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2012 DIGILAW 889 (CAL)

Babul Saha v. Sanat Kumar Mallick

2012-09-24

HARISH TANDAN

body2012
Judgment Harish Tandon, J. These two revisional applications have been preferred against the self same order and as such are taken up together to avoid prolixity of repetition. 2. The petitioner, being the plaintiff, has challenged the judgment and order dated 11th September, 2012 passed in Misc.Appeal No.09 of 2012 by the District Judge, Andaman and Nicobar Islands by which an application for injunction is rejected. 3. Shorn of unnecessary details, the petitioner filed Other Suit No.63 of 2012 against the opposite parties seeking for a decree for specific performance of an agreement for sale of immovable property with an alternate prayer to refund the money paid as and by way of earnest money together with interest at the rate of 18 per centum. 4. The opposite parties are the directors of the M/s Andaman and Nicobar Fish Processing Project (P) Limited and were carrying out the business activities from survey No.96/3, measuring an area of 1.7970 hectares of land situated at Dhanikhari village under Ferrargunj Tehsil, South Andaman District. For running the said business, the opposite parties approached the Bank for the loan, but, because of the loss suffered by them, they could not pay the loan assessed to the tune of Rs.60 lakhs. 5. The opposite parties intended to sell, transfer and dispose of the property comprising the said business and approached the plaintiff who agreed to purchase the same at a consideration of rupees one crore. A formal agreement was executed on 31st October, 2011 between the plaintiff-petitioner and the opposite parties. A sum of Rs.60 lakhs which was due and payable to the bank by the opposite parties were paid by the petitioner and further sum of Rs.5 lakhs was paid in cash. The aforesaid payment of Rs.65 lakhs was duly acknowledged and admitted by the opposite parties in the said agreement. The balance consideration of Rs.35 lakhs was agreed to be paid at the time of execution of the power of attorney before the Sub Registrar. 6. Clause (3) of the said agreement postulates that the possession of the said property shall be handed over by the opposite parties on the date of execution of an agreement or the execution the power of attorney in favour of the petitioner. 7. According to the petitioner, the possession was handed over to him upon execution of the said agreement by the opposite parties. 7. According to the petitioner, the possession was handed over to him upon execution of the said agreement by the opposite parties. Since the opposite parties were contemplating to sell the said property to a third party and refused to execute the deed of conveyance/ sale deed in favour of the petitioner, the said suit has been instituted. 8. An application for injunction has also been taken out in the said suit by the petitioner for an order restraining the opposite parties to maintain the status quo in respect of nature, character and possession of the scheduled property. 9. The Trial Court granted an exparte order of an injunction restraining the opposite parties from alienating, transferring and encumbering the property to a third party. The opposite parties contested the said injunction application by filing objection and it is contended that the said agreement is not an enforceable contract. It is further contended that the said agreement was rescinded and/or terminated and the opposite parties refunded a sum of Rs.4 lakhs by way of a deposit in the account of the petitioner. 10. According to the opposite parties, after acceptance of the said sum of Rs.4 lakhs, the petitioner has accepted the termination/cancellation of the said agreement and as such cannot seek for a decree for specific performance of an agreement. However, another defence was taken in the written objection by the opposite parties that the factum of the termination/cancellation of the agreement and having received a sum of Rs.4 lakhs has been grossly suppressed by the petitioner and as such is not entitled to get the injunction as prayed for. 11. It is to be recorded herein that, although the application for injunction does not contain a prayer restraining the opposite parties from selling, transferring and encumbering the property to a third party, but there was a specific statement made in paragraph 13 thereof relating thereto; even the parties were conscious of the said prayer being the subject matter of an injunction application, proceeded to argue before the Trial Court. 12. By an order dated 26th June, 2012, the said exparte ad interim order was made absolute. The opposite parties no.1 and 2 filed a separate appeal challenging the said order by which the ad interim order is made absolute whereas the opposite party No.3 filed a separate appeal assailing the self same order. 12. By an order dated 26th June, 2012, the said exparte ad interim order was made absolute. The opposite parties no.1 and 2 filed a separate appeal challenging the said order by which the ad interim order is made absolute whereas the opposite party No.3 filed a separate appeal assailing the self same order. The Appellate Court disposed of both the appeals by passing a separate judgment though one is the replica of other. The aforesaid two revisional applications have been filed against the said judgments. 13. Mr. Haradhan Banerjee, learned advocate appearing for the plaintiff/petitioner submits that the Court of Appeal below, while dealing with the injunction application, have been proceeded in the manner as it is deciding the suit itself. 14. He audaciously argues that the court cannot held a mini trial at the time of consideration of the injunction application and placed reliance upon the judgment of the Supreme Court in the case of M/s Julien Educational Trust vs. Sourendra Kumar Roy reported in (2010) 1 SCC 379 . He further submits that before the Court of Appeal below, one of the defendant who suffered a decree, was not made party and, therefore, the order against the said defendant has become final and the Court below was not justified in setting aside the order of an injunction and placed reliance upon the judgment of the Supreme Court in the case of Rajeswari Amma and another Vs.Joseph and another reported in (1995) 2 SCC 159 . 15. Mr. Sudhasatva Benerjee, learned advocate appearing for the opposite parties, refuted the contentions of Mr.Banerjee, in contending that, if an agreement is not capable of being enforced as it has not culminated into an enforceable contract, the Court should not pass the injunction against the opposite parties. He strenuously submits that the injunction, being the discretionary relief, should not be granted if the party approaching the Court is guilty of suppression of material fact. By contending so, he further submits that the fact relating to the recession/cancellation of an agreement and payment of Rs.4 lakhs has been suppressed by the petitioner before the Court. He strenuously submits that the injunction, being the discretionary relief, should not be granted if the party approaching the Court is guilty of suppression of material fact. By contending so, he further submits that the fact relating to the recession/cancellation of an agreement and payment of Rs.4 lakhs has been suppressed by the petitioner before the Court. He succinctly submits that the Court, at the time of granting or refusing the injunction, should exercise the judicial discretion whether the injuries, which the parties are likely to suffer for the refusal of the injunction and placed reliance upon the judgment of the Apex Court in Dalpat Kumar and another vs.Prahlad Singh and others reported in AIR 1993 SC 276 . 16. He further submits that, since the petitioner has prayed for refund of an earnest money, it is apparent that the petitioner can be sufficiently compensated in monetary terms which disentitles him to claim injunction. 17. Lastly, he submits that mere existence of a prima facie case does not entitle the petitioner to get the order of injunction unless it is manifestly demonstrated that irreparable loss and injury would be caused for non-granting of injunction and placed reliance upon the judgment of this Court reported in 2005 (2) Calcutta High Court’s Notes 239. 18. Having considered the respective submissions the point which boils down to be considered is whether the Court of Appeal below could have decided the injunction application by making an observation which would have an effect at the time of the consideration of the suit itself and the injunction application is liable to be dismissed for suppression of facts. 19. Admittedly, an agreement for sale of the immovable property is executed by and between the parties. The term of the agreement, as is evident therefrom, is that the petitioner is obliged to liquidate the bank loan of Rs.60 lakhs standing credit to the opposite parties. In addition thereto, a further sum of Rs.5 lakhs is paid by cash which has not been denied by the opposite parties. The balance sum of Rs.35 lakhs was agreed to be paid at the time of execution of the power of attorney. 20. On meaningful reading of the said agreement one could gather, without subtracting or adding to the words to it, that it is an agreement to sale of immovable property. The balance sum of Rs.35 lakhs was agreed to be paid at the time of execution of the power of attorney. 20. On meaningful reading of the said agreement one could gather, without subtracting or adding to the words to it, that it is an agreement to sale of immovable property. Mere execution of a power of attorney does not invalidate the paramount intention of the parties relating to the sale of the said property. 21. The injunctions are decided basically on three principles, namely; (i) existence of prima facie case; (ii) irreparable loss and injury; and (iii) balance of convenience and inconvenience. 22. Mere existence of a prima facie case shall not entitle the petitioner to get the order of injunction unless it is demonstrated that non-granting thereof would cause irreparable loss and injury. In Dalpat Kumar case, the Apex Court laid-down the principles for granting the injunction in these words:- “5.Therefore, the burden is on the plaintiff by evidence aliunde by affidavit or otherwise that there is ‘a prima facie case’ in his favour which needs adjudication at the trial. The existence of the prima facie right and infraction of the enjoyment of his property or the right is a condition for the grant of temporary injunction. Prima facie case is not to be confused with prima facie title which has to be established, on evidence at the trial. Only prima facie case is a substantial question raised, bona fide, which needs investigation and a decision on merits. Satisfaction that there is a prima facie case by itself is not sufficient to grant injunction. The Court further has to satisfy that non-interference by the Court would result in “irreparable injury” to the party seeking relief and that there is no other remedy available to the party except one to grant injunction and he needs protection from the consequences of apprehended injury or dispossession. Irreparable injury, however, does not mean that there must be no physical possibility of repairing the injury, but means only that the injury must be a material one, namely one that cannot be adequately compensated by way of damages. The third condition also is that “the balance of convenience” must be in favour of granting injunction. Irreparable injury, however, does not mean that there must be no physical possibility of repairing the injury, but means only that the injury must be a material one, namely one that cannot be adequately compensated by way of damages. The third condition also is that “the balance of convenience” must be in favour of granting injunction. The Court while granting or refusing to grant injunction should exercise sound judicial discretion to find the amount of substantial mischief or injury which is likely to be caused to the parties, if the injunction is refused and compare it with that it is likely to be caused to other side if the injunction is granted. If on weighing competing possibilities or probabilities of likelihood of injury and if the Court considers that pending the suit, the subject-matter should be maintained in status quo, an injunction would be issued. Thus the Court has to exercise its sound judicial discretion in granting or refusing the relief of ad interim injunction pending the suit.” 23. The said principle has been reiterated and applied in case of 2005(2) Calcutta High Court’s Notes 239. Section 22 of the Specific Relief Act provides that the plaintiff can seek for refund of an earnest money so paid in case his claim for specific performance is refused. This is an additional claim which entitled the plaintiff to make, in the event, his specific performance is refused by the Court. It is to be reminded that granting a decree for specific performance of an agreement for sale is as equitable relief. Therefore, mere making a prayer, in alternate form, for refund of the earnest money together with interest cannot lead to an inevitable conclusion that the injunction can be defeated as the plaintiff can be compensated in terms of money. 24. In a suit for a specific performance of an agreement for sale of immovable property, if the vendor is allowed to encumber, sale and transfer to a third party, the purpose of institution of the said suit would be rendered nugatory. Although section 52 of the Transfer of Property Act takes care of such transfer, but it does not preclude the stranger purchaser to take a defence as a bona fide purchaser for value without notice under section 19(b) of the Specific Relief Act, more particularly in case when the agreement is unregistered one. 25. Although section 52 of the Transfer of Property Act takes care of such transfer, but it does not preclude the stranger purchaser to take a defence as a bona fide purchaser for value without notice under section 19(b) of the Specific Relief Act, more particularly in case when the agreement is unregistered one. 25. Therefore, once an agreement is admitted and it has been, prima facie, proved that the opposite parties are contemplating to sell, transfer and encumber the property to a third party, the balance of convenience lies in favour of granting the injunction as non-granting would cause irreparable loss and injury. 26. There is sufficient averments made in the injunction application relating to an act of the opposite parties for sale and transfer of the scheduled property although, the prayer couched therein does not specifically contain the said prayer. But the parties were well aware about the case and the prayer which they have to meet in the said injunction application and have addressed the Court on such prayer. Therefore, if there is a necessary ingredient in an application for injunction, the Court is not powerless to grant an appropriate relief to the parties, if they are otherwise entitled to. 27. It is reminded that mere suppression of facts are not sufficient unless it is demonstrated that such facts have a bearing on the matter in issue. Each facts does not constitute a material facts which in absence of being placed on record would have tilted the decision in opposite direction. The consideration at the time of granting exparte ad interim order is different from the consideration of injunction application upon exchange of affidavits. 28. Furthermore, the Court of Appeal has proceeded to decide the injunction application in the manner as if it is deciding the suit itself after the full-fledged trial, which is not permissible. The Court cannot make a finding which has an adverse impact upon the merit of the suit or would render the suit liable to be dismissed on such finding itself. 29. I am not oblivion of the fact that the finding recorded while disposing of the interlocutory application is mere tentative but simultaneously I cannot lost sight of the fact that the observation which would lead to a dismissal of the suit should be avoided which has apparently been not done by the Lower Appellate Court. 30. 29. I am not oblivion of the fact that the finding recorded while disposing of the interlocutory application is mere tentative but simultaneously I cannot lost sight of the fact that the observation which would lead to a dismissal of the suit should be avoided which has apparently been not done by the Lower Appellate Court. 30. Thus, on the basis of the discussion as above, I have no hesitation in my mind that the judgment passed by the Lower Appellate Court is not sustainable and is, accordingly, set aside. The order of the Trial Court is maintained. 31. The revisional applications are thus allowed. However, there shall be no order as to costs.