J.M. Construction Pvt. Ltd vs Krishna Sachdev & Ors
2017 Latest Caselaw 2031 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                        Date of decision: 26th April, 2017.
+                         CS(OS) No.1409/2007
        J.M. CONSTRUCTION PVT. LTD.                              ..... Plaintiff
                    Through: Mr. N.K. Vohra, Adv.
                         versus

    KRISHNA SACHDEV & ORS.                ..... Defendants
                  Through: Mr. Vijay Kishan, Adv with Mr.
                           Vikram Jetly, Adv for D- 1 to 9.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
IA.No.1138/2016 (of the defendants no.1 to 9 under Order VII Rule 11
CPC).
1.

The defendants no.1 to 9 in this suit for specific performance of an Agreement relating to immoveable property and for permanent injunction restraining the defendants from dealing with the property seek rejection of the plaint on the ground of the claim therein being barred by time.

2. The plaintiff instituted this suit pleading (i) that one Sheela Devi (since deceased) was the exclusive owner of property no.C-10, Defence Colony, New Delhi ad measuring 325 sq. yds. and construction thereon; (ii) that the said Sheela Devi vide Memorandum of Understanding executed on 17th June, 1996 (MoU) agreed to sell the said property to the plaintiff for a total sale consideration of Rs.2,60,00,000/-; (iii) that the MoU inter alia required the plaintiff to from its own funds make payment of charges for conversion of leasehold rights in the land underneath the property into freehold; the plaintiff in discharge of the said obligation deposited a sum of Rs.77,955/- with the Land & Development Officer (L&DO); (iv) the

plaintiff on 18th September, 1996 paid an amount of Rs.2,00,000/- to Sheela Devi and receipt whereof was acknowledged in writing by Sheela Devi on 18th September, 1996; (v) the plaintiff, on payment of the remainder sale consideration of Rs.2,58,00,000/-, was/is entitled to get the transaction completed in its favour; (vi) the plaintiff, since the date of the MoU has been solvent, ready and willing to pay remainder part of the sale consideration and complete the transaction; (vii) that on many occasions the plaintiff called upon and reminded Sheela Devi of her obligation under the MoU and for completing the transaction; (viii) however disputes had broken out amongst the family members of Sheela Devi with regard to distribution of sale consideration and owing whereto Sheela Devi could not complete the transaction but kept the performance of her part of obligations in abeyance;

(ix) in May, 1997 Sheela Devi informed that the internal family disputes amongst her family members could not be resolved and as an alternative requested the plaintiff to execute a collaboration agreement for demolition of the property and construction of new building by the plaintiff on joint venture basis; (x) after discussions, the parties entered into and executed a Collaboration Agreement dated 22nd May, 1997; as per the said Agreement the plaintiff was to demolish the existing structure on the property and thereafter at its own costs construct a new building comprising of basement, ground, first and barsati floors and of which Sheela Devi was to own and retain the entire ground floor and the plaintiff to own and retain the entire basement, first and barsati floors with terrace; "cash consideration for Collaboration Agreement authorising the plaintiff company to demolish the then existing structure of the building on the plot of suit property, and reconstruct a new building on space sharing basis was settled at

Rs.1,50,00,000/- [Rupees One Crore and Fifty lacs Only] out of which, simultaneously along with the execution of the aforesaid collaboration agreement on 22.05.1997, the plaintiff company paid to late Smt. Sheela Devi Rs.2,82,045/- (Rupees two lacs eighty two thousand and forty five only) in cash being part payment of cash consideration specified in the collaboration agreement. Of this part cash consideration, the owner paid Rs.1,00,000/- to the defendant no.7"; that the balance Rs.1,46,90,000/- was required to be paid by the plaintiff to Sheela Devi within 30 days after getting permission in Form 37-I under the Income Tax laws and simultaneously at the time of taking vacant physical possession of the property; (xi) the plaintiff immediately after signing the Collaboration Agreement handed over Form 37-I to Sheela Devi for countersigning the same and returning to the plaintiff for onward submission to the Income Tax Department; (xii) the plaintiff repeatedly informed Sheela Devi during the months of June, 1997 to March, 1998 to come forward to complete her part of obligations; (xiii) Sheela Devi kept on delaying the handing over of possession of the property in terms of Collaboration Agreement; resultantly the balance amount payable by the plaintiff also could not be paid; in addition Sheela Devi did not hand over Form 37-I either; Sheela Devi died on 5th May, 1998; she never revoked or cancelled the Agreement in her lifetime; (xiv) the defendants no.1 to 9 herein namely Krishna Sachdev, Lt. Col. (Dr.) Deepti Sablok, Major Deepak Sachdev, Neelima Bhalla, Sarvadaman Bhalla, Anuradha Chopra, Shano Prakash, Lt. (I.N.) Pradeep Prakash Sachdev and Vishal Prakash Sachdev are the natural heirs of Sheela Devi; (xv) the plaintiff contacted the defendants no.1 to 9 in November, 1998 immediately on coming to know of the demise of Sheela Devi and the

defendants no.1 to 9 being fully aware of the Agreement qua the suit property promised to perform the obligations of Sheela Devi after their inter se disputes over the distribution of balance consideration are resolved; (xv) "that the defendants during the years 1998-2005 repeatedly expressed their inability to hand over vacant, peaceful and physical possession and take balance consideration for the suit property. However, the defendants promised that they shall not dispose off the suit property in any manner to any third person or enter into collaboration agreement in respect of the suit property and shall complete their part of pending obligations as required by the aforesaid agreements with the plaintiff company"; (xvi) the defendants no.1 to 9 at no time cancelled or revoked or terminated the written agreements; (xvii) the plaintiff got issued legal notice dated 9th February, 1999 calling up the legal heirs of Sheela Devi to perform the obligations of late Sheela Devi; "even this legal notice was met with all sorts of assurances and commitments from the defendants that the needful as required by the agreements in respect of the transfer or in the alternative handing over the vacant, peaceful and physical possession of suit property in favour of the plaintiff company shall be done once inter se disputes among the legal heirs of late Smt. Sheela Devi get resolved out and settled"; (xviii) the plaintiff by way of abundant caution through its Advocate on 19th November, 1999 published in the newspaper a legal notice about its rights, charge, lien, encumbrance, title and interest in the property; the defendants no.1,7&10 met the Directors of the plaintiff and assured that in accordance with the Agreements the defendants shall perform their part of the contract the moment their internal disputes are over; (xix) the defendants no.1,7&10 and other defendants between December, 1999 to June, 2005 repeatedly visited

the office of the plaintiff and assured and held out that the defendants shall not negotiate with anybody else in respect of the property; (xx) the defendants cleverly and clandestinely concealed the developments in the legal proceedings in Suit No.2020/1999 (however there is no reference to the said suit at any earlier stage of the plaint); (xxi) that in end of June, 2005 the plaintiff learnt that the defendants no.1,7&10 were trying to dispose of the property to third parties in pursuance to decision of Suit No.2020/1999; (xxii) the Directors of the plaintiff attempted to contact the defendants but the defendants avoided; (xxiii) on 7th July, 2005 defendant no.7 gave information to the Directors of the plaintiff that the property had been mutated in their names and Suit No.2020/1999 had been decided; (xxiv) the plaintiff on 8th July, 2005 served notice on defendants no.1 to 9 reminding them of their obligations in respect of the said property; (xxv) the defendant no.7 sent reply dated 20th July, 2005 wherein he for the first time implied refusal to perform the obligations of Sheela Devi under the Agreement and unilaterally sent a Pay Order for Rs.3,10,000/- in favour of the plaintiff; (xxvi) that in the aforesaid reply the defendants have also referred to a document dated 22nd May, 1997 alleged to have been signed on the date of signing of the Collaboration Agreement; the plaintiff has never executed any such document; even if there was any private understanding between Sheela Devi and any of the shareholders/officer bearers of the plaintiff, the plaintiff would not be bound by the same; there was no reference to the said document in Suit No.2020/1999 also and on the contrary the defendants no.1 to 9 had been assuring the plaintiff; (xxvii) that the plaintiff did not accept the Pay Order for Rs.3,10,000/- and is filing the same before this Court; (xxviii) no replies to the legal notice dated 8 th July, 2005 were received from

any of the other defendants; (xxix) a legal notice from the defendant no.7 to one of the Directors of the plaintiff was also received on 22 nd August, 2005; (xxx) the plaintiff got sent another notice dated 12th December, 2005 to take back the Pay Order for Rs.3,10,000/- and to collect Rs.2,58,00,000/- and execute necessary documents in respect of the suit property; (xxxi) in August, 2006 the plaintiff traced the particulars of Suit No.2020/1999 and learnt that it had been transferred to the District Courts and on perusal of records thereof realised that the defendants no.1 to 9 had misled the Court in which the same was pending by stating that J.K. Malhan of the plaintiff had stated that if Rs.3,10,000/- is paid to him he will leave all his rights in the property and that J.K. Malhan had been compensated and was not pressing his rights in the property; (xxxii) that the defendants in collusion with defendant no.14 K.K. Sharma have demolished the property and are re- constructing thereon; (xxxiii) defendant no.13 Sanjeev Anand has been impleaded because he also claims some interest in the property; and, (xxxiv) defendants no.10,11&12 i.e. Lt. Col. Din Dayal Sachdev, Bharat Bhushan Jain and Baldev Sahai have been impleaded as they were the named executors of the Will dated 29th October, 1995 of Sheela Devi.

3. Reliefs of (i) specific performance of the MoU dated 17 th June, 1996 and in the alternative of Collaboration Agreement dated 22 nd May, 1997; (ii) of permanent injunction restraining the defendants from dealing with the property; and, (iii) of damages/compensation in lieu of specific performance have been claimed in the suit (however the damages/compensation have not been quantified).

4. The suit was entertained though no interim relief sought granted.

5. Separate written statements were filed by the defendants no.1 to 9 and defendant no.14 only. The defendants no.10 to 13 did not appear despite service and were on 13th January, 2015 proceeded against ex parte.

6. The defendants no.1 to 6 in their written statement inter alia pleaded

(i) that the claim for specific performance is barred by time as according to the averments in the plaint also the cause of action if any accrued to the plaintiff in February, 1999 and the suit has been filed beyond three years therefrom; (ii) that in pursuance to orders in Suit No.2020/1999 advertisements were published in the Times of India Delhi Edition newspaper of 6th and 7th November, 1999 for sale of the property; (iii) on the date of signing of the Collaboration Agreement an MoU was simultaneously entered into between Sheela Devi and the plaintiff represented by J.K. Malhan, on 22nd May, 1997 itself, whereunder Sheela Devi was given the option to sell the property within 90 days and to refund a sum of Rs.3,10,000/- to the plaintiff and on refund of which amount the Collaboration Agreement was to become null and void and on failure of Sheela Devi to sell the property the plaintiff was given liberty to pay a further sum of Rs.15,00,000/- to Sheela Devi within ten days from expiry of said 90 days and on failure of the plaintiff to pay Rs.15,00,000/-, again option was given to Sheela Devi to sell the property and to refund Rs.3,10,000/- to the plaintiff without any time limitation; (iv) that Sheel Devi did not find a buyer within 90 days and the plaintiff should have paid Rs.15,00,000/- which also the plaintiff did not pay and hence the plaintiff was only entitled to Rs.3,10,000/- and no right under the Collaboration Agreement survives to the plaintiff; (v) that there was no dispute between

defendants no.1 to 9 as to their respective shares in the property and the Suit No.2020/1999 was only for sale of the property in accordance with the Will dated 29th October, 1995 of Sheela Devi; (vi) that defendants no.1 to 3 on 9 th January, 2004 sold from their share in the property by Power of Attorney (PoA) in favour of defendant no.13 Sanjeev Anand for a sum of Rs.30,00,000/-; (vii) the defendants no.4 to 6 in December, 2003 / January, 2004 sold their share by PoA in favour of defendant no.13 Sanjeev Anand for a sum of Rs.30,00,000/-; (viii) that the Collaboration Agreement does not give any detail of construction; (ix) that no notice was given by the plaintiff demanding possession under the Collaboration Agreement; (x) the Collaboration Agreement is not enforceable in law; and, (xi) the claim for specific performance of MoU dated 17th June, 1996 when it admittedly stood novated by Collaboration Agreement, is misconceived.

7. The written statement of defendants no.7 to 9 is on the same lines as the written statement of defendants no.1 to 6 save that in addition it is pleaded that the defendants no.7 to 9 also on 9 th December, 2005 sold their share by PoA in favour of defendant no.13 Sanjeev Anand.

8. The defendant no.14 K.K. Sharma in his written statement has inter alia pleaded (i) defendant no.13 Sanjeev Anand, in whose favour PoA for consideration were executed by the defendants no.1 to 9, vide Sale Deed dated 2nd January, 2006 sold the property to Ms. Ruchi Srivastava; else the pleas on the same lines as in the written statement of the defendants no.1 to 6 and 7 to 9 have been taken by the defendant no.14 K.K. Sharma also; (ii) that the defendant No.14 K.K. Sharma purchased half share in the property from Ms. Ruchi Srivastava vide Sale Deed registered on 25 th May, 2006;

(iii) the other half share in the property was also purchased by the wife of the defendant no.14 K.K. Sharma from Ms. Ruchi Srivastava (iv) the suit is liable to be dismissed for non-joinder of Ms. Ruchi Srivastava.

9. The defendant no.14 K.K. Sharma filed IA No.700/2014 under Order VII Rule 11 of the Code of Civil Procedure, 1908 (CPC) and vide judgment dated 4th January, 2016 the said application was allowed and the suit against the defendant no.14 K.K. Sharma was dismissed as barred by limitation and as not disclosing any cause of action against defendant no.14 K.K. Sharma.

10. The plaintiff preferred RFA(OS) No.25/2016 against the judgment aforesaid but on 9th August, 2016 withdrew the same.

11. Thereafter the defendants no.1 to 9 have filed this application being IA No.1138/2016 under Order VII Rule 11 of the CPC seeking rejection of the plaint on the ground of the suit claim being barred by time against defendants no.1 to 9 as well.

12. The counsel for the plaintiff and the counsel for the defendants no.1 to 9 were heard on 30th November, 2016 and orders reserved.

13. The judgment dated 4th January, 2016 supra rejecting the claim of the plaintiff against defendant no.14 K.K. Sharma and which judgment has attained finality reasons (i) the present suit was filed on 31st May, 2007 i.e. more than ten years after the Collaboration Agreement dated 22 nd May, 1997; (ii) that there was no dispute between the legal heirs of Sheela Devi as is clear from the order dated 7th October, 1999 in Suit No.2020/1999 between the said legal heirs; (iii) no date for performance was fixed in the Collaboration Agreement dated 22nd May, 1997; (iv) the plaintiff claims that the suit has been filed within three years from the date of earliest refusal of

performance under the Collaboration Agreement; (v) however the averments in para 23 of the plaint show that on 9 th February, 1999 the plaintiff for the first time had notice that defendants no.1 to 9, being the legal heirs of Sheela Devi, were trying to sell the property to some third party and which is clear and candid refusal to perform the obligations under the Collaboration Agreement dated 22nd May, 1997; (vi) the plaintiff also immediately issued a legal notice calling upon the defendants no.1 to 9 to perform their obligations under the Collaboration Agreement dated 22nd May, 1997 and threatened that else he will file a suit for specific performance; (vii) the limitation for filing the suit for specific performance started running on 9th February, 1999 when the plaintiff had knowledge/notice of refusal of defendants no.1 to 9 to perform their obligations under the Collaboration Agreement dated 22nd May, 1997; (viii) the plaintiff in the plaint refers to Public Notice dated 19th November, 1999 which further indicates that the plaintiff had knowledge that the defendants no.1 to 9 were not willing to perform their obligations under the Collaboration Agreement dated 22 nd May, 1997; (ix) the plaintiff has made a vague averment regarding the meetings/visits of the defendants in the office of the plaintiff Company but the said averments are not corroborated by any material on record; (x) the documents of defendant no.14 K.K. Sharma reveal that respective portions of the property were sold by the legal heirs of Sheela Devi on different dates in 2004; (xi) the plaintiff has deliberately ignored the said fact which was within the knowledge of the plaintiff since as per its own admission, the plaintiff was in regular touch with defendants no.1 to 9; (xii) as per averments made in the plaint, limitation for filing suit commenced after a week from 19th February, 1999 when the plaintiff served legal notice on the

defendants no.1 to 9; (xiii) the sale by defendants no.1 to 9 of the property is after the expiry of limitation of filing the suit; (xiv) issuance of subsequent legal notice by the plaintiff to the defendants no.1 to 9 in July, 2005 does not extend the period of limitation which already stood expired in 2002; (xv) admittedly the defendants no.1 to 9 neither supplied any document nor performed any part of Collaboration Agreement in response to the notice dated 19th February, 1999; (xvi) the plaintiff even in the notice dated 12 th December, 2005 stated that Sheela Devi had died on 5th May, 1998 and the defendants no.1 to 9 were refusing to perform their part of the agreement; the same is also an admission of the suit claim being barred by time; (xvii) oral extensions pleaded in the plaint cannot be taken note of as no particulars as to when and how long these were, are pleaded; reliance in this regard was placed on Fatehji & Company and Another Vs. L. M. Nagpal (2015) 8 SCC 390; (xviii) the plaintiff, for a relief of specific performance was required to approach the Court within a reasonable time; (xix) reliance in this regard was placed on Manjunath Anandappa Urf Shivappa Hansi Vs. Tammanasa AIR 2003 SC 1391, Sushila Devi (Deceased) through LRs Vs. Adeline D. Lall (Deceased) through LRs 2013 (139) DRJ 594, Shikha Misra Vs. S. Krishnamurthy (2014) 213 DLT 356 and Abdul Rahim Vs. Abdul Zabar (2009) 6 SCC 160; (xx) neither the MoU dated 17th June, 1996 nor the Collaboration Agreement dated 22nd May, 1997 has ever been acted upon and the plaintiff has waived and abandoned its right against the heirs of Sheela Devi by its own conduct; (xxi) Collaboration Agreement dated 22nd May, 1997 cannot be enforced against defendant no.14 who is not even a party thereto; (xxii) the plaint does not disclose any cause of action against defendant no.14; (xxiii) reliance was placed on Ashok Malik Vs. Ramesh

Malik 2008 (150) DLT 693 to hold that issuance of repeated legal notices/public notices does not extend the period of limitation; (xxiv) the plaintiff cannot bring the suit within the period of limitation on the basis of its legal notice dated 8th July, 2005 and the reply dated 20th July, 2005 of defendants no.1 to 9 thereto; and, (xxv) once the claim for specific performance was barred by limitation in the year 2002, service of another legal notice or reply thereto could not make the claim within time.

14. As would be obvious from the above, the ground of the suit claim being barred by time owing whereto the plaint has been rejected against defendant no.14 K.K. Sharma applies squarely to the defendants no.1 to 9 as well. This application by the defendants no.1 to 9 for rejection of the plaint is thus entitled to succeed for the same reasons as recorded in the judgment dated 4th January, 2016 supra which has attained finality.

15. In fact the counsel for the plaintiff could not even offer any arguments as to why the suit claim against the defendants no.1 to 9 is not liable to be rejected in view of the judgment dated 4th January, 2016. Though the orders on the application have remained reserved for the last over five months but no written arguments also have been filed by the counsel for the plaintiff.

16. I may only add:-

A. The claim of the plaintiff for specific performance of the MoU dated 17th June, 1996 and only in the alternative for specific performance of Collaboration Agreement dated 22nd May, 1997 itself disentitles the plaintiff to any relief. As the plaintiff itself has pleaded, while MoU dated 17th June, 1996 was for outright sale of the property to the plaintiff for Rs.2,60,00,000/-, under

the Collaboration Agreement the plaintiff in collaboration with Sheela Devi was to re-construct the property at its own cost and pay Rs.1,50,00,000/- to Sheela Devi and was to acquire rights in the basement, first, barsati and terrace above of the property. The nature of transaction under the two documents was thus distinct. Under the law, the Collaboration Agreement being of subsequent date would prevail over the MoU containing the Agreement to Sell. After the execution of the Collaboration Agreement, the plaintiff as per its own case cannot seek specific performance of the MoU. However the plaintiff, not only in the prayer paragraph of the plaint has in the first instance sought the relief of specific performance of the MoU and only in the alternative sought specific performance of the Collaboration Agreement but even otherwise has pleaded to have in the notice dated 12th December, 2005 preceding the suit having called upon the defendants no.1 to 9 to on receipt of balance Rs.2,50,10,000/- outrightly sell the property instead of to perform their obligations under the Collaboration Agreement. The only inference is that the plaintiff was not ready and willing to perform its part of the Collaboration Agreement. The plaintiff, after the agreement to sell contained in the MoU dated 17th June, 1996 stood novated by the Collaboration Agreement dated 22nd May, 1997, cannot seek specific performance of the MoU. The plaintiff however continues to do so. Axiomatically, the plaintiff would not be entitled to the relief of specific performance of Collaboration

Agreement also.

B. It has come on record that in the written statement of the defendant no.14 K.K. Sharma filed on 4th June, 2010 with copy to the counsel for the plaintiff, that the Sale Deed of the property was executed and registered by defendant no.13 Sanjeev Anand as attorney of the defendants no.1 to 9 in favour of Ruchi Srivastava on 2nd January, 2006 and Sale Deeds of the property were executed by Ruchi Srivastava in favour of defendant no.14 K.K. Sharma and his wife on 25 th May, 2006. The defendants no.1 to 9 thus since 2nd January, 2006 do not have any title to the property and are not in a position, as legal heirs of Sheela Devi, to perform obligations under the MoU dated 17th June, 1996 or under the Collaboration Agreement dated 22nd May, 1997 for specific performance whereof the suit has been filed. Though the plaintiff impleaded one of the subsequent purchasers namely K.K. Sharma as defendant no.14 to the suit but the claim of the plaintiff against the defendant no.14 K.K. Sharma has been rejected. The plaintiff, inspite of knowledge from the written statement of the defendant no.14 K.K. Sharma of title of his wife with respect to half share in the property, did not take any steps to implead the wife of the defendant no.14 K.K. Sharma as a party to the suit. In the absence of a claim of the plaintiff against the defendant no.14 K.K. Sharma and his wife in whom the title to the property has arisen subsequent to the contract of which specific performance

has been claimed, the plaintiff in any case today is not entitled to the relief of specific performance.

C. Though the plaintiff in the first instance has claimed specific performance of the MoU dated 17th June, 1996 but the said MoU as aforesaid has been novated by the Collaboration Agreement dated 22nd May, 1997. The Collaboration Agreement is in the nature of a "contract for the construction of any building or the execution of any other work on land" within the meaning of Section 14(3)(c) of the Specific Performance Act, 1963. Such a contract is specifically enforceable provided inter alia the defendant has, in pursuance of the contract, obtained possession of the land on which the building is to be constructed or other work is to be executed. The defendants as aforesaid, today are not in possession of the property. The Collaboration Agreement, for this reason also is not specifically enforceable.

17. Thus in addition to the ground of limitation, the suit of the plaintiff against the defendants no.1 to 9 is liable to be summarily dismissed for the aforesaid reasons as well.

18. The plaintiff, besides the relief of specific performance, has also claimed the reliefs of permanent injunction and of recovery of damages. The claim for permanent injunction restraining defendants No.1 to 9 from dealing with property is infructuous as the defendants No.1 to 9 since prior to institution of suit are not entitled to the property. As far as the claim for damages is concerned, once the relief of specific performance is barred by

time, so would the relief of recovery of damages in lieu of specific performance be barred by time.

19. The application thus succeeds.

CS(OS) No.1409/2007.

20. The claim of the plaintiff against the defendants no.1 to 9 also fails.

21. Resultantly the suit is dismissed.

22. The Pay Order for Rs.3,10,000/- deposited by the plaintiff in this Court be returned to the defendants no.1 to 9 who are permitted to obtain refund of the monies therein and to appropriate the same towards costs of this misconceived action keeping the defendants no.1 to 9 embroiled in litigation for the last ten years.

Decree sheet be drawn up.

RAJIV SAHAI ENDLAW, J.

APRIL 26, 2017 „pp‟