Rajiv Shakdher, J.

1. This is an appeal filed by the original defendants against order dated 03.12.2010 passed by the learned Single Judge in IA No.9657/2008 in Suit no.1440/2008. The appellants had filed the said application under the provisions of Order 7 Rule 11 read with section 151 of the Code of Civil Procedure, 1908 (in short the Code) seeking a rejection of the plaint on the ground that it lacked cause of action as, according to them, there was no legally enforceable “agreement to sell” in existence.

2. In order to decide the appeal it would be useful to advert to the broad averments in the plaint made by the respondent.

2.1 Respondent, who is the original plaintiff, avers in his suit for specific performance qua a Memorandum of Understanding (in short MOU) dated 23.12.2005, that the appellants by virtue of the said MOU had agreed to the sale of their undivided 1/3rd share in the property being: plot no.15, block no.172, Jor Bagh, New Delhi-110 003 (in short the suit property).

2.2 It is averred that the total consideration for sale of the suit property was fixed at Rs.3,87,50,000/-. It is alleged that towards the said consideration, in the first instance, a cheque of Rs.21 Lakhs was issued in favour of the appellants on the date of the execution of the MOU, which was thereafter replaced with a cheque of Rs.25 Lakhs.

2.3 There is a further averment in the plaint to the effect that, on 09.01.2006, the appellants agreed in writing to the extension of the final date for praying the balance amount.

2.4 It is also averred that the appellants having received a sum of Rs.25 Lakhs towards earnest money and/or part sale consideration, failed to fulfill their contractual obligations and consummate the transaction as agreed. The receipt, in respect of the said sum of Rs.25 Lakhs, as alleged was executed on 23.02.2006.

2.5 It is further alleged that the appellants, though belatedly, had referred to the fact that there was litigation pending qua the property in issue. However, the fact that there was no injunction on the sale of the suit property issued in the said litigation became quite clear to the respondent at a later point in time. The failure on the part of the appellants to honour its commitments constrained the respondents to write a letter dated 02.08.2006, calling upon the appellants to execute and register the necessary documents for concluding the transaction. The said communication was followed by yet another letter dated 07.05.2007, calling upon the appellants to "close the deal" within 15 days of the receipt of the said communication. A somewhat similar communication is alleged to have been sent thereafter on, 04.04.2008.

2.5 It is further averred that contrary to the assurance given, the appellants failed to fulfill their contractual obligations despite several reminders in that regard. It is alleged that the appellants have no intention to honour their obligations and thus seek to retain the sum of Rs.25 Lakhs without coming forth to complete the transaction in terms of the aforementioned MOU.

2.6 It is categorically averred, that the respondent is ready and willing to pay the balance sale consideration of Rs.3,62,50,000/- provided the appellants execute the necessary documents i.e., the sale deed in his favour.

2.7 In the cause of action paragraph of the plaint, it is averred that the cause against the appellant arose for the first time when, the MOU was executed i.e., on 23.12.2005. It is further averred that it arose once again when, a sum of Rs.14 Lakhs was paid on 18.01.2006 to the appellants followed by payment of a further sum of Rs.11 Lakhs on 23.02.2006 towards advance / earnest money / part sale consideration. It is also averred that cause of action in favour of the respondent and against the appellants arose when various communications being: letters dated 02.08.2006, 07.05.2007 and 04.08.2008 were issued by the respondent to the appellants, calling upon them to fulfill their obligations under the MOU.

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