Allowed

Vijay Arora v. M/S Himalayan Vegefruit Ltd.

Himachal Pradesh HC23 Sept 2024FAO(OS)/12/2024

Case brief

AI extract

What is this about?

The appellant challenged the dismissal of his application for temporary injunction restraining respondents from alienating suit property. The High Court held that the Single Judge erred in finding that time was the essence of the contract and in ignoring an endorsement extending the date for execution of the sale deed. The appeal was allowed, and the interim injunction was granted.

What did the court decide?

Impugned order dismissed; OMP allowed; interim injunction granted restraining respondents from transferring/alienating the suit property.

Vijay Arora Vs M/S Himalayan Vegefruit Ltd. — Specific Performance | Himachal Pradesh HC (2024)

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( 2024:HHC:8955 )

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IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA

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FAO(OS) No.12 of 2024 Reserved on:12.09.2024 Pronounced on: 23.09.2024

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Vijay Arora …Appellant

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Versus M/s Himalayan Vegefruit Ltd. & Another …Respondents

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Coram:

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Hon’ble Mr. Justice M.S. Ramachandra Rao, Chief Justice. Hon’ble Mr. Justice Satyen Vaidya, Judge.

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Whether approved for reporting?

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For the appellant : Mr. O.C. Sharma, Advocate. For the respondents : Mr. Navneet Kumar Bhalla, Advocate. (through Video Conferencing).

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M.S. Ramachandra Rao, Chief Justice .

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This appeal is preferred by the appellant challenging the order dt. 31.05.2024 in OMP no.627 of 2021 in Civil Suit no.149 of 202) passed by the learned Single Judge.

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The learned Single Judge, in the impugned order, dismissed the appellant’s application under Order 39 Rules 1 & 2 C.P.C. filed by him to restrain the respondents from transferring, alienating, creating any charge & encumbrances as well as changing the nature of the suit land.

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( 2024:HHC:8955 )

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The said suit had been filed by the appellant for Specific Performance of an Agreement to Sell dt. 19.04.2012 in respect of the suit schedule property after obtaining necessary permission for sale from the Government of Himachal Pradesh for the transfer of the same in favour of the appellant under Section 118 of the and Land Reforms Act, 1972 (in short “the Act” ) and for a permanent prohibitory injunction restraining the respondents from transferring & alienating as well as changing the nature of the suit property; in the alternative, for a decree for refund of Rs.39,80,000/- alongwith interest @ 12% per annum from the date of its payment by the appellant to the 1^st respondent/Company till the actual date of its refund and for costs. The case of the appellant-plaintiff in the suit

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The appellant/plaintiff contended in the suit that the respondents had entered into an Agreement to Sell dt. 19.04.2012 with him for transfer of the suit schedule property for a total sale consideration of Rs.2,63,80,000/-; that he paid to the respondents Rs.39,80,000/- in advance through a Cheque on 20.04.2012; that he had also paid Rs.35,00,000/- in cash; that the respondents had purchased the land by obtaining permission under Section 118 of the Act from the Government of Himachal Pradesh in the name of “ M/s Himalayan Cereals and Fruits Private Limited” , and in the Agreement to Sell, the respondents had undertaken to obtain permission from the Government of Himachal Pradesh for transfer of the land & building in favour of the appellant,

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( 2024:HHC:8955 )

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and simultaneously, the appellant was also to seek permission from the State Government of Himachal Pradesh for purchase of the same.

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The appellant contended that the respondents had leased-out the suit schedule property to certain persons and the property was also encumbered with the H.P. Financial Corporation (in short “the Corporation” ), and in the Agreement to Sell, the respondents had undertaken to pay all the Government and Non-Government liabilities upon the date of execution of Sale Deed.

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It is also contended by the appellant that on 16.12.2014, the respondents had extended the period for registration of the Sale Deed in favour of the appellant from 31.12.2014 to 01.01.2018, as the lessee did not vacate the suit schedule property, and they could not clear the loan amount of the H.P. Financial Corporation.

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He alleged that in spite of several requests to the respondents to seek permission from the State Government under Section 118 of the Act for transfer of the suit schedule property in favour of the appellant, the respondents had been avoiding to perform their obligations on one or other pretext all the times.

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The appellant alleged that he was continuously ready & willing to perform his part of the agreement/contract and was still ready & willing to do so by paying the balance consideration, and that he had issued a Legal Notice dt. 22/27.11.2017 to the respondents to perform their part of the obligations

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( 2024:HHC:8955 )

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under the Agreement to Sell and get the Sale Deed executed & registered in the office of the Sub-Registrar, Kasauli.

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He also contended that subsequently also he had issued Legal Notices on 26.12.2017, 18.07.2019 & 24.07.2019 to the respondents to perform their part of the obligations/contract and to register the Sale Deed in his favour.

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He also got issued a Legal Notice dt. 25.10.2021 to the respondents calling upon the respondents to attend the office of the District Collector, Solan on 02.11.2021 at 10.30 a.m., to which the respondents did not put in appearance at the said Venue. The appellant alleged that this conduct of the respondents amounts to refusal to perform their part of the contract.

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He alleged that the respondents were intending to alienate, dispose off, sell & transfer the suit schedule property in favour of certain other persons with an ulterior motive to defeat & frustrate the Agreement to Sell dt. 19.04.2012 and also to change the nature of the suit schedule property, and so, he filed the instant suit for the aforesaid reliefs.

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( 2024:HHC:8955 )

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Written statement of the respondents-defendants in the suit

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The respondents filed a written statement contending that the suit is barred by limitation, since it was filed 9 years 7 months from the date of the Agreement to Sell dt. 19.04.2012.

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They contended that as per Para-4 of the said Agreement, the last date for full & final payment of sale consideration was 31.12.2014 by the appellant; that the lessee had vacated the entire property in November, 2014 itself; that the loan liability was also fully cleared on 05.03.2014 and there were no outstanding Government or Non-Government dues as on 31.12.2014.

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They alleged that the appellant was estopped by his own act, conduct and acquiescence and that he did not come forward to perform his part of the contract, and, therefore, the respondents on 17.06.2019 had entered into an Agreement to sell the property with a third party.

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They alleged that the appellant had abandoned his contract and did not approach the Court with clean hands and suppressed facts.

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The respondents admitted the signing of the Agreement to Sell on 19.04.2012 and claimed that the appellant paid only Rs.4,80,000/- by Cheque dt. 20.04.2012, but denied that the appellant paid Rs.35,00,000/- in cash.

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It is alleged that the appellant obtained the signatures of the respondents in good faith; that the 2^nd respondent was suffering from a cerebral ailment due to which his faculties were not good and that his eye sight was also affected,

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and the appellant took adantage of the said health condition of the 2^nd

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( 2024:HHC:8955 )

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respondent by obtaining his signature on a pre-drafted Agreement without disclosing the contents.

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It is also alleged that the appellant did not supply copy of the said Agreement to the respondents on the pretext that he would send it later.

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It is denied that there was any privity of contract between the appellant

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and the respondents and there was no contract which can be specifically enforced or performed.

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According to the respondents, the Agreement was unconscionable & unenforceable and had no legal sanctity.

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The respondents admitted that they did not obtain permission under Section 118 of the H.P. Tenancy and Land Reforms Act for selling the suit schedule property, as they allegedly did not have a copy of the Agreement to Sell and the appellant had not paid Rs.35,00,000/-, as promised.

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It is contended that the respondents had performed their part of the contract by discharging & paying the loan on 05.03.2014 and that they had also got vacant possession from the lessee in November, 2014.

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They contended that there had no necessity to extend the time for performance of the Agreement as the payment of entire sale consideration fell due on 31.12.2014, and denied that on 16.12.2014, they had extended the period of registration of the Sale Deed in favour of the appellant from 31.12.2014 to 01.01.2020.

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( 2024:HHC:8955 )

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According to them, the date 31.12.2014 was not the date of registration

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of the Sale Deed but it was the date of payment of entire consideration.

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The Receipt of the Notice dt. 22/27.11.2017 or the Notices dt. 26.12.2017, 18.07.2019 & 24.07.2019 was denied, and it was contended that the said Notices were sent to a wrong address. According to the respondents, the address mentioned therein was: “ 118, Sector 19A, Chandigarh”, but it ceased to be the address of the 1^st respondent after 2013.

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It is contended that the Notice dt. 25.10.2021 got issued by the appellant was a belated attempt to revive the limitation for the suit, which had expired on 31.12.2014

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It is also alleged that the said Notice had no legal effect and was only an attempt to twist the arm of the respondents to extort money from them.

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OMP no.627 of 2021

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This application was filed by the appellant in the said suit, as mentioned

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earlier, under Order 39 Rules 1 & 2 CPC for grant of a temporary injunction restraining the respondents from transferring, alienating, creating any charge and encumbrances as well as changing the nature of the suit property, pending disposal of the suit.

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The contents of the plaint are reiterated in the said application, and it is contended that the appellant had a prima facie good & strong case to succeed on merits; that balance of convenience was in his favour and irreparable loss

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would be caused to him, if the interim relief is not granted to him.

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( 2024:HHC:8955 )

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Reply is filed by the respondents to the said application, reiterating the stand taken in the written statement.

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The order of the learned Single Judge

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The learned Single Judge recorded the respective contentions of the parties.

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He then considered the plea raised by the respondents that the suit was barred by limitation and observed that question of limitation was a mixed question of law & fact and also that the agreement to sell does not confer any title in favour of the appellant.

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After referring to Clause-4 of the Agreement to Sell, which fixed the time for payment of balance consideration of Rs.2,24,00,000/- by 31.12.2014 or after one month of the vacation of property by the lessee, the learned Single Judge observed that in view of the said Clause, the last date in any eventuality, cannot be after 31.12.2014.

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He then referred to the Endorsement dt. 16.12.2014 made on the reverse of the 1^st page of the Agreement to Sell, which extended the period of the Registration of the Sale Deed in favour of the appellant from 31.12.2014 to 01.01.2020, as the lessee had not vacated the suit schedule property and the respondents could not clear the loan amount to the H.P. Financial Corporation.

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The learned Single Judge, however, held that this plea of the appellant

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was denied by the respondents in the written statement by taking the plea that the respondents had denied signing, executing or delivering any writing,

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( 2024:HHC:8955 )

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document, promise or undertaking including the Agreement to extend the period beyond 31.12.2014.

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He also noted that the respondents took the plea that the lessee had vacated the premises in November, 2014 and the entire loan amount was repaid on 05.03.2014, and their further plea that after 19.04.2012, the appellant did not turn up to perform his part of the contract and had not even paid Rs.35,00,000/to the respondents.

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He then adverted to the Legal Notices issued on 22/27.11.2017, 26.12.2017, 18.07.2019, 24.07.2019 & 25.10.2021 and observed that the alleged refusal of the respondents to perform their part of the contract was in the notice of the respondents.

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He then concluded that the appellant was not able to make out a prima facie case for grant of a temporary injunction and the balance of convenience was also not in his favour, since he should have filed the suit earlier instead of issuing Legal Notices.

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The instant Appeal

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Challenging the same, this appeal is filed by the appellant.

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Heard the counsel for the appellant and the respondents.

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Contentions of the appellant’s counsel

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The counsel for the appellant contended that the order of the learned

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Single Judge is erroneous, as the learned Single Judge had not properly appreciated the pleadings and documents filed by the appellant, and the

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( 2024:HHC:8955 )

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observation of the learned Single Judge that the suit was to be filed immediately after 31.12.2014 was erroneous; and his refusal to consider the Endorsement dt. 16.12.2014 extending the last date for execution of the Sale Deed to 01.01.2020, merely because the respondents denied the same, was not proper.

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He, therefore, contended that the appellant ought to have been granted interim relief by the learned Single Judge, since the appellant had a prima facie case in his favour, balance of convenience was also in favour of granting such interim relief and irreparable loss would be caused to the appellant, if the interim relief was denied.

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According to him, in the Agreement to Sell, as originally drafted on 19.04.2012, there is no Clause providing a cut-off date for execution of the Registered Sale Deed in favour of the appellant and Clause-4 only fixed the time for paying the balance consideration as 31.12.2014 or after one month of the vacation of the property by the lessee, whichever was earlier.

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He pointed out that it was the duty of the respondents to obtain permission to sell under Section 118 of the H.P. Tenancy and Land Reforms Act, 1972 and they cannot expect the full payment to be made unless the tenant had vacated the property and the total dues owed by the respondents to the H.P. Financial Corporation were cleared.

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Referring to Annexure A-2 he pointed out that the dues to the H.P. Financial Corporation were certified by the said Corporation to have been

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( 2024:HHC:8955 )

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cleared only on the date when the said document was issued, i.e. 18.11.2022,

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and, therefore, the appellant cannot be expected to pay full consideration without the respondents discharging their obligations under the Agreement to Sell.

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Stand of the respondents’ counsel

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The counsel for the respondents supported the order of the learned Single

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Judge and reiterated the stand taken by the respondents in the written statement.

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Consideration by the Court

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We have noted the contentions of the parties and also considered the documents filed by the parties alongwith their pleadings in the suit.

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The Agreement to Sell dt. 19.04.2012 was executed between the appellant and the respondent no.1/Company for sale of the subject property containing Factory Land and Building for Rs.2,63,80,000/- and there is a recital in Clause-2 of the Agreement that the appellant had paid Rs.39,80,000 on 20.04.2012 through a Cheque, Rs.4,80,000/- also through a Cheque and Rs.35,00,000/- in cash.

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Having signed the Agreement, containing such a Clause, it is not open prima facie to the respondents to say that only Rs.4,80,000/- was paid by the appellant and that they did not receive the other payments.

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Clause-4 of the Agreement to Sell dt. 19.04.2012, states as under:

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“4. That the balance amount of Rs.2,24,000,00/- (Rupees Two crore and Twenty Four Lakh only) will be paid on dated 31.12.2014 or after one month of the vacation of property by lessee, in the year 2014 whichever is earlier.”

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A plain reding of the said Clause-4, prima facie , shows that the date 31.12.2014 or the date of vacation of the property in 2014, whichever is earlier, was the cut-off date only for payment of the balance amount.

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We agree with the contention of the counsel for the appellant that nowhere in the Agreement to Sell, as originally signed on 19.04.2012, was any Clause included which fixed an outer limit for execution of the Registered Sale Deed in favour of the appellant by the respondents.

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Moreover, Clause-5 of the said Agreement refers to the 1^st respondent/Company getting permission to sell under Section 118 of the H.P. Tenancy and Land Reforms Act, 1972; Clause-7 refers to the loan due by the 1^st respondent/Company to the H.P. Financial Corporation, Shimla; Clause-8 stated that the 1^st respondent/Company would be responsible to pay all Government and Non-Government dues/liabilities upto the date of execution of the Sale Deed; and Clause-9 of the Agreement, refers to the suit schedule property having been given on lease till November, 2014 and that the 1^st respondent/Company undertook to get it vacated before the execution of the Sale Deed, so that possession could be given to the appellant.

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A combined reading of Clauses 4, 5, 7, 8 & 9 of the said Agreement, extracted above, leads to the prima facie conclusion that there were reciprocal obligations on both parties and unless the 1^st respondent obtains permission to sell from the State Government of Himachal Pradesh under Section 118 of the

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H.P. Tenancy and Land Reforms Act, 1972, clears the loan owed by it to the H.P. Financial Corporation, Shimla and gets the property vacated by the tenant, the appellant cannot be expected to make the full payment of the balance consideration of Rs.2,24,00,000/-.

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It is therefore not open to the respondents to contend that the last date for execution of the Registered Sale Deed in favour of the appellant was 31.12.2014, and in our opinion, the learned Single Judge erred in holding that the date for execution of the Sale Deed was fixed in the Agreement to sell as 31.12.2014.

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The appellant had specifically relied on the Endorsement on the reverse of the Page-1 of the Agreement to Sell dt. 19.04.2012 which specifically granted extension of the date of Registration of the Sale Deed from 31.12.2014 to 01.01.2020, which Endorsement was signed by the 1^st respondent. The said Endorsement also refers to the duty of the 1^st respondent to get the suit schedule property vacated by the tenant and also to clear the loan from the Bank and secure permission under Section 118 of the Act before 01.01.2018.

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Since prima facie , the said Endorsement dt. 16.12.2014 on the Agreement to Sell was signed by the 2^nd respondent, the plea of the respondents that they did not execute it, cannot be countenanced. Thus prima facie, the said endorsement binds the respondents.

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Even otherwise, Article 54 of the Limitation Act, 1963, prescribes a period of limitation of three years for grant of relief of specific performance

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from the date fixed for the performance, or, if no such date is fixed, when the

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plaintiff has notice that performance is refused.

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As held in Chand Rani v.Kamal Rani¹ , in the case of sale of immovable property, time is never regarded as the essence of the contract. Infact there is a presumption against time being the essence of the contract. It has to be ascertained whether under the terms of the contract, the parties named a specific time within which completion was to take place, really and in substance it was intended that it should be completed within a reasonable time. In Gomathinayagam Pillai v. Palanswami Nadar² and Govind Prasad Chaturvedi v. Hari Dutt Shastri³ , it was held that fixation of the period within which the contract has to be performed does not make the stipulation as to time the essence of the contract.

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Merely because in the suit agreement of sale, time was initially fixed for payment of balance consideration, that does not make it essence of the contract.

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More so in the light of the endorsement dt.16.12.2014 extending time for execution of the registered sale deed till 1.1.2020 while recording that tenant had not been got vacated by that date ( i.e 16.12.2014) and the respondents shall clear the loan on the property ( which had not been cleared by that date) and also get permission from the State Government under section 118 of the Act to sell the property before 1.1.2018. Infact this suggests that specifically the

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1 (1993) 1 SCC 519

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2 AIR 1967 SC 868

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3 (1977) 2 SCC 539

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promise to pay on due date was discarded and the payment came to be linked irrevocably to the above corresponding obligations of the respondents.

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Counsel for the respondents placed reliance on the decision in Saradamani

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Kandappan v. S.Rajalakshmi⁴ to contend the payment of consideration by appellant was not connected to the respondents’ obligations and was independent of it and so the it was obligatory on the appellant to make the payment by the date stipulated in clause 4 originally in the agreement even if the respondents did not fulfill their obligations.

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But in Saradamani Kandappan ( 4 supra), there was clause 6 in the agreement to sell mentioning specifically that payment on the due dates is the essence of the contract and in case of failure on the part of the buyer, the seller shall cancel the agreement to sell. There in no such clause in the suit agreement dt.19.4.2012 in this case making time for payment on the due date, essence of the contract. Also the endorsement dt.16.12.2014 prima facie makes the obligations of each party reciprocal and not independent of each other. So the said decision is distinguishable.

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Also the Agreement to Sell, as originally drafted & signed on 19.04.2012, does not contain any specific clause fixing the date for performance of the said Agreement, i.e. for getting the document registered.

4(2011) 12 SCC 18

( 2024:HHC:8955 )

Therefore, the 1^st part of Article 54 of the Limitation Act, would not

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apply, though the learned Single Judge appears to have applied it taking the date to be 31.12.2014, which view, in our opinion, is not correct.

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The learned Single Judge, in our opinion, was also not correct in ignoring the Endorsement dt. 16.12.2014 extending the time for the Registration of the Sale Deed from 31.12.2014 to 01.01.2020.

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The learned Single Judge is also not correct in holding that after the 2^nd Legal Notice was issued by the appellant on 26.12.2017, to which there was no response from the respondents, the appellant is deemed to have notice of the said alleged refusal of the respondents.

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Therefore, we are of the opinion that the appellant has made out a prima facie case; that balance of convenience is also in favour of the appellant, particularly when the respondents admitted that they had entered into another Agreement to sell the subject property already with a third party on 17.06.2019 in Para-12 of the written statement. Irreparable loss would be caused to the appellant, if the interim relief is denied to the appellant.

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Accordingly, the appeal is allowed. The impugned order dt. 31.05.2024 in OMP no.627 of 2021 (in C.S. no.149 of 2021) of the learned Single Judge, is set aside and the said OMP is allowed. No costs.

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