Delhi District Court
Mohan Khandelwal vs Surinder Kr. Gupta on 20 January, 2025
IN THE COURT OF DISTRICT JUDGE-05,
CENTRAL DISTRICT, TIS HAZARI COURTS, DELHI
Presided by:-
Sh. Abhishek Srivastava, DHJS
CS DJ no. 18883/2016
CNR No:- DLCT01-008854-2016
Sh. Mohan Khandelwal,
Alias Madan Mohan Khandelwal,
S/o Shri J.P. Khandelwal,
R/o C-80, Govindpuri,
University Road, Gwalior (M.P) .......Plaintiff
Vs.
1. Sh. Surinder Kumar Gupta,
S/o Sh. Devi Charan Ji Gupta,
2. Smt. Shakuntla Gupta,
(Died on 24.07.2023
Since deceased through LRs),
3. Sh. Rajeev Gupta,
S/o Sh. Surinder Kumar Gupta,
4. Sh. Sanjay Gupta,
S/o Sh. Surinder Kumar Gupta,
All Residents of
6-A, Underhill Road,
Civil Lines, Delhi
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5. Smt. Krishna Kumar Sharma,
W/o Sh. Roshan Lal Sharma,
6-A, Attur Rehman Lane,
Underhill Road, Civil Lines,
Delhi-110054. .....Defendants
Date of Institution:- 13.07.1992
Date of conclusion of
final arguments:- 03.12.2024
Date of Judgment:- 20.01.2025
JUDGMENT
1. The plaintiffs have filed this suit against the defendants No. 1 to 5,
seeking following reliefs viz. (a) pass a decree of Specific Performance of
the collaboration agreement arrived at between the parties on 23.12.1988
(twenty third December one thousand nine hundred eighty eight) in favour
of plaintiffs and against the defendants directing them to hand over the
possession of the property No. 6-A, Under Hill Road, Civil Lines, Delhi
for the purposes of reconstruction and development of the same in
accordance with the terms of agreement and to convey 45% of the
constructed area after construction on the plot of 3425 Sq. Yds. (three
thousand four hundred twenty five square yards) by executing the sale
deed or such appropriate conveyance deed and to perform all the terms and
conditions on their part in terms of agreement dated 23.12.1988 (twenty
third December one thousand nine hundred eighty eight). (b) In the
alternative to pass a decree for the recovery of a sum of Rs. 35,00,000/-
(Rs. Thirty Five Lakhs) as damages and refund of security in favour of the
plaintiffs and against the defendants. Further, interest be also awarded at
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the rate of 21% per annum on the decretal amount from the date of
institution of the Suit till the recovery of the decretal amount. (c) Costs of
the Suit be also awarded to the plaintiffs against the defendants. and (d)
Such other and further reliefs as this Court may deem fit and proper be also
granted in favour of plaintiffs and against the defendants in the facts and
circumstances of the case.
2. The facts of the case, as pleaded by the plaintiffs in the plaint, in
brief, are as under:-
(a) That the plaintiff No. 1, Sh. Mohan Khandelwal has been
carrying on the business of purchase, sale, development and
construction of the properties. Earlier, the plaintiff No. 1 had been
carrying on business in his own individual name. Later on, the
plaintiff No. 1 promoted and got incorporated a Company M/s
Jeevan Deep Builders Pvt. Ltd. under the Companies Act 1956 on
11.07.1989. Plaintiff No. 1 is the director of the said Company,
plaintiff No. 2, and he is duly authorised to sign and verify the
pleadings and to institute the Suit on behalf of the plaintiff No. 2. A
resolution dated 21.12.1991 was passed by the plaintiff No. 2
authorising the plaintiff No. 1 to sign and verify pleadings, to
institute the Suit and to appoint lawyers and attorneys on behalf of
the plaintiff No. 2.
(b) That the defendants are the owners of property bearing No. 6-
A Underhill Road, Civil Lines, Delhi-110054 measuring about 3425
sq. yards (hereinafter referred to as the ‘suit property’). The
defendants No. 1 to 4 wanted to develop the suit property. The
defendants No. 1 to 4 did not have finances and know-how to
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develop the said property. The defendants No. 1 to 4 approached the
plaintiff No. 1 to construct, develop, improve and make additions/
alterations in the suit property. The defendants No. 1 to 4
approached the plaintiff No. 1 for this purpose in November, 1988.
(c) After a number of meetings in November and December,
1988, the parties reached an understanding/ settlement/ agreement
on 23.12.1988 for the development and construction of the suit
property. The plaintiffs agreed to deposit a sum of Rs. 35,00,000/-
(Rs. Thirty Five Lakhs) towards security deposit for
development/collaboration of the suit property. Pursuant to the
settlement of terms and agreement arrived at between the parties, an
amount of Rs. 2,00,000/- out of total amount of Rs. 35,00,000/- was
paid by the plaintiff No. 1 to the defendants on 23.12.1988. The
defendants after accepting the amount of Rs. 2,00,000/- wrote a
receipt.
(d) In the said receipt dated 23.12.1988, some of the major terms
settled between the parties were incorporated stipulating that
plaintiffs shall deposit a sum of Rs. 35,00,000/- as security for the
development/ collaboration of the Suit property and the plaintiffs
shall be entitled for the 45% share in the built up area and the
defendants shall be entitled for 55% share in the built up property. It
was also stipulated that the security amount of Rs. 35,00,000/- shall
be without interest and was to be refunded after the completion of
the project. As per the receipt dated 23.12.1988, the amount of Rs.
35,00,000/- was to be paid at various stages. Receiving of an
amount of Rs. 2,00,000/- in cash was acknowledged (in the receipt
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dated 23.12.1988) and it was stated that another amount of Rs.
3,00,000/- was payable on 31.12.1988 and a further sum of Rs.
10,00,000/- was to be paid at the time of signing of agreement of
collaboration with the developer and the balance remaining amount
of Rs. 20,00,000/- shall be paid after the plans are sanctioned and
before the commencement of the construction.
(e) That in pursuance of the aforesaid agreement between the
parties, the plaintiffs paid a further sum of Rs. 3,00,000/- vide
cheque No. 0122560 dated 31.12.1988 drawn on Bank of India,
Gwalior to the defendants. The defendants executed another receipt
dated 31.12.1988 acknowledging the payment of Rs. 3,00,000/- to
them.
(f) That thereafter the plaintiffs got all the terms and conditions
agreed between the parties on 23.12.1988 incorporated in a written
agreement and sent the same to the defendants for their approval by
post on 16.05.1989 which was duly received and acknowledged
over telephone by the defendants. The defendants, however, did not
return the same after signing it.
(g) The defendants instead sent a telegram dated 30.05.1989
alleging that agreement incorporating the terms and conditions
settled between the parties had already been given by them to the
plaintiffs. The defendants alleged that the plaintiffs had promised a
number of times to fulfill the terms of the agreement over telephone
but have failed every time and not fulfilling the terms of the
agreement by the plaintiffs is causing irreparable financial and
mental loss to the defendants. The defendants (as last request)
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demanded the further security payment of Rs. 10,00,000/- to be
made to them latest by 15th day 1989 (without specifying the
month), failing which the security amount shall be forfeited.
(h) That the plaintiffs sent a letter dated 09.06.1989 to the
defendants categorically refuting all the allegations made by the
defendants in their telegram dated 30.05.1989. The plaintiffs clearly
stated that the plaintiffs had already sent the written agreement
incorporating all the terms and conditions settled between the parties
to the defendants by post on 16.05.1989 which was received by
them, however, they have failed to return the same after signing it.
The defendants were also informed that they can not forfeit part of
the security amount of Rs. 5,00,000/- , already paid to them. It was
not agreed that the security amount shall be liable for forfeiture for
alleged acts. Time was also not the essence of the agreement. The
plaintiffs also intimated that they are sending another copy of
agreement incorporating all the terms and conditions entered into
between the parties by speed post for the signatures of the
defendants so that the plaintiffs could pay a further sum of Rs.
10,00,000/- and take possession of the property for the
reconstruction. The defendants were also informed that without
signing of the agreement and handing over the possession, a further
amount of Rs. 10,00,000/- as part of security deposit shall not be
payable.
(i) That pursuant to the plaintiff’s letter dated 09.06.1989, the
additional copy of agreement could not be sent immediately as the
consultant of the plaintiffs was not available for some time. The
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plaintiffs therefore sent the additional copy of the agreement for the
signatures of the defendants vide their letter dated 12.07.1989. The
defendants were requested to return the agreement after signing the
same. The defendant No. 1 was also requested to inform the
tentative date for the execution so that the plaintiffs could get the
necessary formalities completed. The said letter was duly served on
the defendant No. 1.
(j) The defendants however did not return the agreement after
signing to the plaintiffs. The plaintiffs therefore wrote a letter dated
13.08.1989 again requesting the defendants to return the agreement
after signatures so that in terms of collaboration agreement agreed
and entered between the parties the work could be started. In the
said letter, the plaintiffs reproduced all the terms and conditions
which were settled between the parties. The said letter was sent by
the plaintiffs by a registered post to all the defendants, however, the
defendants refused to accept the same and were received back by the
plaintiffs with the report of refusal by the postal authorities.
(k) That since the defendants were contemplating creating rights
of other persons in the suit property, plaintiffs on 19.12.1989 filed a
Suit for injunction (Suit No. 3456 of 1989; previous suit) against the
defendants inter alia praying that the defendants be restrained from
entering into any agreement as regards development/ collaboration/
construction of the Suit property and further restraining them
transferring, alienating, or parting with the possession of the Suit
property or any part thereof in any manner to anyone except the
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plaintiffs. The defendants filed written statements controverting the
contention of the plaintiffs.
(l) During the pendency of the previous suit, the plaintiff No. 1
was in Delhi on 01.06.1990 and on 13.06.1990 and had contacted
the defendants for amicable settlement. The defendants however
represented that so long as the suit is pending, it is not conducive for
any settlement. Since the counsel for the plaintiffs had been elevated
in July 1990 and the plaintiffs had no counsel thereafter, and since
the defendants were contending that till the suit is pending, nothing
could be done, the plaintiffs did not pursue their suit which was
dismissed in default on 09.10.1990.
(m) That thereafter the plaintiff No. 1 met several times with the
defendants, however, the defendants kept on delaying the handing
over of agreement duly signed by them and handing over of
possession on one pretext or other. During meetings, the plaintiffs
had pointed out to the defendant No. 1 about his allegation that a
part of the property had been transferred by him to the defendant
No. 5. The defendants assured the plaintiffs that the construction can
be done on the alleged area of the defendant No. 5 and the areas
after construction would be given to the defendant No. 5 by the
defendants No. 1 to 4.
(n) That the defendants No. 1 to 4 however represented that now
they want 60% of the built up area and they demanded a further sum
of Rs. 15,00,000/- as security. The total cost of the construction was
about 35 Lakhs for which the plaintiffs had agreed to give the
security also. That the plaintiffs had always been ready and willing
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to pay the said amount of security, however, the defendants No. 1 to
4 breached their part of agreement in not handing over the
possession of the property and by not executing the power of
attorney in favour of the plaintiff No. 1 so that necessary things
could be done by the plaintiffs in terms of agreement dated
23.12.1988.
(o) That the defendants No. 1 to 4 do not want to perform their
part of agreement dated 23.12.1988 and want to transfer the
property to some other person or persons in breach of the terms of
the agreement. The defendants No. 1 to 4 can not forfeit the amount
of Rs. 5,00,000/- paid by the plaintiffs to the defendants No. 1 to 4
as part of the security amount. The plaintiffs have not breached any
part of the agreement. The terms which were settled between the
parties on 23.12.1988 sufficiently and precisely define the nature of
work to be carried on by the plaintiffs and the things which had to
be done by the defendants No. 1 to 4. The terms were also settled
regarding the rights of the plaintiffs and the defendants No. 1 to 4.
Compensation in money for non performance of the agreement by
the defendants shall not be an adequate relief for the plaintiffs.
(p) That the plaintiffs have always been ready and willing and are
still ready and willing to perform their part of agreement. The
defendants however failed to perform their part of agreement dated
23.12.1988 and thus the present Suit for specific performance.
3. Upon service of summons for settlement of issues of this Suit,
appearance was put on behalf of the defendants No. 1 to 5. Thereafter, a
joint written statement was filed on behalf of the defendants No. 1 to 4. No
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written statement was filed on behalf of the defendant No. 5. The
defendant No. 5 later proceeded ex-parte vide Order dated 25.09.2003.
4. In their written statement, the defendants No. 1 to 4 took the
following preliminary objections:-
(a) That the plaintiffs are precluded from bringing a fresh Suit
(i.e. the present Suit) in respect of the same cause of action as
evinced in Suit No. 3456 of 1989 (a previous Suit) which was
dismissed as per the Order of Hon’ble Mr. Justice D. P. Wadhwa on
09.10.1990. Though the nomenclature of the Suit has been changed,
the cause of action remains the same.
(b) That the present Suit of the plaintiffs is pre-mature. There
have been only negotiations between the plaintiff No. 1 and the
defendants No. 1 & 3. This fact is amply clear from reading of
prayer clause (c) of the previous Suit of the plaintiffs. The plaintiffs
in prayer clause (c) had sought directions from the Hon’ble Court
that the defendants be ordered to enter into a formal agreement with
the plaintiffs. It clearly shows that no agreement was entered into
between the parties and the negotiations in this regard were at initial
stage. This fact is further clarified from reading of para 7 of the
plaint of the previous Suit of the plaintiffs wherein the plaintiffs had
admitted that the plaintiffs got a draft agreement prepared which was
to be signed by the defendants. That the negotiations between the
parties had not merged into an agreement and the parties were not at
all “ad-idem” in regard to terms and conditions of the Contract.
(c) The alleged agreement of which the specific performance is
sought, is infact “non-est”. The present Suit is basically seeking
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specific performance of negotiations which is wholly misconceived;
(a) because the understanding, as alleged by the plaintiffs, records
only what is stated in the receipt given by the defendants No. 1 to 4.
The said receipt does not record any of the obligations to be entered
into by the plaintiffs. This receipt, as such, under no circumstances
can be interpreted as a formal agreement, which can be specifically
performed, and (b) because there was no negotiations entered into
between the plaintiff No. 2 and the defendants No. 1 to 4 as the
plaintiff No. 2 was not incorporated before 11.07.1989 (as per the
plaintiff No. 1). The plaintiff No. 1’s suit for specific performance
based on the allegations that the formal agreement was entered into
between the plaintiffs No. 1 & 2 and the defendants No. 1 to 4 on
23.12.1988 or on 16.05.1989 or any date before the incorporation of
the company, being wholly misconceived, is not maintainable.
(d) That the parties to the Suit i.e. the plaintiff No. 1 and the
defendants No. 1 to 4 have discussed various drafts containing
different terms and conditions and one of such draft agreement was
shown to the plaintiff No. 1 on 23.12.1988 and after having read
whole draft agreement, the plaintiff No. 1 made a part payment of
Rs. 2,00,000/- as security. The copy of the draft was handed over to
the plaintiff No. 1 who sought time to convey the formal acceptance
in regard to the said draft agreement but the plaintiff No. 1 did not
convey the acceptance till date. Meaning thereby, the parties have
not agreed upon the same thing in the same sense.
(e) That the plaintiff No. 2 i.e. M/s Jeevan Deep Builders Pvt. Ltd.
was never a party to the negotiations and the benefits and burdens
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can not be assigned to the said plaintiff No. 2. As such, there has
been a mis-joinder of the plaintiffs in the present Suit.
(f) That the present Suit for specific performance based on the
negotiations, the non-performance whereof can not be enforced, is
not maintainable under Section 14 (a) and (b) of the Specific Relief
Act, 1963. Further, the present Suit is liable to be dismissed as it
does not fulfill the conditions as laid down under Section 14 (3) (c)
of the Specific Relief Act, 1963.
(g) That the relief of specific performance is a discretionary relief
and the plaintiffs, in the facts and circumstances of the case, are not
entitled for same for following reasons; (a) because no agreement/
contract has been executed between the parties; (b) because the
parties have never been at “ad-idem”; (c) because even the
negotiations were not concluded; (d) because the nature of work
under the negotiations was that of building construction; (e) because
the question of possession was never discussed between the parties.
(h) That the plaintiffs are guilty of delays and laches as the
plaintiffs have not explained the delay in filing the present Suit after
dismissal of previous Suit on 09th October 1990. The plaintiff No. 1
gave an unequivocal understanding during negotiations to the
defendants No. 1 to 4 to convey his acceptance within one month
from date of receipt i.e. 23.12.1988 when the proposal vide draft
agreement was handed over to the plaintiff No. 1.
5. On merits, the defendants No. 1 to 4, in their joint written statement,
inter alia pleaded that;
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(a) It is denied that the defendants No. 1 to 4 approached the
plaintiff No. 1 to construct, develop, improve or additions/ alteration
in the suit property. In fact it was the plaintiff No. 1 who made query
from various brokers in regard to entering into collaboration with the
defendants and in response to query from brokers, the defendants
No. 1 to 4 made a proposal in the form of a draft agreement which
was handed over to the plaintiff No. 1 on 23.12.1988. That
acceptance to the said draft agreement was not conveyed to the
defendants No. 1 to 4 till date.
(b) That the Suit property is about 3425 sq. yards is denied. It is
submitted that the property of defendants No. 1 to 4 ad measures
2997 sq. yds only. It is submitted that the defendant No. 5 owns the
balance area i.e. 428 sq. yds.
(c) That as per the receipt dated 23.12.1988, the plaintiff No. 1
was to pay the total sum of Rs. 35,00,000/- as security without
bearing interest and was refundable/ adjustable only after the project
was completed. It is further submitted that before refunding, the said
amount was also adjustable against various defects/ defaults
including non-payment of the remaining security amount.
(d) It is denied that any written agreement was sent to the
defendants No. 1 to 4 on 16.05.1989 by the plaintiff No. 1. It is
further denied that the alleged written agreement was ever received
by the defendants No. 1 to 4. It is further denied that the defendants
No. 1 to 4 ever conveyed any acknowledgment over telephone or
otherwise to the plaintiff No. 1.
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(e) The defendants No. 1 to 4 received a communication dated
09.06.1989 from the plaintiff No. 1. The defendants No. 1 to 4 after
receipt of communication, denied the allegations made therein
telephonically immediately and also denied that any draft agreement
was received from them as alleged by the plaintiff No. 1 in his letter
as referred above. The said draft agreement was never received by
the defendants No. 1 to 4.
(f) That the letter dated 12.07.1989 written by the plaintiff No. 1
is a letter of regret wherein the plaintiff No. 1 regrets for delay to
dispatch a copy of agreement due to non-availability of his
consultant in the meantime at Gwalior. It is written in the said letter
that now after obtaining a copy of the same, the plaintiff No. 1 was
enclosing it for the defendant’s perusal and approval along with
other co-owners. It is submitted that the plaintiff No. 1 had no
adequate finances to finance the deal and pay the aforesaid Rs.
10,00,000/- to enter into the alleged collaboration agreement and
therefore the plaintiff No. 1 was trying his best to delay the
negotiations as long as he could and was sending communications to
the answering defendants without enclosing any draft agreement
therein but emphasising that the draft agreement had been enclosed.
(g) That the communication dated 13.08.1989 was never received
by the defendants No. 1 to 4, therefore, the defendants No. 1 to 4 are
not in a position to comment on the contents of the alleged letter.
(h) That to allege that the time was not the essence of the
agreement is wholly misconceived and premature. It is submitted
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that there has been no agreement between the parties. The terms and
conditions were in the process of negotiations but were not finalized.
(i) That the plaintiff No. 1 never met with the defendants No. 1 to
4 after 20.12.1989. The plaintiff No. 1 has been dishonest from the
very inception of the negotiations and at every step delayed payment
of Rs. 10,00,000/-, as the plaintiffs had no capacity to arrange the
payment of Rs. 10,00,000/- and therefore, deliberately further
delayed the negotiations being finalised. It is submitted that the
plaintiff No. 1 neither conveyed the acceptance of the negotiations as
contained in the draft agreement nor paid a sum of Rs. 10,00,000/- to
the defendants N. 1 to 4 whereupon the agreement was to be entered
into and to be signed. It is submitted that no negotiations can go on
indefinitely and the plaintiff No. 1 was duly notified that if he failed
to remit a sum of Rs. 10,00,000/- to the defendants No. 1 to 4, Rs.
5,00,000/- will be forfeited.
(j) That the plaintiffs are not entitled to claim any damages or
compensation or specific performance under the law of contract for
non-performance by the defendants No. 1 to 4 as there has been no
agreement or contract between the parties.
(k) In view of preliminary objections raised and submissions
made hereinabove, the Suit of the plaintiffs is liable to be dismissed
with costs.
6. Plaintiffs thereupon filed the replication to the written statement of
the defendants No. 1 to 4 wherein they denied the case of the defendants
and reaffirmed the contents of the plaint.
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7. On the basis of pleadings of the parties, following issues were
framed vide Order dated 10.12.1996:-
(1) Whether the present Suit is barred under the provisions of the
Code of Civil Procedure ?
(2) Whether the Suit is maintainable in its present form ?
(3) Whether there is mis-joinder of parties in the present Suit ?
(4) Whether the Suit is barred by Section 14 (3) (c) of the Specific
Relief Act ?
(5) Whether there was any formal agreement between the parties,
which could be enforced under the provisions of Specific
Relief Act ?
(6) If the aforesaid issue is decided in affirmative, whether the
plaintiff has performed his part of the Contract ?
(7) Whether the defendant has failed to perform his part of the
Contract ?
(8) Whether the plaintiff is entitled to a decree for specific
performance, as prayed for in the Suit ?
(9) If it is held that the plaintiff is not entitled to a decree for
specific performance, whether the plaintiff is entitled to decree
of damage and refund of security ?
(10) Whether the plaintiff is entitled to any interest, if so, at what
rate and for which period ?
(11) Relief.
8. During the trial of this Suit, two witnesses viz; PW1 Sh. Mohan
Khandelwal (plaintiff No. 1) and PW2 Sh. N. P. Dass were examined in
support of the case of the plaintiffs.
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9. Sh. Mohan Khandelwal (plaintiff No. 1) has been examined by the
plaintiffs as PW1, who has tendered his evidence by way of affidavit Ex.
PW1/A alongwith following documents:-
(i) Ex. PW1/1: Certified Copy of resolution dated 21.12.1991 of the
plaintiff No. 2.
(ii) Ex. PW1/2: Notice Under Section 16 (2) of the Wealth Tax
Act, 1957.
(iii) Ex. PW1/3: Assessment Order dated 25.03.1992
(iv) Ex. PW1/4: Assessment Order dated 24.03.1992
(v) Ex. PW1/5 (Colly): Assessment Order dated 25.03.1992 and
05.02.1993 passed separately by the assessing authority.
(vi) Ex. PW1/6 (Colly): Statement of loan account of wife of the
plaintiff No. 1.
(vii) Ex.PW1/7 (Colly): Assessment Orders of M/s Ritta Mohan &
Co. for the period of 1988-89 and 1989-90
(viii) Ex. PW1/8 (Ex.P-1): Receipt dated 23.12.1988
(ix) Ex. PW1/9 (Ex.P-2): Receipt dated 31.12.1988
(x) Ex. PW1/10 (Ex.P-3): Telegram dated 30.05.1989
(xi) Ex. PW1/11 (Colly): Office Copy of letter dated 09.06.1989
from plaintiffs to the defendant No. 1 and copy to defendants No. 2
to 4 along with postal receipts.
(xii) Ex. PW1/12 (Colly): Office Copy of letter dated 12.07.1989
from plaintiffs to the defendant No. 1 alongwith postal receipts.
(xiii) Mark A: Copy of agreement.
(xiv) Ex. PW1/13 (Colly): Office Copy of letter dated 13.08.1989
from plaintiffs to defendant No. 1 and copy to the defendants No. 2
to 4 along with postal receipts.
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(xv) Ex. PW1/14 (Colly): Undelivered envelopes addressed to
defendants.
(xvi) Mark B: Copy of Certificate of Incorporation of plaintiff No.
2.
(xvii) Ex. PW1/16 (Colly): Original Travel tickets.
10. PW1 was cross-examined on behalf of the defendants No. 1 to 4.
During Cross-examination of PW1 following documents were exhibited/
marked:-
(i) Ex. PW1/D1 (Colly): Certified copy of the plaint, list of
photocopy of documents and list of reliance and the order sheet of
the previous Suit filed by the plaintiffs i.e. previous Suit No. 3456/
1989
(ii) Mark X: Typed unsigned and undated copy of draft agreement
running into 17 pages endorsed and signed as true copy by Sh.
Rajive Gipta (defendant No. 3) [It has been noted that the said
document does not find mention in the list of reliance dated
16.07.2005 filed on behalf of the defendants No. 1 to 3]
(iii) Mark Y: Certified Copy of the written statement of the
defendant filed in Suit No. 3456/ 1989.
11. Sh. N. P. Dass has been examined by the plaintiffs as PW2, who has
tendered his evidence by way of affidavit Ex.PW2/A. PW2 had deposed
that he was a qualified Architect. He further deposed that at request of Sh.
Mohan Khandelwal, visited the site of the Suit property in January, 1989
and inspected the site for the purpose of preparation of site plan. PW2 was
cross-examined on behalf of the defendants No. 1 to 4.
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12. No other witness was examined on behalf of the plaintiffs. PE was
thereafter closed vide order dated 14.02.2014 and the Suit was posted for
the defendant’s evidence.
13. Record shows that in the meantime, in view of notification No.
27187/DHC/Orgl. Dated 24.11.2015 & in exercise of powers conferred by
Section 4 of the Delhi High Court (Amendment) Act, 2015 (Act 23 of
2015), the present Suit was transferred to the District Court, Delhi vide
Order dated 05.02.2016 (due to change in the pecuniary jurisdiction in
Delhi). Record further shows that before transfer, the Suit was dismissed in
default on 01.08.2014, which was subsequently restored by the Hon’ble
High Court of Delhi vide Order dated 06.09.2019 passed in FAO 451/2017
(the said FAO 451/ 2017 was preferred against the Order dated 17.08.2017
passed by the Ld. ADJ-14, Central, THC whereby the application of the
plaintiff under Order 9 Rule 9 CPC was dismissed). Suit was thereafter
posted for recording of the Defendant’s evidence.
14. On behalf of the defendants No. 1 to 4, Sh. Rajiv Gupta (defendant
No. 3) has been examined as DW1 who tendered his evidence by way of
affidavit Ex.DW1/A. DW1 though relied upon the documents Ex. DW1/1
to Ex.DW1/6, however, on objections of Ld. Counsel for the plaintiff (that
the documents sought to be tendered were not filed by the defendants No. 1
to 4 alongwith their written statement), the documents were de-exhibited.
DW1 was cross-examined on behalf of the plaintiff. It may be noted that
during cross-examination of DW1, the copy of agreement was referred to
as Mark D instead of Mark A.
15. A submission was made by the Ld. Counsel for the defendants No. 1
to 4 that he has instructions from defendants No. 1, 2 and 4 to state that the
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evidence led by the defendant No. 3 as DW1 may also be read in evidence
on behalf of defendants No. 1, 2 and 4 and they do not wish to examine any
other witness in support of their case except DW1. Separate statement of
Ld. Counsel for defendants No. 1, 2 and 4 has been recorded in this regard.
On the submissions of Ld. Counsel for defendants No. 1 to 4, DE was
closed vide Order dated 19.01.2023 and matter was posted for final
arguments.
16. In the meantime the defendant No. 2 expired on 24.07.2023 leaving
behind the defendants No. 1, 3 and 4 as her legal heirs. Amended memo of
parties was accordingly filed.
17. Final arguments were thereafter heard on behalf of plaintiff,
defendant No. 1 and defendants No. 3 & 4 which were concluded on
03.12.2024. Besides, written submissions were also filed on behalf of the
plaintiff and defendants.
18. Following Submissions were made by the Ld. Counsel for the
plaintiff:-
(a) On conclusion of negotiation, a definite, complete and
concluded contract Ex.P1 (Ex.PW1/8) was executed by Defendants
No. 1 to 4 in favour of the plaintiff No. 1 for construction &
development on the plot No. 6A (part of plot No. 6) Under Hill Road,
Civil Lines, Delhi. Plaintiff No. 1 paid Rs. 2 Lakh and Defendants
No. 1 to 4 accepted said part payment towards total security amount
of Rs. 35 Lakhs payable by the plaintiff No. 1 in stages as per Ex.P1
(Ex.PW1/8). The security amount was refundable/ adjustable on
completion of the project under the development/ collaboration
agreement between the parties. The proportionate share/ interestCS DJ 18883/2016
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agreed between the parties, as per the agreement was 55% to the
owners/ Defendants No. 1 to 4 and 45% to the developer/
collaborator/ plaintiff No. 1. Further, Rs. 3 Lakh was payable by the
plaintiff No. 1 by 31st December 1988 and Rs. 10 Lakh was payable
at the time of signing of agreement of collaboration with the plaintiff
No. 1 and balance remaining amount of Rs. 20 Lakh was payable
after sanction of the plan and before start of construction.
(b) Vital terms of the bargain agreed were recorded in the
document Ex.P1 (Ex.PW1/8). This contract is binding and creates
legal obligations, which are enforceable. Signing of collaboration
agreement in terms of Ex.P1 (Ex.PW1/8) was a mere formality to
implement the Ex.P1 (Ex.PW1/8), and the terms of the collaboration
agreement were also settled.
(c) The execution of collaboration/ development agreement
between the parties was not a condition precedent or term of the
bargain but was merely a manner in which the transaction/ contract
already agreed to, would, in fact, go through.
(d) In pursuance to the concluded contract Ex.P1 (Ex.PW1/8),
plaintiff further paid Rs. 3 Lakh vide cheque dated 31.12.1988 and
said payment was accepted and encashed by the Defendants No. 1 to
4 vide a receipt dated 31.12.1988 Ex.P2 (Ex.PW1/9).
(e) The occasion for payment of Rs. 2 Lakhs on 23.12.1988 and
thereafter Rs. 3 Lakhs on 31.12.1988 arose only in pursuance of an
agreement, when the essential terms and conditions were finalised
between the parties. Parting of the money/ payment of Rs. 5 lakhs by
the plaintiff No. 1 and acceptance thereof by the defendants No. 1 to
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4 show that the parties had reached a consensus on the various terms
of the collaboration/ development agreement between them before
signing of Ex.P1 & Ex.P2.
(f) Interest in land and in construction was created by Ex.P1
(Ex.PW1/8) and Ex.P2 (Ex.PW1/9), which is evident from bare
perusal of the document of concluded bargain and the attending
circumstances to the contract and conduct of the parties. Ex.P1 and
Ex.P2 in effect creates interest in the Suit property in favour of the
plaintiff No. 1/ developer for consideration that the entire
construction cost shall be borne by the plaintiff No.1. Thus, a
valuable right and interest in the land with super structure was
acquired by the plaintiff No. 1 and created in his favour by Ex.P1
read with Ex.P2 to exploit the development and to deal with the
constructed area.
(g) Ex.P1 read with Ex.P2 is not a pure construction agreement
and therefore, is enforceable as compensation in money is not an
adequate remedy. Defendants without any fund or any independent
source to construct a new building on their land/ suit property had
engaged plaintiff No. 1 for said purpose with the consideration for
the construction being paid by allocation of a part of the constructed
area i.e. 45% to the plaintiff No. 1. Hence, the contract is
enforceable.
(h) Judicial notice of general trade practice under the
collaboration/ development agreement should be taken by this Court
(Section 56 of the The Indian Evidence Act, 1872/ Section 51 of The
Bhartiya Sakshya Adhiniyam, 2023). Development agreement has
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not been defined by a statute. In collaboration/ development
agreement, a landowner ordinarily provides only land free from all
encumbrances for undertaking development/ construction over his
land as per sanction plan and otherwise all other responsibilities are
on the developer under the general trade practice.
(i) The obligations under the contract Ex.P1 read with Ex.P2
were reciprocal. The defendants have deliberately failed to perform
their obligation of signing the collaboration agreement, which was
provided repeatedly by the plaintiff No. 1 (through several letters
Ex.PW1/11, Ex.PW1/12 and Ex.PW1/13), and Rs. 10 Lakhs towards
the agreed total security amount was payable only on signing of the
collaboration/ development agreement. Defendants No. 1 to 4 failed
to perform their reciprocal obligations.
(j) No explanation has been offered in the written statement for
not replying to the various letters of the plaintiff No. 1 and refuting
contents thereof at the very first instance prior to filing of written
statement.
(k) The stand taken by the defendants No. 1 to 4 in the telegraph
Ex.P3 (Ex.PW1/10) and in their written statement is dishonest, false,
misleading, misplaced, misdirected, afterthought, misconceived,
concocted and illegal in the facts of the case and law involved. The
contention of the defendants No. 1 to 4 that they were not supplied a
copy of the draft collaboration agreement is unbelievable and
untenable. For no fault of developer/ plaintiff No. 1, the owners/
defendants No. 1 to 4 seek to resile from the definite and concluded
agreement Ex.P1 read with Ex.P2.
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(l) No forfeiture clause exists in Ex.P1 and Ex.P2. No such
clause/ condition can be read/ imposed unilaterally by defendants No.
1 to 4 on the plaintiff in the absence of express condition of forfeiture
of amount paid. Defendants can not be allowed to take advantage of
their own wrong and willful conduct.
(m) No objection to maintainability of Suit for not claiming the
relief of declaration against purported cancellation/ refusal of the
concluded agreement, as contended for the first time at the final
argument stage, has been pleaded in the written statement and no
issues in that regard has been framed. Therefore, the contention of
defendants being raised now at this belated stage deserves to be
ignored and rejected and can not be adjudicated. The said contention
travels beyond the written statement. Defendants can not be allowed
to advance any submissions beyond the pleadings.
(n) Plaintiff No. 1 did not accept the repudiation of the Contract
and is seeking enforcement of Ex.P1 read with Ex. P2. Plaintiff was
compelled to institute the present Suit for specific performance in
view of failure of settlement talks between the parties as the
defendants No. 1 to 4 wanted the plaintiff No. 1 to withdraw the
previous Suit No. 3456/ 1989 filed for permanent Injunction. The
railway tickets (Ex.PW1/16) (Colly) in the name of the plaintiff No.
1 shows that the plaintiff No. 1 visited defendants No. 1 to 4 in Delhi
on several occasions for ongoing settlement of the disputes between
the parties. In the settlement talks held between the parties,
defendants No. 1 to 4 enhanced their demand from the agreed terms
Ex. P1 and wanted 60% of the land with superstructure on being
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constructed by the plaintiff No. 1 and additional sum of Rs. 15 Lakh
as security amount. Plaintiff was/ is ready and willing to perform his
part of obligation and his readiness and willingness is evident from
Ex.PW1/2 to Ex.PW1/7. The plaintiff No. 1 has also prayed for relief
of damages and refund of deposited amount from the defendants with
interest thereon as an alternative relief.
(o) The provisions of Order II Rule 2 and Section 11 CPC are not
attracted to the facts of the case.
(p) No document has been filed and proved by the defendants No.
1 to 4 in accordance with law in support of their defence. The
documents sought to be exhibited by DW1 (defendant No. 3) in his
evidence affidavit Ex.DW1/A have been de-exhibited at the time of
recording of examination-in-chief of DW1 on 09.11.2022 and in this
regard Order dated 19.01.2023 may be referred. No leave was taken
by the DW1 to depose on behalf of the defendants No. 1, 2 and 4.
(q) DW1 is not a truthful witness and his credibility is doubtful.
Admittedly, DW1 was not present at the time of signing of Ex.P2,
therefore, he is not in a position to deny delivery of finalised terms
and conditions of the collaboration agreement, therefore, his
testimony regarding delivery of collaboration agreement is
contradictory/ inconsistent and unbelievable. DW1 admits refusal of
plaintiff’s letter dated 13.08.1989 (Ex.PW1/13) as per endorsement
made over the envelope by the postal authority. Addresses mentioned
on the named envelopes have been admitted as correct.
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(r) The paragraph Nos. 2, 3, 8 and 11 of the affidavit of DW1,
Ex.DW1/A are beyond pleadings and therefore, deserve to be
discarded and ignored.
(s) Defendants No. 1 to 4 admits their ownership of the Suit
property to the extent of plot admeasuring 2997 Sq. Yds. As per the
contentions of the defendants No. 1 to 4, defendant No. 5 owns
balance area i.e. 428 Sq. yds. out of 3425 Sq. yds. of the Suit
property by purported sale deed, allegedly executed by the defendant
No. 1 in favour of Smt. Krishna Kumari Sharma. Said purported Sale
transaction was not disclosed to the plaintiff No. 1 at the time of
signing of Ex.P1 and Ex.P2.
(t) Defendants No. 1, 2 and 4 chose not to enter into the witness
box to speak out their case and therefore, an adverse inference, in
terms of Section 114 of the Indian Evidence Act, 1872/ Section 119
of The Bhartiya Sakshya Adhiniyam, 2023, is to be drawn against
them. It is pertinent to mention that no communication was made by
the defendants that draft collaboration agreement received by them
were not in consonance with the agreed terms as per Ex.P1 read with
Ex.P2. The contention/ defence of defendants No. 1 to 4 deserves to
be rejected being contrary to Section 92 of the Indian Evidence Act,
1872/ Section 95 of The Bharatiya Sakshya Adhiniyam, 2023.
(u) Ld. Counsel for the plaintiff has relied on following
judgments:-
(i) Kasarapu Sujatha and Ors. V/s Veera Velli Veera Somaiah;
CS DJ 18883/2016
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(ii)Rathnavathi V/s Kavita Ganashamdas;
MANU/SC/0966/2014
(iii) Inbasagaran & Anr. V/s S. Natarajan (Dead) through LRs;
MANU/SC/0479/2014
(iv) Gurbux Singh V/s Bhooralal; MANU/SC/0241/1964
(v) Jayantilal Chimanlal Patel V/s Vadilal Purushottamdas
Patel; (2017) 13 SCC 409
(vi) Transmission Corporation of Andhra Pradesh Ltd. & Anr.
V/s GMR Vemagiri Power Generation Ltd. & Anr.; (2018) 3
SCC 716
(vii) Khardah Company Ltd. V/s Raymon & Co. (India) Pvt.
Ltd.; (1963) 3 SCR 183
(viii) Harichand Mancharam V/s Govind Luxman Gokhale;
AIR 1923 PC 47
(ix) Jainarain Ram Lundia & Anr. V/s Surajmull Sagarmull &
Ors; 1949 FCR 379
(x) M/s Nanak Builders and Investors Pvt. Ltd. V/s Sh. Vinod
Kumar Alag; 1990 SCC OnLine Del 312
(xi) Kollipara Sriramulu (Dead) by LRs V/s T Aswatha
Narayana (dead) by his LRs; AIR 1968 SC 1028
(xii) Ashok Kumar Jaiswal and Ors. V/s Ashim Kumar Kar
and Ors.; 2014 (4) CTC 369 (FB)
(xiii) A Kanthmani V/s Nasreen Ahmed;
MANU/SC/0234/2017
(xiv) Basavaraj V/s Padmavathi and Anr.; (2023) 4 SCC 239
(xv) State of Tripura and Anr. V/s Bhowmick and Company;
(2004) 1 GLR 489
CS DJ 18883/2016
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(xvi) Janki Vashdeo Bhojwani and Anr. V/s Indusind Bank
Ltd. & Ors; (2025) 2 SCC 217
(xvii) Veluyudhan Sathyadas V/s Govindan Dakshyani;
MANU/SC/0657/2002
(xviii) Tarun Sawhney V/s Uma Lal and Ors.;
MANU/DE/2567/2011
(ix) West Haryana Highways Projects Pvt. Ltd. V/s National
Highways Authority of India and Ors.; MANU/DE/1837/2020
(xx) Rajendra K Bhutta V/s Maharashtra Housing and Area
Development Authority and Ors.; MANU/SC/0226/2020
(xxi) Mono Orion Foods India Ltd. V/s Syndicate Reality Infra
Pvt. Ltd.; MANU/WB/0991/2021.
19. Following Submissions were made by the Ld. Counsel for the
defendant No. 1:-
(a) On the offer of the plaintiff, Sh. Madan Mohan Khandelwal,
as a developer/ collaborator, to develop the portion of the defendants
No. 1 to 4’s plot No. 6A (part of No. 6), Under Hill Road, Civil
Lines, Delhi, an understanding was reached between the plaintiff and
the defendants No. 1 to 4 that the plaintiff will provide an interest
free security amount of Rs. 35 Lakhs to ensure the completion of the
project in a time bound schedule for which a formal agreement will
be executed subsequently.
(b) The plaintiff initially paid Rs. 2 Lakh towards payment of
Security amount vide receipt dated 23.12.1988 Ex.P1 with an
understanding that Rs. 3 Lakh will be paid by 31.12.1988, and Rs.
10 Lakh at the time of signing of agreement of collaboration, and the
CS DJ 18883/2016
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balance amount of Rs. 20 Lakh after plans are sanctioned and before
construction is started. The defendants No 1 to 4 delivered draft
agreement Mark ‘X’ on the same day i.e on 23.12.1988.
(c) Plaintiff further paid an amount of Rs. 3 Lakh vide receipt
dated 31.12.1988 Ex.P2. However, When the plaintiff did not sign
the draft agreement given on 23.12.1988, the defendants No. 1 to 4
by telegram dated 30.05.1989 Ex.P3 notified the plaintiff that they
will forfeit the amount of initial part of Security amount of Rs. 5
Lakh if the draft agreement was not signed by 15.06.1989.
(d) Parties were not at ad idem as the receipt dated 23.12.1988
Ex.P1 was bereft of any details regarding procedure to be followed
for construction/ development of the property. The same was to be
codified only in the formal agreement which never came into being.
In the absence of any formal agreement, there remained several
uncertainties viz. (i) the present Suit is filed on the premise that that
same was in respect of property No. 6A, Under Hill Road measuring
3425 Sq. Yds. whereas the receipt dated 23.12.1988 Ex.P1 does not
contain any measurement of property to be developed except ‘our
property’ meaning thereby 2997 Sq. Yds. as 428 Sq. Yds. stood sold
on 30.03.1984 to the defendant No. 5, (ii) portion of 777 Sq. Yds.
was further sold to Naval Kishore Aggarwal and Manish Kumar
Aggarwal vide transaction dated 01.03.1996; (iii) Consideration was
neither fixed nor estimated; (iv) extent of construction to be carried
out, material to be used, workmanship etc.; (v) percentage provided
is not sufficient for identification of respective shares to the plaintiff
No. 1 and the defendants.
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(e) Admittedly, the receipt dated 23.12.1988 Ex.P1 contains a
reference of execution of a formal agreement in future. It is an
admitted position that the formal agreement could not be concluded.
Receipt dated 23.12.1988 Ex.P1 and receipt dated 31.12.1988 Ex.P2
are merely memorandum of understanding and not a concluded
contract enforceable in law (relied on judgments of Hon’ble
Supreme Court passed in Speech and Software Technologies (India)
Private Limited vs Neos Interactive Limited; (2009) 1 SCC 475 and
Her Highness Maharani Shantidevi P Gaikwad V/s Savjibhai
Haribhai Patel and Others; 2001 (5) SCC 101).
(f) In view of dismissal of the previous Suit filed by the plaintiff
having CS No. 3456/89 (Ex.PW1/D1) (Colly), the present Suit is
barred under the provisions of Order II Rule 2, Order IX Rule 9 (2)
and Section 11 of CPC.
(g) The present Suit is not maintainable in the present form as the
plaintiff has not sought declaration of telegram dated 30.05.1989
Ex.P3 as null and void. As the plaintiff No. 1 failed to sign/ accept
the draft agreement (Mark X) given on 23.12.1989 by the defendants
No. 1 to 4, obligation was on the plaintiff to tender a formal draft
agreement to the defendants No. 1 to 4. Plaintiff No. 1 failed to bring
on record any draft agreement provided to the defendants No. 1 to 4
up to 30.05.1989. First reference to any such draft which is claimed
to be sent on 16.05.1989 by the plaintiff No. 1 (in the name of M/s
Jeevandeep Builders through Director Sh. Madan Mohan
Khandelwal) is mentioned in a letter dated 09.06.1989 (Ex.PW1/11).
However, the complete text of such a draft was not sent or disclosed.
CS DJ 18883/2016
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Second reference of draft which has been made to have been sent
after obtaining it from the consultant at Gwalior in the letter dated
12.07.1989 (Ex.PW1/12). Third reference of dispatch of draft
agreement is by letter dated 13.08.1989 (Ex.PW1/13). This draft is in
the name of Jeevandeep Builders Pvt. Ltd. As the purported draft
sent to the defendants No. 1 to 4 were not between the parties, the
same were neither proper nor valid.
(h) The plaintiff No. 1 never proved any dispatch on 16.05.1989
nor any material is placed on record in support of this claim. The
reference of dispatch on 16.05.1989 was baldly made in a letter
dated 09.06.1989 Ex.PW1/11. Letter dated 09.06.1989 does not
claim to have accompanied the draft agreement. No draft agreement
was sent along with a letter dated 12.07.1989 Ex.PW1/12. So far as
the letter dated 13.08.1989 Ex.PW1/13, the same was never received
by the defendants No. 1 to 4. The two dispatch which were brought
on record by the plaintiff No. 1 of dated 12.07.1989 and 13.08.1989
were not similar at all as one in the name of Jeevandeep Builders and
other was in the name of Jeevandeep Builders Pvt. Ltd. And as such,
these drafts can not be considered as valid tender of draft
agreements.
(i) As the draft was never successfully exchanged by the plaintiff
with the defendants No. 1 to 4, there was no cause of action to file
the present Suit.
(j) Since the plaintiff could not prove tendering of the formal
draft agreement before receipt of telegram dated 30.05.1989 Ex.P3,
there was no occasion for the plaintiff to tender thereafter. Hence,
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the present Suit for specific performance without properly
challenging the telegram dated 30.05.1989 Ex.P3 is not maintainable
(relied on decision of Hon’ble Supreme Court in I.S.Sikandar V/s K.
Subramani; (2013) 15 SCC 27).
(k) The plaintiff never received possession of the Suit property
and as such never acquired any interest in the land to be developed.
As such, if any formal agreement was signed, even that would not be
sufficient to enforce the same. The present Suit as such is barred
under the old provisions of Section 14 (3) (c) of the Specific Relief
Act. (relied on a decision of Hon’ble Supreme Court in Susheel
Kumar Agarwal V/s Meenakshi Sadhu & Ors.; (2019) 2 SCC 241).
(l) Since the Suit for specific performance is not maintainable, the
plaintiff is not entitled to damages or refund of security particularly
when the forfeiture of the same has not been challenged by the
plaintiff.
(m) Ld. Counsel for the defendant No. 1 has relied on following
judgments:-
(i) I.S. Sikandar (dead) by LRs. V/s K. Subramani and Others.;
(2013) 15 SCC 27
(ii) Rajasthan Breweries Limited V/s The Stroh Brewery
Company; 2000 (55) DRJ (DB)
(iii) Speech and Software Technologies (India) Pvt. Ltd. V/s
Neos Interactive Limited; (2009) 1 SCC 475
(iv) Her Highness Maharani Shantidevi P Gaikwad V/s
Savjibhai Haribhai Patel; (2001) 5 SCC 101CS DJ 18883/2016
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(v) Janardan Das & Ors. V/s Durga Prasad Agarwalla & Ors.;
2024 INSC 778
(vi) Royal Orchids V/s Kulbir Singh Kohli & Anr.; 2022 SCC
OnLine Del 2519
(vii) Virgo Industries (Eng.) Pvt. Ltd. V/s Venturetech
Solutions Pvt. Ltd.; (2013) 1 SCC 625
(viii) Saradamani Kandappan V/s S. Rajalakshmi & Ors.;
(2011) 12 SCC 18
(ix) Sushil Kumar Agarwal V/s Meenakshi Sadhu & Ors.;
(2019) 2 SCC 241
(x) Randhir Singh Chandok V/s Vipin Bansal & Anr.; 2007
(98) DRJ 722.
20. Ld. Counsel for the defendants No. 3 and 4 supported the argument
of the defendant No. 1 in sum and substance and made a few more
submissions. Following Submissions were made by the Ld. Counsel for the
defendants No. 3 and 4:-
(a) From the averments and documents relied upon by the
plaintiff No. 1, the parties were up to the stage of negotiations only,
and no concluded contract ever came into existence between the
parties which could be specifically enforced.
(b) At the time of filing earlier Suit No. 3456/1989, the reliefs of
specific performance and damages were available to the plaintiff No.
1 & 2 but were not claimed, hence the present Suit is hit by
provisions of Order II Rule 2 CPC.
(c) Plaintiff No. 1 never pressed Order 39 Rule 1 and 2 read with
Section 151 CPC application clearly showing the plaintiff was not
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serious at all in conducting the Suit and hence are not entitled to
discretionary relief of specific performance.
(d) That although the present Suit was filed by plaintiff No. 1 and
2 claiming the reliefs as set up in the Suit but as per Order dated
09.05.2016, plaintiff No. 2 which was incorporated on 11.07.1989
was deleted but still the plaint was not amended and the plaintiff No.
1 went on relying on the draft agreement of the plaintiff No. 2
allegedly sent by plaintiff No. 2 to the defendant No. 1 to 4 which is
not permissible.
(e) That there is delay in filing the present Suit on 04.01.1992
disentitling the plaintiff No. 1 from seeking discretionary relief of
specific performance.
(f) On 23.12.1988, the defendant No. 4 was minor and no
permission was obtained by the Court to bind defendant No. 4 and
hence the Suit is not maintainable.
(g) There are several contradictions between the averments so
setup in the previous Suit and in the present Suit which demolish the
case of the plaintiff No. 1 altogether on all counts and no relief can
be granted to the plaintiff No. 1.
(h) At no stage, the plaintiff No. 1 was ready and willing to
perform their part of negotiations and the plaintiff No. 1 was buying
time as he had no funds to pay the amounts to the defendants No. 1
to 4.
(i) The plaintiff No. 1 has not satisfactorily explained that when
draft agreement was given to the plaintiff No. 1 on 23.12.1988 for
approval and the plaintiff No. 1 sought one month time to send
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approval, then why did the plaintiff No. 1 sleep over the matter for a
considerable time and allegedly sent another agreement for approval
of the defendants No. 1 to 4 as per alleged letter dated 16.05.1989
(although the same has not been filed and is denied by the
defendants No. 1 to 4).
(j) As per the plaintiff No. 1 the alleged agreement was taken
over by the plaintiff No. 2, then, how can the plaintiff No. 1 say that
he was ready and willing to perform his part of obligations.
(k) That on all factual and legal grounds available on record, it is
clear that the plaintiff No. 1 is not entitled for relief of specific
performance or for any amount of damages/ compensation on any
ground whatsoever.
(l) Ld. Counsel for defendants No. 3 and 4 has relied on
following judgments:-
(i) Van Vibhag Karamchari Griha Nirman Sahkari Sanstha
Maryadit (Regd.) V/s Ramesh Chander & Others.; judgment
dated 19.10.2010 passed in CA No. 8982 of 2010
(ii) Lakhbir Singh V/s Arun Khanna; 2015 (3) CLJ 527 Del
(iii) M/s Virgo Industries (Eng.) P. Ltd. V/s M/s Venturetech
Solutions P. Ltd.; 2012 STPL (Web) 490 SC
(iv) State Bank of India V/s Gracure Pharmaceuticals Ltd.;
(2014) SCCR 1
(v) Coffee Board V/s M/s Ramesh Exports Pvt. Ltd.; (2014)
SCCR 726
(vi) Vurimi Pullarao S/o Satyanarayana V/s Vemari Vyankata
Radharani W/o Dhakoteshwar rao; judgment dated 27.11.2019
passed in C A No. 9065 of 2019CS DJ 18883/2016
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(vii) Vinod Seth V/s Devinder Bajaj & Anr.; judgment dated
05.07.2010 in C A No. 4891 of 2010
(viii) Prem Kumar Bansal V/s Ambrish Garg; 2016 (3) CLJ
703 Del
(ix) Satish Kumar V/s Karan Singh & Anr.; 2016 (1) CLJ 797
SC
(x) Mohan Madan V/s Sheel Gulati; 2015 (3) CLJ 806 Del
(xi) BDR Builders and developers Pvt. Ltd. V/s Shyam Lal
Arora; 2014 (213) DLT 78.
21. I have heard the submissions made on behalf of the parties and have
also carefully perused the material available on record. Before proceeding
to give my issue wise findings, I want to quote what Hon’ble Mr. Justice C.
K. Thakker (Takwani) (as His Lordship then was), in his Book, “Civil
Procedure” Eighth Edition 2017, at Page No. 9, has stated:-
“Rules of pleadings are intended as aids for a fair trial and for
reaching a just decision. An action at law should not be equated to
a game of chess. Provisions of law are not mere formulae to be
observed as rituals. Beneath the words of a provision of law,
generally speaking, there lies a juristic principle. It is the duty of
the Court to ascertain that principle and implement it (Raj Narain
V/s Indira Nehru Gandhi, AIR 1972 SC 1302). Our laws of
procedure are based on the principle that, as far as possible, no
proceeding in a court of law should be allowed to be defeated on
mere technicalities. The provisions of the Code of Civil Procedure,
therefore, must be interpreted in a manner so as to subserve andCS DJ 18883/2016
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advance the cause of justice rather than to defeat it (Ghanshyam
Dass V/s Dominion of India, AIR 1984 SC 1004) .”
22. My issue wise findings on the issues settled vide Order dated
10.12.1996 are as under:-
ISSUE NO. 3
(3) Whether there is mis-joinder of parties in the present Suit ?
23. During arguments, Ld. Counsel for the parties had submitted that this
issue is no longer required to be decided in view of Order dated
09.05.2006 passed in this Suit.
24. For convenience, I am reproducing the relevant portions of the Order
dated 09.05.2006 passed in this Suit by the Hon’ble Ms. Justice Manju
Goel (as Her Lordship then was, when the present Suit was before the
Hon’ble High Court, before transfer to the District Courts due to change in
pecuniary jurisdiction of Courts in Delhi);
“This application under Order I Rule 10 CPC read
with Section 151 CPC seeks permission to drop the name of
plaintiff No. 2 from the array of plaintiffs. The defendants
have objected to the joining of plaintiff No. 2 in the Suit.
Hence the prayer for striking out the name of plaintiff No. 2
from the array of plaintiffs. It is further submitted in the
application that the cause of action survives in the name of
plaintiff No. 1 alone. The prayer does not prejudice the
defendants in any way.
The prayer is accordingly allowed. The name of
plaintiff No. 2 be deleted from the array of the plaintiffs.
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Amended memo of parties has already been placed on
record.
Application stands disposed of.
It is stated at the Bar that the Issue No. 3 regarding
misjoinder of parties was framed because of the presence of
plaintiff No. 2 which was objected to by the defendants.
Issue No. 3, therefore, does not survive in view of order
passed today in IA No. 5887/2005 (application under Order I
Rule 10 read with Section 151 CPC).”
ISSUE NOs. 1 & 2
(1) Whether the present Suit is barred under the provisions of
the Code of Civil Procedure ?
(2) Whether the Suit is maintainable in its present form ?
25. Though it is not specified in the Order dated 10.12.1996 as to on
whom the onus was (placed) to prove these issues, from pleadings, it is
clear that the onus was on the defendants to prove that the present Suit is
barred under the provisions of the Code of Civil Procedure or that the Suit
is not maintainable in its present form.
26. Ld. Counsel for the defendant No. 1 had submitted that the present
issues have been framed in the widest scope and it is available to
encompass all legal issues which go into the maintainability of the present
Suit. He had submitted that the present Suit is barred by the Order II Rule 2
CPC as the cause of action as alleged in Suit No. 3456 of 1989 (previous
suit; Ex.PW1/D1) in para 17 and the cause of action as alleged in the
present Suit in para 23 are substantially and materially same. He had
further submitted that the previous Suit was earlier filed on 19.12.1989
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which was dismissed simpliciter vide Order dated 09.10.1990 and as such
the present Suit is also barred under Order IX Rule 9 (2) CPC. He lastly
contended that since the previous Suit has been finally decided, the
previous Suit would operate as res judicata and the present Suit is barred
under Section 11 CPC.
27. Ld. Counsel for defendants No. 3 and 4 had submitted that before
filing of the present Suit for Specific performance, damages and
Compensation, the plaintiffs had earlier filed a Suit for Injunction as Suit
No. 3456 of 1989 against the defendants No. 1 to 4 (which was dismissed
in default on 09.10.1990), and at the time of filing of earlier Suit No. 3456/
1989, the reliefs of specific performance and damages were available to the
plaintiffs which the plaintiffs omitted to sue for and as such the present Suit
is hit by provisions of Order II Rule 2 CPC. Ld. Counsel for the defendants
No. 3 and 4 during arguments had referred to the cross-examination of
PW1 (conducted on 07.07.2012) for showing that the documents forming
part of previous Suit have been duly proved as Ex.PW1/D1 (Colly). Ld.
Counsel for the defendants No. 3 and 4 further submitted that the Court
records of the previous Suit are tagged with the present Suit.
28. Ld. Counsel for the plaintiff, on the other hand, at the outset,
submitted that Ex.PW1/D1 could not be looked at by this Court and the
same can not be read and relied upon; (a) because Ex.PW1/D1 contains
photocopy of documents, not original, (b) because certified copy of private
document may be proved by summoning the Court record as certified copy
is not a primary evidence in terms of the Evidence Act and no witness was
summoned from the concerned Court to prove certified copy of documents
of previous Suit, (c) because the certified copy was not put to PW1 for
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confirming veracity of the plaint as to whether it was identical to the
original plaint and unless a witness is confronted and afforded with an
opportunity to compare with the original, the same can not be read in
evidence, (d) because a document is not ‘proved’ merely by marking a
document as ‘exhibit’, (e) because the Ld. Local Commissioner had no
authority to decide the marking/ exhibition of document, and (f) because
the previous Suit was not tagged and could not be tagged with the present
Suit as the previous Suit had already been disposed of and the Suit was
merely Summoned vide Order dated 13.07.1992 only for the purpose of
issuing Summons in the present Suit which was issued vide Order dated
21.07.1992.
29. Ld. Counsel for the plaintiff had further submitted that the plaintiff
was compelled to file the present Suit in view of failure of settlement talks
between the parties (happened post withdrawal of the previous Suit) as the
defendants wanted the plaintiff to withdraw the previous Suit No. 3456/
1989 filed for permanent injunction (for talks of settlement). It was further
submitted that the plaintiff had filed Railway tickets (Ex.PW1/16 colly) in
the name of the plaintiff showing that the plaintiff visited the Defendants in
Delhi on several occasions for the amicable settlement of disputes between
the parties. It was further submitted that the plaintiff in the present Suit has
also prayed for relief of damages and refund of the deposited amount from
the defendants with interest thereon as an alternative relief which could not
be claimed in the previous Suit.
30. Ld. Counsel for the plaintiff had further submitted that cause of
action and relief in the previous Suit for injunction and of the present Suit
are not identical/ similar. He submitted that it is trite law that merely
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identity of some of the issues in the two Suits do not bring about identity of
the subject matter in the two Suits. The previous Suit was based on the
cause of action of imminent threat/ apprehension and the present Suit is
based on the cause of action on breach of contract/ refusal of defendants to
perform their part of obligation, even if both the Suits are in respect of the
same property/ same agreement. He had submitted that ‘evidence’ to
support the relief in two suits is also different. He accordingly submitted
that the provisions of Order II Rule 2 CPC are not applicable to the facts of
the present Case.
31. Let us first deal with the objections of the Ld. Counsel for the
plaintiff that the defendants have failed to prove the pleadings of the
previous Suit (Order dated 09.10.1990 passed in previous Suit, plaint,
address form, list of photocopies of documents and list of reliance
collectively exhibited as Ex.PW1/D1) and written statement of the
defendants No. 1 to 4 filed in the previous Suit and marked as Mark Y.
32. Ld. Counsel for the plaintiff had relied on a decision of Hon’ble
Supreme Court in Jayantilal Chimanlal Patel V/s Vadilal Purushottamdas
Patel; (2017) 13 SCC 409. Hon’ble Supreme Court (in an appeal of the
plaintiff), while holding that it is mandatory that to sustain a plea under
Order II Rule 2 of the Code of Civil Procedure, the defendant is obliged
under law to prove the plaint and the proof has to be as per law of evidence,
remitted the matter back for proper appreciation of material on record to
see whether the plaint of the previous Suit had been brought on record and
proved as per law.
33. It is a fact that the records pertaining to the previous Suit are tagged
with the present Suit. The record was requisitioned by the Hon’ble Mr.
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Justice C. M. Nayar (as His Lordship then was, as the present Suit as well
as the previous Suit were originally filed before the Hon’ble High Court
and subsequently transferred to this Court due to change in the pecuniary
jurisdiction of the Courts in Delhi) vide Order dated 13.07.1992 at the time
of issuing summons in the present Suit. It is also a fact that the certified
copy of certain documents of the previous Suit viz. Ex.PW1/D1 and Mark
Y were filed by the defendants in the present Suit.
34. When the Suit was before the Hon’ble High Court of Delhi, plaintiff
No. 1 Sh. Mohan Khandelwal was examined and cross-examined (on
several dates) before the Ld. Local Commissioner. I am referring to
relevant portions of cross-examination of PW1 (conducted on 07.07.2012)
by the Ld. Counsel for the defendants No. 1 to 4;
“…It is correct that I had not filed the earlier suit for specific
performance. Vol. as far as I remember that earlier suit was
filed for injunction. It is correct that the said suit was
dismissed on 09.10.1990. Vol. It was dismissed in default.
The said suit was filed as the defendants are not signing the
agreement on the stamp paper and are not willing to give
possession and are negotiating somewhere. The certified
copy of the plaint, list of photocopy of documents and list of
reliance and the order sheet are Ex. PW1/D1 (Colly). I do not
remember whether the defendants filed the written statement
in the said Suit…”
35. Now, I am referring to relevant portions of cross-examination of
PW1 (conducted on 06.07.2013) by the Ld. Counsel for the defendants;
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“…The witness has been shown by the Sh. C.P. Vig,
Advocate, a certified copy of the written statement of the
defendants filed in Suit No. 3456/1989, which is Mark ‘Y’
and has been asked whether this is the same written
statement filed in the earlier suit bearing No. 3456/1989 filed
by the plaintiff. The witness replies as follows:- I can not say
that Mark Y is the same written statement as had been filed
by the defendants in the Suit No. 3456/1989…”
36. A careful perusal of deposition sheets of PW1 of 07.07.2012 and
06.07.2013 and Order sheets of Ld. Local Commissioner of 07.07.2012 and
06.07.2013 shows that no objection was taken on behalf of the plaintiff
regarding marking of documents as Ex.PW1/D1 (Colly) and MarkY.
37. Hon’ble Supreme Court in the case of Vurimi Pullarao Vs. Vemari
Vyankata Radharani reported in AIR 2020 SC 395; MANU/SC/1806/2019,
has held as follows:-
“14. The situation as it obtained in the case before the
Constitution Bench is distinct from the events as they
transpired in the present case. The first appellate court, in the
judgment which it delivered upon remand took note of the
fact that the Defendant had by its application at Exhibit 117
prayed for summoning the original record of the earlier suit
for injunction for proving the plaint. The Plaintiff opposed
that plea with the assertion that a certified copy of the
document could be placed on record instead of summoning
the original record. The Civil Judge, Senior Division,
accordingly rejected the application on the ground that sinceCS DJ 18883/2016
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the certified copy was filed on the record, it was unnecessary
to call for the original record. The Defendant had moved
another application at Exhibit 118 in the nature of a notice to
admit the certified copy of plaint in the earlier suit. This
came to be allowed by the Trial Court. The first appellate
court noted that there was no objection from the Plaintiff
whereupon the certified copy of the plaint was marked as
Exhibit 137. In this background, the first appellate court was
clearly justified in coming to the conclusion that this is not a
case where the Plaintiff was deprived of an opportunity to
explain the pleadings in the earlier suit. The finding that
there was no prejudice to the Plaintiff cannot be faulted. The
parties were all along aware of the pleadings, the nature of
the objection to the maintainability of the subsequent suit on
the ground of the bar Under Order 2 Rule 2 and the fact that
the plaint in the earlier suit was brought on the record.
Indeed, it was at the behest of the Plaintiff that a certified
copy of the plaint in the earlier suit was allowed to be
brought on the record and marked as Exhibit 137. In the
circumstances, we are of the view that the bar Under Order 2
Rule 2 is attracted.”
(Underlined by me)
38. In the facts and circumstances of the present case, this Court is of the
considered view that the contents of Ex.PW1/D1 and of Mark Y are duly
proved and can be looked at by this Court and the same can be read and
relied upon.
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39. Ld. Counsel for the plaintiff in this regard had also relied on a
decision of Hon’ble Supreme Court in Gurbux Singh V/s Bhooralal; AIR
1964 SC 1810. There is a specific observation of the Hon’ble Supreme
Court that the pleadings in the earlier suit were not part of record (as the
same were not filed in the present Suit). The factual matrix, however, of the
present case being materially different from that dealt with in Gurbux
Singh Supra, the said decision has no application in the facts of the present
case.
40. On the aspect as to whether the present Suit is maintainable in view
of provisions of Order II Rule 2 CPC, Ld. Counsel for the plaintiff had
primarily relied on two decisions of Hon’ble Supreme Court passed in
Rathnavathi V/s Kavita Ganashamdas; MANU/SC/0966/2014 and
Inbasegaran and Anr. V/s S.Natarajan (Dead) through LRs; (2015) 11 SCC
12 whereas Ld. Counsel for the defendants No. 3 and 4 had relied on a
decision of Hon’ble High Court of Delhi passed in Lakhbir Singh V/s Arun
Khanna; 2015 (3) CLJ 527 Del.
41. Hon’ble Division Bench of High Court of Delhi in Lakhbir Singh
Supra, while, in the facts and circumstances of the case, holding that a
singular cause of action accrued in favour of Lakhbir Singh (plaintiff) for
the alleged breach committed by Arun Khanna (defendant) and two reliefs
were available to him under the singular cause of action, [T]he first was to
seek the execution of the sale deed pursuant to the agreement to sell and the
second for delivery of vacant possession of the suit property, dismissed the
Appeal of the Plaintiff. Since, the Hon’ble High Court has discussed both
the judgments of Hon’ble Supreme Court passed in Rathnavathi Supra and
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Inbasegaran Supra, I am quoting the decision of Hon’ble High Court in
extenso;
“7. Order II Rule 2 of the Code of Civil Procedure reads as
under:-
“2. Suit to include the whole claim –
(1) Every suit shall include the whole of the claim
which the plaintiff is entitled to make in respect of the
cause of action; but a plaintiff may relinquish any
portion of his claim in order to bring the suit within
the jurisdiction of any Court.
(2) Relinquishment of part of claim – Where a
plaintiff omits to sue in respect of, or intentionally
relinquishes, any portion of his claim, he shall not
afterwards sue in respect of the portion so omitted or
relinquished.
(3) Omissions to sue for one of several reliefs – A
person entitled to more than one relief in respect of the
same cause of action may sue for all or any of such
reliefs; but if he omits, except with the leave of the
Court, to sue for all such reliefs, he shall not
afterwards sue for any relief so omitted.
Explanation – For the purposes of this rule an
obligation and a collateral security for its performance
and successive claims arising under the same
obligation shall be deemed respectively to constitute
but one cause of action.”
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8. The task would obviously be apparently simple. To see the
cause of action on which the suits filed by Lakhbir Singh were
founded; and if found to be based on the same cause of action,
to hold that the second suit was barred.
9. Attempts have been made to define ‘a cause of action’ but
with varying success. Perhaps the concept can better be
described than defined. Is it one’s right to ask and obtain
judicial aid? Is it the statement of facts showing cause for
judicial action? Or does it exist independently of a judicial
proceeding and consists of that group of facts upon which a
claim for judicial aid can be made? Is it the unlawful invasion
of a right – the wrong committed? Is it that group of facts
showing a primary right-duty and delict? Is it that group of
operative fact showing breach of a single right giving cause
for the Courts to give relief to the party or parties affected? Or
is it that aggregate of operative facts which give rise to one or
more legal relations of right-duty enforceable in the Courts? Is
it the statement of all facts which if traversed by the opposite
party, requiring them to be proved? Is it those facts which
would be required to be stated thereby entitling a complaining
party to some judicial relief?
10. This decision does not make an attempt to find out as to
what should be the best definition of a cause of action, and we
would only observe that each definition, or description of a
cause of action, emphasizes one element more than the other
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while retaining the floret based composite wholeness of a
cause of action.
11. It being a settled law that the requirement of the Code of
Civil Procedure, 1908 enjoins upon a plaintiff to unite all
claims arising out of a cause of action in one suit and does not
enjoin upon a plaintiff to unite different causes of action in
one suit, except in both cases with the leave of the Court to
institute a second suit, the problem arises to identify whether
on the same set of facts two or more causes of action accrue or
arise, or whether two or more reliefs/claims arise out of a
singular cause of action.
12. In some cases the distinguishing marks can be found with
clarity, whereby a cause of action can be readily ascertained,
but many a times amidst the pressure of other legal matters
that the Courts encounter it becomes a complicated task,
because of the time consuming nature thereof, to find out
whether on a given set of facts a singular or a plural cause of
action has accrued.
13. With docket explosions in Courts in India, search needs to
be made for some rule of thumb or formula which perhaps can
be mechanically applied, and if found impossible of being
identified, it would still be desirable to make the test as simple
and as definite as possible, capable of being properly used
under the situations confronted by the Courts.
14. It becomes necessary to define the parameters of a cause
of action because only then the distinguishing features
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consisting of the wrong committed can be identified with
clarity. Per necessity, a cause of action would therefore
consist of two distinct parts. The first part therefore would be
the statements of the facts from which the plaintiff’s primary
right can be ascertained and the second part would be the
statement of the facts from which the defendant’s
corresponding duty having arisen; together with the facts
which constitute the defendants delict or act of wrong.
15. The law has always tried to protect a person from being
unnecessarily harassed by litigation. Its statutory embodiment
in the Indian legal system is to be found in Rule 1 of Order II,
which requires : ‘every suit shall as far as practicable be
framed so as to afford ground for final decision upon the
subjects in dispute and to prevent further litigation concerning
them’. Thus, nobody should be permitted to prosecute two
trials where one, properly constituted, would suffice. Of lately
we find a class of litigants emerging where they use the
machinery of the law to force some desired result by the mere
annoyance of litigation. It is the duty of the Court to protect
individuals from such a misuse of the legal machinery. There
is another reason for the Courts insisting upon the minimum
of suits. The public expense in maintaining the open Courts
has become considerable and the public has a right to demand
that its Courts are not used unnecessarily. A Court cannot be
said to be an open Court if there is too large a congestion of
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suitors at the threshold. Every effort needs to be made to thin
out the crowd seeking the use of the Courts.
16. When a Court is confronted with the question whether a
previous litigation between the same parties embodied the
cause of action on which the subsequent suit has been filed,
the group of constitutive or operative facts needs to be
identified with a hawk’s eye, and the only guiding star would
be to see and identify, with precision, the group of constitutive
or operative facts. If the essential facts are the same, a little
different assembly thereof has to be ignored. The decision
reported as (1913) 89 KAN.622 Naugle Vs. Naugle is
illustrative of how the issue needs to be approached. The
former suit was one for specific performance of a rear estate
contract. The second suit was for damages for breach of the
contract. The Court held that there was one cause of action
and very properly distinguished the case from one of splitting
a cause of action as said it was, in fact, using the same cause
of action for two purposes. To quote :-
“While a creditor may not sue for one-half his
debt at a time and thus split his cause of action, he
is not compelled to pursue his remedy at law for
damages for a breach of contract, but may seek to
secure specific performance only. To do so is not
to split his cause of action into parts but to use it
for only two possible purposes…….
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While the rule against splitting a cause of action is
thoroughly well settled, and based largely, if not
entirely, upon the ground that a defendant may not
be harassed with the expense of repeated litigation
for parts of one claim, by a parity of reasoning it
must be held that a plaintiff with only one cause
of action cannot be permitted to use it more than
once in order to recover from the defendant;
otherwise the latter might be harassed with as
many lawsuit as there were kinds of relief which
the plaintiff deemed himself entitled to. While,
speaking precisely, the questions of damages was
not in fact tried and determined in the former
action, still the cause of action, which included a
right to recover the damages, was tried out and
determined and the plaintiff had his opportunity
and day in court to recover on his one cause of
action whatever the facts and the law warranted.
So, then, the same cause of action had been
litigated, and the only reasons that relief by way
of damages was not sought or had was the failure
of the plaintiffs to use their cause of action as
fully in the former action as they might have
done.”
17. In other words, the relief sought is not a determining
factor in distinguishing a cause of action. The decision shows
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further, that a cause of action may be used for several
purposes. It may be used to obtain judgment for damages for
breach of contract; it may be used to get one’s money back on
breach of contract; it may be used for specific relief as
specific performance or rescission or cancellation. Only one
cause of action is used for whichever purpose it may be
employed. In the same way a trespass may be the basis of an
action to recover damages or, in certain cases, to obtain an
injunction.
18. Whereas it may be easy to find elements which do not
constitute the distinguishing elements of a cause of action, but
sometimes it is exceedingly difficult to pick out those
elements by which a cause of action can be determined. It is
easy for Court to chant : ‘of the various elements the primary
right and duty and the delict or wrong combined constitute the
cause of action in the legal sense of the term’, but sometimes
the chant is difficult to apply. But, its application is easy in
actions upon contracts because in such cases the nature of the
right and the corresponding duty is well-defined. It is trite that
when a contractual right is violated or when the contract is
said to be broken, there arises a cause of action.
19. There may be several breaches of the contract but there is
still only one cause of action except where the contract
consists of a set of many reciprocal obligations which are
breached at different points of time.
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20. The decision of the Supreme Court in Virgo Industries’
case (supra) held a subsequent suit seeking specific
performance of an agreement to sell to be barred under Order
II Rule 2 of the Code of Civil Procedure because a previous
suit had been instituted by the plaintiff seeking a decree for
permanent injunction against the defendant concerning two
agreements of sale both dated July 27, 2005 in respect of two
different parcels of immovable property. Seeking a decree for
permanent injunction to restrain the seller from alienating the
suit property it was pleaded that the attempt to alienate the suit
property was intended to frustrate the agreement between the
parties. In spite of the fact that when the suit praying for a
decree of permanent injunction was filed the six month’s
period fixed under the two agreements for sale for execution
of the sale-deeds had not yet expired, the Supreme Court
found that the two suits were founded on the same cause of
action i.e. an alleged wrong committed by the defendant
having effect of evincing the intention of the defendant not to
honour its obligation under the two agreements to sell. In para
15 of the opinion, dealing with the contention that when the
first suit seeking a decree for permanent injunction was filed
the time fixed under the two agreements for sale dated July
27, 2005 had not elapsed, disagreeing with the view taken by
the High Court, the Supreme Court held as under:-
“15. Furthermore, according to the Plaintiff,
which fact is also stated in the plaints filed in C.S.CS DJ 18883/2016
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Nos. 831 and 833, on the date when the aforesaid
two suits were filed the relief of specific
performance was premature inasmuch as the time
for execution of the sale documents by the
Defendant in terms of the agreements dated
27.7.2005 had not elapsed. According to the
Plaintiff, it is only after the expiry of the aforesaid
period of time and upon failure of the Defendant
to execute the sale deeds despite the legal notice
dated 24.2.2006 that the cause of action to claim
the relief of specific performance had accrued.
The above stand of the Plaintiff found favour with
the High Court. We disagree. 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” as
held by this Court in Vithalbhai (P) Ltd. v. Union
Bank of India 2005 (4) SCC 315. In the aforesaid
case this Court has taken the view that whether a
premature suit is required to be entertained or not
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the Plaintiff from filing the suit on or before a
particular date or the occurrence of a particular
event”, the Court must weigh and balance the
several competing factors that are required to be
considered including the question as to whether
any useful purpose would be served by dismissing
the suit as premature as the same would entitle the
Plaintiff to file a fresh suit on a subsequent date.
We may usefully add in this connection 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 have made his intentions clear
by his overt acts.”
21. Two subsequent decisions of the Supreme Court in which
suits seeking specific performance of an agreement to sell
were held to be maintainable notwithstanding earlier suits
filed seeking a decree for permanent injunction to restrain the
sellers from selling, alienating or creating third party rights in
the properties which were the subject matter of the agreement
to sell, need to be noted by us and ratio of law culled out
therefrom, for the reason we find that both decisions reiterate
the same principle of law which was stated and applied by the
Supreme Court in Virgo Industries’ case (supra). Interestingly,
both decisions were pronounced on October 29, 2014 by two
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different Benches of the Supreme Court. The decisions are
reported as 2014 (12) SCALE 386 Rathnavathi Vs. Kavita
Ganashamdas and 2014 (12) SCALE 435 Inbasegaran Vs.
S.Natarajan.
22. The facts of Rathnavathi‘s case were that the defendant
No.2 in the suit seeking decree for specific performance was
the original owner of a house and defendant No.1 was the
subsequent purchaser. The suit property was purchased by
defendant No.2 under a scheme from Bangalore Development
Authority and on February 15, 1989 defendant No.2 agreed to
sell the suit property to the plaintiff for a consideration of
3,50,000/- (Rupees Three Lacs Fifty Thousand only) and
received 50,000/- (Rupees Fifty Thousand only) as advance
sale consideration. Possession had been handed over to the
plaintiff. The plaintiff paid the balance sale consideration
when possession was handed over to the plaintiff. The
plaintiff made improvements in the property and spent money.
Alleging that defendant No.1 visited the suit property along
with defendant No.2 and other unwanted elements and
threatened the plaintiff to dispossess her from the suit land, a
suit was filed seeking a decree for permanent injunction to
restrain the defendants from interfering in the plaintiff’s
peaceful possession. The relief in the suit was opposed by the
defendants by pleading that balance sale consideration was not
paid and hence defendant No.2 cancelled the agreement to sell
dated February 15, 1989. Pleading same facts as were pleaded
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in the earlier suit the plaintiff filed the second suit seeking
decree for specific performance as also cancellation of the
sale-deed executed by defendant No.2 in favour of defendant
No.1. Finding that the suit seeking decree for permanent
injunction was founded on the wrong of the threat of
dispossession and not a breach of the agreement to sell dated
February 15, 1989, the Supreme Court held that the suit
seeking specific performance was founded on a separate and
distinct cause of action. In paragraph 26 to 36, the Supreme
Court held as under:-
“26. Coming first to the legal question as to
whether bar contained in Order II Rule 2 of Code
of Civil Procedure is attracted so as to non-suit the
Plaintiff from filing the suit for specific
performance of the agreement, in our considered
opinion, the bar is not attracted.
27. At the outset, we consider it apposite to take
note of law laid down by the Constitution bench of
this Court in Gurbux Singh v. Bhooralal AIR 1964
SC 1810, wherein this Court while explaining the
true scope of Order II Rule 2 of Code of Civil
Procedure laid down the parameters as to how and
in what circumstances, a plea should be invoked
against the Plaintiff. Justice Ayyangar speaking
for the Bench held as under:
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In order that a plea of a bar under Order 2 Rule
2(3) of the Code of Civil Procedure should
succeed the Defendant who raises the plea must
make out (1) that the second suit was in respect of
the same cause of action as that on which the
previous suit was based; (2) that in respect of that
cause of action the Plaintiff was entitled to more
than one relief; (3)that being thus entitled to more
than one relief the Plaintiff, without leave obtained
from the Court omitted to sue for the relief for
which the second suit had been filed. From this
analysis it would be seen that the Defendant would
have to establish primarily and to start with, the
precise cause of action upon which the previous
suit was filed, for unless there is identity between
the cause of action on which the earlier suit was
filed and that on which the claim in the later suit is
based there would be no scope for the application
of the bar…..
28. This Court has consistently followed the
aforesaid enunciation of law in later years and
reference to only one of such recent decisions in
Virgo Industries (Eng.) P. Ltd. v. Venturetech
Solutions P. Ltd. (2013) 1 SCC 625, would
suffice, wherein this Court reiterated the principle
of law in following words:
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The cardinal requirement for application of the
provisions contained in Order II Rules 2(2) and
(3), therefore, is that the cause of action in the later
suit must be the same as in the first suit. It will be
wholly unnecessary to enter into any discourse on
the true meaning of the said expression, i.e. cause
of action, particularly, in view of the clear
enunciation in a recent judgment of this Court in
the Church of Christ Charitable Trust and
Educational Charitable Society, represented by its
Chairman v. Ponniamman Educational Trust
represented by its Chairperson/Managing Trustee
JT 2012 (6) SC 149. The huge number of opinions
rendered on the issue including the judicial
pronouncements available does not fundamentally
detract from what is stated in Halsbury’s Laws of
England, (4th Edition). The following reference
from the above work would, therefore, be apt for
being extracted herein below:
‘Cause of Action’ has been defined as
meaning simply a factual situation
existence of which entitles one person to
obtain from the Court a remedy against
another person. The phrase has been held
from the earliest time to include every
fact which is material to be proved toCS DJ 18883/2016
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entitle the Plaintiff to succeed, and every
fact which a Defendant would have a
right to traverse. ‘Cause of action’ has also
been taken to mean that particular action
on the part of the Defendant which gives
the Plaintiff his cause of complaint, or the
subject-matter of grievance founding the
action, not merely the technical cause of
action.
29. In the instant case when we apply the
aforementioned principle, we find that bar
contained in Order II Rule 2 is not attracted
because of the distinction in the cause of action
for filing the two suits. So far as the suit for
permanent injunction is concerned, it was based
on a threat given to the Plaintiff by the Defendants
to dispossess her from the suit house on 2.1.2000
and 9.1.2000. This would be clear from reading
Para 17 of the plaint. So far as cause of action to
file suit for specific performance of agreement is
concerned, the same was based on non
performance of agreement dated 15.2.1989 by
Defendant No. 2 in Plaintiff’s favour despite
giving legal notice dated 6.3.2000 to Defendant
No. 2 to perform her part.
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30. In our considered opinion, both the suits were,
therefore, founded on different causes of action
and hence could be filed simultaneously. Indeed
even the ingredients to file the suit for permanent
injunction are different than that of the suit for
specific performance of agreement.
31. In case of former, Plaintiff is required to make
out the existence of prima facie case, balance of
convenience and irreparable loss likely to be
suffered by the Plaintiff on facts with reference to
the suit property as provided in Section 38 of the
Specific Relief Act, 1963 (in short “the Act”) read
with Order 39 Rule 1 & 2 of Code of Civil
Procedure. Whereas, in case of the later, Plaintiff
is required to plead and prove her continuous
readiness and willingness to perform her part of
agreement and to further prove that Defendant
failed to perform her part of the agreement as
contained in Section 16 of The Act.
32. One of the basic requirements for successfully
invoking the plea of Order II Rule 2 of Code of
Civil Procedure is that the Defendant of the
second suit must be able to show that the second
suit was also in respect of the same cause of
action as that on which the previous suit was
based.
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33. As mentioned supra, since in the case on hand,
this basic requirement in relation to cause of
action is not made out, the Defendants
(Appellants herein) are not entitled to raise a plea
of bar contained in Order II Rule 2 of Code of
Civil Procedure to successfully non suit the
Plaintiff from prosecuting her suit for specific
performance of the agreement against the
Defendants.
34. Indeed when the cause of action to claim the
respective reliefs were different so also the
ingredients for claiming the reliefs, we fail to
appreciate as to how a plea of Order II Rule 2
could be allowed to be raised by the Defendants
and how it was sustainable on such facts.
35. We cannot accept the submission of learned
senior Counsel for the Appellants when she
contended that since both the suits were based on
identical pleadings and when cause of action to
sue for relief of specific performance of
agreement was available to the Plaintiff prior to
filing of the first suit, the second suit was hit by
bar contained in Order II Rule 2 of Code of Civil
Procedure.
36. The submission has a fallacy for two basic
reasons. Firstly, as held above, cause of action in
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two suits being different, a suit for specific
performance could not have been instituted on the
basis of cause of action of the first suit. Secondly,
merely because pleadings of both suits were
similar to some extent did not give any right to the
Defendants to raise the plea of bar contained in
Order II Rule 2 of Code of Civil Procedure. It is
the cause of action which is material to determine
the applicability of bar under Order II Rule 2 and
not merely the pleadings. For these reasons, it was
not necessary for Plaintiff to obtain any leave
from the court as provided in Order II Rule 2 of
Code of Civil Procedure for filing the second
suit.”
23. The facts in Inbasegaran‘s case (supra) were that
S.Natarajan, the defendant was the allottee of a parcel of land
under the housing board. The board had handed over
possession under a lease-cum-sale agreement obliging
S.Natarajan to construct a building on the land. Sale-deed had
not been executed by the board in favour of S.Natarajan. (It
appears that the sale-deed had to be executed by the Board
after S.Natarajan constructed a building on the land).
S.Natarajan entered into an agreement to sell the land with
Inbasegaran for a sale consideration of `3,84,220/- (Rupees
Three Lacs Eighty Four Thousand Two Hundred and Twenty
only) and received a sum of `1,00,000/- (Rupees One Lac
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only) towards part sale consideration and handed over
possession of the land. Inbasegaran constructed a building on
the land. Alleging that S.Natarajan was trying to unlawfully
take possession of the building suit seeking decree for
permanent injunction was filed by Inbasegaran against
S.Natarajan which was followed soon after by a suit seeking
decree for specific performance. Referring to the decision in
Virgo Industries’ case (supra), in paragraph 16 and 17, after
noting a very relevant fact that by the time the suit for specific
performance was filed the housing board had executed the
sale-deed in favour of S.Natarajan, the Supreme Court held as
under:-
“16. Admittedly, the first suit being O.S. No. 445
of 1985 was filed by the Plaintiff-Appellant for
the grant of permanent injunction restraining the
Defendant, his agents and servants from
interfering with the possession and enjoyment of
the suit property by the Plaintiffs either by
attempting to trespass into it or in any other
manner whatsoever. Besides other facts, it was
pleaded that in pursuance of the sale agreement
the Plaintiff took possession of the suit plot from
the Defendant and began construction of Kalyana
Mahal. It was alleged by the Plaintiff that the
Defendant with an ulterior malafide motive and
intention of extracting more money wasCS DJ 18883/2016
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representing to the Plaintiffs that he would
execute the sale deed after getting the sale deed
from the Housing Board and after completion of
the construction of the building. With that ulterior
motive, the Defendant tried to forcibly take
possession of the building constructed by the
Plaintiffs and threatened the Plaintiffs’ worker to
remove them from the building. The Plaintiffs
then gave complaint to the police and in response,
the police immediately rushed to the suit property
and warned the rowdies not to enter into the
building. The Plaintiffs, therefore, pleaded that the
Defendant was again arranging to gather unruly
elements and to forcibly and unlawfully take
possession of the suit property from the Plaintiffs.
With that apprehension, the suit was filed mainly
on the cause of action which arose when the
Defendant attempted to forcibly occupy the suit
property by driving away Plaintiffs’ workers and
that the Defendant was arranging to forcibly and
unlawfully take possession of the suit property.
The Defendant, in his written statement, denied
each and every allegation and stated that building
was constructed by him and in fact the Plaintiffs
attempted to forcibly take possession of the
building.
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17. In the subsequent suit filed by the Plaintiff
being O.S. No. 252 of 1986, a decree for specific
performance of the agreement was claimed on the
ground inter alia that the Defendant in the earlier
suit took a defence that the sale agreement was
allegedly given up or dropped by the Plaintiff. The
cause of action, as pleaded by the Plaintiff in the
subsequent suit, arose when Defendant-
Respondent disclosed the transfer made by
Housing Board in his favour and finally when the
Defendant was exhibiting an intention of not
performing his part of the sale agreement and in
reply to the lawyer’s notice the Defendant made a
false allegation and denied to execute the sale deed
as per the agreement.””
(Underlined by me)
42. In this connection, another decision of the Hon’ble High Court of
Delhi in Nutan Tyagi V/s Nirmala Dabas; 232 (2016) DLT 60;
MANU/DE/1752/2016 can also be referred wherein both the judgments of
Hon’ble Supreme Court passed in Rathnavathi Supra and Inbasegaran
Supra were discussed. The relevant paras are;
“14. What I understand of the two judgments i.e. Virgo
Industries (Eng) P. Ltd. supra and Inbasagaran supra is
that if in the plaint in the earlier suit for injunction, it is
not the plea that the seller is indulging in the acts
which are sought to be injuncted for frustrating theCS DJ 18883/2016
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agreement to sell, a subsequent suit for the relief of
specific performance would not be barred by Order II
Rule 2 CPC; otherwise it would be.
15. xxxxx
16.xxxxx
17. The counsel for the appellant/plaintiff however
drew attention to Rathnavathi Vs. Kavita Ganashamdas
(2015) 5 SCC 223 pronounced on the same date as
Inbasagaran supra by a different Bench of two judges
of the Supreme Court. That was also a case of the
purchaser first instituting a suit for permanent
injunction restraining the seller from interfering with
the purchaser‟s possession of the property agreed to be
sold and subsequently instituting a suit for specific
performance of the agreement to sell. Both the suits
were consolidated for trial. The trial Court dismissed
both the suits inter alia holding the suit for specific
performance to be barred by Order II Rule 2 CPC. The
High Court allowed both the appeals. Supreme Court
upheld the judgments of the High Court. With respect
to the plea of Order II Rule 2 CPC it was held – (i) that
for Order II Rule 2 CPC to apply the cause of action in
later suit has to be the same as in the first suit; (ii) that
the suit for permanent injunction was based on a threat
of dispossession; (iii) the cause of action for the
subsequent suit for specific performance wasCS DJ 18883/2016
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nonperformance of the agreement to sell; (iv) both the
suits were thus founded on the different causes of
action and hence could be filed simultaneously; (v) that
the ingredients to file the suit for permanent injunction
are different than that of the suit for specific
performance; (vi) that even if both the suits are based
on identical pleadings and even if the cause of action to
sue for relief for specific performance of agreement to
sell was available prior to filing of the first suit, the
second suit would not be barred by Order II Rule 2
CPC because the cause of action in the two suits is
different; (vii) a suit for specific performance could not
have been instituted on the basis of cause of action of
the first suit; (viii) merely because pleadings of both
suits are similar to some extent does not give rise to the
Order II Rule 2 of CPC; (ix) it is the cause of action
which is material to determine the applicability of bar
under Order II Rule 2 and not merely the pleadings; (x)
since the plea of Order II Rule 2, if upheld, results in
depriving the plaintiff to file the second suit, it is
necessary for the court to carefully examine the entire
factual matrix of both the suits, the cause of action on
which the suits were founded and the reliefs claimed in
both the suits and lastly the legal provisions applicable
for grant of relief in both the suits.”
(Underlined by me)
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43. Let us now examine the facts of the Case in light of the above-noted
exposition of law.
44. The previous Suit was for ‘Injunction’ and whereas the present Suit
is for ‘Specific performance of Contract and in the alternative for damages/
compensation’. In the previous Suit, the plaintiffs while alleging in para 11
of the plaint that the defendants have threatened to close the negotiations
and enter into a fresh negotiation with third parties and in para 16 that
unless the defendants are restrained treating the agreement with the
plaintiffs as closed and from entering any fresh agreement with any other
party, the plaintiffs will suffer irreparable injury, prayed for following
reliefs:-
a) restrain the defendants from entering into any agreement as
regards the development/ collaboration/ construction on the
property No. 6-A, Underhill Road, Civil Lines, Delhi- 110054
with any other party except the plaintiffs;
b) restraint the defendants from transferring, alienating, or
parting with possession in any manner of property No. 6-A,
Underhill Road, Delhi or any part thereof;
c) direct the defendants to enter into a formal agreement with the
plaintiffs or either of them in terms of the agreement/
understanding dt. 23.12.1988;
d) costs of the proceedings be awarded in favour of the plaintiff
and against the defendants;
e) pass such other and further orders as this Hon’ble Court may
deem fit and proper in the facts and circumstances of the case.
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45. The plaintiffs in paras 13 to 19 of the plaint of the present Suit had
pleaded the facts regarding circumstances under which the earlier Suit for
injunction was filed and what led him filing the present Suit for Specific
performance. Paras 13 to 19 of the plaint of the present Suit reads as
under:-
“13. That since the Defendants were contemplating
resting rights of other person in the property in order to
jeopardised the rights of the plaintiffs and create
multiplicity of rights with a view to complicate the whole
matter, Plaintiffs on 19.12.1989 (nineteenth December
one thousand nine hundred eighty nine) filed a suit for
injunction against the Defendants interalia praying that
the Defendants be restrained from entering into any
agreement as regards development/ collaboration/
construction on the property No. 6-A, Underhill Road,
Civil Lines, Delhi- 110054 with any other party and
further restraining them transferring, alienating, or parting
with the possession of the said property or any part
thereof in any manner to anyone except Plaintiffs. In the
said suit, being suit no. 3456 of 1989 the Defendants were
restrained from transferring the property and entering into
any agreement by an interim order. Plaintiff no. 2 is a
Private Limited Company which was incorporated on
11.7.89. Plaintiff No. 2 is the nominee of Plaintiff no. 1
and all the rights were also assigned in its favour.
Plaintiff no. 2 is a necessary party.
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14. That during the pendency of the suit the Defendants
filed a written statement controverting the contentions of
the Plaintiffs. The Defendants alleged that they did not
enter into any agreement with Plaintiff no. 2 besides
making other allegations.
15. That during the pendency of the said Suit the Plaintiff
no. 1 was in Delhi on 1.6.90 and on 13.6.90 and had
contacted the defendants for amicable settlement as
neither of the parties were gaining any thing from the
dispute. In the suit filed by the Plaintiffs, the defendants
were restrained by an interim injunction from entering
into any agreement with any other person or persons as
regards development/ collaboration and construction. The
Defendants however represented that so long as the suit is
pending it is not conducive for any settlement and in any
case suit is not for specific performance and for mere
injunction.
16. That the Counsel for the Plaintiffs Sh. Arun Kumar
Advocate had been elevated in July 1990 and they had no
counsel thereafter. The Defendants had also been
contending that nothing would be done and could be done
so long as the suit is pending and injunction is operating
against them. The Plaintiffs bonafidely believed the
Defendants and did not pursue their suit which was
dismissed in default of appearance of Plaintiffs and theirCS DJ 18883/2016
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counsel on 09.10.1990 (ninth October one thousand nine
hundred ninety).
17. That the Plaintiff No. 1 again approached the
Defendants a number of times after Nov, 1990 to settle
the matter and thereafter handover the possession of the
plot and take Rs. 10,00,000/- (Rs. Ten lacs) as part of
security amount and balance amount of Rs. 20,00,000/-
(Rs. Twenty lacs) at the time of sanctioning of plans and
before start of construction. The plaintiff no. 1 had
approached and contacted the defendants on 12.11.90 &
20.12.90. The defendants however first represented to the
Plaintiffs that they have not been able to trace the copy of
agreement and soon they shall trace the same and send
the same or it can be collected by the Plaintiff no. 1
thereafter the Plaintiffs can apply for sanctioning of plans
which can be got prepared by the Plaintiffs. The
Defendants however neither send the copy of agreement
duly signed by them nor gave it to the Plaintiff no. 1
whenever he met them. On 17th January, 1991, the
Plaintiff no. 1 met the Defendants who started
representing since considerable time has passed it will not
be possible to construct and develop the property on the
same terms and conditions as were agreed and settled
between them and as there are other differences which are
also to be sorted out. The Plaintiff no. 1 was asked toCS DJ 18883/2016
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contact defendants after a few days after reconsideration
so that the matter could be sorted out.
18. That the Plaintiff no. 1 met Defendants on 4.3.91 and
28.3.91 and a number of times thereafter however,
defendants kept on delaying the handing over of
agreement duly signed by them and handing over of
possession on one pretext or other. The Plaintiffs had also
pointed out to the Defendant no. 1 his allegation that a
part of the property had been transferred by him to the
defendant No. 5. The defendants assured the plaintiffs
that the construction can be done on the alleged area of
the defendant No. 5 and the areas after construction
would be given to the defendant No. 5 by the defendants
No. 1 to 4 from their share of constructed area. The
defendant no. 5 is a necessary and proper party in the
facts and circumstances.
19. That the defendants No. 1 to 4 however represented
that now they want 60% of the built up area and they
demanded a further sum of Rs. 15,00,000/- (Rupees
fifteen lacs) as security. The Plaintiffs also approached
Prem Dhawan for the mediation so that defendants may
perform their part of agreement and may not raise such
demands which were not agreed and which were not
feasible. The defendants however kept on insisting with
their illegal demands and again started delay in signing
the agreement and handing over the possession andCS DJ 18883/2016
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performing other parts of the agreement dated 23.12.88.
The defendants had entered into an agreement for
reconstruction of the plot measuring about 3425 sq. yds.
The FAR in the area permissible is .75 and the Plaintiffs
are entitled for about 10403.45 sq. yds. i.e. 45% of
23113.75 sq. feet area. The total cost of construction was
35 lacs for which amount the Plaintiffs had agreed to give
the security also. The Plaintiffs are entitled for the area of
10403.45 sq. feet i.e. 45% of 23113.75 sq. feet for the
consideration of Rs. 35 lacs which the plaintiffs had
always been ready and willing to pay. That the defendants
no. 1 to 4 have breached their part of agreement in not
handing over the possession of the property and by not
executing the power of attorney in favour of the Plaintiff
no. 1 so that the necessary things could be done by the
Plaintiffs in terms of agreement dated 23.12.1988 (twenty
third December one thousand nine hundred eighty eight)
arrived at between the parties for the development/
collaboration/ construction of property number 6-A
Underhill Road, Civil Lines, Delhi in collaboration with
the Plaintiffs.”
46. So, it is apparent from reading of the pleadings of the previous Suit,
that the previous Suit of the Injunction of the plaintiffs was filed on the
ground of plaintiff’s understanding of the circumstances that the defendants
were threatening to back out from closing a transaction/ negotiations
(arisen out of a receipt dated 23.12.1988; Ex.P1) regarding the
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development/ collaboration/ construction on the property No. 6-A,
Underhill Road, Civil Lines, Delhi- 110054 with the plaintiffs and were
inclined to enter into a fresh agreement with the other party. Subsequently,
during pendency of that Suit, plaintiff No. 1 met with the defendants and
some talks of settlement took place between them and as a pre-condition to
continue/ proceed further with the defendants regarding the completion of
transaction/ negotiations of the said development/ collaboration/
construction on the property No. 6-A, Underhill Road, Civil Lines, Delhi-
110054, the plaintiffs did not pursue their suit which was dismissed in
default of appearance of Plaintiffs and their counsel on 09.10.1990.
However, the defendants during settlement talks tried to re-negotiate terms
with the plaintiffs and ultimately refused to perform their part of
obligations under the said transaction/ negotiations. The plaintiffs, as such,
alleging breach, have filed the present Suit for specific performance
assuming receipt dated 23.12.1988; Ex.P1 as a concluded contract.
47. The sine qua non for invoking Order II Rule 2 against the plaintiffs
by the defendants is that the relief which the plaintiffs have claimed in the
second suit was also available to the plaintiffs for being claimed in the
previous suit on the causes of action pleaded in the previous suit against the
defendant and yet not claimed by the plaintiff. Therefore, what is to be
examined is whether the plaintiff was entitled to claim a relief of specific
performance in the previous suit on the basis of cause of action pleaded by
the plaintiffs in the previous suit against the defendants. In other words, the
question that arises for consideration is whether the plaintiffs could claim
the relief of specific performance against the defendants in addition to his
claim of injunction in the previously instituted suit ? (relied on a decision
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of Hon’ble Supreme Court in Sucha Singh Sodhi (Dead) through LRs V/s
Baldev Raj Walia & Anr.; (2018) 6 SCC 733)
48. In the considered view of this Court, the answer to the question
posed in the above para 47 would be in ‘negative’ as the plaintiffs in the
previous Suit had not pleaded that transaction/ negotiations (arisen out of a
receipt dated 23.12.1988; Ex.P1 (Ex.PW1/8)) was concluded and as such
the foundation for the relief of injunction claimed in the previous suit did
not furnish a complete cause of action to sue for the relief of specific
performance. The previous Suit of the Injunction was based on the
perceived threat of the plaintiffs of backing out of the defendants from
closing a transaction/ negotiations regarding the development/
collaboration/ construction on the property No. 6-A, Underhill Road, Civil
Lines, Delhi- 110054 (paras 11 and 16 of the plaint of the previous Suit).
49. This Court accordingly holds that the present suit filed by the
plaintiffs for specific performance against the defendants is not barred by
the provisions of Order II Rule 2 of the Code.
50. Order IX Rule 9 CPC stipulates that where a Suit is dismissed
because of non-appearance of the plaintiff, the plaintiff shall be precluded
from bringing a fresh Suit on the same cause of action. However, as already
held that the cause of action for filing the present Suit was different from
the cause of action for the previous Suit, bar under Order IX Rule 9 CPC
would not apply to the facts of the present case.
51. The dismissal of the suit under Order IX Rule 8 CPC does not
operate as res judicata. It only imposes a disability on the plaintiff in terms
of Order IX Rule 9 CPC. The argument of Ld. Counsel of the defendant
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No.1 that the present Suit is barred by res judicata as such is misplaced and
untenable.
52. There was another submission of the Ld. Counsel for the defendant
No. 1 on the aspect of maintainability of the present Suit in the present
form. Ld. Counsel for the defendant No. 1 had submitted that the present
Suit is not maintainable in the present form without seeking declaration of
telegram dated 30.05.1989 as null and void. I will deal with this submission
while discussing Issue No. 9.
ISSUE NO. 5
(5) Whether there was any formal agreement between the
parties, which could be enforced under the provisions of
Specific Relief Act ?
53. The issue before this Court is whether receipt dated 23.12.1988,
Ex.P1 (Ex.PW1/8) is a record of the terms of a concluded contract for
construction & development on the plot No. 6A (part of plot No. 6) Under
Hill Road, Civil Lines, Delhi.
54. The receipt dated 23.12.1988, Ex.P1, is in following terms:-
Received a sum of Rupees Two Lakhs in cash towards part
of security amount agreed totally to Rs. 35 Lakhs (Rupees
Thirty Five Lakhs) for development/ collaboration of my/
our plot No. 6A (Part of No. 6) underhill Road, Civil lines,
Delhi. The collaboration/ development shall be in the ratio of
55% to owner and 45% to developer/ collaborator M/s Sh.
Mohan Khandelwal S/o Sh. J. P. Khandelwal R/o 18, Ram
Kishore Road, Civil lines, Delhi- 6. The security amount
shall be without interest and is refundable/ adjustable afterCS DJ 18883/2016
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the project is completed. Further, Rs. 3 Lakhs shall be paid
by 31st Dec, 1988 by the developers/ collaborators and Rs.
10 Lakhs shall be paid at the time of signing of agreement of
collaboration with the developer. The balance remaining
amount shall be paid after the plans are sanction and before
the construction is started.
55. As is seen from reading of contents of Ex.P1 (reproduced
hereinabove), Ex.P1 does mention certain terms regarding construction &
development on the plot No. 6A (part of plot No. 6) Under Hill Road, Civil
Lines, Delhi. The contents unmistakably show that the document was
intended to be a record of certain terms regarding construction &
development on the plot No. 6A (part of plot No. 6) Under Hill Road, Civil
Lines, Delhi. The receipt dated 23.12.1988, Ex.P1, therefore, is more than a
receipt.
56. The case of the defendants No. 1 to 4, on the other hand, is that the
present Suit of the plaintiff is pre-mature as there had been only
negotiations between the plaintiff No. 1 and the defendants No. 1 to 4, and
the negotiations between the parties were not merged into an agreement,
and the parties were not “ad-idem” in regard to terms and conditions of the
Contract.
57. Ordinarily, a receipt is not intended to be a record of the terms of a
contract. It is intended to evidence the receipt of what it says has been
received by the executant. But in some cases, no doubt a receipt may be a
record of the terms of an agreement between the parties. It depends upon
the intention of the parties. The law does not prescribe any particular form
for a record of the terms of an agreement. It is, however, to be seen from
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the contents of the document Ex.P1, whether it reduces to the form of a
document containing the terms of the contract between the parties.
58. Their Lordships of the Judicial Committee in Harichand Mancharam
V/s. Govind Luxman Gokhale; AIR 1923 PC 47; MANU/PR/0064/1922,
held;
9…Whether an agreement is a completed bargain or merely
a provisional arrangement depends, on the intention of the
parties as deducible from the language used by the parties
on the occasion when the negotiations take a concrete shape.
As observed by the Lord Chancellor (Lord Cranworth) in
Ridgway v. Wharton (1857) 6 H.L.C. 238 at p. 289 : 27 L.J.
Ch. 46 : 4 Jur. (N.S.) 173 : 5 W.R. 804 : 10 E.R. 1287 : 108
R.R. 88, the fact of a subsequent agreement being prepared
may be evidence that the previous negotiations did not
amount to an agreement, but the mere fact that persons wish
to have a formal agreement drawn up does not establish the
proposition that they cannot be bound by a previous
agreement. In Von Hatzfeldt-Wildenburg v. Alexander
(1912) 1 Ch. 284 : 81 L.J. Ch. 184 : 105 L.T. 434 Lord then
Mr. Justice Parker laid down that where “the acceptance by
the plaintiff was subject to a condition that the plaintiff’s
Solicitors should approve the title to and covenants
contained in the lease, the title from the freeholder and the
form of contract,” the negotiations did not form a binding
agreement between the parties.
(Underlined by me)
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59. Hon’ble Supreme Court in Kollipara Sriramulu V/s T.
Aswathanarayana and Ors.; AIR 1968 SC 1028, held;
“3. We proceed to consider the next question raised in these
appeals, namely whether the oral agreement was ineffective
because the parties contemplated the execution of a formal
document or because the mode of payment of the purchase
money was not actually agreed upon. It was submitted on
behalf of the appellant that there was no contract because the
sale was conditional upon a regular agreement being executed
and so such agreement was executed. We do not accept this
argument as correct. It is well-established that a mere
reference to a future formal contract will not prevent a binding
bargain between the parties. The fact that the parties refer to
the preparation of an agreement by which the terms agreed
upon are to be put in a more formal shape does not prevent the
existence of a binding contract. There are, however, cases
where the reference to a future contract is made in such terms
as to show that the parties did not intend to be bound until a
formal contract is signed. The question depends upon the
intention of the parties and the special circumstances of each
particular case. As observed by the Lord Chancellor (Lord
Cranworth) in Ridgway v. Wharton 6 H.L.C. 238 the fact of a
subsequent agreement being prepared may be evidence that the
previous negotiations did not amount to a concluded
agreement, but the mere fact that persons wish to have a
formal agreement drawn up does not establish the propositionCS DJ 18883/2016
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that they cannot be bound by a previous agreement In Von
Hatzfeldt-Wildenburg v. Alexander [1921] 1 Ch. 284 it was
stated by Parker, J. as follows :
“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 to 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 latter case there is a binding contract
and the reference to the more formal document may
be ignored.”
4. 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. In Rassier v. Miller 3
A.C. 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 thatCS DJ 18883/2016
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condition is fulfilled no contract is to arise then you
cannot find a concluded contract.”
5. In Currimbhoy and Company Ltd. v. Creet 60 I.A. 297 the
Judicial Committee expressed the view that the principle of
the English law which is summarised in the judgment of
Parker, J. in Van Hatzfeldt-Wildenburg v. Alexander [1912]
1 Ch. 284 was be applicable in India. The question in the
present appeals is whether the execution if a formal
agreement was intended to be a condition of the bargain
dated July 6, 1952 or whether it was a mere expression of the
desire of the parties for a formal agreement which can be
ignored. The evidence adduced on behalf of respondent No. 1
does not show that the drawing up of a written agreement
was a pre-requisite to the coming into effect of the oral
agreement. It is therefore not possible to accept the
contention of the appellant that the oral agreement was
ineffective in law because there is no execution of any formal
written document. As regards the other point, it is true that
there is no specific agreement with regard to the mode of
payment but this does not necessarily make the agreement
ineffective. The mere omission to settle the mode of payment
does not affect the completeness of the contract because the
vital terms of the contract like the price and area of the land
and time for completion of the sale were all fixed. We
accordingly hold that Mr. Gokhale is unable to make good
his argument on this aspect of the case.”
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(Underlined by me)
60. Bearing these principles in mind, let us see how do matters stand in
the present case ?
(i) It (receipt dated 23.12.1988, Ex.P1 (Ex.PW1/8)) talks about
development/ collaboration of plot No. 6A (Part of No. 6) underhill
Road, Civil lines, Delhi.
(ii) The development/ collaboration shall be in the ratio of 55% to
owners (defendants) and 45% to developer/ collaborator (plaintiff).
(iii) Security amount is agreed to Rs. 35 Lakhs which shall be
without interest and is refundable/ adjustable after the project is
completed.
(iv) Rs. 2 Lakh in cash towards part of the security amount has
been received by the owners/ defendants from developer/
collaborator/ plaintiff on 23.12.1988.
(v) Rs. 3 Lakh towards part of the security amount shall be paid by
31.12.1988.
(vi) Rs. 10 Lakhs shall be paid at the time of signing of agreement
of collaboration with the developer.
(vii) The remaining amount of Rs. 20 Lakhs shall be paid after the
plans are sanctioned and before the construction is started.
61. So, receipt dated 23.12.1988, Ex.P1 (Ex.PW1/8) contemplates
signing of an agreement of collaboration with the developer. Now, what is
to be seen is whether the execution of the agreement of collaboration 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 to will in fact go through.
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62. Before proceeding to examine the rival submissions, it is necessary
to bear in mind this general principle (subject to certain exceptions) that in
order to be a binding agreement or contract there ought to be an unqualified
acceptance of all the proposals made by one party or the other, or in other
words, that the parties must be ad idem on all matters concerning the
agreement. It is immaterial that some of the terms of the proposal or the
counter proposal are important or unimportant, major or minor. If the
proposal on even a minor term is not accepted, the parties cannot be said to
be ad idem and there cannot be a concluded contract (Sections 2 and 7 of
the Indian Contract Act, 1872).
63. At the outset it could be seen that the agreed security amount was to
be paid at four stages. First, on 23.12.1988 itself when Ex.P1 was executed,
next around after one week i.e. by 31.12.1988, thirdly at the time of signing
of agreement of collaboration with the developer, and lastly, after the plans
are sanctioned and before the construction is started. And, security amount
is in increasing order; first, Rs. 2,00,000/-, then, Rs. 3,00,000/-, next, Rs.
10,00,000/- and lastly Rs. 20,00,000/-. It clearly shows the increasing
importance of succeeding stages given by the parties.
64. The payment of Rs. 10,00,000/- as part payment towards security
amount is made contemporaneous with the event of executing the
collaboration agreement which itself signifies the importance given to the
execution of the collaboration agreement by the parties. It could further be
seen that no time limit was prescribed by the parties for the execution of
the collaboration agreement indicating that talks were still in the process
and all terms were not settled by then between the parties.
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65. The discussion between the parties was regarding construction &
development of an immovable property. In that regard, receipt dated
23.12.1988, Ex.P1 was executed. In relation to a construction &
development agreement, there are various details and specifications which
need to be agreed between parties before it could be said that an agreement
has been arrived at between them. It is inherent in construction &
development agreement that various material specifications have to be
agreed upon by the parties. For example, the area to be constructed,
sanction of plan, the kind of finish, the quality of workmanship, the quality
of materials to be used in construction, etc. have to be agreed upon before a
collaboration agreement. A construction & development agreement is not
merely a straightforward agreement to sell an open parcel of land. It seems
that the parties were conscious of this fact and for this reason they chose to
have a condition of executing a collaboration agreement.
66. It was submitted by the Ld. Counsels for the defendants No. 1 to 4
that the parties were not at ad idem as the receipt dated 23.12.1988 Ex.P1
was bereft of any details regarding procedure to be followed for
construction/ development of the property. It was submitted that the same
was to be codified only in the formal agreement which never came into
being. In the absence of any formal agreement, there remained several
uncertainties viz. (i) the present Suit is filed on the premise that that same
was in respect of property No. 6A, Under Hill Road measuring 3425 Sq.
Yds. whereas the receipt dated 23.12.1988 Ex.P1 does not contain any
measurement of property to be developed except ‘our property’ meaning
thereby 2997 Sq. Yds. as 428 Sq. Yds. stood sold on 30.03.1984 to the
defendant No. 5, (ii) portion of 777 Sq. Yds. was further sold to one Sh.
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Naval Kishore Aggarwal and Manish Kumar Aggarwal vide transaction
dated 01.03.1996; (iii) Consideration was neither fixed nor estimated; (iv)
there is no reference to the extent of construction to be carried out, material
to be used, workmanship etc.; and (v) the percentage provided is not
sufficient for identification of respective shares to the plaintiff No. 1 and
the defendants.
67. I am reproducing the relevant portions of the cross-examination of
PW1 (conducted on 28.07.2012 on behalf of defendants No. 1 to 4)
highlighting uncertainties regarding one such important aspect (i.e. area to
be developed) relating to development/ construction agreement to be
entered between the plaintiff and the defendants No. 1 to 4;
“Q. Is it correct that defendants no. 1 to 5 were the owners
of 3425 sq. yards plot as on 23-12-1988 ?
A. The defendant nos. 1 to 4 had represented that they were
the owners of property no. 6A Under Hill Road, Civil Line,
Delhi admeasuring 3425 sq. yards. Vol. later on, at the time
of measurement of the property, on the objection of
defendant no. 5 I came to know that defendant no. 5 was also
one of the owners of the property.
I had seen the title documents of the defendant no.
1 to 4. I also saw the title document of def. no. 5 after
raising of objection by def no. 5. I do not remember the
date of title documents in favour of def. No. 5. I can not
exactly remember the date, month, and year of title
document in favour of def. No. 1 to 4. Perhaps those were
somewhere early in 1970’s. The defendant no. 5 was theCS DJ 18883/2016
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owner of 428 sq. yards. It is correct that the def. No. 1 to 4
were the owners of 2997 sq. yards and not of 3425 sq. yards
as on 23-12-1988. It is correct that I had to develop the area
2997 sq. yards of def no. 1 to 4. Vol. I am still entitled. It is
wrong to suggest that I am not entitled to carry out the
project in question.
Q. Whether the suit filed by you is in respect of area of
3425 sq. yards or 2997 sq. yards?
A. I have mentioned the area in respect of which the suit
has been filed in my plaint.”
68. Further, plaintiff’s sending draft agreements to the defendants No. 1
to 4 by his Company’s name and his keenness of impleading its Company
as a party to this Suit as well as previous Suit provide a hint that the
plaintiff perhaps wanted to enter into the agreement with the defendants
No. 1 to 4 through his Company which possibly was not incorporated by
that time. It is a strong circumstance indicating that negotiations were
going on between the plaintiff and the defendants No. 1 to 4. It may be
noted that the plaintiff/ PW1 was evasive in replying whether his Company
was incorporated or not till the execution of Ex.P1 or Ex.P2. I am
reproducing the relevant portions of his cross-examination (conducted on
31.03.2012 on behalf of defendants No. 1 to 4) in this regard;
“…It is correct that my business negotiations with defendant
no 1 to 4 were held in my individual capacity as ‘Mohan
Khandelwal’. I do not remember whether on 23-12-1988 and
31-12-1988 whether M/s Jeevandeep Builders Pvt. Ltd. was
incorporated or not. I do not know the exact date ofCS DJ 18883/2016
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incorporation of M/s Jeevandeep Builders Pvt. Ltd…I do not
remember whether I had informed the defendant no. 1 to 4
that M/s Jeevandeep Builders Pvt. Ltd. was incorporated or
in the process of incorporation during negotiation prior to
23-12-1988. There was no written agreement between me
and defendants no. 1 to 4 to the effect that the project
undertaken by me in individual capacity was to be
performed by M/s Jeevandeep Builders Pvt. Ltd. Vol.
However I had informed them about the said fact verbally to
the defendants No. 1 to 4 after 23-12-1988. It is wrong to
suggest that I had not informed verbally to the defendants 1
to 4 about the said fact. On the date when I informed
verbally to the defendants no. 1 to 4 about the above fact,
M/s Jeevandeep Builders Pvt. Ltd. was not incorporated.
Again said, I do not exactly remember whether at that time
M/s Jeevandeep Builders Pvt. Ltd. was incorporated or was
in the process of incorporation…I can not tell with certainty
that M/s Jeevandeep Builders Pvt. Ltd. was incorporated on
11-07-1989. The certificate of incorporation of said
company was given to me by the Registrar of Companies
however I can not say whether I have the same with me or
not…”
69. Also, it appears that even the plaintiff was of the view that there was
only negotiations between him and the defendants No. 1 to 4 and no
concluded contract came into being by then. The same is apparent from the
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reading of pleadings (particularly of the plaint) and prayer sought in the
previous Suit (discussed in detail while discussing issue nos. 1 & 2).
70. As such, in the considered opinion of this Court, requirement of
execution of the agreement of collaboration mentioned in receipt dated
23.12.1988, Ex.P1 was an important term of bargain between the parties.
To execute an agreement of collaboration in terms of receipt dated
23.12.1988, Ex.P1 was not a mere formality. Receipt dated 23.12.1988,
Ex.P1 (Ex.PW1/8) itself, in the facts and circumstances of the case, can not
be held as a record of the terms of a concluded contract. This Court
accordingly holds that there was no formal agreement between the parties,
which could be enforced under the provisions of the Specific Relief Act,
1963.
ISSUE NO. 4
(4) Whether the Suit is barred by Section 14 (3) (c) of the
Specific Relief Act ?
71. Section 14 (3) (c) of the Specific Relief Act, 1963 (as originally
stood before the 2018 Amendment) apparently provides for a bar to a suit
by a developer for specific performance of a development agreement
between himself and the owner of the property. However, Hon’ble
Supreme Court in Sushil Kumar Agarwal V/s Meenakshi Sadhu; (2019) 2
SCC 24, while giving a purposive interpretation to Section 14 (3) (c) of the
Act, held that the said Section does not bar a developer from seeking
specific performance of development agreement against owner of the
property.
72. As this Court has already held in answer to Issue No. 5 that no
concluded contract came into existence between the parties which could be
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specifically enforced, there is no occasion for this Court to examine this
issue in the present Suit.
73. However, I am reproducing certain paras from Sushil Kumar
Agarwal Supra to further fortify the view taken by this Court that the
receipt dated 23.12.1988, Ex.P1 (Ex.PW1/8) is not a record of the terms of
a concluded contract for construction & development on the plot No. 6A
(part of plot No. 6) Under Hill Road, Civil Lines, Delhi (as held in an
answer to Issue No. 5).
“27. By giving a purposive interpretation to Section 14(3)(c)
(iii), the anomaly and absurdity created by the third
condition will have no applicability in a situation where the
developer who has an interest in the property, brings a suit
for specific performance against the owner. The developer
will have to satisfy the two conditions laid out in sub Clause
(i) and (ii) of Section 14(3)(c), for the suit for specific
performance to be maintainable against the owner. This will
ensure that both owners and developers can avail of the
remedy of specific performance under the Act. A suit for
specific performance filed by the developer would then be
maintainable. Whether specific performance should in the
facts of a case be granted is a separate matter, bearing on the
discretion of the court.
28. Having dealt with the first aspect of the matter, it is now
necessary to determine whether, in the facts of the present
case, the agreement between the Appellant and the
Respondent is capable of specific performance. For thisCS DJ 18883/2016
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purpose, it would be necessary to consider the terms and
conditions of the agreement between the parties.
29. The condition Under Section 14(3)(c)(i) is that the
building or other work described in the contract is
sufficiently precise to enable the court to determine the exact
nature of the building or work. To examine the question as to
whether the scope of the building or work described in the
agreement is sufficiently defined, the Court needs to
determine the exact nature of the work by referring to the
relevant clauses of the agreement. Clause 8 of the agreement
provides that the building shall be constructed in accordance
with approved plans and built with “first class materials”
with wooden doors, mosaic floor, basin and lavatories, tap
water arrangement, masonry work, electric points, finished
distemper and bath room fittings of glazed tiles up to 6″
height and lift, “etc.” Further, at Clause 13 of the agreement,
the parties have agreed that the contractor would construct a
building at the premises consisting of “residential apartments
of various sizes and denomination” in the said building
complex in accordance with plans sanctioned by the Calcutta
Municipal Corporation and the owner shall convey the
proportionate share in the land to the respective buyers.
Clause 22 of the agreement states that if for any reason after
the plan is sanctioned or “for any act or omission on the part
of the owner” the building cannot be constructed; the owner
shall refund to the contractor Rs. 4,00,000/- in addition to allCS DJ 18883/2016
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costs, charges and expenses incurred by the contractor. At
Clause 20 of the agreement, the parties have agreed that the
apartments of the owner shall be constructed and be made in
“similar condition” as that of the contractor with water
connection, sewerage, electric wiring except “special
fittings”.
30. Use of such vague terms in the agreement such as “first
class materials”, “residential apartment of various sizes and
denomination”, “etc.”, “similar condition”, and “special
fittings”, while discussing the scope of work clearly shows
that the exact extent of work to be carried out by the
developer and the obligations of the parties, have not been
clearly brought out. Parties have not clearly defined, inter
alia, the nature of material to be used, the requirements of
quality, structure of the building, sizes of the flats and
obligations of the owner after the plan is sanctioned. Further,
Clause 9 of the agreement states that the owner shall pay the
contractor costs, expenses along with agreed remuneration
only after completion of the building on receiving the
possession. However, the exact amount of remuneration
payable by the owner to the contractor is not to be found in
the agreement. The agreement between the parties is vague.
The court cannot determine the exact nature of the building
or work. The first condition in Section 14(3)(c)(i) is not
fulfilled.”
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ISSUE NOs. 6, 7 & 8
(6) If the aforesaid issue is decided in affirmative, whether the
plaintiff has performed his part of the Contract ?
(7) Whether the defendant has failed to perform his part of the
Contract ?
(8) Whether the plaintiff is entitled to a decree for specific
performance, as prayed for in the Suit ?
74. As is apparent that findings on Issue Nos. 6, 7 and 8 are dependent
on the affirmative finding on Issue No. 5 viz. a finding that there was a
formal agreement between the parties, which could be enforced under the
provisions of Specific Relief Act. However, since this Court has held in
answer to Issue No. 5 that no concluded contract came into existence
between the parties which could be specifically enforced, there is no
occasion for this Court to decide Issue Nos. 6 and 7. This Court for the
same reason further holds that the plaintiff is not entitled to a decree for
Specific performance, as prayed for in the Suit.
ISSUE NO. 9
(9) If it is held that the plaintiff is not entitled to a decree for
specific performance, whether the plaintiff is entitled to decree
of damages and refund of security ?
75. As already held that the plaintiff is not entitled to a decree for
specific performance as there was no concluded contract between the
plaintiff and the defendants, the plaintiff is also not entitled to decree of
damages as well. The only thing which is to be seen is whether the plaintiff
is entitled to a refund of security of Rs. 5,00,000/- from the defendants No.
1 to 4 (forfeited by them).
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76. In this context, two things can be noted at the outset. Firstly, as there
was no concluded contract between the parties, there was no occasion for
any of the parties to allege breach thereof. Secondly, there was no time
period provided in the receipt dated 23.12.1988, Ex.P1 for signing of the
development/ construction agreement by the parties and also there was no
provision for the forfeiture of the security amount deposited by the
plaintiff.
77. Now, in this backdrop, what is to be examined is whether in the facts
and circumstances of the case, the defendants No. 1 to 4 have the right to
retain or forfeit the security money. I am reproducing the paras 3, 4 and 5
of the evidence affidavit Ex.DW1/A of the DW1;
“3. That Shri Mohan Khandelwal who wanted to enter into
collaboration for raising construction of building as
disclosed by him to brokers, approached defendants No. 1 to
4 through broker and on 23.12.1988 negotiations took place
and various drafts containing different terms were discussed
and a proposal as contained in the draft agreement
Ex.DW1/3 drafted by Sh. P. L. Kumar advocate was shown
to Shri Mohan Khandelwal who after going through the said
draft, approved the same during negotiations but sought 1
month time to show the said draft agreement to his
consultant at Gwalior for his approval and then to convey
his acceptance in writing the said draft agreement and hence
copy of said draft agreement was handed over to Shri
Mohan Khandelwal. However no acceptance of the saidCS DJ 18883/2016
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draft agreement was ever conveyed to the defendant No. 1
to 4.
4. That Sh. Mohan Khandelwal after going through the
aforesaid draft agreement on 23.12.1988 became aware that
he was supposed to pay Rs. 35 lakhs interest free security
and out of same, Rs. 5 lakhs was payable before 31.12.1988
as earnest money before entering into agreement upon
further payment of Rs. 10 lakhs, agreement was to be
entered into and signed and balance amount of Rs. 20 lakhs
was payable before start of actual construction work after
sanction of site-plan. The said security interest was
refundable/ adjustable only after the project was completed
and further it was adjustable against various defects/
defaults etc. as shown in the said draft agreement.
5. That aforesaid amount of Rs. 5 lakhs was not paid in one
go before 31.12.1988 but Rs. 2 lakhs only was paid in cash
on 23.12.1988 against receipt dated 23.12.1988 and Rs. 3
lakhs was paid by cheque on 31.12.1988 against receipt
dated 31.12.1988 and Sh. Mohan Khandelwal failed to pay
the amount of Rs. 10 lakhs and to enter into and sign an
agreement despite repeated telephone calls during which
although he gave assurances and promises but failed to do
the needful which made the defendants No. 1 to 4 to send a
telegram dated 30.05.1989 Ex.DW1/4 but to no effect and
no agreement had been entered into and signed by and
between Shri Mohan Khnadelwal and defendants No. 1 to 4.
Bill dated 06.10.1988 is Ex.DW1/5.
CS DJ 18883/2016
Mohan Khandelwal Vs. Surinder Kumar Gupta & Ors
Judgment dated 20.01.2025 Page no. 95 of 100
78. So, the case of the defendants No. 1 to 4 is that on 23.12.1988, a
draft agreement was handed over to the plaintiff who sought one month’s
time for his approval. However, despite repeated requests, the plaintiff
failed to confirm the said draft agreement and to make payment of Rs. 10
Lakhs to the defendants No. 1 to 4 which made the defendants No. 1 to 4 to
send a telegram dated 30.05.1989 to the plaintiff. The defendants No. 1 to
4, as such, need to prove, to justify the forfeiture, following things;
(i) The defendants No. 1 to 4 handed over a draft agreement to the
plaintiff on 23.12.1988;
(ii) The plaintiff failed to sign/ confirm the said draft agreement
despite repeated requests/ calls of the defendants No. 1 to 4; and
(iii) Lastly, the plaintiff failed to confirm/ accept the same to the
defendants No. 1 to 4 within the time provided in the telegram
dated 30.05.1989.
79. As already observed, all the documents (Ex.DW1/1 to Ex.DW1/6)
sought to be exhibited by DW1 (defendant No. 3) in his evidence affidavit
Ex.DW1/A have been de-exhibited at the time of recording of examination-
in-chief of DW1 on 09.11.2022. As such, there is no document on record of
the defendants No. 1 to 4 which can be looked into by this Court.
80. What is to be seen is whether the defendants No. 1 to 4 have been
able to prove on record the fact that they had handed over any draft
agreement to the plaintiff on 23.12.1988, when the receipt dated
23.12.1988, Ex.P1 was signed. The receipt dated 23.12.1988, Ex.P1 itself
could have been the most crucial evidence to prove this fact, had this fact
(that a draft agreement was handed over to the plaintiff for signing/
confirming the same) been recorded therein. The same is not the case.
Nothing in this regard has been recorded in the receipt dated 23.12.1988,
CS DJ 18883/2016
Mohan Khandelwal Vs. Surinder Kumar Gupta & Ors
Judgment dated 20.01.2025 Page no. 96 of 100
Ex.P1. This is also not the case of the defendants No. 1 to 4 that they
obtained any acknowledgment/ receiving of/ from the plaintiff regarding
handing over draft agreement to him on 23.12.1988.
81. During cross-examination of PW1 (on 06.07.2013), a typed unsigned
and undated copy of a draft agreement running into 17 pages (Mark X) was
put to the witness. PW1 then was asked that the said agreement Mark X
was shown to him by the defendants No. 1 to 3 on 23.12.1988, to which the
PW1 replied that no such agreement was shown to him on 23.12.1988. It is
recorded in the deposition sheet of PW1 that the said draft agreement Mark
X did not find mention in the list of reliance dated 16.07.2015 filed on
behalf of the defendants No. 1 to 3. Meaning thereby, this draft agreement
Mark X was not filed on record by the defendants No. 1 to 4, in terms of
provisions of CPC, 1908 read with the Delhi High Court rules, at the
earliest available stage.
82. As such, there is nothing on record to prove the fact that a draft
agreement was handed over to plaintiff on 23.12.1988 except the bare oral
testimony of DW1. It may also be noted that the fact that a draft agreement
was handed over to the plaintiff for signing/ confirming the same on
23.12.1988 is not recorded even in the telegram dated 30.05.1989
Ex.PW1/10 (Ex.P3). The plaintiff, on the other hand, admittedly sent a
letter dated 09.06.1989 Ex.PW1/11 to the defendants lodging his protest
regarding sending the telegram dated 30.05.1989 Ex.PW1/10 (Ex.P3).
Further, the defendants No. 1 to 4 have not brought anything on record to
prove the fact that they requested/ made any call to the plaintiff to sign/
confirm the said draft agreement, and despite the request, the plaintiff
failed to do so.
CS DJ 18883/2016
Mohan Khandelwal Vs. Surinder Kumar Gupta & Ors
Judgment dated 20.01.2025 Page no. 97 of 100
83. In the considered view of this Court, there was no occasion for the
defendants No. 1 to 4 to forfeit the security amount at the first place (as
there was no concluded contract between the parties, and there was no time
period provided in the receipt dated 23.12.1988, Ex.P1 for signing of the
development/ construction agreement by the parties, failing which
authorising defendants No. 1 to 4 forfeiting of the security amount
deposited by the plaintiff), and in any case, the defendants No. 1 to 4 have
failed to prove on record circumstances referred to in the telegram dated
30.05.1989 Ex.PW1/10 (or reasons provided for sending the telegram dated
30.05.1989 Ex.PW1/10) justifying forfeiture in terms thereof.
84. Before concluding the discussion on this issue, I want to examine
one decision of the Hon’ble Supreme Court of India passed in I. S.
Sikandar Supra relied on by the Ld. Counsel for the defendant No. 1 during
arguments. While relying on the judgment, it was submitted by the Ld.
Counsel for the defendant No. 1 that the present Suit is not maintainable as
the plaintiff has not sought declaration of telegram dated 30.05.1989 Ex.P3
as null and void. Facts in the I. S. Sikandar Supra were that there was an
agreement to sell which, in terms of the agreement, was to be performed
within a stipulated time. The defendant/ seller through a legal notice
extended the period and asked the plaintiff/ buyer to pay the sale
consideration and get the sale deed executed within that extended period,
and further notified that on failure to comply with the same, the agreement
of sale would be terminated (if the plaintiff/ buyer would not avail the time
extended to him by the defendant/ seller). Since the plaintiff/ buyer did not
perform his part of the contract within the extended period, the defendant/
seller terminated the agreement. In this factual matrix, the Hon’ble
Supreme Court held that since the plaintiff has not sought for declaratory
CS DJ 18883/2016
Mohan Khandelwal Vs. Surinder Kumar Gupta & Ors
Judgment dated 20.01.2025 Page no. 98 of 100
relief to declare the termination of agreement of sale as bad in law, the Suit
for specific performance on the basis of agreement of sale is not
maintainable in law. Facts of the present case, however, are materially
different from I. S. Sikandar Supra on following counts (and, as such, there
was/ is no need for the plaintiff seeking any declaration qua the telegram
dated 30.05.1989 Ex.PW1/10);
(i) There is no concluded contract between the parties, as such there
is no occasion for any of the parties to allege breach thereof.
(ii) There was no time period provided in the receipt dated
23.12.1988, Ex.P1 for signing of the development/ construction
agreement by the parties and also there was no provision for the
forfeiture of the security amount deposited by the plaintiff (another
indication that Ex. P1 is not a concluded contract).
(iii) The defendants No. 1 to 4 even otherwise have failed to prove
on record circumstances referred to in the telegram dated
30.05.1989 Ex.PW1/10 (or reasons provided for sending the
telegram dated 30.05.1989 Ex.PW1/10) justifying forfeiture in
terms thereof.
85. This Court accordingly holds that the defendants No. 1 to 4 have/
had no right to retain or forfeit the security money of Rs. 5,00,000/- given
by the plaintiff.
ISSUE NO. 10
(10) Whether the plaintiff is entitled to any interest, if so, at
what rate and for which period ?
86. In view of the findings given qua Issue No. 9 viz. that the plaintiff is
entitled to refund of Rs. 5,00,000/- (Rupees Five Lakh) from the defendants
No. 1 to 4 (the security amount forfeited by the defendants No. 1 to 4), it is
CS DJ 18883/2016
Mohan Khandelwal Vs. Surinder Kumar Gupta & Ors
Judgment dated 20.01.2025 Page no. 99 of 100
clear that the plaintiff is entitled to recover interest from the defendants No.
1 to 4. In the facts of the present case, in the considered view of this court,
the interest of justice would be served if the plaintiff is granted pendente
lite interest and future interest at the rate of 6% per annum.
RELIEF
87. As a net result of the aforesaid, the prayer qua specific performance
etc. is declined. However, a decree for a sum of Rs. 5,00,000/- (Rs. Five
Lakh) in favour of the plaintiff and against the defendants No. 1 to 4 along
with costs as well as pendente lite and future interest at the rate of 6% per
annum is passed.
88. After preparation of the decree sheet by the Reader, the file shall be
consigned to the record room.
Digitally
signed by
(Announced in the open court on this 20 day of January , 2025
th
ABHISHEK
ABHISHEK
SRIVASTAVA
This Judgment consists of hundred of signed pages). SRIVASTAVA Date:
2025.01.20
17:39:18
+0530(Abhishek Srivastava)
District Judge-05,
Central, THC, DelhiCS DJ 18883/2016
Mohan Khandelwal Vs. Surinder Kumar Gupta & Ors
Judgment dated 20.01.2025 Page no. 100 of 100
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