JUDGMENT
S. Mukerjee, J.
IA 6716/2002
1. There are two separate aspects arising for
consideration. The first is regarding the ex parte stay,
while the second aspect is in relation to the continuance
of the ad-interim stay order already granted, or whether
any interim order at all is warranted and if so, to what
extent and of what nature.
VALIDITY OF THE EX PARTE INJUNCTION GRANTED IN favor OF
THE PLAINTIFF PLAINTIFF.
2. An interesting question has arisen as to whether
in a suit, where there is a Caveator upon whom copies
are served but for some reason caveator’s counsel does
not appear and ex-parte, ad-interim injunction is
granted, then whether the compliance with Order 39 Rule
3 CPC is still to be carried out or not.
3. The submission of learned counsel for the
defendant is that in this case neither process fee was
filed nor dusty summons or dusty orders were got
collected, and no affidavit at all has been filed, even
though a one page letter of intimation about the stay
order, had been received by the defendant.
4. The contention of the plaintiff on the other
hand, is that once there is a Caveator which has been
served with the papers and the name of the Caveator’s is
shown in the list, thereafter only letter of intimation
is required and there is no necessity to send the
complete set of papers all over again or to file an
affidavit. In this case it is the admitted position that
designated advocate of the Caveator had been served with
the complete set of papers prior to the matter being
listed in the Court.
5. Learned counsel for the defendant has in support
of the stand relied upon the judgment of the Supreme
Court reported as A. Venkatasubbiah Naidu v. S.
Chellappan and Ors. ; and the judgment of
this Court reported as Interling Services Pvt. Ltd.
v. Sh. S.P. Bangera; .
6. To my mind, wherever there is a Caveator who has
been served with a complete set of papers in advance of
the case being listed in the Court, and the name of the
Caveator’s shown in the cause list, there can be no
necessity for compliance with Order 39 Rule 3 of the Code
of Civil Procedure. The reason is simple. Once there is
a Caveator who has filed a Caveat, and the compliance of
the caveat has been done that party (Caveator) is before
the Court and the ad-interim order being passed is not an
order of ex-parte nature, or an order at pre-notice
stage. As such the provisions of Order 39 Rule 3 CPC
would not be attracted at all.
7. Once caveator has been served with the complete
set of papers, thereafter it is not within the control of
the plaintiff as to when exactly the case will be listed.
The Registry of the Court may raise one or more
objections or for any other reason the matter may be
listed after a gap of a few days. However as soon as the
name of the defendant/Caveator’s counsel is shown in the
list, that it itself intimation of all practicing
Advocates, about the case being taken up on the date of
listing, and as such the order passed is not an order
passed ex-parte or at pre-notice stage.
8. In the letter which admittedly was sent by
learned counsel for the plaintiffs and was admittedly
also received by the defendants, the complete details of
the Suit No. the date of listing and the orders passed
have been communicated by the learned counsel for the
plaintiffs. He has also conveyed that the complete set
of documents stands already served earliest in terms of
the caveat. To my mind, the main purpose of such an
intimation is to ensure that the defendant come to know
about the injunction against him at the earliest, and
does not have to wait for the Court summons/service of
orders in routine course through the Process Serving
Agency etc. which may take a longer time. Once the
intimation has admittedly been received, atleast in the
case of the Caveator, there can be no question of the
said party claiming the vacation of stay on that count.
9. The matter may be considered from another angle
also.
10. The rigour of Order 39 Rule 3 CPC is not to be
held against the plaintiffs in such cases of Caveator on
account of defendant having been duly served, and the
defendant’s counsel name having been duly recorded in the
official list of business of the High Court.
11. After the order was reserved, learned counsel for
defendant cited but that judgment is on
the point that once Court directs notice by Court order,
then compliance thereof is to be by actual notice and not
by deemed service since Caveator’s name is shown in the
list.
12. In view of the above there is no merit of the
submission of the learned counsel for the defendants that
on account of non-service of another complete set of
pleadings and documents and/or on account of non-filing
of affidavit, the injunction granted is liable to be
vacated on that short ground alone.
AD INTERIM INJUNCTION TILL THE DISPOSAL OF THE SUIT
WHETHER WARRANTED AND IF SO THE NATURE AND EXTENT THEREOF
13. The facts of this case, to the extent admitted by
both parties, may briefly be capsulated. Vide agreement
to sell dated 19.1.1993 executed between one Ms.
Promilla Kapoor and the plaintiffs 1 & 2, the said
plaintiffs 1 & 2 agreed to purchase the entire property
bearing No. N-79, Panchsheel Park, New Delhi-110017, for
total consideration of Rs. 1.20 Crores. Proceedings for
Income-tax clearance had also been taken in relation to
this transaction between Ms. Kapoor and the plaintiffs.
14. After the plaintiffs came into possession of the
property, they in turn agreed to sell to defendants 1 & 2
the first floor of the property to be re-built, at Rs. 65
Lacs, vide agreement to sell dated 29.10.1993.
15. On 26.8.1994 Income-tax permission was obtained
in relation to the transaction between the plaintiffs and
the defendants.
16. The possession of the first floor was also handed
over to defendants 1 & 2 on 24.8.1995.
17. A power of Attorney was thereafter executed by
plaintiff No. 3, in favor of Defendant No. 3, on
20-5-1997.
18. It is customary in such transactions where
payment has been made and possession of property has been
transferred pursuant to agreement to sell, that one of
the family members of the purchaser is given a Power of
Attorney so that the seller’s presence may not be
necessary at the time of registration of the sale deed.
19. On 7.6.2002, a sale deed was executed by Ms.
promilla Kapoor in favor of the plaintiffs for the
entire property, after the said property had been
converted to free-hold, vide document dated 4.4.2000.
20. In the intervening period, after the property had
been converted to free-hold and before the sale deed of
the entire property took place between Ms. Promilla
Kapoor and the plaintiffs, the defendants 1 & 2, it
appears, by taking advantage of the Power of Attorney
dated 20.5.1997 which was already executed by plaintiff
No. 3 in favor of Defendant No. 3, got a sale deed
executed between themselves, in which vendor, is shown to
be the original owner Ms. Promilla Kapoor making the
sale through Shri Rohit Gulati (Defendant No. 3) acting as
the subsequent attorney of the first attorney (Shri K.L.
Chugh Plaintiff No. 3).
21. Thus a piquant situation has developed whereby
so-to-say the second stage purchaser of the first floor,
has jumped over the head of his immediate seller (viz
Plaintiffs 1 & 2), and has rather got executed a sale
deed in his (defendant’s) favor even before the sale
deed in favor of the plaintiffs, by showing the
defendant No. 3 who is the son of defendant No. 1 to be the
attorney through attorney of the original seller Ms.
Promilla Kapoor.
22. The said piquant situation has been further
complicated by the fact that while incorporating the
terms and conditions of the sale deed dated 18.10.2000,
the defendants 1 & 2 have deviated/departed from certain
terms and conditions of the agreement to sell between the
plaintiffs and the defendants, including in particular
with reference to a premption clause, agreed to between
the parties, and duly embodied in their agreed to sell
dated 26.10.1990.
23. Other grievances in relation to the said sale
deed in favor of defendants No. 1 & 2, are that (a) the
proportionate land share has been enlarged and (b) the
share of 1/3rd of free-hold conversion charges and
charges for the total property, have been given the
go-bye. Certain other covenants, including purely
residential user have been allegedly dropped.
24. Above all the plaintiffs are aggrieved of what
they describe to be a totally fraudulent exercise of the
defendants using the Income-tax Clearance Certificate
pertaining to transaction between Ms. Promilla Kapoor
and the plaintiffs, as if the same were an ITCC between
Ms. Promilla Kapoor and themselves.
25. There are certain other elaborations of the
aspect of false or the fraudulent ITCC user as also
apprehensions of the plaintiffs that the plaintiffs could
be in difficulty of re-opening of it’s Income-tax
assessments etc., with which I do not propose to deal in
detail lest the same operate to the prejudice of any one
of the parties, and in any case the niceties and further
extrapolation of this point need not be gone into by me
as I feel I should confine for interim purchases only to
the aspect that it appears to be the admitted position
that there was no ITCC directly between Ms. Promilla
Kapoor and the defendants, and therefore the sale deed
executed on 18.10.2000 by defendant No. 3 acting as
Attorney through Attorney of Ms. Promilla Kapoor, is
under a cloud to the extent.
26. The matter was heard at considerable length and
both parties made their submissions from their own
respective stand-points, and each claimed to be the
victim of black-mail and arm-twisting activities of the
other.
27. The stand of the defendants primarily was that
defendant has purchased the first floor and admittedly
has paid the full price as agreed and as such there can
be no doubt about the defendants entitlement to ownership
of the said first floor. According to learned Senior
Counsel for defendant the whole dispute boils down to
and revolves around the so-called right of pre-emption as
contained in Clause 11 of the agreement to sell (but not
incorporated in the final impugned sale deed), which
clause defendants submits is to be held as void on
account of uncertainty. The submission of defendants
submits is that the clause be held as void on account of
uncertainty of price or bases of computation thereof.
Shri Valmiki Mehta, learned Senior Counsel for the
defendants submits that such a pre-emption clause, at the
highest, can amount to an agreement to sell the first
floor back to the plaintiffs, which necessarily requires
consensus ad-item. The most significant aspect is that
either there should be an agreed price, or a mechanism to
work out the price, such as a stipulation to the effect
that on repayment of price initialy paid by defendants
plus interest year by year at “X” %, the plaintiffs will
be entitled to pre-emptively buy back the first floor.
28. The absence of any parameters governing
computation of price, according to him is fatal, and
therefore the non-inclusion of that unenforceable clause
in the final sale deed, is immaterial and in
consequential.
29. There further alternative contention of Shri
Valmiki Mehta, learned Senior Counsel for the defendants
is that, in any case, the defendant has already carried
out substantial compliance of the “pre-emption clause”,
by sending a communication dated 3.10.1998 to the
plaintiffs, informing them that the defendants had a
buyer for Rs. 1.60 Crores, to which plaintiffs No. 1 & 2
replied back, that the offer is highly excessive and
called upon the defendants to furnish further
particulars.
30. To my mind, on a prima-facie appreciation, this
aspect of compliance with the pre-emption clause needs to
be dealt with in the first instance. Either the clause
contained in the agreement to sell (and which the
plaintiff contended should have been there in the
impugned final sale deed), is either to be held as vague
and unenforceable or as violative of Sections 10 and 11
of the transfer of Property Act (in case we proceed upon
the stand taken by the plaintiff), or would have to be
read down to imply merely the stipulation of an
opportunity being extended to the plaintiff to exercise
his right of pre-emption, by being allowed to jump in at
the last moment and to purchase the first floor at
whatever consideration amount, which has been hard-bargained
between the defendant and some other third
party.
31. It could have been understood if the response of
the plaintiffs, had been to give a counter offer-cum-conditional
waiver by responding that the “rate quoted is
too high”, but we are prepared to purchase at say Rs. 1
crore”. In case you have an offer above Rs. 1.0 crore
which would abide by the terms of the agreement to sell
dated 19.1.93, and not containing any terms undermining
or taking away the benefit of the terms of the said
agreement to sell dated 19.1.93, then we (plaintiffs)
waive our right to pre-emption subject to sale being
effected in favor of a third party at the price of Rs.
1.60 crore or more” .
32. It could have been added in response of the
plaintiff that “in case the sale is not concluded at the
value of Rs. 1.60 crore, then for any lesser value,
below that amount, further option will have to be
extended to us (plaintiffs) in accordance with the terms
and conditions of the agreement to sell dated 19.1.93.”
33. The response of the plaintiff not having been on
above lines, those aspects of challenge no longer ensure
to the favor of the plaintiff whether we consider the
terms of Clause 11 of the agreement to sell dated 19.1.93
to be void and unenforceable under clause Sections 10 &
11 of the Transfer of Property Act or alternatively we
consider the option of pre-emption as having been
satisfied and exhausted by the communications dated
3.10.98 and 16.10.98 which are document Nos. 3 & 4 to the
defendant’s documents as filed on record.
34. Coming back now to the main grievance of the
plaintiffs viz regarding the impugned action on the part
of the defendants No. 1 & 2 in getting a sale deed
executed in their favor, by their own son (defendant
No. 3), and by procuring the creation of a sale deed
document having clauses materially different, and at
variance with the agreement to sale dated 19.1.93, and
rather operating to the prejudice and undermining the
essential sub-stratum of some of the vital terms and
conditions of the said agreement to sell between the
parties.
35. The Learned Senior Counsel for this defendants
understandably kept the focus away from the admitted
position before transaction was completed and once the
payment was made and possession delivered the defendants
thereafter completed the execution of document at the
level of their own family itself by the son (defendant
No. 3) executing the sale deed in favor of the parents
(defendants 1 & 3).
36. No doubt the payment having been made by the
defendants and possession was with them and on the moral
stand points the defendant did not commit any grave crime.
He had paid money and was entitled to completed the paper
work.
37. The Plaintiffs had also provided to the
defendants convenient opportunity for carrying out this
bit of manipulation, by keeping the General Power of
Attorney in effect all through in favor of the defendant
No. 3 who thereby became the attorney of the attorney in
relation to original owner Ms. Pramila Kapoor.
38. It is the admitted position that the said Power
of Attorney in favor of defendant No. 3 had a provision
for a further sale to be effected by the defendants in
favor of some third party.
39. After the property was converted to free-hold,
and the transaction in favor of the plaintiffs became a
transaction of valid and lawful transfer of the entire
property in there favor of the plaintiff it was then
appropriate and required on the part of the plaintiff to
have immediately got the sale deed executed in their own
favor, and then to have executed a sale deed in favor
of the defendant 1 & 2.
40. In case the defendants No. 1 and 2 were not
cooperating in contributing their share of 1/3rd of the
free-hold conversion charges or sale deed expenses, then
the appropriate recourse would have been to serve a
notice upon the defendants informing them about the
compliances required of them and offering to execute a
sale deed as power the agreed terms and conditions already
contained in the agreement to sell dated 19.1.93.
41. In case the defendants did not cooperate after
due service of notice, the plaintiffs ought to have
thereupon revoked the General Power of Attorney in favor
of the defendant No. 3. The plaintiff did not adopt
either of these valid recourses.
42. Equally, the defendant No. 1 & 2 also did not act
in accordance with their rights and obligations in law.
It is not, and cannot be a valid defense on their part
that they had done all what was needed of them and/or
that they had called upon the plaintiffs to execute the
sale deed and/or that it was only on account of the
plaintiffs action unreasonably that the execution and
registration of sale deed remained pending and/or that
therefore, the defendants 1 & 2 felt constrained to get
the sale deed executed in their favor by using the
service of defendant No. 3 who is their own son and
attorney of attorney.
43. In the entire written statement, there is no
allegation to the effect that the plaintiffs were in any
manner averse to or not cooperating in execution of sale
deed in favor of the defendant.
44. There is also no explanation whatsoever as to why
or how the ITCC obtained by Ms. Promilla Kapoor in
relation to her transaction viz-a-viz plaintiffs for the
entire property, could be hijacked and utilised by the
defendants for executing the sale deed in their own
favor.
45. Moreover, it is not and it cannot be the case of
the defendants that their transaction was really with Ms.
Promilla Kapoor, and that the plaintiff was only an
intermediary.
46. Once the first floor was sold by the plaintiffs 1
& 2 in favor of defendants No. 1 & 2, it was obligatory
on the part of the defendants to stick to that situation,
in both the “de-jure” and also the “de-jure” sense.
Defendants are acknowledging that the transaction was of
sale between themselves and plaintiffs. As such the
deviation and departure from the terms and conditions of
the agreement to sell dated 19.1.93, concludes the
situation as far as the establishing of a malafide or
colourable motive, atleast for prima-facie purposes.
47. When the matter was argued out and my question
put to the Ld. Senior Counsel for the defendants, made
it perhaps apparent to the defendants, that this aspect
of essential conditions of agreement to sell having been
given a go-by in the impugned sale deed, was weighing
heavy on my consideration, the defendants thereupon filed
what they described to be “proposed terms of settlement
on behalf of the defendant”.
48. These are dated 28.9.2002 and duly supported by
the affidavit of the defendant No. 1. In and by the said
document, the defendant have tried to revert back in the
form of an undertaking to the Court/or clarification to
the executed registered sale deed which has been impugned
in the suit, or most of the aspects on which departure
had been made from the agreement to sell dated 19.1.93,
except in relation to the pre-emption clause, which
obviously the defendants are insisting to be void and
unenforceable or alternative satisfied by exchange of
letters.
49. On a consepctuous of what has been said above. I
have pondered over the three tests governing the grant of
interlocutory injunction, I find that the plaintiffs has
established both strong prima-facie case and balance of
convenience in their favor. As regards the irreparable
injury aspect also I find that if the defendants are not
injuncted from effecting any further sale, that would
operate to cause irreparable injury to the plaintiffs
since the defendants No. 1 and 2 have eliminated
plaintiffs No. 1 and 2 from the picture and also the
terms and conditions of the basic agreement to sell dated
19.1.93, and any third party who now enters into the
first floor as the bonafide purchaser for consideration
without notice, may in law be entitled to insist upon the
terms and conditions of the impugned sale deed dated
18.10.2000.
50. The learned Senior Counsel for the defendants has
also drawn my attention to the latest decision of the
Apex Court in Hindustan Petroleum Corporation v. Sriman
Narayan and Anr., and in
particular, to the following passage:-
“The decision whether or not to grant an
interlocutory injunction has to be taken at a time
when the exercise of the legal right asserted by
the plaintiff and its alleged violation are both
contested and remain uncertain till they are
established on evidence at the trial. The relief
by way of interlocutory injunction is granted to
mitigate the risk of injustice to the plaintiff
during the period before which that uncertainty
could be resolved. The object of the
interlocutory injunction is to protect the
plaintiff against injury by violation of his right
for which he could not be adequately compensated
in damages recoverable in the action if the
uncertainty were resolved in his favor at the
trial. The need for such protection has, however,
to be weighed against the corresponding need of
the defendant to be protected against injury
resulting from his having been prevented from
exercising his own legal rights for which he could
not be adequately compensated. The Court must
weight one need against another and determine
where the “balance of convenience” lies”.
51. Even by the said yard-stick, I find that the
plaintiff is entitled to grant an injunction to mitigate
the risk of in justice to the plaintiff, till the matter
is resolved by the final disposal of the suit. Any sale
or third party rights created by the defendants, under
the impugned sale deed, would result in injury by
violation of plaintiff’s right for which the plaintiff
cannot be compensated in damages.
52. The defendants having acted at their own
initiative and peril, do not need to be protected from
the eventuality of there own creation and as such not
being able to exercise their right to sell or transfer or
alienate the premises in the meanwhile.
53. In view of the above, I consider this to be a fit
case for grant of ad interim injunction in favor of the
plaintiff and against the defendants restraining the
defendants, their employees, agents, attorneys,
representatives and servants from disposing of or
creating any third party interest in the suit property,
i.e. first floor portion of the said building with a store
room measuring approx. 70 sq. ft. in the basement and a
proportionate share in the land underneath of the
property N-79, Panchsheel Park, New Delhi-17 in any
manner except in strict conformity with the terms of the
Agreement to Sell dated 19-1-1993 executed before the
Plaintiffs Nos. 1 & 2 the Defendants Nos. 1 & 2, and not
without disclosing in writing the pendency of these
proceedings as a recital to the document with the third
party.
54. While concluding, I do feel some element of
compassion and sympathy for the defendants who have paid
the entire consideration, and but for their folly (or so
it prima-facie appears), would have been in a position to
enjoy the rights of transfer/alienation of the first
floor in favor of third parties.
55. To my mind for properly balancing the equities,
grant of stay has to conditional in most cases. The
condition may be of actual costs of contest or
indemnification of drop in price of immovable property
or waiver of one out of possible alternative stands/contentions/reliefs
or anything else which appears to
the Court granting injunction, to be required and/or
proper.
56. The plaintiff’s, stand as reflected by their
response in October 1998, is that they need not respond
to each offer of third party, but rather to their
(plaintiff’s) assessment of fair sale value in absolute
terms.
57. To this end, I feel that it would be required and
warranted that the first party be made to convey its
offer in a sealed cover regarding purchase the first
floor on the same terms and conditions as are contained
in the agreement to sell dated 19.1.93 and subject to
further consideration thereof by this Court the sealed
offer will have to be accompanied by an undertaking by
the plaintiffs that this is a final exercise of option of
pre-emption by them, and that subject to the terms of the
impugned sale deed being brought in line with the
agreement to sell dated 19.1.93, the plaintiff’s option
of pre-emption shall stand as satisfied/exhausted/eliminated
upon the defendants bringing any
third party before the Court, for amount even one rupee
higher than the amount contained in the sealed bid of the
plaintiff, subject to the third party so brought by the
defendants agreeing to a sale deed in line with the
agreement to sell dated 19.1.1993, save and except for
the pre-emption clause which shall stand exhausted, and
therefore not required to be repeated in the future
transfer documents in favor of the third party. This
sealed bid and undertaking of the plaintiffs should come
on record within a period of two weeks from today,
failing which the matter be placed before court for
additional condition to be imposed upon the plaintiffs,
by way of security for possible fall in price of the
first floor. The bid if it be filed, will be opened now
or at later stage after hearing the parties on that
aspect.
58. I also propose to expedite the final disposal of
the suit itself by separate orders to that effect.
SUIT NO. 1245/2002
1. Amended plaint and court fee be filed within a
week. Written statement within one week thereafter
Replication within three weeks from the date of this
order. Both the parties to file their respective
originals documents after exchanging advance copies
within 4 weeks from the date of this order.
2. The matter to be listed for admission/denial of
documents before the Joint Registrar on 15.11.2002. The
evidence by way of affidavits would have to be filed by
the plaintiffs within 15 days thereafter and by the
defendants before the date fixed. The matter be listed
for cross-examination before Mr. Sanjiv Sharma Advocate
of this Court who is appointed Local Commissioner as per
prescribed scale of fee to record cross-examination on
the said date and to continue day by day from 4.00 p.m.
onwards, on consecutive days. On the date immediately
after the conclusion of evidence, the matter be listed in
the Court for final hearing.
Application IA 6716/2002 stands disposed of.
IA 8554/2002 (Under Order VI Rule 17)
The amendments sought do not change the nature of
the suit and are aimed at bringing on record subsequent
events as well as to make up the deficiency of court fee.
The amendments being necessary for complete and
efficacious adjudication, is allowed.
Application (IA 8554/02) stands disposed of.
Amended plaint with court fee be filed within a
week.
IA 8558/2002 (Under Order 39 Rule 1 & 2 CPC)
For the reasons detailed in relation to IA
6716/2002 and in view of disposal of suit itself having
been expedited, the defendants are restrained from
carrying out any structural changes, additions or
alternations except after obtaining leave of this Court.
Application (I.A. No. 8558/02) stands disposed of.
I.A. No. 8559/02 (Under Order 26 Rule 9 CPC)
Learned counsel for petitioner did not press this
application at this stage. Application is accordingly
dismissed as withdrawn.