SICPA INDIA PRIVATE LTD v. KAPIL KUMAR & ORS

12. The plaintiff states that after filing of the suit, subsequent events and facts, which were not in the knowledge of the plaintiff, came to be in the knowledge of the plaintiff at the behest of the defendants, therefore, the plaintiff intends to place on record such subsequent facts and documents and seeks necessary additional reliefs by amending the plaint and to implead Mr.K.L. Chugh as defendant No.7 and seeks additional reliefs against him as the subsequent purchaser becomes a necessary party to be impleaded in the present suit. The plaintiff also seeks a relief in the proposed amended plaint that sale deed dated 7th December, 2010 be declared null and void and that the same is unenforceable as per averments made in the proposed plaint to this aspect. Though through court process the defendants were not served, but on the date of execution of sale-deed, they were aware about the pendency of suit in view of information given by the plaintiff by issuance of letter.

13. It is the case of the plaintiff that each relief being sought for by the plaintiff in the instant suit is based on defendants’ breach of its contractual obligations under the three loan agreements dated 27th August 2008, 27th November, 2008 and 27th February, 2009, concerning recovery of money, as also agreement to sell dated 27th February, 2009, relating to sale of ground floor of the Vasant Vihar Property executed by defendant Nos.[1] and 2 in favour of the plaintiff.

14. It is alleged in the plaint that the property at Penthouse No.1917-A, (New No.1923-A), DLF, Magnolias, Gurgaon is claimed to have been purchased by defendant No.6 before filing the suit as alleged in the written statements. Thus, the plaintiff is entitled to seek relief of recovery of money under the loan agreements as also relief of specific performance. The same was deferred by reserving liberty to pray for such reliefs by filing of an application under Order 2 Rule 2 CPC, being I.A.No.15012/2010, which was filed along with the suit reserving liberty to seek other reliefs including the relief of specific performance. In the application, being I.A. No.478/2011, the plaintiff seeks impleadment of Mr.K.L. Chugh, subsequent purchaser of property at Vasant Vihar, vide sale deed dated 7th December, 2010 (proposed defendant No.7). While I.A. No.274/2012 is the application for amendment of the suit under Order 6 Rule 17 CPC which is also filed by the plaintiff at subsequent stage.

15. As per record only defendant No.6 has filed the written statement who has raised various preliminary submissions. The averments made in the written statement are totally opposite to the statement made in the plaint. The defendant No.6 has also filed the original documents in support of its case. It is stated in the written statement that the suit of the plaintiff is totally misconceived, false, frivolous and not maintainable. The extract of averments made in the preliminary submissions is mentioned below: i) That Defendants 1 & 2 approached the answering defendant for availing loan facility in September 2006. After due diligence done by the answering defendant and negotiations, the answering defendant lent Rs 2,50,00,000/- ( Two Crores Fifty Lacs only) to the Defendants No. 1 & 2 on mutually agreed terms and conditions and against the equitable mortgage of Pent House No. 1917-A (Now re-numbered as 1923-A) DLF Magnolias, Gurgaon vide loan agreement dated 26th September, 2006. The lien of answering defendant was also marked with DLF. ii) That vide letter dated 1st September, 2007, the Defendant No.1 & 2 requested the answering defendant to release the property from lien as they were getting loan on better interest rates from ICICI Bank which was acceded to and released the original Flat Buyer agreement and also got its lien removed from DLF in favour of ICICI Bank however obtained pari-pasu charge from the borrower over the DLF property. iii) That on 4th July, 2008 the Defendants No. 1 & 2 sought another loan from the answering defendant. After conducting due-diligence and after negotiations, the answering defendant lent Rs 83,00,000/- (Rupees Eighty Three Lacs Only) to the defendants No. 1 & 2 on mutually agreed terms and conditions and against the equitable mortgage of Basement of property No. D-6/2 Vasant Vihar, New Delhi. A separate loan agreement dated 4.7.08 was executed. iv) The loan of the Defendants No. 1 & 2 was moving smoothly and against the DLF property on Rs 47.50 Lacs approx remained due. The defendant No.1 & 2 came to get top up of the loan. Considering the past performance, the answering defendants advanced another sum of 172.25 Lacs thereby made the total loan amount against DLF property to Rs 2. 20 Crores. A supplementary loan agreement dated 1.10.08 was also executed in continuation of original loan agreement dated 26th September, 2006. v) Thereafter the Defendants No. 1 & 2 became irregular in their repayments to the loan facility advanced by the defendant No.6 and finally in February 2010 approached the defendant No.6 disclosing that they are unable to service the ICICI loan facility and they are apprehending action by ICICI Bank against the DLF property for recovery of the loan amount. They disclosed that dues of DLF are also mounting and DLF is also threatening to cancel the allotment. It was further informed that they have already taken loan upon the Ground Floor of D-6/2 Vasant Vihar Property from ICICI Bank and due to defaults, ICICI Bank is also likely to take action against the property for the recovery. The Defendants No. 1 & 2 again sought help of the defendant No.6. vi) On inquiry by the defendant it came to light that the DLF has already cancelled the allotment of the Pent House due to non-payment of the installments totaling to about Rs 80 Lacs. Further the ICICI loan amount against the DLF property was about Rs 5.85 Crores which was also heading towards default. Further the dues payable to the Defendant for the loan taken against DLF property by the Defendants No. 1 & 2 were also to the tune of Rs 2.80 Crores. That it was also confirmed that the loan liability of ICICI Bank in February 2010 against the Vasant Vihar property was Rs 5.40 Crores and the dues payable to the Defendant for the loan taken against Vasant Vihar property by the Defendants No. 1 & 2 were also to the tune of Rs 1. 33 Crores. vii) It is contended that considering all the situation and calculating the odds and risk, the answering defendant agreed to help Defendants No.1 & 2 and decided to buy the Ground Floor and Basement of property D-6/2 Vasant Vihar, New Delhi for an agreed total sum of Rs

6.75 Crores. For the purchase of the basement and Ground floor the answering defendant paid Rs 6.75 Crores in following manner: i) Rs 2 Lacs cash to the Defendants No. 1 & 2 against receipt dated 15th February, 2010. ii) Rs 1.33 Crores towards repayment of dues of the answering defendant against the loan agreement dated 4th July, 2008. iii) Taken over the loan liability of ICICI Bank against the Ground Floor of the Vasant Vihar property which was at Rs 5.40 Crores as on 15th viii) Second Supplementary Loan agreement dated 24th February,2010 in continuation of loan agreement dated 26th September, 2006 and supplementary loan agreement dated 1.10.08, the defendant paid Rs 80 Lacs to DLF and revived the allotment of the pent house. Further cleared the overdue installments of ICICI and also started paying the dues of ICICI Bank on behalf of the Defendants No. 1 & 2 to regularize the loan with a view to protect the property. It was agreed in the Second Supplementary Loan agreement dated 24th February, 2010 that the defendant shall be at liberty to dispose off the property at DLF till 31st May, 2010 and clear the upto date dues of defendant alongwith interest. Failing which, the defendant agreed to purchase the DLF property on mutually agreed price. ix) That till 31st May, 2010 the defendant No.6 carried on paying the dues of ICICI Bank against the DLF property and also paid dues of DLF. Further to secure its interest, defendant No. 1 & 2 executed registered power of attorney dated 07th April, 2010 in favour of representative of Defendant No.6. x) As the defendants No.1 & 2 could not sell the DLF property till 31st May 2010 as such finding no way out, the defendants No.1 & 2 offered to sell their DLF pent house property to the defendant. Finally, after negotiations the defendant finally agreed to purchase the DLF property on negotiated agreed price of Rs. 11, 51,00,000/- (Rupees Eleven Crores Fifty One Lacs Only). Towards the payment of the sale consideration, for the purchase of the DLF property the defendant paid Rs. 11.51 Crores in following manner:i) Rs 1 Lac cash to the Defendants No. 1 & 2 against receipt dated 15th July 2010. ii) Rs 5.00 Crores towards repayment of dues of the answering defendant against the loan agreements dated 26th September, 2006, 1st October, 2008 and 24th iii) Taken over the loan liability of ICICI Bank against the Ground Floor of the Vasant Vihar property which was at Rs 5.65 Crores as on 1st June,2010. iv) Future dues payable to DLF were assessed at Rs. 85 Lacs. xi) That for the sale-purchase of property at Vasant Vihar, agreement to sell dated 15th February, 2010 and Power of Attorney dated 15th February, 2010 were executed by defendants No. 1 & 2 in favour of the defendant No.6. Similarly for the sale-purchase of property at DLF agreement to sale dated 1st June 2010 and Memorandum of Understanding dated 1st June 2010 were executed by defendants No 1 & 2 in favour of the answering defendant. After purchasing the two properties, on 23.08.2010, the defendant fully and finally paid Rs.10, 84,53,097 (Rupees Ten Crores Eighty Four Lacs Fifty Three Thousand and Ninety-Seven only) to ICICI Bank obtained NOCs and got the original title deeds of Vasant Vihar and DLF property released. Further to secure its entitlement over the property, got its lien marked in records of DLF, in terms of requirements of DLF, replacing the name of ICICI. xii) It is stated in the written statement that although the answering defendant has purchased the properties and had paid full and final consideration, but to minimize its cost, the sale deeds were not executed or got registered. Rather it was agreed that as and when the defendant No.6 desires, the Defendants No. 1 & 2 shall execute all the necessary documents either in favor of the answering defendant or in favour of its nominee at the sole discretion of the answering defendant. Defendant No.6 located a buyer to sell the Ground floor and Basement of property D-6/2 Vasant Vihar, New Delhi and after negotiations, the deal was finalized on 11th October, 2010 and cheque was received from the prospective buyer however the formal agreement to sell for Rs 6. 75 Crores (Rupees Six Crores Seventy Five Lacs) was got executed on 21st October, 2010 by the defendant, from defendant No.1 & 2 directly in favour of Mr. K. L. Chugh S/o Mr. R. L. Chugh, R/o N-79, Panchsheel Park, New Delhi. A representative of the defendant signed the document as witness and confirming party of the agreement to sell. xiii) That subsequently in terms of the agreement to sell dated 21st October, 2010, Sale Deed dated 7th December, 2010 was also got executed by the defendant from the defendants No. 1 & 2 directly in favour of Mr K.

Park, New Delhi regarding basement and ground floor of property bearing No. D-6/2, Vasant Vihar, New Delhi and a representative of answering defendant signed the document as witness and confirming party and all the payments received were simultaneously credited in the account of Defendant.

16. It was also mentioned in the written statement that the defendant No.6 was not at all aware about any loan or second charge upon the properties at Vasant Vihar or Gurgaon as alleged by the plaintiff. However a letter dated 11th October, 2010 was received by the said defendant issued by the plaintiff wherein a request was made by the plaintiff to the said defendant to provide the details of loan given to defendants No.2 to 3 by the said defendant and also to record the second charge of plaintiff upon the properties. The letter was duly replied by the defendant No.6 vide letter dated 27th October, 2010 and it was informed to the plaintiff that the two properties have been purchased by the defendant No.6 against due consideration. In view thereof, second charge of the plaintiff cannot be recorded against the two properties.

17. It is also alleged in the written statement that from the documents filed and relied upon by the plaintiff it is clear that vide letter dated 23rd February, 2010, the defendant No.1 to 3 have informed that the property Basement and Ground Floor of D-6/2, Vasant Vihar has already been sold for a sum of Rs 6.75 Crores and they are already looking for a buyer for Gurgaon property, who also attached therewith the cheque of Rs 5 Lacs as the surplus from the sale of Vasant Vihar property after clearing dues of defendant No. 4 and 6. Pursuant thereto the plaintiff wrote a letter to defendant No.1 to 3 dated 9th March, 2010 with the subject title “permission to sell”. There was no protest or objection or condition indicated or mentioned by the plaintiff upon the defendants No.1 to 3 thereby showing their displeasure/non-permission to the defendants 1 to 3 about sale of the properties. Rather only information has been sought about the documentations regarding the sale.

18. By letter dated 13th March, 2010 the plaintiff has informed the defendants No.1 that the value of shares i.e. the security against which the loan of Rs.[5] crores was extended is dropping and requested the defendant No.1 either to clear the dues otherwise the shares would be sold. From this letter it is absolutely clear that the suit properties were never pledged as security nor were they ever put under second charge with plaintiff and in fact all the documents regarding second charge upon the two properties and agreement to sell regarding the Vasant Vihar property are an afterthought and created ante dated to raise false claim upon the two properties in connivance with the defendant No.1 to 3 and the plaintiff. It is stated that the apprehension of the defendant No.6 further got strength from the letter dated 15th June, 2010 written by defendant No.5 DLF whereby it had refused to take cognizance of any back dated letter.

19. It is alleged that the plaintiff was fully aware about all the transactions but until the entire money is paid and cleared by the defendant No.6 by investing about Rs.18,26,00,000/- (Rupees Eighteen Crores and Twenty Six Lacs only) no letter or objection was raised by plaintiff before any authority or department or even with the defendant No.6. The property at Vasant Vihar was purchased on 15th February, 2010 and the Gurgaon property was purchased on 1st June, 2010. The plaintiff is now seeking second charge alone without seeking any recovery from the borrowers. It is a collusive suit between the plaintiff and defendant No.1 to 3 which has been filed only to create problems with ulterior motives despite knowing fully well that no relief regarding recording of second charge can be made against an individual. As the defendants No. 1 & 2 are no more the owners of the suit property, the question of recording any charge upon the property does not arise.

20. After filing the suit, various pending applications have been filed by the parties, details of which are mentioned in para 1 of my order. The averments made in these applications and replies filed by the non-applicants are referred as under: i) I.A. No.478/2011 (Order 1 Rule 10(2) read with Section 151 CPC) This application has been filed by the plaintiff for addition of party i.e. Mr.K.L. Chugh. The main submissions made in the application are that when the matter came up for hearing, after the summons were served and notices were issued, on 9th December, 2010, the counsel for the defendants No. 1, 2 and 3 gave a statement that they have sold the property to defendant No. 6. The counsel for defendant No.6 stated that the Vasant Vihar property has been sold by them on 7th December 2010 to one Mr. Chugh. On the Court’s direction, the counsel for the defendant No.6 vide email dated 21st December, 2010, conveyed to the counsel of the plaintiff the details of the buyer and the sale executed by defendant No.6 in favour of the buyer, Mr. Chugh. The details are as under: Name of the purchaser: K L Chugh Address: N- 79, Panchsheel Park, New Delhi- Date of Registry: 07/12/2010 Sale Consideration: Rs.6,75,00,000/- (Rupees Six Crores Seventy Five Lacs Only) It is stated in the application that the sale of the property by defendants No.1, 2 and 3 to defendant No.6 and by defendant No.6 to Mr. Chugh during the pendency of the suit has been objected to by the plaintiff and it is considered necessary that Mr.Chugh is made a party in the matter. It has been stated that Mr. Chugh is a necessary and proper party because the dispute involved in the matter cannot be finally adjudicated in his absence. In his reply to the said application, Mr. Chugh stated that he met defendant Nos. 1 and 2 through a property agent from whom he bonafidely purchased the property being the Ground Floor and Basement of D-6/2, Vasant Vihar, New Delhi on 7th December, 2010 for a consideration of Rs.6.75 Crores pursuant to an Agreement to Sell dated 21st October 2010 and he is in the possession of the same. It has been stated that the defendants No.1 and 2 had stated that they had cleared title without any encumbrance, charge or lien. In fact the original title deeds were in possession of defendants No.1 and 2, which were shown to him at the time of entering into the agreement to sell. He purchased the property from defendants No.1 and 2 and not from any other party as claimed by the plaintiff in his application. It has been stated that as claimed by the plaintiff, had the property been mortgaged to the plaintiff, the original title deeds of the same ought to have been in the plaintiff’s possession. The property has been bought by him in good faith and for consideration after due diligence. ii) I.A. No. 6654/2011 (u/O 1 R. 10 r/w S.151 CPC) The above application has been filed by defendants No.1 to 3 for deletion of names of defendants No.4 to 6 as being neither proper nor necessary parties to the suit. It has been stated that various loan agreements have been executed between the plaintiff and defendants No. 1 to 3, however, defendants No. 4 to 6 are not parties to the said agreements and have no privity of contract with the plaintiff. They are referred to as proforma parties in the plaint itself. Defendants No. 4 to 6 have wrongly and falsely been made parties only with a view to put undue pressure upon defendants No.1 to 3. Therefore, the names of defendants No. 4 to 6 be deleted from the array of parties as being neither proper nor necessary parties for proper adjudication of the disputes. In the reply to the said application, the plaintiff stated that the presence of defendants No.4 to 6 has become necessary and now the plaintiff is seeking reliefs against the defendants No.4 to 6 also, in view of subsequent facts brought on record. iii) I.A. No. 6657/2011 (u/S. 8 of Arbitration and Conciliation Act, 1996) The above mentioned application is also filed by defendants No.1 to 3 for reference of the disputes in the present suit to arbitration. It is stated that various loan agreements were executed by the plaintiff and defendants No. 1, 2 and 3, wherein there is a clause providing for arbitration. Since the present suit is seeking enforcement of an obligation as enumerated in the loan agreement which clearly and specifically provides for arbitration in case of any dispute arising out of the agreement, the present suit be dismissed and the parties be relegated to arbitration in terms of contractual provisions. In the reply to the said application, the plaintiff stated that the arbitration agreement is between the plaintiff and defendant No.3. However, the subject-matter of the present suit cannot be referred to arbitration because the parties are different and the reliefs are being sought against third parties who are not parties to the Arbitration Agreement. iv) I.A. No. 20809/2011 (u/O 7 R. 11 r/w S.151 CPC) Yet another application filed by defendants No.1 to 3 for rejection of the present suit. It is stated by the defendants No.1 to 3 that since the document relied upon by the plaintiff (loan agreement dated 27th February, 2009) for claiming second charge on the immovable properties is unregistered and the same is inadmissible in evidence. The suit by the plaintiff based on the unregistered document involving interests in immovable property is barred by law and is therefore liable to be rejected. It is stated that if the suit is for the alleged cause of action of non-payment of dues, then the remedy for the same is a suit for recovery, which the plaintiff has not claimed. The plaintiff is rather seeking to enforce recovery by means of injunction. Such a cause of action is not permissible under the law. It is also stated that for recovery of dues, the plaintiff is required to pay ad valorem court fee. The plaintiff is seeking to avoid the payment of court fee by not filing a suit for recovery. In reply filed by the plaintiff to the said application, the contentions of the defendants have been denied. v) I.A. No. 274/2012 (Order 6 Rule 17 r/w S.151 CPC) This is an application filed by the plaintiff for amendment of the plaint to bring on record the subsequent developments in the matter. It is the case of the plaintiff that certain cause of action arose post issuance of summons in the matter and certain information has not been provided by the defendants despite direction by this Court. Defendants’ attempts were not to give full information to the plaintiff, and suppressing complete information in the process delaying entire progress and trial of the suit. In view of the subsequent developments, the plaintiff has filed the instant application to amend the plaint in terms of para 17 of the application. In the reply to the said application, the defendants No. 1 to 3 have stated that the proposed amendments are not legally maintainable and sustainable in the eyes of law. If the proposed amendments are allowed, it will change the whole character and nature of the existing suit which is for “permanent injunction” into a suit for “specific performance and/or recovery” and thus constitutionally and fundamentally changing the nature and character of the suit”. It is stated that plaintiff has filed the application only after the defendants filed an application under Order 7 Rule 11 CPC seeking rejection of the plaint on various grounds. It is only an attempt to overcome the objection raised by the defendants and to take away the legal rights of the defendants. In the reply filed by defendant No.6, it has been stated that in case the plaintiff is permitted to amend his suit, it would change the entire colour of the suit. The plaintiff is trying to introduce a new case which was not his case in the original plaint by converting his suit of injunction into a suit for declaration and specific performance and also for a recovery. The other two applications have been filed by the plaintiff, one I.A. No.15012/2010, under Order II Rule 2 CPC, the details of which are already mentioned and second I.A. No.15011/2010 filed along with plaint is for stay, wherein an ex-parte order was not passed, however, after service of the defendants, status quo order was passed on 9th December, 2010. As some of the facts in the main suit and pending applications are common, the same are being considered together.

21. Mr.C.Mukund, the learned counsel appearing on behalf of plaintiff, has made various submissions which are outlined as under: a) That the correct position is that when the suit and interim application were first time listed before court on 10th November, 2010, the summons and notice were issued for 16th November, 2010. But the same were not issued and defendants could not be served, however, the complete sets of paper-book were privately sent to all the defendants by speed posts which were served. An affidavit of service was filed on 12th November, 2010. b) That the matter was listed on 16th November, 2010 and the Court issued notice and fixed 9th December, 2010 for hearing. The plaintiff collected the notices from the Court, the Registry and caused the same to be served upon the defendants. The plaintiff filed an affidavit of service dated 6th December, 2010 by giving details of service. According to the plaintiffs, prior to execution and registration of sale deed dated 7th December, 2010 by the defendants No.1 and 2 in favour of Mr.K.L. Chugh, all the defendants were duly served with the notices issued by this Court and inspite of knowing about the plaintiff case and pendency of suit, the defendants No.1, 2, 3 and 6 caused the sale deed to be executed and registered in favour of Sh.K.L. Chugh, of property bearing No.7, Panchsheel Park, New Delhi-110017. c) That even before filing of the suit, the plaintiff caused paper publications to be published in the newspaper both in English and Hindi version of Hindustan Times, English and Hindustan in Hindi informing the general public at large that the said two properties are mortgaged properties in favour of the plaintiff and in view of the default committed by the defendants No.1, 2 and 4, not to deal with or purchase, or enter into any arrangement in respect of the said properties in any manner. The copies of the paper publications have been filed along with the list of documents. Mr.Chugh has purchased the property, which is the subject matter, from defendants No.1 and 2 as he has admitted in his criminal complaint filed by him. The defendant No.6 was never the owner of the property. All the papers allegedly filed by the defendant No.6 in support of its submissions are not genuine and cannot be relied upon. The stand taken by the defendant No.6 is contrary to the statement made by Mr.Chugh. d) That the new purchaser of the property namely K.L. Chugh is therefore a necessary and proper in the present proceedings. The plaintiff states that presence of Mr.K.L. Chugh, the new purchaser of the suit property before this Court is necessary in order to enable this Court to effectively and completely adjudicate upon and settle all the questions involved in the suit and to avoid multiplicity of judicial proceedings, confliction of judicial decisions and to save costs of parties. As such the plaintiffs have filed this application for addition of Mr.K.L. Chugh as one of the defendants in the suit. e) That the Vasant Vihar property has been sold by defendant No.1 to 3, 4 and 6 in connivance with each other to Mr.K.L. Chugh, who is a necessary party. All the defendants and Mr. Chugh were aware about the pendency of suit on the date of execution of sale deed i.e. 7th December, 2010. It was done deliberately two days prior to the next date fixed by the court on 9th December, 2010 in order to frustrate the rights and claims of the plaintiff and in normal case, the said transaction ought not to have been done when the suit is pending and the defendants were aware about it. f) That it is necessary that Mr.K.L. Chugh be impleaded as defendant No.7 and the plaintiff application under Order 6 Rule 17 CPC for amendment of plaint and relief be allowed in view of subsequent events. It is argued by Mr.Mukund that the plaintiff in the matter has already filed an application under Order II Rule 2 CPC along with plaint being IA No.15012/10 in which the notice was issued on 10th November, 2010 reserving liberty to seek other relief including the relief of specific performance. As Mr.K.L. Chugh is the subsequent purchaser of the property by sale deed dated 7th December, 2010 therefore the application under Order 6 Rule 17 CPC is liable to be allowed. The plaintiff is merely bringing the additional fact and events and prayers are to be added in view of change of circumstances.

22. The following decisions are referred by Mr.Mukund in support of his submissions: Under Order 1 Rule 10 CPC i. Amit Kumar Shaw and another vs. Farida Khatoon and another, AIR 2005 SC 2209. ii. Razia Begum vs. Sahebzadi Anwar Begum and others, AIR 1958 SC 886. iii. M/s Aliji Monoji & Co. vs. Lalji Mavji and others, AIR 1997 SC 64. iv. Savitri Devi vs. District Judge, Gorakhpur and Others, v. Khemchand Shankar Choudhary and another vs. Vishnu Hari Patil and others, AIR 1983 SC 124. Under Order VII Rule 11 CPC i. M/s. Texem Engineering vs. M/s. Texcomash Export, ILR (2011) IV Delhi 176. ii. D. Ramachandran vs. R.V. Janakiraman and others, AIR 1999 SC 1128. Under Section 8 of the Arbitration and Conciliation Act i. Booz Allen and Hamilton Inc. vs. SBI Home Finance Limited and Others, (2011) 5 SCC 532 (Paras 48.3, 51 & 52). Under Order II Rule 2 CPC i. Virgo Industries (Eng.) Private Limited vs. Venturetech Solutions Private Limited, (2013) 1 SCC 625 (Para 8). Under Section 52 of the Transfer of Property Act i. Thomson Press (India) Limited vs. Nanak Builders and Investors Private Limited and Others, (2013) 5 SCC 397 (Paras 16, 26, 30 & 45). ii. Guruswamy Nadar vs. P. Lakshmi Ammal (dead) Through LRs and Others, (2008) 5 SCC 796 (Paras 6, 7, 8, 9 & 13). iii. Jayaram Mudaliar vs. Ayyaswami and Others, (1972) 2 SCC 200 (Paras 13, 14, 43 & 44).

23. Mr.Sandeep Sethi, learned Senior counsel appearing on behalf of the defendants No.1 to 3, Mr.Maninder Singh, learned Senior counsel appearing on behalf of the defendant No.6 and Mr.T.K. Ganju, learned Senior counsel appearing on behalf of the proposed defendant No.7, have made their submissions at great length and their main argument is that when the suit itself is not maintainable, the question of considering the prayer made in the applications for amendment and impleadment does not arise. It is common argument of all the defendants that there is no cause of action for the plaintiff to file the present suit which is not maintainable and if the suit itself is not maintainable, the amendment in the plaint and prayer for impleadment of additional party is not called for. As far as proposition of law, as laid down in the judgments referred by the plaintiff, is concerned, they are not disputing the same. They submit that in an appropriate case such relief(s) can be granted. But in the present case, the plaintiff is not entitled for relief claimed in the suit. The said decisions do not help the case of the plaintiff.

24. From the record and original documents filed by the defendant No.1, it is evident that Mr.Chugh had purchased the property after availing a loan from Standard Chartered Bank. The said bank had also carried out due diligence for the said property. It would be apparent from above that the Agreement to Sell dated 21st October, 2010 was prior to the suit filed by the plaintiff. Mr.Chugh had paid the sale consideration to defendant Nos.[1] and 2 as recorded in the sale deed in the following manner: S.No. Cheque/Draft No. Date Drawn on Bank Amount

1. 327861 11.10.2010 Standard Chartered Bank, Greater Kailash-I, New Delhi 10,00,000

2. 327863 21.10.2010 Standard Chartered Bank, 90,00,000

3. 099094 02.12.2010 Standard Chartered Bank, 3,25,00,000

4. 465421 30.11.2010 Standard Chartered Bank, 2,50,00,000 Narain Manzil, Barakhamba Road, Delhi Total 6,75,00,000 The original title deeds of the said property were with defendant Nos.[1] and 2 who handed over the same to Mr. Chugh. The said title deeds are now lying with Standard Chartered Bank against the loan granted to Mr. Chugh. It shows that at no point of time during the purchase of the said property Mr.Chugh had any knowledge about the present suit and/or any of the transactions alleged in the suit between the plaintiff and defendants No.1 and 2. The suit was filed on 2nd November, 2010 which was listed before Court first time on 10th November, 2010. Before filing of suit, Mr.Chugh already initiated various steps to get the loan sanctioned. Mr. Chugh apparently came to know about the filing of the suit and litigation between the parties at the later stage. According to him, he came to know about the same when the copy of application, being I.A. No.478/2011 under Order 1 Rule 10 CPC, was served. As soon as he got to know about the present suit and alleged transactions between defendant Nos.[1] and 2 Mr. Chug filed a complaint with the Economic Offences Wing, Crime Branch, New Delhi on 6th April, 2011 against defendants No.1 and 2 who had concealed the loan transactions and other documents executed by them with the plaintiff from Mr. Chugh.

25. In the plaint, the plaintiff sought the reliefs restraining the defendants No.1 and 2 from selling, transferring and creating third party interest of the suit properties and for declaration that the defendants No.4 to 6 are second charge of the plaintiff and mandatory injunction against them. It has come on record that before filing of suit in view of the deal finalized on 11th October, 2010 the agreement to sell dated 21st October, 2010 was already executed with regard to the property of ground floor and basement of D-6/2, Vasant Vihar, New Delhi. The cheque was received from Mr.Chugh, prospective buyer.

26. In the light of above mentioned facts and circumstances, it is to be considered by this Court as to whether the suit filed by the plaintiff is maintainable against the defendants No.4 to 6 or the plaintiff has now any cause of action against them and whether the plaintiff is entitled to relief of impleadment of Mr.Chugh and consequently amendment of plaint.

27. The present suit is in the nature of suit for declaration/injunction wherein plaintiff has prayed for a decree for declaration that the properties No.D-6/2, Vasant Vihar, New Delhi and Pent House No.1923-A, DLF Magnolia, Gurgaon are under the second charge of the plaintiff. The plaintiff’s claim of second charge over the properties is based on the loan agreement dated 27th February, 2009 who is also seeking enforcement of purported agreement to sell dated 27th February, 2009.

28. It is not denied by the plaintiff that the document relied upon by the plaintiff (loan agreement dated 27th February, 2009) for claiming second charge on the immovable properties is unregistered document. The suit is admittedly filed on the basis of unregistered document involving interest in immovable property.

29. A charge can be created under Section 100 of the Transfer of Property Act, 1882 and all the provisions which apply to simple mortgage shall also apply to the creation of any charge. A simple mortgage is defined under Section 58 (B) of the Transfer of Property Act, 1882 wherein without delivering possession of the mortgage property, the mortgagor binds himself personally to pay the mortgage money and in the event of this default the mortgage property can be sold. Under Section 59 of the Transfer of Property Act, 1882 every mortgage other than the mortgage by deposit of title deeds (i.e. equitable mortgage) can be affected only by a registered instrument signed by the Mortgagor and attested by the two witnesses. It is admitted in the present case, that the charge has not been registered. Under Section 17(B) of the Registration Act, registration of charge is compulsory and in absence of registration, the charge cannot be enforced. Reliance in this regard can be placed on the case of M.L. Abdul Jabbar Sahib vs. H. Venkata Sastri and Sons & Ors., AIR 1969 SC 1147, and relevant paras 12 and 15 of the same are reproduced as under: “12. As to the second question, the argument on behalf of the respondents is that Section 100 of the Transfer of Property Act attracts Section 59 and that a charge can be created only by a document signed, registered and attested, by two witnesses in accordance with Section 59 where the principal money secured is Rs. 100 or upwards. The High Court accepted this contention following its earlier decisions in Viswanadhem v. Menon and Shiva Rao v. Shanmugasunderaswami and held that the security bond was invalid, as it was attested by one witness only. We are unable to agree with this opinion. Section 100 is in these terms: "Where immoveable property of one person is by act of parties or operation of law made security for the payment of money to another, and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property; and all the provision hereinbefore contained which apply to a simple mortgage shall, so far as may be, apply to such charge. Nothing in this section applies to the charge of a trustee on the trust property for expenses properly incurred in the execution of his trust, and, save as otherwise expressly provided by any law for the time being in force, no charge shall be enforced against any property in the hands of a person to whom such property has been transferred for consideration and without notice of the charge.

15. If a charge can be made by a registered instrument only in accordance with Section 59, the subsequent transferee will always have notice of the charge in view of Section 3 under which registration of the instrument operates as such a notice. But the basic assumption of the doctrine of notice enunciated in the second paragraph is that there may be cases where the subsequent transferee may not have notice of the charge. The plain implication of this paragraph is that a charge can be made without any writing.”

30. The said document purporting to create a charge would also require to be executed on a stamp paper of requisite value under the provisions of Stamp Act which has not been done. A document, which is not adequately stamped in accordance with law, cannot be looked into for any purpose whatsoever. In the case of Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana & Anr., (2012) 1 SCC 656, (SLP (C) No.13917/2009, dated 11th October, 2011), it was observed: “15. In the earlier order dated 15.5.2009, the objects and benefits of registration were explained and we extract them for ready reference:

to any legal obligation or liability and who is or are the person(s) presently having right, title, and interest in the property. It gives solemnity of form and perpetuate documents which are of legal importance or relevance by recording them, where people may see the record and enquire and ascertain what the particulars are and as far as land is concerned what obligations exist with regard to them. It ensures that every person dealing with immovable property can rely with confidence upon the statements contained in the registers (maintained under the said Act) as a full and complete account of all transactions by which the title to the property may be affected and secure extracts/copies duly certified." Registration of documents makes the process of verification and certification of title easier and simpler. It reduces disputes and litigations to a large extent.”

31. It is apparent in the present case that the defendant No.6 purchased the Gurgaon property on 1st June, 2010. Mr.Chugh has purchased the Vasant Vihar property on 7th December, 2010. There was no interim order on that date. From the correspondences available on record, which is not denied by the plaintiff, it is clear that the plaintiff was aware about the said transaction. The plaintiff while drafting the plaint has vaguely made its statement in this respect and is trying to take the shelter of the application filed by the plaintiff under Order II Rule 2 CPC. It is settled law that by application of the second part of Section 100 of the Transfer of Property Act a charge is not enforceable against a bonafide transferee of the property for value without notice of the charge. In the present case, no steps were taken by the plaintiff to recover the loan amount from defendants No.1 to 3. The suit is merely filed for declaration. No proposed amendment in the plaint is for alternative prayer for recovery from the defendants No.1 to 3.

32. As regard the relief sought by the plaintiff for enforcement of purported agreement to sell dated 27th February, 2009, Clauses 3 and 4 of the said agreement provide as under: “3. That since the said property is carrying housing loan(s) from ICICI Bank Ltd./ICICI Home Finance, the second party shall settle the outstanding dues of ICICI Bank Limited/ICICI Home Finance before enforcing the Agreement. The First Party will however pay the EMIs due on the home loan against the aforesaid property during the period upto 30.06.2009.

4. In the event the First Party is able to get a better price than the consideration agreed between them in this agreement. The First Party would be duly authorized for contracting and selling the aforesaid property without recourse to the Second Party but under an information to the Second Party in respect of contracting a deal of aforesaid sale consideration. In this case the first party undertakes to settle the ICICI Bank Limited/ICICI Home Finance loans out of the sale proceeds and remit the balance to the second party towards part payment against the ICD.”

33. It is argued by Mr. T.K. Ganju, learned Senior counsel appearing on behalf of proposed defendant No.7 that the said relief is neither maintainable nor available to the plaintiff. The suit property in question has been sold to Mr. Chugh vide registered Sale Deed dated 7th December, 2010. In fact, an agreement to sell was also executed on 21st October, 2010 before the filing of the suit in question. Further, in terms of Section 41 (e) and (g) of the Specific Relief Act, 1963 such an injunction cannot be granted. The said provisions provide as follows: “41.(e) An injunction cannot be granted to prevent the breach of a contract the performance of which would not be specifically enforced. 41(g). An injunction cannot be granted to prevent the continuing breach in which the plaintiff has acquiesced.” It is submitted that the said agreement to sell dated 7th December, 2010 is not enforceable. Even assuming such agreement to sell was enforceable, the plaintiff has acquiesced in its breach by impliedly consenting for sale of property to third party, intimation of which was conveyed to it by defendant Nos.[1] and 2 through their letter dated 24th February, 2010. If the suit filed by the plaintiff is not maintainable, the same would not be maintainable even on the basis of the amendment application as the specific performance of the alleged agreement to sell cannot be enforced by the plaintiff in terms of Clause 3 of the aforesaid agreement as it is not the case of the plaintiff nor have they pleaded that they have paid, cleared or settled their dues of ICICI Bank and therefore, the plaintiff has no right to enforce the agreement to sell. Further, in the alternative in terms of clause 4 of the agreement to sell, third party rights have been created with knowledge of the plaintiff and ultimately the suit property has been sold and conveyed to Mr.Chugh for a valuable consideration. Mr. Chugh is a bonafide purchaser of the suit property. The proposed application under Order VI Rule 17 CPC filed by the plaintiff seeking amendment is hence strongly opposed on the reasons that the present suit is malafide attempt by the plaintiff to defeat the rights and cloud the title of Mr.Chugh in the said property without any justification.

34. It is evident from the documents filed by the plaintiff that the plaintiff was fully aware of the fact that with effect from 24th February, 2010, when an intimation was sent to him by defendants No.1 & 2 regarding the sale of the suit property for the price of Rs.6.75 crores, the plaintiff never objected to the said sale. The said sale was, therefore, with the knowledge and implied consent of the plaintiff. The plaintiff as a reasonable and prudent person ought to know that several third party rights would have been created over the suit property. Thus, being aware of the fact that as early on 24th February, 2010, third party rights over the suit property have been created, the present application for amendment was filed in January, 2012 seeking specific performance of its agreement to sell dated 27th February, 2009 and further reliefs for cancellation of the sale deed in favour of Mr.Chugh.

35. On a perusal of Clause 3, it is clear that right of plaintiff to enforce the Agreement to Sell would arise only if the plaintiff settles the outstanding dues of ICICI Bank. The dues of ICICI Bank admittedly were about Rs.5.40 crores against the said property at Vasant Vihar. The plaintiff under Clause 3 of the said Agreement cannot seek enforcement of the said Agreement unless and until the outstanding dues of ICICI Bank are first paid, cleared or settled, which were approximately Rs.5.40 crores in February, 2010. The plaintiff has not settled and/or paid the said dues of ICICI Bank. Neither there is averment in the plaint nor even in the proposed amended plaint to this effect.

36. Upon intimation about sale of Vasant Vihar (Ground and Basement) property vide defendant’s letter dated 28th February, 2009 plaintiff did not raise any protest about its sale or offered to enforce the said agreement to sell by offering to pay dues of ICICI Bank. The intention of the plaintiff was neither to offer to settle dues of ICICI Bank and enforce the said agreement to sell nor to raise any protest to the sale being affected by the defendants to Mr.Chugh. The plaintiff, having chosen not to enforce the agreement to sell when offered in February, 2009 by not settling the dues of ICICI Bank cannot now take a U turn and try to enforce the same without having to fulfill its obligation of settling the account of ICICI Bank which has been paid by the proposed buyer i.e. defendant No.6. Through this declaratory suit the plaintiff is trying to assert its limited right without actually fulfilling its obligations under the agreement. Unless and until the plaintiff pays the outstanding dues to ICICI Bank, plaintiff could not have enforced the said agreement to sell. The plaintiff waited for the dues of ICICI to be paid which were eventually paid by Defendant No.6 and the Vasant Vihar property became unencumbered then it filed declaratory suit which clearly lacks cause of action.

37. The plaintiff was fully aware of its limited rights over the property, (as ICICI Bank was the first charge holder of the suit property), especially in view of the fact that the major amount of sale proceeds would go to the first charge holder i.e. ICICI Bank as explained in the letter of defendant dated 23rd February, 2010, the plaintiff chose not to resist the proposed sale and willing encashed the two bank drafts submitted by the defendants.

38. In Clause 4 of the said agreement to sell dated 27th February, 2009, it is provided that if defendants No.1 and 2 get a better price then the consideration agreed between the plaintiff and the defendant No.1 (i.e. more than Rs.5.75 crores), the defendant Nos.[1] and 2 are entitled and authorized for contracting and selling the suit property without recourse to the plaintiff to whom only an intimation is required to be sent in respect of such a sale. It is admitted case of the plaintiff that on 23rd February, 2010, the defendant Nos.[1] to 3 sent a letter intimating the plaintiff that they have found a buyer for Ground Floor and Basement of Vasant Vihar property for a net consideration of Rs.6.75 crores and after paying Rs.5.40 crores to ICICI Bank and other loans, a sum of Rs.[5] lac was remitted to the plaintiff by a cheque drawn on HDFC Bank. The plaintiff in reply to the said letter, vide their letter dated 9th March, 2010 did not object to the sale and also encashed the cheque of Rs.[5] lac, thereby conveying their implied acceptance of the sale by the defendants No.1 to 3 of the said suit property. In terms of Clause 4 of the agreement to sell, only intimation to the plaintiff was to be given, there was no obligation to take the consent of the plaintiff. The plaintiff did not raise any objection to the said sale by their letter dated 9th March, 2010. By another letter dated 13th March, 2010 issued by plaintiff to defendant No.1 still no objection to the sale was raised by plaintiff. The demand was raised that the value of the securities are below their outstanding amount payable by defendant No.1. Even by letter dated 27th October, 2010, the defendant No.6 had informed the plaintiff having purchased both properties from the defendants No.1 and 2 against consideration and refused to record the charge. The correspondences exchanged between the parties are extracted as under: “KK/SICPA/2009-2010 Dated February 23, 2010 M/S SICPA (INDIA) LIMITED 308-312, MERCANTILE HOUSE, 15, K. G. MARG, NEW DELHI-110001. Kind attn. of Mr. Vij please Dear Sir, SUB: Permission for property sale. This has reference to the loan agreement dated 27th February, 2009 executed between SICPA India Ltd and Brushman (India) Limited, wherein apart from other securities, second charge on properties located at D-6/2 Ground Floor, Vasant Vihar, New Delhi-110057 and penthouse No. 1917-A, DLF Magnolias, Gurgaon both in the name of Kapil Kumar s/o late sh Kanwal Krishan and Rittu Kumar w/o Kapil Kumar were offered as per the loan agreement. Relevant documents were submitted to you as mentioned in the loan agreement. We wish to inform you that there is a demand notice raised by DLF on the Penthouse No. 1923A of appx. Rs. 98 Lacs and the allotment is liable to be cancelled in case this amount is not paid within a reasonable time. Further, there is a pressure from ICICI housing loan department to clear off the loans on both the properties, failing which they have threatened to initiate action as per law. We are therefore, under pressure to sell off both the properties and clear the bank loans. We have found a buyer for Vasant Vihar property and have taken a token advance against the same, for a total Net consideration of Rs 675 Lacs (ground pus basement combined). Out of this, a sum of Rs 540 Las (appx) has to be paid to ICICI Bank various loans running against the Vasant Vihar property while Rs 133 Lacs has to be paid to M/s Genesis Finance Co. Ltd. Towards the loan running against the basement. This leaves a sum of Rs 2.00 Lacs (appx) balance with us to be repaid to you. However, as a goodwill gesture, we are remitting you a sum of Rs 5 Lacs (payable vide D/D No. 02050[7] dated 15th February, 2010 for Rs 2 Lacs and No. 02050[8] dated 15th February, 2010 for Rs 3.00 Lacs, both drawn in your favour on HDFC Bank). You are aware of the financial crunch at our end and we are sure that this gesture of remitting you more amount than what is left out of sale proceeds shall not go unappreciated by you. In light of the above, you are requested to kindly accord your permission to sell the Vasant Vihar property and also confirm that the Agreement to sell entered with you against the same and the Power of attorney/Will submitted against the same is treated as cancelled. It is not out of place to inform you that talks with prospective buyers for Magnolia property are also underway and we hope to finalise the same within next two/three weeks. We also take this opportunity to inform you that the bank restructuring is still in progress. Bankers had appointed a stock auditor to conduct stock valuation, as a prerequisite to the restructuring process. The process of physical stock taking at major locations has been completed and the required information has been passed on to the stock auditors subsequently. We expect the stock audit report to be finalized/submitted to bankers by first/second week of March, 2010. Subsequently, the bank shall proceed further in the matter. Photocopy of letters received from stock auditors are enclosed for your reference. As regards the GDR issue, we had already submitted our application for in-principle approval to various stock exchanges in December 2009 itself. Certain queries are raised by the stock exchanges and the necessary documentation is underway. The offering circular (prospectus) is more or less complete. We need to appoint the legal councel for the issue (in India & abroad) and after receiving the in-principle approval from the stock exchanges, we shall be in a position to open the issue. We trust you shall find yourself updated on various issues and request you to kindly grant us permission/confirmations as requested by us with regards to Vasant Vihar property immediately. Regards For BRUSHMAN (INDIA)

LIMITED KAPIL KUMAR MANAGING DIRECTOR Enc: As above”