2020 (1) TMI 1281 - SC - Indian Laws

Suits for declaration and specific performance against the defendant sister concerns - Existence of concluded contract or not - HELD THAT - Whether there existed a concluded contract between the parties or not, is itself a matter for trial to be decided on basis of the evidence that may be led. 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. The plaintiff failed to do show the same on admitted facts. The draft MoU dated 30.03.2018 in Clause C contemplated payment of the income tax dues of ₹ 18.64 crores as part of the consideration amount only whereafter the agreement was to be signed relating back to the date 29.03.2008. 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 grant of injunction to the plaintiff is unsustainable. Resultantly the orders of injunction are set aside. Nothing in the present order shall be deemed or construed as any expression of opinion or observation by us at the final hearing of the suit which naturally will have to be decided on its own merits. Appeal allowed.

Issues Involved:
1. Existence of a concluded contract between the parties.
2. Grant of temporary injunction.
3. Delay in filing the suit.
4. Balance of convenience and irreparable injury.
5. Conduct of the parties.

Detailed Analysis:

1. Existence of a Concluded Contract:
The plaintiff claimed a concluded contract existed with the defendants for the sale of land, supported by a final draft MoU dated 30.03.2018 and the payment of an advance sum of ?2.16 crores. The defendants disputed this, arguing negotiations did not reach finality and remained at the discussion stage. The Principal Civil Judge inferred a concluded contract from the e-mails exchanged on 29.03.2018 and 30.03.2018, and the High Court upheld this view, citing the communication of acceptance via e-mail and WhatsApp. However, the Supreme Court noted the prolonged negotiations and the plaintiff's awareness of simultaneous negotiations with others, concluding the matter was still at an "embryo stage" and the plaintiff failed to establish mutuality or that the parties were ad-idem.

2. Grant of Temporary Injunction:
The Principal Civil Judge granted a temporary injunction to prevent the defendants from creating third-party rights, which the High Court affirmed. The Supreme Court emphasized the discretionary nature of such relief in specific performance suits, requiring a strong prima facie case, balance of convenience, and irreparable injury. The Court found the plaintiff did not meet these criteria, particularly noting the lack of a concluded contract and the significant delay in filing the suit.

3. Delay in Filing the Suit:
The plaintiff filed the suit seven months after the alleged contract date, which the defendants argued was a significant delay impacting their position. The Supreme Court found the plaintiff's explanation for the delay unconvincing, noting the plaintiff's awareness of the defendants' negotiations with others and the refund of the advance payment. The Court highlighted the importance of timely action in commercial dealings, especially when third-party rights are involved.

4. Balance of Convenience and Irreparable Injury:
The Supreme Court assessed the balance of convenience and potential irreparable injury, concluding it favored the defendants. The defendants had made substantial payments and altered their position materially, while the plaintiff failed to demonstrate the necessity of an injunction to prevent irreparable harm. The Court reiterated that an injunction is not warranted if other remedies are available.

5. Conduct of the Parties:
The conduct of the parties was a crucial factor in the Court's decision. The plaintiff's delay in filing the suit and failure to remit the advance payment after its refund indicated a lack of urgency and commitment. The defendants, on the other hand, acted in good faith by negotiating with another party and making substantial payments to clear tax dues. The Court emphasized the need for equitable conduct by parties seeking injunctive relief.

Conclusion:
The Supreme Court set aside the orders of injunction, finding the plaintiff failed to establish a prima facie case, the balance of convenience favored the defendants, and the plaintiff's conduct did not merit equitable relief. The Court directed the suit to proceed on its merits without prejudice from the present order. The appeals were allowed.

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