M/S Shining India Developers Private ... vs Lt. Col. P.S. Bhatnagar on 15 July, 2011

[Cites 22, Cited by 3]

Delhi High Court

M/S Shining India Developers Private ... vs Lt. Col. P.S. Bhatnagar on 15 July, 2011

1. The plaintiff has filed this suit for specific performance of the Agreement to Sell dated 22nd October, 2005 in respect of land ad-measuring 8,000 sq.yrds. bearing khasra Nos.335 (5-10) and 336 (3-9) situated at CS(OS)No.444/2009 Page 1 of 36 Village Khanpur, Tehsil Mehrauli, New Delhi. Along with the suit, the plaintiff filed I.A.No.3118/2009 under Order XXXIX Rules 1 and 2 of the Code of Civil Procedure on which both the parties have addressed their arguments at length.

2. Plaintiff's Case 2.1 Vide Agreement to Sell dated 22nd October, 2005, the plaintiff agreed to purchase the suit property from the defendant for a total consideration of `9,60,00,000/- out of which the plaintiff paid advance of `1,00,00,000/- at the time of signing of the agreement and the remaining sale consideration of `8,60,00,000/- was to be paid on or before 31st January, 2006 at the time of registration of the necessary documents.

2.2 Vide letter dated 19th January, 2006, the plaintiff enquired about the No Objection Certificate (NOC) from the defendant.

2.3 Vide letter dated 9th February, 2006, the plaintiff called upon the defendant to arrange for No Objection Certificate (NOC) for registration of the sale deed whereupon the defendant sent a reply dated 13th CS(OS)No.444/2009 Page 2 of 36 February, 2006 pointing that there was no clause in the agreement for obtaining the NOC. The defendant also pointed out that the plaintiff had requested for extension of time to make the balance payment and on his request, the defendant had extended the date of payment of balance sale consideration from 31st December, 2005 to 31st January, 2006. The defendant called upon the plaintiff to make the payment of balance sale consideration by 24th February, 2006.

2.4 Vide notice dated 4th September, 2006, the plaintiff once again called upon the defendant to obtain the NOC from the concerned authority for execution of the sale deed to which the defendant sent the reply dated 5th October, 2006 once again pointing out that NOC was not a condition under the agreement and the plaintiff has committed the breach of the agreement by not making payment of the balance sale consideration of Rs.8,60,00,000/- and, therefore, the agreement to sell stood terminated on 24th February, 2006 and the advance money was forfeited.

CS(OS)No.444/2009 Page 3 of 36 2.5 The plaintiff instituted the present suit for specific performance on 30th January, 2009.

3. Defendant's Case 3.1 There was no obligation on the part of the defendant to obtain the NOC under the agreement to sell dated 22nd October, 2005.

3.2 No NOC was required for execution of the transfer documents and the said fact was within the knowledge of the plaintiff at the time of agreement to sell dated 22nd October, 2005. The demand of NOC was, therefore, just an afterthought. (Para 7 of the defendant‟s reply dated 5th October, 2006 to the legal notice dated 4th September, 2006).

3.3 The plaintiff was never ready or willing to complete the transaction in terms of his financial readiness which severely lacked right from the very beginning. The two cheques for Rs.25 lakhs towards advance were initially dishonoured upon presentation due to insufficiency of funds and were subsequently substituted with demand drafts.

CS(OS)No.444/2009 Page 4 of 36 3.4 The plaintiff, a property dealer, entered into the agreement to sell for speculation but had no arrangement for the balance sale consideration of Rs.8,60,00,000/-. 3.5 The plaintiff has raised the false plea of NOC which was not a term of the agreement.

3.6 The balance sale consideration of Rs.8,60,00,000/- was payable by 31st January, 2006. However, vide letter dated 13th February, 2006, the defendant called upon the plaintiff to pay the balance sale consideration by 24th February, 2006. No payment was made by the plaintiff even up to 24th February, 2006 and, therefore, the agreement to sell stood terminated and the advance money was forfeited which was intimated to the plaintiff vide reply dated 5th October, 2006.

3.7 The plaintiff never had the financial capacity to pay the balance sale consideration of Rs.8,60,00,000/-. The defendant obtained the copies of the balance sheets of the plaintiff for the years 2005 to 2008 and placed the same on record to show the financial incapacity of the plaintiff. CS(OS)No.444/2009 Page 5 of 36

4. Relevant Documents The agreement to sell dated 22nd October, 2005 does not contain any condition or requirement for the defendant to obtain the NOC. The agreement also does not contain any term or condition for execution of sale deed. The agreement to sell clearly provides that the balance sale consideration of Rs.8,60,00,000/- was payable by 31st January, 2006 at the time of registration of the necessary documents failing which the agreement would stand cancelled and the advance money shall stand forfeited. The relevant clauses of the said agreement are reproduced hereunder:-

"NOW THIS AGREEMENT TO SELL WITNESSETH AS UNDER:

That in consideration of the sum calculated at Rs.12,000/- per square yard (Rupees Twelve thousand per square yard only) out of which a sum of Rs.1,00,00,000/- (Rupees one crore only) as advance money has been received by the FIRST PARTY from the SECOND PARTY, in the following manner:-

1. Cheque No.503151 dated 22.10.05 drawn on ICICI Bank, Shanti Niketan Branch, New Delhi for Rs.25,00,000/-

(Rupees Twenty five lacs only).

CS(OS)No.444/2009 Page 6 of 36

2. Cheque No.503152 dated 26.10.05 drawn on ICICI Bank, Shanti Niketan Branch, New Delhi for Rs.25,00,000/- (Rupees Twenty five lacs only).

3. Cash - Rs.50,00,000/- (Rupees fifty lacs only) the receipt of which the FIRST PARTY hereby admits and acknowledges and the remaining balance sum of approximately Rs.8,60,00,000/-

(Rupees Eight Crores sixty lacs only) will be paid by the SECOND PARTY to the FIRST PARTY, at the time of the registration of the necessary documents, the FIRST PARTY doth hereby agree to grant, convey, sell, transfer and assign all his rights, titles and interests in the said land (fully described above) along with the ownership rights in the land underneath, free from all encumbrances, TO HAVE AND TO HOLD THE SAME unto the SECOND PARTY, absolutely and forever.

THAT the actual physical vacant possession of the said property will be delivered by the FIRST PARTY to the SECOND PARTY, at the time of the registration of the necessary documents, after receiving the full consideration.

THAT on or before 31st January, 2006 the FIRST PARTY will execute and get the necessary documents of the said property registered, in favour of the SECOND PARTY of his nominees/s, on receipt of the full and final balance amount, failing which the CS(OS)No.444/2009 Page 7 of 36 SECOND PARTY shall be entitled to get the necessary documents registered through the court of law by SPECIFIC PERFORMANCE OF THE CONTRACT, at the cost and expenses of the FIRST PARTY; and in case the SECOND PARTY does not pay the balance amount by 31st January, 2006, this agreement will stand cancelled and the advance money shall stand forfeited."

(Emphasis supplied)

5. Admitted Facts 5.1 The plaintiff has paid a sum of Rs.1 crore as advance money to the defendant at the time of execution of the agreement to sell dated 22nd October, 2005 and the balance sale consideration of Rs.8,60,00,000/- was payable by the plaintiff to the defendant on or before 31 st January, 2006 at the time of registration of the necessary documents by the defendant.

5.2 The agreement provides for cancellation and forfeiture of the advance money in the event of non- payment of balance sale consideration by 31st January, 2006.

5.3 The agreement does not provide for execution of sale deed at the time of payment of balance sale CS(OS)No.444/2009 Page 8 of 36 consideration. The agreement uses the words „the necessary documents‟ which implies that the parties intended and agreed to transfer the suit property by means of other documents such as registered General Power of Attorney.

5.4 Even otherwise, all sale transactions in Sainik Farms are conducted through registered General Power of Attorney because the said colony is not regularized and the plaintiff being a property dealer was well aware of it (Para 23, 26 and 27 of the plaint).

5.5 The agreement does not contain any condition requiring the defendant to obtain the NOC in respect of the suit property.

5.6 The payment of Rs.8,60,00,000/- by the plaintiff to the defendant was not dependent upon any condition whatsoever in the agreement.

5.7 The date of payment of balance sale consideration was extended by the defendant from 31st January, 2006 to 24th February, 2006.

5.8 The plaintiff has not made the payment of balance CS(OS)No.444/2009 Page 9 of 36 sale consideration of Rs.8,60,00,000/- to the defendant by 31st January, 2006 in terms of the agreement dated 22nd October, 2005 or by the extended date of 24th February, 2006.

5.9 Vide reply dated 5th October, 2006, the defendant intimated the plaintiff that the plaintiff has committed breach of the agreement by not making the payment of balance sale consideration of Rs.8.6 crores by 24th February, 2006 and, therefore, the agreement stood terminated and the advance money has been forfeited. The plaintiff chose not to send any response to the letter dated 5th October, 2006 and thereby impliedly admitted the termination of the sale agreement on 24th February, 2006.

5.10. There was no written communication by the plaintiff with the defendant from 5th October, 2006 upto the filing of the suit on 30th January, 2009.

6. Judgments referred to and relied upon by the plaintiff -

Rojasara Ramjibhai Dahyabhai vs. Jani Narottamdas Lallubhai, 1986 (2) SCR 447, Vishwa Nath Sharma vs. CS(OS)No.444/2009 Page 10 of 36 Shyam Shanker Goela & Anr., (2007) 10 SCC 595, Silvey vs. Arun Varghese, AIR 2008 SC 1568, Nirmala Anand vs. Advent Corporation Private Limited, AIR 2002 SC 2290, J.P. Builders vs. A. Ramadas Rao, (2011) 1 SCC 429, Nilkanth Dhondiba Chavan (D) by LRs vs. Sou. Umabai, AIR 2005 Bombay 98 and Mohan Overseas Private Limited vs. Goyal Tin & General Industries, 2010 I AD (Delhi) 253.

7. Judgments referred to and relied upon by the defendant -

7.1 M/s. Gujarat Bottling Co. Ltd. v. Coca Cola Company, AIR 1995 SC 2372 - The Hon‟ble Supreme Court held that the parties invoking the jurisdiction of the Court under Order XXXIX of the Code of Civil Procedure must be fair and honest. The relevant finding of the Court is reproduced hereunder:-

"50. In this context, it would be relevant to mention that in the instant case GBC had approached the High Court for the injunction order, granted earlier, to be vacated. Under Order 39 of the Code of Civil procedure, jurisdiction of the Court to interfere with an order of interlocutory or temporary injunction is purely equitable and, therefore, the Court, on being approached, will, apart from other considerations, also look to the conduct of CS(OS)No.444/2009 Page 11 of 36 the party invoking the jurisdiction of the court, and may refuse to interfere unless his conduct was free from blame. Since the relief is wholly equitable in nature, the party invoking the jurisdiction of the Court has to show that he himself was not at fault and that he himself was not responsible for bringing about the state of things complained of and that he was not unfair or inequitable in his dealings with the party against whom he was seeking relief. His conduct should be fair and honest. These considerations will arise not only in respect of the person who seeks an order of injunction under Order 39 Rule 1 or Rule 2 of the CPC, but also in respect of the party approaching the Court for vacating the ad-interim or temporary injunction order already granted in the pending suit or proceedings."

(Emphasis supplied) 7.2 His Holiness Acharya Swami Ganesh Dassji v. Sita Ram Thapar (1996) 4 SCC 526 - The Hon‟ble Supreme Court held as under:-

"2. There is a distinction between readiness to perform the contract and willingness to perform the contract. By readiness may be meant the capacity of the plaintiff to perform the contract which includes his financial position to pay the purchase price. For determining his willingness to perform his part of the contract, the conduct has to be properly scrutinised. There is no documentary CS(OS)No.444/2009 Page 12 of 36 proof that the plaintiff had ever funds to pay the balance of consideration. Assuming that he had the funds, he has to prove his willingness to perform his part of the contract. According to the terms of the agreement, the plaintiff was to supply the draft sale deed to the defendant within 7 days of the execution of the agreement, i.e., by 27.2.1975. The draft sale deed was not returned after being duly approved by the petitioner. The factum of readiness and willingness to perform plaintiffs part of the contract is to be adjudged with reference to the conduct of the party and the attending circumstances. The court may infer from the facts and circumstances whether the plaintiff was ready and was always ready and willing to perform his part of the contract. The facts of this case would amply demonstrate that the petitioner/plaintiff was not ready nor had the capacity to perform his part of the contract as he had no financial capacity to pay the consideration in cash as contracted and intended to bide for the time which disentitles him as time is of the essence of the contract."

(Emphasis supplied) 7.3 N.P. Thirugnanam v. R. Jagan Mohan Rao, AIR 1996 SC 116 - The Hon‟ble Supreme Court held that to adjudge whether the plaintiff was ready and willing to perform his part of the contract, the Court must take into consideration the conduct of the plaintiff prior and CS(OS)No.444/2009 Page 13 of 36 subsequent to the filing of the suit along with other attending circumstances. The amount of balance sale consideration must be proved to be available with the purchaser right from the date of execution till the date of decree. The Court upheld the dismissal of the suit for specific performance on various grounds inter alia that the plaintiff was dabbing in real estate business without means to purchase the suit property and the very contract was speculative in nature. The relevant findings are reproduced hereunder:-

"4. It is next contended that the plaintiff was always ready and willing to perform his part of the contract. To buttress it, counsel placed strong reliance on the evidence of PW-2, who had testified that he was willing and prepared to lend a sum of Rs. 2,00,000 to the plaintiff on the foot of a promissory note. It is not necessary for the plaintiff that he should keep ready the money on hand. What is relevant and material is that he should have the necessary capacity to raise the funds and was ready and willing to perform his part of the contract which has been demonstrated by the evidence of PW-2. We do not accede to the contention. The trial Judge had pointed out that on an application filed by the defendants, a direction was given to the plaintiff by order dated February 11, 1991 to deposit CS(OS)No.444/2009 Page 14 of 36 the amount of Rs. 2,00,000 or furnish bank guarantee giving time up to March 11, 1991. He neither deposited the amount nor has given bank guarantee. It was also found that the plaintiff was dabbling in real estate business.'

5. It is settled law that remedy for specific performance is an equitable remedy and is in the discretion of the court, which discretion requires to be exercised according to settled principles of law and not arbitrarily as adumbrated under Section 20 of the Specific Relief Act 1963 (for short, 'the Act'). Under Section 20, the court is not bound to grant the relief just because there was valid agreement of sale. Section 16(c) of the Act envisages that plaintiff must plead and prove that he had performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than those terms the performance of which has been prevented or waived by the defendant. The continuous readiness and willingness on the part of the plaintiff is a condition precedent to grant the relief of specific performance. This circumstance is material and relevant and is required to be considered by the court while granting or refusing to grant the relief. If the plaintiff fails to either aver or prove the same, he must fail. To adjudge whether the plaintiff is ready and willing to perform his part of the contract, the court must take into consideration the conduct of the plaintiff prior and subsequent to the filing of the suit alongwith other attending circumstances. The amount CS(OS)No.444/2009 Page 15 of 36 of consideration which he has to pay to the defendant must of necessity be proved to be available. Right from the date of the execution till date of the decree he must prove that he is ready and has always been willing to perform his part of the contract. As stated, the factum of his readiness and willingness to perform his part of the contract is to be adjudged with reference to the conduct of the party and the attending circumstances. The court may infer from the facts and circumstances whether the plaintiff was always ready and willing to perform his part of the contract.

6. In view of the aforesaid factual findings and of the legal position, the High Court has rightly concluded thus:

"We have no hesitation in recording the agreement with the finding of the learned single Judge that the plaintiff has hopelessly failed and shown rather reluctance than readiness to perform his part of the contract. In the facts that are noticed in the judgment of the trial court, which are extracted by us as above, the only possible conclusion is that the plaintiff really had rather reluctant than willing to perform his part of the contract and was at no time ready with either money or resources to fulfill his part of the contract. The other circumstances which are noticed by the learned single Judge and are detailed CS(OS)No.444/2009 Page 16 of 36 by him in the judgment go to show that the very idea of entering into an agreement with the first defendant alone when the plaintiff-appellant was already informed about the death of Dr. R. Surya Rao and the devolution of his interest upon the first defendant, his mother, his brothers and his sisters, was to somehow or other enter upon the property, but, the stipulated rent also was not paid by the plaintiff to the defendants. The trial court has noted that there was no legal necessity for the defendants to part with the suit property and held against the plaintiff that the very contract was speculative in nature and entered into by the plaintiff who has been dabbling in real estate transactions without the means to purchase a substantial immovable property like the suit property and we agree with the same."

(Emphasis supplied) 7.4 Rahat Jan v. Hafiz Mohammad Usman, AIR 1983 Allahabad 343 - The Allahabad High Court held that the plaintiff‟s readiness and willingness must be in accordance with the terms of the agreement. The plaintiff cannot add CS(OS)No.444/2009 Page 17 of 36 any additional condition for the performance of his part of the contract and the plaintiff would not be entitled to any relief if the readiness and willingness displayed was not in relation to the agreement. The plaintiff was also found not ready and willing to perform his part of contract on the ground that the stand taken by the plaintiff was inconsistent with the terms and conditions of the contract. The relevant portion is reproduced hereunder:-

"7...The stand taken by the Plaintiff was certainly inconsistent with the terms and conditions of the agreement. There is, thus no escape from the conclusion that the Plaintiff was not ready and willing to perform his part of the contract."

"8. Section 16(c) of the Specific Relief Act 1963 contains a mandatory, provision, according to which no relief for specific performance of the contract can be enforced in favour of a person who fails to aver and prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him. Explanation to this section. further, lays down that the Plaintiff should aver and prove his readiness and willingness to perform the contract according to its true construction. Readiness and willingness to perform ibis part of the contract is to be judged on the true construction of the agreement. The Plaintiff's readiness CS(OS)No.444/2009 Page 18 of 36 and willingness must be in accordance with the terms of the agreement. The readiness and willingness of the Plaintiff to perform the contract should, therefore, be in accordance with the terms contained in the agreement. The readiness of the Plaintiff must be in relation to the real agreement between the parties. If it transpires that the real agreement is not what the Plaintiff alleges and the readiness and willingness which the Plaintiff displayed was not in relation to the agreement, the Plaintiff would be within the mischief of the doctrine of readiness and willingness to perform the contract and he will not be entitled to any relief. (See Md Ziaul Haque v. Calcutta Vyapar Pratisthan, AIR 1966 Cal 605)."

(Emphasis supplied) 7.5 K.S. Vidyanandam v. Vairavan, 1997 3 SCC 1 - The Hon‟ble Supreme Court held that the contract should be performed within a reasonable time having regard to the terms of the contract prescribing the time limit although the Article 54 of the Limitation Act provides for a period of three years. The specific performance was declined to the plaintiff on the ground that the total inaction of the plaintiff for 2½ years after initial payment of a small amount as earnest money as the agreement CS(OS)No.444/2009 Page 19 of 36 specifying the period of six months in which the plaintiff had to make the payment of balance sale consideration. The findings of the Hon‟ble Supreme Court as under:-

"10. It has been consistently held by the courts in India, following certain early English decisions, that in the case of agreement of sale relating to immovable property, time is not of the essence of the contract unless specifically provided to that effect. The period of limitation prescribed by the Limitation Act for filing a suit is three years. From these two circumstances, it does not follow that any and every suit for specific performance of the agreement [which does not provide specifically that time is of the essence of the contract] should be decreed provided it is filed within the period of limitation notwithstanding the time limits stipulated in the agreement for doing one or the other thing by one or the other party. That would amount to saying that the time- limits prescribed by the parties in the agreement have no significance or value and that they mean nothing. Would it be reasonable to say that because time is not made the essence of the contract, the time-limits specified in the agreement have no relevance and can be ignored with impunity? It would also mean denying the discretion vested in the court by both Sections 10 and 20. As held by a Constitution Bench of this Court in Chand Rani v. Kamal Rani, AIR 1993 SC 1742 , "it is clear that in the case of sale of immovable property there is no presumption as to time being th essence CS(OS)No.444/2009 Page 20 of 36 of the contract. Even if it is not of the essence of the contract, the court may infer that it is to be performed in a reasonable time if the conditions are (evident): (1) from the express terms of the contract; (2) from the nature of the property; and (3) from the surrounding circumstances, for example, the object of making the contract". In other words, the court should look at all the relevant circumstances including the time-limits specified in the agreement and determine whether its discretion to grant specific performance should be exercised. Now in the case of urban properties in India, it is well-known that their prices have been going up sharply over the last few decades - particularly after 1973. In this case, the suit property is the house property situated in Madurai, which is one of the major cities of Tamil Nadu. The suit agreement was in December 1978 and the six months' period specified therein for completing the sale expired with 15th of June, 1979. The suit notice was issued by the plaintiff only on 11.7.1981, i.e., more than two years after the expiry of six months' period. The question is what was the plaintiff doing in this interval of more than two years? The plaintiff says that he has been calling upon Defendants 1 to 3 to get the tenant vacated and execute the sale deed and that the defendants were postponing the same representing that the tenant is not vacating the building. The defendants have denied this story. According to them, the plaintiff never moved in the matter and never called upon them to execute the sale deed. The Trial Court has CS(OS)No.444/2009 Page 21 of 36 accepted the defendants' story whereas the High Court has accepted the plaintiffs story. Let us first consider whose story is more probable and acceptable. For this purpose, we may first turn to the terms of the agreement. In the agreement of sale, there is no reference to the existence of any tenant in the building. What it says is that within the period of six months, the plaintiff should purchase the stamp papers and pay the balance consideration whereupon the defendants will execute the sale deed and that prior to the registration of the sale deed, the defendants shall vacate and deliver possession of the suit house to the plaintiff. There is not a single letter or notice from the plaintiff to the defendants calling upon them to get the tenant vacated and get the sale deed executed until he issued the suit notice on 11.7.1981. It is not the plaintiffs case that within six months, he purchased the stamp papers and offered to pay the balance consideration. Defendants' case is that the tenant is their own relation, that he is ready to vacate at any point of time and that the very fact that the plaintiff has in his suit notice offered to purchase the house with the tenant itself shows that the story put forward by him is false. The tenant has been examined by the defendant as DW-2. He stated that soon after the agreement, he was searching for a house but could not secure one. Meanwhile [i.e., on the expiry of six months from the date of agreement], he stated, the defendants told him that since the plaintiff has abandoned the agreement, he need not CS(OS)No.444/2009 Page 22 of 36 vacate. It is equally an admitted fact that between December 15, 1978 and July 11, 1981, the plaintiff has purchased two other properties. The defendants' consistent refrain has been that the prices of house properties in Madurai have been rising fast, that within the said interval of 2 1/2 years, the prices went up by three times and that only because of the said circumstance has the plaintiff [who had earlier abandoned any idea of going forward with the purchase of the suit property] turned round and demanded specific performance. Having regard to the above circumstances and the oral evidence of the parties, we are inclined to accept the case put forward by Defendants 1 to 3. We reject the story put forward by the plaintiff that during the said period of 2 1/2 years, he has been repeatedly asking the defendants to get the tenant vacated and execute the sale deed and that they were asking for time on the ground that tenant was not vacating. The above finding means that from 15.12.1978 till 11.7.1981, i.e., for a period of more than 2½ years, the plaintiff was sitting quiet without taking any steps to perform his part of the contract under the agreement though the agreement specified a period of six months within which he was expected to purchase stamp papers, tender the balance amount and call upon the defendants to execute the sale deed and deliver possession of the property. We are inclined to accept the defendant's case that the values of the house property in Madurai town was rising fast and this must have induced the plaintiff to wake up after 2 1/2 years and CS(OS)No.444/2009 Page 23 of 36 demand specific performance."

"13. In the case before us, it is not mere delay. It is a case of total inaction on the part of the plaintiff for 2½ years is clear violation of the term of agreement which required him to pay the balance, purchase the stamp papers and then ask for execution of sale deed within six months. Further, the delay is coupled with substantial rise in prices - according to the defendants, three times - between the date of agreement and the date of suit notice. The delay has brought about a situation where it would be inequitable to give the relief of specific performance to the plaintiff."

(Emphasis supplied)

8. FINDINGS In the facts and circumstances of this case, this Court is of the prima facie opinion that the plaintiff has failed to make the payment of Rs.8,60,00,000/- to the defendant on or before 24th February, 2006 and, therefore, the agreement stood cancelled. There was no obligation on the part of the defendant to obtain the NOC as the parties had agreed to complete the sale by necessary documents such as registered General Power of Attorney. The sale agreement, therefore, clearly provides that the defendant would execute the necessary documents in favour of the CS(OS)No.444/2009 Page 24 of 36 plaintiff. The Plaintiff cannot add any additional condition for the performance of his part of the contract. The plaintiff, a property dealer, raised a false plea of the requirement of the NOC which was clearly denied by the defendant vide reply dated 5th October, 2006 to the legal notice to which the plaintiff never responded and made no written communication with the defendant till the filing of the suit on 30th January, 2009 which implies that the plaintiff accepted the termination of the agreement. This case is squarely covered by the judgments in M/s. Gujarat Bottling Co. Ltd. v. Coca Cola Company (Supra), His Holiness Acharya Swami Ganesh Dassji v. Sita Ram Thapar (Supra), N.P. Thirugnanam v. R. Jagan Mohan Rao, (Supra), Rahat Jan v. Hafiz Mohammad Usman (Supra) and K.S. Vidyanandam v. Vairavan (Supra). The judgments cited by the plaintiff are not applicable to the facts of this case. The plaintiff is, therefore, not entitled to the relief of injunction. CS(OS)No.444/2009 Page 25 of 36

9. Conduct of the plaintiff 9.1 In M/s. Gujarat Bottling Co. Ltd. v. Coca Cola Company AIR 1995 SC 2372, the Hon‟ble Supreme Court held that the conduct of the parties invoking the jurisdiction of the Court under Order XXXIX of the Code of Civil Procedure must be fair and honest. The relevant finding of the Court is reproduced hereunder:-

"50. In this context, it would be relevant to mention that in the instant case GBC had approached the High Court for the injunction order, granted earlier, to be vacated. Under Order 39 of the Code of Civil procedure, jurisdiction of the Court to interfere with an order of interlocutory or temporary injunction is purely equitable and, therefore, the Court, on being approached, will, apart from other considerations, also look to the conduct of the party invoking the jurisdiction of the court, and may refuse to interfere unless his conduct was free from blame. Since the relief is wholly equitable in nature, the party invoking the jurisdiction of the Court has to show that he himself was not at fault and that he himself was not responsible for bringing about the state of things complained of and that he was not unfair or inequitable in his dealings with the party against whom he was seeking relief. His conduct should be fair and honest."

CS(OS)No.444/2009 Page 26 of 36

(Emphasis supplied) 9.2. In Dalip Singh v. State of U.P., (2010) 2 SCC 114, the Hon'ble Supreme Court noted as under:-

"1. For many centuries, Indian society cherished two basic values of life i.e. „Satya' (truth) and „Ahimsa' (non- violence). Mahavir, Gautam Buddha and Mahatma Gandhi guided the people to ingrain these values in their daily life. Truth constituted an integral part of the justice-delivery system which was in vogue in pre-Independence era and the people used to feel proud to tell truth in the courts irrespective of the consequences. However, post-

Independence period has seen drastic changes in our value system. The materialism has over-shadowed the old ethos and the quest for personal gain has become so intense that those involved in litigation do not hesitate to take shelter of falsehood, misrepresentation and suppression of facts in the court proceedings. In the last 40 years, a new creed of litigants has cropped up. Those who belong to this creed do not have any respect for truth. They shamelessly resort to falsehood and unethical means for achieving their goals. In order to meet the challenge posed by this new creed of litigants, the courts have, from time to time, evolved new rules and it is now well established that a litigant, who attempts to pollute the stream of justice or who touches the pure fountain of justice with tainted hands, is not entitled to any relief, interim or final."

CS(OS)No.444/2009 Page 27 of 36

9.3. In Padmawati and Ors. v. Harijan Sewak Sangh, 154 (2008) DLT 411, this Court noted as under:

"6. The case at hand shows that frivolous defences and frivolous litigation is a calculated venture involving no risks situation. You have only to engage professionals to prolong the litigation so as to deprive the rights of a person and enjoy the fruits of illegalities. I consider that in such cases where Court finds that using the Courts as a tool, a litigant has perpetuated illegalities or has perpetuated an illegal possession, the Court must impose costs on such litigants which should be equal to the benefits derived by the litigant and harm and deprivation suffered by the rightful person so as to check the frivolous litigation and prevent the people from reaping a rich harvest of illegal acts through the Courts. One of the aim of every judicial system has to be to discourage unjust enrichment using Courts as a tool. The costs imposed by the Courts must in all cases should be the real costs equal to deprivation suffered by the rightful person."

"9. Before parting with this case, I consider it necessary to pen down that one of the reasons for over-flowing of court dockets is the frivolous litigation in which the Courts are engaged by the litigants and which is dragged as long as possible. Even if these litigants ultimately loose the lis, they become the real victors and have the last laugh. This class of people who perpetuate illegal acts by obtaining stays and injunctions from the Courts must be made to pay the sufferer not only the entire illegal gains CS(OS)No.444/2009 Page 28 of 36 made by them as costs to the person deprived of his right and also must be burdened with exemplary costs. Faith of people in judiciary can only be sustained if the persons on the right side of the law do not feel that even if they keep fighting for justice in the Court and ultimately win, they would turn out to be a fool since winning a case after 20 or 30 years would make wrong doer as real gainer, who had reaped the benefits for all those years. Thus, it becomes the duty of the Courts to see that such wrong doers are discouraged at every step and even if they succeed in prolonging the litigation due to their money power, ultimately they must suffer the costs of all these years long litigation. Despite settled legal positions, the obvious wrong doers, use one after another tier of judicial review mechanism as a gamble, knowing fully well that dice is always loaded in their favour, since even if they lose, the time gained is the real gain. This situation must be redeemed by the Courts."

(Emphasis supplied) This Court imposed costs of Rs.15.1 lakhs in the above case.

9.4 I agree with the findings by the learned Judge in Padmawati's case (supra) and wish to add a few words. There is another feature which has been observed and it is of unscrupulous persons filing false claims or defences CS(OS)No.444/2009 Page 29 of 36 with a view that the other person would get tired and would then agree to compromise with him by giving up some right or paying some money. If the other party is not able to continue contesting the case or the Court by reason of falsehood falls into an error, the wrong succeeds. Many times, the other party compromises, or at other times, he may continue to fight it out. But as far as the party in the wrong is concerned, as this Court noted in Padmawati's case (supra), even if these litigants ultimately lose the lis, they become the real victors and have the last laugh.

9.5 In the present case, the conduct of the plaintiff does not appear to be honest. There was no written agreement between the parties for obtaining the NOC and the plaintiff has raised a dishonest plea with the hope that the plaintiff can, with the Court delays, drag the case for years and the other side would succumb to buy peace. If the other side does not so settle in the end, they are hardly compensated and remains a loser.

10. Imposition of Costs In the recent judgment dated 4th July, 2011 in the case CS(OS)No.444/2009 Page 30 of 36 of Ramrameshwari Devi v. Nirmala Devi in Civil Appeal Nos.4912-13/2011, the Hon‟ble Supreme Court has held that the Courts have to take into consideration pragmatic realities and have to be realistic in imposing the costs. The relevant paragraphs of the said judgment are reproduced hereunder:-

"45. ........We are clearly of the view that unless we ensure that wrongdoers are denied profit or undue benefit from the frivolous litigation, it would be difficult to control frivolous and uncalled for litigations. In order to curb uncalled for and frivolous litigation, the courts have to ensure that there is no incentive or motive for uncalled for litigation. It is a matter of common experience that court's otherwise scarce and valuable time is consumed or more appropriately wasted in a large number of uncalled for cases."

"52. The main question which arises for our consideration is whether the prevailing delay in civil litigation can be curbed? In our considered opinion the existing system can be drastically changed or improved if the following steps are taken by the trial courts while dealing with the civil trials.

A. Pleadings are foundation of the claims of parties. Civil litigation is largely based on documents. It is the bounden duty and obligation of the trial judge to carefully scrutinize, check and verify the pleadings and the documents filed by the parties. This must be done immediately after civil suits are filed.

CS(OS)No.444/2009 Page 31 of 36

B. The Court should resort to discovery and production of documents and interrogatories at the earliest according to the object of the Act. If this exercise is carefully carried out, it would focus the controversies involved in the case and help the court in arriving at truth of the matter and doing substantial justice.

C. Imposition of actual, realistic or proper costs and or ordering prosecution would go a long way in controlling the tendency of introducing false pleadings and forged and fabricated documents by the litigants. Imposition of heavy costs would also control unnecessary adjournments by the parties. In appropriate cases the courts may consider ordering prosecution otherwise it may not be possible to maintain purity and sanctity of judicial proceedings.

D. The Court must adopt realistic and pragmatic approach in granting mesne profits. The Court must carefully keep in view the ground realities while granting mesne profits.

E. The courts should be extremely careful and cautious in granting ex-parte ad interim injunctions or stay orders. Ordinarily short notice should be issued to the Defendants or Respondents and only after hearing concerned parties appropriate orders should be passed.

F. Litigants who obtained ex-parte ad interim injunction on the strength of false pleadings and forged documents should be adequately punished. No one should be allowed to abuse the process of the court.

CS(OS)No.444/2009 Page 32 of 36

G. The principle of restitution be fully applied in a pragmatic manner in order to do real and substantial justice.

H. Every case emanates from a human or a commercial problem and the Court must make serious endeavour to resolve the problem within the framework of law and in accordance with the well settled principles of law and justice.

I. If in a given case, ex parte injunction is granted, then the said application for grant of injunction should be disposed of on merits, after hearing both sides as expeditiously as may be possible on a priority basis and undue adjournments should be avoided.

J. At the time of filing of the plaint, the trial court should prepare complete schedule and fix dates for all the stages of the suit, right from filing of the written statement till pronouncement of judgment and the courts should strictly adhere to the said dates and the said time table as far as possible. If any interlocutory application is filed then the same be disposed of in between the said dates of hearings fixed in the said suit itself so that the date fixed for the main suit may not be disturbed.

53. According to us, these aforementioned steps may help the courts to drastically improve the existing system of administration of civil litigation in our Courts. No doubt, it would take some time for the courts, litigants and the advocates to follow the aforesaid steps, but once it is observed across the country, then prevailing system of adjudication of civil courts is bound to CS(OS)No.444/2009 Page 33 of 36 improve.

54. While imposing costs we have to take into consideration pragmatic realities and be realistic what the Defendants or the Respondents had to actually incur in contesting the litigation before different courts. We have to also broadly take into consideration the prevalent fee structure of the lawyers and other miscellaneous expenses which have to be incurred towards drafting and filing of the counter affidavit, miscellaneous charges towards typing, photocopying, court fee etc.

55. The other factor which should not be forgotten while imposing costs is for how long the Defendants or Respondents were compelled to contest and defend the litigation in various courts. The Appellants in the instant case have harassed the Respondents to the hilt for four decades in a totally frivolous and dishonest litigation in various courts. The Appellants have also wasted judicial time of the various courts for the last 40 years.

56. On consideration of totality of the facts and circumstances of this case, we do not find any infirmity in the well reasoned impugned order/judgment. These appeals are consequently dismissed with costs, which we quantify as Rs. 2,00,000/- (Rupees Two Lakhs only). We are imposing the costs not out of anguish but by following the fundamental principle that wrongdoers should not get benefit out of frivolous litigation."

(Emphasis supplied) CS(OS)No.444/2009 Page 34 of 36 This case is squarely covered by the aforesaid judgment and warrants imposition of heavy costs on the plaintiff.

11. Conclusion In the facts and circumstances of this case, this Court is of the view that there is no prima facie case in favour of the plaintiff and against the defendant as the plaintiff has not paid the balance sale consideration of Rs.8,60,00,000/- to the defendant within the time period stipulated under the agreement and, therefore, the agreement stood terminated. The balance of convenience is in favour of the defendant who would suffer irreparably in the event of an injunction being granted in this matter. The suit is prima facie vexatious and frivolous. The Plaintiff is, therefore, not entitled to any injunction. I.A. No.3118/2009 under Order XXXIX Rules 1 and 2 of the Code of Civil Procedure is, therefore, dismissed with cost of Rs.1,00,000/-. The plaintiff is directed to pay the cost to the defendant within four weeks.

12. The observations made hereinabove are prima facie and shall not constitute any expression of final opinion on CS(OS)No.444/2009 Page 35 of 36 the issues involved and shall have no bearing on the merits of the case.

CS(OS)No.444/2009

1. In T. Arivandandam v. T.V. Satyapal, AIR 1977 SC 2421, the Hon‟ble Supreme Court held that if on a meaningful reading of the plaint, the suit appears to be manifestly vexatious and meritless in the sense of not disclosing a clear right to sue, the Court should nip it in the bud by rejecting the plaint under Order VII Rule 11 of the Code of Civil Procedure.

2. List for consideration before the Regular Bench as to whether the suit is liable to be rejected under Order VII Rule 11 of the Code of Civil Procedure on 28th July, 2011.

3. Both the parties shall remain present in the Court on the next date of hearing along with all documents relating to this case within their power and possession for being examined under Section 165 of the Indian Evidence Act, if deemed necessary.

J.R. MIDHA, J.

JULY 15, 2011/aj CS(OS)No.444/2009 Page 36 of 36

Unlock Advanced Research with PRISMAI

Delhi High Court