Himachal Pradesh High Court
Ghevarchand R. Jain vs M/S Himland Real Estate (P) Ltd. Co. And ... on 27 May, 2024
Author: Sandeep Sharma
Bench: Sandeep Sharma
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA.
OMP No. 187 of 2023 in
Civil Suit No. 7 of 2019
Order reserved on: May 6, 2024
Order pronounced on: May 27, 2024
.
________________________________________________________
Ghevarchand R. Jain ........... Applicant/Plaintiff
Versus
M/s Himland Real Estate (P) Ltd. Co. and others
Non-applicants/Defendants
________________________________________________________
Coram:
Hon'ble Mr. Justice Sandeep Sharma, Judge.
Whether approved for reporting? 1
For the Applicants/
Defendants : Ms. Geeta Luthra, Senior Advocate
with Mr. Udit Shaurya Kaushik,
Advocate.
For the Applicant/
Plaintiff
r :
Mr. G.D. Verma, Senior Advocate
with Mr. Sarthak Mehta, Advocate.
________________________________________________________
Sandeep Sharma, Judge (Oral)
By way of instant application filed under Order XXXIX rule 4 read with 151 CPC, prayer has been made on behalf of applicants /defendants (hereinafter, 'defendants') for vacation of order dated 6.7.2022, whereby interim order dated 28.3.2019 passed in OMP No. 73 of 2019, came to be made absolute during pendency of suit subject to alteration/modification /vacation on motion.
2. Precisely, the grouse of defendants, as has been highlighted in the petition and further canvassed by Ms. Geeta Luthra, learned Senior Counsel duly assisted by Mr. Udit Shaurya Kaushik, Advocate is that once, defendants had filed a detailed reply to application under Order XXXIX, rules 1 and 2 CPC, for interim relief filed by the non-
1Whether the reporters of the local papers may be allowed to see the judgment?
::: Downloaded on - 14/06/2024 20:31:57 :::CIS 2applicant/plaintiff (hereinafter, 'plaintiff) i.e. OMP No. 73 of 2019, this court ought not have made aforesaid order absolute, without taking into consideration the reply filed by the defendants. While making this court .
peruse order dated 6.7.2022, Ms. Luthra, learned Senior Counsel vehemently argued that the same is not based upon proper appreciation of pleadings adduced on record by respective parties, rather, this court, in a mechanical manner, without assigning any cogent and convincing reason proceeded to make order dated 28.3.2019, absolute. While referring to order dated 28.3.2019 in OMP No. 73 of 2019, learned Senior Counsel for defendants further argued that neither any reason has been assigned in the aforesaid order nor the same has been passed on the basis of pleadings adduced on record by the plaintiff. Ms. Luthra, learned senior counsel further stated that this court while making aforesaid order absolute, was expected to afford an opportunity of hearing to the non-applicant/defendant, especially with a view to ascertain the correctness of averments contained in the application filed under Order XXXIX rule 1 and 2 CPC,
3. Learned Senior Counsel, while making this court peruse averments contained in the plaint as well as written statement, vehemently argued that plaintiff, made false and misleading statements in relation to the material particulars in OMP No. 73 of 2019. Learned Senior Counsel for the defendants further argued that the plaintiff falsely and misleadingly stated that defendants had failed to perform their part of contract, rather material available on record clearly reveals that the plaintiff repeatedly failed to perform its part of contract, as a result thereof, defendant was compelled to file Civil Suit No. 3 of ::: Downloaded on - 14/06/2024 20:31:57 :::CIS 3 2008 for damages, which subsequently came to be withdrawn on account of amicable settlement inter se parties. Learned Senior Counsel for defendants submitted that the plaintiff falsely stated that .
the Memorandum of Understanding was for allotment of shares by defendant No.1, rather, it is apparent from Clause 2 of MoU that it was only for transfer of shares from defendant Nos. 2 and 3 to the plaintiff and as per transfer, plaintiff would have become 60% shareholder whilst defendant Nos. 2 and 3 were to retain 40% of shareholding. She also invited attention of this Court to Clause 21 of MoU to state that the plaintiff was to bear 60% of expenditure of the project and furtherance to Clauses 23 and 24 of the MoU, plaintiff was to bear expenses for obtaining project licences/approvals and pursue matter in with relevant authorities for implementation of project, however, plaintiff conveniently and in utter disregard to MoU, breached terms and condition of MoU, as a result of which defendants had to suffer huge losses. Learned Senior Counsel for the defendants submitted that the fact that plaintiff did not even pay consideration for purchase of 60% equity shares in defendant company is self explanatory of breach committed by plaintiff, in addition to false and misleading averments.
As per averments of application at hand, defendants suffered loss of Rs.7.00 Crore approximately on account of breach committed by the plaintiff, as a consequence of non-payment and non-compliances and land bought by defendants became a subject of the proceedings under S.118 of the Himachal Pradesh Land Reforms and Tenancy Act, due to non-utilization of land within prescribed period of two years.
::: Downloaded on - 14/06/2024 20:31:57 :::CIS 44. While making his court peruse documents filed by the plaintiff, Ms. Luthra, learned Senior Counsel appearing for the defendants submitted that plaintiff tried to mislead this court by stating that he had .
deposited Rs.5,89,18,970/- in the Bank account of the defendants, whereas, a bare perusal of documents filed by plaintiff itself would reveal that the amount stated to have been paid was not paid by the plaintiff rather, by some third party. Learned Senior Counsel representing defendant further argued that even if it is presumed, without prejudice to the defendants that amount was paid by third party there is no existing privity of contract between defendants and said third party and as such, plaintiff otherwise cannot take benefit, if any of the money deposited by third party. Lastly, Ms. Luthra, learned Senior Counsel for defendants, while making this court peruse S.16(3) of the Specific Relief Act submitted that specific performance of a contract cannot 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.
While making this Court peruse the pleadings adduced on record in the shape of plaint filed by the plaintiff, learned Senior Counsel attempted to persuade this Court to agree with her contention that there is no whisper in the plaint with regard to readiness and willingness of the plaintiff to perform its part of contract.
5. Lastly Ms. Luthra, learned Senior Counsel for the defendants submitted that that even though, there is no record suggestive of the fact that the plaintiff ever paid sum of Rs.5,89,18,970, but even having taken note of alternative prayer made in the plaint, this court, with a ::: Downloaded on - 14/06/2024 20:31:57 :::CIS 5 view to protect interest of plaintiff can proceed to modify the order sought to be vacated in instant proceedings, subject to plaintiff's furnishing bank guarantee qua aforesaid amount of Rs. 5,89,18,970.
.
6. To the contrary, Mr. G.D. Verma, Senior Advocate duly assisted by Mr. Sarthak Mehta, Advocate, while refuting aforesaid submissions made by learned Senior Counsel representing the defendants submitted that present application is not maintainable, because no relief for setting aside order passed in exercise of power Order XXXIX, rules 1 and 2 CPC, can be passed on the application filed under Order XXXIX rule 4 CPC, which only provides for vacation of stay. Mr. Verma, learned senior counsel further argued that though order dated 6.7.2022, sought to be vacated does not contain rival submissions made by parties as well as discussion on merit qua the correctness of the pleadings adduced on record by the parties but defendants cannot dispute the fact that aforesaid order was passed by this Court after having afforded due opportunity of hearing to both the parties.
7. While making this court peruse pleadings adduced on record in the shape of plaint, learned Senior Counsel representing plaintiff strenuously argued that the plaintiff has already performed its part by paying huge amount of Rs.5,89,18,970/-. He further submitted that though there may not be specific averments with regard to readiness and willingness to perform the remaining part of contract, but if plaint is read in its entirety, it cannot be said that no readiness or willingness ever came to be expressed by the plaintiff for execution of MoU, which is bone of contention in the instant proceedings. Mr. Verma, further argued that otherwise also, defendant being aggrieved by order dated ::: Downloaded on - 14/06/2024 20:31:57 :::CIS 6 6.7.2022, ought to have filed an appeal in the competent court of law, but certainly, application, if any, under Order XXXIX, rule 4 CPC, is not maintainable and as such, deserves outright rejection. He further .
submitted that order dated 6.7.2022 is in continuation of order dated 28.3.2019, passed in OMP No.73 of 2019, perusal whereof reveals that court, while passing aforesaid order, had not only perused pleadings adduced on record rather, same was passed after due application of mind. Mr. verma further submitted that since on 6.7.2022, this court having perused pleadings adduced on record in OMP No. 73 of 2019, and after having heard counsel for parties, found no reason to modify order dated 28.3.2019, there was otherwise no occasion for it to pass detailed order, rather, it rightly made order dated 28.3.2019, absolute by passing order dated 6.7.2022.
8. Mr. Verma, learned senior counsel for the plaintiff further argued that with a view to avoid execution of MoU and Supplementary MoU and to usurp amount deposited by the plaintiff in bank account of the defendants, defendants had filed Civil Suit No. 3 of 2008, titled M/s Himland Real Estate Pvt. Ltd. v. Ghevarchand R. Jain, but same though was hotly contested by the plaintiff, defendants after six years, agreed to settle dispute outside the court and aforesaid civil suit was withdrawn on 18.9.2014, and parties were relegated to the position prior to filing of the suit. He submitted that defendants withdrew the suit in Lok Adalat, as a result of which, parties acknowledged the continuance of MoU and SMoU dated 26.5.2007, respectively.
Though, defendant after withdrawal of suit, assured the plaintiff to transfer the share of the company or in the alternative to return the ::: Downloaded on - 14/06/2024 20:31:57 :::CIS 7 amount paid to the plaintiff, but yet failed to act in accordance with aforesaid promise.
9. Lastly, Mr. Verma, learned Senior Counsel representing plaintiff .
submitted that though by way of alternative, prayer, plaintif prayed for refund of Rs.5,89,18,970/-, but once it is apparent form perusal of pleadings adduced on record, that the plaintiff has suffered loss to the tune of Rs. 24,85,60,000/-, merely furnishing Bank Guarantee in the sum of Rs.5,89,18,970/-, may not be sufficient to protect the interest of the plaintiff.
10. Having heard learned counsel for the parties and perused the material available on record, this court finds that the plaintiff filed the present suit for specific performance of Contract/Memorandum of Understanding and supplementary Memorandum of Understanding dated 26.5.2007 arrived inter se /plaintiff and the defendants. In the alternative, plaintiff prayed for refund of Rs. 5,89,18,970/- which the plaintiff has allegedly already paid to the applicant/defendant towards part performance of the Memorandum of Understanding alongwith pendente lite, future interest and cost of suit. Defendant company, which is engaged in real estate development business, allegedly approached non/plaintiff for investment in capital of the company for purchase of 60% shares and said proposal of the defendant was accepted by the plaintiff and finally, based on said oral contract, arrived inter se parties, defendants agreed to transfer 60% of shares and such proposal was accepted by the plaintiff. Finally, based on oral contract arrived inter se parties, plaintiff allegedly started performing its part by depositing money in the bank account of the company and its Director ::: Downloaded on - 14/06/2024 20:31:57 :::CIS 8 Smt. Mamta Chaudhary. Plaint further reveals that defendant company proposed to set up Him City township by developing 151.5 Bigha land situate in Village Jharmajri, Tehsil Nalagarh, District Solan, Himachal .
Pradesh and according to oral contract arrived inter se parties, parties executed MoU on 6.1.2007 and thereafter the provisions of MoU were subsequently superseded by execution of MoU dated 26.5.2007 and a supplementary MoU of same date. As per agreed terms, defendant company agreed to transfer 60% of shares to plaintiff and assessed project value price at Rs.48.72 paisa per share against normal issue price of Rs.10/- each and thus premium of each share of the company was worked out at Rs. 38.72 paise and plaintiff agreed to purchase 60% of share of the company having its price value of Rs.24,84,60,000/- being actual value of 51000 equity shares. Plaintiff averred in the plaint that he had agreed to pay Rs.5,10,00,000/- at first instance to the defendants as per MoU and SMoU arrived inter se parties and remaining balance amount of Rs.19,74,60,00/- was to be paid by the plaintiff in two different installments as agreed inter se parties. As per plaintiff, sum of 5,10,00,000 was paid as per details given in the plaint but yet no steps were taken by defendants to transfer the shares in its favour.
11. Though, at the first instance, defendant filed civil suit as detailed herein above, but same was ultimately withdrawn with the understanding that both the parties would abide by MoU however, allegedly, defendants failed to perform their part, as a result thereof, plaintiff filed suit at hand for specific performance, which is yet to be ::: Downloaded on - 14/06/2024 20:31:57 :::CIS 9 decided on the basis of pleadings and evidence produced on record by parties.
12. Precisely the controversy, which needs to be decided in the .
case at hand is, "whether order dated 6.7.2022, whereby interim injunction order dated 28.3.2019 passed in OMP No. 73 of 2019, came to be made absolute, is legally tenable being non-speaking and passed without hearing the defendants?"
13. Perusal of order dated 28.3.2019 passed in OMP 73 of 2019, reveals that court after having heard learned counsel for the plaintiff and gone through para-5 of the plaint, wherein plaintiff claimed that sum of Rs. 5,89,18,970 has been paid to company directly as well as through its Director, ordered that till the next date of hearing, defendant will not create third party in any manner whatsoever, on the assets of the company.
14. Though after receipt of notice in the main suit as well as in OMP No. 73 of 2019, defendants filed written objections as well as reply to OMP No.73 of 2019 but, as per the defendants, this court on 6.7.2022, proceeded to make order dated 28.3.2019, absolute, without bothering to look into the reply to the application as well averments contained in the written statement, which though, at relevant time, stood filed in Registry of this court but was lying under objections.
15. Though perusal of order dated 6.7.2022 suggests that that Mr. Rajesh Kumar Parmar, Advocate for defendant was present in the court, but certainly, there is nothing in the order to suggest that opportunity of hearing was ever afforded to learned counsel for defendants and material placed on record by defendant was ever taken ::: Downloaded on - 14/06/2024 20:31:57 :::CIS 10 into consideration, rather, this court straightway proceeded to affirm order dated 28.3.2019 passed in OMP No. 73 of 2019, whereby defendant was restrained from creating third party interest in any .
manner whatsoever in the asset of company.
16. Though Mr. G.D. Verma, learned Senior Counsel appearing for the plaintiff attempted to argue that order dated 28.3.2019 passed in OMP No. 73 of 2019, is based upon proper appreciation of pleadings adduced on record and there is due application of mind, however, he was unable to dispute the fact that that on 28.3.2019, pleadings of one side only i.e. plaintiff, were available with the court and as such, it cannot be said that order dated 28.3.2019, which ultimately came to be made absolute, on 6.7.2022, was passed by the court after evaluating pleadings and other material adduced on record by both the parties.
17. Though it came to be claimed repeatedly on behalf of the non-
applicant/plaintiff that on 6.7.2022, matter was heard at length and court proceeded to confirm order dated 28.3.2019 on the basis of pleadings of respective parties adduced on record, but such fact, if any, cannot be ascertained from order dated 6.7.2022. There is no reference, if any, of the reply filed by the defendant to OMP 73 of 2019, or to the pleadings adduced on record by plaintiff in the shape of plaint as well as application under Order XXXIX rules 1 and 2 CPC.
18. Very purpose of granting ad-interim injunction on first day of listing of suit or other proceedings is to protect the interest of the plaintiff, who, in the event of non-grant of interim relief, may suffer irreparable loss and injury, which cannot be compensated in terms of the money but, while passing interim order, which is passed for limited ::: Downloaded on - 14/06/2024 20:31:58 :::CIS 11 period, court always calls upon opposite party to show cause, why interim order granted should not be made absolute and in case, trial Court subsequently on the basis of pleadings of the parties, comes to .
a conclusion that the interim injunction order is not based upon true facts, it can proceed to dismiss the application or modify the interim order
19. Bare perusal of reply filed by defendants to the application at hand, clearly reveals that defendants had brought certain material facts to the fore, which can have serious implications and bearing on the main suit and as such, there appears to merit in the submission learned Senior Counsel for defendants that had this Court, look into the reply filed by the defendants, it ought not have proceeded to confirm order dated 28.3.2019, which was admittedly passed on the basis of averments contained in the plaint that the plaintiff has already paid Rs.5,74,18,970/-. As per own averments of the plaintiff, as contained in the plaint, plaintiff had to pay Rs.5.10 Crore and Rs.19,74,60,000 in two installments, as agreed inter se parties. Admittedly, there is nothing in the plaint, suggestive of the fact that, apart from paying Rs.5.10 Crore, plaintiff ever paid any installment towards balance amount of Rs.19,74,60,000/-. If it is so, mere statement, if any, on behalf of the plaintiff that he has performed his part of MoU by paying Rs.5.10 Crore, may not be sufficient to make absolute the order dated 28.3.2019, thereby restraining the defendants from creating third party interest over the assets of company. No doubt, aforesaid order dated 6.7.2022 can be laid challenge by way of an appeal under Order XLI, rule 3 pc, as argued by learned senior counsel for the plaintiff, but ::: Downloaded on - 14/06/2024 20:31:58 :::CIS 12 since order dated 6.7.2022, itself reserved liberty to the defendants to get it altered, modified or vacated, no illegality can be said to have been committed by the defendants, by filing instant application under .
Order XXXIX, rule 4 CPC, which provides for discharging, varying or setting-aside the interim order passed under Order XXXIX, rules 1 and 2 CPC.
20. Careful perusal of provisions contained under Order XXXIX rule 4 CPC reveals that any order for injunction may be discharged, varied or set aside by court on an application by any such party, dissatisfied with such order,, provided that if a party has made false and misleading statements in the application seeking temporary injunction or in the affidavit supporting such application, and if the injunction was granted without notice to the opposite party.
21. At this stage, it would be apt take note of S.16C of the Specific Relief Act, which reads as under:
"16. Personal bars to relief.-- Specific performance of a contract cannot be enforced in favour of a person--
(a). x x
(b). x x
(c) 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, other than terms the performance of which has been prevented or waived by the defendant."
22. Aforesaid provision mandates that specific performance of contract cannot be enforced in favour of person, who fails to aver and prove that he has performed or has always been ready and willing to ::: Downloaded on - 14/06/2024 20:31:58 :::CIS 13 perform the essential terms of the contract which are to be performed by him, other than terms the performance of which has been prevented or waived by the defendant .
23. Though, it has been specifically claimed by defendants that there is nothing in the plaint, suggestive of the fact that the plaintiff ever performed or is ready and willing to perform essential terms of contract, but this court, having taken note of the fact that findings, if any qua aforesaid aspect of the matter, at this stage, would affect the judgment in the main suit, purposely restrains itself from commenting upon the merits of the claim of the defendants, however, having taken note of the fact that allegedly plaintiff, till date has paid Rs.5.10 Crore against the total consideration, whereas, sum of Rs.19,74,60,000/- is to be paid, is persuaded to agree with learned Senior Counsel for the defendants that injunction order dated 28.3.2019 needs to be vacated/modified.
24. Since this court has purposely avoided to return findings with regard to rival submissions made by counsel for the parties with regard to readiness and willingness of the plaintiff to perform his part of contract, in terms of MoU and SMoU, which may have a direct bearing on the final outcome of the suit, there appears to be no justification for this Court to take into consideration the law cited by both the parties, which is mainly focused on law laid down by Apex Court qua aspect of readiness and willingness of the parties to perform their part, in terms of agreement sought to be enforced.
25. Since findings, if any given by this court, qua claims and counter-claims made by parties in their pleadings may have direct ::: Downloaded on - 14/06/2024 20:31:58 :::CIS 14 impact upon the main suit, this court without going into merits of the suit, deems it fit to appropriate to take note of alternative prayer made by the plaintiff in the suit, which reads as under:
.
".. or in the alternative plaintiff is entitle for claim of compensation of Rs.5,89,18,970/- on account of compensation of the breach of said contract by defendants alongwith pendentalite and future interest and cost of the suit."
26. Though, in the plaint, an attempt has been made to carve out a case, that on account of non-performance of terms and conditions of MoU, which is in dispute, plaintiff has suffered huge loss, but, once, in the plaint, alternative prayer has been made for refund of Rs.5,89,18,970/- allegedly paid by the plaintiff to the defendants, interest of both the parties can be protected /safeguarded by modifying order dated 28.3.2019, which was made absolute on 6.7.2022 to the extent that the defendant would be permitted to create third party interest in the assets of Company, subject to furnishing Bank Guarantee of Rs.5.10 Crore.
27. At this stage, it would be apt to take note of the fact that before the application could be decided on merits, offer was made by learned senior counsel for the defendants that the defendants are ready and willing to furnish bank guarantee of Rs.5.10 Crore but such prayer was opposed by learned counsel for the plaintiff on the ground that the amount involved in the case at hand is much more than Rs. 5.10 Crore.
However, this court is of view that one in the alternative, plaintiff has prayed for refund of Rs.5.10 Crore, no prejudice, shall be caused to the plaintiff, in case, a direction is issued to the defendants to furnish bank guarantee in the sum of Rs.5.10 Crore within some fixed period.
::: Downloaded on - 14/06/2024 20:31:58 :::CIS 1528. By passing aforesaid order, interest of both the parties would be protected. With furnishing of Bank Guarantee in terms of instant order, amount alleged to have been paid by the plaintiff, would be secured .
and similarly, defendants would be entitled to create third party interest in the township project, which has been put to jeopardy on account of dispute inter se parties.
29. Consequently, in view of the detailed discussion made herein above, order dated 28.3.2019, passed by this Court in OMP No. 73 of 2019, which was made absolute vide order dated 6.7.2022, is modified to the extent that, subject to furnishing Bank Guarantee in the sum of Rs.5,89,18,970/- by the defendants, within four weeks from today, the defendants shall be entitled to create third party interest over the assets of the defendant No.1 Company.
30. Needless to say, bank guarantee if any furnished in terms of instant order by defendant shall be checked and verified by the Registrar General of this Court.
31. The application stands disposed of accordingly.
COMS No. 7 of 201932. List for framing of issues, on a date to be fixed by learned Additional Registrar (Judicial).
(Sandeep Sharma) Judge May 27, 2024 Vikrant ::: Downloaded on - 14/06/2024 20:31:58 :::CIS