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2008 DIGILAW 293 (CAL)

Swapan Kumar Saha v. Jayanta Kumar Bose

2008-03-12

SANJIB BANERJEE

body2008
Judgment : SANJIB BANERJEE, J. (1). THE plaintiff in this suit for specific performance of an agreement for sale of an immovable property insists on an order of injunction restraining the defendants from dealing with the property on the ground that the protection accorded to him under Section 52 of the Transfer of Property Act is not adequate. (2). THE defendants assert that the plaintiffs conduct should discourage the court from affording any more protection than what the plaintiff has by virtue of the doctrine of lis pendens. (3). AN impassioned plea of the defendants for rejection of the plaint or dismissal of the suit did not earlier find favour with the court. The defendants implore that the continuation of the suit cannot be the only basis for making an order of injunction as sought and for the plaintiff to have earned the order that he seeks, he should have done the extra bit for balancing the comparative convenience. (4). THE facts are not much in dispute. On August 2, 1988 the plaintiff entered into an agreement for sale of 15 cottah 8 chittack and 45 sq.ft. land along with a bungalow situate thereon at premises no. 21, Mandeville Gardens, Calcutta at a consideration of Rs. 26.70 lakh. The plaintiff was required to pay, and has paid, by way of earnest a sum of Rs. 3.70 lakh and the agreement required the balance consideration to be paid at the time of completion of the transaction. The defendants as sellers were required to make out a marketable title to the said premises and the purchase was to be completed within six months from the date of entering into the agreement or within such extended time as the parties may agree. It was the defendants obligation to obtain all permissions as were necessary for the transfer including the no objection certificate under Section 269ul of the Income Tax Act, 1961 and to produce the same for inspection of the plaintiffs advocates at least two weeks prior to the completion of the transaction. The defendants were also obliged to obtain the clearance certificate under Section 230a of the Income Tax Act and similarly produce the same for inspection. (5). THE terms of the agreement of August 2, 1988 were reduced to writing on September 23, 1988 and it is such agreement that is sought to be specifically enforced. (6). The defendants were also obliged to obtain the clearance certificate under Section 230a of the Income Tax Act and similarly produce the same for inspection. (5). THE terms of the agreement of August 2, 1988 were reduced to writing on September 23, 1988 and it is such agreement that is sought to be specifically enforced. (6). SHORTLY after the written agreement, the defendants applied before the income Tax Authorities for obtaining the requisite permissions. By a notice of November 22, 1988 the Income Tax Authorities made an order of compulsory purchase of the premises under Section 269ud (1) of the Income Tax Act. (7). THE plaintiff assailed the notice and the decision reflected therein in WP 6388 of 1988 within a week of issuance of the notice by the Income Tax authorities. The defendants were impleaded as respondents in the proceedings instituted before this court under Article 226 of the Constitution of India. On December 2, 1988 an order of injunction was made in WP 6388 of 1988 to the following effect: "the Court: In view of the urgency pleaded, compliance with the provisions of Rule 27 is dispensed with. There will be ad-interim order in terms of prayers (g), (h) and (i) of the petition until further orders of Court. Neither the petitioner nor the respondents Nos. 4 to 7 will be entitled to take any further step in the matter until further orders of Court. Petitioner is directed to serve all the respondents with a copy of this petition along with a copy of this order within 9.12.88 and file the affidavit of service to that effect within 12.12.88. In default, the interim order passed herein will stand vacated. Liberty is given to the respondents to apply for variation or vacating the interim order on notice to the petitioner. Matter to appear in the list on 16.12.88 as "application". All parties to act on a signed copy of the minutes of this order on usual undertaking. " (8). THE parties, as it appears, went into deep slumber upon obtaining the order of December 2, 1988 and were completely oblivious to the events that overtook them. First, there was the Supreme Court judgment rendered in the c. B. Gautam case reported at (1993) 1 SCC 78 and, thereafter, the provisions for preemptive purchase of property stood deleted from the Income Tax Act. First, there was the Supreme Court judgment rendered in the c. B. Gautam case reported at (1993) 1 SCC 78 and, thereafter, the provisions for preemptive purchase of property stood deleted from the Income Tax Act. It was only upon the writ petition of 1988 appearing as an old matter, that the plaintiff herein brought the matter to its conclusion. An order was made on April 7, 2006 setting aside the notice issued by the Income Tax Authorities on November 22, 1988 and the Income Tax Authorities were permitted to issue a fresh notice of hearing to the parties and reconsider the matter and pass an appropriate order. A no objection certificate under Section 269ul (3) of the Income Tax Act was issued by the Income Tax Authorities on August 30, 2006 following which the plaintiff forwarded a draft conveyance to the defendants under cover of a letter of september 7, 2006, offering to pay the balance consideration of Rs. 23 lakh at the time of execution of the deed. The letters addressed by the plaintiffs advocate to the defendants were returned with the endorsement "refused" and the plaintiff suggests that it was in such refusal that the defendants evinced their disinclination to discharge their obligations under the agreement of September 23, 1988. The suit was launched in September, 2006 and an interim order of injunction came to be made. On September 26, 2006 the interim order was vacated by recording the submission made on behalf of the defendants that the defendants did not have any intention to alienate the property in question. Such order was made upon postponing the adjudication on the challenge to the maintainability of the petition. (9). NO ground has been urged that the petition is not maintainable, but it is on merits that the defendants urge that the injunction should be refused and the self-imposed embargo recorded in the order of September 26, 2006 should be discharged. (10). IT is also of some relevance that during the pendency of the writ petition, and almost covering the entire span of time that it remained on board, there was another serious skirmish involving the same property and where the parties to the present suit formed part of the dramatis personae. Suit no. (10). IT is also of some relevance that during the pendency of the writ petition, and almost covering the entire span of time that it remained on board, there was another serious skirmish involving the same property and where the parties to the present suit formed part of the dramatis personae. Suit no. 217 of 1989 was filed on March 27, 1989 by one Deepak Prakash seeking, inter alia, specific performance of an alleged prior agreement to sell the same property. In March of 1996 an order of injunction was passed in the suit restraining the defendants herein from selling the property to the plaintiff herein. The suit was dismissed on September 4, 2002, the appeal therefrom rejected on June 16, 2005 and the resultant special leave petition failed on January 2, 2006. (11). THE plaintiff says that he paid the earnest deposit required of him and did all things necessary for prompt conclusion of the transaction but was impeded by the Income Tax Authorities whereupon, in further demonstration of his readiness and willingness, he instituted the writ petition and ultimately succeeded in dislodging the order of compulsory purchase. The plaintiff asserts that the defendants participated at the hearing before the Income Tax Authorities which culminated in the permission of August 30, 2006 and the plaintiff could have had no inkling of the subsequent disinclination on the defendants part. The plaintiff shows that within a week of permission being accorded by the Income Tax authorities, he had the deed of conveyance drafted and despatched to the defendants. There was no delay in instituting the suit, submits the plaintiff, and the prompt successive acts would entitle the plaintiff to an order of injunction that he now canvasses. The plaintiff pleads that he had no control over the progress of the writ petition as it is not uncommon for such petitions to remain languishing for more than a decade in this court. The plaintiff points to his prompt offer of tendering the balance consideration and says that, in the circumstances, no more could have been expected of him to demonstrate his eagerness in pursuing the transaction. (12). TWO petitions, one by the first three defendants and the other by the fourth defendant, for rejection of the plaint and/or dismissal of the suit were dismissed on January 22, 2008 with liberty to the defendants to urge the grounds taken at the trial. (12). TWO petitions, one by the first three defendants and the other by the fourth defendant, for rejection of the plaint and/or dismissal of the suit were dismissed on January 22, 2008 with liberty to the defendants to urge the grounds taken at the trial. The present petition appeared in the list thereafter and was adjourned on a number of occasions to enable the parties to arrive at a settlement. The defendants were agreeable to sell but demanded adequate consideration. The figures that were bandied about from one adjournment to the next were required not to be mentioned in court. Ultimately, the plaintiff offered to pay a sum of Rs. 1 crore in all for immediate conveyance and the defendants offered to pay the plaintiff more than such amount for him to merely abandon the claim and withdraw the suit. (13). IN the context of such divergent assessments as to the values of the property and rights accrued, the merits have to be assessed. The mere inadequacy of consideration or its devaluation over time may not be the only factor that would weigh with court for grant of specific performance. Yet, consideration, or the adequacy thereof, is inextricably intertwined with readiness and willingness. The spirit of Section 16 of the Specific Relief Act and, particularly, of clause (c) thereunder requires price to be considered as a relevant factor. The readiness and willingness of a person to obtain a thing for less than its adequate value is not the readiness and willingness that Section 16 (c) of the specific Relief Act demands of a suitor seeking specific performance. The economic theory of insatiable demand asides, it is human nature to be more willing than not to buy cheap and sell dear. A person may not have any use for that which he obtains at less than its adequate value, but it presents him with an opportunity to dispose it of at a higher value and chuckle at the margin. (14). THE plaintiff first refers to a judgment of a Division Bench of this Court reported at AIR 1988 Cal 25 (Muktakesi Dawn v. Haripada Mazumdar) to assert that the doctrine of lis pendens may take care of pendente lite transfers but it may not always be good enough to take care of the interest of a plaintiff in a suit for specific performance, in respect of such transfer. A passage from paragraph 4 of the report is placed: "it is true that the doctrine of lis pendens as enunciated in S. 52 of the T. P. Act takes care of all pendente lite transfers; but it may not always be good enough to take fullest care of the plaintiffs interest vis-a-vis such a transfer. The suit giving rise to the impugned order is one for specific performance of sale in respect of the suit property and if the defendant is not restrained from selling the property to a third party and accordingly a third party purchases the same bona fide for value without any notice of the pending litigation and spends a huge sum for the improvement thereof or for construction thereon, the equity in his favour may intervene to persuade the Court to decline, in the exercise of its discretion, the equitable relief of specific performance to the plaintiff at the trial and to award damages only in favour of the plaintiff. It must be noted that R. 1 of o. 39 of the Code clearly provides for interim injunction restraining the alienation or sale of the suit property and if the doctrine of lis pendens as enacted in S. 52 of the T. P. Act was regarded to have provided all the panacea against pendente lite transfers, the Legislature would not have provided in R. 1 for interim injunction restraining the transfer of suit property. R. 1 of O. 39, in our view, clearly demonstrates that, notwithstanding the Rule of lis pendens in S. 52 of the T. P. Act, there can be occasion for the grant of injunction restraining pendente lite transfers in a fit and proper case. " (15). AS to the effect of the perceived increase in price of an immovable property during the pendency of the proceedings and its effect in a suit for specific performance, the judgments reported at AIR 1995 SC 1607 (SVR Mudaliar v. Rajabu F. Buhari) and (2006) 7 SCC 756 (Jai Narain Parasrampuria v. Pushpa devi Saraf) have been placed by the plaintiff. In the SVR Mudaliar case the supreme Court posed a question as to the propriety in granting relief of specific performance after a lapse of about 33 years during which time the price of the property had gone up enormously. In the SVR Mudaliar case the supreme Court posed a question as to the propriety in granting relief of specific performance after a lapse of about 33 years during which time the price of the property had gone up enormously. The Supreme Court restored the decree granted for specific performance passed by the trial court on the following reasons as to the relevant aspect at paragraph 27 of the report: "27. Insofar as the delay in the disposal of the case and the rise in prices during interregnum, Shri Parasaran urges that the delay not having been occasioned by any act of the plaintiff, he may not be punished for the same on the principle of "actus curiae neminem gravabit" - an act of the court shall prejudice no man. As regards the rise in prices, the submission is that it should not weigh with the court in refusing the relief if otherwise due, as opined in S. V. Sankaralinga Nadar v. P. T. S. Ratnaswami Nadar, which decision was cited with approval in Mir Abdul Hakeem Khan v. Abdul Mannan Khadri. We are in agreement with this view because of the normal trend of rise in prices of properties situate especially in metropolitan city like Madras, where the property in question is situate. If merely because the prices have risen during the pendency of litigation, we were to deny the relief of specific performance if otherwise due, this relief could hardly be granted in any case, because by the time the litigation comes to an end a sufficiently long period is likely to elapse in most of the cases. This factor, therefore, should not normally weigh against the suitor in exercise of discretion by a court in a case of the present nature. " (16). THOUGH the plaintiff relies on paragraph 63 of the Parasrampuria case, the facts and factors leading up to the conclusion at paragraph 63 need also be seen: "59. One of the learned Judges of the High Court also held that the said agreement dated 12-6-1984 was in fact an agreement for obtaining loan. There was no warrant for such a proposition. One of the learned Judges of the High Court also held that the said agreement dated 12-6-1984 was in fact an agreement for obtaining loan. There was no warrant for such a proposition. Clause 7 of the agreement on the basis whereof such a finding was arrived at reads as under: " (7) That it is further agreed that in case any defect in the right or title of the parties of the first part or the said Company is found or any other encumbrance or legal hurdle is found in respect of the said house property then in both the circumstances the second party shall have option for the refund of advance money of Rs. 10 lakhs together with interest @ 18% per annum. " "60. It is interesting to note that the sale deed dated 24-2-1979 whereby sarafs purchased the property also contains an identical clause. Such types of clauses normally are found in the agreement so as to enable the vendee to protect his interest against the defects in the vendors title, if any. The agreement records the valuation of property at Rs. 11 lakhs. The respondents relying on or on the basis of another purported agreement dated 4-6-1984 executed by Sarafs in favour of their son-in-law, Original defendant 5, S. K. Mittal stated that the property was worth Rs. 25 lakhs. The trial court, in our opinion, correctly arrived at an opinion that the said agreement was a sham one. Original Defendant 5 did not file any suit for specific performance of contract. The said agreement for sale had not been acted upon by the parties. Reliance placed on the said agreement by a learned Judge of the High Court was, therefore, unwarranted. "61. The High Court in its judgment did not show as to how the said finding of the learned trial court in that behalf was wrong. Moreover, except the said agreement, no other legal evidence was brought on record to establish as to what was the actual market value of the property. "62. The value of the property, as noticed hereinbefore, was only Rs. 2 lakhs in the year 1979. Within a period of 5 years thereof as per the agreement for sale, its price went up five times over the original. It is, wholly unlikely that the property which was valued at Rs. 2 lakhs in 1979, would be worth Rs. "62. The value of the property, as noticed hereinbefore, was only Rs. 2 lakhs in the year 1979. Within a period of 5 years thereof as per the agreement for sale, its price went up five times over the original. It is, wholly unlikely that the property which was valued at Rs. 2 lakhs in 1979, would be worth Rs. 25 lakhs in 1984. "63. In any view of the matter inadequate consideration by itself would not lead to the conclusion that the same was an agreement of loan. Inadequate consideration, it is trite, is also not a ground for refusing to grant a decree for specific performance of contract." (17). THE defendants refer to the C. B. Gautam case and paragraph 46 thereof as to how petitions challenging preemptive purchases under the Income Tax Act then pending before various High Courts were to be dealt with. The defendants refer to the directions issued by the Supreme Court in that regard. The defendants submit that the plaintiff ought to have been aware of the law as laid down by the Supreme Court in the C. B. Gautam case or even aware of the subsequent deletion of the relevant provisions from the Income Tax Act. The defendants urge that the plaintiff took no steps for more than a decade after the c. B. Gautam judgment and it was only upon the writ petition appearing in the cause list as one of the old matters, that the plaintiff proceeded to bring it to a conclusion. (18). THE defendants also rely on the judgment reported at (1995) 5 SCC 545 (Gujarat Bottling Co. Ltd. v. Coca Cola Co.) and say as in every injunction, the court would look into the conduct of the party seeking injunction and refuse to interfere unless his conduct was free from blame. Paragraph 47 of the report is particularly stressed on: "47. In this context, it would be relevant to mention that in the instant case GBC had approached the High Court for the injunction order, granted earlier, to be vacated. Paragraph 47 of the report is particularly stressed on: "47. In this context, it would be relevant to mention that in the instant case GBC had approached the High Court for the injunction order, granted earlier, to be vacated. Under Order 39 of the Code of Civil Procedure, jurisdiction of the Court to interfere with an order of interlocutory or temporary injunction is purely equitable and, therefore, the Court, on being approached, will, apart from other considerations, also look to the conduct of the party invoking the jurisdiction of the Court, and may refuse to interfere unless his conduct was free from blame. Since the relief is wholly equitable in nature, the party invoking the jurisdiction of the Court has to show that he himself was not at fault and that he himself was not responsible for bringing about the state of things complained of and that he was not unfair or inequitable in his dealings with the party against whom he was seeking relief. His conduct should be fair and honest. These considerations will arise not only in respect of the person who seeks an order of injunction under Order 39 Rule 1 or Rule 2 of the Code of Civil procedure, but also in respect of the party approaching the Court for vacating the ad interim or temporary injunction order already granted in the pending suit or proceedings." (19). THE defendants next refer to the judgment reported at (1984) 1 All ER 978 (Patel and anr. v. Ali and anr.) where the decree for specific performance was reversed on the defendants argument that it failed to give due weight to the hardship likely to be caused to the first defendant and failed to take into account the evidence of the first defendant that her relatives could raise money sufficient to compensate the plaintiffs in damages. In that case, an agreement was entered into on July 31, 1979 for the sale of a suburban dwelling house and the action was brought, as the court noticed, after considerable delay. The appellate court took note of the events subsequent to the agreement and before the action was launched some four years later. At the date of the contract the first defendant had only an infant child and the first defendant was in good health. She was about 23 years old and spoke virtually no English at all. The appellate court took note of the events subsequent to the agreement and before the action was launched some four years later. At the date of the contract the first defendant had only an infant child and the first defendant was in good health. She was about 23 years old and spoke virtually no English at all. In the summer of 1980 she was diagnosed to have a bone cancer and had her right leg was amputated at the hip joint even when she was carrying her second child. The second child was born in August of 1980, her husband thereafter went to prison for nearly a year and a half and after his release, the first defendant became pregnant again and had her third child in August 1983. The hardship to the defendant of enforced removal from the familiar building and its known surroundings was recognised and the court held: "in the end, I am satisfied that it is within the courts discretion to accede to the defendants prayer if satisfied that it is just to do so. And, on the whole, looking at the position of both sides after the long unpredictable delay for which neither seeks to make the other responsible, I am of opinion that it is just to leave the plaintiffs to their remedy in damages if that can indeed be effective." (20). THE defendants cite Fry on Specific Performance (6th Ed.) paragraph 1159 for the proposition that if the purchaser seeking interlocutory injunction is not able to establish his right to specific performance, the court may refuse, on the ground of comparative convenience, to restrain the vendor by injunction until the hearing. The basis of the principle is that the court would weigh whether the grant of injunction would, if the plaintiff ultimately failed, do more injury to the defendant than its refusal would occasion to the plaintiff should he ultimately be successful. (21). ORDINARILY the court may preserve a property in statu quo during the pendency of a suit in which the rights are left to be decided at the trial and no opinion is expressed at the interlocutory stage as to such rights. A purchaser pendente lite in a case of such nature would take subject to the plaintiffs rights and the mere incident of subsequent purchase cannot wish away the plaintiffs claim. A purchaser pendente lite in a case of such nature would take subject to the plaintiffs rights and the mere incident of subsequent purchase cannot wish away the plaintiffs claim. It is, as in all cases of injunction, a consideration of the strength of the claim and the balance of comparative convenience. This is not a case of either inadequacy of consideration or of appreciation of price during the pendency of proceedings. It is not the defendants case that the price of Rs. 26.70 lakh for the mandeville Gardens property was inadequate in 1988. It is also not the defendants argument that the price has so completely altered between the time of the institution of the suit and when this application is being finally heard, that the two figures would not be recognisable. If hardship is, indeed, a ground that can carry any weight in the matter of exercise of discretion, then it matters little whether the hardship is on account of any subsequent debilitating physical injury or financial hardship. And yet there may be hardship occasioned to the vendor for which no fault will lie on the vendees part, but the hardship would be a consideration in the exercise of discretion. (22). IN the Patel v. Ali case neither the purchaser nor the vendor blamed the others conduct in seeking or resisting the order. The court considered the matter on a no-fault basis, yet found the delay of four years to be a circumstance that would disentitle the plaintiff to the relief of specific performance. The conduct of the plaintiff here is not without blemish. The plaintiff could have taken steps to expedite the matter for the expedition was likely to have resulted in the transaction being concluded earlier. Even if the plaintiff may have done nothing till end-1993, there has been no attempt to show that the plaintiff took any meaningful step to bring the writ petition to its fruition on the basis of the C. B. Gautam judgment. To say that the plaintiffs conduct cannot be questioned for the period that the court did not find it convenient to dispose of the writ petition would be to ignore the spirit of readiness and willingness that Section 16 (c) of the specific Relief Act conveys. To say that the plaintiffs conduct cannot be questioned for the period that the court did not find it convenient to dispose of the writ petition would be to ignore the spirit of readiness and willingness that Section 16 (c) of the specific Relief Act conveys. It may also be required to test the defendants conduct by the same yardstick as to whether the defendants ought to have, as parties to the writ petition, taken steps for its speedier disposal. But to be so exacting on the defendants would be to require readiness and willingness on a vendors part, which the Specific Relief Act does not warrant. A vendor may remain inactive and be none the worse for it when the vendors conduct is assessed in the purchasers suit for specific performance. (23). SINCE it is the plaintiff who is found as the one who has to bear the brunt of the delay, at least after 1993 and the C. B. Gautam case, it needs to be seen whether the plaintiff brings any virtue that can offset his tardiness in approach in concluding the transaction. Even without applying the businessmans multiplier of money doubling in five years that held good until the drop in interest rates in this decade, a sum of Rs. 23 lakh in 1988 would yield, at any conservative estimate, much more than what the plaintiff has offered in pretence of his readiness and willingness. (24). CASES have to be decided on facts and legal principles, consciously keeping passions and prejudices at bay. There is no precedent brought for discretion not to bear on the phenomenal increase of the price of the property prior to the action being brought. Precedents do not formulate rigid standards in an area in which the legislature so warily treads. They lay down broad guidelines consistent with the legislative policy. It would be strange if, by employing judicial artifices and techniques, a discretion conferred by statute is cut down by devising a formula which confers the authority to grant or refuse injunction of such nature within a strait-jacket. Cast iron rules cannot be made even if it is conceded that judges may have imperfect awareness of the needs of changing milieu and the vicissitudes of life. (25). THE plaintiff here, on his conduct, has to remain satisfied with whatever protection the doctrine of lis pendens affords it. Cast iron rules cannot be made even if it is conceded that judges may have imperfect awareness of the needs of changing milieu and the vicissitudes of life. (25). THE plaintiff here, on his conduct, has to remain satisfied with whatever protection the doctrine of lis pendens affords it. If it appears more likely than not, that this plaintiff may not get the decree that he seeks, it follows that he may not get his injunction during the interregnum. The defendants are discharged of their obligation to abide by the commitment made to not alienate the property as recorded in the order of September 26, 2006. But the undertaking will continue to remain effective for a period of a fortnight. If within such time the plaintiff deposits with the Registrar, Original Side, a sum of Rs. 3 crore, there will be an order of injunction restraining the defendants from dealing with or disposing of the property till the disposal of the suit. If the plaintiff deposits the money, the registrar, Original Side, will put in the same in a fixed deposit account with a nationalised bank in the vicinity of the Court. In the event such money is not furnished within the time permitted, this petition will stand dismissed with costs assessed at 2000 GMs. Urgent certified photostat copies of this judgment, if applied for, be supplied to the parties upon compliance with all requisite formalities.