree
which has been arrived at between the parties will be treated as non-est
and a nullity in law if the consent of the parties has been obtained
against the provisions as contained in the Indian Contract Act and
ground for vitiation of such a decree would include a mis-representation
and fraud. Mis-representation and fraud are defined in Section 18 &
Section 19 of the Indian Contract Act respectively. It is on these
provisions of the Indian Contract Act that the ground of fraud and mis-
representation have been pleaded. Submission being that assignment
deed dated 20.04.2005 executed by defendant No. 6 in favour of the
plaintiff is in fact a fraud and based on false averments.
24 However what is the mis-representation in the assignment deed
has not been disclosed; there is no detail of either the mis-representation
or fraud. It is a simplicitor statement unsupported by any further detail;
except a vague averment that this document dated 20.04.2005 was only
an agreement to assign and not a completed deed of assignment. The
assignment deed is a registered document. Defendant No. 6 had assailed
this document by filing an application seeking setting aside of this
decree (20.03.2006) on the ground that this assignment deed was not a
valid assignment but he had lost this argument right up to the Supreme
Court. On 20.11.2009, the Supreme Court had dismissed his appeal.
25 This Court notes with pain that the document dated 20.04.2005
was available with the defendants right from the inception; this
document was filed along with the plaint in the year 2006. It was on the
basis and premise of this document that the suit was filed. Defendants
No. 1 to 5 had entered into a compromise with the plaintiff voluntarily
and with their free will which is recorded in the consent decree dated
20.03.2006. No detail of „fraud‟ or „mis-representation‟ has been
pleaded or expressed to the Court. In fact even on a specific query had
been put to the learned counsel for the applicant there is hardly any
answer. Clauses 2 & 3 of this MOU (dated 20.04.2005) disclose that the
first party (i.e. defendant No. 6) agreed by this document to assign all
rights in his favour to the second party i.e. the plaintiff. Out of the total
consideration of Rs. 1 crore, Rs. 80 lacs was admittedly received by
defendant No. 6. The document read as a whole clearly depicts the intent
of defendant No. 6 which was to assign all his rights in the property to
defendant No. 6. Reference to the earlier document dated 28.02.2005
executed between defendants No. 1 to 5 & defendant No. 6 by virtue of
which defendant No. 6 had acquired his right also finds mention. The
MOU dated 20.04.2005 was a complete assignment deed. At the cost of
repetition the plea of fraud and misrepresentation set up by the
defendants i.e. both by defendant nos.1 and 4 as also defendant no.6 had
been rejected right up to the Apex Court.
26 The order dated 31.08.2009 is also relevant. This was an order
passed by the executing Court. The executing Court for the first time
had in fact laid down the timeline within which the parties were to
perform their respective obligations. It would be relevant to extract this
part of the order. It reads herein as under:-
"In view of the fact that the suit property is a leasehold property, it will have to be
converted to freehold. An application in that regard is stated to be pending in the
office of L and DO. Since the Defendants 1 to 5 in the suit are not coming forward to
take further steps, the learned Court Commissioner is directed to take the necessary
steps in terms of this order (along with a certified copy of the decree) and get the
conveyance deed executed in the office of the Land DO in favour of the JDs/
Defendant Nos.1 to 5 within the next two weeks. The balance sale consideration for
the purpose of registration of the sale deed shall be deposited in this Court by the
DH within a period of 15 days from the date that the conveyance deed is executed in
favour of the JDs.
22. As a next step, within two weeks thereafter, the DH will submit to the learned
Court Commissioner the draft sale deed and after finalizing the same the learned
Court Commissioner will take steps to have it registered. The DH will be called
upon to deposit the stamp duty by the learned Court Commissioner within a period
of two weeks. A sum of Rs.20 lakhs which has to be paid by the DH will also be
deposited in this Court by the DH within a period of fifteen days from the date of
execution of the conveyance deed. Upon such deposits it will be open to the
applicant Mr. Rajesh Kumar to file an appropriate application seeking withdrawal
of the said amount of Rs. 20 lakhs and the original sellers to file an application for
withdrawing the balance sale consideration.
23. The fees of Mr. J.K. Aggarwal, the learned Court Commissioner is fixed at
Rs.40,000/- which will be paid by the DH within a period of two weeks from today.
Simultaneous with the registration of the sale deed, the learned Court Commissioner
will take possession of the suit property and hand it over to the DH. It will be open
to the learned Court Commissioner to seek the assistance of the local police, if any,
for carrying out the directions aforementioned.
24. With the above directions, the execution petition is disposed of. A certified copy
of this order together with certified copy of the decree be delivered forthwith to the
Court Commissioner.
27 The executing Court had noted that defendants No. 1 to 5 were
not coming forward to take relevant steps. Accordingly, a Court
Commissioner (J.K. Aggarwal) had been appointed to get the
conveyance deed executed on the application already pending before the
L & DO. This was to be done in two weeks. The balance consideration
had to be paid by the plaintiff in favour of the defendants when the
conveyance deed would have been executed by the judgment debtor.
Till date the conveyance deed has not been executed in favour of the
judgment debtor.
28 The report of the Court Commissioner is relevant and speaks
volumes of the conduct of the defendants. The Court Commissioner has
submitted three interim reports. They are dated 05.10.2009, 18.11.2009
and 12.12.2009. In its report dated 18.11.2009, it had categorically been
stated that the Deputy L & DO had addressed a letter to the defendant
Krishan Kumar Bakshi asking her to be present before the L & DO with
all the requisite documents in order that the conveyance deed could be
executed in favour of the party. However, inspite of intimation by the
Deputy L & DO to the judgment debtor, they had cared not to appear. In
its report, the Court Commissioner has categorically stated that on
12.11.2009, Krishan Kumar Bakshi (defendant no.) had received this
communication from the Deputy L & DO and had replied vide her
communication dated 16.11.2009 wherein she had stated that since the
SLP is pending before the Supreme Court and she had sought a stay of
the execution; the directions of the Court Commissioner be kept in
abeyance.
29 Thus admittedly the judgment debtors were aware of the
proceedings initiated by the Court Commissioner but they chose
deliberately and intentionally to avoid them and not to appear before the
Land and DO for the execution of the conveyance deed. The Court
Commissioner has filed his last report dated 12.12.2009 bringing all
these facts to the knowledge of the Court wherein it was reported that
the Deputy L & DO has again asked for the presence of the parties in
order that the conveyance deed could be executed in their favour and
inspite of notice to their counsel (Ms. Bina Gupta, Advocate), none had
appeared for the judgment debtor. Thus the whole premise of argument
of the defendants that there is delay on the part of the decree holder in
complying with the directions contained in the order dated 31.08.2009
and thus decree is liable to be rescinded without any basis.
30 In view of the aforenoted discussion, this Court is of the view that
none of the three applications filed by the applicant are sustainable.
They have been filed only to delay the proceedings. Being malafide each
of the application is dismissed with costs quantified at Rs.20,000/- each.
I.A. No.2286/2010 (under Order XXIII Rule 3 of the CPC)
31 The applicant himself is not clear whether it is a case of mis-
representation or fraud; till the first two days, the arguments were being
presented on „fraud‟ and pleadings also spoke of fraud; it is noteworthy
to note that the details of the mis-representation or fraud has not been
given. This Court has already rejected his plea that the MOU dated
20.04.2005 was only an agreement to assign and not a complete deed of
assignment.
32 The consent decree and the plea of fraud/mis-representation (as
noted supra) had been set up at various stages of the litigation and right
up to the Supreme Court, this plea at all stages had been rejected. The
application is also time barred. Limitation for an application of such a
nature is three years which period has to be counted from the date when
the knowledge of the fraud/mis-representation was known to the party;
admittedly in this case, the applicants learnt about the fraud/mis-
representation qua the assignment deed when defendant No. 6 filed an
application on 18.05.2006 seeking setting aside of the consent decree
dated 20.03.2006. The present application filed in December, 2010 was
clearly beyond the period of limitation. On this ground also, the
application is also liable to be dismissed.
33 This application is without any merit. It is dismissed.
I.A. No. 1460/2014 (under Section 28 of the Specific Relief Act)
34 The discussion supra evidences that the breaches were all
committed by the defendants. In fact the order dated 31.08.2009 passed
by the executing Court had noted that the defendants were not
cooperating and that is why a Local Commissioner had been appointed.
The Local Commissioner in its various reports had detailed the non-
cooperative attitude of the defendants and inspite of the defendants
being asked to appear before the office of L & DO to get the conveyance
deed executed, they failed to do so. The letter dated 16.11. 2009 of
Krishna Kumar Bakshi is a clear evidence of this defiant attitude of the
defendants. They were at breach on almost every stage of the
proceedings. The obligation on the part of the plaintiff to pay the
balance consideration of Rs.4.17 crores within 15 days would have
arisen only after the execution of the conveyance deed which at the cost
of repetition has not been executed till date.
35 The Apex Court in Hungerford Investment Trust Limited (supra)
while dealing with the power and jurisdiction of a Court on an
application under Section 28 of the said Act had inter-alia noted as
under:-
"It may and not infrequently does happen that after judgment has been given for the
specific performance of a contract, some further relief becomes necessary, in
consequence of one or other of the parties making default in the performance of
something which ought under the judgment to be performed by him or on his part;
as for instatement, where a vendor refuses or is unable to execute a proper
conveyance of the property, or a purchaser to pay the purchase money....
There are two kinds of relief after judgment for specific performance of which either
party to the contract may, in a proper case, avail himself:
(i) He may obtain (on motion in the action) an order appointing a definite time and
place for the completion of the contract by payment of the un-paid purchase-money
and delivery over of the executed conveyance and title deeds, or a period within
which the judgment is to be obeyed, and, if the Other party fails to obey the order,
may thereupon at once issue a writ of sequestration against the defaulting party's
estate and effects....
(ii) He may apply to the Court by motion in the action) for an order rescinding the
contract. On an application of this kind, if it appears that the party moved against
has positively refused to complete the contract, its immediate rescission may be
ordered: Otherwise, the order will be for rescission in default of completion within a
limited time...."
36 The factual matrix of the case discloses that all faults lay on the
part of the defendants. The obligation on the part of the plaintiff to pay
the balance amount had not arisen as the conveyance deed was not
executed in favour of the defendants and this was all for the fault on the
part of the defendant. Learned Local Commissioner and the
communications exchanged between him and the Deputy L & DO and
defendants No. 1 to 5 are all evident of this fact.
37 The defendants are not entitled to any relief on this application. It
is dismissed.
I.A. No. 5310/2014 (under Order 11 Rule 12 of the Code)
38 This application has been filed under order 11 Rule 12 of the
Code which specifically stipulates that such an application can be
entertained only in a pending suit. Even presuming the submission of
the learned counsel for the defendants that the suit has not yet been
disposed of and even while decreeing the suit of a specific performance,
it is only in the nature of a preliminary decree and the Court is yet seized
of the matter; the prayer made in the application is also not liable to be
granted to the applicant. The submission of the applicant that the
obligation could not be performed by the plaintiff as he did not have the
sufficient funds in not a matter to be gone into at this stage as the
obligation had to come in hierarchy. The first obligation was on the part
of the defendants to get the conveyance deed executed in his favour. It
was only thereupon after 15 days of the execution of the conveyance
deed in favour of the defendants that the plaintiff was obliged to pay the
balance amount. The obligation on the part of the plaintiff had not arisen
as the conveyance deed has not been executed till date. The question of
asking the plaintiff to file his tax returns and to disclose his bank
statement does not arise. This application appears to be malafide. It is
dismissed.
39 Alternate submission
An alternate submission had also been made by the learned
counsel for the applicant. This was to the effect that if this Court is not
inclined to pass any favourable order on the three pending applications
filed by the applicant, the Court may consider his alternate plea; his
alternate plea being that he is entitled to an enhancement of money
compensation as the consent decree was passed in the year 2006 and in
the last nine years, the property prices have escalated and the sale price
of the property in question which was in the year 2006 fixed at Rs.5.20
crores has now escalated to more than 10 times over. This Court being a
Court of equity may in the alternate compensate the applicant.
40 This argument has been opposed. Learned senior counsel for the
plaintiff has pointed out that in all these applications which have been
filed before this Court, this submission has not been pleaded. This
submission has been made orally and being an afterthought and not
being part of the pleadings, the applicant is not entitled to any relief on
this count. Even otherwise, equitable considerations cannot weigh in
favour of a party who himself has been negligent and guilty; it is all
because of intentional fault on the part of the applicant/defendant that
the conveyance deed had not been executed till date in favour of the
applicant; the plaintiff is crying hollow and was running from pillar to
post since 20.03.2006 and inspite of the plaintiff having the consent
decree since then; the same has not been implemented; no equitable
consideration was in favour of the plaintiff.
45 This Court is of the view that the applicants are also not entitled
to this alternate prayer.
46 In AIR 2002 SC 2290 Nirmala Anand Vs. Advent Corporation
Pvt. Ltd. and Ors., the Apex Court while examining such an alternate
plea in a suit for specific performance had off quoted that no party can
take advantage of its own wrong. In this context, it had also noted as
under:-
"45. It would be seen in none of the above noted cases this Court has laid an
absolute rule that the proposed vendee would be required to compensate the
proposed vendor for the escalation of price of the land and building during the
pendency of the proceeding in Court at different level.
46. The appellant has always been ready and willing to perform her part of contract
at all stages. She has not taken any advantage of her own wrong. The appellant is in
no way responsible for the delay at any stage of the proceeding. It is the respondents
who have always been and are trying to wriggle out of the contract. The respondents
cannot take advantage of their own wrong and then plead that the grant of decree of
specific performance would amount to an unfair advantage to the appellant.
47. Requiring the appellant to pay further sum of Rs. 40 Lakhs would/may amount of
frustrating the agreement itself as the appellant may not be in a position to pay the
sum of Rs. 40 lakhs. Respective counsel for the parties had quoted the figure of a
particular sum which could be paid to the appellant in lieu of avoiding the decree of
specific performance. The appellant had not made an offer to pay any additional
sum over and above the quoted price to sell by way of compensation. It does not
indicate the financial position of the appellant to pay the additional sum of Rs. 40
lakhs. With due respect, in my view, it would be unfair to grant the decree of specific
performance by one hand and take it back by the other."
47 The applications having being dismissed, the next course is to
ensure that the execution of the decree dated 20.03.2006 is properly
effected. This Court accordingly deems to think fit to appoint Mr. Vinod
Goel, Registrar General of this Court to ensure that the conveyance deed
qua the suit property i.e. property bearing No. 14-B (also known as 14-
C), Bazaar Marg, Old Rajender Nagar is executed by the L & DO in
favour of the defendants and for this purpose, this Court authorizes the
Registrar General to act on behalf of the defendants who have not been
cooperating and not appearing before the L & DO which has led to the
frustration and non-implementation of the decree dated 20.03.2006. The
conversion charges of converting the property from lease hold to
freehold are agreed to be borne by the plaintiff. After the conveyance
deed has been executed in favour of the defendants, the balance payment
of Rs.4.17 crores shall be made by the plaintiff to the defendants within
a period of 15 days.
48 The fee of the Local Commissioner is fixed at Rs.50,000/- to be
borne by the decree holder.
49 All applications as also the execution petition stand disposed of in
the above terms.
INDERMEET KAUR, J
MAY 06, 2015
A
