Santokh Singh & Anr vs M/S Shagun Farm Pvt Ltd
2017 Latest Caselaw 323 Del

$~33
*    IN THE HIGH COURT OF DELHI AT NEW DELHI
+    CS(OS) 1756/2011
     SANTOKH SINGH & ANR                       ..... Plaintiffs
                      Through: Mr. S.S. Johar & Ms. Eti Solanki,
                                 Advs.
                              Versus
     M/S SHAGUN FARM PVT LTD                   ..... Defendant
                      Through: Mr. Rakesh Kumar & Mr. Aditya
                                 Nayyar, Advs.
     CORAM:
     HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
                      ORDER

% 18.01.2017

IA No.2702/2014 (of the defendant under Order VII Rule 11 CPC)

1. The two plaintiffs viz. Sh. Santokh Singh and Sh. Lalit Agarwal instituted this suit for specific performance of an agreement dated 28th December, 2006 of sale by defendant to the two plaintiffs of agricultural land ad-measuring 7 Bighas 19 Biswas in village Brijbasan, New Delhi and agricultural land measuring 4 Bighas 16 Biswas in village Bamnoli, New Delhi.

2. The suit was entertained and summons thereof issued. The suit was not accompanied with any application for interim relief restraining the defendant from further transacting the property, as is customary in such suits.

3. In this context, it may also be noticed that though the suit came up first before the Joint Registrar on 22nd July, 2011 but the requisite court fees had not been paid on the plaint and time wherefor was sought; the court fees was not deposited inspite of adjournments on 16th August, 2011, 15th September, 2011, 20th October, 2011, 14th November, 2011 and the

summons of the suit as aforesaid were finally issued on 30 th November, 2011.

4. The plaintiffs thereafter also did not show any haste in pursuing the suit.

5. This application of the defendant under Order VII Rule 11 of the CPC came up before this Court on 9th November, 2016 when the following order was passed:

"2. Rejection of the plaint in terms of Order VII Rule 11 of the Code of Civil Procedure, 1908 (CPC) is sought on the ground of vexatious conduct of the plaintiffs. It is contended that the plaintiffs, after filing this suit, instituted a suit for permanent injunction in the District Court and which suit was dismissed in default on 24th August, 2011.

3. The counsel for the defendant/applicant though has taken the said plea but has not filed the documents in support thereof along with the application. He says that the said documents have been filed with a rejoinder to OA No.132/2014 filed earlier but does not have the pagination to show the said documents.

4. After much difficulty, the documents have been traced and perused and it is found that the suit filed was for permanent injunction; the present is a suit for specific performance and the counsel for the defendant/applicant is unable to show as to how the filing of the subsequent suit for permanent injunction would defeat the present suit. Rather it is found that this suit, though initially presented on 23rd February, 2011, was thereafter repeatedly re-filed and got listed first on 22nd July, 2011. The suit before the Trial Court is found to have been filed on 13th April, 2011 and dismissed as aforesaid on 24th August, 2011.

5. The application under Order VII Rule 11 is even otherwise not maintainable in view of the case law as discussed recently in Nutan Tyagi Vs. Nirmala Dabas 232 (2016) DLT 60.

6. The counsel for the defendant/applicant then states that the suit claim is barred by time.

7. However on enquiry, which Article of the Schedule to the Limitation Act, 1963 applies to a suit for the relief of specific performance, the counsel has no idea.

8. Subject to deposit of further conditional costs of Rs.10,000/- with the Delhi High Court Bar Association Lawyers‟ Social Security and Welfare Fund, New Delhi, list on 12th January, 2017.

6. The counsel for the defendant was heard on the application on 12 th January, 2017. After hearing the counsel for the defendant, it was enquired from the counsel for the plaintiffs whether the two plaintiffs were present in the Court.

7. Only the plaintiff no.2 was informed to be present. Further hearing was adjourned to today with a direction for both plaintiffs to appear before this Court.

8. The direction for personal presence of the two plaintiffs was issued as after hearing the counsel for the defendant on the application under Order VII Rule 11 of the CPC, need to record the statement of both the plaintiffs was felt.

9. It is the case of the plaintiffs in the plaint i) that the defendant offered to sell the land aforesaid for a total sale consideration of Rs.3.55 crores and which offer was accepted by the plaintiffs and an advance payment of Rs.42,50,000/- was made by the plaintiffs to the defendant vide bayana receipt dated 28th December, 2006; ii) that prior to execution of the bayana receipt an Agreement to Sell was also entered into orally between the parties in which the terms of the agreement between the parties were agreed upon. The said "oral Agreement to Sell was duly admitted by the seller in the

bayana receipt executed by it on 28th December, 2006"; iii) that at the time of Agreement to Sell, the defendant through one of its Director informed the plaintiffs that the land was not mutated in the revenue records in the name of the defendant; iv) as such it was mutually agreed that No Object Certificate (NOC) would be obtained from the concerned department for effecting sale of the suit property to the plaintiffs; v) the "defendant further assured the plaintiffs that after obtaining the NOC from the concerned authority, mutation of the plaintiffs‟ name would be directly done in the revenue records without waiting for mutation of the defendant‟s name in the revenue records"; vi) that the date for payment of balance sale consideration and for execution of sale deed was agreed to be 21st March, 2007 or 15 days after receiving of the aforesaid NOC by the seller from the concerned department whichever was later; vii) the defendant did not apply for NOC in favour of the plaintiffs; viii) the plaintiffs served a legal notice dated 20th March, 2007 upon the defendant calling upon the defendant to immediately obtain NOC and execute the sale deed; ix) no reply was received to the said notice but the defendant requested the plaintiffs to withdraw the notice assuring that it was on the anvil of obtaining the NOC in favour of the plaintiffs; x) the defendant thereafter informed the plaintiffs that the land will have to be first mutated in the name of the defendant, for the defendant to obtain the NOC;

xi) the defendant in the month of September / October, 2010 made an application to the concerned authority for mutation of the land in its favour;

xii) that the plaintiffs learnt that the defendant was clandestinely entering into another sale agreement with a third party with respect to the property;

xiii) that since the date of the Agreement to Sell, the price of the land had escalated.

10. The defendant in its application under Order VII Rule 11 of the CPC has pleaded i) that the plaintiffs have concealed having instituted a suit before the Civil Judge for permanent injunction restraining the defendant from dealing with the property; the said suit was dismissed in default on 24 th August, 2011; ii) this suit though was filed on 23rd February, 2011 but was repeatedly re-filed, last on 21st July, 2011 and listed before the Joint Registrar on 22nd July, 2011; iii) that the suit filed on 23rd February, 2011 for specific performance of a bayana receipt dated 28th December, 2006 is barred by time; iv) though the plaintiffs pleaded oral Agreement to Sell prior to the bayana receipt but a perusal of the bayana receipt does not show any such prior oral agreement; v) that the plaintiffs in the legal notice dated 20 th March, 2007 got sent by them stated that subsequent to the bayana receipt dated 28th December, 2006, Agreement to Sell dated 5th January, 2007 had been executed between the parties and which Agreement to Sell is in possession of the defendant; vi) there is contradiction between the plaint and the notice preceding the plaint; vii) that the shareholding and directorship of the defendant was transferred in favour of new Directors in the year 2011; the plaintiffs are in collusion with the earlier shareholders / Directors of the defendant company.

11. It was owing to the aforesaid contradictions borne out from the record that the presence of the plaintiffs before this Court was deemed necessary. The plaintiffs have appeared today and their statements have been recorded by me. They have inter alia stated (without going into the aspect of contradiction if any in the statements of the two plaintiffs) i) that an agreement was prepared which was signed by them and which was taken by the defendant for signing but not returned; ii) that they have a plain copy of

that agreement with them; iii) that advance of Rs.42.50 lacs was given by cheques dated 28th December, 2006 in the sum of Rs.7.50 lacs each in the names of Sh. Gulshan Kumar and Sh. Jagdish Chander both Directors of the defendant and by payment of Rs.27.50 lacs in cash; iv) that the payment of Rs.15 lacs was made by cheques in the personal name of the two Directors of the defendant instead of in the name of the defendant who was the owner of the land agreed to be sold on the asking of Sh. Gulshan Kumar who represented that he and his brother Mr. Mahender Magon owned the defendant; v) that Sh. Gulshan Kumar had also given documents of himself and his brother being the owner of the defendant and resolution of the Board of Directors of defendant; vi) that they had informed the advocate who drafted the plaint of being in possession of the plain copy of the Agreement to Sell; vii) that though they verbally asked Sh. Gulshan Kumar for the agreement but did not demand the same in writing; viii) that they never withdrew the notice dated 20th March, 2007; ix) that the resolution of the Board of Directors of defendant was also handed over to the advocate who drafted the plaint; x) that they met Sh. Gulshan Kumar for the last time in the beginning of the year 2010; xi) that they had in the year 2012 seen the record of Registrar of Companies with respect to the defendant and found that Sh. Gulshan Kumar and Sh. Mahenderji had ceased to be the Directors of the defendant.

12. I have heard the counsel for the plaintiffs and the counsel for the defendant.

13. As far as the ground of rejection of the plaint on the ground of dismissal in default of a suit for permanent injunction filed by the plaintiffs in the Court of the Civil Judge for injunction restraining the defendant from

dealing with the property is concerned, what emerges is that the plaintiffs, after instituting this suit on 23rd February, 2011 without payment of court fees and which court fees was not paid till November, 2011, on 13 th April, 2011 instituted the suit for permanent injunction in the Court of the Civil Judge and which was dismissed in default on 24 th August, 2011. It is thus found that the suit before the Civil Judge was filed after the institution of this suit and has been dismissed in default of appearance. I have wondered on what principle of law would this suit be liable to be rejected therefrom. Though at one point of time it was the law that institution of a suit for permanent injunction restraining the defendant from dealing with the property would under Order II Rule 2 CPC bar a subsequent suit for specific performance but the said law has undergone a change as discussed by me in Nutan Tyagi supra. Thus the same cannot constitute a ground for rejection of the plaint.

14. To be fair to the counsel for the defendant, he also, after attention had been drawn to the aforesaid, has not pressed the said ground and has rather sought rejection of the plaint on the ground of limitation.

15. Article 54 of the Schedule to the Limitation Act provides limitation of three years for a suit for specific performance of an Agreement to Sell of immovable property, commencing from the date fixed for performance and if no such date is fixed, from the date when the plaintiff first has notice that performance is refused.

16. The bayana receipt allegedly executed by the defendant, besides confirming the receipt of Rs.42.50 lacs as advance towards sale of the property aforesaid, provides that it has been executed "as per terms and conditions laid down in Agreement to Sell which is executed between the

parties hereto on date".

17. The same thus does not contain any date fixed for performance.

18. No Agreement to Sell has been filed by the plaintiffs which as per the said bayana receipt contains the terms and conditions.

19. The plaintiffs in the plaint have pleaded that as per the oral Agreement to Sell, the date fixed for performance was 21st March, 2007 or 15 days after receipt by the defendant of NOC from the concerned department, whichever was later. The defendant denies the Agreement to Sell in toto.

20. Thus, as per the averments in the plaint which alone have to be seen at the stage of Order VII Rule 11 of the CPC, the date fixed of 21 st March, 2007 for performance was subject to the receipt of NOC and if the NOC was not received till then, then the performance was to be within 15 days of receipt of NOC. It is not the case of the plaintiffs that NOC was received at any time, for the time of 15 days therefrom for performance getting fixed. On the contrary, it is the plea of the plaintiffs that they first had notice that performance was received only in February, 2011 and within about one year wherefrom this suit was instituted (subject to the question to be determined at appropriate time whether institution of the suit without court fees was a suit "duly instituted" within the meaning of Order IV Rule 1(3) as amended with effect from 1st July, 2002). In this state of facts, it cannot be said that a ground for rejection of the plaint under Order VII Rule 11 of the CPC also is made out.

21. I may notice that the counsel for the plaintiffs, on the aspect of limitation, has referred to Rathnavathi Vs. Kavita Ganashamdas (2015) 5 SCC 223 to contend that time was not of the essence of the Agreement to

Sell and that in the present case no time was fixed for performance and the date of 5th January, 2007 was only tentative. The counsel for the defendant relied on:

(i) Hardesh Ores Pvt. Ltd. Vs. Hede & Company (2007) 5 SCC 614 on Article 54 of the Limitation Act but which is found to be in the context of renewal of lease and not applicable.

(ii) The Church of Christ Charitable Trust & Educational Charitable Society Vs. Ponniamman Educational Trust MANU/SC/0515/2012 to contend that where the allegations are vexatious and meritless and not disclosing a clear right to sue, the plaint should be rejected under Order VII Rule 11 CPC.

(iii) Vandana Sharma Vs. Hemlata Goswmay 209 (2014) DLT 714, Sumer Singh Salkan Vs. Reema 2015 III AD (Delhi) 361, Mohan Chandra Tewari Vs. Harish Chandra Bhandari AIR 2003 Uttaranchal 10, judgment dated 17th September, 2010 of a Single Judge of the High Court of Gujarat in Laxmiben Vs. Vasudevbhai Gandabhai Patel, Aravali Infrapower Ltd. Vs. R.B. Gupta MANU/DE/0346/2015 and Texem Engineering Vs. Texcomash Export 162 (2009) DLT 444(DB) on duty of the Court to deal with frivolous and vexatious suits but which are not found to be applicable.

22. As far as the third ground taken by the defendant for rejection of the plaint i.e. of the contradictions in the averments in the plaint and in the documents is concerned, the same cannot be a ground for rejection. The counsel for the defendant also has not been able to establish so.

23. IA No.2702/2014 of the defendant under Order VII Rule 11 of the CPC thus has to be dismissed and is dismissed.

CS(OS) No.1756/2011

24. I had however in the aforesaid state of affairs enquired from the counsel for the plaintiffs as to why, in accordance with the dicta of the Supreme Court in Vinod Seth Vs. Devinder Bajaj (2010) 8 SCC 1, the principle of lis pendens be made inapplicable to this suit which though will have to be put to trial. After hearing Ms. Eti Solanki for the plaintiffs, the matter was passed over and on passover Mr. S.S. Johar, Advocate for the plaintiffs appeared.

25. The genesis of the judgment in Vinod Seth supra was the prejudice suffered by the defendant in a suit for specific performance of an Agreement of Sale of immovable property even in the absence of any restraint order against him, due to applicability of the principle of lis pendens and which virtually makes the property inalienable or unencumberable at market rates and with no measure left to compensate the defendant in the event of the plaintiff in the suit for specific performance ultimately failing. The costs of the suit even if awarded to the defendant in such a situation were not found sufficient to compensate the defendant. Supreme Court in Vinod Sethi held that a Court is justified in taking a view that on material till then on record, the likelihood of the plaintiff succeeding in the suit or securing any interim relief against the defendant is remote and to exempt the suit property from the operation of Section 52 of the Transfer of Property Act so that the defendant would have the liberty to deal with the property in any manner inspite of the pendency of the suit. I have in Rajiv Maira Vs. Apex Apartments Pvt. Ltd. 2013 (138) DRJ 464 so exempted the property subject matter of that proceedings and SLP (C) No.5920/2014 preferred thereagainst was dismissed on 24th March, 2014.

26. I am, for the reasons here after appearing, of the view that chances of the plaintiffs succeeding in this suit for specific performance are remote and there would be no way to compensate the defendant for the prejudice caused from applicability of Section 52 of the Transfer of Property Act during the pendency of the suit which though has to be put to trial. CONDUCT OF THE PLAINTIFFS:

A. Though the plaintiffs instituted this suit on 23rd February, 2011 but without any court fees. Upon suit being returned, it was filed after long delay, on 3rd June, 2011, thereafter on 4th July, 2011, 18th July, 2011 and 21st July, 2011. The application for exemption from payment of court fees till the time of final judgment came up before the Joint Registrar on 22 nd July, 2011 and was placed before the Court on 16th August, 2011. Inspite of the plaintiffs having been granted time of two weeks to pay the court fees and inspite of adjournment on 15th September, 2011, 20th October, 2011 and 14th November, 2011, court fees was not paid. The court fees was finally paid before the suit was listed next on 30th November, 2011. B. While the plaintiffs were so avoiding payment of court fees in the suit for specific performance before this Court, the plaintiffs on 13 th April, 2011 filed the suit for permanent injunction before the Civil Judge. In the plaint in the said suit for permanent injunction to restrain the defendants from dealing with the property, the same averments as made in the plaint before this Court, were made. In the said plaint, it was not disclosed that the plaintiffs, prior to filing thereof had instituted a suit for specific performance before this Court.

C. It appears that the plaintiffs were unable to procure an order of interim injunction before the Civil Judge and hence the plaintiffs, after the defendant

had filed written statement in that suit, chose not to pursue that suit for injunction and got it dismissed in default on 24th August, 2011. D. The plaintiffs however on 30th November, 2011, when finally summons of this suit were issued, did not inform this Court of having, after the institution of this suit, instituted the suit for permanent injunction and of dismissal thereof.

E. It is quite obvious that the plaintiffs have been abusing the process of the Court by using the same to coerce the defendant to agree to the demands of the plaintiffs.

F. The process of the Court cannot be permitted to be used as a tool of operation / coercion.

CONTRADICTIONS IN THE CASE OF THE PLAINTIFF:

G. As per the bayana receipt filed by the plaintiffs, the terms and conditions agreed upon between the plaintiffs and the defendant were "laid down in Agreement to Sell which is executed between the parties hereto on date". However no Agreement to Sell of 28th December, 2006 has been pleaded or filed by the plaintiffs. There is no explanation also on behalf of the plaintiffs with respect thereto.

H. The plaintiffs in the notice dated 20th March, 2007 preceding the suit stated that the amount of Rs.42.50 lacs was paid by them to the defendant "vide bayana receipt dated 28.12.2006 and the agreement between you and our clients was reduced in writing vide Biana Agreement dated 05.01.2007, the original of which is in your possession" and that the last date for payment of balance sale consideration and for execution of sale deed "was stipulated in the Biana Agreement as 21.03.2007 or 15 days, after the receiving the No Objection Certificate (NOC) by you from the concerned

department, which ever is later" and that "as per Clause 3 of the Biana Agreement dated 05.01.2007, it was your sole responsibility to obtain the NOC before the stipulated date and inform the same to our clients". I. However, in the plaint there is no mention or explanation with respect to the Bayana Agreement dated 5th January, 2007 and the same has also not been filed by the plaintiffs. Though in the notice it was stated that the original of the said Bayana Agreement dated 5th January, 2007 is in possession of the defendant but therefrom the plaintiffs also being in custody of a copy thereof is borne out. Possession by the plaintiffs of at least a copy of the Bayana Agreement dated 5th January, 2007 is also evident from the plaintiffs in the notice referring to Clause 3 of the Bayana Agreement dated 5th January, 2007. Without possessing a copy of the Bayana Agreement dated 5th January, 2007, reference to a particular term thereof by Clause no.3 by the plaintiffs and by their advocate who gave the notice was not possible. J. The plaintiffs in their statements recorded today also have admitted possessing a copy of the said Bayana Agreement dated 5th January, 2007 and having shown it to the advocate who drafted the plaint. K. The only inference from suppression thereof is that the same does not bear out the case set up by the plaintiffs in the plaint. L. In the plaint the plaintiffs have rather set up an oral Agreement to Sell prior to bayana receipt dated 28th December, 2006 and which oral Agreement to sell is neither referred to in the bayana receipt nor in the notice preceding the suit.

MERITS M. Though the plaintiffs claim to have paid advance sale consideration of Rs.42.50 lacs but the payment of Rs.27.50 lacs out of the same is by cash

and of Rs.15 lacs by cheques, not in the name of the defendant but in the names of Sh. Gulshan Kumar and Sh. Jagdish Chander mentioned in the bayana receipt as the Directors of the defendant.

N. The plaintiffs in their statements recorded before this Court have admitted knowledge of the ownership of the property of the defendant. The defendant as a juristic entity is distinct from its Directors and advance sale consideration in pursuance to an Agreement to Sell by a company, even though acting through its Directors, has to be paid in the name of the company and not its Directors.

O. Though the plaintiffs in their statements before this Court stated that they inspected the records of the Registrar of Companies but have not pleaded that the consideration paid by them is reflected in the balance sheet of the defendant of the relevant year.

P. The payment of Rs.15 lacs out of Rs.42.50 lacs is by cheques in the name of Gulshan Kumar for Rs.7.50 lacs and in the name of Jagdish Chander for Rs.7.50 lacs, both described in the bayana receipt as Directors of the defendant.

R. The plaintiffs in their statements before this Court have described the defendant company as owned by Sh. Gulshan Kumar and his brother Sh. Mahender Magon and have not named Sh. Jagdish Chander. There is nothing to show that Sh. Jagdish Chander, cheque in whose name of Rs.7.50 lacs is relied upon to show advance payment to the defendant, was a Director of the defendant. Again though having inspected the records of the Registrar of Companies, it is neither pleaded nor shown from copies of record of Registrar of Companies that the said Sh. Jagdish Chander was a Director at the relevant time.

S. In the bayana receipt, even the total sale consideration for which the land had been agreed to be sold is not mentioned.

T. Though the plaintiffs in their statement recorded today have deposed having documents of ownership of defendant and resolution of Board of Directors but the same have also not been filed.

U. The suit has indeed been filed after an unusual delay of more than four years from the date of bayana receipt. Though plaintiffs have pleaded the date tentatively fixed for performance of 5 th January, 2007 but inspite of the defendant‟s having not fulfilled its part by then, the plaintiffs waited for four years. The plaintiffs, to bring the suit within limitation, have pleaded oral assurances of the Directors of the defendant. Though I have in L.M. Nagpal Vs. Fatehji & Co. (2013) 138 DRJ 464 held that owing to pleas of oral / verbal extension of the time stipulated for performance, a plaint cannot be rejected but Supreme Court in Fatehji & Co. Vs. L.M. Nagpal (2015) 8 SCC 390 preferred thereagainst has held that in the face of a written agreement fixing the date of performance and extensions in writing thereof, the oral extensions of time pleaded without giving any particulars as to when and how long could not come in the way of rejection of the plaint on the ground of the claim therein being time barred.

27. The principle of lis pendens including as enshrined in Section 52 of the Transfer of the Property Act is thus inapplicable to the property subject matter of the suit and the defendant, notwithstanding the pendency of the suit which will have to be put to trial, would be entitled to deal with the property.

28. On the pleadings of the parties, the following issues are framed:

(i) Whether the defendant had agreed to sell agricultural land ad-

measuring 7 Bighas 19 Biswas in village Brijbasan, New Delhi and agricultural land measuring 4 Bighas 16 Biswas in village Bamnoli, New Delhi to the plaintiffs for a total sale consideration of Rs.3.55 crores and on the other terms pleaded by the plaintiffs? OPP.

(ii) Whether the bayana receipt dated 28th December, 2006 is executed by Sh. Gulshan Kumar on behalf of the defendant? OPP

(iii) Whether Sh. Gulshan Kuamr was competent to sign the bayana receipt dated 28th December, 2006 on behalf of the defendant? OPP

(iv) Whether the plaintiffs have paid advance sale consideration of Rs.42.50 lacs to the defendant? OPP

(v) Whether the suit claim is within time? OPP

(vi) Whether the plaintiffs have always been ready and willing to perform their part of the agreement? OPP

(vii) Whether the discretion implicit in the grant of relief of specific performance is to be exercised in favour of the plaintiffs? OPPr

(viii) Relief.

29. No other issue arises or is pressed.

30. The parties to file their list of witnesses on or before 15 th February, 2017.

31. The plaintiffs to file affidavits by way of examination-in-chief of all their witnesses within eight weeks.

32. Mr. P.K. Saxena, Additional District Judge (Retd.), Mob. No. 9910384668 is appointed as the Court Commissioner to record evidence in the suit. His fee is fixed at Rs.10,000/- per hearing to be borne by the plaintiffs only and which in the event of plaintiffs succeeding in the suit would be awarded as costs to the plaintiffs against the defendant.

33. The parties to appear before the Court Commissioner after eight weeks on or about 30th March, 2017 with prior appointment.

34. The Court Commissioner to endeavour to complete recording of evidence before the next date fixed before this Court.

35. The Registry is directed to send the file of the suit at the place and time fixed by the Court Commissioner for recording of evidence.

36. List on 30th November, 2017.

RAJIV SAHAI ENDLAW, J JANUARY 18, 2017 „gsr‟..

(Corrected & released on 4th February, 2017)