2019 (8) TMI 1905 - HC - Indian Laws

Suit for declaration and specific performance against the defendant - maintenance of status-quo - equitable balance/relief - Prima Facie Case and Readiness and Willingness - Binding Nature of Contract and Continuous Negotiations - Scope of Appellate Jurisdiction. Prima Facie Case and Readiness and Willingness - HELD THAT - The court observed that triable issues are very much involved which deserve proper adjudication and noted the plaintiff's readiness and willingness, evidenced by the payment of Rs. 2.16 crores in January 2018 and the readiness to pay the balance amount of Rs. 27.84 crores - The defendant's unilateral return of Rs. 2.16 crores was seen as an attempt to project the amount as short-term finance, which required further examination - It is not a simple case where the plaintiff has failed miserably in indicating prima facie case and then, wanted an injunction from the Court to intercept the further steps of defendant. The conduct on the part of defendant certainly a matter of trial. So, while considering the equitable principle in mind, the conduct of the defendant is also not possible to be ignored. As a result of this, in such a situation when case is made out of a trial, the subject matter of the suit deserves to be protected, particularly when the manner in which the transaction is taking place and again, the registered agreement to sell has taken place and not a final concluding transaction with defendant No. 2. This prima facie look of the circumstance necessitates the Court to preserve the subject matter even with a view to avoid multiplicity of proceedings and further alienation as has been apprehended by the plaintiff. Status-quo and Equitable Relief - HELD THAT - It is settled position of law that normally, during the litigating process when a case is made out, the status-quo deserves to be granted and simply because the transaction is of a high value or simply because the legal proceedings taking some more time, would not be a circumstance to lift the order of status-quo, because ultimately the same would lead to a multiplicity of proceedings and would seriously prejudice the ultimate outcome if taking place in favour of the plaintiff. As a result of this, to save this situation, the Court is of the opinion that the order in question of maintaining status-quo does not call for any interference and at the best, the suit will have to be expedited considering the peculiarity of circumstances reflecting on record. Further, the Court is also of the opinion that prima facie case and prima facie title cannot be confused because prima facie will have to be examined at length during the course of adjudication of the proceedings and here are the circumstances which are not the circumstances which can be ignored just to vacate the order of status-quo. All these issues which have been raised are significant issues depending upon the record and as such, the trial court must be given an adequate opportunity to examine it at length. Binding Nature of Contract and Continuous Negotiations - HELD THAT - The court refrained from making a definitive conclusion on whether the continuous negotiations amounted to a binding contract, noting that this issue required examination through evidence during the trial. Scope of Appellate Jurisdiction - HELD THAT - The appellate court had adequate power to reverse the finding arrived at by the trial court. But then the same will have to be in a peculiar situation where the findings are apparently perverse or there may be a manifest error or patently illegality. In such kind of situation, normally the appellate court should reverse the order. But as said earlier, the background of this fact of a peculiar nature, would lead to a conclusion that during the pendency of the suit proceedings, the status-quo what has been ordered by the court below does not require to be altered. The court dismissed the appeal, maintaining the status-quo order to protect the subject matter during the trial.

Summary

Issues Involved:

1. Existence of a Concluded Contract
2. Specific Performance and Declaration
3. Injunction Relief
4. Applicability of Commercial Courts Act
5. Conduct and Readiness of the Parties

Summary:

1. Existence of a Concluded Contract:
The court examined whether a concluded contract existed between the parties. The plaintiff, K.S. Infraspace LLP, argued that a contract was concluded through a series of negotiations, meetings, and email exchanges, culminating in the final draft of the Memorandum of Understanding (MOU) and Agreement to Sell (ATS) on 30.3.2018. The defendant, Haryana Containers Ltd., contended that no specific signed agreement existed and that the negotiations did not result in a binding contract. The court noted that the WhatsApp communications and emails suggested that the parties were negotiating terms until the last moment, and the plaintiff had paid Rs. 2.16 crores as a token amount, indicating readiness and willingness to perform the contract.

2. Specific Performance and Declaration:
The plaintiff sought specific performance of the MOU/ATS and a declaration against the defendants. The court observed that the plaintiff consistently demonstrated readiness and willingness to perform their part of the contract, as evidenced by the balance certificate from the bank showing sufficient funds. The defendant's unilateral withdrawal from the contract and return of the token amount through RTGS were seen as actions that needed further examination during the trial.

3. Injunction Relief:
The court granted an injunction to preserve the status quo and prevent the defendants from executing any further documents, including sale deeds, related to the disputed land until the final disposal of the suit. The court emphasized that the subject matter of the suit should be protected to avoid multiplicity of proceedings and potential prejudice to the plaintiff. The injunction was deemed necessary to maintain the balance of convenience and prevent irreparable harm to the plaintiff.

4. Applicability of Commercial Courts Act:
The defendants argued that the suit was not maintainable under the Commercial Courts Act, as the land in question was used exclusively for commercial purposes. The court rejected this contention, noting that the suit involved issues of specific performance and declaration, which required detailed examination during the trial. The court held that the provisions of the Commercial Courts Act did not preclude the suit from being heard in the current forum.

5. Conduct and Readiness of the Parties:
The court scrutinized the conduct of both parties, particularly the defendant's actions leading up to the withdrawal from the contract. The plaintiff's readiness and willingness to perform were supported by the bank's balance certificate and the prompt reaction to the defendant's unilateral actions. The court found that the plaintiff had made a prima facie case for the relief sought, and the defendant's conduct warranted further investigation during the trial.

Conclusion:
The court dismissed the appeals, upheld the injunction order to maintain the status quo, and directed the trial court to expedite the suit proceedings. The court emphasized that the observations made were tentative and should not influence the final adjudication of the suit. The operation of the present order was suspended for four weeks to allow the appellant to seek further remedies.