Calcutta High Court
Punit Beriwala vs Suva Sanyal And Anr. on 22 July, 1997
Equivalent citations: AIR1998CAL44, AIR 1998 CALCUTTA 44, (1998) 37 BANKLJ 360, (1998) 1 CAL WN 109, (1997) 3 ICC 823
Author: Satya Brata Sinha
Bench: Satya Brata Sinha, Bhaskar Bhattacharya
JUDGMENT Satya Brata Sinha, J.
1. This appeal, at the instance of the plaintiff, is directed against an order dated 27th March, 1997 whereby and whereunder the said learned Judge refused to grant an order of injunction in favour of the plaintiff. The fact of the matter is as follows :
2. The defendant No. 2 allegedly entered into an agreement with the defendant No. 1 who is, admittedly, the owner of the suit premises who was in possession thereof till 7th March, 1995 whereafter she had shifted to another flat. The defendant No. 2 also entered into agreements with the tenants who had been occupying the premises in question in terms whereof they had surrendered their respective tenancies. A plan for construction of a multi-storey ed building upon demolition of the old structures was also sanctioned by the Calcutta Municipal Corporation on 5th of August, 1996. Allegedly, the defendant No. 2 approached the plaintiff on 19th July, 1996 for sale of the suit premises on representation that he was authorised therefor. On 20th July, 1996, allegedly, an agreement was entered into by and between the parties pursuant whereto a sum of Rs. 1,00,000 (Rupees One lakh) was paid by the plaintiff to the defendant No. 2 in presence of the defendant No. 1. The said payment was made against the payment of Rs. 16,00,000/- (Rupees Sixteen Lakhs) at the time of execution of the formal agreement. Allegedly, at the instance of one Jayanta Mukherjee, certain papers were also handed over by the defendant No. 2. Thereafter, a draft agreement, as contained in Annexure 'A' to the plaint was prepared. According to the plaintiff, although, he was, at all material times, was ready and willing to perform his part of contract, the defendants had failed and neglected to take any steps forexecution of the agreement and toexecute the Deed of Conveyance in terms of the said draft agreement. The defendant No. !, who is the owner of the property, categorically denied and disputed that he had ever entered into any agreement with the plaintiff or for that matter, the defendant No. 2 was authorised. The defendant No. 1 further categorically denied and disputed that there had been any transaction including the passing of a sum of Rs. 1,00,000/- from the plaintiff to the defendant No. 2. It is stated that so far as the Title Deeds arc concerned, the broker of the plaintiff might have come across one of the xerox copies but this, by itself, cannot give any credence to the story of the plaintiff that an Agreement for Sale had been entered into. Defendant No. 2 also categorically denied and disputed all the allegations of the plaintiff to the 'hilt (and) stated that during his activities as a building-developer one Gautam Mukherjee came to his office as a professional broker but the plea that he had been looking for a flat and defendant No. 2 without making any commitment, agreed to find out a flat or apartment for the plaintiff. According to the said defendant he could never imagine that he would engineer the payment of Rs. 1,00,000/- to find out such a mythical story as cooked up in the plaint and in the application for injunction.
3. For the purpose of disposal of this appeal it is not necessary to state in details the other statements made by the defendant No. 2 in his written statement and/or affidavit-in-opposition as the same have been stated in details by the learned trial Jude himself. The learned trial Judge, upon consideration of the materials on record and upon hearing the learned counsel for the parties, inter alia, arrived at the following conclusions :
(1) In view of Section 230 of the Indian Conn act Act, the defendant No. 2 could not have entered into a contract with the plaintiff in respect of the suitproperty on behalf of the defendant No. 1 and, thus, he has wrongly been impleaded as a party.
(2) The purported agreement is violative of Section 269UC(1) of the Income-tax Act as admittedly, no agreement in writing had been entered into prior to filing of the said suit.
(3) The statement made by the plaintiff in paragraph 8 of the plaint vis-a-vis the purported agreement as contained in Annexure 'A' thereto cannot be prima facie accepted, as 5th August. 1996 is the date when the plan was sanctioned but admittedly, the agreement was entered into on 20th July, 1996 and thus the question of grant of a decree for specific performance of contract in the said suit docs not arise and inasmuch as the averments made in paragraph 16 nullifies the submissions made in paragraph 8 thereof.
(4) Although, according to the plaintiff cause of action for the suit has arisen on 12th August. 1996, the plaintiff filed the application for temporary injunction much thereafter.
(5) In view of the statements made in paragraph 23 of the application for temporary injunction, the plaintiff having prayed for damages to the extent of Rs. 1,00,000/-, no injunction should be granted.
4. Mr. S. P. Roychowdhury, learned counsel appearing on behalf of the plaintiff/appellant, inter alia, submitted that the learned trial Judge committed an error in so far as he failed to take into consideration the affidavit-in-opposition filed by defendants Nos. I and 2 wherein they had accepted the fact that there was some sort of transaction between the plaintiff and the defendant No. 2. The learned counsel has drawn our attention to the purported receipt of a sum of Rs. 1,00,000/-granted on the baek of avisiting card and submitted on the basis thereof that the plaintiff has not been able to show that a part of the consideration amount has been paid to the defendant No. 2 who had been acting on behalf of the defendant No. 1. It was further submitted that a bare perusal of Chapter XXC of the Income-tax Act show that Section 269UC(1) thereof docs not stand as a bar in entering into an oral agreement in respect of a transaction over Rs. 10 lakhs and this, the learned trial Judge must be held to have been misdirected himself in passing the impugned order. The learned counsel in this connection has drawn our attention to a decision of the Delhi High Court in Shri Rajesh Aggarwal v. Shri Balbir Singh, . Our attention has further been drawn to the fact that Section 52 of the Transfer of Property Act by itself cannot be a bar for grant of an injunction as has been prayed for by the plaintiff in view of the Division Bench decision , Sm. Muktakesi Dawn v. Haripada Mazumdar. The learned counsel, in his usual fairness, has also drawn our attention to the decision of the Supreme Court of India in Dalpat Kumar v. Prahlad Singh, and submitted that the observations made therein as regards the applicability of Section 52 of the Transfer of Property Act in suits for specific performance of contract was rendered per incurium and must be held to have been made in the facts and circumstances of the said case and, thus, the same cannot be said to have been any general application whatsoever as thereby the Apex Court did not lay down any law within the meaning of Article 141 of the Constitution of India.
5. The learned counsel submits that this Court, in exercise of its jurisdiction under Section 104 read with Order XLIII, Rule 1(r) of the Code of Civil Procedure, is entitled to reappraise the entire facts and circumstances of the case and arrive at its own conclusion as regards the merit of the matter.
6. Mr. P. K. Dutta, the learned counsel appearing on behalf of the respondents, inter alia, submitted that this Court, sitting in appeal, cannot lightly interfere with the decision of the learned trial Judge, who had refused to exercise its discretion in not passing an order of injunction in favour of the plaintiff. The learned counsel, in support of his contention has relied upon a Division Bench decision of the Apex Court in Gujarat Steel Tubes Ltd., etc. etc. v. Gujarat Steel Tubes Mazdoor Sabha, (Wander Limited v. Antox India (P) Ltd.). According to the learned counsel, a proper construction of the plaint and in particular, the averments made in paragraph 8 find read with the prayer portion thereof would clearly show that the suit for specific performance of contract is not maintainable as the plaintiff had alleged that there had been merely an agreement to agree and thus, concluded contract had been entered into by and between the parties to the suit. The learned counsel submits that although in paragraph 8 of the plaint the plaintiff pleaded that the agreement was entered into on 20th July, 1996, the agreement sought to be enforced in the suit is dated 2nd of August, 1996, The learned counsel contends that on the face of the plaint, the agreement is void ah initio as it attracts the wrath of Sections 23 and 25 Indian Contract Act, in so far as, admittedly, the defendant No. 2 could not have entered into a contract for and on behalf of defendant No. 1 in view of the provisions contained in Section 230 of the Indian Contract Act. Section 269UC(1) of the Income-tax Act, contends Mr. Dull, is a provision in terms whereof the Central Government acts as an watchdog and same is a mandatory one. The learned counsel submits that the heading of Chapter XXC does not control the plain meaning of the provisions of Section 269UC(1) and the provisions following the same inasmuch as the language of said provision is absolutely clear, unambiguous. Our attention, in this connection has been drawn to a decision of a Division Bench reported in 1975 Calcutta Weekly Notes 173 wherein this Court has held that once the alleged gi..mt is illegal, the Court would not look to any further fact for granting any relief in favour of the plaintiff.
7. Before we consider the rival submissions made by the learned counsel for the parties on merit, we may observe that we agree with the findings of the learned trial Judge to the effect that there exists a lot of discrepancies in the statements made in the plaint vis-a-vis the alleged agreement. The agreement, which is contained in Annexure-A to the plaint does not bear any date. On the face of the averments made in the plaint, the said agreement was a draft one. The plaintiff, admittedly, stated that a formal agreement was to be arrived at by and between the parties. In fact, as noticed hereinbefore, the plaintiff in his plaint as also in his application for injunction categorically stated that the defendants have not only failed and/or neglected to execute the Deed of Conveyance but have also failed and neglected to execute a Deed of Agreement. The plaintiff, therefore, in our opinion, by necessary implication has admitted that no concluded agreement had been entered into. A mere agreement to agree is not enforceable in a Court of law. Furthermore, it is a trite law, that in order to enforce an agreement, the same must constitute a 'contract' within the meaning of Section 2(g) of the Indian Contract Act. It must also be a lawful one having a lawful consideration therefor and entered into with a lawful object. Section 23 read with the explanation appended to Section 25 of the Indian Contract Act leaves no manner of doubt that before adecree for specific performance of contract can be passed, the plaintiff must show that there exists a lawful agreement capable of being enforced in a Court of law. Prima facie, the plaintiff has failed to do the same. There cannot be any doubt whatsoever, that in the matter of grant of injunction the Court is bound to consider three basic facets therefor, namely, (1) prima facie case, (2) balance of convenience, and (3) irreparable injury.
8. While considering the question of prima facie case, it may be true, that the title of the plaintiff is not required to be proved at that stage but what is needed is there must exist triable issue. But, in our opinion, in a suit for specific performance of contract the plaintiff must also show that apart from the fact that the agreement in question constitutes 11 contract, he will be seriously prejudiced if any transfer is made by the defendant despite Section 52 of the Transfer of Property Act. It is further well-known that a vague agreement cannot be specifically enforced. Reference, in this connection may be made to the case of Shree Ambarnath Mills Corporation, Bombay v. D. B. Godbole, Custodian of Evacuee Properly, . Furthermore, in the instant case, the plaintiff has not stated that the defendant No. 2 by reason of a Power of Attorney or otherwise was entitled to enter into an agreement on behalf of the defendant No. 1. Admittedly, the defendant No. 1 was the sole owner of the property in question. The agreement for sale, therefore, could only be entered into by the plaintiff with the defendant No. 1 herself, or her agent authorised in that regard. As an agent acts for and on behalf of him prima facie a suit for specific performance of contract is not maintainable against the former. Section 230 of the Indian Contract Act read with Section 2(2) of the Power of Attorney Act prima facie debars execution of such contract by an agent.
9. We are further of the view that Chapter XXC of the Income-tax Act is also applicable in the instant case. Section 269UC(1) of the Income-tax Act stalls with a non obstante clause. Such a provision has a wide amplitude. In our opinion, the provisions contained in the entire chapter have to be read in their entirety. For the purpose of construction of the provisions contained in Chapter XXC of the Income-tax Act, the entire chapter has to be read and then each provision has to be read separately sentence by sentence and then word by word. Chapter XXC authorises the Central Government to purchase an immovable property in certain cases of transfer. The word 'transfer' has been defined in Sub-clause (f) Clause (2) of Section 269UA to include possession of such a property to be taken or retained in part performance of contract of the nature referred to in Section 53A of the Transfer of Property Act. The plaintiff, in paragraph 8 of the Injunction petition has categorically stated that the defendant No. 2 in furtherance of the said purported oral agreement is required to deliver possession of the properties in suit upon payment of a sum of Rs. 16,00,000/- to the defendants whereafter he was entitled to commence construction thereupon.
10. Section 269UC(1). in that view of the matter, is prima facie attracted inasmuch as admittedly, the transaction in question is for a consideration above Rs. 10,00,000/-. Clause (f) of Section 269 defines 'agreement for transfer' to mean an agreement which is registered under the Indian Registration Act, 1908 for the transfer of any immovable property. Section 269UC(1) which begins with "Notwithstanding anything contained in the Transfer of Property Act, 1882 (4 of 1882), or in any other law for the time being in force, unless an agreement in the nature referred to therein is executed, under Sub-section (2) provisions of such an agreement to be reduced in writing. Sub-section (3) of the said provisions provides that a statement referred to in Sub-section (2) shall be furnished to the appropriate authority, whereupon the concerned authority may exercise its option to purchase the same on behalf of the Central Government in terms of Section 269UD of Ihe Act. An agreerment in wnling, therefore, in such a situaiion, cannot be said to be an idle formaiily. It is true as has been submitted by Mr. Roychowdhury, that an oral agreement can also be enforced in a suit for specific performance of contract but in the facts and circumstances of this case, we are of the opinion that not only no such plea of oral contract had been raised but on the plaintiff sown showing the agreemcntupon which reliance has been placed do not constitute a concluded contract so as to entitle the plaintiff to specifically enforce in a Court of law.
11. We are also of the opinion that the matter relating to grant of injunction being a matter of pure discretion, the learned trial Judge was not bound to grant such relief merely because it was lawful to do so. It is not the case of the appellant that the discretion of the learned trial Judge has been exercised in an arbitrary or wrongful manner. It is true that discretion cannot be arbitrary but must be sound and reasonable guided by judicial principles and capable of correction by a court of appeal but has also to be borne in mind that the jurisdiction of this Court to interfere being equitable, is also governed by equitable principles. It is now well-settled that before the appellate court the appellant must satisfy that the discretion has been improperly exercised. In this case, the learned trial Judge has considered all aspects of the matter and in particular has analysed the materials on record and thereupon he has come to the conclusion that the plaintiff on the basis thereof had failed to show existence of a prima facie case and in this situation it is the duty of the appeal court to examine the matter carefully.
12. In Gujarat Steel Tubes Ltd. v. Gujarat Steel Tubes Mazdoor Sabha, the Apex Court has, inter alia, stated the law in the following terms (at page 1916 of AIR) :
"While the remedy under Article 226 is extraordinary and is of Anglo-Saxon vintage, it is not a carbon copy of English processes. Article 226 is a sparing surgery but the lancet operates where injustice suppurates. While traditional restraints like availability of alternative remedy hold back the court, and judicial power should not ordinarily rush in where the other two branches fear to tread, judicial daringis notdaunted where glaring injustice demands even affirmative action. The wide words of Article 226, are designed for service of the lowly numbers in their grievances if the subject belongs to the court's province and the remedy is appropriate to the judicial process. There is a native hue about Article 226 without being anglophilic or anglophobic in attitude. Viewed from this jurisprudential perspective, we have to be cautious both in not overstepping as if Article 226 were as large as an appeal and not failing to intervene where a grave error has crept in. Moreover, we sit here in appeal over the High Court's judgment. And an appellate power interferes not when the order appealed is not right but only when it is clearly wrong. The difference is real, though fine."
13. The same principles have also been reiterated in Wander Limited v. Antox India(P) Ltd., reported in 1990 (2) Mad LJ 1 (Supreme Court) wherein the law has been laid down in the following terms :
"The appeals before the Division Bench were against the exercise of discretion by the single Judge. In such appeals, the appellate Court will not interfere with the exercise of discretion of the court of first instance and substitute its own discretion except where the discretion has been shown to have been exercised arbitrarily or capriciously or perversely or where the Court had ignored the settled principles of law regulating grant or refusal of interlocutory injunctions. An appeal against exercise of discretion is said to be an appeal on principle. Appellate Court will not reassess the material and seek to reach a conclusion different from the one reached by the Court below if the one reached by the Court was reasonably possible on the material. The appellate Court would normally not be justified in interfering with the exercise of discretion under appeal solely on the ground that if it had considered the matter at the trial stage it would have come to a contrary conclusion. If the discretion has been exercised by the trial Court reasonably and in a judicial manner, the fact that the appellate Court would have taken a different view may not justify interference with the trial Court's exercise of discretion."
14. This aspect of the matter has recently been considered in Durga Debi v. Ganeshi, reported in 1997 (3) ICC 235.
15. Furthermore, in this case on the plaintiffs own showing the extent of loss he is likely to suffer is to the extent of Rs. 1,00,000/-. Admittedly, he has not paid the consideration of Rs. 36 lakhs to the defendant No. 1 and defendant No. 2.
16. The question of balance of convenience and irreparable loss or irretrievable injury to be suffered by the plaintiff may also have to be considered in that context. Even if plaintiff succeeds in the suit, the purchaser of the property would be bound by the doctrine of lis pendens. In any event, in view of the statements made in paragraph 23 of the application for injunction, the court can grant a decree to the extent of Rs. 1,00,000/- in his favour.
17. What is an irretrievable injury has been stated by the Apex Court in 1988 (4) JT 232 which decision has been followed by a Division Bench judgment of the Patna High Court reported in 1990 (2) BUR 326.
18. The Apex Court also in Shiv Kumar Chadha v. Municipal Corporation of Delhi & others, laid down the law thus :--
"It need not be said that primary object of filing a suit challenging the validity of the order of demolition is to restrain such demolition with the intervention of the Court, In such a suit the plaintiff is more interested in getting an order of interim injunction. It has been pointed repeatedly thataparty is not entitled to an order of injunction as a matter of right of course. Grant of injunction is within the discretion of the Court and such discretion is to be exercised in favour of the plaintiff only if it is proved to the satisfaction of the Court that unless the defendant is restrained by an order of injunction, an irreparable loss or damage will be caused to the plaintiff during the pendency of the suit. The purpose of temporary injunction is, thus, to maintain the status quo. The Court grants such relief according to the legal principles -- ex debitojustitiae. Before any such order is passed the Court must be satisfied that a strong prima facie case has been made out by the plaintiff including on the question of maintainability of the suit and the balance of convenience is in his favour and refusal of injunction would cause irreparable injury to him."
19. Admittedly, in view of Section 54 of the Transfer of Property Act, even if a person is armed with agreement of sale, he does not acquire any interest thereby and thus he must show existence of special equity in his favour for the purpose of obtaining an order of injunction.
20. We do not agree that the judgment of the Supreme Court in Dalpat Kumar v. Prahlad Singh has been rendered per incurium and, thus, not binding on us. In this connection reference may also be made to Swarup Singh v. Nirmal Singh reported in 1997 (3) ICC 190.
21. Before parting with this case, we may state that we having gone through the entire matter and having heard the learned counsel for the parties on merits, are satisfied that the findings arrived at by the learned trial Judge can neither be said to be unsound in law nor can be said to be arbitrary so as to merit interference by this Court.
22. For the reasons aforementioned, the appeal is dismissed with costs. Counsel's fee assessed at 200 Gms.
Bhaskar Bhattacharya, J.
23. I agree.