Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2020 Supreme(SC) 4

SUPREME COURT OF INDIA
ASHOK BHUSHAN, NAVIN SINHA, JJ.
AMBALAL SARABHAI ENTERPRISE LIMITED – APPELLANT(S)
VERSUS
KS INFRASPACE LLP LIMITED AND ANOTHER – RESPONDENT (S)
CIVIL APPEAL NO(s). 9346 OF 2019 (arising out of SLP (Civil) No(s). 23194 of 2019)
WITH
HARYANA CONTAINERS LIMITED – APPELLANT(S)
VERSUS
KS INFRASPACE LLP LIMITED …RESPONDENT(S)
CIVIL APPEAL NO(s). 9347 OF 2019 (arising out of SLP (Civil) No(s). 23200 of 2019)
NEPTUNE INFRASPACE PRIVATE LIMITED – APPELLANT(S)
VERSUS
KS INFRASPACE LLP LTD. AND ANOTHER – RESPONDENT(S)
CIVIL APPEAL NO(s). 934849 OF 2019 (arising out of SLP (Civil) No(s). 2731127312 of 2019)
Decided on : 06-01-2020

Advocates Appeared:
For the Appellant :Huzefa Ahmadi, Garima Bajaj, C.U. Singh, Kapil Sibal, Megha Jani, Anushree Prashit Kapadia, Raghav Tankha, Viddusshi, Advocates
For the Respondent:Nikhil Goel, Huzefa Ahmadi, Garima Bajaj, Advocates

IMPORTANT POINT
Plaintiff seeking temporary injunction in a suit for specific performance will have to establish a strong prima facie case on basis of undisputed facts.

Headnote:
Specific Relief Act, 1963 – Sections 36 and 37 – Agreement to sell – Suits for declaration and specific performance – Injunction at initial stage of litigation, where claims of parties are still at a nebulous stage, has stalled progress of suit – Grant of relief in a suit for specific performance is itself a discretionary remedy – Plaintiff seeking temporary injunction in a suit for specific performance will have to establish a strong prima facie case on basis of undisputed facts – Conduct of plaintiff will also be a very relevant consideration for purposes of injunction – Discretion at this stage has to be exercised judiciously and not arbitrarily – Emails and WhatsApp messages will have to be read and understood cumulatively to decipher whether there was a concluded contract or not – Plaintiff at this stage has failed to establish that there was a mutuality between parties much less that they were ad idem – In a matter concerning grant of injunction, apart from existence of a prima facie case, balance of convenience, irreparable injury, conduct of party seeking equitable relief of injunction is also very essential to be considered – Defendants had also proceeded to utilize sum of Rs.36.20 crores also and had materially altered their position evidently by inaction of plaintiff to institute suit in time and having allowed third party rights to accrue by making substantial investments – Balance of convenience is in favour of defendants on account of intervening developments – Grant of injunction to plaintiff is unsustainable – Orders of injunction set aside. (Paras 14, 15, 17, 19, 21 and 24)
Facts of the case:
Plaintiff filed two suits for declaration and specific performance against defendant sister concerns with regard to a total area of 19,685 square meters of lands. High Court by its order dated 30.08.2019 affirmed order of injunction holding that communication of acceptance to draft MoU sent by email dated 30.03.2018 coupled with exchange of WhatsApp correspondences between the parties amounted to a concluded contract.
Findings of Court:
In facts and circumstances of the present case, grant of injunction to the plaintiff is unsustainable. Resultantly orders of injunction are set aside. Nothing in present order shall be deemed or construed as any expression of opinion or observation by us at the final hearing of the suit which naturally will have to be decided on its own merits. High Court has already given directions to expedite the hearing of the suit and we reiterate the same.
Result : Appeals allowed.

JUDGMENT

Navin Sinha, J.

The present appeals arise from a common order dated 30.08.2019, passed in three separate miscellaneous appeals filed by the appellants before the High Court affirming an order of injunction. K.S. Infraspace LLP Ltd., respondent no. 1, filed Special Civil Suit Nos.322 of 2018 and 323 of 2018 before the Court of Principal Civil Judge at Vadodara against the appellants in Civil Appeal No.9346 of 2019 (Ambalal Sarabhai Enterprise) and Civil Appeal No.9347 of 2019 (Haryana Containers Ltd.) respectively, which are sister concerns. The appellant in Civil Appeal No.9348 of 2019 (Neptune Infraspace Private Ltd.) was impleaded as defendant no.2 in the latter suit. The parties shall be referred to by their respective position in the Civil Suit, for the sake of convenience.

2. The plaintiff filed the two suits for declaration and specific performance against the defendant sister concerns with regard to a total area of 19,685 square meters of lands situated in Village Wadiwadi, Subhanpura, District Vadodara in Gujarat. The plaintiff contended that there existed a concluded contract with the defendants after negotiations for sale of the suit lands for a total sum of Rs.31,81,73,076/- and 58,26,86,984/- respectively. The plaintiff had duly communicated its acceptance of the final draft memorandum of understanding (MoU) dated 30.03.2018. Only the formal execution of contract documents remained as a formality. A sum of Rs.2.16 crores had also been paid as advance. The plaintiff was ready and willing with the balance amount. Alternately, it was claimed that there existed a concluded oral contract between the parties. The Defendants had surreptitiously entered into a registered agreement for sale with defendant no.2 on 31.03.2018 and thus the suit and prayer for injunction.

3. The Principal Civil Judge by order dated 18.02.2019 held that by inference the terms and conditions for sale stood finalised by the e-mail dated 29.03.2018 and 30.03.2018. A token amount of Rs.2.16 crores had already been paid and the plaintiff was ready and willing with the balance amount. Creation of third party rights would lead to further litigation. Thus by an order of temporary injunction the defendants were restrained from executing any further documents including a sale deed or creating further charge, interest or deal with the suit lands in any manner.

4. The High Court by its order dated 30.08.2019 affirmed the order of injunction holding that the communication of acceptance to the draft MoU sent by e-mail dated 30.03.2018 coupled with the exchange of WhatsApp correspondences between the parties amounted to a concluded contract.

5. We have heard learned senior counsel Shri Kapil Sibal, Shri C.U. Singh and Shri Huzefa Ahmadi, appearing on behalf of defendant nos. 1 and 2, who are the appellants before us. Shri Sibal, making the lead arguments on behalf of the defendant sister concerns submitted that they had decided to sell the lands in view of financial stringency and their inability to meet financial commitments inter-alia leading to attachment of immovable properties by the Income Tax Department for dues of Rs.48,74,45,929/- apart from other statutory liabilities, employee related liabilities and business liabilities. The negotiations with the plaintiff did not attain finality but remained at the stage of discussions only. The wavering conduct of the plaintiff to meet the Income Tax liability of the defendants as part of the consideration amount to facilitate sale by lifting of the attachment, left the defendants with no other choice but to negotiate afresh with defendant no. 2. The contention that execution of the agreement remained a formality was disputed. This is evident from the alternative contention in the suit that there existed an oral contract.

6. The plaintiffs response of acceptance to the final draft MoU dated 30.03.2018 was belated. The plaintiff was well aware all along that the defendants were negotiating with two others also a

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2020 Supreme(SC) 4

IMPORTANT POINTPlaintiff seeking temporary injunction in a suit for specific performance will have to establish a strong prima facie case on basis of undisputed facts.

Cases Referred (12)

IMPORTANT POINT
Plaintiff seeking temporary injunction in a suit for specific performance will have to establish a strong prima facie case on basis of undisputed facts.