Madras High Court
Eurotherm India Private Limited vs Johnson Lifts Private Limited on 25 September, 2013
Author: R.Sudhakar
Bench: R.Sudhakar
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 25.9.2013 CORAM: THE HON'BLE MR.JUSTICE R.SUDHAKAR Application No.3316 of 2013 in C.S.No.36 of 2013 Eurotherm India Private Limited Tamarai Tech Park SP Plot # 16-19 & 20A Thiru Vi Ka Industrial Estate Inner Ring Road, Guindy Chennai 600 032 .. Applicant Vs Johnson Lifts Private Limited No.1, East Main Road Anna Nagar West Extension Chennai 600 001. .. Respondent PRAYER: Application is filed under Order VII Rule 11 of the Code of Civil Procedure read with Order XIV Rule 8 of the Original Side Rules to reject the plaint filed along with the suit in C.S.No.36 of 2013 pending on the file of this Court under the provisions/principles of Order VII Rule 11 of the Code of Civil Procedure. For Applicant : Mr.T.R.Rajagopalan, Sr.Counsel for M/s.M.Velmurugan For Respondent : Mr.Yashod Vardhan, Sr.Counsel for M/s.SPAN Associates Application No.3316 of 2013 in C.S.No.36 of 2013 R.SUDHAKAR,J.
This application is filed under Order VII Rule 11 of the Code of Civil Procedure read with Order XIV Rule 8 of the Original Side Rules to reject the plaint filed along with the suit in C.S.No.36 of 2013 pending on the file of this Court under the provisions/principles of Order VII Rule 11 of the Code of Civil Procedure.
2.1. The brief facts of the case are as under: On 15.3.2012, the plaintiff/respondent herein entered into a Memorandum of Understanding with the defendant/applicant herein for purchase of the suit schedule property, subject to certain terms and conditions contained therein. As per Clause 9(ii) of the Memorandum of Understanding, the defendant/applicant herein should obtain a No Objection Certificate from the Department of Industries and Commerce, Tamil Nadu for sale/transfer of the property, and as per Clause 9(v) of the Memorandum of Understanding, the defendant/ applicant herein should discharge the mortgage created in favour of HDFC Bank.
2.2. Pursuant to the signing of the Memorandum of Understanding, a cheque for a sum of Rs.5,00,000/- was issued by the plaintiff/respondent herein and the same was duly acknowledged by the defendant/applicant herein. Thereafter, there is a series of correspondence between the plaintiff/ respondent herein and the defendant/applicant herein for getting the No Objection Certificate from the Department of Industries and Commerce, Tamil Nadu and that condition has not been complied with by the defendant/applicant herein. Therefore, the plaintiff/respondent herein issued a legal notice on 23.7.2012 (Plaint Document No.11). The relevant portion of the said notice reads as under:
My client has all along been ready to perform its part of the contract dated 15.3.2012 and to pay the balance sale consideration and have the sale deed registered in its own name. My client desired to commence utilization of the said premises soon after purchase and so agreed to complete the sale at the earliest. 2.3. The defendant/applicant herein refuted the contents of the above said notice. Thereafter, the plaintiff/respondent herein issued a rejoinder on 27.9.2012 and the relevant portion of the same reads as under:
My client has always been and is ready and willing to perform its part of the contract and therefore, regrets that it is not agreeable to accept M/s.Eurotherm India Pvt. Ltd.'s cheque dated 31.8.2012 bearing No.987251 drawn on HDFC Bank, Chennai-2 for Rs.5,00,000/- and the same is not being presented. 2.4. It is the case of the plaintiff/respondent herein that since the Memorandum of Understanding dated 15.3.2012 is valid till 30.3.2012 and the same did not conclude as per the agreed terms, the defendant/applicant herein intended to sell the property, subject matter of the Memorandum of Understanding, by placing an advertisement in the English daily The Hindu on 16.11.2012, which forced the plaintiff/respondent herein to approach the City Civil Court, Chennai filing the suit in O.S.No.7193 of 2012 for permanent injunction based on the Memorandum of Understanding dated 15.3.2012.
2.5. Along with the suit in O.S.No.7193 of 2012, the plaintiff/respondent herein also filed an application in A.No.17685 of 2012 under Order II Rule 2 of the Code of Civil Procedure and the same was ordered on 24.11.2012. The averments made in the plaint in O.S.No.7193 of 2012 and in the affidavit filed in support of A.No.17685 of 2012 before the City Civil Court, Chennai are relied upon by the defendant/applicant herein for filing the present application to reject the plaint. On 26.11.2012, the learned XVIII Assistant Judge, City Civil Court, Chennai granted ad interim injunction in I.A.No.17663 of 2012.
2.6. The leave to sue the defendant/applicant herein for specific performance was sought for and granted by this Court on 21.12.2012 in A.No.5596 of 2012 and the present suit in C.S.No.36 of 2013 has been laid on 7.1.2013. On notice, the defendant/applicant herein has come forward with this application under Order VII Rule 11 of the Code of Civil Procedure to reject the plaint.
3.1. In support of this application, the averments made in a portion of the plaint in O.S.No.7193 of 2012 and the affidavit filed in support of the application filed by the plaintiff/respondent herein under Order II Rule 2 of the Code of Civil Procedure before the City Civil Court, Chennai have been relied upon by the defendant/applicant herein to state that the present suit is not maintainable on the ground that there is no cause of action to maintain the suit, as the plaintiff/respondent herein was not ready and willing to perform his part of the contract, as is evident from their inability to mobilize court fee. Expatiating the said plea, Mr.T.R.Rajagoplan, learned Senior Counsel appearing for the defendant/applicant herein placed reliance on Section 16 of the Specific Relief Act, 1963, which reads as under:
16. Personal bars to relief.-
Specific performance of a contract cannot be enforced in favour of a person-
(a) who would not be entitled to recover compensation for its breach; or
(b) who has become incapable of performing, or violates any essential term of, the contract that on his part remains to be performed, or acts in fraud of the contract, or wilfully acts at variance with, or in subversion of, the relation intended to be established by the contract; or
(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.
Explanation.-For the purposes of clause (c),-
(i) where a contract involves the payment of money, it is not essential for the plaintiff to actually tender to the defendant or to deposit in court any money except when so directed by the court;
(ii) the plaintiff must aver performance of, or readiness and willingness to perform, the contract according to its true construction. Since the affidavit filed before the Court below establishes the plaintiff/respondent's inability to pay court fee, the suit for specific performance is bad, as no relief can be granted in terms of Section 16(c) of the Specific Relief Act, 1963.
3.2. Mr.T.R.Rajagopalan, learned Senior Counsel appearing for the defendant/applicant herein relied upon a decision of the Supreme Court in N.P.Thirugnanam v. R.Jagan Mohan Rao (Dr), AIR 1996 SC 116, wherein it has been held as under:
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 a 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 along with other attending circumstances. The amount 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 ready and was always ready and willing to perform his part of contract. (emphasis supplied) 3.3. The learned Senior Counsel appearing for the defendant/ applicant herein also referred to the relevant portions of the plaint in O.S.No.7193 of 2012 and the affidavit filed by the plaintiff/respondent herein in support of the application filed under Order II Rule 2 of the Code of Civil Procedure before the City Civil Court, Chennai. The said averments have been extracted by the defendant/applicant herein in paragraphs (8) and (9) of the affidavit filed in support of this application and the same read as under:
8. I submit that the affidavit in support of the Order 2 Rule 2 C.P.C. Application, the respondent/plaintiff has averred as follows:
'10. I submit that the Petitioner is taking necessary steps to move the concerned Court seeking specific performance of the contract entered into between the parties to the suit. Since the suit for specific performance involves payment of substantial court fee the Petitioner requires some time for mobilization of resources for the same. In the interregnum period the Respondent may deal with the property and convey the same to third parties ignoring the MOU dated 15.3.2012 entered with the Petitioner company and the Petitioner's rights over the petition property will be defeated. I submit that if the Respondent is allowed to sale of the petition property then the civil rights of the Petitioner will be defeated and the same would prejudice the rights of the Petitioner.'
9. In paragraph 11 of the plaint in that suit also a similar averment was made. It reads as follows:
'11. The Plaintiff submits that it is taking steps to move the concerned Court seeking specific performance of the contract entered into between the parties to the suit. Since the suit for specific performance involves payment of substantial court fee the Plaintiff requires some time for mobilization of resources for the same. In the interregnum period the Defendant may deal with the property and convey the same to third parties ignoring the MOU dated 15.3.2012 entered with the Plaintiff company and the Plaintiff's rights over the suit property will be defeated. The Defendant has also expressed its desire to convey the suit property to third parties by its advertisement in 'The Hindu' dated 16.11.2012 and the 'Times of India' dated 17.11.2012 and if the Defendant is allowed to have its say it would prejudice the rights of the Plaintiff.' 3.4. The learned Senior Counsel appearing for the defendant/applicant herein pleaded that since the plaintiff/respondent herein has clearly stated that they have no funds to pursue the suit for specific performance, it is a clear admission that they are not ready and willing to perform their part of the contract and, therefore, they could not maintain the suit for specific performance and there is no cause of action. Therefore, in terms of Section 16(c) of the Specific Relief Act, 1963, no relief can be granted. Consequently, the suit is liable to be rejected as plaintiff/respondent herein has not established a cause of action for filing the suit and the suit is barred by law.
4.1. Mr.Yashod Vardhan, learned Senior Counsel appearing for the plaintiff/respondent herein referred to the two notices issued by them on 23.7.2012 and 27.9.2012 and pleaded that the plaintiff/respondent herein has in explicit terms stated that they are ready and willing to perform their part of the contract. The bar under Section 16(c) of the Specific Relief Act, 1963 will not apply to the facts of the present case. The cause of action for the earlier suit is different from the present one and leave has been obtained to pursue the subsequent suit.
4.2. Insofar as the averments made in the plaint in O.S.No.7193 of 2012 and the affidavit filed in support of the application filed under Order II Rule 2 of the Code of Civil Procedure before the City Civil Court, Chennai are concerned, it is pleaded that since the defendant/applicant herein have expressed their mind to sell the property, unmindful of the Memorandum of Understanding entered into with the plaintiff/respondent herein, by placing an advertisement in the English daily The Hindu on 16.11.2012, the plaintiff/respondent herein had to rush to the City Civil Court, Chennai seeking permanent injunction and in the interlocutory application filed in that suit, ad interim injunction was sought for and granted.
4.3. It is further pleaded that the plaintiff/respondent herein in the plaint in O.S.No.7193 of 2012 and the affidavit filed in support of the application filed under Order II Rule 2 of the Code of Civil Procedure before the City Civil Court, Chennai has only averred that the Petitioner requires some time for mobilization of resources for filing the suit for specific performance. The suit before the court below was to safeguard the property under the Memorandum of Understanding dated 15.3.2012. It has not been stated that they are unable to pay the court fee for filing the suit for specific performance. The injunction suit was an immediate necessity. The words used in the affidavit are misread and interpreted out of context.
5. The issues that arise for consideration are:
(i)Whether the plea of the defendant/applicant herein that the plaintiff/respondent herein was never ready and willing to perform his part of the contract in terms of the Memorandum of Understanding dated 15.3.2012 and, therefore, there was no cause of action for filing the suit is justified?
(ii)Whether there is any justification for filing this application under Order VII Rule 11 of the Code of Civil Procedure? and
(iii)Whether the suit is barred by Section 16(c) of the Specific Relief Act, 1963, giving rise to a plea that the suit has to be rejected in terms of Order VII Rule 11 of the Code of Civil Procedure?
Issue (i)
6. In support of the first plea reliance is placed on the statement made in the affidavit filed in support of the plaint in O.S.No.7193 of 2012 and the averments in the plaint, which have already been extracted above. The cause of action for filing the suit before the Court below in O.S.No.7193 of 2012 and for grant of injunction is to restrain the defendant/applicant herein from alienating the property, which is the subject matter of the Memorandum of Understanding dated 15.3.2012. The defendant/applicant herein provoked the plaintiff/respondent herein to go to the civil court to protect their rights by making an advertisement in the newspaper that they want to sell the property which is the subject matter of the Memorandum of Understanding. It is at this juncture that the plaintiff/respondent herein had no other choice except to file a suit for injunction and seek interim relief. They also filed an application seeking leave of the Court for filing a suit for specific performance, making it clear thereby that they are interested in pursuing the matter to enforce the Memorandum of Understanding dated 15.3.2012. The statement made in support of the affidavit in application filed under Order II Rule 2 of the Code of Civil Procedure only shows that while taking steps to file the suit for specific performance, they are before the civil court for interim protection of their rights. This cannot be confused with the relief for specific performance. The cause of action for filing the suit before the Civil Court in O.S.No.7193 of 2012 and the present suit though may arise from a common issue, the relief is for a different purpose, for which leave of the Court has already been obtained.
7. The statement made in the plaint in O.S.No.7193 of 2012 and in the affidavit filed in support of the application filed under Order II Rule 2 of the Code of Civil Procedure before the City Civil Court, Chennai that the plaintiff/respondent herein requires some time to mobilize funds to pursue the suit for specific performance cannot be taken as a ground to state that there are no funds available with them. In fact, the additional counter affidavit filed in this application by the plaintiff/respondent herein shows their sound financial status, though it is not relevant to be considered at this point of time. All that the Court is required to consider at this stage is whether even prior to the filing of the suits, the plaintiff/respondent herein was ready and willing to perform his part of the contract in terms of the Memorandum of Understanding, which they had, in fact, specifically avouched in the notices dated 23.7.2012 and 27.9.2012. The plaintiff/respondent herein has also pleaded readiness and willingness in the plaint. Their stand is clear in no uncertain terms.
8. The statement made in the plaint in O.S.No.7193 of 2012 and in the affidavit filed in support of the application filed under Order II Rule 2 of the Code of Civil Procedure before the City Civil Court, Chennai that the plaintiff/respondent herein requires some time to mobilize funds cannot be construed to mean that the plaintiff/respondent herein is in financial crunch and, therefore, they are not ready and willing to perform their part of the contract in terms of the Memorandum of Understanding. The averment in the application made under Order II Rule 2 of the Code of Civil Procedure is only for the purpose of stating before the Court below the urgency in filing the suit for injunction, while reserving their right to file a suit for specific performance. It is, therefore, a clear indication that the plaintiff/respondent herein intends to file a suit for specific performance, for which leave under Order II Rule 2 of the Code of Civil Procedure was sought for and granted. In fact, the plaintiff/respondent herein has immediately thereafter filed the present suit in C.S.No.36 of 2013 for specific performance within a short period of time. It clearly establishes that at no point of time the plaintiff/respondent herein was lethargic about their claim under the Memorandum of Understanding. They have been diligently pursuing the matter prior to the filing of the suit in O.S.No.7193 of 2012 before the City Civil Court, Chennai and the tenor of the notices clearly shows that there was a clear and persistent claim for execution of the sale deed in terms of the Memorandum of Understanding and that they were ready and willing to perform their part of the contract. What is evident from those notices is that the defendant/applicant herein has not performed their part of the contract in terms of the Memorandum of Understanding. This, however, is an issue to be considered in the trial in the suit for specific performance. Hence, the first issue is answered in the negative.
Issues (ii) and (iii)
9. The defendant/applicant herein relied upon the provisions of Section 16(c) of the Specific Relief Act, 1963 and a decision of the Supreme Court in N.P.Thirugnanam v. R.Jagan Mohan Rao (Dr), referred supra. The decision of the Supreme Court in N.P.Thirugnanam v. R.Jagan Mohan Rao (Dr), referred supra, relied upon by the learned Senior Counsel appearing for the defendant/applicant herein does not stand in the way of the plaintiff/ respondent herein in pursuing the suit before this Court. In the said decision, it has been clearly held that the continuous readiness and willingness on the part of the plaintiff is a condition precedent to grant the relief of specific performance. If the plaintiff fails to either aver or prove the same, he must fail. It is limpid from the notices dated 23.7.2012 and 27.9.2012 issued prior to the filing of the suit before the City Civil Court, Chennai as well as before this Court that the plaintiff/respondent herein was ready and willing to perform his part of the contract in terms of the Memorandum of Understanding dated 15.3.2012. Therefore, the provision of Section 16(c) of the Specific Relief Act, 1963 does not get attracted. In any event, Explanation (i) to Section 16(c) of the Specific Relief Act, 1963 makes it furthermore clear that were a contract involves payment of money, it is not essential for the plaintiff to actually tender or deposit in the Court the money, except when so directed by the Court. Explanation (ii) to Section 16(c) of the Specific Relief Act, 1963 states that the plaintiff must aver performance of, or readiness and willingness to perform the contract. This is evident from the two notices issued by the plaintiff/respondent herein prior to filing of the suit before the Court below. Hence, the said decision, in the view of this Court, may not stand in the way of the plaintiff/respondent herein in filing the present suit.
10. For the purpose of this application, the Court does not find any justification in the plea taken for rejection of the plaint under Order VII Rule 11 of the Code of Civil Procedure on a specious plea of no cause of action. Hence, issues (ii) and (iii) are answered against the defendant/applicant herein.
For the foregoing reasons, this Court has no hesitation to dismiss this application. Accordingly, this application is dismissed.
25.9.2013 Index : Yes/No Internet : Yes/No sasi