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HIGH COURT OF DELHI
JUDGMENT
NEW METAL VISION PRIVATE LIMITED .....Plaintiff
Through: Mr. Siddharth Yadav, Sr.
Advocate with Ms. Niharika Khanna, Ms. Hanshika Sharma and Mr. Pushyak Panchal, Advocates
Through: Mr. Amit Sibal, Sr. Advocate with Mr. Prateek Kumar, Ms. Raveena Rai and Mr. Siddhant Gaur, Advocates for D-1.
1. The present application under Order XXXIX Rule 1 and 2, read with Section 151 of the Code of Civil Procedure, 1908 [hereafter „CPC‟] has been filed on behalf of the applicant/plaintiff, seeking grant of ad-interim ex-parte injunction in favour of the plaintiff and against the defendants.
FACTUAL BACKGROUND
2. The present suit arises from a series of transactions concerning the property bearing number B-4/43, Paschim Vihar, New Delhi [hereafter „suit property‟], which forms the subject matter of dispute between the parties.
3. The facts, as set out in the plaint and the present application, are that the defendant no. 1 is a partner in a partnership firm, namely Bharat Steel Traders, which is engaged in the business of importing finished steel products, including tinplate sheets and coils. In 2015, Bharat Steel Traders extensively borrowed funds from banks and financial institutions, including Bank of India. The loans were secured by a mortgage created by defendant no. 1 over the suit property in favor of Bank of India. Subsequently, a settlement was reached between Bharat Steel Traders and Bank of India, under which Bharat Steel Traders was required to pay a sum of ₹7,00,00,000/- in quarterly installments of ₹75,00,000/- for the release of the mortgage and the return of the original title deeds of the suit property. Since Bharat Steel Traders did not have funds to fulfil the said settlement, the defendant no. 1 started to explore buyers for the suit property.
4. On 15.12.2015, defendant no. 1 approached the plaintiff with an offer to sell the suit property. An Agreement to Sell [hereafter „ATS-I‟] was executed between the plaintiff and defendant no. 1. It was agreed that the total sale consideration of ₹7,00,00,000/- would be paid by the plaintiff to defendant no. 1 or to any person, firm, or bank nominated by defendant no. 1 in quarterly installments, starting in December 2015. In return, defendant no. 1 undertook to clear all liabilities with Bank of India and to transfer a clear and marketable title of the suit property to the plaintiff. It is averred that between December 2015 and April 2019, the plaintiff paid an amount of ₹2,22,94,626/- to Bharat Steel Traders, as nominated by defendant no. 1.
5. However, on 02.04.2019, a fresh Agreement to Sell [hereafter „ATS-II‟] was executed between the plaintiff and defendant no. 1, since the defendant no. 1 failed to produce the original documents of the suit property by that point of time, and accordingly, ATS-I was cancelled, save and except for the payment already made by the plaintiff. In the new agreement, the sale consideration for the suit property was revised to ₹12,00,00,000/-. Under Clause 4 of ATS-II, defendant no. 1 was obligated to deliver a clear and marketable title of the suit property along with the original title deeds to the plaintiff by March 2022. Clause 6 of ATS-II further clarified that the amount of ₹2,22,94,626/- already paid by the plaintiff would be adjusted against the total sale consideration, and only the balance amount was to be paid.
6. Between 02.04.2019 and 31.03.2022, the plaintiff paid an additional sum of ₹3,71,08,096/- (out of remaining sum of ₹9,77,05,374/-) to defendant no. 1 and to various persons nominated by defendant no. 1. However, the grievance of the plaintiff is that despite receiving substantial payments, i.e. ₹5,94,02,722/-, defendant no. 1 failed to comply with the obligations under the ATS-II. In 2024, the plaintiff claims to have discovered that defendant no. 1, in collusion with defendant no. 2, had entered into another Agreement to Sell with respect to the suit property. This subsequent agreement was executed despite the existence of a valid and subsisting ATS-II dated 02.04.2019 in favour of the plaintiff.
7. In view of the above, the plaintiff has instituted the present suit for specific performance and this application has been preferred under Order XXXIX Rule 1 and 2 of CPC seeking grant of adinterim ex-parte injunction in favour of the plaintiff and against the defendants.
8. The learned senior counsel for the plaintiff argues that the plaintiff has paid a total consideration of ₹5,94,02,722/-, under ATS-I dated 15.12.2015 and ATS-II dated 02.04.2019, to the defendant NO. 1. These agreements obligated defendant no. 1 to provide a clear and clean title of the suit property, along with the original title deeds, by specified dates. However, despite receiving substantial payments from the plaintiff, defendant no. 1 has failed to fulfill these contractual obligations. The learned senior counsel emphasizes that defendant no. 1 has neither provided the original title deeds nor approached the plaintiff to execute the sale deed. Instead, defendant no. 1 has maintained complete silence on its possession of the title deeds and its readiness to execute the sale deed, thereby breaching the contractual obligations.
9. It is further argued that defendant no. 1 has acted with mala fide intent, as evidenced by its current attempts to transfer the suit property to defendant no. 2, even though he has already received substantial consideration from the plaintiff. It is contended that this conduct demonstrates an ulterior motive to defraud the plaintiff after accepting substantial payments from the plaintiff under ATS-I and ATS-II. Specific reference is made to Clause 2 of ATS-I and Clauses 2 and 4 of ATS-II, which required defendant no. 1 to settle all issues with the Bank of India, pass on a clear and clean title, and execute the sale deed upon receipt of the balance sale consideration.
10. The learned senior counsel also points out that the reliance by defendant no. 1, on documents such as the letter dated 16.07.2019 from the Bank of India and the order dated 18.09.2020 of the Debts Recovery Tribunal during the course of arguments, cannot be accepted at this stage, particularly when these documents were never disclosed to the plaintiff by defendant no. 1 earlier. It is argued that the plaintiff has always been ready and willing to perform its obligations under ATS-II, as required under Section 16(c) of the Specific Relief Act, 1963, and has specifically pleaded the same in the plaint also. The plaintiff‟s readiness and willingness have been consistent and bona fide, as evidenced by the payments made until 31.12.2021. The argument of defendant no. 1 that the plaintiff ceased payments after 2021 is misplaced, as the plaintiff was not required to pay the remaining balance until defendant no. 1 fulfilled its reciprocal obligations, including providing the original title deeds of the suit property. The learned senior counsel also contends that time was no longer the essence of the contract once defendant no. 1 accepted part payments, and any attempt to claim otherwise is legally unsustainable.
11. On behalf of the plaintiff, the learned senior counsel asserted that specific performance of ATS-II is the only efficacious remedy for the plaintiff. Clause 15 of ATS-II expressly provides for specific performance as a remedy in case of a breach of the agreement, Therefore, it was prayed that the present application be allowed in favour of the plaintiff.
12. In support of the aforesaid submissions, the learned senior counsel had also placed reliance on several case laws. Submissions on Behalf of Defendant No. 1
13. On the other hand, the learned senior counsel appearing for defendant no. 1 argues that the suit is barred as the plaintiff has failed to demonstrate the necessary readiness and willingness to execute the sale deed in accordance with the terms of ATS-II. Clause 6, read with Clause 4 of ATS-II, unambiguously stipulates that the obligation to execute the sale deed was contingent upon the payment of the balance sale consideration by the plaintiff. It is contended that the plaintiff has neither pleaded nor produced any evidence to show that the balance sale consideration was paid or even tendered on or before March 2022. It is argued that the absence of any formal or informal correspondence seeking compliance with the contractual obligations demonstrates the plaintiff‟s lack of intent to fulfill their part of the agreement. It is further contended that even if the defendant‟s alleged breach is assumed (which is denied), the plaintiff must independently establish its readiness and willingness to perform the contract, which it has failed to do.
14. It is argued that the defendant no. 1 was in possession of the original title deeds of the property as of September 2020, well before the stipulated deadline of 31.03.2022, for the execution of the sale deed. Despite the availability of the title deeds, the plaintiff did not make any attempt to pay the remaining sale consideration or seek execution of the sale deed. The learned senior counsel also contended that the plaintiff‟s failure to act over a prolonged period of 2 years and 7 months renders their claim for specific performance untenable. The plaintiff‟s inaction during this time is indicative of a lack of readiness and willingness to perform its contractual obligations, a fundamental requirement for the relief of specific performance. The learned senior counsel further argues that readiness and willingness must be continuous and not merely asserted at the time of filing the suit. The conduct of the plaintiff, both prior to and subsequent to the filing of the suit, must unequivocally establish their intent and ability to perform their obligations under the contract. In this regard, reliance has been placed on decision in C.S. Venkatesh v. A.S.C. Murthy: (2020) 3 SCC 280.
15. The learned senior counsel also referred to the specific terms of ATS-II, particularly Clause 17, which provides that in the event the vendor fails to comply with Clause 2, the entire amount paid by the vendee would be refundable, and the agreement would stand canceled. It is thus stated that Clause 2 of ATS-II clearly mentions that the agreement was predicated on the vendor‟s assurance of providing the necessary title deeds. Even assuming the plaintiff‟s allegations regarding the non-production of title deeds by the defendant to be true, the contractual remedy available to the plaintiff, as per Clause 17, would be limited to seeking a refund of the amounts paid, and not specific performance. It is thus argued that the plaintiff‟s reliance on Clause 15 to claim specific performance is misplaced and contrary to the express terms of the agreement.
16. The learned senior counsel further contended that the instant suit is a counterblast to the petition filed by the defendant no. 1 under Sections 241-242 of the Companies Act, 2013, alleging mismanagement in the affairs of the plaintiff company. The timing of this suit indicates that it was filed not with the intent to enforce the agreement but as a retaliatory measure to the aforesaid petition filed against the plaintiff.
17. In view of the above, the learned senior counsel urged this Court to dismiss the present suit as the plaintiff has failed to make out a case for the grant of specific performance, both on facts and on law.
ANALYSIS & FINDINGS
18. The issue for consideration before this Court is as to is whether an ad-interim or interim injunction, restraining the defendant nos. 1 and 2 and/or their agents, legal representatives, etc. from transferring, selling, alienating or parting with possession of the suit property, in further of any agreement to sell entered into between the defendants, is merited in the facts and circumstances of the case.
19. The Hon‟ble Supreme Court, in Dalpat Kumar and Anr. v. Prahlad Singh and Ors.: (1992) 1 SCC 719, had discussed the essentials for granting a temporary injunction under Order XXXIX of CPC. The relevant extract of the decision is set out below: “4…Injunction is a judicial process by which a party is required to do or to refrain from doing any particular act. It is in the nature of preventive relief to a litigant to prevent future possible injury. In other words, the court in exercise of the power of granting ad interim injunction is to preserve the subject matter of the suit in the status quo for the time being. It is settled law that the grant of injunction is a discretionary relief. The exercise thereof is subject to the court satisfying that (1) there is a serious disputed question to be tried in the suit and that an act, on the facts before the court, there is probability of his being entitled to the relief asked for by the plaintiff/defendant; (2) the court's interference is necessary to protect the party from the species of injury. In other words, irreparable injury or damage would ensue before the legal right would be established at trial; and (3) that the comparative hardship or mischief or inconvenience which is likely to occur from withholding the injunction will be greater than that would be likely to arise from granting it.
5. Therefore, the burden is on the plaintiff by evidence aliunde by affidavit or otherwise that there is "a prima facie case" in his favour which needs adjudication at the trial. The existence of the prima facie right and infraction of the enjoyment of his property or the right is a condition for the grant of temporary injunction. Prima facie case is not to be confused with prima facie title which has to be established, on evidence at the trial. Only prima facie case is a substantial question raised, bona fide, which needs investigation and a decision on merits. Satisfaction that there is a prima facie case by itself is not sufficient to grant injunction. The Court further has to satisfy that noninterference by the Court would result in "irreparable injury" to the party seeking relief and that there is no other remedy available to the party except one to grant injunction and he needs protection from the consequences of apprehended injury or dispossession. Irreparable injury, however, does not mean that there must be no physical possibility of repairing the injury, but means only that the injury must be a material one, namely one that cannot be adequately compensated by way of damages. The third condition also is that “the balance of convenience” must be in favour of granting injunction. The Court while granting or refusing to grant injunction should exercise sound judicial discretion to find the amount of substantial mischief or injury which is likely to be caused to the parties, if the injunction is refused and compare it with that it is likely to be caused to the other side if the injunction is granted. If on weighing competing possibilities or probabilities of likelihood of injury and if the Court considers that pending the suit, the subject-matter should be maintained in status quo, an injunction would be issued. Thus the Court has to exercise its sound judicial discretion in granting or refusing the relief of ad interim injunction pending the suit.” (Emphasis added)
20. Similarly, the Hon‟ble Supreme Court in Kishorsinh Ratansinh Jadeja v. Maruti Corporation and Ors.: (2009) 11 SCC 229, held as under:
(iii) irreparable loss and injury.”
21. Insofar as the merits of the case are concerned, the learned senior counsel for defendant no. 1 had, primarily and vehemently, argued that the plaintiff has failed to demonstrate from the record that there was readiness or willingness on its part to fulfill its obligations under the ATS-II and execute the sale deed, and therefore, no prima facie case for interim injunction is made out in favour of the plaintiff. The learned senior counsel for the plaintiff, conversely, has argued that the plaintiff had, during the period between December 2015 and March 2022, paid almost an amount equivalent to 50% of the sale consideration to the defendant no. 1, and it was due to the failure of defendant no. 1 to obtain the original title deeds of the suit property, which resulted in non-fulfilment of the ATS-I and ATS-II and reiterates that the record would reveal that, the plaintiff has always been willing and ready to perform its part of obligations under ATS-I and ATS-II.
22. At the outset, it would be relevant to take note of Clause 2 and Clause 4 of ATS-I, which are set out below: “Clause 2: That the Vendor Agrees and unconditionally confirms to settle all the issues with Bank of India and pass on the clear and clean title of the said property to the Vendee along with the Original Title deeds of the Said Property latest by 30th September, 2017. Clause 4: That on or before 30 September, 2017 the Vendor (on receiving the balance sale consideration) will execute and get the sale deed of the said portion of the said property registered, in favour of the Vendee or his nominee/s.”
23. Similarly, Clause 2 and Clause 4 of ATS-II are set out below: “Clause 2: That in reference to the above point, vendor and vendee decides to enter into a fresh agreement upon assurance provided by the vendor that he will provide the necessary title deeds of the concerned property. Clause 4: That the Vendor agree and unconditionally confirms to pass on the clear and clean title of the said property to the vendee along with the Original Title deeds of the said property latest by March 2022.”
24. Having pursued the documents placed on record by both the parties, this Court finds merit prima facie in the contentions of the plaintiff. Undisputedly, when ATS-I was executed between the plaintiff and defendant no. 1, the suit property was mortgaged with Bank of India and had to be redeemed by payment of an amount of ₹7,00,00,000/- by the defendant no. 1. The plaintiff was to make payments to the defendant no. 1 and only upon handing over of clear title/deeds of the suit property to the plaintiff, the sale deed was to be executed. It is also clear from the records that till the year 2019, the plaintiff had paid an amount of ₹2,22,94,626/- to the defendant no. 1 (under ATS-I). However, the defendant no. 1 had failed to obtain the original documents of the suit property from Bank of India. Thus, plaintiff‟s readiness and willingness to perform its obligations under ATS-I is prima facie clear from the said events.
25. Next, it is crucial to note that since the defendant no. 1 had failed to obtain the original title deeds of the suit property, another agreement i.e. ATS-II was executed on 02.04.2019, between the plaintiff and defendant no. 1, wherein the sale consideration of the suit property was increased to ₹12,00,00,000/-. Concededly, the plaintiff had made further payments of ₹3,71,08,096/-, in addition to the amount paid previously i.e. ₹2,22,94,626/-, which amounts to a total of ₹5,94,02,722/-, between the period 2019 to 2022. Thus, prima facie, it appears that the plaintiff was ready and willing to perform its obligations and eventually get the sale deed executed. However, as apparent from a bare reading of the agreements to sell, the sale deed could not have been executed till the defendant no. 1 had repaid the loan obtained by mortgaging the subject property with Bank of India, and would have further redeemed the mortgage and obtained the original title deeds of the suit property.
26. During the course of arguments, the defendant no. 1 premised its case on the fact that in the year 2020 itself, the defendant no. 1 had redeemed the suit property and the plaintiff thereafter had never insisted or requested the defendant no. 1 to execute the sale deed. However, this argument, at this stage, is unmerited since the plaintiff could not have known, on its own, that the defendant no. 1 had settled its accounts with Bank of India and obtained the title documents of the suit property. More so since the defendant no. 1 has failed to place on record any document to show that he had, at any point of time, after execution of ATS-II, informed the plaintiff that the original title deeds of the suit property had been obtained by him from Bank of India after redemption of mortgage and that he was ready and willing to perform his obligations under the ATS-II. In other words, the defendant no. 1 has himself not placed on record any document vide which he has communicated to the plaintiff that he was ready and willing to execute the sale deed since he had obtained the possession of original title documents, and was in a position to hand over the original title documents of the suit property to the plaintiff for the purpose of execution of ATS-II. It was also not argued that the plaintiff was orally informed in this regard. It is to be noted that the defendant no. 1 had received almost 50% of the sale consideration amount from the plaintiff. The ATS-II was thus reciprocal and performance of one thing was dependent on the other, i.e. the payment of the remaining amount towards sale was dependent upon the defendant no. 1 handing over the original title deeds of the suit property.
27. Further, the argument of the learned senior counsel for defendant no. 1, that it cannot be said that the amount paid by the plaintiff was used by the defendant no. 1 towards redeeming the suit property from mortgage, also can be of no consequence at this stage as it will be difficult to reach a conclusion, without evidence and trial, that the said money was used for which purpose. Be that as it may, it is admitted that under ATS-I, the plaintiff had paid an amount of ₹2,22,94,626/- to the defendant no. 1, and under ATS-II, between 2019 and 2022, the plaintiff had paid a further amount of ₹3,71,08,096/- to the defendant no. 1, after the enhancement of the sale price, which also shows that the plaintiff was ready and willing to buy the suit property even after defendant no. 1 though not being in possession of original title documents of the suit property enhanced its price by ₹5,00,00,000/- and had duly received further sale consideration amount under ATS-II.
28. In any case, at the stage of considering an application under Order XXXIX Rule 1 and 2 of CPC, this Court is required to appreciate only the following factors: (i) existence of a prima facie case; (ii) likelihood of irreparable injury that cannot be adequately compensated by damages; and (iii) balance of convenience favoring the applicant.
29. Further, applying the principles laid down in the decisions cited above, this Court comes to the conclusion that at this stage, prima facie, the defendant no. 1 himself never came forward to inform the plaintiff about having redeemed the suit property, so that the plaintiff could make the payment of the remaining amount as was agreed to between the parties, and that the plaintiff till date has paid an amount of ₹5,94,02,722/- out of total agreed consideration of ₹12,00,00,000/-, i.e. almost 50%, to the defendant no. 1. Further, Clause 15 of ATS-II clearly provides that in event of nonperformance or default by one party to the agreement, the other party would be entitled to file a suit for specific performance, as has been done by the plaintiff herein.
30. Therefore, in view of foregoing discussion, this Court is of the opinion that the balance of convenience is in favour of the plaintiff, and it would suffer irreparable harm if the defendants are not restrained from disposing of the suit property. Prima facie case, at this stage, is in favour of the plaintiff.
31. Accordingly, the defendants are restrained from transferring, selling, alienating or parting with possession of the suit property, in furtherance of any agreement to sell entered into between the defendants, and are directed to maintain status quo in respect of the suit property till the next date of hearing.
32. Compliance of Order XXXIX Rule 3 CPC be made within two weeks. An affidavit of compliance may be filed within three days thereafter.
33. However, nothing expressed hereinabove shall tantamount to an expression on the merits of the case.
34. Issue notice of this application to the defendants, who may file their reply to the same within a period of four weeks. Rejoinder, if any, be filed within a period of two weeks thereafter.
35. List before learned Joint Registrar (Judicial) on 17.02.2025.
36. Issue summons to the defendants through all permissible modes, including electronic mode and dasti as well. Since appearance has already been entered on behalf of defendant no. 1 have already appeared, formal service of summons qua defendant no. 1 may be dispensed with.
37. The summons to the defendant(s) shall indicate that the written statement(s) to the plaint shall be positively filed within a period of 30 days from the date of receipt of summons. Along with the written statement(s), the defendants shall also file the affidavit(s) of admission/denial, without which the written statement(s) shall not be taken on record.
38. Liberty is given to the plaintiff to file the replication within a period of 15 days of the receipt of the written statement(s). Along with replication, if any, filed by the plaintiff, the affidavit(s) of admission/denial of documents of the defendant(s) shall be filed by the plaintiff.
39. List before the learned Joint Registrar (Judicial) for completion of pleadings on 17.02.2025.
40. The judgment be uploaded on the website forthwith.
SWARANA KANTA SHARMA, J DECEMBER 24, 2024/zp/at/A