Ambalal Sarabhai Enterprise Limited Versus KS Infraspace LLP Limited and Another
Court / Forum : Supreme Court of India
Citation : Civil Appeal No(s). 9346 of 2019
Coram : Justice Ashok Bhushan and Justice Navin Sinha
Subject : Declaration and Specific Performance of Contract
Date of Decision : January 6, 2020
- K.S. Infraspace LLP Limited (the “Plaintiff”) filed the two suits for declaration and specific performance against Ambalal Sarabhai Enterprise Limited (the “Defendant”) and Haryana Containers Limited, sister concerns with regard to a total area of 19,685 square meters of lands situated in Village Wadiwadi, Subhanpura, District Vadodara in Gujarat.
- The Plaintiff contended that there existed a concluded contract with the Defendants after negotiations for sale of the suit lands for a total sum of Rs.31,81,73,076 and 58,26,86,984 respectively. The Plaintiff had duly communicated its acceptance of the final draft memorandum of understanding (MoU) dated March 30, 2018. Only the formal execution of contract documents remained as a formality. A sum of Rs.2.16 crores had also been paid as advance. The Plaintiff was ready and willing to pay the balance amount. Alternately, it was claimed that there existed a concluded oral contract between the parties. The Defendants however, had surreptitiously entered into a registered agreement for sale with defendant no.2 on 31.03.2018 and thus the suit and prayer for injunction.
- The Principal Civil Judge, Vadhodra, vide its order dated February 18, 2019 held that by inference the terms and conditions for sale stood finalised by the email dated March 29, 2018 and March 30, 2018. A token amount of Rs.2.16 crores had already been paid and the Plaintiff was ready and willing with the balance amount. Creation of third party rights would lead to further litigation. Thus, by an order of temporary injunction the defendants were restrained from executing any further documents including a sale deed or creating further charge, interest or deal with the suit lands in any manner.
- The High Court of Gujrat by its order dated August 30, 2019 affirmed the order of injunction passed by the Principal Civil Judge.
- Hence the present Appeal.
- Whether there existed a concluded contract between the parties or not?
- Chapter VII, Section 36 of the Specific Relief Act, 1963 (hereinafter referred to as `the Act') provides for grant of preventive relief. Section 37 provides that temporary injunction in a suit shall be regulated by the Code of Civil Procedure, 1908. The grant of relief in a suit for specific performance is itself a discretionary remedy. A Plaintiff seeking temporary injunction in a suit for specific performance will therefore have to establish a strong prima facie case on basis of undisputed facts. The conduct of the Plaintiff will also be a very relevant consideration for purposes of injunction. The discretion at this stage has to be exercised judiciously and not arbitrarily.
- If the Plaintiff contended a concluded contract and/or an oral contract by inference, leaving an executed document as a mere formality, the onus lay on the Plaintiff to demonstrate that the parties were ad idem having discharged their obligations as observed in Brij Mohan and others vs. Sugra Begum and Ors., (1990) 4 SCC 147. The Plaintiff failed to show the same on admitted facts. The draft MoU dated March 30, 2018 in Clause C contemplated payment of the income tax dues of Rs.18.64 crores as part of the consideration amount only, thereafter, the agreement was to be signed relating back to the date March 29, 2008. Had this amount been already paid or remitted by the Plaintiff, entirely different considerations would have arisen with regard to the requirement for execution of a written agreement remaining a mere formality. Needless to state the balance of convenience is in favour of the Defendants on account of the intervening developments, without furthermore, inter alia, by reason of the Plaintiff having waited for seven months to institute the suit. The question of irreparable harm to a party complaining of a breach of contract does not arise if other remedies are available to the party complaining of the breach. The Special Civil Judge failed to address the issue of delay. The High Court noticed the arguments of the defendants with regard to delay in the institution of the suit but failed to deal with it.
- Accordingly, the grant of injunction to the Plaintiff is unsustainable and the orders of injunction are set aside.