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2016 Supreme(Del) 3124
IN THE HIGH COURT OF DELHI AT NEW DELHI
S. RAVINDRA BHAT & DEEPA SHARMA, JJ.
GOPAL KRISHNA KAPOOR & ORS. - Appellants
Versus
R.S. CHHABRA & ORS. - Respondents
FAO(OS) 437, 461, 462 of 2015, C.M. APPL.14113-14114, 15308-15309, 15312-15313 of 2015
Decided On : 24-08-2016
For the Appellants :Sh. P. Kapoor, Ms. Bina Gupta, Sh. Ramesh Singh and Sh. Ranjit Raut, Advocates.
For the Respondents:Sh. C.L. Sachdeva, Sh. Preet Pal Singh and Sh. Yash Chawla, Advocates.
Where a decree for specific performance has been passed, such decree is in the nature of a preliminary decree and the court does not lose its jurisdiction over the matter. In terms of Section 28, where the decree holder does not come forth and pay the purchase money in the time fixed by the decree, the Court may rescind the contract of sale. However, such relief is not granted in every case, but instead the Court has to exercise its discretion and act in the interests of equity depending on the factual matrix of the case before it.
Headnote:
COMPROMISE DECREE - SPECIFIC PERFORMANCE - ASSIGNMENT OF RIGHTS - VALIDITY - SECTION 28 OF THE SPECIFIC RELIEF ACT - RESCISSION OF CONTRACT - COURT'S DISCRETION - EQUITY - DELAY - NON-COOPERATION - CLEAN HANDS - LIMITATION.
Fact of the Case:
The appellants entered into a Memorandum of Understanding (MOU) to sell the suit property to the second respondent, Rajesh Kumar, for a consideration of Rs. 5,20,00,000/-. Rajesh entered into an MOU with the first respondent, Chhabra, to assign and get the sale deed executed in the latter’s favour. In terms of the second MOU, Rajesh agreed to “sell, transfer, convey and assign” the disputed property to Chhabra for his bonafide needs and requirements, and he agreed to purchase it in the same terms and conditions as stated in the first MOU with the appellants. A compromise decree was entered into between the appellants and Chhabra wherein it was agreed that the latter, would be entitled to the property after having paid the remainder amount. Rajesh filed an application impugning the compromise decree on the ground of fraud and misrepresentation by Chhabra. Chhabra filed an application seeking the implementation of the compromise decree. The appellants filed an application seeking interim injunction against the execution of the compromise decree. The Division Bench dismissed Rajesh’s appeal wherein it held that the effect of the second MOU was that the right to get the sale deed executed was vested in Chhabra, and the only right left with Rajesh was to get the remaining amount (Rs. 20,00,000/-) from Chhabra. Rajesh filed an application objecting against the execution of the compromise decree. The learned Single Judge dismissed the said application. The appellants and Rajesh appealed to the Supreme Court of India. The Supreme Court dismissed both the petitions, holding that there was no reason to interfere with the order of the lower court. Pursuant to the Supreme Court’s order, the appellants filed an application under proviso to Rule 3 of Order XXIII Code of Civil Procedure (CPC). Later, the appellants filed applications under Section 28 of the Specific Relief Act and under Order XI Rule 12. The impugned order dismissed all three applications.
Finding of the Court:
1. The assignment of rights in favour of Rajesh by Chhabra was a complete assignment. 2. The plea of fraud urged by the appellants was unmerited. 3. I.A. No. 2286/2010 was dismissed on account of there being no violation of any provisions of the Indian Contract Act, 1872 in obtaining of the consent decree dated 20.03.2006, and on account of the application being barred by the law of limitation. 4. I.A. No. 1460/2013 was dismissed on account of the appellant’s fault for not cooperating in the execution of the conveyance deed, due to which Chhabra could not fulfill his subsequent obligation of making the payment for the disputed property. 5. I.A No. 5310/2014 was dismissed on the ground that there is no reason to examine Chhabra’s capacity to pay, since the payment has to be made only after the conveyance deed has been executed, but that it had not been done till then.
Issues: 1. Whether the assignment of rights in favour of Chhabra was valid? 2. Whether the plea of fraud urged by the appellants was tenable? 3. Whether I.A. No. 2286/2010 was maintainable? 4. Whether I.A. No. 1460/2013 was maintainable? 5. Whether I.A No. 5310/2014 was maintainable?
Ratio Decidendi: 1. The appellants were aware about the second MOU, which Rajesh was empowered to enter into, and over which the appellants had no right to object. 2. The compromise decree was lawful, and I.A. No. 2286/2010 under Order XXIII Rule 3 had to fail. 3. The appellants themselves have not cooperated in the execution of the conveyance deed. 4. Due to the non-cooperation of the appellants, the conveyance deed could not be executed despite repeated efforts of the Land and Development Officer; no opportunity arose for Chhabra to make the balance payment. 5. Since the non-payment of the purchase money by Chhabra within the time allowed for by the execution order dated 31.08.2009 was due to the repeated lapses on part of the appellants, this Court does not discern any equity in favour of the appellants, entitling them to relief.
Final Decision: The present batch of appeals is dismissed as unmerited.
S. RAVINDRA BHAT, J.
1. These three appeals arise from the judgment of the learned Single Judge dated 06.05.2015 whereby three applications viz. I.A. Nos. 2286/2010, 1460/2014 and 5310/2014 in CS(OS) 353/2006 were dismissed, and execution of the compromise decree dated 20.03.2006 was directed.
Facts
2. The appellants entered into a Memorandum of Understanding (hereafter “first MOU”) to sell the suit property, No. 14B (or 14C), Bazar Marg, Old Rajinder Nagar, to the second respondent, Rajesh Kumar (hereafter “Rajesh) on 28.02.2005 for a consideration of Rs. 5,20,00,000/-. Clause 3 of the MOU provided that the balance consideration of Rs. 4,65,00,000/- was to be payable at the time of execution and registration of the sale deed before the Sub-Registrar, mutation of the property in the name of the appellants and its conversion from leasehold to freehold. The appellants were responsible for the said conversion and mutation. Clause 7 of the first MOU enabled Rajesh to further nominate and assign his rights in the MOU in favour of any nominees or assignees, to which the appellants could not object. Clause 3 also provided that the second respondent was entitled to get the sale deed executed in favour of nominees- again, to this too the appellants agreed not to object. Rajesh entered into an MOU on 20.04.2005 (hereafter “second MOU”) with the first respondent (hereafter “Chhabra”) to assign and get the sale deed executed in the latter’s favour.
3. In terms of the second MOU, between Chhabra and Rajesh, the latter agreed to “sell, transfer, convey and assign” the disputed property to the former (Chhabra) for his bonafide needs and requirements, and he agreed to purchase it in the same terms and conditions as stated in the first MOU with the appellants. As the second respondent had paid Rs. 1,00,00,000/- to the appellants, Chhabra agreed to repay it to Rajesh. While Rs. 80,00,000/- was paid already, the balance amount of Rs.20,00,000/- was to be paid at the time of assignment of the agreement by the appellants in favour of Rajesh. It was further agreed that once the balance amount of Rs. 20,00,000/- was paid, all rights were to be transferred to the first respondent.
4. Rajesh, alleging fraud in regard to their failure to convey the suit property, filed CS(OS) 353/2006 against the present appellants, late Smt. Sanjogta Bakshi and Chhabra and sought specific performance of the contract. An order for ex-parte ad-interim injunction was passed on 27.02.2006. The plaintiff Rajesh alleged that the appellants were requested time and again to mutate the property and convert it into freehold as Chhabra had the funds ready, yet no action was taken. It was alleged that the respondents found out that the appellants were contacting brokers in the area to sell the property to some other third party, despite representing to the second respondent for a year that the property will be sold to him after the mutation. Furthermore, the demand was increased to the prevalent market price of Rs. 7,00,00,000/- on the ground that the property rates had gone up. During the pendency of the suit a compromise decree dated 20.03.2006 was entered into between the present appellants and Chhabra wherein it was agreed that the latter, would be entitled to the property after having paid the remainder amount. The compromise decree further stated that Chhabra would be responsible for settlement with the second respondent, Rajesh.
5. On 18.05.2006, Rajesh filed I.A. No. 6399/2006 in CS(OS) 353/2006 impugning the compromise decree dated 20.03.2006 on the ground of fraud and misrepresentation by Chhabra. Rajesh claimed that there was no valid assignment of rights in favour of Chhabra by the second MOU due to which Chhabra lacked the competence to enter into the compromise decree with the present appellants. Chhabra filed I.A. No. 8638/2006 in CS(OS) 353/2006 seeking the implementation of the compromise decree. The said applications were dismissed on the ground that both Ch
