Kishorsinh Ratansinh Jadeja vs Maruti Corp.& Ors

owners of agricultural land in Survey No.36

measuring 32 acres and 38 gunthas situated in

Village Nanamauva, Taluka & District Rajkot

(hereinafter referred to as the `suit land'). On 2

19th March, 1980, the appellant and the other joint

owners of the suit land entered into an Agreement

with Tirupati Cooperative Housing Society - a

proposed Cooperative Housing society - for

development of the said land upon obtaining

necessary permission under Section 20 of the Urban

Land (Ceiling & Regulation) Act, 1976 (hereinafter

referred to as the `Land Ceiling Act, 1976') for

exemption and for construction of houses for the

weaker sections. The application made by the

proposed Society on 29th April, 1988, under Section

20 of the Land Ceiling Act, 1976, was rejected and

according to the appellant and other joint owners,

on the failure of the proposed Society to get such

permission, the Agreement could not be performed

and, therefore, by Public Notice dated 24th April,

1988, the Agreement was declared to have been

cancelled.

3. A legal notice was received from one Sharad N.

Acharya, Advocate, denying that the Agreement had

been cancelled, as indicated in the Public Notice. 3

Despite cancellation of the Agreement, the

Respondent No.1 called upon the appellant to give

effect to the Agreement dated 19th March, 1980,

executed with the said respondent for development

of the said land. The Respondent No.1 thereupon

filed Special Civil Suit No.299 of 1999 on 29th

November, 1999, before the Civil Court at Rajkot

against the appellant, inter alia, praying for a

declaration that the Respondent No.1 was in

possession of the suit land and for a decree for

specific performance of the said Agreement. In the

alternative, for a decree for refund of the earnest

money of Rs.1,81,000/- and for damages amounting to

Rs.16,30,670/- with interest @12% per annum. The

Respondent No.1 also filed an application for

interim injunction to restrain the appellant from

entering into the said land and disturbing the

possession of the Respondent No.1 and to further

restrain the appellant from alienating the land to

any third party. The Civil Court at Rajkot

dismissed the said application by its order dated

29th April, 2002, against which the Respondent No.1 4

filed appeal from Order No.372/2000 before the

Gujarat High Court, which was ultimately withdrawn

with a direction for expeditious disposal of the

suit within a period of 10 months. The suit was

thereafter taken up for trial by the Civil Court at

Rajkot, and by judgment and order dated 23rd

November, 2007, while rejecting the prayer for

specific performance, the Trial Court directed

refund of the earnest money.

4. The Respondent No.1, thereafter, filed an

appeal on 15th February, 2008, being First Appeal

No.853/2008, along with an application, being Civil

Application No.2405/2008, inter alia, to restrain

the respondents therein from transferring or

alienating the land in question to any third party

till the disposal of the appeal. Since the

appellant was on caveat before the High Court,

after hearing the parties, the Division Bench of

the Gujarat High Court admitted the appeal but did

not grant any stay, as prayed for, and only

directed that if the property in question was dealt 5

with in any way, that would be subject to the

decision of the appeal.

5. Although, the Respondent No.1 failed to obtain

any order of injunction in the appeal, he issued a

Public Notice through his learned Advocate on 7th

March, 2008, asking the public not to deal with the

property. In response thereto, the appellant also

caused a Public Notice to be published on 10th

March, 2008, clarifying that no injunction order

had been passed by the Gujarat High Court. The

said fact was brought to the notice of the Gujarat

High Court by the Respondent No.1 by way of an

additional affidavit on the basis whereof, the High

Court passed an order on 22nd April, 2008, directing

that the property in question should not be sold.

Thereafter, on 6th May, 2008, a further application

for injunction No.5618/2008 was filed in the

pending First appeal by the Respondent No.1 herein

indicating that constructions were being raised on

the land in question. On the basis of the above,

the Division Bench of the Gujarat High Court, on 7th 6

May, 2008, passed the following order impugned in

these appeals :

"By this application, learned counsel for the applicant submits that inspite of the directions of this court issued vide orders dated 29.02.2008 and 22.04.2008, the constructions are being raised in the disputed land.

Learned counsel Mr. Pahwa, the respondent No.2 submits that the constructions were raised about 6 months back, and part of the property was already sold.

To avoid further complications and multiplicity of litigations, we order that no construction be raised on the disputed land. In spite of our direction, if further construction is raised, the applicant will be at liberty to approach the concerned police authority, and the concerned police authority is also directed to take immediate steps to stop the construction on the disputed land.

Civil application stands disposed of."

6. Appearing for the appellants, Mr. Mukul

Rohtagi, submitted that the Respondent No.1, Maruti

Corporation (plaintiff in the suit), came to be

registered as a partnership firm on 21st June, 1989,

but has sought specific performance of an agreement

alleged to have been entered into with the 7

appellant on 19th March, 1980, executed on a Non-

judicial stamp paper dated 17th March, 1990. Mr.

Rohtagi urged that it was obvious that the claim of

the Respondent No.1 in the plaint had no valid,

legal and/or factual foundation, on the basis of

which the interim orders could have been passed by

the High Court. He submitted that none of the

three orders impugned in the appeal were speaking

or reasoned orders. As the orders would themselves

reveal, they were simply reactions to new facts

brought to the notice of the Court from time to

time and orders were passed on the basis thereof

without even giving the appellant herein or other

interested parties a proper opportunity of meeting

the allegations or questioning the same. Mr.

Rohtagi submitted that the several interim orders

passed by the Division Bench were devoid of any

reason and were liable to be set aside.

7. Mr. Ranjit Kumar, learned senior counsel, who

appeared for the Respondent Nos.2 to 7, who were

the joint owners of the property with the 8

appellant, while adopting Mr. Rohtagi's

submissions, supplemented the same by contending

that the original agreement with Tirupati

Cooperative Housing Society stipulated that the

said proposed Housing Society would have to apply

to the authorities of the Land Ceiling Act, 1976,

under Section 20 thereof, for exemption and leave

to construct on the vacant land. Learned counsel

submitted that such application had been made by

Tirupati Cooperative Housing Society, but the same

was rejected and on such rejection, a public

announcement was made discontinuing the agreement

between the owners of the land and the proposed

Tirupati Cooperative Housing Society.

8. Mr. Ranjit Kumar urged that the owners of the

property had never entered into any agreement with

Maruti Corporation-Respondent No.1 herein, which

filed a suit identical to that filed by Tirupati

Cooperative Housing Society, relying on the same

cheques by which Tirupati had advanced certain sums

to the owners of the property. Mr. Ranjit Kumar 9

also urged that, in any event, even if the case of

the Respondent No.1 is accepted as correct, for 19

years it had not applied for exemption to develop

the land under Section 20 of the Land Ceiling Act,

1976, without which it was not possible to develop

the property. It is only after the repeal of the

Land Ceiling Act, 1976, on 19th March, 1999, that

the Respondent No.1 filed the aforesaid suit

seeking enforcement of an agreement alleged to have

been entered into between the parties on 19th May,

1980, when exemption under Section 20 of the said

Act was no longer required.

9. Mr. Ranjit Kumar submitted that initially when

the First Appeal of the Respondent No.1 was

admitted in the Gujarat High Court, an order was

also passed in Civil Application No.2405 of 2008 to

the effect that if the property in question was

dealt with in any way the same would be subject to

the decision in the appeal. Learned counsel urged

that since in its order the High Court had embodied

the principles of Section 52 of the Transfer of 10 Property Act, 1882 and there was no bar to the

alienation of the property, as many as 280 plots

had been sold to different purchasers by way of

registered sale deeds and they had started

construction on the plots which they had acquired

presumably after obtaining necessary development

permission sanctioned by the Rajkot Municipal

Corporation. It was submitted that up to such point

there could be no objection with regard to the

orders passed in the First Appeal. Thereafter,

when the interim order was modified on 22nd April,

2008, on the same application and the owners of the

property were restrained from selling the same, the

said modification, though not called for, was still

capable of being defended.

10. The real problem was created when on 7th May,

2008, on a fresh Civil Application for Injunction

No.5618 of 2008 filed on 6th May, 2008, an order was

passed by the Division Bench which not only had

serious consequences for the transferees but also

for the owners of the land who were parties to the 11

suit. The order which has been extracted

hereinabove directed that no construction be raised

on the disputed land and if any further

construction was raised, the Respondent No.1 herein

would be at liberty to approach the concerned

police authorities who were directed to take

immediate steps to stop the construction on the

disputed land. Mr. Ranjit Kumar emphasised that

the cryptic manner in which the said application

was disposed of by such a mandatory order, was

contrary to all legal principles and even

procedural law. He submitted that no liberty to

deal with the fresh application filed on 16.5.2008

was even given by the Division Bench to the

respondents in the appeal and on the very next day

on 7th May, 2008, without even giving any reasons

for passing such an order, it disposed of the same

finally to the severe prejudice of the appellant

and the Respondent Nos. 2-7 herein and the 280

transferees to whom plots had been conveyed and

that too when they were not parties to the appeal. 12

11. It was also submitted that no thought was even

given to the principles embodied in Order XXXIX

Rules 1 and 2 of the Code of Civil Procedure before

such a drastic order of injunction was passed by

the High Court in the First Appeal. Mr. Ranjit

Kumar submitted that the basic principles for

granting injunction involving the making out of a

prima facie case, the balance of convenience and

inconvenience, and irreparable loss and injury,

were not even taken into consideration when the

orders of injunction were passed.

12. In addition to the above, Mr. Ranjit Kumar also

referred to the decision of this Court in Mandali

Ranganna & others vs. T. Ramachandra [(2008) 11 SCC

1] wherein an additional principle was sought to be

enunciated relating to grant of injunction by way

of an equitable relief. This Court held that in

addition to the three basic principles, a Court

while granting injunction must also take into

consideration the conduct of the parties. It was

observed that a person who had kept quiet for a 13

long time and allowed others to deal with the

property exclusively would not be entitled to an

order of injunction. The Court should not

interfere only because the property is a very

valuable one. Grant or refusal of injunction has

serious consequences depending upon the nature

thereof and in dealing with such matters the Court

must make all endeavours to protect the interest of

the parties.

13. Mr. Ranjit Kumar submitted that having filed

the suit for enforcement of its purported rights

under the Agreement of 1980 in the year 1999 and

having allowed the owners of the property to deal

with the same and certain rights having been

created in favour of third parties when there was

no restraint orders of the Courts, the High Court

erred in granting such an interim order with such

drastic consequences without even giving the

persons, who were to be adversely affected by the

order, an opportunity of being heard. 14

14. Opposing the submissions made on behalf of the

appellant and the Respondent Nos.2 to 7, Mr. Soli

J. Sorabjee, learned senior counsel, submitted that

it was necessary to clear the impression that had

been given that the Respondent No.1-Maruti

Corporation came into existence only on 21st June,

1989. He submitted that, on the other hand, the

Respondent No.1 was in existence even in 1980, but

as an unregistered partnership, and that it became

a registered partnership on 21st June, 1989. Mr.

Sorabjee submitted that the question of the

existence of Maruti Corporation or the validity of

the agreement executed between Maruti Corporation

and the owners of the property would have to be

considered on evidence and till a decision was

arrived at in the matter, it was only appropriate

that the status-quo of the property be maintained,

particularly when a large number of transfers are

alleged to have been made, which could make the

relief sought for by the Respondent No.1 a mere

paper relief, if it ultimately succeeded. 15

15. Mr. Sorabjee also contended that when the

application for a restraint order against

construction was sought to be filed on 6th May,

2008, neither the appellant nor the other

respondents had disclosed the fact that such

transactions had already taken place and that the

transferees had started raising their construction

on the basis of such conveyances.

16. Mr. Sorabjee took pains to point out that while

in the suit all the issues had been decided against

the plaintiff, the issue relating to limitation

had, however, been decided in favour of the

plaintiff and it was held that the suit for

specific relief was not barred by limitation. Mr.

Sorabjee submitted that since the injunction order

was in force since 7th May, 2008 and more than 10

months had passed since then, without disturbing

the interim order of stay, the High Court could be

requested to dispose of the First Appeal which is

pending before it expeditiously.

16

17. Mr. Huzefa Ahmadi, who appeared for the

Respondent No.1 - Maruti Corporation in Special

Leave Petition (Civil) No. 12855 of 2008, while

adopting Mr. Sorabjee's submissions, urged that the

Tirupati Cooperative Housing Society had been

created by Maruti Corporation with a definite

object in mind. He submitted that the lands in

question were agricultural in nature and could not,

therefore, be acquired by any other body other than

a cooperative society. It was on account of such

bar that the Tirupati Cooperative Housing Society

was proposed to be created on grounds of expediency

and was yet to be registered. He also submitted

that the payments made to the owners by Tirupati

Cooperative Housing Society had been made from the

account of Maruti Corporation and consequently when

exemption under Section 20 of the Land Ceiling Act,

1976, was not granted to the proposed Cooperative

Society, the Respondent No.1 filed a separate suit

for specific performance of the agreement which had

been entered into with the Maruti Corporation and

the payments made by Tirupati Cooperative Housing 17

Society were shown to be the payments which had

been made by Maruti Corporation. Mr. Ahmadi also

submitted that Maruti Corporation could not apply

for exemption under Section 20 of the Land Ceiling

Act, 1976, and as a consequence it filed the suit

for specific performance only after the said Act

was repealed, thereby doing away with the necessity

of obtaining exemption under Section 20 thereof.

Mr. Ahmadi also contended that unless the appellant

and the other joint owners of the property and

their transferees were suitably restrained from

dealing with the properties during the pendency of

the two appeals before the first Appellate Court,

the appeals would be rendered infructuous as it

would become impossible once the constructions had

come up, to revert back to the position when the

plots were still undeveloped.

18. On a careful consideration of the submissions

made on the behalf of the respective parties, the

scenario which emerges is that while on the one

hand the Respondent No.1 is strongly in favour of 18

the status quo of the suit lands being maintained

during the pendency of the suit for specific

performance filed by it, the appellant and the

other joint owners have projected a case of both

balance of convenience and inconvenience and

irreparable loss on being restrained from

developing their own property by the Respondent

No.1, purportedly on the basis of a spurious

document. Mixed with the aforesaid issues is the

issue of the 280 transferees to whom plots have

been conveyed by the owners and who were enjoying

the same by raising structures which were at

different stages of construction. We are faced

with a situation where inspite of having obtained

the said plots at a point of time when the

injunction against the owners was not in force, the

transferees, who were not even parties before the

Court, have been restrained by an interim order of

injunction of a mandatory nature which seriously

affects them, but without giving them any

opportunity of hearing.

19

19. We have to consider the effect of the third

order passed on 7th May, 2008, on Civil Application

for Injunction No.5618 of 2008 filed of the

previous day on 6th May, 2008, ordering that no

construction be raised on the disputed lands on the

280 transferees who were in the process of raising

their constructions. As will be apparent from the

order itself, the same was passed in great haste

without even giving the owners of the lands an

opportunity of contesting the application. In

fact, the application was disposed of by a cryptic

order which does not even contain any reason for

passing the same. The Division Bench has merely

indicated that to avoid further complications and

multiplicity of litigation, the order was being

passed not to raise constructions on the disputed

land, without even taking into consideration the

several transferees who were to be adversely

affected by such an order. Even the appellant

herein and the Respondents No.2 to 7 were not given

an opportunity of filing any affidavit to counter 20

the statements and allegations made in the

application for injunction.

20. It is quite obvious that the High Court was

completely oblivious to the facts of the case and

passed different orders at different times on the

applications filed at regular intervals by the

Respondent No.1 Corporation.

21. The reasoning provided in the interim order

dated 22nd April, 2008, is, to say the least,

legally untenable. Having passed an order earlier

on 29th February, 2008, based on the principle of

lis pendens, the Division Bench of the High Court

in its second order dated 22nd April, 2008, observed

that when the First Appeal was admitted and the

matter in dispute as regards the property in

question was sub-judice, the properties in question

should not be sold and passed an order which was

contrary to the initial order which was made in

keeping with Section 52 of the Transfer of Property

Act.

21

22. It is well established, that while passing an

interim order of injunction under Order XXXIX Rules

1 and 2 CPC, the Court is required to consider

three basic principles, namely,

(i) prima facie case;

(ii) balance of convenience and inconvenience;

and

(iii) irreparable loss and injury.

None of the said principles have been

considered by the High Court while passing the

second and third interim orders dated 22nd April,

2008 and 7th May, 2008, nor has the High Court taken

into account the long silence on the part of the

Respondent No.1 Corporation in filing a suit after

19 years.

23. In our view, while passing the interim order

dated 7th May, 2008, the High Court ought to have

considered the effect which its order would have on

the 280 transferees to whom some portions of the 22

land had already been sold and who had commenced

construction thereupon, particularly when they were

not even parties in the appeal, nor were they heard

before they were injuncted from continuing with the

construction work. Such an order affecting third

party rights in their absence, as they were not

parties to the proceedings, cannot be sustained

having further regard to the manner in which the

said order was passed. An application for an order

which would have far and wide reaching consequences

was sought to be disposed of by the Division Bench

on the very next day without giving an opportunity

of controverting the allegations made therein even

to those who were parties in the suit, though it

had been brought to the notice of the Court that

conveyances had been executed in favour of 280

purchasers. This is not a case where the appellant

and the other co-owners had violated any restraint

order passed by the Court in transferring the plots

in question to the said 280 transferees. The said

transfers were effected at a point of time when

there was no injunction or restraint order against 23

the appellant and the other owners of the property

and as far as the said transfers are concerned, the

only order that could have been passed on the said

application is the order which was passed at the

first instance on 29th January, 2008, based on the

principles of Section 52 of the Transfer of

Property Act, 1882. The restraint order on the

transferees must, therefore, be held to be bad and

liable to be set aside.

24. As far as the lands which the appellant and the

other joint owners have been restrained from

alienating by the second order dated 22nd April,

2008, are concerned, we are of the view that in the

event the order of 22nd April, 2008, is set aside,

the Respondent No.1 can be compensated in terms of

money and no irreparable loss and injury will be

caused to it on account thereof. On the other

hand, if the owners of the property remain

restrained from developing the same, it is they,

who will suffer severe prejudice, as they will be

deprived of the benefit of the user of their land 24

during the said period. The balance of convenience

and inconvenience is against grant of such

injunction. The success of the suit for specific

performance filed by the Respondent No.1 depends to

a large extent on tenuous proof of genuineness of

the agreement sought to be enforced after 19 years,

despite the finding of the Trial Court that the

suit was not barred by limitation.

25. The question of conduct of the Respondent No.1

also becomes relevant, inasmuch as, having slept

over its rights for more than 19 years, it will be

inequitable on its prayer to restrain the owners of

the property from dealing with the same, having

particular regard to the fact that a large portion

of the land has already been conveyed to as many as

280 purchasers who are in the process of erecting

constructions thereupon.

26. We are, therefore, unable to sustain the

interim orders passed by the Division Bench of the 25

Gujarat High Court on 22nd April, 2008 and 7th May,

2008 in the appeals pending before it.

27. We, accordingly, set aside the orders dated

22nd April, 2008 and 7th May, 2008, passed by the

Division Bench of the Gujarat High Court in

F.A.No.853 of 2008 and C.A. Nos.2405 and 5618 of

2008 and maintain the initial order dated 29th

February, 2008. The appeals and the connected

Interlocutory Applications are, accordingly,

disposed of.

28. The High Court is requested to dispose of the

appeals pending before it at an early date without

being influenced by any observations made in this

judgment.

29. There will be no order as to costs.

______________J.

(ALTAMAS KABIR) 26

New Delhi ______________J. Dated:06.04.2009 (CYRIAC JOSEPH)