Allowed

M/s.Presstells and Fabrications Pvt. Ltd. v. M/s.Mahaveer Infrastructure and Projects

Telangana HC29 Apr 2011CRP/5254/2010

Case brief

AI extract

What is this about?

In exercise of supervisory jurisdiction under Article 227, the High Court held that a suit for injunction based solely on a development agreement is not maintainable when specific performance is the appropriate remedy. Consequently, the lower court erred in granting status quo.

What did the court decide?

Order dated 09.07.2010 directing status quo was set aside; suit to be disposed of expeditiously.

M/s.Presstells and Fabrications Pvt. Ltd… — Civil Procedure and Limitation | Telangana HC (2011)

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THE HONOURABLE SRI JUSTICE N.V. RAMANA

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CIVIL REVISION PETITION No. 5254 of 2010

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ORDER:

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This civil revision petition is directed against the order dated 09.07.2010 passed in I.A. No. 1146 of 2010 in O.S. No. 1158 of 2010 by the Principal Senior Civil Judge, Ranga Reddy District, whereunder while ordering urgent notice to the petitioners, defendants 1 to 4 in the suit, and also to the 2^nd respondent-5^th defendant, the Principal Senior Civil Judge directed the matter to be called on 27.07.2010 and further directed the defendants to maintain status quo in the meanwhile.

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Brief facts of the case are that the 1^st respondent herein filed the suit O.S. No. 1158 of 2010 on the file of the Principal Senior Civil Judge, Ranga Reddy District, for perpetual injunction, restraining the petitioners and the 2^nd respondent herein, who are the defendants in the suit, their men or any other person or persons claiming through them from alienating the suit schedule property or creating charge, lien, mortgage, gift, in respect thereof, by creating registered or unregistered documents in favour of third parties, and also from altering the nature of the suit schedule property. Along with the suit, the 1^st respondent- plaintiff filed I.A. No. 1146 of 2010, seeking ex parte ad-interim injunction against the defendants.

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The case of the 1^st respondent-plaintiff, in brief, is that the 1^st defendant, who is the 1^st petitioner herein, represented by its Chairman and Managing Directors, entered into a development agreement dated 16.10.2001 with the plaintiff, in respect of the suit

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schedule property i.e. the land in an extent of 22722 sq. meters equivalent to 26627.4 sq. yards covered by Sy. No. 79 situated at Sanathnagar Village, Balanagar Revenue Mandal, Ranga Reddy District. At the time of entering into the said development agreement, it was represented by the defendants that the 1^st defendant had already obtained ULC clearance from the competent authority, declaring the suit schedule property to be non-surplus land, but however, they did not obtain any such clearance. And on the other hand, there was litigation pending with regard to obtaining of ULC clearance, which continued upto 2004, and even though the plaintiff was not required to pay any amount for obtaining ULC clearance, they have paid an amount of Rs.30,00,000/- out Rs. 80,05,024/-, and the balance amount of Rs. 50,05,024/- was paid by the 1^st defendant through demand drafts. The 1^st defendant represented by defendants 2 and 3 specifically stated that the petition schedule property is free from all encumbrances, charges, liens, mortgages, except subsisting mortgage with State Bank of India and that the 1^st defendant has not entered into any agreement whatsoever in respect of the petition schedule property with the third parties, and collected a sum of Rs. 1,30,00,000/- from the plaintiff, which is reflected in the development agreement, for releasing the property from mortgage. Further, it was specifically agreed under the agreement that the 1^st defendant is having marketable title in respect of the suit schedule property and if there are any disputes or claims made by any third party the first party shall alone be responsible for clearing the same and that if any loss is sustained by the petitioner due to defect of the title, the 1^st defendant will reimburse the same. While so, the 5^th defendant, who is one of the shareholders of the 1^st defendant company, along with two others, raised a dispute

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in respect of the suit schedule property, against the 1^st defendant company, by approaching the Company Law Board and the same is still continuing and the matter is pending before the Apex Court even as on today, and the 1^st defendant represented by defendants 2 and 3 is not taking any steps to get the dispute cleared. The defendants, though agreed to dismantle the sheds, buildings, equipments of the company existing in the suit schedule property and handover one pucca building to the plaintiff, so far they did not handover the same and on the other hand, they are utilizing the same. They, having agreed to, in the agreement, did not execute a supplementary agreement, specifying the shares of the parties in the suit schedule property, and also did not execute special power of attorney in favour of the plaintiff to sign and submit necessary plans to MCH. The plaintiff further stated that the title of the property is still not clear because of the litigation raised by the 5^th defendant with respect thereto is still going on. However, he states that he could obtain the required permissions, in pursuance of the development agreement, by spending an amount of Rs.1,43,632/- for conversion of land from industrial zone to residential zone, of which the 1^st defendant was required to pay 40%; Rs. 15,00,000/- towards purchase of land for approach road, which the 1^st defendant was required to provide; Rs. 10,00,000/- for obtaining no objection from airport authority; Rs. 1,25,000/- to APIDC, Balanagar; Rs. 4,00,000/- paid in the office of Commissioner of Industries and other miscellaneous expenditure amounting to Rs. 1,98,45,071/-. All these laches on the part of the defendants would disclose that they are not co-operating with the plaintiff in executing the development agreement, as per the terms and conditions stipulated therein. Further, though the plaintiff applied for

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the required permissions to MCH, Hyderabad Metro Development Authority, Electricity Department, and other concerned departments, for construction of the proposed apartments and complexes, by paying requisite fee and charges, but however, in view of the objections raised by the 5^th defendant, they could not obtain those permissions and the delay is only because of the dispute in between the defendants. It was specifically agreed in the development agreement that the plaintiff has to handover the developed apartments and complexes within thirty months from the date of obtaining sanction plan or from the date of handing over the charge of the property, whichever is earlier, but, because of the attitude of the defendants in raising objections, filing cases etc., permissions could not be sanctioned by the concerned authorities, so also the defendants did not handover the charge of the property so far. That being so, the 1^st defendant got issued a notice dated 21.05.2010 to the plaintiff, making all false allegations and claiming forfeiture of the amounts paid by the plaintiff, pursuant to the development agreement, though they have got no right to claim as such, as they have not complied the terms stipulated in the development agreement and necessary permissions could not be obtained in view of the objections raised by one of them. To the said notice, the plaintiff got issued a reply notice dated 10.06.2010, pursuant to which the 5^th defendant got issued a reply notice dated 24.06.2010, admitting the institution of company petition by him before the Company Law Board and the matter being sub judice before the Supreme Court of India.

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Further, at clause 26 of the development agreement, it was specifically agreed that the parties to the agreement shall be bound by all the terms contained therein and if any of the parties commit breach

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of any of the terms contained therein, then the other party as the case may be is entitled to enforce specifically the terms of the contract and also to claim damages in respect of loss sustained from the party committing the breach. In view of the said clause, though there is no co-operation from the defendants, the plaintiff is ready to proceed with construction by obtaining required permission within the agreed period of thirty months, after the permissions are granted, but the defendants, in collusion with each other, are creating hurdles, only with a view to have an unlawful gain for themselves and to harass the plaintiff, who has already obtained certain permissions by spending huge amounts. The plaintiff, further, came to know on 02.07.2010 that the defendants, in collusion with each other, are intending to alienate the suit schedule property in favour of third parties or otherwise are intending to create mortgage or any other nature of documents in respect thereof, to have an unlawful gain for themselves and to cause wrongful loss to the plaintiff, who had already spent huge amounts pursuant to the development. When the plaintiff questioned about the same, defendants 2 to 4 have given evasive answers and in such circumstances, the plaintiff was constrained to file the present suit for perpetual injunction and the present interlocutory application for interim injunction, as stated above.

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The Court below, by order dated 09.07.2010, while ordering notice on the interlocutory application to the defendants, directed the matter to be posted on 27.07.2010 and further directed the defendants to maintain status quo in the meanwhile. Aggrieved thereby, defendants 1 to 4 preferred the present revision petition.

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The learned counsel for the petitioners-defendants submits that the suit filed by the 1^st respondent-plaintiff for injunction, based on a

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development agreement, without seeking the relief of specific performance, is not maintainable, and as such the Court below committed an error in granting order of status quo. He further submits that the Court below, without giving any reasons, ordered status quo in a mechanical way and as such the same is liable to be set aside. In support of his argument, he relied on a judgment of this Court in Chellingi Narayanamurthy v. Chillingi Satyanarayana^[1] . He, thus, prayed to allow the revision petition and set aside the order under revision.

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On the other hand, the learned counsel for the 1^st respondentplaintiff submits that the revision is not maintainable, because the remedy available to the plaintiff against the impugned order of status quo is to move the Court below by way of a vacate petition seeking to vacate the orders and further prefer appeal against that order. But, the petitioners-defendants, without availing those remedies, have approached this Court. In support of his contention, he relied on a judgment of this Court in Innovative Pharma Surgicals v. Pigeon Medical Devises Pvt. Ltd .^[2] . He, thus, prayed to dismiss the revision.

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In the light of the rival contentions of the parties, the issues that arise for consideration of this Court are as follows:

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1) Whether the present revision against an order of status quo, is maintainable, when there is a remedy of filing petition to vacate the status quo order as provided by the Civil Procedure Code?

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2) Whether the Court below was right in granting ex parte interim order of status quo?

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In re issue No.1:

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Before considering this issue, it would be appropriate, if a reference is made to the scope and power of this Court under Article 227 of the Constitution of India, to entertain a revision against an order passed by a court/tribunal subordinate to it.

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The apex Court in Surya Dev Rai vs. Ram Chander Ra i^[3] , having considered the scope and power of this Court, to interfere with an order passed by a Court/Tribunal subordinate to it in exercise of its supervisory jurisdiction under Article 227 of the Constitution of India vis-à-vis Article 226, held in paragraph 26 of the judgment, as follows: “In order to safeguard against a mere appellate or revisional jurisdiction being exercised in the garb of exercise of supervisory jurisdiction under Article 227 of the Constitution, the Courts have devised self-imposed rules of discipline on their power. Supervisory jurisdiction may be refused to be exercised when an alternative efficacious remedy by way of appeal or revision is available to the person aggrieved. The High Court may have regard to legislative policy formulated on experience and expressed by enactments where the legislature in exercise of its wisdom has deliberately chosen certain orders and proceedings to be kept away from exercise of appellate and revisional jurisdiction in the hope of accelerating the conclusion of the proceedings and avoiding delay and procrastination which is occasioned by subjecting every order at every stage of proceedings to judicial review by way of appeal or revision. So long as an error is capable of being corrected by a superior Court in exercise of appellate or revisional jurisdiction, though available to be exercised only at the conclusion of the proceedings, it would be sound exercise of discretion on the part of the High Court to refuse to exercise the power of superintendence during the pendency of the proceedings. However, there may be cases where but for invoking the supervisory

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jurisdiction, the jurisdictional error committed by the inferior court or tribunal would be incapable of being remedied once the proceedings have concluded.”

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Thereafter, the Apex Court summed up their conclusions in a nutshell at paragraph 38, as follows:

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1) Amendment by Act 46 of 1999 with effect from 1-7-2002 in Section 115 of the Code of Civil Procedure cannot and does not affect in any manner the jurisdiction of the High Court under Articles 226 and 227 of the Constitution.

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2) Interlocutory orders, passed by the courts subordinate to the High Court, against which remedy of revision has been excluded by CPC Amendment Act 46 of 1999 are nevertheless open to challenge in, and continue to be subject to, certiorari and supervisory jurisdiction of the High Court.

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3) Certiorari, under Article 226 of the Constitution, is issued for correcting gross errors of jurisdiction i.e. when a subordinate court is found to have acted i) without jurisdiction – by assuming jurisdiction where there exists none, or ii) in excess of its jurisdictionby overstepping or crossing the limits of jurisdiction, or iii) acting in flagrant disregard of law or the rules of procedure or acting in violation of principles of natural justice where there is no procedure specified, and thereby occasioning failure of justice.

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4) Supervisory jurisdiction under Article 227 of the Constitution is exercised for keeping the subordinate courts within the bounds of their jurisdiction. When a subordinate court has assumed a jurisdiction which it does not have or has failed to exercise a jurisdiction which it does have or the jurisdiction though available is being exercised by the court in a manner not permitted by law and failure of justice or grave injustice has occasioned thereby, the High Court may step in to exercise its supervisory jurisdiction.

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5) Be it a writ of certiorari or the exercise of supervisory jurisdiction, none is available to correct mere error of fact or of law unless the following requirements are satisfied: (i) the error is manifest and apparent on the face of the proceedings such as when it is based on clear ignorance or utter disregard of the provisions of law, and (ii) a grave injustice or gross failure of justice has occasioned thereby.

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6) A patent error is an error which is selfevident i.e. which can be perceived or demonstrated without involving into any lengthy or complicated argument or a long-drawn process of reasoning. Where two inferences are reasonably possible and the subordinate court has chosen to take one view, the error cannot be called gross or patent.

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7) The power to issue a writ of certiorari and the supervisory jurisdiction are to be exercised sparingly and only in appropriate cases where the judicial conscience of the High Court dictates it to act lest a gross failure of justice or grave injustice should occasion. Care, caution and circumspection need to be exercised, when any of the abovesaid two jurisdictions is sought to be invoked during the pendency of any suit or proceedings in a subordinate Court and the error though calling for correction is yet capable of being corrected at the conclusion of the proceedings in an appeal or revision preferred thereagainst and entertaining a petition invoking certiorari or supervisory jurisdiction of the High Court would obstruct the smooth flow and/or early disposal of the suit or proceedings. The High Court may feel inclined to intervene where the error is such, as, if not corrected at that very moment, may become incapable of correction at a later stage and refusal to intervene would result in travesty of justice or where such refusal itself would result in prolonging of the lis.

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8) The High Court in exercise of its certiorari or supervisory jurisdiction will not convert itself into a court of appeal and indulge in reappreciation or evaluation of evidence or correct errors in drawing

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inferences or correct errors of mere formal or technical character.

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9) In practice, the parameters for exercising jurisdiction to issue a writ of certiorari and those calling for exercise of supervisory jurisdiction are almost similar and the width of jurisdiction exercised by the High Courts in India unlike English courts has almost obliterated the distinction between the two jurisdictions. While exercising jurisdiction to issue a writ of certiorari, the High Court may annul or set aside the act, order or proceedings of the subordinate courts but cannot substitute its own decision in place thereof. In exercise of supervisory jurisdiction, the High Court may not only give suitable directions so as to guide the subordinate court as to the manner in which it would act or proceed thereafter or afresh, the High Court may in appropriate cases itself make an order in supersession or substitution of the order of the subordinate court as the court should have made in the facts and circumstances of the case.

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At paragraph 39, the Apex Court concluded the judgment observing thus:

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“Though we have tried to lay down broad principles and working rules, the fact remains that the parameters for exercise of jurisdiction under Article 226 or 227 of the Constitution cannot be tied down in a straight-jacket formula or rigid rules. Not less than often, the High Court would be faced with dilemma. If it intervenes in pending proceedings, there is bound to be delay in termination of proceedings. If it does not intervene, the error of the moment may earn immunity from correction. The facts and circumstances of a given case may make it more appropriate for the High Court to exercise self-restraint and not to intervene because the error of jurisdiction though committed is yet capable of being taken care of and corrected at a later stage and the wrong done, if any, would be set right and

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rights and equities adjusted in appeal or revision preferred at the conclusion of the proceedings. But there may be cases where “a stitch in time would save nine”. At the end, we may sum up by saying that the power is there but the exercise is discretionary which will be governed solely by the dictates of judicial conscience enriched by judicial experience and practical wisdom of the judge.”

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Now considering the scope and power of this Court to entertain a revision in exercise of its supervisory jurisdiction under Article 227 of the Constitution of India, it may be noticed whether the present revision is maintainable against the impugned order of status quo passed by the Court below.

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Admittedly, the suit is filed by the 1^st respondent-plaintiff for perpetual injunction, basing on the development agreement dated 16.11.2001. It is the case of the plaintiff that they are ready to perform their part of the obligation under the agreement and wanted the defendants to perform their part of the agreement, so as to enable them to proceed with the execution of agreement. It is further their case that the defendants committed breach of the agreement and are taking steps to alienate the property, and that if they succeed in alienating the property, they would be put to irreparable loss and injury. Therefore, they are compelled to file the suit for decree of permanent injunction.

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When there is an agreement and one party commits breach of the agreement while the other is ready to perform his part thereof, the remedy available to the aggrieved party is to invoke the provisions of Specific Relief Act, and claim the relief of specific performance of the agreement/contract. Section 41 (h) of the Specific Relief Act, provides that an injunction cannot be granted when equally efficacious relief

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can certainly be obtained by any other usual mode of proceeding except in case of breach of trust.

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Since the grievance of the 1^st respondent-plaintiff mainly arises out of the development agreement, which they contend that the respondents are not coming forward to perform their part of the obligation under the development agreement and are seeking to alienate the property covered by the development agreement, the remedy of the 1^st respondent-plaintiff is to file suit for specific performance, which is an efficacious remedy, and not a suit for injunction. In Chellingi Narayanamurthy’s case (1 supra), on which the learned counsel for the petitioners-defendants placed reliance, this Court held that an agreement holder who is in possession of property by way of part performance cannot maintain a suit for mere injunction without filing a suit for specific performance.

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In the instant case also, the 1^st respondent-plaintiff, who is claiming right under a development agreement, has an efficacious remedy of filing a suit for specific performance, and without claiming such relief, in view of the bar contained under Section 41 (h) of the Act, they are not entitled to claim mere relief of injunction. Hence, having regard to the guidelines laid down by the apex Court in Surya Dev Rai’s case (3 supra) with respect to exercise of jurisdiction under Articles 226 and 227 of the Constitution, I am of the considered opinion that this is a fit case where this Court, in exercise of its supervisory jurisdiction under Article 227 of the Constitution, can interfere with the order of the Court below, because if the error committed by the Court below, is not corrected immediately, then such order, by lapse of time, would gain legitimacy.

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The learned counsel for the respondent relied on a judgment of this Court in Pharma Surgicals (2 supra). The facts of the said case are that the plaintiff filed a suit for injunction and along with the suit, he filed an application for ad-interim injunction. The trial Court granted interim injunction. The 4^th defendant in the suit against whom injunction was granted has preferred an appeal before this Court without filing an application to vacate the injunction order, on the ground that the learned Judge is not disposing of the application. Except this, no other ground was raised by the defendant. The Division Bench, considering the scope of Order 43, Order 39 and the judgment of the apex Court in A. Venkata Subbaiah Naidu vs. S. Chellappan^[4] , has held that no appeal lies as a matter of course against grant of an ex parte interim injunction and only in extraordinary circumstances or the rarest of the rare cases, where the order is perverse, biased or suffers from lack of jurisdiction, one can come before appellate Court and further if the Court below fails to pass orders within the time as stipulated under the Civil Procedure Code i.e. within 30 days, then also appeal can be preferred to the High Court. This judgment is in no way helpful to the respondent-plaintiff, because the facts of that case and the facts of the case on hand are totally different. In fact, I am of the opinion that the judgment relied upon by the respondent strengthens the case of the petitioners-defendants, because the facts of the present case fall under the extraordinary circumstances as held by the Division Bench in the above referred case, because, when Section 41(h) of the Specific Relief Act clearly bars a suit for injunction, when an alternative remedy is available, the Court below passed an order without jurisdiction and this case falls under the extraordinary circumstances. That apart, the present C.R.P.

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is filed under Article 227 of the Constitution of India.

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Accordingly, the first issue is answered in favour of the revision petitioners, holding that in the facts and circumstances of the case, the revision is maintainable under Article 227 of the Constitution.

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In re issue No. 2:

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The law is well settled that for grant of interim injunction, the plaintiff should prove three elements i.e. the prima facie case, balance of convenience and irreparable loss. The grant of injunction is a discretionary relief. No doubt, grant of injunction is discretion of the Court, but the discretion is not to be exercised arbitrarily and it must be based on sound and reasonable grounds and guided by judicial principles. The appellate Court would normally not be justified in interfering with the exercise of discretion unless the order of the trial Court is arbitrary, capricious and unreasonable, or the Court has either not taken into consideration the material facts available on record or not applied proper principles.

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For the grant of temporary and permanent injunction, the grounds are entirely different. In the case of temporary injunction, the plaintiff will have to show a prima face case, balance of convenience and also irreparable loss or injury, while in the case of permanent injunction, he has to satisfy the provisions of Section 38 of the Specific Relief Act. The provisions of Section 38 of the Specific Relief Act will have to be read along with the provisions of Section 41 of the Act. While considering the grant of temporary injunction, if the Court, prima facie, is of the opinion that the suit itself is not maintainable, since no decree of permanent injunction can be granted in view of the bar under Section 41 (h) of the Act, then the question of the Court going into the

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question as to whether the plaintiff has made out any prima facie case, for grant of temporary injunction does not arise. In Shrimant Shamrao Suryavanshi v. Pralhad Bhairaba Suryavansh i^[5] , the apex Court held that the defendant in a suit for recovery of possession can take shelter under Section 53-A of the Act and protect his possession, and Court further observed that the defence is available to the defendant as a “shield but not as a sword”. In view of the above stated judgments and the law laid down by this Court and the Apex Court, the Court below went wrong in granting ad-interim injunction. In the case on hand, the 1^st respondent-plaintiff, having not sought the relief of specific performance of the development agreement, could not have claimed the relief of injunction based on the said development agreement, and therefore, the Court below ought not to have granted ex parte status quo order, and that too without recording any reasons. In that view of the matter, I am of the considered view that the Court below has misdirected itself and committed an error in granting ex parte status quo order. Accordingly, the second issue is answered in favour of the petitioners-defendants and against the 1^st respondentplaintiff.

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For the foregoing reasons, I hold that the Court below has exercised the jurisdiction in a manner not permitted by law, which amounts to failure of justice. Therefore, the order dated 09.07.2010 passed by the Court below in I.A. No. 1146 of 2010 in O.S. No. 1158 of 2010 cannot be sustained and is accordingly set aside, and the C.R.P. is allowed without costs. However, the Court below is directed to dispose of the suit expeditiously.

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JUSTICE N.V. RAMANA

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Dated: 29^th April, 2010 IBL

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[1] 2009 (4) ALT 379 [2] AIR 2004 AP 310 [3] (2003) 6 SCC 675 [4] AIR 2000 SC 3032 [5] AIR 2002 SC 960

M/s.Presstells and Fabrications Pvt. Ltd. v. M/s.Mahaveer Infrastructure and Projects

Case brief

What is this about?

What did the court decide?

M/s.Presstells and Fabrications Pvt. Ltd. v. M/s.Mahaveer Infrastructure and Projects

Case brief

What is this about?

What did the court decide?

What the court decided

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