Full Text
HIGH COURT OF DELHI
JUDGMENT
Through: Mr. Ravi Gupta, Sr. Adv. with Mr. Abhijat & Ms. Liza Baruah, Advs.
Through: Mr. Sandeep Sethi, Sr. Adv. with Mr. Ashish Aggarwal and
Mr. A.K.Mathur, Advs.
1. Whether the Reporters of local papers may be allowed to see the judgment?
2. To be referred to Reporter or not? Yes
3. Whether the judgment should be reported in the Digest? Yes MANMOHAN SINGH, J.
1. By this order, I propose to decide the defendant’s application under Order VII Rule 11 read with Section 151 CPC for rejection of the plaint.
2. The facts are that the plaintiffs have filed the present suit for Specific Performance of agreement to sell dated 27.06.2008 which was 2011:DHC:4176 I.A. No. 11771/2010 in CS(OS) No.1447/2010 Page No.2 of 21 executed in respect of the property bearing No.D-104, Defence Colony, New Delhi.
3. The main contention of the defendant is that on a bare reading of the plaint along with the documents, the same demonstrates that the suit is without any cause of action and is barred by law in view of the various letters dated 14.11.2008, 04.12.2008, 15.01.2009 and 04.02.2009 by which the plaintiffs themselves have terminated the agreement to sell dated 27.06.2008 and their claim in the said letters was only in respect of the refund of the amount paid by them at the time of the agreement to sell alongwith interest and the alleged damages.
4. Mr. Sandeep Sethi, learned Senior counsel appearing on behalf of the defendant states that after having terminated the agreement and demand for refund of the amount, the present suit for specific performance of the agreement is without cause of action and is liable to be rejected, as in view of the plaintiffs’ conduct, the suit for specific performance is not maintainable under Section 16(c) of the Specific Relief Act, 1963. In support of his submissions, Mr. Sethi has referred the following judgments:-
(i) Mrs. Gopal Devi vs. Mrs. Kanta Bhatia, AIR 1994
(ii) Vinod Seth vs. Devinder Bajaj and Anr., JT 2010 (8)
(iii) Pukhraj D. Jain and others vs. G. Gopalakrishna,
(2004) 7 Supreme Court Cases 251
5. The relevant paras of the case of Mrs. Gopal Devi (supra) read as under:-
6. The relevant para of the case of Vinod Seth (supra) reads as under:-
7. The relevant para of the case of Pukhraj D. Jain and others (supra) read as under:- “6. Section 16(C) of the Specific Relief Act lays down that specific performance of a contract cannot I.A. No. 11771/2010 in CS(OS) No.1447/2010 Page No.8 of 21 be enforced in favour of a person who fails to aver and prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than terms the performance of which has been prevented or waived by the defendant. Explanation II to this sub-section provides that the plaintiff must aver performance of, or readiness and willingness to perform, the contract according to its true construction. The requirement of this provision is that plaintiff must aver that he has always been ready and willing to perform the additional terms of the contract. Therefore not only there should be such an averment in the plaint but the surrounding circumstances must also indicate that the readiness and willingness continue from the date of the contract till the hearing of the suit. It is well settled that equitable remedy of specific performance cannot be had on the basis of pleadings which do not contain averments of readiness and willingness of the plaintiff to perform his contract in terms of Forms 47 and 48 of CPC. Here the respondent no.1 himself sent a legal notice rescinding the contract and thereafter filed OS no.801 of 1977 on 7.11.1977 claiming refund of the advance paid by him. In fact the suit for recovery of the amount was decreed by the trial court on 24.7.1985 but he himself preferred a revision against the decree wherein an order of rejection of the plaint was passed by the High Court. In such circumstances, it is absolutely apparent that the respondent no.1 was not ready and willing to perform his part of the contract and in view of the mandate of section 16 of the Specific Relief Act no decree for specific performance could be passed in his favour. The trial court, therefore, rightly held that the suit filed by respondent no.1 was not maintainable.”
8. In reply to the submissions made by the defendant, the plaintiffs’ contention is that the plaint does disclose a cause of action. At I.A. No. 11771/2010 in CS(OS) No.1447/2010 Page No.9 of 21 this stage, the Court has to see the plaint and the averments made therein, and not to determine the correctness of the facts stated in the written statement. It is stated in the plaint that after the execution of the agreement between the parties on 27.06.2008, the defendant had assured the plaintiffs that all members of the HUF would personally present themselves before the Sub Registrar to sign documents as confirming parties. However, the Karta of the HUF failed to show that all the members of the defendant were present at the time of execution and registration of the sale deed and had signed the same as confirming parties on or before 06.10.2008.
9. Mr. Ravi Gupta, learned Senior counsel for the plaintiffs has argued that the defendant failed to supply the documents evidencing the details of the members of the HUF and for the said reason, all the default is on the part of the defendant. On the question that the sale transaction could not be completed by the date agreed upon, his answer is straight and simple that the defendant acted in the breach of its obligation. As far as writing of the letters are concerned, the plaintiffs have admitted that these letters have been issued by the plaintiffs. Their reply is that it is the defendant who breached his obligation by not presenting all members of HUF despite of promise, therefore, the plaintiffs under compelling circumstances had no option but to ask for refund of the money and I.A. No. 11771/2010 in CS(OS) No.1447/2010 Page No.10 of 21 terminate the agreement, though all the times, the defendant did not accept for termination or to refund the money. Every time, the defendant had agreed to perform his obligation and had also extended time to complete the transaction as mentioned in the replies. Mr. Gupta says that all these facts are specifically mentioned in the plaint and at the same time the plaintiffs have assigned valid reasons for writing such letters. He also referred statement made in the letters by the plaintiffs as well as in para 8 of the plaint wherein it was specifically mentioned that his client is always ready and willing to perform his obligation under the said agreement and complete the intended sale transaction. In view of these facts he says that trial in the matter is required. In support of his submissions, he has referred the following judgments:-
(i) P. D’souza vs. Shondrilo Naidu, (2004) 6 Supreme
(ii) Shri Ravinder Singh vs. Shri Chuckles Kohli and
(iii) Kamala and others vs. K.T. Eshwara Sa and others,
(2008) 12 Supreme Court Cases 661
10. The relevant para of the case of P. D’souza (supra) read as under:-
11. The relevant para of the case of Shri Ravinder Singh (supra)
I.A. No. 11771/2010 in CS(OS) No.1447/2010 Page No.12 of 21
12. The relevant paras of the case of Kamala and others (supra)
13. It is settled law that while deciding the application under Order VII Rule 11 CPC for rejection of plaint, the averments in the plaint have to be seen and not the pleas taken in the written statement. The documents are also to be taken into consideration, which are annexed with the plaint in view of the judgment in the case of Liverpool & London S.P. & I Asson. vs. M.V. Sea Success I & Anr., I.A. No. 11771/2010 in CS(OS) No.1447/2010 Page No.13 of 21 2004(9) SCC 512. There is no bar that the Court cannot exercise discretion for rejection of the plaint under Order VII Rule 11 CPC at any stage of the suit before the conclusion of trial.
14. Let me now examine the present case in view of rival submissions made by the parties.
15. The learned Senior counsel for the defendant has relied upon the letters dated 14.11.2008, 04.12.2008, 15.01.2009 and 04.02.2009 in support of his submissions. The said letters have been filed by the plaintiffs along with the plaint. Therein the plaintiffs has undoubtedly requested the defendant to refund the entire amount along with the interest @ 24% per annum and also informed the defendant about the termination of the said agreement. In all the letters the plaintiffs have repeated the similar statement.
16. In reply to the said letters, the defendant had never agreed to refund the money or made any statement agreeing about the termination of a contract rather from the replies, it indicates that the defendant was always ready and willing to perform his part of the contract and also extended period from time to time and called upon the plaintiffs to complete the transaction after making the balance amount in terms of the agreement to sell dated 27.06.2008. In the letter dated 24.01.2009, it was also informed by the defendant to the plaintiffs that he has become I.A. No. 11771/2010 in CS(OS) No.1447/2010 Page No.14 of 21 entitled to forfeituring the amount received, but at the same time, it was also mentioned that he is willing to extend the period of the conclusion of deal in terms of the said agreement.
17. After execution of the agreements, the first letter written by the plaintiffs was on 15.10.2008. The relevant extract of the said letter reads as under: “Your letter has made us worried about your intentions. We reiterate that no such extension of time was ever sought by any of us. The sale documents had to be signed and registered on or before 6.10.2008 and balance consideration was to be paid by us to you. We have since been waiting for your call to inform us whether all members of your HUF are present in Delhi as per your own assurance, to complete the formalities. We are ready with the required funds. However, instead of informing us as to when you (as Karta of Vendor) and the other members of the HUF (as Confirming Parties) would attend the Sub-Registrar’s office to sign the sale documents, you have written this mischievous letter giving an alleged One Time Extension, when no extension has ever been sought by us. You have yourself breached the Agreement. As you are aware, we have always been ready and willing to complete the sale/purchase of the abovesaid property and request you kindly inform us the date and time when you and other members of your HUF will attend the Sub Registrar’s office for completion of sale formalities and taking balance payment.”
18. In their second letter dated 14.11.2008, the similar grievance was made by the plaintiffs. The relevant portion are reproduced here below: I.A. No. 11771/2010 in CS(OS) No.1447/2010 Page No.15 of 21 “That when the final date of conclusion of the transaction was approaching, we requested you number of times as to status of calling all the co-parceners of the said HUF and also the necessary details about the constitution and relevant documents filed with income tax authorities as regards the said HUF, however, no response was received from you for the reasons best known to you. It seems that since the real estate prices during such period were rising sharply and you intentionally delayed the matter in order to wriggle out of the valid and binding contract. Nothing was heard from your side since then and as a result thereof, our huge investments made I the property has been struck up un-necessarily without any gain to us and rather huge losses/damages had occurred to us, just because of your un-lawful act and conduct by not fulfilling your commitments within the agreed time frame. We are in complete shock to see such an irresponsible behavior on your part and in these circumstances, we having left with no option would request you to kindly refund the entire amounts so paid to you along with interest @ 24% per annum from the date of payment till the date of actual refund along with damages/losses to the tune of RS. 2,00,00,000/- (Rs. Two Crores Only) suffered to us, within 10 days from the date hereof, failing which we shall have no option except to proceed against you in court of law and in such an event, all the consequences would follow at your risk and cost.”
19. In their third letter dated 04.12.2008, it was again mentioned that the plaintiffs were ready and willing to perform their part of the contract but since there was a breach on the part of the defendant, therefore the refund was asked for along with interest and damages and contract was terminated but under these circumstances, defendant had no right to forfeit the earnest money. I.A. No. 11771/2010 in CS(OS) No.1447/2010 Page No.16 of 21
20. The plaintiffs in para-19 of the plaint have stated that in the month of May, 2009 the plaintiffs had learnt through their friends that the defendant had deliberately and dishonestly concealed from the plaintiffs that the suit property had been attached by the Debt Recovery Tribunal vide order dated 10.07.2001 passed in RC No.77/2000 “Union Bank of India vs. M/s Logic Systems (P) Ltd.” and in August, 2009 the defendant approached the plaintiffs and re-assured the plaintiffs that the defendant had all intention of completing the agreed sale transaction and would take all the possible steps to settle the dispute with the bank. In para-20, it is also stated that the defendant also requested the plaintiffs to withdraw the police complaint and the plaintiffs assured the defendant that the police complaint would be withdrawn once the dispute with the bank is settled and the cloud over the title and the status of the property in dispute is clear.
21. A specific averment is made by the plaintiffs in the plaint that in the month of May, 2010 again the plaintiffs came to know that the defendant was meeting various real estate agents for the purpose of negotiating sale of the suit property with third parties and also came to know that the dispute pending in the Debt Recovery Tribunal had been settled in March, 2010 and the settlement certificate has been issued in that case. Thereafter, the plaintiffs issued a letter dated 24.05.2010 I.A. No. 11771/2010 in CS(OS) No.1447/2010 Page No.17 of 21 calling upon the defendant to execute the sale deed and perform his part of the obligation under the contract. However, the defendant ignored the said letter issued by the plaintiffs. The relevant extract from the said letter reads as under:- “Since the said property was an HUF property, you had assured and undertook that you would be calling other members and co-parceners of the HUF for execution and registration of the sale deed in our favour. We have paid to you a further sum of Rs.1,60,00,000/-. Thus, total sum of Rs.2,61,00,000/- (Two Crores & Sixty One Lacs Only) stands paid by us to you under the present sale transaction. And a further sum of Rs.5,00,000/- to Mr. Syed Salim, in addition to Rs.2,61,00,000/-. Thus, total sum of Rs.2,66,00,000/-. When the final date of conclusion of the transaction was approaching, we had requested you to complete all the formalities so as to complete the sale transaction. However, no response was received from you for the reasons best known to you, at that time. Since you were not coming forward to complete the sale transaction and our large amount(s) were involved, we vide our letter dated 14.11.2008 had made a demand for the refund of the entire money along with interest calculated @ 24% and also claimed damages quantified to Rs.2,00,00,000/- (Rupees Two Crores Only) over and above the said amount paid to you. However, we had maintained our rights upon the said property till you refund our dues. This letter of us was duly replied by you through your Advocate M/S. S.N.G. Consultants vide reply I.A. No. 11771/2010 in CS(OS) No.1447/2010 Page No.18 of 21 dated 24.11.2008. Though various false averments were made in the said reply, but, you had impressed upon to complete the sale transaction in our favour instead of refunding our amount(s). Considering your attitude, we again impressed upon you for the refund of our amount(s) vide legal notice dated 04.12.2008 followed by a letter dated 15.01.2009 & another legal notice dated 04.02.2009. However, you vide your legal reply dated 24.01.2009 followed by another legal reply dated 07.02.2009 still persisted to complete the sale transaction in our favour. Though we were always interested to purchase the said property, however, considering your attitude, we were asking for refund of our amount(s). Later on we came to know that you were delaying the matter and completion of the sale transaction in our favour since the said property was a subject matter of case/litigation/dispute concerning the Union Bank of India, Asset Recovery Branch, Connaught Place, New Delhi. The said proceedings were pending disposal before the Court of DRT II, Delhi in RC No.77/2000 and also in Appeal No.08/07. The said proceedings are pending disposal before the forum concerned. Finding no other alternative, we had lodged a Police Complaint with the S.H.O., P.S. Defence Colony, New Delhi. In furtherance thereof you Syed Saleem was summoned by the Investigating Officer during the investigation proceedings. At that time you people had approached us with an assurance that you would complete the sale transaction in our favour and get the matter cleared from the aforesaid court proceedings pending before DRT II, Delhi and further requested not to precipitate the issue and press our complaint. I.A. No. 11771/2010 in CS(OS) No.1447/2010 Page No.19 of 21 Relying upon your such assurances, we did not press our complaint before the Police, which complaint is otherwise pending investigation till date. In order to conclude the deal and close the issue, you are requested to complete the necessary formalities at your end and complete the sale transaction in our favour at the earliest. We are prepared with the funds and are willing to complete the sale transaction at the earliest. You are requested to inform us the time when you would be in a position to complete the sale transaction in our favour so that the necessary sale drafts may be got prepared by us at our end.”
22. In the present case, it is not in dispute that by various letters the plaintiffs have repeatedly asked the defendant to refund the advance amount along with interest and damages and also terminated the contract, but at the same time the plaintiffs have made the specific statement in the plaint and tried to justify their act explaining that under which circumstances these letters are written. It is to be examined as to whether the justification given by the plaintiffs in various paras of the plaint is tenable or not. In case, the plaintiffs have failed to prove the same in total, then the suit of the plaintiffs must fail in view of the decisions referred by the defendant. However, in the light of the statement made by the plaintiffs in various paras of the plaint, the relief sought by the defendant in the present application cannot be granted as this Court is of the view that the trial in the suit is required. Section 16(c) of the Specific I.A. No. 11771/2010 in CS(OS) No.1447/2010 Page No.20 of 21 Relief Act, 1963 requires not only the averment about the readiness and willingness of the plaintiff in a suit, but also the proof of readiness and willingness. It is settled law that when such readiness and willingness is in dispute, then there cannot be proof unless the trial is held in the matter.
23. It is pertinent to mention that issues in the main suit have also been framed which include the rival submissions of the parties made in the present application. The plaintiffs have also adduced their evidence by way of affidavit. But during the hearing of the present application, the plaintiffs have also filed an application under Order VI Rule 17 CPC being I.A. No.11154/2011 for amendment of plaint, seeking alternative relief, in case the Court is not inclined to grant the relief for specific performance of the said agreement to sell dated 27.06.2008 in favour of the plaintiffs, to refund to the plaintiffs the earnest money along with the interest due thereon @ 24% per annum from the date of payment till realization. The said application is yet to be taken up.
24. After having considered the over-all facts and circumstances, this Court is not inclined to allow the prayer made in the application, however, the objection raised by the defendant that the suit is not maintainable, is kept open and the same shall be considered by the Court after trial without the influence of the order passed in this application. I.A. No. 11771/2010 in CS(OS) No.1447/2010 Page No.21 of 21
25. The application is accordingly dismissed. I.A. No.11154/2011 (u/o 6 R 17 CPC) List on 14.11.2011.
MANMOHAN SINGH, J AUGUST 16, 2011 ka