Delhi High Court
Yahoo Properties Pvt. Ltd. vs Bhai Manjit Singh And Anr on 1 November, 2012
Author: Kailash Gambhir
Bench: Kailash Gambhir
$~24
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS) 510/2005
YAHOO PROPERTIES PVT. LTD. ..... Plaintiff
Through Mr. S P Kalra, Sr. Adv. with Mr.
Rajiv Kapoor, Mr. Avinash Mishra, Adv.
versus
BHAI MANJIT SINGH AND ANR. ..... Defendant
Through Mr. Amit S Chadha, Sr. Adv. with
Mr. Alok Kumar Aggarwal and Mr. Kunal
Sinha, Adv.
Mr. Neeraj Chaudhari, Adv. for CGSC
with Ms. Neha Singh, Adv. for D-9
CORAM:
HON'BLE MR. JUSTICE KAILASH GAMBHIR
ORDER
% 01.11.2012 IA No 13108/2012
By this application filed under Order 14 Rule 2(2) (b) moved by defendant nos. 1 to 4, they seek direction to treat issue no. 7 as a preliminary issue.
Addressing arguments on this application, Mr. Amit Chadha, learned Senior Advocate appearing for the defendant nos.1 to 4 submit that vide order dated 9.12.2005, this Court had framed the issues arising out of the pleadings of the parties and one of the issues framed was issue no. 7, onus of which was placed on the plaintiff to prove that the plaintiff was always ready and willing to perform its part of the contract. Counsel also submits that under Section 16 (c) of the Specific Relief Act 1963, the plaintiff has CS(OS) NO. 510/2005 1 not merely to plead but prove the said fact in evidence that he has always been ready and willing to perform the contract. Counsel further submits that since in the present case, plaintiff has failed to prove issue no. 7 and on its failure to lead any evidence on the said issue, therefore, the plaintiff as per the mandate of Section 16 (c) of the Specific Relief Act 1963, would fail in the present suit on this sole ground. Counsel for the defendants also submit that on the failure of the plaintiff to lead any evidence on the said issue, the relief sought by the plaintiff for specific performance of the contract has become barred by law and once, the remedy of the plaintiff has become barred by law, then, as per the mandate of Order 14 Rule 2 (2) (b ) of the of Code of Civil Procedure, 1908, the issue no. 7 is required to be treated as preliminary issue, so that without dissipating the precious time of this Court any further, the present case itself can be disposed of, after hearing arguments on the issue no. 7. Counsel for the defendants further submit that Order 14 Rule 2(2) (b) mandates that if the case or any part thereof can be disposed of on an issue of law, which relates to a bar to the suit created by any law for the time being in force such issue may be treated as preliminary issue. Counsel also placed reliance on Order 15 Rule 3 of Code of Civil Procedure, 1908 to support his argument that where after framing of the issues the court is satisfied that no further arguments or evidence is required to be adduced on such issues which may be sufficient for the decision of the suit then in such like state, the discretion vests with the Court to proceed to determine such an issue and give its final verdict. CS(OS) NO. 510/2005 2
The learned Senior Counsel also submits that from a bare reading of the plaint, it would be manifest that whatever amounts the defendants had paid under the Memorandum of Understanding (MOU), the plaintiff had taken post-dated cheques for the equivalent amount which was inclusive of the interest amount calculated @ 15% p.a. Therefore, in this regard the Counsel raised a contention that with the acceptance of the said post-dated cheques by the plaintiff, the plaintiff lost its right to claim specific performance of the Contract.
Counsel for the defendants placed reliance on the following judgments to support his arguments:
1. Man Kaur (DEAD) by LRS. V. Hartar Singh Sangha, (2010) 10 SCC 512
2. Bal Krishna & Anr V. Bhagwan Das( Dead) by LRS and others, (2008) 12 SCC 145
3. Manjunath Anandappa URF Shivappa V. Tammansa & othrs, (2003) 10 SCC390
4. N.P. Thirugnanam (Dead) by LRS. V. Dr. R.Jagan Mohan Rao and others, (1995) 5 SCC115 This application has been strongly opposed by Mr. S P Kalra Senior Advocate appearing for the plaintiff. Mr. Kalra submits that issues in this matter were framed way back in December, 2005, and the plaintiff closed its evidence in affirmative on 4.3.2008. Counsel for the plaintiff further submits that the defendants in the past 4 years have only examined one witness, while the total number of witnesses sought to be examined by the defendants are just two in number. Counsel for the plaintiff also raised a contention that the purpose of filing the said application by the defendants at such an advance stage is only with an oblique motive to cause further CS(OS) NO. 510/2005 3 delay in the matter. Counsel further submits that this is not the stage for this Court to frame a preliminary issue as the matter has almost reached the final stage. Counsel also submits that the plaintiff has placed sufficient material on record which is not in dispute between the parties, to show that the plaintiff has always been ready and willing to fulfill its part of the obligation. Counsel for the plaintiff further submits that an amount of Rs.
1.51 crores was paid by the plaintiff at the time of the execution of the MOU dated 21.10.2003. Counsel further submits that an additional amount of Rs.
50 lacs was also paid by the plaintiff, out of the remaining sale consideration amount. Counsel also submits that in the Suit No. 826/2011 filed by Mitsui & Co. Ltd., against the defendants, the present plaintiffs had agreed to pay an amount of Rs. 15 crores to Mitsui & Co. Ltd., on behalf of these defendants and in fact, the plaintiffs had brought a bank draft/cheque for the said amount of Rs. 15 crores, so as to get the premises vacated from Mitsui & Co Ltd. Counsel further submits that the plaintiffs were always ready and willing to fulfill their part of contract to pay the balance consideration amount and the plaintiffs are in a position to satisfy this Court on the said fact on the strength of material already available on record.
Counsel also submits that this Court will have to go into the factual aspect of the case in deciding issue no. 7 if the same is framed as a preliminary issue. Lastly, the Counsel submits that the application moved by the defendants is highly belated and therefore, the same deserves outright rejection on this sole ground.
CS(OS) NO. 510/2005 4
In support of his arguments, counsel for the plaintiff placed reliance on the following judgments:
1. Mohammaed Yasin V. Abdul Kalam & others, 32 (1987) DLT 143
2. Madhabananda Ray And Anr. vs Spencer And Company Ltd. AIR 1988 ORISSA 35
3. Dhirendranath Chandra vs Apurba Krishna Chandra And Ors AIR 1979 PATNA 34
4. Usha Sales Ltd. V. Malcolm Gomes and others AIR 1984 BOMBAY 60 I have heard learned counsel for the parties at considerable length and given my thoughtful consideration to the arguments advanced by them.
The plaintiff has filed the present suit for Specific Performance of a Contract, mainly on the allegations that in or around middle of October, 2003, defendant nos.1 to 5 had represented to the plaintiff that the defendant no.1 was the exclusive and absolute owner of the property situated at 28A Prithvi Raj Road, New Delhi. It is also the case of the plaintiff that the defendant nos. 1 to 5 had offered to sell the same for a total sale consideration amount of Rs.29 crores, and an Agreement to Sell dated 21.10.2003 was duly executed by the defendant no.2 in her capacity as karta of defendant no.1 in favour of the plaintiff. It is also the case of the plaintiff that a sum of Rs.1.51crores was paid by the plaintiff by means of cheque no 681234 dated 21.10.2003 drawn on Bank of Rajasthan, Janpath, New Delhi and receipt thereto was duly acknowledged by defendants no. 1, 2 and 3 in the said Agreement to Sell itself. It is also the case of the plaintiff that the defendant nos. 1 to 7 had assured the plaintiff that they CS(OS) NO. 510/2005 5 would complete the said transaction within a period of 90 days from the date of execution of the Agreement to Sell and the balance sale consideration amount shall be paid by the plaintiff at the time of final execution and registration of the Sale Deed and handing over of the vacant and peaceful possession of the property in question to the plaintiff. The other facts as set out by the plaintiff in the plaint may not be relevant for the purpose of deciding the present application.
Contesting the present suit the defendant in their written statement raised a principal objection that no Agreement to sell was ever executed or entered into between the defendant no.1 and the plaintiff at any point of time. It is also the case of the defendants that whatever amount, the plaintiff had paid under the MOU, the post-dated cheques for the equivalent amounts were accepted by the plaintiff along with the interest amount @ 15% per annum. The defendants have also averred that there was no concluding contract between the parties, specific performance of which can be sought by the plaintiff. This Court does not find the necessity of narrating the entire defense as raised by the defendants in so far as to deal with the controversy involved in the present application is concerned. Based on the pleadings of the parties, this Court framed the following issues on 09.12.2005:-
1. "Whether there was no concluded contract of sale of property in suit between the plaintiff and the defendant no 1 to 6?
2. Whether the memorandum of understanding dated 21.10.2003 was superseded by the subsequent understanding as contained in the joint application being the IA No. 7145 of 2004 filed in suit No. 826 /04?CS(OS) NO. 510/2005 6
3. (a) Whether the understanding contained in the said application, being IA No. 7145/2004 came to an end on the expiry of 1.12.2004?
(b) What is the effect of IA No. 7145/2004 not being allowed by the court on the relief claimed in present suit?
4. Whether the suit for specific performance for transfer of immovable properties in furtherance to the memorandum dated 21.10.2003 is maintainable in the face of clause (c ) of the said Agreement? If so, to what effect?
5. whether the total consideration/price to be paid by the plaintiff or purchase of the property in suit was to be fixed by the parties after obtaining the permission from the court and after removing the encumbrances?
6. Whether the suit is bad by misjoinder of the parties as alleged in Para 12 of the written statement filed by the defendant no. 1 to 6?
7. Whether the plaintiff has always been and is willing to perform its part of the contract?
8. to what relief is plaintiff entitled and against which of the defendants?
9. What is the effect of the property being mortgaged to defendant No. 10 on the relief claimed by the plaintiff?
10. Relief"
At the time of the framing of the issues, none of the defendants raised any plea for framing the issue no. 7 as a preliminary issue. The onus of proving issue nos. 1 to 6 was placed on the defendants, while onus of proving issue nos. 7 and 8 was placed on the plaintiff. The plaintiff closed its evidence in affirmative on 4.03.2008 and since then, matter has been fixed for the evidence of the defendants.
It is not in dispute that for the past four years, the defendants have examined only one witness and as per the list of witnesses filed by them, only one more witness is required to be examined by them. Undeniably, the CS(OS) NO. 510/2005 7 matter has reached at the final stage and this application has been moved by the defendants at a stage when the case is almost ripe for final hearing.
Before I deal with the contentions raised by the counsel for the parties, it would be appropriate to re-produce Order 14 Rule 2(2) and order 15 Rule 3 of the Code of Civil Procedure 1976, which reads as under:-
"ORDER XIV. SETTLEMENT OF ISSUES AND DETERMINATION OF SUIT ON ISSUES OF LAW OR ON ISSUES AGREED UPON "2. Court to pronounce judgments on all issues - (1) Notwithstanding that a case may be disposed of on a preliminary issue, the court shall subject to the provisions of sub- rule (2), pronounce judgment on all issues.
(2)where issues both of law and of fact arise in the same suit, and the court is of opinion that the case or any part thereof may be disposed of on an issue of law only, it may try that issue first if that issue relates to-
(a) The jurisdiction of the court, or
(b) A bar to the suit created by any law for the time being in force, and for that purpose may, if it thinks fit , postpone the settlement of the other issues until after that issue has been determined, and may deal with the suit in accordance with decision on that issue"
(Subs by CPC (Amendment)Act 104 of 1976, for Rule 2( w.e.f 1-2-1977) Before inculcating the said amendment Rule 2 was read as under:
"R.2. Issues of law and of fact-
"Where issues of both law and of fact arise in the same suit , and the Court is of the opinion that the case or any part thereof may be disposed of on the issues of law only, it shall try those issues first, and for that purpose may, if it thinks fit, postpone the settlement of the issues of the fact until after the issues of law have been determined."
"ORDER XV . DISPOSAL OF THE SUIT AT THE FIRST HEARING CS(OS) NO. 510/2005 8
3. Parties at issue (1) Where the parties are at issue on some question of law or of fact, and issues have been frame by the Court as herein before provided, if the Court is satisfied that no further argument or evidence than the parties can at once adduce is required upon such of the issues as may be sufficient for the decision of the suit, and that no injustice will result from proceeding with the suit forthwith, the Court may proceed to determine such issues, and , if the finding thereon is sufficient for the decision, may pronounce judgment accordingly, whether the summons has been issued for the settlement of issues only or for the final disposal of the suit:
Provided that, where the summons has been issued for the settlement of issues only, the parties or their pleaders are present and none of them objects.
(2) Where the finding is not sufficient for the decision, the Court shall postpone the further hearing of the suit, and shall fix a day for the production of such further evidence, or for such further argument as the case requires."
The provisions of Order 14 Rule 2 came up for consideration before the Hon'ble Supreme Court in the case of Major S.S. Khanna vs. Brig. F.J. Dillon AIR 1964 SC 497, wherein it was held as under:-
"Under O. 14 R. 2 where issues both of law and of fact arise in the same suit, and the Court is of opinion that the case or any part thereof may be disposed of on the issues of law only, it shall try those issues first, and for that purpose may, if it thinks fit, postpone the settlement of the issues of fact until after the issues of law have been determined. The jurisdiction to try issues of law apart from the issues of fact may be exercised only where in the opinion of the Court the whole suit may be disposed of on the issues of law alone, but the Code confers no jurisdiction upon the Court to try a suit on mixed issues of law and fact as preliminary issues. Normally all the issues in a suit should be tried by the Court: not to do so, especially when the decision on issues even of law depends upon the decision of issues of fact, would result in a lop-sided trial of the suit." Though there has been a slight amendment in the language of Order XIV Rule 2 CPC by the Amending Act, 1976, but the principle enunciated in the above quoted decision still holds good and there can be no departure from the principle that the Code confers no jurisdiction upon the Court to try a CS(OS) NO. 510/2005 9 suit on mixed issue of law and fact as a preliminary issue and where the decision on issue of law depends upon decision of fact, it cannot be tried as a preliminary issue.
In Estrela Batteries v. Modi Industries (AIR 1976 All 201), it was held that in a case where a preliminary issue as to jurisdiction of the Court to entertain the suit raised is not a pure question of law but is one involving mixed question of law and fact, the finding of the trial Court that such issue cannot be decided as a preliminary issue under Order 14, Rule 2 was held to be not vitiated by any error. A Full Bench of the Madhya Pradesh High Court (Indore Bench) considered the scope and effect of Rule 2 of Order 14 in Ramdayal Umraomal v. Pannalal Jagan-nathji, (AIR 1979 Madh Pra 153 (FB)), wherein it was held by the Full Bench after reviewing the entire case law on the point that under Order 14, Rule 2 of the C P. C., an issue relating to jurisdiction of the Court can be tried as a preliminary issue only if it can be disposed of without recording any evidence. If the issue about jurisdiction is a mixed question of law and fact requiring recording of evidence, the same cannot be tried as a preliminary issue.
The Hon'ble Supreme Court in Ramesh B. Desai v. Bipin Vadilal Mehta,(2006) 5 SCC 638, has laid down that Order 14 Rule 2 of CPC confers no jurisdiction on a Court to decide the mixed questions of fact and law as a preliminary issue. It is clearly held in this judgment that where for a decision on an issue of law (such as a suit being barred by a particular law) depends upon the decision on disputed fact then the issue cannot be CS(OS) NO. 510/2005 10 tried as a preliminary issue. The Supreme Court has therefore made it clear that once there are disputed questions of facts which require trial, the issue cannot be decided as a preliminary issue. Para 13 of this judgment isrelevant and the same read as under:-
"13. Sub-rule (2) of Order 14 Rule 2 CPC lays down that where issues both of law and of fact arise in the same suit, and the court is of the opinion that the case or any part thereof may be disposed of on an issue of law only, it may try that issue first if that issue relates to (a) the jurisdiction of the court, or (b) a bar to the suit created by any law for the time being in force. The provisions of this Rule came up for consideration before this Court in Major S.S. Khanna v. Brig. F.J. Dillon and it was held as under: (SCR p.
421) "Under Order 14 Rule 2, Code of Civil Procedure where issues both of law and of fact arise in the same suit, and the court is of opinion that the case or any part thereof may be disposed of on the issues of law only, it shall try those issues first, and for that purpose may, if it thinks fit, postpone the settlement of the issues of fact until after the issues of law have been determined. The jurisdiction to try issues of law apart from the issues of fact may be exercised only where in the opinion of the court the whole suit may be disposed of on the issues of law alone, but the Code confers no jurisdiction upon the court to try a suit on mixed issues of law and fact as preliminary issues. Normally all the issues in a suit should be tried by the court; not to do so, especially when the decision on issues even of law depend upon the decision of issues of fact, would result in a lopsided trial of the suit."
Rule 2 was amended by the Code of Civil Procedure (Amendment) Act, 1976. The object of the amendment of 1976 was that the Court should decide all issues together and there should not be piecemeal decisions on separate issues, unless the issue is an issue of law pertaining either to the suit being barred by law or pertains to the jurisdiction of the Court. A plain reading of Rule 2 will show that even where the Court finds that the case can be disposed of on a preliminary issue, still the Court has been mandated to pronounce judgment on all the issues. Thus, Sub-Rule 2 is again subject to fulfillment of two other conditions laid down in Rules (a) & (b) of the Sub- CS(OS) NO. 510/2005 11 Rule -2 of Rule-2. Sub-Rule 2(a) relates to the issue of jurisdiction of the Court and Sub-Rule 2(b) relates to a bar to the suit created by any law for the time being in force. Sub Rule 2 further provides that in the said two eventualities, the Court if it thinks fit, may postpone the settlement of the other issues until determination of the preliminary issue and thereafter, may deal with the suit in accordance with the decision on such a preliminary issue. Certainly, both the eventualities envisaged in Sub-Rule 2
(a) and (b) are dissects of law. There is thus, no scope to frame a preliminary issue wherever decision on such a preliminary issue cannot be decided without appreciating the factual controversy involved in a suit. The decision on the factual controversies can be arrived at only after the parties are given a chance to adduce their respective evidence.
It is also evident from the language of Sub Rule 2 of Rule 2, Order 14 that it is not obligatory on the Court to decide a issue relating to jurisdiction or legal bar to a suit as preliminary issue as the language of Rule 2 (2) of Order 14 clearly indicates that discretion is given to the Court and no such duty is imbued upon the Court to decide any issue as a preliminary issue. Wherever the Court finds that the issue is such which necessitates investigation into the facts after the evidence is led by the parties, then in such a case even where the issue relates to the jurisdiction of the Court or the issue being barred under any law, will be decided by the Court only after the trial and not by framing a preliminary issue. CS(OS) NO. 510/2005 12 Thus the principle enunciated under Order 14 Rule 2 CPC by the amending Act, 1976, there can be no departure from the fact that the Code confers no jurisdiction upon the court to frame a preliminary issue on mixed issues of law and fact and where the decision on issue of law depends upon decision of fact, it cannot be tried as a preliminary issue.
Although going by the contentions raised by the parties, there can be no quarrel with the legal proposition canvassed by Mr. Amit Chadha, learned senior counsel for the defendant and the judgments cited by him so far the mandate of Section 16 (c) of the Specific Relief Act is concerned. Undoubtedly to seek Specific Performance of a contract, the plaintiff has to plead and prove that he was always ready and willing to perform his part of the contract. Having said this, it cannot be disputed that for proving any facts in a case, the same can be proved either by admission in the pleadings or based on the admission of the documents of either of the parties and finally with the help of evidence. Therefore, it cannot be said that simply because the plaintiff has not entered the witness box, the same by itself should non-suit the plaintiff as argued by learned counsel for the defendants. The effect of the plaintiff not entering into the witness box certainly will be taken into consideration at the time of final decision of this case and, therefore, this Court would be hesitant to embark upon this fact finding enquiry at this stage. As already discussed above, prior to the amendment in Order 14 Rule 2 C.P.C all the legal issues on which the suit could be disposed of CS(OS) NO. 510/2005 13 were to be tried as preliminary issues. But after the amendment, the preliminary issue may be framed by the Court only when the issue relates to a jurisdiction of the Court or when a bar under any law is created to the maintainability of a suit. The other departure brought out in the amendment is that under S.14 (2) (ii), the expression 'shall' has been substituted by the expression 'may' and therefore, it is now left to the discretion of the Court to frame the preliminary issues even if such issue may relate to the jurisdiction of the Court or a bar to the suit created by any law. For excusing a decision in such like case, relevance can be placed on the judgment of this Court in Mohammad. Yasin Vs. Abdul Kalam & Another, reported in 32(1987) DLT 143 where the court took a view that once the issues are settled then the Court would not be justified, especially after a lapse of six years to order one of the issues to be tried as a preliminary issue. The relevant part of the said paragraph is reproduced as under:-
"(7) .... It is no doubt true that in the written statement it was stated that this should be treated as a preliminary issue but the court, while framing the issues in 1979, did not exercise its discretion in favor of the respondents/defendants. The question which arises is whether the trial court was justified in directing, six years after the issues had been framed, that one of the issues tried as a preliminary issue. The words "and for that purpose may, if it thinks fit, postpone the settlement of the other issues......" occurring in Order 14 Rule 2(2) seems to indicate that the trial court has to decide the question as to whether to treat an issue as a preliminary issue or not at the time of settlement of issues. Once the issues are settled, then ordinarily under Order 14 Rule 2(1) together. The discretion which is given to the trial court under sub-rule(2) of all the CS(OS) NO. 510/2005 14 issues are to be disposed of together. The discretion which is given to the trial court under sub-rule (2) of order 14 rule 2 is firstly whether to frame a preliminary issue or not and, secondly to postpone the settlement of other issues. It is open to the trial court to frame all the issues but still say, at the time of framing of the issues, that a particular issue will be treated as a preliminary issue provided, of course, that that issue pertains to the jurisdiction of the court or to the maintainability of the suit. The intention of the Legislature being that the disposal of the suit should be expedited, it would not be proper to construe the provision in such a way as to give an opportunity to the defendant to approach the court after a number of years and apply for treating one particular issue as a preliminary issue. This is precisely what has been done by the respondents in the present case. The proper time for insisting that a preliminary issue be framed was in 1979 when the issues were originally settled. Once the issues are settled then the court would not be justified, especially after lapse of 6 years, to order that one of the issues should be tried as a preliminary issue. The trial court, Therefore, erred in the present case in exercising its discretion in directing the issue with regard to jurisdiction to be regarded as a preliminary issue."
In the light of the aforesaid legal position, this Court is not inclined to exercise the discretion in favour of framing any preliminary issue at this stage after a long gap of seven years from the date of framing of the issues and that too when the matter has almost reached the final stage. Hence, there lies no merit in the present application and the same is accordingly dismissed.
KAILASH GAMBHIR, J NOVEMBER 01, 2012 p CS(OS) NO. 510/2005 15