Neutral Citation Number: 2022/DHC/005277
$~27
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 01.12.2022
+ CS(OS) 631/2022
MS KIMAYA BUILDTECH LLP ..... Plaintiff
Through: Mr.Sanjeev Sindhwani, Sr.
Adv. with Mr.Prashant Mehta
& Mr.Raghav Merwaha, Advs.
versus
RAMESH KAUL & ORS. ..... Defendants
Through: Mr.Rajiv Kumar Ghawana &
Mr.Neelaksh Sharma, Advs. for
D-1.
CORAM:
HON'BLE MR. JUSTICE NAVIN CHAWLA
NAVIN CHAWLA, J. (Oral)
I.A. 16279/2022
1. Notice on this application was issued to the defendants by the order of this Court dated 07.10.2022. On the said date, the learned counsel for the defendant no.1 had entered appearance and accepted notice on behalf of the defendant no.1. Notice was, therefore, to be served on the defendant nos.2 to 4.
2. The Office Report indicates that the report of service on the remaining defendants is awaited. The learned senior counsel for the plaintiff, however, pleaded that in absence of an ex-parte ad-interim
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injunction, the plaintiff apprehends that a third-party interest may be created in the property in question, and, therefore, prays for grant of an ad interim relief.
3. He has also drawn my attention to the Power of Attorney executed by the defendant nos.2 to 4 in favour of the defendant no.1, which, inter alia, authorizes the defendant no.1 to appear for them, including sign a vakalatnama.
4. On the other hand, the learned counsel for the defendant no.1 submits that the defendant no.1 possesses only 40% of share in the subject-property. The Power of Attorney(ies) in favour of the defendant no. 1 stand revoked by the defendant nos.2 to 4. He submits that, therefore, the consideration of the present application and the prayer of the plaintiff for the grant of an ad interim injunction must be considered by this Court only when all the defendants are duly served.
5. I have considered the submissions made. I am of the opinion that the plaintiff has been able to make out a case for grant of an ad- interim ex-parte injunction so as to protect the status quo of the property till the defendant nos. 2 to 4 enter appearance and are heard in detail with respect to their defence. In this regard, I am also influenced by the fact that the entire dealing/correspondence with respect to the transaction in question has been carried out with the plaintiff by the defendant no. 1, who is duly represented. The order passed today is only ad-interim in nature and can always be revisited by this Court on hearing the remaining defendants as and when they are duly served with the Suit and enter their appearance. Signature Not Verified Digitally Signed By:RENUKA NEGI Signing Date:02.12.2022 20:16:17 CS(OS) 631/2022 Page 2 of 19 Neutral Citation Number: 2022/DHC/005277
6. It is the case of the plaintiff that the plaintiff entered into an Agreement to Sell dated 17.11.2018 (hereinafter referred to as 'the Agreement') with respect to the property bearing no. B-237B, admeasuring 281 Sq. Yards, situated at Greater Kailash Part-I, New Delhi- 110048 (hereinafter referred to as the 'subject-property') with Late Shri Arjan Nath (the father of the defendants). The Agreement was executed by the defendant no.1, who was Power of Attorney holder of late Shri Arjan Nath.
7. The Sale Consideration agreed to be paid by the plaintiff under the Agreement was Rs.12.25 Crore (Rupees Twelve Crore Twenty- Five Lakh only). The Agreement records that out of the said Sale Consideration, Rs.1 Crore (Rupees One Crore only) stands paid to the Vendor, while remaining amount of Rs.11.25 Crore (Rupees Eleven Crore Twenty-Five Lakh only) shall be received by the Vendor from the Vendee at the time of handing over of the complete vacant and physical possession of the subject-property. Clauses 1 and 2 of the Agreement are reproduced hereinbelow:-
"1. That in pursuance of this Agreement to Sell and in consideration of a total sum of Rs.12.25.00.000/- (Rupees Twelve Crores Twenty Five Thousand lacs only) out of which the FIRST PARTY has received a sum of Rs. 1,00,00,000/- (Rupees One Crore Only) in the following manner:
Rs. 76,08,000/- (Rupees Seventy Six Lakh Eight Thousand Only) vide Cheque No. 898287 dated 16th November, 2018 drawn on Yes Bank, M Block Market, Greater Kailash Part - II, New Delhi 110048;
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Rs. 23,92,000/- (Rupees Twenty Three Lakh Ninety Two Thousand Only) deducted towards applicable TDS;
from the SECOND PARTY, as advance sale consideration at the time of signing of this Agreement to Sell, the receipt of which the FIRST PARTY admits and acknowledges hereby.
2. The remaining balance (full and final) sale consideration of Rs.11,25,00,000/- (Rupees Eleven Crores Twenty Five lacs Only) less applicable TDS shall be received by the FIRST PARTY from the SECOND PARTY, at the time of handing over the complete vacant and physical possession of the SAID PROPERTY by the FIRST PARTY to the SECOND PARTY and signing, execution & registration of Sale Deed etc. in respect of the SAID PROPERTY (in whole or part/portion wise, as desired by the SECOND PARTY) in favour of the SECOND PARTY or its Nominee(s) in the office of the Sub-Registrar, New Delhi, within 60 days from the date of actual handing over of possession subsequent to the order of eviction. At the same time, the FIRST PARTY shall also handover all the original title deeds/documents of the SAID PROPERTY to the SECOND PARTY."
8. The Agreement also recorded that 1/4th of the subject-property as on that date was in the possession of one Dr. Neerja Kaul, the wife of the defendant no.1, as also Ms. Nivedita Kaul, the daughter of the defendant no.1.
9. The learned senior counsel for the plaintiff, drawing reference to the order dated 28.07.2021 passed by the Supreme Court in Contempt Petition (C) No. 412/2021 titled Dr. Ramesh Kaul vs. Nivedita Kaul & Anr., submits that the possession of the subject
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property was received by the defendant no.1 only on 09.07.2021. This fact was communicated by the defendant no. 1 to the plaintiff by way of his email dated 04.08.2021, giving the requisite 60 days notice. He submits that, therefore, the period of sixty days would commence only when the intimation was sent by the defendant no.1 to the plaintiff by way of the e-mail dated 04.08.2021.
10. Further, drawing reference to various e-mails exchanged between the parties thereafter, he submits that the same clearly shows that the plaintiff was always ready and willing to perform its end of the bargain and the terms of the Agreement. On the other hand, the defendant no.1, while first acknowledging the Agreement and seeking its performance, later sought to re-negotiate with the plaintiff on the terms of the Agreement. He submits that the plaintiff, in a bona fide manner, even tried to arrive at an amicable settlement with the defendants by way of mediation proceedings, however, the same having failed, the plaintiff was forced to file the present suit.
11. He submits that even prior to obtaining the possession of the said property, the defendants had, vide an e-mail dated 06.04.2020, called upon the plaintiff to perform its terms of the Agreement. The plaintiff, even at that stage, acknowledged and undertook to perform the Agreement, however, as the defendants were not in the possession of the subject-property, and due to the outbreak of the COVID-19 pandemic, the Agreement could not be performed at that stage. He submits that, therefore, the earlier e-mails exchanged between the
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parties would have no relevance, apart from showing that even at that stage, the defendants acknowledged the terms of the Agreement.
12. On the issue of non-deposit of the TDS by the plaintiff, the learned senior counsel for the plaintiff submits that the father of the defendants requested the plaintiff not to deposit the TDS amount as he would be seeking a reduction on the deposit of tax, being a Non- Resident Indian. He submits that this is also evident from the e-mail dated 06.04.2020 of the defendant no.1, wherein, the defendant no.1 stated that the tax on the balance payment shall be deposited by the defendant no.1 after consulting his Chartered Accountant. He further submits that the issue of non-deposit of TDS is only a ruse being now created by the defendant no.1 to somehow wriggle out of the binding Agreement. He submits that the plaintiff even today is willing to deposit the amount of TDS along with the applicable interest and penalty with the Tax Authorities.
13. On the other hand, the learned counsel for the defendant no.1 submits that in terms of the Agreement, the plaintiff was to pay Rs.1 Crore as advance at the time of entering into the Agreement; out of which, Rs.76,08,000/- (Rupees Seventy-Six Lakh Eight Thousand only) was duly paid to the father of the defendant no.1. The remaining amount of Rs.23,92,000/- (Rupees Twenty-Three Lakh Ninety-Two Thousand only) was to be deducted towards the applicable TDS by the plaintiff. It is now admitted that the plaintiff failed to deposit the TDS amount. He submits that, therefore, the plaintiff was in breach of the
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terms of the Agreement, and cannot seek Specific Performance thereof.
14. The learned counsel for the defendant no.1 further submits that the plaintiff is not entitled to the discretionary relief of grant of a Specific Performance, for considerable time that has elapsed between the execution of the Agreement and the filing of the present suit. He submits that the plaintiff has admittedly paid only a sum of Rs.76.08 lakhs, out of a total consideration of Rs.12.25 crores, which would translate to only 6.2% of the total Sale Consideration. Placing reliance on the judgment of this Court in A.K. Narula v. Iqbal Ahmed and Ors, ILR (2013) I Delhi 315, he submits that this itself would be a ground to refuse the exercise of discretion for grant of the relief of specific performance of the Agreement in favour of the plaintiff.
15. He submits that the terms of the Agreement have to be performed within a reasonable period, even though time may not be of essence thereof. He submits that the Agreement having been executed in November, 2018, and more than reasonable period having expired there-from, the plaintiff is, therefore, not entitled to seek Specific Performance of the Agreement, and consequentially, no interim order in favour of the plaintiff deserves to be passed. In support, he places reliance on the judgment of the Supreme Court in Chand Rani v. Kamal Rani, (1993) 1 SCC 519.
16. The learned counsel for the defendant no.1 further submits that for the grant of relief of Specific Performance, the plaintiff must not only plead but also prove that it was always ready and willing to Signature Not Verified Digitally Signed By:RENUKA NEGI Signing Date:02.12.2022 20:16:17 CS(OS) 631/2022 Page 7 of 19 Neutral Citation Number: 2022/DHC/005277
perform its obligations under the Agreement. Such readiness and willingness must be shown from the date of the Contract till the filing of the suit. He submits that in the present case, the plaintiff apart from asserting that it was always ready and willing to perform the agreement, has not placed on record any document to show the availability of finances with the plaintiff to perform its obligations under the same. In support, he places reliance on the following judgments:-
1. U.N. Krishnamurthy v. A.M. Krishnamurthy, 2022 SCC OnLine SC 840;
2. N.P. Thirungnanam v. Dr.R. Jagan Mohan Rao and Others, (1995) 5 SCC 115; and
3. Katta Sujatha Reddy and Another v. Siddamsetty Infra Projects Pvt. Ltd. and Others, 2022 SCC OnLine SC 1079.
17. The learned counsel for the defendant no.1, drawing reference to the e-mails dated 25.05.2020 and 18.09.2020 of the plaintiff, asserts that in the said e-mails itself, the plaintiff had contended that due to the outbreak of the COVID-19 pandemic, and as the Agreement was to be performed within a period of six months of the execution thereof, the terms of the Agreement would have to be re-negotiated.
18. Placing reliance on the judgment of the Supreme Court in Balram Singh v. Kelo Devi, 2022 SCC OnLine SC 1283, he submits that the Agreement being an unregistered document, even otherwise, the plaintiff is not entitled to seek Specific Performance thereof.
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19. The learned counsel for the defendant no.1 further places reliance on the judgment of the Supreme Court in Ambalal Sarabhai Enterprises Limited v. KS Infraspace LLP Limited and Another, (2020) 5 SCC 410, to submit that for grant of an ad interim injunction, the plaintiff must show more than a simple prima facie case. The plaintiff can always be compensated in terms of damages, in case the plaintiff eventually succeeds in the suit. However, grant of an interim injunction in favour of the plaintiff would cause irreparable injury to the defendants, especially keeping in view the meager amount paid by the plaintiff as an advance under the Agreement.
20. In rejoinder, the learned senior counsel for the plaintiff has submitted that in view of the amendment to the Specific Relief Act, 1963, the only exception for grant of the relief for Specific Performance to the plaintiff would be a finding of the plaintiff not being ready and willing to perform its terms of the bargain. In the present case, he submits, the plaintiff has been able to show at least prima facie its readiness and willingness to perform the terms of the agreement right from the date of execution thereof till the filing of the suit. In support, he places reliance on the judgment of the Supreme Court in Katta Sujatha Reddy & Anr. v. Siddamsetty Infra Projects Pvt. Ltd. & Ors., 2022 SCC OnLine SC 1079.
21. I have considered the submissions made by the learned counsels for the parties.
22. The relevant terms of the Agreement have been reproduced hereinabove. The same clearly state that the balance payment was to Signature Not Verified Digitally Signed By:RENUKA NEGI Signing Date:02.12.2022 20:16:17 CS(OS) 631/2022 Page 9 of 19 Neutral Citation Number: 2022/DHC/005277
be made by the plaintiff within a period of sixty days from the date of actual handing over of possession subsequent to the order eviction passed against the wife and daughter of the defendant no.1. From the order dated 28.07.2021 of the Supreme Court referred to hereinabove, it is evident that the defendants obtained the possession of the said property only on 09.07.2021. Reliance of the learned counsel for the defendant no.1 on the e-mails prior thereto, therefore, in my prima facie opinion would not come to the aid of the defendants.
23. Be that as it may, by an e-mail dated 06.04.2020, the defendant no.1 stated that the possession of the said property will be handed over to the defendants on 31.05.2020. The plaintiff vide e-mail dated 25.05.2020 stated that it is ready and willing to perform the agreement, however, due to outbreak of the COVID-19 pandemic and restrictions imposed by the Government of India, the defendants must give a firm time frame to the plaintiff as the plaintiff would be unable to travel to India. The plaintiff further stated that Ms. Nivedita Kaul had not handed over the possession of the subject-property to the defendants. The email dated 25.05.2020 of the plaintiff is reproduced herein below:-
"Thank you for taking time to write an email and it was great to hear from you. How are you and your family and I pray for you and your family's well being.
I have gone through your email in reference to the Agreement to Sell dated 11.11.2018 entered between you for and on behalf of Mr. Arjan Nath Kaul being his General Power of Attorney and our Firm M/s Kimaya Buildtech
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LLP in respect to Property bearing No. B-
237B, Greater Kailash Part-I, New Delhi measuring 281 Sq. Yards ("said property"). It is reiterated that we are absolutely ready and willing to perform the said agreement to sell as per its terms and conditions.
As you are aware the Government on March 24th 2020 had imposed a lockdown to control the corona virus outbreak in the country which is still in continuation being lockdown 04. Though some activities have been permitted by the Government in the present lockdown and conditional lifting of restrictions, but still the situation is same with no improvement in economic conditions. Even the concerned Sub Registrar Office (where sale deed is to be registered) is not working properly and moreover it is occupied by the Doctors working on or associated with Covid-19.
Therefore, in such contingency, it will be premature to commit anything.
Insofar as our part of the agreement to sell is concerned, we have always been and still ready and willing to perform the same. Rather we were desperately waiting to make the balance payment and close the sale as market was also very good. But since M. Nivedita Kaul has not handed over the possession to you, the agreement remains pending, though you were confidant to take over the possession from M. Nivedita Kaul within two months, as informed by you. However, there will be no problem at all and we are very much willing & ready to perform the agreement but cannot be predicted with certainty in view of the aforesaid facts and circumstances and market scenario due to covide-19. Even otherwise, the balance payment is to be made within 60 days from the date of taking over the complete vacant physical possession of the property from M. Nivedita Kaul in terms of eviction order as clearly stipulated in Clause 2 of the Agreement to Sell.
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As heard, the situation in USA is also not good and even flights are not coming to India, except for the stranded Indian citizens, though now proposed with certain conditions. I am surprised how you have fixed your travel with certainty though it is necessary for you to take over the possession from M. Nivedita Kaul. However, taking over possession can be done even if the curb remains operative as you need not go to an public place such as Sub Registrar office, which is must for transferring/conveying the said property. Therefore, in view of the aforesaid facts and circumstances, it is pre-mature to commit anything and let's hope for the good. However, I will revert back to you and convey the best possible date and time, once threat of corona pandemic is over and government lifts the restrictions and/or announces lifting. It is therefore requested, please wait for sometime for the decision (of the Government) to come and hereby assure you that if everything will be all right before the agreed time, we shall go ahead in accordance with the schedule and if not, then there would be no option except to reschedule the plan."
24. A reading of the above email does not show that the plaintiff had resiled from the Agreement or wanted to renegotiate the terms thereof, as was contended by the learned counsel for the defendant no.1.
25. The email dated 18.09.2020, relied upon by the learned counsel for the defendant no. 1, reads as under:-
"Hope you and everyone in the family is fine and doing well.
Apropos to our last discussion sometime in May, 2020 when you were planning to visit
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India in July, 2020. I understand that your visit in this situation is not safe but on the same time I also know that without your presence/visit here in Delhi (India), getting the possession of the property can be more delayed, as we have already wasted almost 22 months on this. I still remember when we entered in to the transaction in November' 2018, as communicated, we were quite confident of getting the possession within 6 months. Keeping in mind the said scenario, I kept myself fully prepared by all means. I could not use the funds nor I could derive any benefit therefrom. Now almost 22 months have been passed and the position is still the same. Even the real estate market is not the same as it was in 2018-19 and the prices have fallen down by 20% to 25% specially in this pandemic situation. Thus, it is requested to kindly let me know your schedule to visit here in Delhi (India) so that you can take over the possession of the property and we can discuss all the modalities including the timeline and conclude this transaction."
26. A reading of the above email again does not support the contention of the learned counsel for the defendant no. 1 that the plaintiff wished to renegotiate the agreement or that a period of six months for completion of the transaction was of essence to the Agreement. On the other hand, the above email shows the readiness and willingness of the plaintiff to 'conclude this transaction'.
27. Post taking over the possession, the defendant no.1 addressed an e-mail dated 04.08.2021 to the plaintiff informing the plaintiff of the vacation of the subject-property, and also undertook to hand over the possession of the subject-property at the time of payment of the balance amount by the plaintiff. He stated that this be treated as a sixty
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days' notice period for the plaintiff. It is, therefore, evident that as on 04.08.2021, the defendant no.1 affirmed his obligations under the Agreement and did not plead any breach or delay in performance thereof on the part of the plaintiff. The plaintiff in return, vide e-mail dated 07.08.2021, accepted the sixty days' notice and also expressed its readiness and willingness to perform its obligations under the Agreement. The plaintiff pleaded for a permission to visit the subject property along with the bank officials for the purpose of obtaining the bank loan. The parties thereafter exchanged a few more e-mails.
28. It is by an e-mail dated 13.09.2021 that the defendant no.1 pleaded that as almost three years had expired from the execution of the agreement, the defendants would like to re-negotiate the terms thereof. The defendants also offered to return the advance received by their father to the plaintiff. The plaintiff, by an e-mail dated 17.09.2021, however, insisted upon the defendants to comply with the terms of the Agreement, and also asserted that it is arranging the balance sale consideration to conclude the sales transaction of the said property on 03.10.2021, that is, on completion of the sixty days' notice period. The defendants, however, insisted on a re-negotiation of the price, and on the same, again various e-mails were exchanged between the parties.
29. As the parties could not arrive at a settlement of their disputes, they also initiated a pre-suit mediation, which also resulted in a failure on 02.06.2022. The plaintiff has thereafter filed the present suit on 22.09.2022.
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30. From the above exchange of e-mails, prima facie it appears that the plaintiff has always been ready and willing to perform its part of the Agreement. The Agreement could not be performed earlier as the defendants had not been able to obtain physical possession of the subject property from the wife and the daughter of the defendant no.1. On obtaining such possession, the defendant no.1 sought compliance with the terms of the agreement from the plaintiff, which the plaintiff duly consented to. The plaintiff has also placed on record a copy of the correspondence dated 01.11.2021 from HDFC Ltd. communicating its principle approval of a loan of Rs. 7 Crores in favour of the plaintiff. Prima facie, therefore, I find no merit in the submission of the learned counsel for the defendant no. 1 that the plaintiff has failed to show its readiness and willingness to perform the Agreement. The judgments cited, therefore, do not appear to be of any help to the case of the defendant no. 1.
31. On the issue of non deposit of the TDS, the same was also raised for the first time by the defendant no.1 vide e-mail dated 06.04.2020. As noted hereinabove, thereafter also the defendant no.1 did not state the said ground for re-negotiating the deal with the plaintiff, till 13.08.2021. In fact, by the email dated 04.08.2021, the defendant no. 1 called upon the plaintiff to complete the sale transaction. The same, therefore, appears to be an afterthought. The learned senior counsel for the plaintiff has also asserted that it was at the request of the father of the defendant no. 1 that the TDS was not deposited by it. In any case, the plaintiff is being put to conditions in
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this regard for grant of an interim injunction that I intend to pass in the present order.
32. On the issue of the plaintiff having deposited only 6.2% of the sale consideration, in my opinion, this was the bargain arrived at between the father of the defendant no.1, through the defendant no.1 himself. The defendant no.1 cannot now plead that only because the plaintiff was made to deposit 6.2% of the total Sale Consideration, the plaintiff must be denied the relief of Specific Performance. The parties are free to enter into their bargain and it's not for this Court to judge the reasonableness of these terms. In any case, these are matters which have to be considered once the defendants file their response to the suit. In this regard, I may also take note of the judgment of the Supreme Court in Katta Sujatha Reddy and Another (supra), wherein, the Supreme Court has observed that the adequacy of monetary damages as a ground for rejection of relief of Specific Performance/injunction has been done away with by the legislature in order to provide better compensation to the aggrieved party in from of the Specific Performance of the Contract.
33. I must also note that though notice on this application and summons in the suit were issued to the defendants on 07.10.2022, and were accepted by the learned counsel appearing for defendant no.1 for the defendant no.1 on the said date, the defendant no.1 has till date not filed his written statement or reply to this application. Therefore, all assertions of the learned counsel for the defendant no.1 are merely his
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own submissions and not supported by any affidavit of the defendant no.1. They therefore, need to be considered from that prospective.
34. At this stage, I do not deem it proper to deal in detail with the other judgments which are cited by the learned counsel for the defendantno.1 as the defendants are yet to file their response to the application as also to the suit. At present, the subject matter of the present suit deserves to be preserved. Suffice it to say, the plaintiff for the above recorded reasons has been able to make out a good prima facie case in its favour. The balance of convenience is also in favour of the plaintiff and against the defendants. The plaintiff is likely to suffer a grave irreparable injury in case the ad-interim injunction is not granted in its favour, for the reason that the plaintiff has waited for three years for the Specific Performance of the Agreement and cannot now be left at the mercy of the defendants.
35. In view of the above, until further orders, the defendants are restrained from creating any third-party interest or parting with possession of the said property till further orders. This shall, however, be subject to the condition that the plaintiff deposits the amount of the TDS as stipulated in the Agreement, along with the applicable interest and penalty, in the account of the father of the defendants, with the Income Tax Department within a period of four weeks from today and furnish proof thereof on an affidavit before this Court. The plaintiff shall further deposit a sum of Rs.5 Crores with the Registrar General of this Court within a period of six weeks from today. The amount
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deposited by the plaintiff shall be kept in a fixed deposit and shall abide by further orders of this Court.
36. Needless to state and reiterate that any and all observations made hereinabove are merely prima facie in nature and shall not bind or influence this Court once the defendants file their response to the suit and the application.
37. Let fresh notice of this application be issued to the un-served defendants by way of speed-post as also by way an e-mail. The defendant no.1 shall provide the e-mail addresses of the un-served defendants to the plaintiff within a period of two days from today.
CS(OS) 631/2022
38. As the Office Report indicates that the service on the defendant nos.2 to 4 is awaited, while awaiting such report, let fresh summons be issued to the defendant nos.2 to 4, to be served through speed-post and e-mail, returnable on 13th February, 2023 before the learned Joint Registrar (Judicial).
39. The learned senior counsel for the plaintiff submits that there is an error in the numbering of the defendants in the Memo of Parties.
40. On his oral prayer, the plaintiff is permitted to file an amended Memo of Parties within a period of two days. Let fresh notice and summons be issued to the remaining defendants on such amended Memo of Parties.
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41. The learned senior counsel for the plaintiff further prays for leave to file certain additional documents on record.
42. The plaintiff shall move an appropriate application in this regard, which shall be considered in accordance with law.
43. The next date of hearing, that is, 12.12.2022 before the learned Joint Registrar (Judicial), shall stand cancelled.
NAVIN CHAWLA, J
DECEMBER 1, 2022/rv
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