Rejection of a plaint is a serious matter as it non suits the plaintiff and kills the cause of action. It cannot be arrived cursorily without satisfying the requirement of the settled provisions of Code of Civil Procedure. For adjudication of rejection of plaint, averments made in the plaint only have to be read without looking at the defense and thereafter it is to be seen whether on the averments made in the plaint Order 7 Rule 11 can be attracted or not. In ascertaining whether the plaint shows a cause of action the Court is not required to make an elaborate enquiry into doubtful or complicated questions of fact or law.
Delhi High Court
Deepak Ansal vs Ansal Properties And Industries ... on 29 November, 2006
Equivalent citations: 138 (2007) DLT 560
Bench: A Kumar
1. This order will dispose of plaintiff's applications under Order 39 Rule 1 & 2 and another application under Order XL Rule 1 read with Order XXXIX Rules 1 and 2 and Section 151 of the Code of Civil Procedure and the application of the Defendant No. 2 under order VII Rule 11 and in the alternative under order 1 rule 10 of the Code of Civil Procedure.
2. The plaintiff has filed a suit for specific performance in respect of Flat No. GF-29, B-148, Statesman House, Barakhamba Road, New Delhi besides a suit for declaration and permanent injunction and for recovery of damages/mesne profits against the defendants. Plaintiff, Shri Deepak Ansal, contended that Shri Sushil Ansal is his brother. They, Ansal brothers, were jointly in the management and control of Ansal Group of Companies including Ansal Properties and Industries Limited, defendant No. 1, and he held majority share with his brother, Shri Gopal Ansal.
3. A family settlement was arrived at among the brothers with the object of giving separate ownership, management and control of companies to each brother and consequently, plaintiff transferred all his shares in Ansal Page 3852 Properties and Industries Limited to Shri Sushil Ansal, defendant No. 2 and his nominee.
4. A restructuring plan was executed for net worth equivalization of three flagship companies.The plaintiff contended that in 1988, defendant No. 1 proposed to construct a multi storey commercial building at plot No. B-148, Statesman House, Barakhamba road, New Delhi comprising of independent flats and in that building he agreed to buy a commercial flat No. GF-29 comprising of 250 sq.ft. @ Rs. 3,500/- per sq.ft. for a total consideration of Rs. 8,75,000/-.According to plaintiff, agreement to sell in respect of said flat is reflected and evidenced by the allotment letter dated 15th October, 1990 executed by the defendant No. 1 in favor of plaintiff in terms whereof defendants agreed to sell the said flat to the plaintiff. The plaintiff contended that besides the said flat, he, his wife, his sons and his HUF also entered into similar agreements in respect of other flats in the same building. The plea of the plaintiff is that he paid the entire consideration of Rs. 8,75,000/-.In respect of other flats in his name and in the name of other family members and his HUF, a total consideration of Rs. 94,71,550/- has been paid representing the payment of sale consideration of 11 flats which were agreed to be sold to the plaintiff and his family members.
5. The plaintiff asserted that with a view to defeat the rights of the plaintiff and his family members, the defendants had been threatening to allot the flats of plaintiff and his family members to EXIM Bank (i.e., Export Import Bank of India) and even a resolution to this effect was passed by the defendants necessitating a notice dated 21st March, 2000 sent by plaintiff to the defendant No. 1 and the Directors. In reply dated 22nd March, 2000 to the said notice, the defendant No. 1 confirmed, by reducing 2000 sq. ft from the area of EXIM Bank deal and adding to the already existing area with the company, the area of Shri Gopal Ansal and Shri Deepak Ansal and their families would remain almost intact. According to plaintiff, thereafter despite assurances by the Directors of Defendant No. 1, even after elapse of reasonable time, the possession of the flat was not given necessitating sending another notice dated 23rd May, 2002 calling upon the defendants to handover the possession of the flat to the plaintiff. In reply dated 5th June, 2002 to notice date 23rd May, 2002, the defendants raised a demand of Rs. 1,32,00,000/- for all the 11 flats of plaintiff and his family members and also stated that the defendants are agreeable to consider the matter on payment of said sum.The plaintiff's plea is that the entire sale consideration for the flat in dispute amounting to Rs. 8,75,000/- was paid and regarding escalation of cost of construction, fire fighting installation charges, L&DO charges, maintenance, deposits, etc., the defendant No. 1 never raised any such demands nor the details thereof have been given and as such the alleged demands are bogus and were raised as an after thought so as to cause willful loss, damage, hardship and injury to the plaintiff.It was also averred that in relation to the implementation of Restructuring Plan of April 2000, two awards dated 2nd December, 1999 and 22nd February 2002 have also been passed by the Group of Arbitrators named in Restructuring Agreement and even all the three brothers had written letters dated 20th December, 1999 indicating that the award given by the Arbitrator shall be binding on all the parties.
Page 3853
6. In these circumstances, the plaintiff filed the application for interim injunction contending that the defendants are apprehending illegal cancellation of allotment of the plaintiff and creating of third party interest in respect thereof. Consequent to the application of the plaintiff, an ex parte interim order dated 21st June, 2002 was passed restraining the defendants, their servants, agents, representatives, etc. from transferring, selling, alienating, mortgaging, handing over the possession or otherwise encumbering and creating third party interest in the flat in question. Thereafter, another application was filed seeking appointment of receiver to take possession of the said flat and to let out the property. That the flat of the plaintiff with other flats of his family members and the flats of his brother, Shri Gopal Ansal can fetch a substantial rental in excess of Rs. 10,50,000/- per month and in the circumstances plaintiff and his family members and the family of his brother is incurring loss of Rs. 10,50,000/- per month and each flat owner is suffering a loss of Rs. 50,000/- per month. The plaintiff/applicant contended that a deep-rooted conspiracy on the part of the various employees, Executives and Directors of the defendant No. 1 with Mr.Sushil Ansal to cause damage, embarrassment and prejudice to the plaintiff. He contended that property/flat was intended to be sold by defendant No. 1 company and it is not for the personal use and in the circumstances it will be just and proper that the plaintiff be appointed as receiver and given possession thereof as the premises is in eminent danger of getting dissipated due to malicious conduct of the defendants. The plea of the plaintiff is based on the fact that other flats belonging to his wife, Ms. Divya Ansal, were fraudulently sold to third parties in a bid to complicate and confuse the matter and deprive the plaintiff of his legal rights.
7. The plaintiff has relied on 1998(46) DRJ 826, Ashok Rai v. Kailash Nath and Associates and Ors. , Mrs. Vijay Srivastava v. Mirahul Enterprises and Ors. , Syed Khuwaja Syed Ahmed v. The Maharashtra Housing and Area Development Authority , Rajeshwar Nath Gupta v. Administrator General and Ors. , Jagad Bandhu Chatterjee v. Smt. Nilima Rani and Ors. , Indian Cable Co. Ltd. V. Smt. Sumitra Chakraborty , Amrish Kilachand And Anr. V. Indian Commercial Co. and others; , Industrial Credit and Investment Corporation of India Ltd. and Ors. V. Karnataka Ball Bearings Corporation Ltd and Ors. in support of his contention that there is a concluded agreement between the parties and the plaintiff will suffer irreparable Page 3854 loss and injury unless the defendants are restrained from parting with possession and a receiver is appointed to the property and the possession be taken from the defendants.
8. The applications of the plaintiff are contested by the defendants contending, inter alia, that the allotment of the flat in dispute was provisional by allotment letter dated 15th October, 1990. The total sale consideration of Rs. 8,75,000/- only by the said allotment letter did not tantamount to any concluded agreement for sale or purchase of any immovable property. The defendant asserted that the rates per square feet were excluding of L&DO and other charges and even the rate of Rs. 3,500/- per sq. ft. was not even fixed and was liable for enhancement/escalation.
9. In para 11 of the written statement, the defendant No. 1 gave the details of payments made by the plaintiff amounting to Rs. 8,75,000/-, however, it was asserted that the plaintiff did not make the payments in terms of the schedule. The defendants also claimed a sum of Rs. 2,54,780/- on account of electric connection charges; fire fighting charges; L&DO charges; power back up charges; escalation charges; ground rent; vacant land tax and security deposits and a sum of Rs. 8,66,856/- as interest on delayed payment up to 31st May, 2002.Regarding the interest which was first demanded from the plaintiff by reply dated 5th June, 2002, defendants stated that the plaintiff was involved in the management of defendant No. 1 and was fully aware of the demands being made on persons similarly situated as the plaintiff for payment of various Installments.Since the entire payment has not been paid, no demand letter prior to 5th June, 2002 was given and plaintiff cannot contend that the entire consideration or sale price of the flat has been paid.The defendants have also contested the prayer for appointment of receiver on the ground that plaintiff does not have any immediate right to possession of the property as also the relief of specific performance being a discretionary remedy which may or may not be granted and in which case the plaintiff shall only be entitled for damages and therefore at interlocutory stage the defendants who are in possession, prior to the filing of suit cannot be dispossessed. The allegation of the plaintiff that the dispute pertaining to the flat whose specific performance is sought, has been raised on account of disputes between the families of plaintiff and defendant No. 2, was denied. Regarding the flat, it was stated that it is not contiguous with other flats of the plaintiff and his family members which are interspersed. Three of the flats involved in the suits are of Mrs. Divya Ansal, wife of the plaintiff, has already been allotted to third parties. The defendants' contention is that no case of dissipation of the property or irreparable mischief has been made out and in case a receiver is appointed and the property is let out, it would involve issuance of deduction of tax at source and payment of house tax which will cause complication inasmuch as it will not be clear as to in whose account tax is to be deducted and payment is to be made and consequently the plaintiff should not be granted the relief for appointment of receiver till he is found entitled for possession of the flat by specific performance.
10. The defendants have relied on AIR 1981 DELHI 291, Jiwan Dass Rawal V. Narain Dass and Ors. , Purshottam Vishindas Raheja v. Page 3855 Life Insurance Corporation of India and Ors. , Hari Mohan Sharma and Others V. CSR Poultry Research and Breeding Farm , Ravi Kumar V. Misha Vadhera and Ors. AIR 1921 Allahabad 91,Mohammad Askari v. Nisar Husain and Ors. , Shri BaijNath v. Ansal and Saigal Properties Pvt. Ltd. , H.G. Krishna Reddy and Co. V. M.M. Thimmiah and Anr. AIR (39) 1952 NAGPUR 220, Shamjibhai v. Jagoo Hemchand and Ors. , Rajeshwar Nath Gupta v. Administrator General and Ors. , Bharat Petroleum Corporation Ltd. V. Hari Chand Sachdeva and Ors. , Essex Farms Pvt. Ltd. and Anr. V. Delhi Transport Corporation , B.R. Mulani V. Dr. A.B. Aswathabnarayana and Ors. to contend that there is no concluded agreement between the parties and the plaintiff is not entitled for appointment of a receiver nor for the injunction as prayed by him.
11. The plaintiff has refuted the pleas of the defendants and contended that since the past few years there have been disputes and differences between the three brothers in the Ansal family that is between the defendant No. 2, Mr. Sushil Ansal, and the other two brothers i.e. Mr. Depak Ansal and Mr. Gopal Ansal created primarily by the defendant No. 2, to grab control and ownership of the various companies of the Ansal group so as to exclude and deprive his other two brothers. Though there have been two awards to resolve the various disputes and differences inter alia with regard to control and ownership of the Ansal Group of Companies but the defendant No. 2 who is the Chairman and in control of defendant No. 1 has been attempting to illegally and wrongfully frustrate the settlement with a view to deprive the other two brothers of their lawful right, control and ownership of the Ansal Group of companies.The entire control and management rests with the defendant No. 2. According to the plaintiff it is defendant No. 2 who is responsible for the impugned illegal, wrongful, arbitrary and malafide cancellation of the allotment and the same is yet another attempt to cause willful loss, hardship and injury to the plaintiff. According to the assertion of the plaintiff the defendants have sent the reply dated 5.6.2002 from which it is evident that the defendants are illegally and wrongfully refusing and avoiding to perform their legal and contractual obligations towards the plaintiff in respect of the suit flat.
12. The learned Counsel for the parties have been heard at length and the pleadings have been perused along with documents. Whether the agreement executed between the parties is concluded or it requires execution of another agreement and whether the agreement between the parties is binding. In Page 3856 , Kollipara Sriramulu V.T. Aswatha Narayana the Supreme Court had held that whether there is a binding contract between the parties or not depends upon the intention of the parties and the special circumstances of each particular case. It was held by the Apex Court:
It appears to be well settled by the authorities that if the documents or letters relied on as constituting a contract contemplate the execution of a further contract between the parties, it is a question of construction whether the execution of the further contract is a condition or term of the bargain or whether it is a mere expression of the desire of the parties as to the manner in which the transaction already agreed will in fact go through. In the former case there is no enforceable contract either because the condition is unfulfilled or because the law does not recognize a contract to enter into a contract. In the later case there is a binding contract and the reference to the more formal document may be ignored." In other words, there may be a case where the signing of a further formal agreement is made a condition or term of the bargain, and if the formal agreement is not approved and signed there is no concluded contract.
13. It is settled law that if a contract is to be made, the intention of the offeree to accept the offer must be expressed without leaving room to the doubt as to the fact of acceptance or to the co-incidence of the terms of the contract with those of the offer. There is also not doubt that the acceptance must be absolute and must correspond with the terms of the offer. If the two minds are not ad idem in respect of the property to be sold, there cannot be a contract for specific performance.
14. It is a question of construction whether the execution of the further contract is a condition or term of the bargain or whether it is a mere expression of the desire of the parties as to the manner in which the transaction already agreed will in fact go through. In M/s Pelican Estates Pvt. Ltd v. Kamal Pal Singh and Ors. 113 (2004) DLT 675 it was held that whether the alleged negotiations had remained inchoate or had fructified into consensus ad idem on all the ingredients necessary for the formation of a contract depends upon the intention of the parties and the special circumstances of each particular case. In the circumstance, can an inference be drawn from the facts and circumstances of this case that there was a concluded agreement not requiring any further written contract and that the parties were ad-idem in respect of all the terms and conditions between them which can be specifically enforced? In Rossiter v. Miller (1878) 3 AC 1124 Lord Cairns said:
If you find not an unqualified acceptance subject to the condition that an agreement is to be prepared and agreed upon between the parties, and until that condition is fulfillled no contract is to arise then you cannot find a concluded contract.
A concluded contract is one which settles everything and leaves nothing to be settled between the parties. In (1934) 2 KB 7, May and Buther v. The King, it was held:
Lord Dunedin told that to be a good contract there must be a concluded contract and a concluded contract is one which settles everything that Page 3857 is necessary to be settled and leaves nothing to be settled by agreement between the parties.
15. Where a concluded agreement to sell is being set up there must be no possibility of doubt on any essential concomitants of the contract. An agreement to sell does not create any right in the property and can not bind the Estate contrary to the position in the case of a mortgage or lease. Though personal rights created against the vendor to obtain specific performance can ultimately bind any subsequent transferee who obtains transfer of the property with notice of the agreement to sell. In India under the provisions of Transfer of Property Act, agreement to sell does not create an equitable estate in the purchaser. Reliance for this can be placed on the decision of this Court in Jiwan Dass Rawal v. Narain Dass and Ors. AIR 1981 DELHI 291 where it was observed:
Adverting, therefore, to the merits of the controversy, it may at the outset be taken note that unlike the law in England where an agreement of sale creates an equitable estate in the purchaser, the law in India does not recognize any such estate. Section 54 of the Transfer of Property Act in specific terms provides that a contract for sale does not, of itself, create any interest in or charge on such property. Such contract is merely a document creating a right to obtain another document in form of sale deed to be registered in accordance with law.In other words, a contract for sale is a right created in personam and not in estate. No privity in estate can be deduced there from which can bind the estate, as is the position in cases mortgage, charge or lease.Of course, such personal right created against the vendor to obtain specific performance can ultimately bind any subsequent transferee who obtains transfer of the property with notice of the agreement of sale.
16. The Apex Court in , Mayawati v. Kaushalya Devi had held that the jurisdiction to order specific performance of a contract is based on the existence of a valid and enforceable contract. Where a valid and enforceable contract has not been made, the Court will not make a contract for the parties and the specific performance will not be ordered if the contract itself suffers from some defect which makes the contract invalid or unenforceable. It was rather held that even if the contract is valid and enforceable, the discretion of the Court will be there to pass or not to pass a decree of specific performance but if the stipulation and terms are uncertain, and the parties are not ad idem, there can be no specific performance, for there was no contract at all. Where there are negotiations, the Court has to determine at what point, if at all, the parties have reached. It was observed by the Supreme Court:
8...The jurisdiction to order a specific performance of a contract is based on the existence of a valid and enforceable contrAct the law of contract is based on the ideal of freedom of contract and it provides the limiting principles within which the parties are free to make their own contracts. Where a valid and enforceable contract has not been made, the court will not make a contract for them. Specific performance will Page 3858 not be ordered if the contract itself suffers from some defect which makes the contract invalid or unenforceable.The discretion of the court will be there even though the contract is otherwise valid and enforceable and it can pass a decree of specific performance even before there has been any breach of the contract.It is, therefore, necessary first to see whether there has been a valid and enforceable contract and then to see the nature and obligations arising out of it.The contract being the foundation of the obligation the order of specific performance is to enforce that obligation.
11... It is settled law that if a contract is to be made, the intention of the offeree to accept the offer must be expressed without leaving room for doubt as to the fact of acceptance or to the coincidence of the terms of acceptance with those of the offer. The rule is that the acceptance must be absolute, and must correspond with the terms of the offer. If the two minds were not ad idem in respect of the property to be sold, there cannot be said to have been a contract for specific performance.If the parties themselves were not ad idem at to the subject matter of the contract the Court cannot order specific performance.
18...The specific performance of a contract is the actual execution of the contract according to its stipulations and terms, and the courts direct the party in default to do the very thing which he contracted to do.The stipulations and the terms of the contract have, therefore, to be certain and the parties must have been consensus ad idem.The burden of showing the stipulations and terms of the contract and that the minds were ad idem is, of course, on the plaintiff.If the stipulations and the terms are uncertain, and the parties are not ad idem, there can be no specific performance, for there was no contract at all.Where there are negotiations, the Court has to determine at what point, if at all, the parties have reached agreement. Negotiation thereafter would also be material if the agreement is rescinded.
17. Whether there was a concluded agreement to sell which can be specifically enforced, therefore, has to assessed from the facts of the case. It is necessary first to see whether there has been a valid and enforceable contract and then to see the nature and obligations arising out of it? Whether the intention of the offeree to accept the offer was express without leaving room for doubt as to the fact of acceptance or to the coincidence of the terms of acceptance with those of the offer? Was this acceptance absolute and corresponded to the terms of the offer? Whether the two parties were or were not at ad-idem in respect of the terms of the sale of the property? If parties are themselves are not ad-idem regarding the sale of the property, the Court cannot order specific performance and if the Court cannot order specific performance the Court should not pass any interim order in such facts and circumstances.
18. Both the parties have relied on a number of judgments in support of their contentions and pleas. Considering the present facts and circumstances, it may not be necessary to deal with all the cases sited by the parties in detail at this interim stage as the fact situation of the present case is apparently distinguishable from the fact situation of the decisions relied on behalf of Page 3859 parties. A decision is only an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein nor what logically follows from the various observations made in it. The ratio of any decision must be understood in the background of the facts of that case. It has been said long time ago that a case is only an authority for what it actually decides, and not what logically follows from it. It is well settled that a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision. The Supreme Court in Bharat Petroleum Corporation Ltd and Anr. v. N.R. Vairamani and Anr. AIR 2004 SC 778 hadobserved:
Court should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as Euclid's theorems nor as provisions of the statute and that too taken out of their context. These observations must be read in the context in which they appear to have been stated. Judgments of Courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes.
A case is only an authority for what it decides. As observed by the Supreme Court in State of Orissa v. Sudhansu Sekhar Misra :
A decision is only an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein nor what logically follows from the various observations made in it. On this topic this is what Earl of Halsbury,LC said in Quinn v. Leathem 1901 AC 495:
Now before discussing the case of Allen v. Flood (1898) AC 1 and what was decided therein, there are two observations of a general character which I wish to make, and one is to repeat what I have very often said before, that every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be found there are not intended to be expositions of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found. The other is that a case is only an authority for what it actually decides. I entirely deny that it can be quoted for a proposition that may seem to follow logically Page 2009 from it. Such a mode of reasoning assumes that the law is necessarily a logical Code, whereas every lawyer must acknowledge that the law is not always logical at all.
The ratio of any decision must be understood in the background of the facts of that case. It has been said long time ago that a case is only an authority for what it actually decides, and not what logically follows from it.
Page 3860 Similarly in Bhavnagar University v. Palitana Sugar Mills Pvt Ltd , the Supreme observed:
It is well settled that a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision.
19. Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases. Disposal of cases by blindly placing reliance on a decision is not proper. The following words of Lord Denning in the matter of applying precedents have become locus classicus:
Each case depends on its own facts and a close similarity between one case and anr. is not enough because even a single significant detail may alter the entire aspect, in deciding such cases, one should avoid the temptation to decide cases (as said by Cordozo) by matching the colour of one case against the colour of Anr. To decide therefore, on which side of the line a case falls, the broad resemblance to Anr. case is not at all decisive.
20. Precedent should be followed only so far as it marks the path of justice, but onemust cut the dead wood and trim off the side branches else one will find oneself lost in thickets and branches, yet some of the precedents relied on by the parties require consideration. In Ashok Rai v. Kailash Nath and Associates and Ors. (Supra) a Single Judge of this Court had appointed a receiver and put the purchaser in possession who had paid full consideration. Agreement between the parties was for construction of the building and different areas were agreed to be taken by different parties. One of the parties to the building construction agreement had entered into an agreement to sell and the entire consideration was paid which fact was not disputed and in those circumstances it was held that the plaintiff had a prima facie case and non grant of ad-interim mandatory injunction is likely to cause irreparable injury to the plaintiff. The Single Judge had relied on the decision in Mrs.Vijay Srivastava V. Mirahul Enterprises and Ors. 2nd 1987(II) Delhi 51. In Mrs.Vijay Srivastava (Supra) which is also relied on by the plaintiff in the present suit, the plaintiff in that suit had paid more than 90% of the cost fixed in the agreement for building construction and had also advanced interest free loans for constructions to be completed by the defendants where it was held to be a fit case to issue mandatory injunction directing the defendants to hand over the possession of the flats to the plaintiffs. It was held that in case only an interim injunction restraining the defendant from alienating or parting with possession of the flats is passed, the plaintiffs would be deprived of getting possession of the flats and would continue to pay rents for the premises in their occupation and the defendants who have received much amount then what could be expected by them would enjoy the possessory benefits of the flats. Regarding appointment of a receiver a Single Judge of the Bombay High Court in Syed Khuwaja Syed Ahmed (supra) had Page 3861 held that it must be determined not only on the facts of a particular case but also in the context of a social situation. In this case the plaintiff was one of the occupants of an old building which had crumbled down and he had been given an alternative accommodation though the building had been reconstructed by the authority. The plaintiff in this case was an occupant of the old building and his grievance was that he had not been given alternative accommodation. Since a flat was lying vacant and an application was filed by the plaintiff in that case to appoint him as a receiver and hand over the possession of the flat, it was held that the condition of justness and convenience has to be appreciated not only with reference to the facts of each case but also in the context of social situation. Since the flat was lying idle and the plaintiff was suffering and did not have even a small nook to rest his limbs it was held to be eminently just and convenient to appoint a receiver and to appoint plaintiff as his agent and consequently the plaintiff was allowed to get into the occupation of the flat temporarily. The plaintiff was, however, directed to give an undertaking to hand over the possession to the receiver, if his claim is not made good. Regarding waste the Court had held that considering the acute housing scarcitykeeping a flat idle is not only a waste but a criminal waste and the Court should not turn a blind eye to such criminal waste.
21. In Rajeshwar Nath Gupta (Supra),a Single Judge had held that where the defense set up is bonafide and the proposition of law is arguable, it is not advisable for the Court to appoint a receiver to take possession of immovable property from the defendants unless and until the Court is of the opinion that there is well founded fear that the property in question will be dissipated or that other irreparable mischief may be done unless the Court gives a protection. It is only if more than a prima facie case is made out by the plaintiff to the likelihood of the suit being decreed and if there is no tangible defense raised by the defendants and if it will lead to manifest injustice then in exceptional circumstances the Court would be justified in appointing a receiver and granting interim injunction. The Court has referred to five principles which can be described as the 'panch sadachar' of our Courts exercising equity jurisdiction in appointing receivers as:
1) The appointment of a receiver pending a suit is a mater resting in the discretion of the Court. The discretion is not arbitrary or absolute. It is a sound and judicial discretion, taking into account all the circumstances of the case, exercised for the purpose of permitting the ends of justice, and protecting the rights of all parties interested in the controversy and the subject matter and based upon the fact that there is no other adequate remedy or means of accomplishing the desired objects of the judicial proceeding.
2) The Court should not appoint a receiver except upon proof by the plaintiff that prima facie he has very excellent chance of succeeding in the suit.
3) Not only must the plaintiff show a case of adverse and conflicting claims to property, but, he must show some emergency or danger or loss Page 3862 demanding immediate action and of his own right he must be reasonably clear and free from doubt. The element of danger is an important consideration. A Court will not act on possible danger only, the danger must be great and imminent demanding immediate relief. It has been truly said that a Court will never appoint a receiver merely on the ground that it will do no harm.
4) An order appointing a receiver will not be made when it has the effect of depriving a defendant of a 'de facto' possession since that might cause irreparable wrong. If the dispute is as to title only, the Court very reluctantly disturbs possession by receiver, but if the property is exposed to danger and loss and the person in possession has obtained it through fraud or force the Court will interpose by receiver for the security of the property. It would be different where the property is shown to be 'in medio' that is to say, in the enjoyment of no one, as the Court can hardly do wrong in taking possession: it will then be the common interest of all the parties that the Court should prevent a scramble as no one seems to be in actual lawful enjoyment of the property and no harm can be done to anyone by taking it and preserving it for the benefit of the legitimate who may prove successful. Therefore, even if there is no allegation of waste and mismanagement the fact that the property is more or less 'in medio' is sufficient to vest a Court with jurisdiction to appoint a receiver. Otherwise a receiver should not be appointed in super cession of a bona fide possessor of property in controversy and bona fides have to be presumed until the contrary is established or can be indubitably inferred.
5) The Court, on the application of a receiver, looks to the conduct of the party who makes the application and will usually refuse to interfere unless his conduct has been free from blame. He must come to the Court with clean hands and should not have disentitled himself to the equitable relief by laches, delay, acquiescence etc."
In this case the shop on the ground floor was let out by the predecessor in interest of the plaintiff, Mrs. Enid, who was the sole tenant and who did not leave behind any heirs or next of kin and the defendants were alleged to be business associates of Mrs. Enid. In these circumstances and considering that defense raised by the defendants was not wholly untenable, a receiver was not appointed.In Jagad Bandhu Chaterjee ( supra) the Supreme Court rejected the contention that waiver of right under Section 26F of Bengal Tenancy Act must be founded on contract or agreement held that it is open to a promiseto dispense withthe performance of the promise made to him and he can accept instead any satisfaction which he thinks fit. In Indian Cable Co. Ltd. (supra) tenant was restored the possession by mandatory interlocutory injunction even though it resulted in grant of relief claimed in the suit. In Amrish Kilachand and Anr. (supra) a person claiming that he was in joint possession and in his absence he was dispossessed, had sought Page 3863 appointment of receiver. It was held to be appropriate to appoint a commissioner to ascertain whether it is possible to carve out a portion of the said premises and in case such a course was not feasible then to appoint a receiver and the defendant was to be put in possession of the premises as the agent of the receiver. In Industrial Credit & investment Corporation of India Ltd, the Apex Court was concerned with conferring power on the receiver to effect sale of the property even prior to the passing of the decree in a suit for recovery ofRs.76,72,00,000/-.
22. Per contra the defendants have relied on Surinder Sethi (Supra) where it was held in a suit for specific performance, where the agreement to sell has a stipulation that in case of default on the part of seller, double the money would be payable, prima facie case for injunction was not made out as the damages had already been liquidated and specially since the relief of specific performance is discretionary in nature. In Rajeshwar Nath Gupta (Supra) a Single Judge had held in the facts and circumstances that the defense raised by the defendants on the face of it was not wholly tangible and so wherever there is a bonafide defense which has been set up and where the proposition of law is arguable it is not advisable for the Court to appoint a receiver to take possession of immovable property from the defendants unless and until the Court is of the opinion that there is well founded fear that the property in question will be dissipated or that other irreparable mischief may be done unless the Court gives a protection. If more than a prima facie case is made out by the plaintiff to the likelihood of the suit being decreed and there is no tangible defense raised by the defendants and in case manifest injustice would be done then the Court would in exceptional circumstances be justified in granting interim relief by appointment of a receiver. In Ravi Kumar (Supra) a Division Bench had held that the discretion to appoint a receiver is not arbitrary or unregulated but has to be exercised cautiously, judicially and according to the legal principles after consideration of the whole of the circumstances of the case. A receiver cannot be appointed merely because it is expedient or convenient to one of the parties to do so or because it will do no harm. A bonafide possessor of property should not be dispossessed pending suit unless there is substantial reason such as, well founded fear that the property in question being dissipated or that some other irreparable mischief may occur unless the Court gives its protection. Before appointing a receiver the matter should be considered judicially in all aspects including prima facie case that is either a good title to the property or special equity in his favor requiring immediate dispossession of the defendant or that the property in the hands of the defendant is in the danger of being wasted. The Division Bench was of the view that ordinarily the purchaser who is ready and willing to complete the contract and who has deposited the consideration in the Court be not put in possession straightway except where the Court thinks of taking over Page 3864 possession through the receiver because of serious likelihood of waste or danger to property or the existence of other situation.
23. In Sh.Baijnath (Supra) relied on by the defendants the agreement to sell was for a flat on the 13th floor of the building and the agreement was contingent on sanction of plan of 13th floor by the authority who had not given the sanction. In these circumstances it was held that the specific performance of part of agreement to hand over hall to the plaintiff purchaser could not be ordered.The decision in suit No. 1898/84 decided on 5.3.1986, M/s.Bralco Metal Industries (P) Ltd V. Kailash Nath and Associates, the application seeking interim relief was dismissed as the Court in the facts and circumstances was of the view that the parties could not suggest any reasonably and fairly via media to safeguard the legitimate interest of both of them. The dispute in the said matter was whether the plaintiff is entitled to an area of 1633 sq.ft at the rate of 180 sq.ft which was disputed by the defendants as no rate or area of the flat was given in the receipt. In Jiwan Dass Rawal v. Narain Dass and Ors (supra) relied on by the defendant it was observed that whereas in Englandan agreement of sell creates an equitable estate in the purchaser, however, the law in India does not recognize any such estate.Section 54 of the Transfer of Property Act in specific terms provides that a contract for sale does not, of itself, create any interest in or charge on such property. In this case the disputes had arisen under an agreement to sell.
24. The plaintiff is claiming rights in the property on the basis of allotment letter issued to him. The Defendants have, however, filed the documents showing that agreements to sell were executed with other allottee of spaces in the same building. The allotment letter also stipulates that the allotment is provisional by the builder who is responsible and not the owners in any manner whatsoever. The allotment letter also stipulates that the rates per sq. feet mentioned for the flat are exclusive of L&DO charges and other charges mentioned in the allotment letter. The agreement to sell executed in respect of other allottes rather reflect the details about the amounts to be charged. For a concluded contract, the intention of the offeree to accept the offer must be expressed without leaving any doubt regarding the terms of the contract. Apparently prima facie the final price including the various components of price payable to L&DO and other charges had not been finalized. This Court also by order dated 11.10.2002 after hearing the parties at length and in order to appropriately balance the equities between the parties, as a prima facie measure had held that it will be open to the plaintiff to obtain possession of the flat from the defendants on depositing a cheque of Rs. 2,54,780/- towards L&DO charges and escalation and will also pay 50% of the disputed interest amount directly to the defendants who will retain the same subject to only furnishing affidavit of undertaking about restitution in case the same is ultimately ordered by this Court to be refunded and in respect of balance 50% of the disputed interest the plaintiff had to pay the same from the advance and security deposit received from the tenants by letting out the premises as one unit and if any amount had still remained Page 3865 due, it was to be paid within six months. It seems for these conditions the defendants did not agree and, therefore, these proposals did not materialize.
25. Where a concluded agreement to sell is set up there should not be any possibility of doubt on essential terms of the contract. Prima facie there are differences about the essential terms of the contract. Consequently, even before a specific performance of an agreement as claimed by the plaintiff is granted, this Court will have to fix the amount payable by the plaintiff to the defendants. In H.G. Krishna Reddy and Company (Supra) it was held that if a document which is entered into between two parties and which is relied on as constituting contract contemplates the execution of a further regular agreement between the parties, it is a matter of construction whether the agreement of a further contract is a condition of the terms of the bargain or whether it is a mere expression of the desire of the parties as to the manner in which the original agreement should be performed. The true test for determining whether there was such a binding contract is whether the parties were of one mind on all the material terms of the contract at the time it is said to have been finalised between them and whether they intended that the matter was closed and concluded between them.
26. In Baijnath (Supra) a Division Bench had declined specific performance of part of an agreement by handing over hall to the plaintiff purchaser on 13th floor of a building as the agreement was contingent on sanction of the plan of that floor by the authority. In Shamjibhai and others (Supra) a Division Bench of Nagpur High Court had held that in contracts for sale of land, there are three well defined stages and it is always a matter for construction when these three stages are present as to which the parties intended to be the crucial stage at which both sides are to be bound. These three stages were defined as period of negotiation in which suggestions and counter suggestions are handled to and fro and thereafter second stage is reached when this stage is concluded and the parties reach an agreement and the parties can reduce their points of agreement in writing and can draw a formal agreement and execution of the formal document is the third stage.
27. Though the plaintiff has contended that he has always been ready and willing to perform his part of the agreement but the charges as claimed by the defendants have not been paid and the charges as were directed by the Court as an interim measure were also not agreed to by both the parties. The parties in the facts and circumstances could not suggest any reasonably and fairly via media to safeguard the legitimate interest of both the parties. From the agreement to sell in respect of other flats what appears is that the possession was handed over to the provisional allottes after receipt of entire balance consideration from them. Since the plaintiff was also a Director of the defendant firm, the plaintiff cannot absolve himself completely of the knowledge of the such facts and that after allotment letters, the agreement to sell were executed and possession was given on payment of entire amount as demanded under the Agreement to sell executed with other allottees.
Page 3866
28. For the appointment of a receiver, a person seeking appointment is to make out a case of waste or damage to the property. The averments of the plaintiff appears to be that he would be suffering substantial loss in case the possession is not taken from the defendants and the premises is let out. A receiver cannot be appointed merely because it is expedient or convenient to one of the parties to do so or because it will do no harm to do so. Though the appointment of receiver is discretionary but the discretion is also based on sound judicial principles. A receiver can be appointed in case no other adequate remedy or means of accomplishing the desired object of the judicial proceeding is available but it is to be based on a very good prima facie case of plaintiff succeeding in the suit. In order to have a receiver appointed plaintiff not only has to show a conflicting claim to the property but must show some emergency or damage or loss demanding immediate action. It is also no more res-integra that normally receiver is not to be appointed where it has an effect of depriving a defendant of a de-facto possession which may cause irreparable loss to the defendant. The conduct of the parties also become very relevant in the circumstances. The plaintiff, by order dated 11.10.2002 as an interim measure till the next date, was directed to deposit a certain amount towards the L&DO charges which, however, was not paid by the plaintiff. The plaintiff had been director of the defendant No. 1. The defendant No. 1 has produced various agreements to sell of other allottees to show that other allottees were given possession on execution of Agreements to sell in their favor on payment of amounts demanded by the defendant No. 1. The plaintiff can not contend prima facie that he was not aware of these facts and circumstances. The disputes are whether the allotment letter is a concluded agreement to sell in favor of the plaintiff and other disputes which have been raised by the defendants. On considering these facts and circumstances, prima facie, the plaintiff is not entitled for an interim mandatory injunction directing the defendants to give possession of the property to the plaintiff.
29. In Purshottam Vishindas Raheja (supra) a Single Judge in a suit for specific performance of the agreement to sell had held that the plaintiff does not get the right of possession unless he gets a decree and a defendant therefore, cannot be dispossessed at an interlocutory stage. Another Single Judge of this Court in Hari Mohan Sharma (supra) on the undertaking of the defendant that he will maintain status quo in respect of the property for which the suit for specific performance of agreement to sell was pending the relief of appointment of receiver was denied to the plaintiff. A Division Bench of this Court in Ravi Kumar (Supra) had also held that the possession of an occupant should not be lightly disturbed and that too at a preliminary stage. It was held that even if the plaintiff states in the plaint that he was ready and willing to complete the contract and then deposits the entire consideration in the Court, such a plaintiff cannot normally be put in possession straightway Page 3867 unless the Court thinks of taking over possession through a receiver because of the serious likelihood of waste or damage to the property or the existence of other circumstances mentioned. A Division Bench of Allahabad High Court in Mohd. Askari (supra) had held that penury of a party is also not a ground for appointment of a receiver. Though the plaintiff has not contended that he is poor but what is being stated is that a substantial amount of rent will be lost, in case the possession of the flat is not taken from the defendant and the plaintiff is allowed to let out the same through the receiver. A Division Bench of this Court in Bharat Petroleum Corporation Ltd (supra) had rather held that mandatory injunction or interlocutory applications should be granted only to restore status quo and not to establish new state of things. The plaintiff has claimed the damages/mesne profits. In case the plaintiff is able to establish that he was entitled for specific performance and also to claim of mesne profits, the loss which the plaintiff shall suffer will be recoverable as also the relief of specific performance and possession. The amount which the plaintiff will earn in case the property is let out, will not constitute dissipation of property or irreparable loss to the plaintiff as this amount will be recoverable as mesne profits from the defendants. In case the property is not let out by the plaintiff, there will neither be dissipation of the property nor will it be such irreparable mischief which would require protection of appointment of receiver. The loss to the plaintiff will be only, in case even after proof of mesne profits, the plaintiff is not able to recover the damages/mesne profits from the defendants. But such an eventuality will not be of such a nature so as to grant immediate relief of appointment of receiver in the facts and circumstances.Therefore, considering the entirety of the facts and circumstances and various orders passed by this Court, prima facie, the plaintiff has not been able to make out a case for taking possession of the flat in dispute from the defendants and for appointment of the receiver and for letting outthe same.
30. The plaintiff was granted ex-parte interim injunction restraining defendants from transferring, selling, mortgaging or encumbering third party interest in the flat by order dated 21.6.2002. Considering the fact that plaintiff was the Director of the defendant No. 1 company and allotment of the flat is alleged to have been on account of restructuring plan for net worth equivalisation of different companies and the fact that the consideration except the L&DO charges and other charges and interest has been paid, in case the defendants create third party rights in the said property or encumber the same by creating any mortgage or sale, will cause greater inconvenience to the plaintiff than to the defendants. In the circumstances plaintiff shall suffer irreparable loss and damages and the inconvenience caused to the plaintiff shall also be greater. Therefore, it will be just and appropriate to restrain the defendants from selling, mortgaging or otherwise encumbering, creating third party interest in the flat No. GF-29, B-148, Statesman House, Barakhamba Road, New Delhi during the pendency of the suit and consequently the IA No. 5667/2002 and 8356/2002 are disposed of in terms hereof accordingly.
31. Therefore in IAs No. 5667 of 2002 and 8356 of 2002, the relief for appointment of receiver is declined, however, interim injunction in terms Page 3868 hereof is confirmed in favor of plaintiff and against the defendants during the pendency of the present suit and the applications are disposed of in terms hereof.
IA No. 8614/2002
32. By this application under order VII Rule 11, the defendant No. 2/applicant has sought rejection of the plaint against him on the ground that no cause of action is disclosed in the plaint against him. According to him, the agreement in respect of which specific performance is claimed by the plaintiff, was executed by defendant No. 1 which is a Corporation and juristic person and independent of him and defendant No. 2 is only the Chairman of the defendant No. 1. The letter in respect of which declaration is claimed is also by defendant No. 1 and defendant No. 1 alone is liable for the specific performance of the flat in respect to which the suit has been filed.
33. According to the defendant No. 2/applicant the entire plaint does not disclose any cause of action against the applicant/defendant No. 2. Rejection of the plaint against defendant No. 2 is also sought on the ground that in a suit for specific performance of an agreement to sell, persons other than the parties to the agreement are not necessary nor proper parties and in the circumstances it is apparent that defendant No. 2 has been drawn unnecessarily in the suit with malafide intention. It is contended that there are family disputes between defendant No. 2 and the plaintiff and defendant No. 2/applicant has been dragged into this litigation in order to settle the personal scores regarding the family disputes. The defendant No. 2 also contended that he is the Chairman of defendant No. 1 and is not involved in the day to day functioning or affairs of the defendant No. 1 Company which are in the hands of professionals, who act in the best interest of defendant No. 1. Defendant No. 1 is stated to be a public limited company where large percentage of shares are held by the members of the public and which is listed in the stock exchange and all policy decisions are taken by the Board of Directors of defendant No. 1 which also has the nominee of the banks and financial institutions. In these circumstances it has been claimed that the plaint be rejected against defendant No. 2.
34. The application is contested by the plaintiff/non applicant. It was asserted by the non applicant that the pleas have been raised in the plaint against defendant No. 2 who was aware of the contract in respect of which specific performance is sought and non performance of contractual obligations in respect of the agreement to sell are solely on account of and at the behest of defendant No. 2. It is asserted that there are disputes between the defendant No. 2 on one side and his brothers including plaintiff on the other side and specific allegations have been made in paragraphs 35 to 42 of the plaint which disclose an ample cause of action against defendant No. 2 and in the circumstances defendant No. 2 is a necessary and in any case a proper party and plaint is not liable to be rejected against defendant No. 2.
35. Perusal of the plaint discloses that specific averments have been made against defendant No. 2 and pleas have been raised. In paragraph 37 of the plaint it is asserted that there have been disputes and differences between the three brothers in the Ansal family that is between defendant No. 2 and Page 3869 other two brothers namely Deepak and Gopal Ansal which are created primarily by defendant No. 2 to grab and control the ownership of various companies of Ansal Group so as to exclude and deprive his brothers, plaintiff and other brother of their rights. The plaintiff has also referred to restructuring plan between the three brothers including defendant No. 2 in April, 2000 and two awards dated 2.12.1999 and 22.2.2002. According to the plaintiff defendant No. 2 who is the Chairman and in control of defendant No. 1 has been attempting to illegally and wrongfully frustrate the settlement with a view to deprive the brothers of their lawful right, control and ownership of Ansal Group of Companies.
36. In para 40 of the plaint it has been categorically asserted that defendant No. 2 is responsible for the impugned illegal, wrongful, arbitrary and malafide cancellation of the allotment and it is another attempt to cause willful loss, hardship and injury to the plaintiff. Similar averments have been made against the defendant No. 1.
37. The prayer has been made for a decree of specific performance against the defendants and not against defendant No. 1. Similarly decree of declaration has also been claimed against the defendant and even injunctions have been claimed against the defendants from cancelling the plaintiff's allotment in respect of flat No. GF-29, B-148, Statesman House, Barakhamba Road, New Delhi from allotting or handing over possession of the flat to any other person and in the alternative a decree for damages and mesne profits has already been claimed against the defendants and not only against defendant No. 1.
38. It is no more res-integra that a necessary party is one whose presence is absolutely necessary and without whose presence the issue cannot effectually and completely be adjudicated upon and decided between the parties. The plaintiff has claimed decree for specific performance and a decree for damages and injunction against the defendant No. 2 also and averments have been made against defendant No. 2 in the plaint and in the circumstances it cannot be held that there are no pleas against defendant No. 2. Ultimately on the basis of the pleas and evidence produced by the plaintiff whether he would be entitled for a decree or not is not material for adjudicating whether the plaintiff is a necessary party or not. Plaintiff is also a dominus lIT is and he is entitled to sue every possible adverse claimant in the same suit whom he wishes to proceed to avoid multiplicity of suit and needless expenses. Plaintiff is entitled to join all the persons as defendants against whom right to relief is alleged or exist. A party can be joined as defendant even though the plaintiff does not think that he has any cause of action against him as it is open to the Court to add at any stage of the suit, a necessary party or a person whose presence before the Court may be necessary in order to enable the Court to effectually and completely adjudicate upon and settle all the questions involved in the suit.
39. Rejection of a plaint is a serious matter as it non suits the plaintiff and kills the cause of action. It cannot be arrived cursorily without satisfying the requirement of the settled provisions of Code of Civil Procedure. For adjudication of rejection of plaint, averments made in the plaint only have to be read without looking at the defense and thereafter it is to be seen whether Page 3870 on the averments made in the plaint Order 7 Rule 11 can be attracted or not. In ascertaining whether the plaint shows a cause of action the Court is not required to make an elaborate enquiry into doubtful or complicated questions of fact or law.
40. Looking at the plaint and the averments made by the plaintiff against defendant No. 2 it cannot be inferred that the plaint does not disclose cause of action against the defendant No. 2. Consequently, what is apparent is that the plaint discloses cause of action against the defendant No. 2 and the relief has also been prayed against the defendant No. 2. Merely because ultimately the relief may not be granted against defendant No. 2, will not be a ground to reject the plaint against the defendant No. 2/applicant because the Court has not to see whether the claim made by the plaintiff is likely to succeed but it is merely to satisfy itself that the allegations made in the plaint, if accepted as true would entitle the plaintiff to the relief he claims. In ascertaining whether the plaint shows a cause of action the Court does not enter upon a trial of the issue effecting the merits of the claim made by the plaintiff nor it can take into consideration the defense raised by the defendants on the merits of the case. Consequently, it is apparent that the plaint discloses cause of action against the defendant No. 2 and the plaint is not liable to be rejected against defendant No. 2 on the grounds as has been raised by defendant No. 2/applicant.
41. Considering the averments made in the plaint in the facts and circumstances, it can not be inferred that the suit has been instituted against a wrong person or there is a bona fide mistake in instituting the suit against the defendant No. 2. In the entirety of facts and circumstances, it can not be inferred that the presence of defendant No. 2 is not necessary for determination of real matter in dispute.
42. Therefore, the application of the defendant No. 2 for rejection of the plaint against him under Order 7 Rule 11 of the Code of Civil Procedure or for his deletion under Order 1 Rule 10 is dismissed. Parties are, however, left to bear their own cost.
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