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2017 Supreme(Del) 665
IN THE HIGH COURT OF DELHI AT NEW DELHI
RAJIV SAHAI ENDLAW, J.
DHARAMPAL SATYAPAL LTD. – Plaintiff
Versus
SANMATI TRADING AND INVESTMENT LTD. AND ANR. – Defendants
CS(OS) No.320 of 2006
Decided On : 23-02-2017
For the Plaintiff : Mr. Deepak Dhingra, Ms. Shivangi Singh and Mr. Sumit Kr. Vats. Advs.
For the Defendant : Mr. Yakesh Anand, Mr. Nimit Mathur and Ms. Sonam Anand, Adv., Mr. Rohit K. Naagpal, Adv.
A plaintiff cannot claim specific performance without seeking a declaration of termination of the agreement, as per relevant legal provisions.
Headnote:
Specific Performance - Agreement of Sale - CPC Order XLI Rule 5(1), Specific Relief Act, 1963 Section 34, Indian Contract Act, 1872 Section 55 - The court discussed the plaintiff's claim for specific performance of an Agreement of Sale and the requirement of a declaration of termination of the agreement. The court referred to relevant provisions of the CPC, Specific Relief Act, and Indian Contract Act and held that the plaintiff was not entitled to the relief of specific performance due to the cancellation of the agreement by the defendant.
Fact of the Case:
The plaintiff sought specific performance of an Agreement of Sale for a property in New Delhi. The defendants, through letters, cancelled the agreement, leading to the plaintiff's claim for relief.
Finding of the Court:
The court found that the plaintiff was not entitled to the relief of specific performance due to the cancellation of the agreement by the defendant.
Issues: The main issue was whether the plaintiff was entitled to the relief of specific performance without claiming the relief of declaration of the termination of the agreement.
Ratio Decidendi: The court held that the plaintiff cannot claim specific performance without seeking a declaration of termination of the agreement, as per relevant legal provisions.
Final Decision: The preliminary issue was decided in favor of the defendants, and the court deferred dismissal of the suit pending the outcome of appeals before the Division Bench.
1. The suit is listed for hearing arguments on issue no.(i) ordered to be treated as a preliminary issue vide order dated 5th October, 2016.
2. The counsel for the plaintiff states that FAO(OS) No.219/2016 and FAO(OS) No.373/2016 arising from the order dated 2nd May, 2016 partly allowing amendments of the plaint and order dated 5th October, 2016 closing the right to carry out amendments allowed on 2nd May, 2016 are pending consideration before the Division Bench of this Court.
3. The counsel however admits that there is no stay of proceedings in the present suit.
4. The counsel for the plaintiff though agrees that the orders aforesaid from which the appeals aforesaid are pending have no bearing on the preliminary issue but states that for decision of the preliminary issue, there has to be a validly constituted plaint before this Court.
5. As far as this Bench is concerned, there is a plaint before this Court in terms of the orders which though are in appeal before the Division Bench. It thus cannot be said that there is no validly constituted plaint before this Court. Per Order XLI Rule 5(1) of the CPC, an appeal shall not operate as a stay of proceedings under a decree or order.
6. The plaintiff instituted this suit seeking the relief of specific performance of an Agreement of sale of property no.3, Friends Colony (West), New Delhi, pleading (i) that the defendant no.1 Sanmati Trading & Investment Ltd. (STIL) is registered with the Reserve Bank of India (RBI) to carry on the business as Non-Banking Financial Institution and defendant no.2 Shri K. Sundaram is the Managing Director and his wife Smt. R. Sundaram (defendant no.3) is the Director of the defendant no.1 STIL; the defendant no.1 STIL is a closely held Company; (ii) that sometimes in January-February, 2004 negotiations commenced between the plaintiff and the defendants in respect of the said property; (iii) it was represented to the plaintiff that the defendant no.1 STIL was the absolute and exclusive owner of the said property and the property was free from any kind of encumbrances; it was however informed that the original title documents of the property were in the custody of the erstwhile Directors but the defendants had filed a suit for declaration and recovery thereof and the same was pending adjudication; the defendants promised to make available the original title deeds of the property at the earliest possible date whereafter the Sale Deed would be executed by them; (iv) it was further offered to the plaintiff that if the defendants were unable to make available the original title documents of the property, the parties may at the sole option of the plaintiff agree to reach some alternative arrangement to convey a valid title in the property from the defendant no.1 STIL to the plaintiff; (v) that on the basis of the said assurances and promise of the defendants, the plaintiff agreed to purchase the property and a concluded contract of sale of property for a total sale consideration of Rs.16,29,00,000/- was made on 20th March, 2004; the agreement was oral; (vi) the plaintiff paid a sum of Rs.11,00,000/- by account payee cheque and the said cheque was duly received and encashed by the defendants; (vii) that after the said oral agreement, a Memorandum of Understanding (MoU) (Agreement to Sell) was also executed between the parties on 17th June, 2004 confirming the sale transaction and as per agreement between the parties, was placed in a sealed cover and the sealed cover was signed from outside and is duly taped and is in possession of the plaintiff; a copy of the MoU without signatures was being filed as Annexure-A to the plaint; (viii) the defendants, inspite of repeated reminders of the plaintiff to complete the sale, kept on deferring the same; and, (xi) in paras 23 to 26:-
“23. That defendant no.1 Company (under the signature of defendant no.2), instead of answering the queries of the plaintiffs and out of mala fides wrote a letter dated 1st March, 2005 a
