THE HON’BLE SRI JUSTICE V.V.S. RAO AND THE HON’BLE SRI JUSTICE B.N.RAO NALLA CIVIL MISCELLANEOUS APPEAL No.455 of 2009 31.12.2009 Between: Yuva Constructions Pvt. Ltd., 18-1-36, Temple Lane, Near Mango Market, Tarapet, Vijayawada, represented by its Authorised Signatory, T.Vijaya Kumar … Appellant AND Naisa Sudhakar Reddy, S/o.late Naisa Ramasubba Reddy And others ... Respondents THE HON’BLE SRI JUSTICE V.V.S. RAO AND THE HON’BLE SRI JUSTICE B.N.RAO NALLA CIVIL MISCELLANEOUS APPEAL No.455 of 2009 JUDGMENT:(per Hon’ble Sri Justice V.V.S.Rao) This appeal under Order XLIII Rule 1 of Code of Civil Procedure 1908 (CPC) is filed against the order dated 08.4.2009 in I.A.No.130 of 2008 in O.S.No.85 of 2008 on the file of the Court of IV Additional District Judge, Tirupati. By the said order, appellant, who is fourth defendant in the suit, has been restrained from alienating the suit schedule property by changing the physical features in any manner to third parties till the disposal of the suit. The suit schedule property is comprised in survey Nos.188/1 and 188/2 situated at Kotramangalam Village accounts of Renigunta Mandal in Chittoor District admeasuring Acs.5.27. The brief facts of the matter are as follows. Respondents 1 and 2 herein (hereafter, plaintiffs) filed the suit for specific performance of agreement of sale dated 21.7.2005 executed by defendants 1 to 3 after receiving balance sale consideration of Rs.1,12,02,000/- and delivered possession of suit schedule property. The appellant herein was also impleaded as fourth defendant (hereafter called as such) alleging that they erected a board at the suit schedule property and were taking up developmental works. Plaintiffs alleged that fourth defendant is a stranger and he has no manner of right thereto. They also allege that defendants 2 and 3 on behalf of first defendant firm entered into agreement of sale agreeing to sell suit schedule property for Rs.1,37,02,000/- and received advance amount of Rs.25,00,000/- and agreed to execute registered sale deed on or before 20.12.2005. They also allege that they paid Rs.10,200/- to Tirupathi Urban Development Authority (TUDA) for betterment charges and applied for approval of the layout. TUDA refused to approve the master-plan. The plaintiffs then approached defendants 1 to 3 for furnishing correct survey numbers of the property. Defendants 1 to 3 did not cooperate. On enquiry they came to know that survey numbers mentioned in the sale deed of defendants 1 to 3 were wrongly noted, which was also confirmed by revenue authorities. Plaintiffs therefore postponed payment of balance sale consideration and requested defendants 1 to 3 to obtain registered rectification deed and then execute registered sale deed in favour of plaintiffs. But in spite of repeated demands and plaintiffs expressing their readiness and willingness to perform their part of contract, defendants did not cooperate though they obtained rectification deed on 13.6.2007 from their vendors. Time is not essence of the contract and, therefore, vendors are bound to execute the sale deed after receiving balance sale consideration. They got issued notice on 28.12.2007 calling upon defendants 1 to 3 to receive balance sale consideration and to execute sale deed on 28.1.2008 before Sub Registrar, Renigunta. After receiving the same, vendors advised plaintiffs to be ready with the money and draft document at Sub Registrar’s Office. Therefore, on 28.1.2008 plaintiffs were present at the Sub Registrar’s Office, Renigunta, along with draft document and challans under which stamp duty was paid. Though they waited upto 5.00 pm, defendants 1 to 3 did not turn up. Suspecting the bona fides of the vendors, on 25.1.2008 plaintiffs visited the suit schedule property and found that name board erected by them was damaged and that fourth defendant along with 10 to 15 followers came there and threatened plaintiffs informing that he grabbed the land and, therefore, he is impleaded as a party. In their interlocutory application for temporary injunction, plaintiffs made similar averments. The trial Court on 08.7.2008 ordered ex parte ad interim injunction by passing an order, which reads as under. Heard the learned counsel appearing for the petitioners. Perused the affidavit of the petitioner filed in support of the petition and the documents filed along with the plaint. The petitioners filed the suit against the defendants for specific performance of agreement of sale dated 25.1.2005. It is the case of the petitioners that the respondent agreed to sell the petition schedule property to the petitioners for total consideration of Rs.1,37,02,000/- and received advance of Rs.25,00,000/- on the same day and that the respondents are not coming forward to execute regular registered sale deed in favour of the petitioners in spite of several demands. As seen from the record, it is very clear that the petitioners also got issued a legal notice to the respondent before filing the suit. Prima facie case and balance of convenience appear to be in favour of the petitioners. If notice is ordered before granting ad interim injunction, the very purpose for which this petition is filed may be defeated by delay. If the respondents are allowed to alienate the petition schedule property to third parties, the petitioner will be put to much hardship. To avoid multiplicity of proceedings and to keep the property in tact, I think, it is just and proper to grant ad interim. Issue ad interim injunction restraining the respondents from alienating the petition schedule property by changing the physical features in any manner to third parties. Notice to the respondents by 21.8.2008. The petitioners are directed to comply the provision of Order 30 Rule 3(a) CPC. The fourth defendant filed counter making following allegations and averments. Fourth defendant purchased suit schedule property from defendants 1 to 3 under a registered sale deed dated 04.7.2007 bearing document No.4697 of 2007 of Sub Registrar’s Office, Renigunta, duly paying sale consideration of Rs.11,69,940/- by way of demand draft. Fourth defendant also verified the title of the vendors and only after taking assurance from them that suit schedule property is free from any encumbrances and after obtaining all the title deeds and relevant documents they purchased the suit schedule property. They took possession of suit schedule property. After registration of sale deed, there was escalation of land rates. The vendors then requested for payment of higher rates, which was refused by fourth defendant. Therefore, defendants 1 to 3 colluded with plaintiffs, created a false document as if there was agreement in force earlier to the sale in favour of fourth defendant and got filed the suit. The said agreement has no validity and expired on 20.12.2005. Fourth defendant also purchased Acs.16.55 including suit schedule property and developed the property. Defendants 1 to 3 are aware of the sale deed. Subsequently they developed the property by spending huge amounts. They also obtained necessary orders from Revenue Divisional Officer (RDO) for mutation in the revenue records as well as permission for conversion of agricultural land into non-agricultural land. Fourth defendant also alleged that plaintiffs were not ready and willing to perform the contract and that they did not place any evidence that they committed breach of contract and that they are not bona fide purchasers. In the enquiry, the trial Court marked plaintiffs’ documents Exs.A1 to A17 which include the agreement of sale dated 21.7.2005 (Ex.A1), Registration copy of rectification deed dated 13.6.2007 (Ex.A2) and legal notice dated 28.12.2007 issued by plaintiffs (Ex.A3). Defendants’ documents being copy of sale deed dated 11.7.2005 under which defendants 1 to 3 purchased the property from M/s.Munireddy Venkata Reddy, Nadamuni Reddy, Gopala Reddy and Dasaradha Rami Reddy in favour of defendants 1 to 3 was marked as Ex.B1, encumbrance certificate was marked as Ex.B2 and registered sale deed dated 04.7.2007 executed by defendants 1 to 3 in favour of fourth defendant was marked as Ex.B3. Learned IV Additional District Judge, Tirupathi, considered the only question for consideration as to whether plaintiffs made out prima facie case and proof of balance of convenience and hardship warranting the grant of ad interim injunction observing that the fourth defendant failed to explain as to why defendants 1 to 3 sold the property at Rs.11,69,940/- when the market value is Rs.1,37,02,000/- and came to the conclusion that the agreement in favour of plaintiffs prima facie evidences bona fide purchase by plaintiffs, thought it fit proper to grant interim injunction and accordingly made ad interim ex parte injunction granted on 18.07.2008 absolute. The learned District Judge also opined that if the fourth defendant is allowed to alienate the property by making further constructions, the plaintiffs would suffer hardship. In this appeal, fourth defendant contends that the agreement set up by the plaintiffs is not bona fide and is doubtful. Apart from saying that defendants 1 to 3 are in collusion with the plaintiffs to defeat the rights of the fourth defendant under Ex.B3 sale deed, the learned senior counsel would urge that defendants 1 to 3 themselves purchased suit schedule property for Rs.2,63,500/- and therefore sale consideration under Ex.B3 cannot be considered as low. According to him, so as to defeat the rights of the fourth defendant, plaintiffs in collusion with defendants 1 to 3 mentioned the consideration as Rs.1,37,02,000/-. He contends that till the suit was filed, the plaintiffs themselves were not aware of the exact survey numbers of the property, they purchased under Ex.B1 suit agreement, dated 21.07.2005, which itself is typed on stamp paper purchased three months prior to the alleged agreement. He submits that even as per suit agreement of sale, the last date for payment of sale consideration was 20.12.2005, in default of which the vendors can forfeit the advance amount allegedly paid. Therefore, he submits that the agreement is unenforceable. Lastly, he submits that fourth defendant is a bona fide purchaser without notice of alleged prior sale in favour of plaintiffs, and therefore, the contract set up by plaintiffs cannot be specifically enforced. Learned counsel for plaintiffs (respondents 1 and 2 herein) submits that defendants 1 to 3 in collusion with fourth defendant has executed Ex.B3, sale deed, and the same does not in any manner affect the rights of the plaintiffs under Ex.B1, agreement of sale. According to him, even though defendants 1 to 3 obtained rectification deed from their vendors, on 13.06.2007, the same was never brought to the notice of the plaintiffs in spite of the fact that they paid necessary stamp duty by way of challan Ex.A5. Nextly, he contends that though the survey number was wrongly mentioned in the agreement of sale, plaintiffs can always seek specific performance after the defect is rectified by the vendors as contemplated under Section 13 of the Specific Relief Act, 1963. He placed reliance on Century Flour Mills v S.Suppiah[1], Sujit Pal v Prabir Kumar Sun[2], Sri Brahadambal Agency and Partnershi Firm v Ramasamy[3], Ashwani Kumar v Lachi Ram[4], Kishore Motiani v M/s.Om Prakash and Sons[5], Deendayal v Smt Harjot Kanwar[6], Ranga Reddy v P.Aswarthappa[7], Power Grid Corporation of India Limited v Nadipalloi Varakrypa Prasada Rao[8] and Taurus Homes Private Limited v Joint Collector No.1, R.R.District[9]. In the background of the case and having regard to the rival submissions, we have called upon the question as to whether the Court below was in error in granting ad interim injunction restraining the fourth defendant – the subsequent purchaser; from alienating the suit schedule property by changing the physical features to third parties. In a suit for specific performance of agreement of sale, of late, it has become common that the plaintiff also moves an interlocutory application for injunction restraining the defendant (vendor) from alienating the property pending adjudication of the rights of the plaintiff, to enforce the contract. If the plaintiff is also in possession, which is delivered to him under the suit agreement, it is also common that plaintiff seeks ad interim injunction restraining the defendant from interfering with the possession. In other case, the plaintiff can be said to have proved prima facie case if he convinced the Court that the suit agreement is valid, and that it is executed by the persons competent to sell, it is executed in respect of the property which is delineated and capable of easy identification, and also that he/she has been ready and willing to perform his/her part of the contract, and that defendant/vendor went back on the promise to cause legal injury to the plaintiff. There could be other factors of prima facie cases, depending on the circumstances. In a case where a third party comes forward saying that the same suit schedule property has been purchased subsequent to the suit agreement or such third party is already made a party to the suit, the plaintiff has to further prove that the subsequent purchaser had notice whether actual or constructive of the original contract which is sought to be enforced in the suit and that such subsequent contract was effected by the defendant only to defeat the interests of the plaintiff. As pointed out by learned senior counsel for the fourth defendant, the plaintiffs impleaded the fourth defendant alleging that ten to fifteen followers of fourth defendant entered into the suit schedule land saying that it has been grabbed and threatened the plaintiffs. There is not even an allegation that the fourth defendant is subsequent purchaser with knowledge and notice of the suit agreement in favour of the plaintiffs. When it was specifically pleaded and evidence was adduced by marking Ex.B.3, registered sale deed, which itself is a constructive notice to the plaintiffs, it is rather curious for the plaintiffs to contend that the sale deed in favour of the fourth defendant is not bona fide. When the competing parties rely on registered documents and/or unregistered agreements of sale, the Court must attach importance to the registered documents notwithstanding the fact that the sale consideration of registered document may be less and sale consideration shown in the unregistered agreement of sale may be more, which by itself is not relevant. Indeed, it would be improper to ignore registered sale deed in favour of the fourth defendant only on the ground that it is for consideration of Rs.11,69,940/- especially when defendants 1 to 3 themselves purchased the property under Ex.B.1, sale deed, for a sum of Rs.2,63,500/-. Therefore, in the absence of any plea that the fourth defendant is a subsequent purchaser with notice of prior sale and in the absence of even rudimentary proof, it cannot be said that the plaintiffs have prima facie case in their favour to seek specific enforcement of contract. As per Section 19 of the Specific Relief Act specific enforcement of contract can be denied if there is a subsequent purchaser who is a transferee for value and who paid money in good faith and had no notice of original contract. Plaintiffs never made any attempt to prove in that direction. This Court after perusal of Ex.B1, dated 11.07.2005, Ex.A1, dated 21.07.2005 and Ex.B3, dated 04.07.2007 is convinced that there is unexplained discrepancy in the case set up by plaintiffs. Plaintiffs’ agreement is typed on non-judicial stamp paper which was purchased by first plaintiff on 15.04.2005. The agreement was entered on 21.07.2005. Two probabilities are that the stamp paper was purchased on 15.04.2005 and used and executed on 21.07.2005 or the signatures were obtained on 15.04.2005 and later agreements were typed on stamp papers. In either of these cases, the agreement itself creates suspicion. A copy of the written statement filed by second defendant – partner of first defendant, is supplied by plaintiffs. Though the execution of the agreement is admitted, its enforceability is denied. All the allegations made by plaintiffs are categorically denied with reference to each of the allegations and a further allegation is made that the plaintiffs have set up a frivolous case. They alleged that plaintiffs failed to comply with the terms and conditions of Ex.A.1, that they were never ready to perform their part of the contract within the time stipulated though the time is essence of the contract and also expressed their inability and requested defendants 1 to 3 to refund the advance amount. Therefore, second defendant offered that they sold the plaint schedule property to fourth defendant, after obtaining rectification deed although no such deed is required and delivered possession on the date of Ex.B.3. Thus, when the vendors of the plaintiffs themselves dispute the enforceability of the agreement of sale on the ground that plaintiffs went back on their promise and requested for refund of the advance amount paid, prima facie case in their favour cannot readily be inferred. The second defendant, who filed the counter on behalf of the first defendant, also alleged that defendants 1 to 3 never agreed to sell plaint schedule properties to plaintiffs and Ex.A.1 agreement is in respect of properties mentioned in the schedule to Ex.A.1. This also creates a doubt as to whether defendants 1 to 3 sold the plaint schedule property to plaintiffs under Ex.A.1. Here it is necessary to notice that the particulars of the property purchased by defendants 1 to 3 under Ex.B.1, the property they allegedly sold to plaintiffs under Ex.A.1 and the property purchased by fourth defendant under Ex.B.3. Under Ex.B.1, dated 11.07.2005, defendants 1 to 3 purchased land admeasuring Acs.5.27 out of total extent of Acs.8.53 in survey No.188/2 situated in No.19, Kotramangalam village of Renigunta Mandal. The said land is bounded on East - survey No.188/2, west – pathway, north – road leading to Panniru canal and south – land of Kotramangalam Venkata Reddy. In Ex.A.1, suit agreement, dated 21.07.2005, the boundaries are the same and the land covered by Ex.A.1 is also comprised in survey No.188/2. But, under sale deed, Ex.B.3, dated 04.07.2007, fourth defendant purchased land admeasuring Acs.2.42 in survey No.188/1 and Acs.2.85 in survey No.188/2 (totally admeasuring Acs.5.27) and the said land is bounded on East by land of Gollapalli Muni Reddy, west by pathway, north by road leading to Panniru canal and south by land of Kotramangalam Venkata Reddy. The plaint schedule, however, does not conform to the schedule in Ex.A.1, but curiously to the schedule in Ex.B.3. This is sought to be explained by the plaintiffs that they realize the incorrect survey numbers when they approached TUDA, that they requested defendants 1 to 3 to obtain necessary rectification deed from vendors and though such rectification deed was obtained on 13.06.2007, the same was withheld from plaintiffs. This appears to be highly improbable for two reasons. Indisputably, Ex.A1 was executed on 21.07.2005 and till 28.07.2007, when they issued notice, the plaintiffs did not make any efforts to pay balance of consideration of more than Rupees one crore nor issued any notice to defendants 1 to 3. Secondly, Ex.B.3 sale deed was executed in favour of fourth defendant on 04.07.2007, after obtaining rectification deed on 13.06.2007, which is quite probable. In addition, counsel for plaintiffs has placed before this Court the proceedings of Revenue Divisional Officer dated 15.12.2009 whereunder necessary permission was granted for conversion of agricultural land to non-agricultural use. Therefore, as alleged by defendant No.2 in the written statement, the plaint schedule property is certainly not the land which is mentioned in the schedule under Ex.A1, agreement of sale. For these reasons, we are not able to approve the findings recorded by Court below that the plaintiffs proved prima facie case and balance of convenience. Admittedly, plaintiffs were not in possession of the property and it is only fourth defendant who is in possession of the property. Further, specific performance can also be denied and compensation is awarded. As noticed supra, though as admitted by second defendant, the fourth defendant is subsequent purchaser, plaintiffs did not even allege that fourth defendant had notice of prior sale. Therefore, Section 19(b) of Specific Relief Act would be attracted. We, however, hasten to add that all these matters are to be gone into after a full trial and observations are only intended for the purpose of this appeal and are not intended to influence the independent consideration by Court below. In the result, for the above reasons, the impugned order of the Court below is set aside and I.A.No.130 of 2008 in O.S.No.85 of 2008 shall stand dismissed. We direct the parties to bear their respective costs. The civil miscellaneous appeal is accordingly allowed. No costs. _______________ (V.V.S.RAO,J) __________________ (B.N.RAO NALLA, J) December 31, 2009 YS [1] AIR 1975 Madras 270 (FB) [2] AIR 1986 Calcutta 220 [3] AIR 2002 Madras 352 [4] AIR 2003 Himachal Pradesh 28 [5] AIR 2003 Delhi 166 [6] AIR 2003 Rajasthan 202 [7] 2009 (2) ALT 127 [8] 2209 (2) ALT 135 [9] 2009 (4) ALT 627