Gujarat High Court
Mehul Shantilal Patel vs Samatbhai Nanubhai Varu on 25 July, 2022
C/AO/26/2022 ORDER DATED: 25/07/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/APPEAL FROM ORDER NO. 26 of 2022
With
CIVIL APPLICATION (FOR STAY) NO. 1 of 2022
In R/APPEAL FROM ORDER NO. 26 of 2022
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MEHUL SHANTILAL PATEL
Versus
SAMATBHAI NANUBHAI VARU
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Appearance:
MR KAMAL TRIVEDI FOR MR DHAVAL D VYAS(3225) for the Appellant(s)
No. 1
MS TEJAL A VASHI(2704) for the Respondent(s) No. 1,2
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CORAM:HONOURABLE MS. JUSTICE NISHA M. THAKORE
Date : 25/07/2022
ORAL ORDER
1. This Appeal from Order is directed against the order dated 6th January, 2022 passed by the 11th Additional Chief Judicial Magistrate, First Class, Vadodara on an interim injunction application (Exh.5) along with interim applications seeking similar relief being filed by the original-plaintiff vide Exh. 10, 28 and 37 in Special Civil Suit No.8 of 2021, whereby the learned Trial Court has been pleased to direct the original defendant- appellant herein, an order of status quo to be maintained in respect of the suit lands.
2. The brief facts as emerges from the record are reproduced as under:
2.1. 20.04.2017: The Appellant-defendant purchased land Page 1 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022 C/AO/26/2022 ORDER DATED: 25/07/2022 bearing Survey ' No.385/2 admeasuring 0.45.53 hc. sq. mtrs. and Survey No.386 admeasuring 0.48.56 he. sq. mtrs., situated at Village Sayajipura, Vadodara ("suit lands", for short).
2.2 02.011.2018: The Respondents-Plaintiffs asserted their right in the suit lands, on the basis of an unregistered "Agreement to Sell without possession'. It is contended by the Respondents-
Plaintiffs to have agreed to purchase the land in question for a total consideration of Rs.10.21 Crores, out of which Rs.5 Cr is alleged to have been paid in cash.
The alleged agreement to sell stipulates conditions, wherein as per condition no.2, if the Appellant-Defendant did not return the said amount of Rs.5 cr. within 90 days (i.e. on or before 02.02.2019), then in that case, the remainder amount of consideration of Rs.5.21 Cr. will be paid by Respondents-Plaintiffs to the Appellant-Defendant, within 30 days therefrom (i.e. by 02.03.2019) and the plaintiffs were entitled to get executed registered sale deed.
As per condition no.3, if the Appellant- original defendant repay the amount of Rs. 5.0 crores within a period of 90 days, the agreement was to be treated cancelled.
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C/AO/26/2022 ORDER DATED: 25/07/2022 As per Condition no.4, if the Appellant- original defendant fails to repay such amount within 90 days, then after payment of remaining sale consideration of 5.21 crores, were entitled to get executed registered sale deed. It was also agreed that in case of any eventuality, the parties mutually in writing can extend the time period.
As per condition no.5, if the agreement to the holder fails to get the registered sale deed executed then the agreement to sell was to be treated cancelled.
2.3. 22.08.2020: A demand notice came to be issued by the Respondents-Plaintiffs, through their advocate, interalia, calling upon the Appellant-Defendant to execute sale deed. 2.4. 05.09.2020: In response to the above, the Appellant- Defendant gave its interim reply, requesting to provide a notarised copy of the above Agreement to sell dated 2.11.2018, so as to enable them to provide appropriate reply.
2.5. 10.09.2020: Thereafter, additional notice came to be issued by the Respondents-Plaintiffs, through their advocate, inter-alia, Page 3 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022 C/AO/26/2022 ORDER DATED: 25/07/2022 providing a copy of the said Agreement dated 2.11.2018. 2.6. 03.10.2020: Upon receiving the copy of the said Agreement to sell dated 02.11.2018, the Appellant-Defendant replied to the aforesaid notices and in para 11 thereof, specifically denied the receipt of any cash amount from the Respondents-Plaintiffs. 2.7. 08.01.2021: After a period of more than one year, the Respondents-Plaintiffs filed a Special Civil Suit No.8 of 2021, seeking specific performance of the aforesaid Agreement to Sell dated 02.11.2018, along with interim injunction application (Exh.5). 2.8. 15.02.2021: The Respondents-Plaintiffs filed an application at Exh.10 seeking order of status quo against the Appellant - Defendant.
2.9. 15.02.2021: The Respondents-Plaintiffs filed an application under Section 52(2) of Transfer of Property Act, 1882 for registering lis pendens.
2.10. 15.02.2021: Lis pendes was registered with Sub-registrar, Vadodara.
2.11. 15.02.2021: The Appellant-Defendant sold a portion of land Page 4 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022 C/AO/26/2022 ORDER DATED: 25/07/2022 admeasuring around 1100 sq. mtrs., out of the land in question, in favour of one Shri Dhrumil Mehta, under a registered sale deed. 2.12. 17.02.2021: The Appellant-Defendant filed their reply at Exh.16 to the aforesaid application at Exh.10.
2.13. 02.03.2021: The Respondents-Plaintiffs filed their written submissions at Exh.28 in support of the aforesaid application at Exh. 10.
2.14. 23.07.2021: The Respondents-Plaintiffs filed an application below Exh. 37, stating, inter-alia, that the Appellant-Defendant had started construction on the land in question, and therefore prayed to pass immediate order directing the Appellant-Defendant to maintain status quo.
2.15. 06.01.2022: Vide common order, impugned in the present appeal, the aforesaid applications below Exhs.10, 28 and 37 were allowed, whereas the application below Exh. 5 was partly allowed, thereby directing the Appellant-Defendant to maintain status quo. 2.16. 27.01.2022: Appellant-Defendant filed the captioned appeal, challenging the aforesaid order.
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3. Heard Mr. Kamal B. Trivedi, learned Senior Counsel appearing with Mr. Dhaval D. Vyas, learned advocate on record for the appellant - original defendant and Ms. Tejal Vasi, learned advocate appearing on caveat on behalf of respondents - original plaintiffs.
4. Mr. Kamal Trivedi, learned senior counsel appearing with Mr. Dhaval D. Vyas learned advocate on record has advanced submissions mainly on three legal propositions of law. 4.1. Mr. Trivedi, learned Senior Counsel at the outset submitted that the original-plaintiffs have failed to establish prima facie case to grant them the equitable relief of injunction against the defendant. Mr. Trivedi has drawn attention of this Court to the alleged agreement to sell dated 2nd November, 2018 and has submitted that the said document is an unregistered document, wherein the plaintiffs have claimed to have derived right in the suit lands by contending payment of Rs. 5 crores in cash, as Bana amount. He further read the terms and conditions stipulated in the alleged agreement to sell, more particularly condition no. 2, 3, 4 and 5 and submitted that no prudent person would ever hand over huge cash without any proof of acknowledgement of such amount. Page 6 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022
C/AO/26/2022 ORDER DATED: 25/07/2022 He submitted that the defendant has outright denied any such transaction and invited the attention of this Court to a written statement filed before the Trial Court. He further submitted that the specific defence has been raised in the Civil Suit that the alleged agreement to sell is a false agreement, in fact, a forged and fabricated document.
5.3. He invited attention of this Court to the decision of this Court in the case of Mrugen Atulkumar Trivedi v.s Abhijat Parashar Mehd reported in 2020(2) GLR 1379 and has submitted that this Court had not entertained the Appeal from Order and had confirmed the order passed by the learned Chamber Judge thereby holding that no prima facie case can be said to have been made out, wherein in a suit for Specific Performance of an unregistered documents, the parties have stated to paid an amount of Rs.11 lakh in cash, when the source of the such amount was not substantiated by placing any document on record. He further submitted that in the said case, the agreement to sell was dated 23.04.2015, which was indisputably an unregistered document and the suit was filed in the month of July, 2018. In such peculiar facts, this Court had denied the interim injunction to the plaintiff seeking relief of interim injunction, which is equitable in Page 7 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022 C/AO/26/2022 ORDER DATED: 25/07/2022 nature.
5.4. Mr. Trivedi also relied upon the decision of this Court in the case of Harshad Kumar Kantilal Bhalodwala and anrs. vs. Ishwarbhai Chandubhai Patel and Ors. reported in 2010 (1) GLH 112, wherein this Court has by relied upon the decision of this Court in the case of Khimjibhai Harjivanbhai Patadia v.s Patel Govindbhai Bhagvanbhai and Ors. reported in 2006 (4) GLR 3058. He referred to and relied upon paragraph 6 and 7 of the aforesaid decision and submitted that no injunction could have been granted, when the agreement to sell itself is disputed and the payment of bana amount is alleged to have been paid in cash without any source of such amount being placed on record, the plaintiff was required to produce some evidence to show the source of the sale consideration amount.
5.5. Mr. Trivedi also relied upon the judgment of this Court in the case of Jayeshkumar Mathurbai Patel Vs. Mukeshbhai Vershibhai Desai in Appeal From Order No.130 of 2020, by relying upon para 39 and submitted that when the very factum of payment of consideration by the plaintiffs to defendant is shrouded with cloud and in absence of any document to support such Page 8 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022 C/AO/26/2022 ORDER DATED: 25/07/2022 version of payment of cash amount to the defendant, no equitable relief of interim injunction can be granted.
5.6. Mr. Trivedi, learned counsel appearing for the appellant has referred to and relied upon the aforesaid decisions and further submitted that when the agreement to sell itself is disputed and the part sale consideration, ie. of Rs. 5.0 Crores, which is alleged to have been paid in cash, is disputed, then initial burden to prima facie prove such payment of huge amount in cash is upon the plaintiff, who asserts that the said amount is paid by him to the defendant. He further submitted that except for the agreement to sell, the original - plaintiff having not produced other documents to establish their assertion of making the cash payment of an amount of Rs. 5 crores as alleged is not proved. He therefore submitted that the Trial Court ought to have appreciated that the plaintiff having failed to lead any supporting document to show source of consideration, the plaintiffs have not discharged the initial burden. In such circumstances, the Trial court committed serious error of recording prima facie case and grant of equitable relief of injunction in favour of plaintiffs.
5.7. At this stage, Mr. Trivedi invited the attention of this Court to Page 9 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022 C/AO/26/2022 ORDER DATED: 25/07/2022 the alleged agreement to sell, more particularly Condition Nos. 2, 3, 4 and 5 and submitted that as stipulated in Condition No.2 and 3, if the defendant who had received an amount of Rs.5 crores, failed to repay such amount within a period of 90 days then the plaintiff was entitled to get execute registered sale deed in his favour. He further submitted that as per Condition No.4, the original plaintiff was required to make payment of remaining amount of the sale consideration i.e. Rs. 5.21 crores to the defendant within a period of 30 days. Thereafter, as per condition No.5, if the defendant failed to execute the registered sale deed, then it was agreed that the agreement would stand cancelled. By referring to the time period stipulated in the aforesaid conditions, Mr. Trivedi submitted that the period of 90 days from the date of execution of sale deed i.e. 2nd November, 2018 was to expire on 2nd February, 2019, whereby the defendant was to repay the amount of Rs.5 crores as received by him in the form of Bana amount. He further submitted that the period of 30 days as stipulated in condition No.4 to get registered sale deed in favour of the plaintiff was to expire on 02.03.2019. He further invited the attention of this Court that the first legal notice, which came to be issued by the original-plaintiff calling upon the present appellant - original defendant to perform their part of contract is dated 22nd Page 10 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022 C/AO/26/2022 ORDER DATED: 25/07/2022 August, 2020, which is almost after a period of one year and 5 months. He further submitted that the appellant herein - original defendant had responded to such notice by reply dated 5th September, 2020, whereby they had outright objected to execution of the alleged agreement to sell. He invited the attention of this Court to the contents of para 5 of such reply dated 5th September, 2020. He further submitted that upon the receipt of the copy of the alleged agreement to sell, the original defendant - present appellant herein had given notice to the original - plaintiff on 3rd October, 2020 and had also responded to the legal notice dated 5th September 2020. He invited attention of this Court to the contents of paras 6 and 11 of the said reply-cum-notice dated 3rd October, 2020. He further submitted that the present Civil Suit came to be filed much thereafter, i.e. 8th January, 2021. He therefore, submitted that there is delay in approaching the learned Court below while seeking discretionary equitable relief in the nature of interim injunction. More, particularly when the appellant herein being exclusive owner of the property has bona fidely entered into transactions qua part of the land with third party. 5.8. Mr. Trivedi has referred to and relied upon the decisions of the Supreme Court in the case of Ambalal Sarabhai Enterprises vs Page 11 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022 C/AO/26/2022 ORDER DATED: 25/07/2022 K.S. Infraspace Llp and Ors. reported in AIR 2020 SC 307 and by drawing attention of this Court to facts of the said case submitted that delay of 7 months was treated fatal in commercial dealing involving high stake. He has referred to and relied upon the observations made by the Supreme Court in para 19 and 21 of the said judgment and submitted that even accepting the finding recorded by the Trial Court that the present suit is filed within a period of limitation as prescribed under Article 54 of the Limitation Act, then also delay is to be treated fatal for entitlement of equitable relief of injunction against defendant. 5.9. He further submitted that the Trial Court ought to have appreciated the conduct of the plaintiffs seeking the equitable relief of injunction in light of the observations of the Supreme Court in the case of Motilal Jain v/s Ramdasi Devi reported in AIR 2020 SC 2404.
5.11. Mr. Trivedi has referred to and relied upon Section 52 of the Transfer of Property Act. He invited the attention of this Court to the registration of the notice of lis pendens dated 15.02.2021. 5.12. At this stage, Mr. Trivedi also invited the attention of this Court to the registered sale-deed executed in favour of a third Page 12 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022 C/AO/26/2022 ORDER DATED: 25/07/2022 party on 15.02.2021. He submitted that so far as the factor of irreparable loss is concerned, the same is secured in view of the registration of notice of lis pendens.
5.13. He invited the attention of this Court to two decisions of the Supreme Court in the case of Nawab John and others Vs. V.N. Subramanyam reported in 2012 AIR SCW 4248 and in the case of Dalpat Kumar and another vs. Prahland and Ors. reported in AIR 1993 SC 276.
5.13. He therefore submitted that no prejudice to the rights of the plaintiffs would be caused in case the order of status quo granted by the Trial Court is vacated.
5.14. He lastly submitted that having failed to establish the prima facie case, the balance of convenience and the irreparable loss in terms of money, the Trial Court committed gross error in passing the order of status quo against the defendant -appellants herein. He therefore, prayed to quash and set aside the order allowing Exh. 5 application. He submitted that in view of the pendency of the suit, any transfer which may occur would always be governed by the principles of lis pendens.
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6. On the other hand this Appeal From Order has been vehemently objected by Ms. Tejal Vashi.
6.1 The learned advocate appearing on caveat on behalf of the respondents - original plaintiffs. She invited attention of this Court to the date of registration of lis pendens i.e. 15th February, 2021, which was registered prior in point of time vide Registration No.02473 before the Office of Sub-Registrar, Vadodara and further referred to the date of registered sale-deed executed by the defendant-present appellant in favour of the third party in respect of the part of the suit lands on the same date i.e. 15.02.2021, which was registered subsequently vide Registration No. 02508. She therefore submitted that in spite of the fact that the suit was filed on 8th January 2021, the summons were issued on 15.02.2021. Pursuant to which, the notice of lis pendens came to be registered on 15.02.2021, defendant has proceeded to execute the registered sale deed in favour of third party on the same day i.e. 15.02.2021. She therefore, submitted that the Trial Court has rightly passed the order of status quo pending the suit. 6.2 She further invited attention of this Court to the subsequent application seeking similar relief being prayed by the original - Page 14 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022
C/AO/26/2022 ORDER DATED: 25/07/2022 plaintiffs vide Exh.10, 28 and 37. She further submitted that in fact a petrol pump unit has been started on the part of the suit land. In such circumstances, the plaintiffs are apprehending their rights being jeopardized by the acts of the defendant pending the Civil Suit.
6.3. She also invited attention of this Court to the conditions, more particularly Condition Nos.1, 2 and 3 stipulated in the agreement to sell and submitted that the Trial Court upon analyses of such condition, has rightly arrived at finding that the agreement to sell has continued to be in force. She further invited attention of this Court to the contents of the second reply-cum-notice dated 5th October 2020 addressed by the original defendant. More particularly by referring to para 11, she submitted that in fact upon bare reading of the contents of the said notice and reading it with the written statement filed by the defendant, the defendant has not disputed his signature. In fact, the defence is raised that by misrepresentation the signature has been taken. She therefore, submitted that the signature being found to have been admitted on the agreement to sell itself amounts to acknowledgment of receipt of bana amount of Rs.5 crores. She therefore, submitted that no supporting documents were required to be placed on record in Page 15 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022 C/AO/26/2022 ORDER DATED: 25/07/2022 support of the payment of the cash amount of Rs.5 crores to the defendant - appellant herein.
6.4. She further submitted that even applying the ratio laid down by this Court as well as by the Supreme Court, relied upon by the learned counsel appearing for the appellant, the plaintiff having placed on record the agreement to sell has adduced prima facie material about the payment of the part sale consideration to the original-defendant appellant herein.
6.5. Ms. Vashi, inviting attention of this Court to condition Nos.1, 2 and 3 of alleged agreement to sell dated 2nd November 2018 , submitted that time was not an essence of the said agreement to sell. She submitted that as per Condition No.3, in absence of repayment of a bana amount of Rs.5 crores to the original plaintiff, the agreement to sell remained in force and it was for the original defendant - appellant herein to execute the sale deed. She further submitted that the cause of action has been explained in the plaint whereby the suit has been filed within the prescribed period of three years of limitation. She therefore submitted that in no manner a suit seeking specific performance is hit by delay and laches. 6.6. At this stage, Ms. Vashi relied upon the decision of the Page 16 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022 C/AO/26/2022 ORDER DATED: 25/07/2022 Supreme Court in the case of Welspun Specialty Solutions vs Oil And Natural Gas Corporation reported in (2022) 2 SCC 382. By referring to the facts of the case, she invited attention of this Court to the basic principles laid down by the Supreme Court as regard the time condition obligations as reproduced in para 34 and 35:
"34. Mr. Shyam Diwan, learned senior counsel, appearing on behalf of the Remi Metals, submitted that the view taken by the Arbitral Tribunal was reasonable, as the loss sustained by ONGC is given on the basis of actual loss. In this situation, the interpretation of the law and the facts provided under the award is a reasonable interpretation, which can be sustained as being a plausible view.
35. This Court cannot interfere with this award, as the award is a plausible view for the following reasons: a. The Arbitral Tribunal's interpretation of contractual clauses having extension procedure and imposition of liquidated damages, are good indicators that 'time was not the essence of the contract'.
b. The Arbitral Tribunal's view to impose damages accrued on actual loss basis could be sustained in view of the waiver of liquidated damages and absence of precise language which allows for reimposition of liquidated damages. Such imposition is in line with the 2nd para section 55 of the Indian Contract Act. c. The Arbitral Tribunal was correct in distinguishing the dictum of this Court in Saw Pipes (supra), which validated imposition of liquidated damages in a similar contract. d. The High Court and District Court strayed beyond the limitation under section 34 and 37 of the Arbitration Act. e. Other aspects of the award also do not require interference of this Court, in view of the law laid down in the Project Director, National Highways Page 17 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022 C/AO/26/2022 ORDER DATED: 25/07/2022 No.45E and 220, National Highways Authority of India Vs. M.Hakeem. 2"
6.7. She therefore submitted that merely because time is stipulated in the agreement to sell itself would not be sufficient, to conclude that time is an essence of contract. She submitted that the Court is required to read the entire contract as well as the surrounding circumstances to find out whether time is an essence of the contract or not. She therefore, submitted that considering the cause of action, the present suit filed by the original plaintiffs - respondents herein is within the period of limitation prescribed under Article 54 of Limitation Act and the Trial Court has rightly passed the impugned order directing status quo to be maintained by the defendants in respect of the suit property. She further submitted that there is no termination of agreement to sell as such. In fact a demand notice dated 22nd August, 2020 was raised by the original plaintiff calling upon the original defendant - appellant herein to perform his part of contract, failing which the suit has been filed on 8th January 2021, which is within a period of 3 years from the date when the actual cause of action arose for filing such suit.
6.8. She further submitted that mere registration of notice of lis Page 18 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022 C/AO/26/2022 ORDER DATED: 25/07/2022 pendens may not preclude the Court from granting order of status quo against the defendant, once prima facie case is established. She submitted that in the peculiar facts and circumstances whereby the defendant has parted with the parcel of land, the plaintiffs have apprehension that their right may be jeopardized, pending the suit. She therefore submitted that having transferred the land in favour of 3rd party, the balance of convenience is in favour of the original plaintiffs. In absence of an interim injunction being granted pending the suit, in case, if the defendant proceeds with the transactions or creation of third party rights, it may not only lead to irreparable loss, which could not be compensated in terms of money, but may also lead to multiplicity of proceedings. 6.9. She further submitted that the original plaintiffs were always ready and willing to perform their part of contract and in uncertain terms have declared before the Trial Court to offer the remaining part of the sale consideration as on date.
6.10. In such circumstances, she has prayed to not to interfere in the present Appeal From Order and to uphold the order passed by the learned Trial Court below Exh. 5, 10, 28 and 37.
7. Mr. Trivedi, in rejoinder has vehemently objected to the Page 19 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022 C/AO/26/2022 ORDER DATED: 25/07/2022 aforesaid submissions canvassed by the learned Counsel for the plaintiffs - respondents herein.
7.1 He invited the attention of this Court to the index copy reflecting the sale deed in favour of 3rd party and submitted that only a part of land was being transferred by the original defendant. He submitted that the alleged agreement to sell is in respect of the two parcels of land, which totally measures 9048 sq. meters. As against that the registered sale deed which is executed in favour of the third party on 15.02.2021 is only to the extent of 1089 sq. meters of suit land. He therefore submitted that no irreparable loss is likely to be caused to the original plaintiff as a major part of land still continues in the name of the original owner i.e. original defendant.
7.2. He further submitted that the payment of bana amount of Rs.5 crores is at present shrouded with cloud in absence of any supporting material being placed by the original plaintiff either before the Trial Court or before this Court. In such circumstances, the balance of convenience is not in favour of the original plaintiffs but in favour of the original defendant. He again invited attention of this Court to the chronology of time period stipulated in conditions Page 20 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022 C/AO/26/2022 ORDER DATED: 25/07/2022 Nos.2, 3, 4 and 5 of the alleged agreement to sell and submitted that even assuming that such agreement to sell existed then the original plaintiffs were expected to offer the remaining amount of Rs.5.21 crores by issuing legal notice. He further submitted that no document has come on record to suggest that any attempts were made by the plaintiff to pay the remaining amount of sale consideration within the stipulated time period as alleged in the agreement to sell. He therefore submitted that time is an essence of the agreement to sell.
7.3. Mr. Trivedi also invited attention of this Court to the decision relied upon by the learned Counsel appearing for the respondents. More particularly the basic principles laid down by the Supreme Court as regards time conditions / obligations and submitted that upon bare reading of the recitals of the agreement to sell, the agreement to sell holders being the promissors were bound to complete their obligation as per the dates stated in the contract. He therefore submitted that the original plaintiffs did not abide by the obligation as stipulated in the alleged agreement to sell. In such circumstances, the agreement to sell loses its sanctity and in such circumstances stands terminated by the act of the parties. Page 21 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022
C/AO/26/2022 ORDER DATED: 25/07/2022 7.4. He therefore submitted that the right of the original plaintiffs is very much protected as notice of lis pendens has already been registered and any transfer which may take place pending the suit will always be subject to the outcome of the suit. 7.5. In such circumstances, he prayed to allow the present Appeal From Order and to dismiss the application Exh.5 alongwith Exhs.10, 17 and 38 preferred by the original plaintiffs.
8. Heard the Learned Counsels appearing for the respective parties at length. The record reveals that indisputably the appellant- original defendant is the owner of the suit lands, on the date of the alleged agreement to sell.
Analysis :
Before examining the merits of the matter, it would be appropriate to extract the relevant provisions of the Registration Act, 1908.
Sec. 17 of the Registration Act, 1908 : Documents of which registration is compulsory.-- (l) The following documents shall be registered, if the property to which they relate is situated in a district in which, and if they have been executed on or after the date on which, Act No. XVI of 1864, or the Registration Act, 1866, or the Registration Act, 1871, or the Registration Act, 1877, or this Act came or comes into force, namely:--
(a) Instruments of gift of immovable property;Page 22 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022
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(b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property;
(c) non-testamentary instruments which acknowledge the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extinction of any such right, title or interest; and
(d) leases of immovable property;
(e) non-testamentary instruments transferring or assigning any decree or order of a Court or any award when such decree or order or award purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property:
(f) any decree or order or award or a copy thereof passed by a Civil Court on consent of the defendants or on circumstantial evidence but not on the basis of any instrument which is admissible in evidence under section 35 of the Indian Stamp Act, 1899 (2 of 1899), such as registered title deed produced by the plaintiff, where such decree or order or award purports or operate to create, declare, assign, limit, extinguish whether in present or in future any right, title or interest whether vested or contingent of the value of one hundred rupees and upwards to or in immovable property; and
(g) agreement of sale of immovable property of the value of one hundred rupee and upwards", Provided that the State Government may, by order published in the Official Gazette, exempt from the operation of this subsection any lease executed in any district, or part of a district, the terms granted by which do not exceed five years and the annual rents reserved by which do not exceed fifty rupees.
Thus, Section 17 of 1908 Act is a disabling section. The documents defined in clauses (a) to (e) therein require registration compulsorily. So far as agreement to sell is concerned it is included within clause (g). One can notice Part X of the 1908 Act deals with the effects of registration Page 23 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022 C/AO/26/2022 ORDER DATED: 25/07/2022 and non- registration. Section 49 gives teeth to section 17 by providing effect of non-registration of documents required to be registered. Section 49 reads thus:
Section 49 of the Registration Act,1908 Effect of non- registration of documents required to be registered.-- No document required by section 17 or by any provision of the Transfer of Property Act, 1882 ( 4 of 1882), to be registered shall--
(a) affect any immovable property comprised therein, or
(b) confer any power to adopt; or (c) be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered:
Provided that an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act, 1882 (4 of 1882), to be registered may be received as evidence of a contract in a suit for specific performance under Chapter-II of the Specific Relief Act, 1877 (3 of 1877) or as evidence of any collateral transaction not required to be effected by registered instrument."
8.1. Thus, in light of the above provisions of Registration Act, Section 17 (1) (b) mandates that any agreement to sell, which has the effect of creating and taking away the rights in respect of an immovable property, having value more than Rs. 100, is required to be registered. At the same time though Section 49 of the Act imposed a bar on the admissibility of an unregistered agreement to sell required to be registered under section 17 of the Act, however, the proviso permits such unregistered agreement to be considered in a suit seeking specific performance.Page 24 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022
C/AO/26/2022 ORDER DATED: 25/07/2022 8.2. The Apex Court and even the proviso to section 49 of the Act, itself making it evident that an unregistered document affecting immovable property though required to be registered, but if unregistered, may still be received as an evidence to the contract in a suit for specific performance. Thus, in light of the aforesaid legal position the Court finds that though the disputed agreement to sell as per the case of the plaintiffs created right, though being unregistered document but considering proviso to section 49 of the Registration Act, the suit for specific performance is maintainable in the eyes of law.
8.3. In light of the above legal position this Court is called upon to examine the case of the original Plaintiffs - respondents herein that the disputed agreement to sell itself was an acknowledgment of amount of Rs. 5.0 crores cash. At this stage it would be apt to refer to the case of Yellapu Uma Maheswari v. Buddha Jagadheeswararao, (2015) 16 SCC 787, wherein the Apex Court has held that in the suit for declaration of title, an unregistered document can be relied upon for collateral purposes i.e. to prove possession, payment of sale consideration and nature of possession; but not for primary purpose i.e. sale between the Page 25 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022 C/AO/26/2022 ORDER DATED: 25/07/2022 plaintiff and defendant or its terms.
'Collateral Purpose' under Sec. 49 Registration Act expressly states admissibility of unregistered documents in evidence for collateral purposes. The word 'collateral' signifies something beyond or parallel. According to the Law of Lexicon it means "that which is by the side, and not the direct line; that which is additional to or beyond a thing". Thus, even the said disputed agreement to sell, though being unregistered document, the same can be looked into for collateral purpose ie. acknowledgment of the part sale consideration. Considering proviso to section 49, even to read for collateral purpose the same can only be read as evidence unless sufficiently stamped.
8.4. On examining the record of the present appeal, the Court finds that upon reading of the para-11 of the contents of the reply cum notice, prima facie goes to suggest that though the defendant has not disputed his signature but then has categorically disputed the contents of the agreement. However, the plaintiff cannot be permitted to rely upon a part of the document as perceived by it to be in his favour and leave out what is apparently against him. The Court is expected to construe a document as a whole and one or Page 26 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022 C/AO/26/2022 ORDER DATED: 25/07/2022 two lines out of context cannot be accepted. In peculiar facts of the case, where the original plaintiffs claimed to have made payment of a huge amount of Rs. 5.0 crores in cash, the Court before considering equitable relief of grant of injunction would like to examine such claim of payment of cash amount of Rs. 5.0 crores being prima facie established based on the sole document of unregistered document ie. disputed agreement to sell. 8.5. At this stage, the moot question which arises for consideration is whether the admission of the appellant's signature on the disputed agreement to sell amounts to an admission of its execution? A similar question arose before the Apex Court in the case of Veena Singh ( dead) through LR Vs. The District Registrar/ Additional Collector ( F/R) and another, reported in 2022 LiveLaw (SC) 462, wherein the Supreme Court after careful consideration of various provisions of Registration Act and various authorities, has analyzed the word "execution". The term "execution" in Section 35(1)(a) Registration Act means that a person has signed a document after having fully understood it and consented to. Thus, the Apex Court observed :
"57. The word "execution" of a document does not stand admitted merely because a person admits to Page 27 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022 C/AO/26/2022 ORDER DATED: 25/07/2022 having signed the document. Such an interpretation accounts for circumstances where an individual signs a blank paper and it is later converted into a different document, or when an individual is made to sign a document without fully understanding its contents. Adopting a contrary interpretation would unfairly put the burden upon the person denying execution to challenge the registration before a civil court or a writ court, since registration will have to be allowed once signature has been admitted."
The Apex Court while giving purposive interpretation of word "execute" has also taken into consideration the decision of the Apex Court in the case of Suraj Lamps and Industries Pvt. Ltd. vs. State of Haryana & Another , reported in (2009) 7 SCC 363, to highlight the purpose of registration as a form of public policy. Thus, the Supreme Court observed that the execution of a document/deed does not stand admitted merely because a person admits to having signed the document/ deed.
8.6. Now, the scope of power of the High Court, while dealing with impugned order passed by the trial Court, in an appeal from order arising under order 43 rule 1 read with section 104 of the Code of Civil Procedure is concerned, it is a settled position of law. The proposition propounded by the Apex Court while exercising appellate jurisdiction has indicated that unless and until there is Page 28 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022 C/AO/26/2022 ORDER DATED: 25/07/2022 any material irregularity or perversity is reflecting and the view taken by the learned trial Judge is reasonably probable on the basis of documents then such view is not to be substituted and as such the said proposition of law, has been consistently observed by the Courts. Some observations contained in a decision in the case of Wander Ltd. and another versus Antox India P.Ltd. reported in 1990 (Supp) SCC 727 requires to be referred hereinafter. The relevant observations contained in paragraph No.14 as such reproduced hereinafter:
"14. The appeals before the Division Bench were against the exercise of discretion by the Single Judge. In such appeals, the Appellate Court will not interfere with the exercise of discretion of the court of first instance and substitute its own discretion except where the discretion has been shown to have been exercised arbitrarily, or capriciously or perversely or where the court had ignored the settled principles of law regulating grant or refusal of interlocutory injunctions. An appeal against exercise of discretion is said to be an appeal on principle. The Appellate Court will not reassess the material and seek to reach a conclusion different from the one reached by the court below if the one reached by the court was reasonably possible on the material. The appellate court would normally not be justified in interfering with the exercise of discretion under appeal solely on the ground that if it had considered the matter at the trial stage it would have come to a contrary conclusion. If the discretion has been exercised by the Trial Court reasonably and in a judicial manner the fact that the appellate court would have taken a different view may not justify interference with the trial court's exercise of discretion. After referring to these principles Gajendragadkar, J. in Printers ( Mysore) Private Ltd. Vs. Pothan Joseph :Page 29 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022
C/AO/26/2022 ORDER DATED: 25/07/2022 ... These principles are well established, but as has been observed by Viscount Simon in Charles Osention & Co. v. Johnston the law as to the reversal by a court of appeal of an order made by a judge below in the exercise of his discretion is well established, and any difficulty that arises is due only to the application of well settled principles in an individual case."
Thus, the Hon'ble Supreme Court in the case of Wander Ltd. (supra) has specifically observed that the Appellate Court can interfere with the order of the trial court when it is found that discretion has been exercised by the trial Court arbitrarily or capriciously or perversely or where the Court had ignored the settled principles of law regulating grant or refusal of interlocutory injunction.
8.7. In light of the above legal position, the Court finds that the unregistered agreement to sell can be looked into for collateral purposes to examine the fact of payment and acknowledgment of cash amount, however, when it involves transaction of payment of cash of Rs. 5.0 crores, then even for collateral purpose, it ought to have been sufficiently stamped. At the same time, when the appellant - original defendant has though admitted signature but has categorically disputed execution of such agreement, then a heavy burden lies on the original plaintiff to fortify such claim of Page 30 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022 C/AO/26/2022 ORDER DATED: 25/07/2022 payment of cash by supporting documents or explaining its source. In absence of any supporting material or source of such cash amount being placed on record by the original plaintiffs, there are all more reasons to accept the case of the defendant that no such agreement to sell of suit land was ever executed. The Court prima facie finds force in the submissions of Mr. Trivedi that prima facie the terms and conditions, if closely examined, relates more to amount being advanced as loan failing which it was to be treated as agreement to sell. As observed herein above, in the considered opinion of this court, the terms and conditions essentially are to be read, rather than the title of the document is to be taken into consideration while deciding the nature of transaction entered upon. Considering the amount of cash involved, the Court finds that these are unaccounted transactions and the Court may not come to the aid of the party in an illegal transaction. In the opinion of this Court, there exist no prima facie case in favour of plaintiff as the very existence of agreement to sell itself has become triable, which can be gone into at the stage of evidence. In the present case while granting the status quo, the learned trial Judge has ignored above settled principles of law.
8.8 At this stage, the jurisdiction to grant decree of specific Page 31 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022 C/AO/26/2022 ORDER DATED: 25/07/2022 performance was discretionary and under Section 20(2) of the Specific Relief Act, 1963, it provided the cases in which the Court may properly exercise the discretion. However, after amendment of Section 20 of the Specific Relief Act, 1963 the discretion no longer exists with the Court once the plaintiff has proved agreement to sell and shown his readiness and willingness to perform his part of contract, as the same may promote dishonesty amongst executant of contract, who may withdraw from such contract by denying it. However, so far as grant of injunction is concerned , the Courts are guided by judicial principles. The Court therefore finds that the Trial Court committed error in finding that there exists a prima facie case in favour of the plaintiff. 8.8. This Court had inquired from the learned Counsels appearing for the parties as to whether any public notice regarding title clearance was given before the registered sale deed which came to be executed by the appellant- original defendant to third party, however, no material on behalf of appellant - original defendant has come on record clarifying the same. On the other hand Ms. Vashi learned counsel appearing on behalf of original plaintiffs- respondents herein has drawn attention of this Court by referring to few public notices issued by parties other than purchaser from Page 32 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022 C/AO/26/2022 ORDER DATED: 25/07/2022 defendant, in whose favour agreement to sell has been executed in favour of said party by the present appellant. She has referred to public notice dated 17.10.2021 issued by the original plaintiffs after filing of suit thereby cautioning the public at large about their claims in suit land. She further drew attention to at least two objections being received from parties claiming rights in suit land. She further submitted that in spite of public notice being issued, the 3rd party has entered into the transaction. Hence, she urged that since triable issues are involved in the proceedings, trial court directions to the defendant to maintain status quo of the suit land may not be disturbed, so as to see as no irreversible situation can be created.
Admittedly, the sale deed in favour of 3rd party is executed on the day when the notice of lis pendens came to be registered ie. 15.02.2021 and pending the suit ( filed on 08.01.2021). In such circumstances, the apprehension expressed by the plaintiffs to grant interim injunction from transferring the suit lands, pending the suit is justified but at the same time in absence of prima facie case, the balance of convenience tilts in favour of the defendant. The Court notices that the plaintiffs waited for almost one year and five months ( ie. The last date as per the terms of the agreement expired on 2.3.2019 and the 1st legal notice was issued on Page 33 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022 C/AO/26/2022 ORDER DATED: 25/07/2022 22.08.2020 whereas the suit came to be filed on 08.01.2021) before instituting suit and to seek injunction. Ultimately, if the plaintiffs are able to establish the payment of Rs. 5 crores handed over to the defendant then the same can be compensated by passing a decree of payment for such amount. Thus, in absence of any interim injunction, the Court finds that no such irreparable loss, which cannot be computed in terms of money, is likely to be caused in case of plaintiffs.
8.9. So far as notice of lis pendens being registered, any transaction which may take place pending the suit will be governed by the outcome of the suit proceedings. The Court also cannot unnoticed the transactions with 3rd parties entered upon by defendant No.1 resultantly, to adjust the equity between parties and considering principle of lis pendens, the transaction entered upon with 3rd party pending the suit as well as any further transaction related to suit property is to be treated as subject to outcome of main suit, and would bind the parties and further looking to this peculiar circumstance, liberty is kept open requesting the learned Trial Judge to expeditiously deal with and dispose of suit on merits independently.
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C/AO/26/2022 ORDER DATED: 25/07/2022
9. In the result, the present Appeal from Order is allowed. The impugned order dated 06.01.2022 passed by the Trial court directing the defendant to maintain status quo in respect of suit lands is quashed and set aside. In view of the disposal of Appeal from Order, the Civil Application of stay stands disposed.
10. It is needless to clarify that while deciding the main suit proceeding, the learned Trial Judge may deal with and decide on the basis of available material and evidence which may come on record during trial, and uninfluenced by the observations made in the impugned order as well as present order as the same are at the interim stage.
FURTHER ORDER:
After pronouncement of the order, Ms. Tejal Vashi, learned counsel for the respondent prays for stay of the order for a period of four weeks.
Mr. Shankeshwar, learned counsel for Mr. Dhaval Vyas appearing for the appellant has objected to grant of such stay.
Let there be stay of order for a period of three weeks from today.
(NISHA M. THAKORE,J) ALOK KUMAR/Y.N. VYAS Page 35 of 35 Downloaded on : Tue Jul 26 21:37:32 IST 2022