Calcutta High Court (Appellete Side)
M/S Gtz (India Private Limited) vs Power Electronic Engineers & Ors on 23 September, 2009
Author: Bhaskar Bhattacharya
Bench: Bhaskar Bhattacharya
Form No. J(2)
IN THE HIGH COURT AT CALCUTTA
Appellate/Revisional/Civil Jurisdiction
Present:
The Hon'ble Mr. Justice Bhaskar Bhattacharya
And
The Hon'ble Mr. Justice Prasenjit Mandal
F.M.A. No. 453 of 2008
With
C.A.N. 9511 of 2008
M/s GTZ (India Private Limited)
Versus
Power Electronic Engineers & Ors.
For the Appellant: Mr. Saktinath Mukherjee,
Mr. Saptansu Basu,
Mr. Amit Chatterjee,
Mr. Siddhartha Banerjee.
For the Respondents: Mr. Bidyut Kumar Banerjee,
Ms. Shila Sarkar.
Heard on: 25.08.09.
Judgment on: 23rd September, 2009.
Bhaskar Bhattacharya, J.:
This First Miscellaneous Appeal is at the instance of a plaintiff in a suit for specific performance of contract and is directed against Order No.10 dated 28th April, 2007, passed by the learned Civil Judge, Senior Division, Second Court, Barasat in Title Suit No.2 of 2007 thereby dismissing an application under Order 39 Rules 1 and 2 of the Code of Civil Procedure filed by the plaintiff.
Being dissatisfied, the plaintiff has come up with the present first miscellaneous appeal.
The appellant before us filed in the Trial Court a suit being Title Suit No.2 of 2007 for specific performance of contract against the respondents. In that suit, the Urban Development Department, Government of West Bengal, was made proforma defendant. The case made out by the plaintiff may be summed up thus:
a) The defendant Nos.1 and 2, as owner of the property described in the schedule of the plaint, entered into an agreement for sale on 30th August, 2005 with the plaintiff which is an industrial plot measuring 5.47918 cottahs for a price of Rs.54,00,000/- and took a sum of Rs.5,00,000/- as earnest money and advance out of total consideration of Rs.54,00,000/-.
b) The defendant Nos.1 and 2 agreed to transfer the right, title and interest to the plaintiff subject to approval of U.D. Department, Government of West Bengal, as per notification Nos.1721 and 1722 dated 6th May, 2005.
It was further agreed that transaction would be completed within one month after the issue of letter of permission by the U.D. Department, Government of West Bengal.
c) The defendant Nos.1 and 2 by virtue of a Lease Agreement dated 30th April, 1988 between the Governor of West Bengal and the defendant Nos.1 and 2 acquired the said property as a lessee for 999 years for the purpose of setting up an industry for manufacturing rectifier based equipment. On 17th January, 1989 possession of the property was delivered to the defendant Nos.1 and 2 and from that date, they were in possession.
d) On 14th October, 2004 on behalf of the Government of West Bengal a notice was issued asking why the plot of land should not be resumed for violating Clause 296 of the Lease Agreement.
e) The defendant Nos.1 and 2, on 14th December, 2004, gave a reply to the said officer and on getting the reply, the Deputy Secretary of the concerned Department on 3rd January, 2005 again requested the defendant Nos.1 and 2 to explain within 30 days as to what steps they had taken for construction of the building on the suit property. On getting the said letter, the defendant Nos.1 and 2, by their letter dated 28th January, 2005, explained the circumstances of delay for construction and requested the Government to condone their lapses. Subsequently, the two notifications being Nos.1721 and 1722 dated 6th May, 2005 were issued permitting transfer under certain circumstances.
f) The defendant Nos.1 and 2 by their letter dated 5th September, 2005 requested the Principal Secretary, Government of West Bengal, U.D. Department for permission to transfer the leasehold right, title and interest of suit property and also for change of trade.
g) Subsequently, by letter dated 9th September, 2005, the Deputy Secretary of the concerned Department issued latter to the defendant Nos.1 and 2 for construction and necessary action of re-entering into possession of the plot in the event of failure to comply with the direction contained therein. Subsequently, however, the said Deputy Secretary by a letter dated 25th October, 2005 informed the defendant Nos.1 and 2 that the Government in principle had agreed to transfer the leasehold right of the property to the plaintiff and requested the defendants to furnish information about the transfer.
h) On 6th December, 2005 as per request of the defendant Nos.1 and 2, the plaintiff wrote a letter to the concerned officer of the Government of West Bengal on the subject of permission for the transfer of the leasehold right in reply to the letter dated 25th October, 2005 addressed to the defendants.
i) The plaintiff, subsequently, requested the defendants to expedite the matter and for obtaining permission for transfer of the suit property to the plaintiff but the defendant Nos.1 and 2 expressed their unwillingness to transfer the property in terms of the agreement. Hence the suit for specific performance of contract.
On the basis of selfsame allegations made in the plaint, the plaintiff came up with an application for temporary injunction restraining the defendant Nos.1 and 2 from transferring or alienating or changing the nature and character of the suit property or encumbering the suit property in anyway till the disposal of the application for injunction.
Such application was opposed by the defendant Nos.1 and 2 by filing written objection and their objections may be summed up thus:
a) As per instruction of the plaintiff, the defendants applied before the U.D. Department, Government of West Bengal for transferring the property but the U.D. Department, Government of West Bengal did not give any permission in favour of the defendants and subsequently, issued notice to the defendants on 9th September, 2005 by threatening that if the defendant Nos.1 and 2 did not start construction work and get the plan sanctioned from appropriate authority within six months. They will resume possession of the property.
b) Subsequently, the defendant Nos.1 and 2 by spending a sum of Rs.20,00,000/- or more has started construction after taking sanctioned plan from the municipality.
c) As the plaintiff did not pay any heed upon the intimation given to the defendants, by a letter dated 6th November, 2005, the defendant Nos.1 and 2 cancelled the agreement and intimated the plaintiff concerned to take refund of the amount of earnest money.
d) The suit was further barred as per provision of West Bengal Government Land Regulation Transfer Act, 1993 and the suit for specific performance was not sustainable before the Civil Court and as such, the injunction application should be dismissed.
The learned Trial Judge by the order impugned herein dismissed the application for injunction mainly on the ground that the agreement for transfer having been written on an insufficient stamped paper of Rs.10/-, the suit was prima facie not maintainable. The learned Trial Judge further held the plaintiff having already started construction and having made expenditure to the tune of Rs.20,00,000/- and at the same time, the U.D. Department not having accorded any permission, it was a fit case for rejection of the application for temporary injunction.
Being dissatisfied, the plaintiff has come up with the present appeal. Mr. Saktinath Mukherjee, the learned senior advocate appearing on behalf of the appellants, has, at the very outset, contended that the learned Trial Judge erred in law in holding that simply because the agreement was entered into on insufficiently stamped paper no relief could be granted in the suit. Mr. Mukherjee submits that his client was ready to make payment of deficit stamp duty as per Stamp Act for impounding the said document.
Mr. Mukherjee further contends that admittedly the defendant Nos.1 and 2 having taken Rs.5,00,000/- as earnest money and having failed to return the same, and at the same time, having terminated the agreement at a point of time when the U.D. Department was actively considering the proposal for transfer, the learned Trial Judge should have granted the prayer for injunction.
Mr. Banerjee, the learned senior advocate appearing on behalf of the defendant Nos.1 and 2, on the other hand, has opposed the aforesaid contention by contending that under the Act of 1993 the suit was not maintainable in the Civil Court. He, further, submits that his client having already spent more than Rs.20,00,000/- towards the construction till the presentation of the written objection to the application for temporary injunction, the learned Trial Judge rightly refused to grant any temporary injunction. Mr. Banerjee further contends that the balance of convenience and inconvenience is also in favour of refusing the prayer for injunction.
Therefore, the first question that arises for determination in this appeal is whether in view of the provisions contained in the West Bengal Government Land Regulation and Transfer Act, 1993, the present suit for specific performance is prima facie barred in a civil Court.
After going through the provisions contained in the said Act, we find that the Civil Court's jurisdiction has been excluded in respect of the disputes which are required to be decided under the said Act as pointed out in Section 14 of the Act. The dispute as to specific performance of contract between a lessee and a third party subject to the permission of the lessor is not such a dispute, which is required to be decided by the authorities mentioned in the Act. In this suit, as it stands, the Court is not called upon to decide whether in the facts of the present case, the Government should grant permission or not, nor will the Court pass any direction upon the Government to grant permission.
As pointed out by the Privy Council long ago in the case of Motilal vs. Nanhelal reported in AIR 1930 PC 287, which has now become a settled law that a decree for specific performance of sale of land which is subject to the permission of Government or other authority is well maintainable and while granting a decree, the Court has the jurisdiction to order the vendor to apply to the authority within a specified period, and if the sanction is forthcoming, to convey the same to the purchaser within a certain time. This proposition of law was followed in Chandnee Widya Vati Madden vs. Dr. C.L. Katial (AIR 1964 SC
978) and R.C. Chandiok vs. Chuni Lal Saharawi (AIR 1971 SC 1238). The Privy Council in the case of Motilal vs. Nanhelal (supra) also laid down that there was always an implied covenant on the part of the vendor to do all things necessary to effect transfer of the property regarding which he had agreed to sell the same to the vendee and the advanced permission from the concerned government or other authority was not a condition precedent for grant of decree for specific performance. The aforesaid proposition of law has been again reiterated by the Apex Court in the case of Vishwa nath Sharma vs. Shyam Sankar Goela reported in (2007) 10 SCC 595. The position, however, will be different if the Government before the disposal of the suit rejects the prayer of permission for transfer in favour of the plaintiff and such decision attains finality for not challenging the same before the appropriate authority prescribed in the Act of 1993 or due to affirmation of the same by the highest Court of the Nation.
Thus, we find no substance in the first contention of Mr. Banerjee. The next question is whether the learned Trial Judge was justified in refusing to grant temporary injunction simply because the agreement between the parties was written on insufficiently stamped paper.
It is now settled law that failure to stamp a document properly does not affect the validity of the transaction embodied therein but merely renders the document inadmissible in evidence. (See Purna Chandra Chakraborty vs. Kalipada Roy reported in 46 CWN 477). However, in view of the provision contained in Section 35 of the Stamp Act, the Court before which such document is produced has the right to regularize such defect on realization of the appropriate stamp duty and the penalty prescribed in the Act. Therefore, the learned Trial Judge erred in law in holding that simply because the agreement was executed on the insufficiently stamped paper, the Court should reject the prayer of injunction. The learned Trial Judge at that stage, could demand from the plaintiff sufficient amount of security to safeguard the interest of the State Revenue but there was no justification of rejecting the prayer of injunction when existence of such agreement and acceptance of earnest money of Rs.5 lakh has been admitted and it has appeared from the materials on record that the defendants Nos.1 and 2 have not returned back the amount of earnest money while cancelling the agreement.
The most important point now comes for consideration is whether the plaintiff has proved a strong prima facie case to have an order of temporary injunction restraining the defendants from making any construction over the suit property.
After hearing the learned counsel for the parties and after going through the materials on record, we find that the concerned Department of the Government of West Bengal has been made a party to the suit. It further appears from record, by virtue of the two notifications being Nos. 1171- UD/O/M/SL(AL/NR/)8l/8/2004(pt) and 1722-UD/O/M/SL/(AL/NR)8L/2004(pt) both dated May 6, 2005, a lessee of industrial plot is entitled to pray for transfer of the leasehold interest before the concerned authority after complying with the formalities prescribed therein and in the event such permission is granted there is no impediment in transferring the interest of a lessee in favour of the third party. It further appears from record that the defendant Nos.1 and 2 sought for such permission and as it appears from the letter dated October 25, 2005 issued by the concerned authority that the Government had principally agreed with the proposal but at that stage, the defendant Nos.1 and 2 had terminated the agreement for the reason best known to them. However, no material has been placed before the Court indicating that after October 25, 2005, the Government has turned down the proposal of the transfer in favour of the plaintiff.
We, thus, find that the plaintiff has made out a strong prima facie case to go for trial and it has already expressed its readiness and willingness by giving a bank guarantee to the tune of a sum of Rs.1 Crore pursuant to an order of a Division Bench of this Court as a condition of grant of temporary injunction during the pendency of this appeal.
Balance of convenience and inconvenience in this type of a suit is always in favour of plaintiff because if we now refuse temporary injunction and permit the defendants to change the nature of the property, ultimately if the plaintiff succeeds in proving its case, the learned Trial Court may refuse to grant the relief of specific performance on the ground of huge construction made by the defendant Nos.1 and 2 in the meantime and grant an alternative decree for return of earnest money or damages. On the other hand, if the suit fails in the long run, the defendants can be compensated for the loss suffered due to the delay in making construction from the bank guarantee given by the plaintiff.
We, therefore, find that the learned Trial Judge while rejecting the prayer of temporary injunction did not follow the well-accepted principles which are required to be observed while deciding an application for temporary injunction in this type of a case and as such, it is a fit case for interference with the discretion exercised by the Trial Court which was clearly wrong.
We, consequently, set aside the order impugned and allow the application for temporary injunction by continuing the interim order passed by a Division Bench of this Court earlier on the same terms and condition imposed therein. The appellant will keep the bank guarantee alive till the disposal of the suit and such further time, as may be directed by the learned Trial Judge while disposing of the suit.
The learned Trial Judge is directed to dispose of the suit as expeditiously as possible and in no case beyond February, 2010.
In the facts and circumstances, there will be, however, no order as to costs.
(Bhaskar Bhattacharya, J.) I agree.
(Prasenjit Mandal, J.)