Delhi High Court
Earthz Urban Spaces Pvt Ltd vs Ravinder Munshi & Ors. on 2 June, 2022
Author: Amit Bansal
Bench: Amit Bansal
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 2nd June, 2022
+ CS(OS) 287/2022
EARTHZ URBAN SPACES PVT LTD ..... Plaintiff
Through: Mr. Samrat Nigam with Ms. Sonali
Chopra, Advocates.
versus
RAVINDER MUNSHI & ORS. ..... Defendants
Through: Mr. Rajshekhar Rao, Sr. Advocate
with Ms. Meherunisa Anand Jatley,
Ms. Mansi Sood and Ms. Aarushi
Sahrawat, Advocates for D-1.
Mr. Apoorv P. Tripathi, Advocate for
D-2.
Mr. Ashish Dholakia, Sr. Advocate
with Mr. Akash Panwar and Ms.
Anjali Kaushik, Advocates for D-3.
CORAM:
HON'BLE MR. JUSTICE AMIT BANSAL
JUDGMENT
AMIT BANSAL, J. (Oral) I.A. 7930/2022 (u/S 149 CPC)
1. Deficient court fee has been paid on behalf of the plaintiff.
2. The application stands disposed of.
CS(OS) 287/2022, I.A. 7928/2022 (O-XXXIX R-1 & 2 of CPC)
3. The present suit has been instituted for specific performance of 'Oral Agreement to Sell' entered into on 27th April, 2021 and the Memorandum of Understanding ('MoU') dated 2nd June, 2021 in respect of the 'suit property' Signature Not Verified Signed By:SAKSHI CS (OS)287/2022 Page 1 of 11 RAMOLA Signing Date:06.05.2022 12:23:12 bearing no. B-8, Pamposh Enclave, New Delhi-110048. The prayer in the suit is set out below:
"a) Pass a Decree of Specific Performance directing the Defendants to jointly and severally fulfill their part of obligations under the Agreement to Sell dated 27.04.2021, MoU dated 02.06.2021 as well as subsequent electronic and oral agreement(s) and execute the Sale Deed(s) in respect of the property bearing No. B-8, Pamposh Enclave, New Delhi - 110048 in favour of the Plaintiff and/or its Nominee(s), against the payment of the balance sale consideration and as per law"
4. Along with the plaint, the plaintiff has also filed an application under Order XXXIX Rules 1 & 2 of the Code of Civil Procedure, 1908 (CPC), seeking the following reliefs:
"i pass an ex-parte ad-interim order thereby restraining the Defendants, their agents, assigns, nominees, legal heirs, representatives etc. from alienating, transferring, mortgaging, parting with possession or creating any third party interest in any manner whatsoever in the property bearing No. B-8, Pamposh Enclave, New Delhi - 110048;
ii pass a temporary injunction thereby restraining the Defendants, their agents, assigns, nominees, legal heirs, representatives etc. from alienating, transferring, mortgaging, parting with possession or creating any third-party interest in any manner whatsoever in the property bearing No. B-8, Pam posh Enclave, New Delhi - 110048;"
5. Counsels for the defendants appear on advance notice and oppose the issuance of summons in the present suit.
6. Counsel for the plaintiff has placed reliance on the various transcripts of the WhatsApp messages exchanged between the parties on 21st April, 2021 and 27th April, 2021 to contend that an 'Oral Agreement to Sell' was arrived at between the parties. Reliance has also been placed on (i) the MoU Signature Not Verified Signed By:SAKSHI CS (OS)287/2022 Page 2 of 11 RAMOLA Signing Date:06.05.2022 12:23:12 entered into between the plaintiff and the defendants, (ii) the legal notice dated 27th August, 2021, sent on behalf of the plaintiff to the defendants seeking specific performance of the oral agreement to sell and (iii) the reply dated 30th August, 2021 to the aforesaid legal notice on behalf of the defendants no.1 and 2.
7. Based on the aforesaid, counsel for the plaintiff submits that there was a valid oral agreement to sell between the parties and therefore, the present suit for specific performance of the aforesaid agreement would be maintainable and summons ought to be issued in the suit.
8. Senior counsels appearing on behalf of the defendants submit that there was no oral agreement entered into between the parties. Further, even if it is assumed that an oral agreement to sell was entered into between the parties, the same stood superseded by the MoU dated 2nd June, 2021. The terms of the MoU make it clear that it was a non-binding document between the parties and could not be enforced in a court of law. It is further contended that the plaintiff has suppressed the public notice dated 26th August, 2021 issued on behalf of the plaintiff in respect of the aforesaid property, which is purely premised on the MoU dated 2nd June, 2021. Even in the aforesaid legal notice sent by the plaintiff, no reference has been made to any oral agreement to sell, it is completely based on the MoU dated 2nd June, 2021. It is further submitted that till date not a penny has been received from the plaintiff in respect of the proposed transaction. Based on the aforesaid averments, it is submitted that even if summons were to be issued in the present suit, it should be clarified that the doctrine of lis pendens as provided in Section 52 of the Transfer of Property Act, 1882 would not be applicable in the present case.
Signature Not Verified Signed By:SAKSHI CS (OS)287/2022 Page 3 of 11 RAMOLA Signing Date:06.05.2022 12:23:129. I have heard the counsels for the parties at length.
10. I have gone through the transcripts of WhatsApp messages exchanged between the parties. A reading of the same only conveys that the parties were negotiating amongst themselves for the sale of the suit property. However, no final agreement could be reached between the parties with regard to the modalities of sale of the suit property. Counsel for the plaintiff has extracted at page no.22 of the plaint certain extracts from the WhatsApp messages exchanged between the parties on 27th April, 2021. The same are extracted below:
"Achal Kohli (Real Estate Agent):
Terms of transaction finalised today
1) Price finalised 26 cr.
2) Payment time 3 months.
3) Owners will provide all relevant documents.
Ravinder Munshi (Defendant No. 1):
Thank you all for everyone's positive contribution to the discussions and negotiations that culminated in the understanding that we reached yesterday. Throughout our conversations, I felt that the discussions were conducted in a very professional manner, a feature seldom seen in situations were two parties with incongruent interests came together as one. My best wishes for the continued good health for each of you and all your loved ones.
Regards, Ravi"
11. It has rightly been pointed out on behalf of the defendants that while extracting the aforesaid extracts, the plaintiff has omitted certain crucial parts of the messages exchanged on the said date, which show that Ravinder Munshi, the defendant no.1, was added in the WhatsApp group, where the Signature Not Verified Signed By:SAKSHI CS (OS)287/2022 Page 4 of 11 RAMOLA Signing Date:06.05.2022 12:23:12 aforesaid messages were exchanged, only after the first/former part of the message had been exchanged between the parties. Clearly, the defendant no.1 would not have knowledge of the messages that had been exchanged between the parties prior to adding him in the WhatsApp group. This is evident from the transcript of the messages set out at page no.38 of the documents filed with the plaint. Therefore, there cannot be any oral agreement to sell based on the aforesaid messages. In fact, this clearly amounts to suppression and misrepresentation on behalf of the plaintiff.
12. It would be apposite to extract some of the relevant clauses from the MoU dated 2nd June, 2021.
"BACKGROUND:
A. The Sellers are the owners of a certain property that is available for sale.
B. The Purchaser wishes to purchase said property from the Sellers.
This Document will establish the basic terms to be used in a future real estate contract for sale ("the Sale Deed") between the Purchaser and the Sellers. The terms contained in the Document are NOT comprehensive and it is expected that additional terms may be added, and existing terms may be changed or deleted. The basic terms are, as follows:
Non-Binding agreement with the limited purpose of attempting to provide the most favourable tax treatment to the Sellers.
1. This Document does not create a binding agreement between the Purchaser and the Sellers and will not be enforceable. Absolutely no rights will be created in favour of either party by this document, including right to ask for damages or execution of a Sale Deed. The limited and only purpose of this Document is for the Purchaser to assist and Signature Not Verified Signed By:SAKSHI CS (OS)287/2022 Page 5 of 11 RAMOLA Signing Date:06.05.2022 12:23:12 facilitate the Sellers in receiving the most favourable tax indexation and associated tax treatment that may be legally available to the Sellers in the event that a Sale Deed is executed between the parties. Only the Sale Deed, duly executed by the Purchaser and the Sellers, will create legal rights and be enforceable. The terms and conditions of the Sale Deed will supersede any terms and conditions contained in this Document.
Transaction Description
2. The property (the "Property") that is the subject of this Document is located at:
B-8 Pamposh Enclave, New Delhi-110048 Purchase Price
3. The Purchase price for the Property is Indian Rupees Twenty-Six Crores, including the Compulsory Tax Deduction at Source.
4. Upon making the payment to the Sellers in full, the Purchaser will take possession of the Property on July 31, 2021, or at any time, thereafter, as mutually agreed upon.
XXX XXX XXX
12. The Purchaser and the Sellers understand and acknowledge that nothing contained in this Documents constitutes a contractual obligation between the two parties."
13. A perusal of the clauses of the MoU extracted above, clearly show that by this document the parties did not intend to enter into a binding agreement. The parties have used words/expressions such as "terms contained in the document are not comprehensive"; "additional terms may be added"; "existing terms may be changed/deleted". Further, it has specifically been stated that the MoU will not be enforceable and will not create any rights in favour of either of the parties, including the right to ask Signature Not Verified Signed By:SAKSHI CS (OS)287/2022 Page 6 of 11 RAMOLA Signing Date:06.05.2022 12:23:12 for damages or execution of a Sale Deed. Therefore, in my view, the aforesaid MoU does not constitute an agreement that can be specifically enforced by the parties in a court of law.
14. In view of the aforesaid MoU being executed between the parties on 2nd June, 2021, all previous WhatsApp messages exchanged between the parties, in terms of which plaintiff claims the existence of an 'Oral Agreement to Sell', also stand superseded.
15. Though in the plaint, the plaintiff constantly makes a reference to 'Oral Agreement to Sell', the fact of the matter is that in the legal notice dated 27th August, 2021 sent by the plaintiff to the defendants, no reference to an 'Oral Agreement to Sell' has been made. The reference in the aforesaid legal notice is to the agreement dated 2nd June, 2021, which as noted above is not a legally binding agreement. Clause 4 of the said legal notice is set out below:
"4. That, it is legally notified to you the Noticees No. 1 to 3 that, in pursuance to the aforesaid events and negotiations of terms, you the above said Noticees No. 1-3 entered in to an Agreement dated 02.06.2021 with our Client whereby, you the Noticees No. 1-3, expressly agreed to sell the above property and execute the Sale Deed of the same in favour of our Client or its nominees, for a total sale consideration of sum of Rs.26,00,00,000/- [Rupees twenty six crores]."
16. It is also to be noted that the plaintiff has failed to place any document on record to show that any payment has been made on behalf of the plaintiff to the defendants towards the sale consideration of Rs.26 crores. Even though the plaintiff claims that he has paid Rs.5 lakhs in cash, no receipt in respect thereof has been placed on record. Further, in respect of the cheques bearing no.001081 and 001082 dated 11th August, 2021 for a sum of Signature Not Verified Signed By:SAKSHI CS (OS)287/2022 Page 7 of 11 RAMOLA Signing Date:06.05.2022 12:23:12 Rs.5,00,000/- and Rs.2,00,000/- respectively, no bank statement has been placed on record by the plaintiff to show that the aforesaid amounts have been encashed. In fact, one of the cheques wrongly records the name of the defendant no.3.
17. Counsel for the plaintiff has drawn attention of the Court to WhatsApp messages exchanged between the parties even after the execution of MoU. However, a perusal of the aforesaid messages clearly show that no agreement was arrived at between the parties and the parties were continuing to negotiate the terms of a proposed agreement.
18. Senior counsels for the defendants have placed reliance on the judgment of a Coordinate Bench of this Court in Santokh Singh and Anr. Vs. M/s Shagun Farm Pvt. Ltd., 2017 SCC OnLine Del 6844. Paragraphs 25 and 26 of the said judgment read as under:
"25. The genesis of the judgment in Vinod Seth supra was the prejudice suffered by the defendant in a suit for specific performance of an Agreement of Sale of immovable property even in the absence of any restraint order against him, due to applicability of the principle of lis pendens and which virtually makes the property inalienable or unencumberable at market rates and with no measure left to compensate the defendant in the event of the plaintiff in the suit for specific performance ultimately failing. The costs of the suit even if awarded to the defendant in such a situation were not found sufficient to compensate the defendant. Supreme Court in Vinod Sethi held that a Court is justified in taking a view that on material till then on record, the likelihood of the plaintiff succeeding in the suit or securing any interim relief against the defendant is remote and to exempt the suit property from the operation of Section 52 of the Transfer of Property Act so that the defendant would have the liberty to deal with the property in any manner inspite of the pendency of the suit. I have in Rajiv Maira v. Apex Apartments Pvt. Ltd. 2013 (138) DRJ 464 so exempted the property subject Signature Not Verified Signed By:SAKSHI CS (OS)287/2022 Page 8 of 11 RAMOLA Signing Date:06.05.2022 12:23:12 matter of that proceedings and SLP (C) No. 5920/2014 preferred thereagainst was dismissed on 24th March, 2014.
26. I am, for the reasons here after appearing, of the view that chances of the plaintiffs succeeding in this suit for specific performance are remote and there would be no way to compensate the defendant for the prejudice caused from applicability of Section 52 of the Transfer of Property Act during the pendency of the suit which though has to be put to trial."
19. Taking into account the conduct of the plaintiff in the aforesaid case, the court observed that the doctrine of lis pendens will not apply to the property that was subject matter of the suit and the defendant therein would be free to deal with the property. Counsel for the plaintiff submits that the aforesaid judgement was passed prior to the amendment of the Specific Relief Act in 2018 and therefore, would not apply to the present case. I do not agree. The observations of the aforesaid judgment would be squarely applicable to the facts of the present case, on account of the following factors:
(i) The transcripts of the WhatsApp messages filed on behalf of the plaintiff do not establish any oral agreement between the parties.
(ii) The transcripts of the WhatsApp messages of 27th April, 2021 have been selectively extracted in the plaint and material parts thereof, have been deliberately omitted so as to mislead the court.
(iii) The case of an 'Oral Agreement to Sell' has been set up only for the first time in the plaint. In the legal notice sent on behalf of the plaintiff to the defendants, the case was completely based on the MoU dated 2nd June, 2021.Signature Not Verified Signed By:SAKSHI CS (OS)287/2022 Page 9 of 11 RAMOLA Signing Date:06.05.2022 12:23:12
(iv) A perusal of the aforesaid MoU clearly show that it is not a binding agreement between the parties and therefore, cannot be enforced in a court of law.
(v) No proof of payment of any amount to the defendants has been produced on behalf of the plaintiff. The cheque bearing no.001082 amounting to Rs.2 lakhs wrongly records the name of the defendant no.3.
20. Taking into account the aforesaid, I am of the view that the likelihood of the plaintiff succeeding in the present suit is remote and therefore, it is a fit case to exempt the suit property from the operation of Section 52 of the Transfer of Property Act during the pendency of the suit. Great prejudice would be caused to the defendants if upon issuance of summons in the suit, the doctrine of lis pendens is applied in respect of the suit property.
21. Counsel for the plaintiff relies upon the judgment in Punit Beriwala vs. Bhai Manjit Singh Huf and Others, 2022 SCC OnLine Del 378, to contend that a suit for specific performance of an oral agreement to sell would be maintainable. In the view that I have taken above that the plaintiff in the present case has not established the existence of an oral agreement to sell, the said judgment would have no relevance.
22. Let the plaint be registered as a suit.
23. Issue summons to the defendants in the suit. Summons are accepted on behalf of counsels for the defendants.
24. The written statement(s) shall be filed within thirty days from the receipt of summons. Along with the written statement(s), the defendants shall also file affidavit of admission/denial of the documents of the plaintiff.
Signature Not Verified Signed By:SAKSHI CS (OS)287/2022 Page 10 of 11 RAMOLA Signing Date:06.05.2022 12:23:1225. Liberty is granted to the plaintiff to file replication to the written statement(s) within fifteen days from the receipt of the written statement(s). Along with the replication filed by the plaintiff, an affidavit of admission/denial of the documents of the defendants, be filed by the plaintiff.
26. List before the Joint Registrar on 8th September, 2022 for completion of service and pleadings.
27. List before the Court on 25th November, 2022 for framing of issues.
28. In view of the discussion above, the plaintiff has failed to make out a prima facie case in its favour and neither is the balance of convenience in favour of the plaintiff. Accordingly, the present application under Order XXXIX Rules 1 and 2 of the CPC is dismissed. It is made clear that the defendants would be entitled to deal with the property notwithstanding the pendency of the present suit.
AMIT BANSAL, J.
JUNE 02, 2022 dk Signature Not Verified Signed By:SAKSHI CS (OS)287/2022 Page 11 of 11 RAMOLA Signing Date:06.05.2022 12:23:12