Judgment:
*IN THE HIGH COURT OF DELHI AT NEW DELHI Date of decision:
21. t, April, 2014 % + CS(OS) No.1030/2009 SH. LAKHBIR SINGH Through: ..... Plaintiff Mr. I.S. Alag, Adv. Versus SH. ARUN KUMAR KHANNA ..... Respondent Through: Mr. Sudhir K. Makkar & Ms. Meenakshi Singh, Advs. CORAM :HON’BLE MR. JUSTICE RAJIV SAHAI ENDLAW RAJIV SAHAI ENDLAW, J1 The following issue, of the issues framed on 05.07.2011 in this suit for specific performance of an Agreement of Sale of immovable property and for permanent injunction restraining the sole defendant from transferring, alienating or encumbering the property and in the alternative for compensation and, ordered to be treated as a preliminary issue, is for adjudication:
“Whether the suit is barred in view of Order 2 Rule 2 (3) of the Code of Civil Procedure?. OPD”
2. Arguments were heard on 06.03.2014. However neither counsel cited the recent judgment of the Supreme Court in Virgo Industries (Eng.) Pvt. Ltd. Vs. Venturetech Solutions Pvt. Ltd. (2013) 1 SCC625 After inviting attention of the counsels thereto, again opportunity was given to the counsels to make their further submissions if any after studying the said judgment and after further hearing, orders were reserved.
3. The plaintiff has filed the present suit on 26.05.2009, pleading: (i) that the defendant, vide Agreement to Sell dated 18.11.2006, agreed to sell, the first floor of property No.3, Road No.5, situated at Punjabi Bagh Extension, New Delhi and which property was then under construction, to the plaintiff for a total sale consideration of Rs.1,20,00,000/out of which a sum of Rs.12,00,000/- was paid as bayana / advance and the balance sale consideration amount of Rs.1,08,00,000/- was to be paid on or before 15.08.2007 i.e. within 300 days from the date of the Agreement to Sell; (ii) that though under the Agreement to Sell, the plaintiff was not under obligation to pay any further amount to the defendant till the date of delivery of possession but the defendant requested the plaintiff for some more amount and the plaintiff, till the institution of the suit, had paid a total sum of Rs.72,00,000/- to the defendant towards sale consideration; (iii) the defendant however failed to complete the construction work within the stipulated period of 10 months from 18.11.2006 and thus became liable to pay interest at 24% per annum on the amount received from the plaintiff; (iv) that though the defendant, as a counterblast to the repeated reminders of the plaintiff, issued legal notice dated 05.07.2007 to the plaintiff but subsequently assured the plaintiff that he will complete the construction work and on this assurance received further sum of Rs.3,00,000/- in cash against receipt dated 27.07.2007 from the plaintiff; (v) that the defendant however again sent a false and frivolous notice dated 27.07.2007 to the plaintiff and to which a reply dated 13.09.2007 was given by the plaintiff recording that by then a sum of Rs.72,00,000/- had been paid towards purchase consideration; (vi) that the plaintiff subsequently learnt that the defendant was trying to re-sell the said first floor and create third party rights therein; (vii) that the plaintiff, having no other option, filed a suit for permanent injunction before the Court of the Senior Civil Judge, Delhi for an order of permanent injunction to restrain the defendant from selling, alienating, disposing of or creating any third party rights in the said first floor; the said suit was accompanied with an application under Order 2 Rule 2(3) of the CPC for leave to allow the plaintiff to file a suit for specific performance and damages in the event of failure / refusal of the defendant to comply with the terms of the Agreement to Sell dated 18.11.2006; (viii) that in the aforesaid suit for permanent injunction, vide order dated 26.09.2007, the parties were directed to maintain status quo; (ix) that the said suit was pending adjudication till the date of institution of the present suit; (x) the plaintiff thereafter learnt that the defendant himself had shifted into the said first floor and which signified that the defendant had no intention to perform his part of the Agreement to Sell dated 18.06.2006. Hence the suit for specific performance.
4. Summons of the suit were issued and vide ex parte ad-interim order dated 27.05.2009, the defendant was restrained from creating any third party interest in the property agreed to be sold.
5. The defendant contested the suit by filing a written statement, on the grounds: (a) that the present suit is barred by Order 2 Rule 2 (3) of the CPC for the reason of the plaintiff having earlier filed a suit for permanent injunction and which was pending adjudication till the institution of the present suit and the present suit is founded on the same cause of action as the earlier suit for permanent injunction; (b) that the plaintiff has admittedly not been granted any leave by the Court of the Civil Judge for filing the present suit and in the absence of any special leave, the present suit is not maintainable; (c) that the Agreement to Sell clearly stipulated that the plaintiff shall pay a sum of Rs.15,00,000/- after every two months starting from 21.01.2007 and the plaintiff was accordingly liable to pay a sum of Rs.75,00,000/- within 10 months from 21.01.2007; (d) that the plaintiff had clearly defaulted in payment of the said amount and is not entitled to the relief of specific performance; (e) that the defendant had vide notice dated 21.07.2007 cancelled the Agreement to Sell; (f) denying that the plaintiff had paid a sum of Rs.72,00,000/and pleading that the plaintiff had made payment of only Rs.45,00,000/- which too was not paid in accordance with the schedule of payments stipulated in the Agreement to Sell; (g) the last payment of Rs.3,00,000/- was made by the plaintiff on 27.07.2007 after the legal notices dated 05.07.2007 and 21.07.2007 calling upon the plaintiff to make balance payment of Rs.30,00,000/- then due; (h) that the plaintiff was falsely claiming payment of a sum of Rs.15,00,000/- made by one Mr. S. Manmohanpal Singh to be in relation to the purchase price when the said amount of Rs.15,00,000/- was received by the defendant for entirely different transaction of proposed loan which did not fructify and the receipt executed by the defendant therefor was to be destroyed; (i) that the defendant had entered into an agreement dated 09.12.2005 with the owners of the property and under which agreement, the defendant had acquired ownership rights in respect of the first floor of the property; (j) that the plaintiff, on the date of signing of the Agreement to Sell did not give any copy thereof to the defendant and failed to give the same despite repeated reminders of the defendant.
6. Needless to state, the plaintiff filed a replication reiterating the case in the plaint.
7. Vide interim order dated 26.04.2010, subject to the defendant depositing the amount of Rs.45,00,000/- admittedly received from the plaintiff together with reasonable interest i.e. total Rs.52,00,000/-, the earlier interim order restraining the defendant from creating any third party interest in the property was vacated.
8. The plaintiff preferred FAO(OS) Nos.552-553/2010 against the interim order aforesaid. However finding that the defendant had not deposited in the Court the sum of Rs.52,00,000/- as directed and that the effect thereof was of continuance of the earlier ex parte order, the appeal was not pressed.
9. On 05.07.2011, as aforesaid, the following issues were framed and of which issue no.(i) supra was ordered to be treated as a preliminary issue:
“(i) Whether the suit is barred in view of Order 2 Rule 2 (3) of the Code of Civil Procedure?. OPD (ii) Whether the plaintiff has carried out his part of the contract?. If not, to what effect?. Onus per party (iii) Whether the plaintiff was ready, willing and able to perform his part of the contract on all material dates?. OPP (iv) 10. Relief.”
Vide order dated 08.12.2011, finding that the defendant had not filed the pleadings in previous suit and on the basis whereof the plea of Order 2 Rule 2 CPC has been taken and referring to Gurbux Singh Vs. Bhooralal AIR1964SC1810 the defendant was directed to file certified copies of the pleadings in the previous suit and which have been filed.
11. The plaintiff applied for striking off the defence of the defendant owing to the defendant having not deposited Rs.52,00,000/- in this Court. The said application was dismissed on 10.09.2013 observing that the vacation of the ex parte order as sought by the defendant was subject to the said deposit and since the amount had not been paid, the interim order for stay as sought by the plaintiff was continuing and no case for striking off defence is made out. FAO(OS) No.463/2013 preferred against the said order was dismissed on 28.10.2013.
12. The counsel for the plaintiff during the hearing on 06.03.2014 on the preliminary issue, referred to: (i) Rohit Kumar Vs. A.S. Chugh 155(2008) DLT424 (ii) Bengal Waterproof Ltd. Vs. Bombay Waterproof Manufacturing Company (1997) 1 SCC99 (iii) Kunjan Nair Sivaraman Nair Vs. Narayanan Nair (2004) 3 SCC277 (iv) Ashoka Builders & Promoters Vs. Edward Keventer (Successors) P. Ltd. 51 (1993) DLT421 (v) Gurbux Singh Vs. Bhooralal AIR1964SC1810 (vi) Shri Inacio Martins Vs. Narayan Hari Naik AIR1993SC1756 and, (vii) Order dated 23.11.2009 in CS(OS) No.213/2009 titled Shashi Sharma Vs. Arun Khanna. of which Rohit Kumar (supra) is of the undersigned, taking a view that Order 2 Rule 2 of the CPC would have no application to such a situation. However the Supreme Court subsequently in Virgo Industries (Eng.) Pvt. Ltd. (supra) has taken a different view.
13. The counsel for the defendant relies on: (i) Kamal Kishore Saboo Vs. Nawabzada Humayun Kamal Hasan Khan AIR2001Delhi 220; (ii) Shri Vishal Anand Vs. Smt. Bimla Anand 113 (2004) DLT850(DB); (iii) Ashok Aggarwal Vs. Bhagwan Das Arora AIR2001Delhi 107; and, (iv) Rohit Kumar (supra). Again, in view of the recent dicta in Virgo Industries (Eng.) Pvt. Ltd. (supra) and by which this Court is bound, need is not felt to discuss the judgments cited by the defendant also in detail.
14. Before discussing the judgment Virgo Industries (Eng.) Pvt. Ltd., it may be mentioned that “that the previous suit for permanent injunction filed by the plaintiff was withdrawn by the plaintiff on 16.01.2010 giving the reason of having filed the present suit “on the same cause of action”.
15. In Virgo Industries (Eng.) Pvt. Ltd.; (aa) the plaintiff in that case filed a suit for permanent injunction in the Madras High Court restraining the defendant therein from alienating, encumbering or dealing with the properties agreed to be sold to the plaintiff to any third party other than the plaintiff; (bb) in the plaint in the aforesaid suit for injunction, it was stated that as the period of six months fixed under the Agreement to Sell for execution of the sale deed had not expired till then, the plaintiff was not claiming the relief of specific performance of the Agreement; the plaintiff sought leave of the Court to omit to claim the relief of specific performance with liberty to sue for the said relief at a later point of time, if necessary; (cc) the plaintiff thereafter filed in the Court of the District Judge, a suit seeking a decree against the defendant for execution and registration of the sale deed of the same property and for delivery of possession thereof to the plaintiff; in the said suit, the factum of filing of the earlier suit for permanent injunction was mentioned and it was further pleaded that since at the time of filing of the suit for permanent injunction, the time for performance of the Agreement to Sell had not elapsed and the plaintiff was under the bona fide belief that the defendant would perform the agreement, the relief of specific performance was not claimed in the earlier suit; however since the defendant inspite of legal notice did not execute the sale deed, the relief of specific performance was being claimed; (dd) the defendant filed a petition under Article 227 of the Constitution of India in the Madras High Court for striking off the plaint in the suit for specific performance, on the ground of the same being not maintainable under the provisions of Order 2 Rule 2 of the CPC, contending that the cause of action for both the suits was the same viz. the refusal or reluctance of the defendant to execute the sale deed in terms of the Agreement to Sell and it was open for the plaintiff to at the time of suing for permanent injunction also claim the relief of specific performance and which relief had not been sought and no leave had been granted by the High Court and thus the subsequent suit for specific performance was barred; (ee) the Madras High Court dismissed the petition under Article 227 of the Constitution of India for the reason: (i) that since on the date of institution of the previous suit for permanent injunction, the time stipulated in the agreement for execution of the sale deed had not expired, therefore the cause of action to seek the relief of specific performance had not accrued and the provisions of Order 2 Rule 2 (3) CPC were not attracted to render the subsequent suit for specific performance non-maintainable; (ii) that the provisions of Order 2 Rule 2 (3) CPC would render a subsequent suit not maintainable only if the earlier suit had been decreed and the said provision does not apply if the first suit remains pending; and, (iii) that the petition under Article 227 was not maintainable and the remedy if any of the defendant was of Order 7 Rule 11 of the CPC. (ff) the Supreme Court, upon being approached by the defendant against the dismissal of his petition under Article 227 of the Constitution of India, found / held: (A) though leave to sue for the relief of specific performance at a later stage was claimed by the plaintiff in the previous suit for permanent injunction, admittedly no such leave was granted; (B) the question for adjudication was whether the cause of action for both the suits was one and the same; (C) the plaintiff in the plaint in the previous suit for permanent injunction had pleaded that the defendant was finding an excuse to cancel the Agreement to Sell and to sell the property to some third party and that the defendant was attempting to frustrate the Agreement to Sell; (D) the aforesaid pleading in the plaint in the previous suit for permanent injunction left no room for doubt that on the date of institution thereof, the plaintiff‟s case was that the defendant had no intention to honour the Agreement to Sell; (E) in the aforesaid situation, it was open for the plaintiff to incorporate the relief of specific performance along with the relief of permanent injunction that formed the subject matter of the subsequent suit; (F) the foundation for the relief of permanent injunction furnished a complete cause of action to the plaintiff to also sue for the relief of specific performance; yet the said relief was omitted and no leave in this regard was obtained or granted by the Court; (G) the plea of the plaintiff, that on the date of institution of the previous suit for permanent injunction, the relief of specific performance was premature for the reason of the time fixed in the Agreement to Sell for completion of sale having not lapsed and which had been accepted by the High Court in dismissing the petition under Article 227, was not tenable; (H) “a suit claiming a relief to which the plaintiff may become entitled at a subsequent point of time, though may be termed as premature, yet cannot per se be dismissed to be presented on a future date. There is no universal rule to the above effect inasmuch as "the question of a suit being premature does not go to the root of the jurisdiction of the Court"”; (I) that there is no provision in the Specific Relief Act, 1963 requiring a plaintiff claiming the relief of specific performance to wait for expiry of the due date for performance of the agreement in a situation where the defendant may make his intentions clear by his overt acts; (J) the High Court had also erred in holding that provisions of Order 2 Rule 2 of the CPC would be applicable only when the first suit is disposed of; and, (K) Order 2 Rule 2 of the CPC seeks to avoid multiplicity of litigations on the same cause of action and the legislative intent behind the same would not stand fully subserved by holding that the provisions thereof will apply only if the first suit is disposed of and not in a situation where the second suit has been filed during the pendency of the first suit; rather Order 2 Rule 2 of the CPC will apply to both the situations. Accordingly, the Supreme Court struck off the plaint in the suit for specific performance.
16. Applying the aforesaid binding ratio, it is found that in the present case; i) the Agreement to Sell dated 18.11.2006 between the parties provided for; a) the balance sale consideration of Rs.1,08,00,000/- to be paid by the plaintiff / purchaser on or before 300 days i.e. 10 months i.e. 15.08.2007; b) the defendant / seller to deliver peaceful, vacant possession of the first floor agreed to be sold to the plaintiff / purchaser against receipt of balance sale consideration within the stipulated period with all proper documents of sale; ii) the receipt executed by the defendant / seller of Rs.12,00,000/by way of earnest money / bayana at the time of Agreement of Sell on the reverse of the second page of the Agreement to Sell, mentions, that after every two months from 21.11.2006, Rs.15,00,000/- will be paid and also records receipt of Rs.15,00,000/- as second installment, leaving a balance of Rs.93,00,000/-; iii) the subsequent receipts filed by the plaintiff also are with reference to the “installments”; iv) the defendant, vide legal notice dated 05.07.2007, copy of which has been filed by the plaintiff himself, notified the plaintiff that the plaintiff had failed to pay the balance sale consideration in the installments agreed and called upon the plaintiff to pay the balance then due of Rs.30,00,000/- within seven days along with a further sum of Rs.10,00,000/- and notified the plaintiff that if the said amount was not paid, the defendant will have no option but to cancel the deal; v) the defendant vide another legal notice dated 27.07.2007, copy of which also has been filed by the plaintiff, notified the plaintiff that the plaintiff having not paid the amounts as demanded vide previous notice dated 05.07.2007, again called upon the plaintiff to comply therewith and again notified the plaintiff that if the plaintiff did not make the payment, the defendant will cancel the deal; vi) the time fixed in the Agreement to Sell for performance expired on 15.08.2007; vii) the plaintiff got sent a reply dated 13.09.2007 to the notice aforesaid dated 27.07.2007 and which clearly shows that the disputes and differences had arisen between the plaintiff and the defendant pertaining to the Agreement to Sell; viii) the plaintiff on 26.09.2007 instituted “the previous suit for permanent injunction” and in the plaint therein inter alia pleaded:
“4. That as per the terms of agreement to sell dated 18.11.2006 the plaintiff is liable to pay the balance payment on or before 15th August, 2007 with a clear understanding that the possession of the constructed first floor shall be handed over to the plaintiff and sale deed in respect of the first floor of the property in question shall be executed by the defendant in favour of the plaintiff simultaneously with the final payment of Rs.1,08,00,000/- as mentioned in Agreement to Sell. Despite of payment of Rs.72,00,000/- as stated above till date the defendant has failed / neglected to complete the construction work of first floor of the property in question as such having no other option the plaintiff also not paid the remaining consideration amount. Otherwise also, the defendant is not legally entitled to claim the same until and unless he complete the construction of the property in question and hand over the same to plaintiff. Not only the defendant failed to complete the construction of above said property and handover the same to the plaintiff and the actual owner of the above said property, within prescribed time. The defendant is legally liable for misrepresentation, fraud and cheating with the plaintiff.
5. That despite of repeated requests and reminders defendant has failed to perform his part of allegation as per agreement dated 18.11.2006. It is submitted that the defendant failed to complete the construction of first floor of the above said property and handover the same to the plaintiff and similarly the defendant failed to construct the remaining portion of the property in question and hand over the same to the actual owner of the above said property within prescribed time. The defendant despite of receiving that amount of Rs.72,00,000/- failed to construct the property in question and misappropriated the said amount for his personal use whereas the same was given to the defendant with a clear assurance that the same shall be used only for the purpose of construction of first floor of the property in question. This conduct of the defendant itself sufficient to show the malafide intention of the defendant as not only he misappropriated the above said Rs.72,00,000/- but now trying to grab the property in question. These facts are also sufficient to show that the defendant not only cheated the plaintiff but also harassing the actual owners of the property in question.
7. That when the plaintiff repeatedly approached the defendant to complete the construction work and handover the possession of the first floor of the property in question, the defendant on 05.07.2007, as an after thought send a notice to the plaintiff with a false and frivolous pleas. However, later on the defendant approached to the plaintiff and undertake to complete the construction work of the property in question at the earliest. With this assurance, he has also received sum of Rs.3,00,000/- in cash vide receipt dated 27.07.2007 from the plaintiff. Despite of receiving the amount the defendant again send a false and frivolous notice dated 27.07.2007 to the plaintiff with a clear intention to grab the property in question and to resell the same at higher price. These facts are sufficient to show the malafide intention of the defendant that on the one hand he received another sum of Rs.3,00,000/- in cash after the notice dated 05.07.2007 and on the other hand again send notice dated 27.07.2007. Having no other option, the plaintiff send a suitable reply dated 13.09.2007 to the defendant. Whereby, the plaintiff specifically denied all the averments of notice dated 05.07.2007 and 27.07.2007 and state the true facts. The plaintiff also recited in his reply that he has made a payment of Rs.72,00,000/- as part payment to the defendant, however, despite of receiving the said amount the defendant failed / neglected to complete the construction work of the property in question and hand over the same to the plaintiff as per Agreement to Sell dated 18.11.2006. Despite of due service of reply dated 13.09.2007, the defendant failed to perform his part of obligation as per Agreement to Sell dated 18.11.2006 and to hand over the possession of constructed first floor of the property in question to the plaintiff and plaintiff hereby reserves his right to file a separate suit for specific performance and damages for the same against the defendant and crave leave Hon’ble Court to allow the plaintiff to file the separate suit for specific performance and damages in this regard.
9. That the plaintiff is the proposed purchaser, having an interest in the first floor of property no.3, road no.5, Punjabi Bagh Extn., New Delhi-26 vide Agreement to Sell dated 18.11.2006 and he has already paid a sum of Rs.72,00,000/- as part payment towards the total sale consideration of the above said property in question. If the defendant would be succeeded to create any third party interest in the above said property then the same would jeopardize the interest of the plaintiff. It would also cause irreparable injury and damages to the plaintiff. The balance of convenience also lies in the favour of plaintiff and in against the defendant.”
17. Paras no.4, 5, 7 and 10 of the plaint in the present suit are substantially similar to paras no.4,5,7 and 8 of the plaint in the previous suit for permanent injunction. The plaintiff, in the cause of action paragraph of the plaint in the present suit also has pleaded the cause of action for the relief of specific performance to have accrued on 18.11.2006, 03.09.2007 and lastly in April, 2009 when the defendant after completion of the suit property instead of handing over to the plaintiff himself shifted in the suit property and which showed his clear intention not to perform the Agreement to Sell and rather to breach all terms of the Agreement to Sell dated 18.11.2006 and thereby refused to perform his part of the terms and conditions of the Agreement to Sell dated 18.11.2006.
18. Though as the aforesaid analysis of the factual position before the Supreme Court in Virgo Industries (Eng.) Pvt. (supra) as well as in the present case would show that the judgment of the Supreme Court is squarely applicable but the counsel for the plaintiff, after his attention was invited to Virgo Industries (Eng.) Pvt. sought to differentiate by contending that Virgo Industries (Eng.) Pvt. was not concerned with a case of construction as the present case but in my opinion the said factual difference would not allow this Court to take a different view. Else, the ratio squarely applies. The counsel for the plaintiff also relied on Vithalbhai (P) Ltd. Vs. Union Bank of India (2005) 4 SCC315which was referred to by the Supreme Court in Virgo Industries (Eng.) Pvt. but I am bound by the dicta of the Supreme Court. Mention may also be made of my recent judgment in Sucha Singh Sodhi (deceased) through LRs Vs. Baldev Raj Walia MANU/DE/0450/2014 where also I have had an occasion to deal with the said aspect.
19. Thus it has to be necessarily held that the claim for specific performance is barred by Order 2 Rule 2 of the CPC. The same logic would apply to the other reliefs claimed in the plaint also, whether as ancillary to the relief of specific performance or in alternative to the relief of specific performance.
20. I may record that this Court had during the hearing proposed to prevail upon the defendant to refund the amount of Rs.52,00,000/- (supra) to the plaintiff but the plaintiff was not agreeable to the same.
21. The preliminary issue is accordingly decided in favour of the defendant and against the plaintiff. The suit is dismissed as barred by Order 2 Rule 2 of the CPC. However since the judgment in Virgo Industries (Eng.) Pvt. owing whereto the suit was dismissed, is subsequent to the date of institution of the suit and my own view in Rohit Kumar (supra) was to the contrary, it cannot be said that the suit as filed was frivolous or vexatious, hence no costs. Decree sheet be prepared. RAJIV SAHAI ENDLAW, J APRIL21 2014 „gsr‟..