Suit for Mandatory Injunction maintainable for enforcing specific performance

In this post we will discuss about whether we should file a case for specific performance or mandatory injunction if the other party fails to complete a transaction of an immovable property.

INTRODUCTION :Specific performance is a specialized remedy used by courts when no other remedy (such as money) will adequately compensate the other party. If a legal remedy will put the injured party in the position he or she would have enjoyed had the contract been fully performed, then the court will use that option instead. The most common reason courts grant specific performance is that the subject of the contract is unique, when it’s not merely a matter of money or where the true amount of damages is unclear. When a contract is for the sale of a unique property, for instance, mere money damages may not remedy the purchaser’s situation.

Mandatory injunction is an order requiring the defendant to do some positive act for the purpose of putting an end to a wrongful state of things created by him, or otherwise in fulfilment o his legal obligation.

WHO:

Atma Ram Petitioner

Versus

Charanjit Singh Respondent

WHAT:

The holder of an agreement for the purchase of an immovable property, whose suit for a mandatory injunction. (construed by the Trial Court as a suit for specific performance) was decreed by the Trial Court, but which decree was upset by the First Appellate Court and confirmed on second appeal by the High Court, has come up with the present Special Leave Petition.

WHEN:

On 12.10.1994, an agreement was entered into by the petitioner with the respondent. By this agreement, the respondent agreed to sell to the petitioner, the land and factory premises at Plot No.90, Sector21, Industrial Area, Bhiwani, with the land measuring about 1250 sq. yards. The total sale consideration fixed under the agreement was Rs.4,38,000/. An earnest money of Rs.1,00,000/ was paid by the petitioner to the respondent at the time of execution of the agreement. The date for performance of the contract was fixed under the agreement as 07.10.1996.

WHERE:

IN THE SUPREME COURT OF INDIA, CIVIL APPELLATE JURISDICTION.

We have heard Shri R Basant, learned senior counsel appearing for the petitioner and Shri Soumen Talukdar, learned counsel appearing for the respondent.

ALSO READ- INJUNCTION CIVIL SUIT CHANDIGARH PANCHKULA MOHALI

HOW:

The petitioner issued a legal notice dated 12.11.1996 claiming that when the date fixed for specific performance arrived, he approached the respondent for the completion of the transaction, and that at that time, the respondent disclosed about the pendency of some civil litigation with a third party, as an impediment for the execution of the sale deed. Therefore, the petitioner claimed in the legal notice that the respondent should furnish the details of all the litigation pending in respect of the said property and that if no litigation was pending, the respondent should come forward to execute the sale deed within 15 days.

FACTS:

The brief facts essential for the disposal of the special leave petition are as follows;

(i) On 12.10.1994, an agreement was entered into by the petitioner with the respondent. By this agreement, the respondent agreed to sell to the petitioner, the land and factory premises at Plot No.90, Sector21, Industrial Area, Bhiwani, with the land measuring about 1250 sq. yards. The total sale consideration fixed under the agreement was Rs.4,38,000/. An earnest money of Rs.1,00,000/ was paid by the petitioner to the respondent at the time of execution of the agreement. The date for performance of the contract was fixed under the agreement as 07.10.1996.

(ii) The petitioner issued a legal notice dated 12.11.1996 claiming that when the date fixed for specific performance arrived, he approached the respondent for the completion of the transaction, and that at that time, the respondent disclosed about the pendency of some civil litigation with a third party, as an impediment for the execution of the sale deed. Therefore, the petitioner claimed in the legal notice that the respondent should furnish the details of all the litigation pending in respect of the said property and that if no litigation was pending, the respondent should come forward to execute the sale deed within 15 days.

(iii) As there was no response to the legal notice, the petitioner filed a civil suit in CS No.240 of 1999 in the Court of the Additional Civil Judge, Senior Division, Bhiwani. The prayer made in the suit was for a mandatory injunction to direct the respondent to execute all documents of transfer of the property in question after receiving the balance sale consideration. It is relevant to note here that since the suit was filed only for the relief of mandatory injunction, the petitioner valued the suit only at Rs.250 and paid a fixed court fee of Rs.25.

(iv) The respondent filed a written statement denying everything including the execution of the agreement. He also questioned the maintainability of the suit in the form in which it was filed. The respondent further claimed that the suit was barred by limitation.

(v) On the basis of the pleadings, the Trial Court framed eight issues for consideration on 12.10.2002. These issues were as follows:

“(1) Whether the plaintiff agreed to purchase the suit property from the defendant for a sum of Rs.4,38,000/ and paid Rs.1,00,000/ as earnest money on 12.10.1994 as alleged? OPP (2) Whether the plaintiff is entitled to relief of mandatory injunction as prayed for? OPP (3) Whether the plaintiff has no locus standi to file the suit? OPD (4) Whether the plaintiff has no cause of action to file the suit? OPD (5) Whether the suit is not maintainable in the present form? OPD (6) Whether the suit is bad for misjoinder and non joinder of necessary parties? OPD (7) Whether the plaintiff is estopped by his own act and conduct from filing the suit? OPD (8) Relief.”

(vi) After filing the written statement, the respondent also took out an application for the dismissal of the suit on the ground that a suit for mandatory injunction was not maintainable for enforcing specific performance of an agreement of sale. The said application was disposed of by the Trial Court by a very curious order, dated 09.08.2003, holding that the suit was in fact one for specific performance of an agreement of sale and that the technical objection regarding the maintainability could be overcome by directing the petitioner/plaintiff to pay the requisite court fee. Accordingly, Trial Court directed the petitioner/plaintiff to make good the deficit court fee on or before 08.09.2003.

(vii) Unfortunately, the respondent did not challenge the aforesaid order of the Trial Court dated 09.08.2003. As a consequence, the petitioner/plaintiff paid the deficit court fee and the trial court chose to treat the suit as one for specific performance.

(viii) After so overcoming a major hurdle, the Trial Court decreed the suit by a judgment dated 03.02.2006, directing the petitioner to pay the balance of sale consideration within one month and directing the respondent to get the suit property transferred in the name of the petitioner, directly from HUDA.

(ix) Aggrieved by the judgment and decree, the respondent filed a regular first appeal in Civil Appeal No. 181 of 2006, on the file of Additional District Court, Bhiwani. By a judgment dated 02.01.2013, the District Court allowed the appeal and set aside the judgment of the Trial Court, thereby dismissing the suit.

(x) Aggrieved by the judgment of the First Appellate Court, the petitioner filed a second appeal in RSA No.1244 of 2013 on the file of the High Court of Punjab & Haryana at Chandigarh. The High Court dismissed the second appeal by a judgment dated 20.05.2016. It is against the said judgment and decree that the plaintiff has come up with the above special leave petition.

ALSO READ- SPECIFIC RELIEF VS. SPECIFIC PERFORMANCE

ISSUES:

The suit was actually one for specific performance, the petitioner ought to have at least valued the suit on the basis of the sale consideration mentioned in the agreement. But he did not. If the suit was only for mandatory injunction (which it actually was), the only recourse open to the petitioner was to seek an amendment under Order VI, Rule 17 CPC. If such an application had been filed, it would have either been dismissed on the ground of limitation (K.Raheja Constructions Ltd., vs. Alliance Ministries 1) or even if allowed, the prayer for specific performance, inserted by way of amendment, would not have been, as a matter of course, taken as relating back to the date of the plaint (Tarlok Singh vs. Vijay Kumar2, Van Vibhag Karamchari Griha Nirman Sahkari Sanstha Maryadit vs. Ramesh Chander3). Therefore, a shortcut was found by the petitioner/plaintiff to retain the plaint as such, but to seek permission to pay deficit court fee, as though what was filed in the first instance was actually a suit for specific performance. Such a dubious approach should not be allowed especially in a suit for specific performance, as the relief of specific performance is discretionary under Section 20 of the Specific Relief Act, 1963.

CITE JUDGEMENT ON THE SETTLED LAW:

K.Raheja Constructions Ltd. & Anr V. Alliance Ministers & Ors

SPECIAL LEAVE PETITION (CIVIL) No.9397 OF 1995 The petitioners admittedly filed O.S.No.213/93 (subsequently numbered as O.S.251/87) for relief of permanent injunction restraining the respondents from alienating, encumbering, selling, disposing of, or in any way dealing with the said property, more particularly described in Schedule ‘A’ to the plaint or any portion thereof. In paragraph 13 of the plaint it was stated thus:

“The said defendants after a lapse of a month, through a letter dated 29th April, 1987 sent by defendant No.4 to plaintiff No.1 blandly intimated that the offers of plaintiff No.1 were not being accepted by the trustees of defendant No.1, a copy of the 4th defendant’s said letter dated 29th April, 1987 is annexed hereto and marked as document No.4. By his letter dated 4th May, 1987 addressed to defendant No.4, the plaintiff No.1 set out the correct position and reiterated that a definite and concluded contract for sale of the said property in favour of plaintiff No.1 had been confirmed by the said defendants to allege that the offers had not been accepted. The 1st plaintiff by their said letter also reiterated their readiness and willingness to perform their part of the contract and pay the balance purchase price in accordance with the terms and conditions agreed upon. A copy of the said letter dated 4th may, 1987 is annexed hereto and marked as document No.5”.

Pursuant to the letter dated April 29, 1987 addressed by the plaintiff, the defendants in their reply dated 4.5.87 rejected the offer of the petitioners. Therein the petitioners themselves have expressly set out that there is a concluded contract of sale between the petitioners and the respondents and that they are ready and willing to perform their part of the contract paying the balance consideration in the terms and conditions of the said letters. In paragraph 28 of the plaint, April 29, 1987 is one of the dates set out to give them cause of action. On November 25, 1994 application under Order 6 Rule 17 was filed in I.A.

745/94 seeking to amend the plaint for the grant of the relief of specific performance. The averments made in support thereof is that they subsequently, discovered that the Charity Commissioner had granted permission for the sale of the Trust Property and, therefore, the petitioners are entitled to the decree of specific performance. That application was dismissed by the trial Court on January 20, 1995 and by the High Court on February 21, 1995 in CRP No. 510/95. Thus, this petition for leave.

Shri Santosh Hegde, learned senior counsel for the petitioners, has contended that the petitioners have not come forward with any new plea. They have set out all the material allegations and their claims in the plaint. What they are seeking for is only a formal relief which, though not originally asked for, the omission does not preclude the petitioners to file the application under Order 6 Rule 17 seeking for the amendment of the plaint. The relief is really founded upon the facts set out in the plaint and it is the subsequent knowledge about permission granted by the Charity Commissioner for alienation, which required the amendment. We find that the contention is not tenable.

It is seen that the permission for alienation is not a condition precedent to file the suit for specific performance. The decree of specific performance will always be subject to the condition to the grant of the permission by the competent authority. The petitioners having expressly admitted that the respondents have refused to abide by the terms of the contract, they should have asked for the relief for specific performance in the original suit itself. Having allowed the period of seven years elapsed from the date of filing of the suit, and the period of limitation being three years under Article 54 of the Schedule to the Limitation Act, 1963, any amendment on the grounds set out, would defeat the valuable right of limitation accrued to the respondent.

Shri Hegde placed strong reliance on the judgment of this Court in A.K.Gupta vs. D.V.C. reported in [1965] INSC 179; 1966 (1) SCR 796. In that case, the petitioners had expressly reserved the right to claim the amount of Rs.65,000/- in the original plaint, valuing it accordingly. Since, the relief of injunction was confined to a limited point, subsequently, he filed an application for the alternative relief of recovery of the amount of Rs.65,000/-. In that view, this Court held that since the petitioners have already reserved the right in the plaint, the relief of injunction, as originally prayed for, did not preclude the appellant to file the application under Order 6 Rule 17 to claim the relief for the amount which he originally sought for. The ratio therein has no application to the facts in this case.

On the facts, we hold that the application for amendment was barred by limitation. The petition is, accordingly, dismissed.

ALSO READ- PERMANENT TEMPORARY INJUNCTION SUIT CHANDIGARH PANCHKULA MOHALI

FINDINGS OF THE COURT:

As a matter of fact, if the suit was actually one for specific performance, the petitioner ought to have at least valued the suit on the basis of the sale consideration mentioned in the agreement. But he did not. If the suit was only for mandatory injunction (which it actually was), the only recourse open to the petitioner was to seek an amendment under Order VI, Rule 17 CPC. If such an application had been filed, it would have either been dismissed on the ground of limitation (K.Raheja Constructions Ltd., vs. Alliance Ministries 1) or even if allowed, the prayer for specific performance, inserted by way of amendment, would not have been, as a matter of course, taken as relating back to the date of the plaint (Tarlok Singh vs. Vijay Kumar2, Van Vibhag Karamchari Griha Nirman Sahkari Sanstha Maryadit vs. Ramesh Chander3). Therefore, a shortcut was found by the petitioner/plaintiff to retain the plaint as such, but to seek permission to pay deficit court fee, as though what was filed in the first instance was actually a suit for specific performance. Such a dubious approach should not be allowed especially in a suit for specific performance, as the relief of specific performance is discretionary under Section 20 of the Specific Relief Act, 1963.It may be true that the approach of the High Court in non suiting the petitioner/plaintiff on the ground of limitation, despite the original defect having been cured and the same having attained 1 1995 Suppl. (3) SCC 17 2 1996 (8) SCC 367 3 2010 (14) SCC 596 finality, may be faulty. But we would not allow the petitioner to take advantage of the same by taking shelter under Section 149 CPC, especially when he filed the suit (after more than three years of the date fixed under the agreement of sale) only as one for mandatory injunction, valued the same as such and paid court fee accordingly, but chose to pay proper court fee after being confronted with an application for the dismissal of the suit. Clever ploys cannot always pay dividends. Coming to the second aspect revolving around Section 16(c), a look at the judgment of the Trial Court would show that no issue was framed on the question of readiness and willingness on the part of the petitioner/plaintiff in terms of Section 16(c) of the Specific Relief Act, 1963. The fact that the petitioner chose to issue a legal notice dated 12.11.1996 and the fact that the petitioner created an alibi in the form of an affidavit executed before the SubRegistrar on 7.10.1996 (marked as Exhibit P2) to show that he was present before the SubRegistrar for the purpose of completion of the transaction, within the time stipulated for its performance, was not sufficient to conclude that the petitioner continued to be ready and willing even after three years, on 13.10.1999 when the plaint was presented. No explanation was forthcoming from the petitioner for the long delay of three years, in filing the suit (on 13.10.1999) after issuing a legal notice on 12.11.1996. The conduct of a plaintiff is very crucial in a suit for specific performance. A person who issues a legal notice on 12.11.1996 claiming readiness and willingness, but who institutes a suit only on 13.10.1999 and that too only with a prayer for a mandatory injunction carrying a fixed court fee relatable only to the said relief, will not be entitled to the discretionary relief of specific performance.