FAO (OS) No.108/2008 25 of 25 Reportable IN THE HIGH COURT OF DELHI AT NEW DELHI + FAO(OS) 108/2008 and CM Appl. No.3231/2008 Date of Hearing: 21.08.2008 Date of Decision: 25.09.2008 PANTALOON RETAIL INDIA LTD. ..... Appellant Through Dr.A.M. Singhvi and Mr. Rajiv Nayar, Senior Advocates with Mr.Rishi Aggarwal, Mr.Akshay Runga and Mr.Abhishek Kale versus DLF LIMITED & ORS ..... Respondent Through Mr.Soli J. Sorabji, Senior Advocate with Ms.Diya Kapur, Mr.Debmalya Banerjee, Ms.Mandeep Kaur, Mr.Abhishek Roy & Ms.Mansi Gupta CORAM :- *THE HON'BLE MR.JUSTICE A.K.SIKRI THE HON'BLE MR. JUSTICE MANMOHAN SINGH 1.Whether Reporters of Local papers may be allowed to see the Judgment? 2.To be referred to the Reporter or not? 3.Whether the judgment should be reported in the Digest? A.K. SIKRI, J. : 1. The plaint of the appellant, who filed suit for mandatory injunction etc. against the respondent herein,has been returned vide orders dated 8.2.2008 by the learned Single Judge on the ground that Delhi court lacks territorial jurisdiction to entertain the suit. Challenging that order, present appeal is FAO (OS) No.108/2008 25 of 25 preferred. Only those necessary facts which have bearing on the issue of territorial jurisdiction need a mention. For the sake of clarity, we maintain the nomenclature of the parties as in the suit. That means hereafter the appellant would be referred to as the plaintiff and the respondent No.1 as the defendant. 2. The defendant, DLF Limited, has constructed and developed a massive Mall known as “South Point” (defendant No.2). It is located at DLF City, Phase V, Sector 53, Village Waziarabad, Gurgaon, Haryana. Spaces in the said Mall are given to various traders on lease. The plaintiff also agreed to take on lease an area measuring 1,10,000 sq. ft. in the said Mall for a period of nine years @ Rs.39/- per sq. ft. A Memorandum of Understanding (MOU) in this behalf was signed between the parties on 12.5.2004. This MOU, inter alia, gives the details about the understanding reached between the parties. The defendant was also handed over a cheque of Rs.1,01,000/- by the plaintiff as token money. This cheque was duly encashed. We may note that at the time when this MOU was entered into, the construction of the Mall was still underway. It was completed sometime in the year 2006. After the completion of the Mall, e-mail dated 5.10.2006 was addressed by the defendant No.1 to the plaintiff offering a draft formal lease deed to be executed between the parties. The plaintiff objected to the said draft alleging that some terms of the MOU were not incorporated therein. FAO (OS) No.108/2008 25 of 25 Request was sent vide e-mail dated 10.10.2006 for incorporation of those terms. It is not necessary to go into the exact nature of dispute and exchange of further e-mails between the parties. Suffice it is to mention that dispute remained about the exact text of the intending agreement because of which lease agreement could not fructify. According to the plaintiff, the defendants were backing out because of boom in the real estate sector and increase in property prices. This led the plaintiff approach this Court by filing the suit, as aforementioned. 3. Along with suit, the plaintiff also filed the application under Order 39 Rules 1 and 2 of the Code of Civil Procedure (hereinafter referred to as the ‘Code’) seeking interim protection. Order dated 7.12.2007 was passed restraining the defendants from transferring the possession of the area measuring about 1,10,000 sq. fts. in favour of any third party or create any rights therein in favour of anyone contrary to MOU dated 12.5.2004 on the condition of deposit of Rs.80,00,000/-. The plaintiff deposited that amount in this Court. 4. On receipt of summons in the suit the defendants No.2 and 3 filed their written statements questioning the territorial jurisdiction of this Court. Defendant No.1 also took the similar plea, albeit in the form of IA No.14649/2007 filed under Order 7 Rule 10 of the Code praying that the plaint be returned for want of jurisdiction. FAO (OS) No.108/2008 25 of 25 5. The learned Single Judge has accepted the plea of the defendants, inter alia, on the ground that the property in question is an immovable property and is situated outside the territorial jurisdiction of this Court. It held that the suit filed by the plaintiff seeks relief of “possession” as well and thus this Court will not have the territorial jurisdiction to entertain that suit. The learned Single Judge referred to some case law (which we shall discuss at the appropriate stage) and on that basis, culled out the following principle which would govern the issue of jurisdiction in such cases:- “A perusal of different judgments on the question of jurisdiction shows that in case of a suit for specific performance of an agreement to sell, if the Plaintiff does not claim the relief of possession and only claims the relief of execution of sale deed, this Court can entertain the suit on the ground that Defendant resides within the jurisdiction of this Court. Thus, it is to be seen as to what is the nature of the suit of the Plaintiff.” 6. We may point out at this stage that the counsel for the parties also proceeded on the basis of aforesaid statement of law. However, it would still necessary to discuss the provisions of the Code to thrash out legal position. Section 16 of the Code makes the following reading:- “16. Suits to be instituted where subject-matter situated, subject to the pecuniary or other limitations prescribed: suits, (a) for the recovery of immovable property with or without rent or profits, FAO (OS) No.108/2008 25 of 25 (b) for the partition of immovable property, (c) for foreclosure, sale or redemption in the case of a mortgage of or charge upon immovable property, (d) for the determination of any other right to or interest in immovable property, (e) for compensation of wrong to immovable property, (f) for the recovery of movable property actually under distraint or attachment, shall be instituted in the Court within the local limits of whose jurisdiction the property is situated: Provided that a suit to obtain relief respecting, or compensation for wrong to, immovable property held by or on behalf of the defendant, may where the relief sought can be entirely obtained through his personal obedience be instituted either in the Court within the local limits or whose jurisdiction the property is situated, or in the Court within the local limits of whose jurisdiction the defendant actually and voluntarily resides, or carries on business, or personally works for gain.” 7. It is clear from a plain reading of Section 16 that in any suit where the relief claimed is of the nature described in clauses (a) to (f), such a suit in respect of immovable property is to be instituted in the Court within the local limits of whose jurisdiction the property is situate. In the present case, immovable property is located in Gurgaon, Haryana, which is outside the local limits of Delhi. Clause (a) deals with recovery of immovable property and clause (d) is about those suits where determination of any other right to or interest the property is called for. We are not concerned with other clauses in the present case. On the other hand, proviso to Section 16 lays down certain circumstances in which suit can be instituted even within the local limits of FAO (OS) No.108/2008 25 of 25 whose jurisdiction the defendant actually and voluntarily resides or carries on business or personally works for gain. Thus, normally a suit in respect of immovable property is to be filed where the subject-matter, i.e., the immovable property is situate. However, in the proviso an exception is laid down by providing that relief respecting or compensation for wrong to, immovable property can be obtained through the personal obedience of the defendant, the suit can also be instituted where the defendant resides etc. If the proviso is applicable, the principles stipulated in Section 20 of the Code would determine the territorial jurisdiction. In any case, in so far as the Court within local limits of whose jurisdiction the property is situate shall always have the jurisdiction even when case is covered by the proviso. 8. The question, therefore, is as to whether present case is covered by clause (a) or (d) of Section 16 of the Code on the one hand or proviso thereof is applicable and therefore, provisions of Section 20 of the Code can also be invoked. 9. To find answer to this question, we refer to certain precedents of the Apex Court as well as this Court. First case which needs mention is the judgment of the Supreme Court in Adcon Electronics Pvt. Ltd. v. Daulat and another, (2001) 7 SCC 698. In that case, vide agreement dated 12.7.1986 immovable property situate in Indore, MP, was agreed to be sold by the defendant to the plaintiffs. Suit for specific performance was filed in the High Court of FAO (OS) No.108/2008 25 of 25 Judicature at Bombay (now Mumbai) praying, inter alia, for a declaration that agreement dated 12.7.1986 and Memorandum of Understanding dated 1.8.1987 was still subsisting and binding on the defendant and a decree for specific performance of the said agreement and the memorandum was sought. The defendant took objection to the maintainability of that suit in Mumbai on the ground that immovable property was situate in Indore, MP. This plea was not accepted by either the Single Judge or the Division Bench of the Bombay High Court. It is in these circumstances the appeal came to be filed against the judgment of the Bombay High Court, before the Supreme Court, by the defendant. The Supreme Court held that a suit for specific performance simplicitor, in the absence of an explicit prayer for delivery of possession of the suit property, would not be treated as a “suit for land.” After taking note of certain judgments of the High Courts as well as that of Federal Court, the Supreme Court summed up the legal position, with approval, in the following words:- “14. In Debendra Nath Chowdhury v. Southern Bank Ltd., AIR 1960 Cal 626, a Division Bench of the Calcutta High Court took the view that the suit for specific performance of the contract to execute and register a lease with alternative claims for damages is not a “suit for land” within the meaning of clause 12 of the Letters Patent. 15. From the above discussion it follows that a “suit for land” is a suit in which the relief claimed relates to title to or delivery of possession of land or immovable property. Whether a suit is a “suit for land” or not has FAO (OS) No.108/2008 25 of 25 to be determined on the averments in the plaint with reference to the reliefs claimed therein; where the relief relates to adjudication of title to land or immovable property or delivery of possession of the land or immovable property, it will be a “suit for land”. We are in respectful agreement with the view expressed by Mahajan, J. in Moolji Jaitha case (supra).” 10. The Court further observed that though in a suit for specific performance of contract for sale of immovable property containing a stipulation that on execution of the sale deed the possession of the immovable property will be handed over to the purchaser and because of that it is implied that delivery of possession of immovable property is a part of the decree of specific performance of the contract but having regard to the provisions of Section 22 of the Specific Relief Act, unless relief for possession is specifically asked for, no court can grant that relief. Discussion on this aspect is contained in para 17 of the judgment, which is reproduced below:- “17. It may be seen that sub-section (1) is an enabling provision. A plaintiff in a suit for specific performance may ask for further reliefs mentioned in clauses (a) and (b) thereof. Clause (a) contains reliefs of possession and partition and separate possession of the property, in addition to specific performance. The mandate of sub- section (2) of Section 22 is that no relief under clause (a) and (b) of sub-section (1) shall be granted by the court unless it has been specifically claimed. Thus it follows that no court can grant the relief or possession of land or other immovable property, subject-matter of the agreement for sale in regard to which specific performance is claimed, unless the possession of the immovable property is specifically prayed for.” FAO (OS) No.108/2008 25 of 25 11. On this basis, the Court held that as in the case before it relief for possession was not specifically claimed, suit for specific performance was not to be treated as “suit for land” and therefore, Bombay High Court had the jurisdiction to entertain the suit on the basis of “cause of action”. Thus, the Court, in essence, held that where the suit filed is one for specific performance only without claim relief for possession, provision like Section 16 will have no application and the principle contained in Section 20 of the Code would be attracted for the purpose of determination of the territorial jurisdiction of a court. 12. We may point out at this stage itself that earlier judgment of the Supreme Corut in the case of Babu Lal v. Hazari Lal Kishori Lal and others, 1982 (3) SCR 94 was not taken note of by the Supreme Court. In that case, the decree for specific performance simplicitor was passed by the Court. In the execution of the said decree, the decree holder wanted possession as well. In view of Section 22 of the Specific Relief Act,1963 question arose before the Court as to whether decree for possession had to be specifically sought for. Referring to the provisions of Section 22 of the Specific Relief Act the contention of the judgment debtor was that as the plaintiffs had not claimed any relief for possession in the suit, they were precluded from claiming that relief at a subsequent stage. This contention of the judgment debtor was not accepted holding that Section 22 was an enabling provision. The FAO (OS) No.108/2008 25 of 25 legislative history behind enacting Section 22, Specific Relief Act, 1963, was noted and the Court opined that even if such a relief was not claimed at the initial stage of the suit, the Court could permit the plaintiff to include this relief at the subsequent stage. We may extract the following discussion in this behalf from the said judgment:- “Section 22 enacts a rule of pleading. The Legislature thought it will be useful to introduce a rule that in order to avoid multiplicity of proceedings the plaintiff may claim a decree for possession in a suit for specific performance, even though strictly speaking, right to possession accrues only when suit for specific performance is decreed. The Legislature has now made a statutory provision enabling the plaintiff to ask for possession in the suit for specific performance and empowering the court to provide the decree itself that upon payment by the plaintiff of the consideration money within the given time, the defendant should execute the deed and put the plaintiff in possession. The section enacts that a person in a suit for specific performance of a contract for the transfer of immovable property, may ask for appropriate reliefs, namely, he may ask for possession, or for partition, or for separate possession including the relief for specific performance. These reliefs he can claim, notwithstanding anything contained in the Code of Civil Procedure 1908, to the contrary. Sub-section (2) of this section, however, specifically provides that these reliefs cannot be granted by the Court, unless they have been expressly claimed by the plaintiff in the suit. Sub- section (2) of the section recognized in clear terms the well-established rule of procedure that the court should not entertain a claim of the plaintiff unless it has been specifically pleaded by the plaintiff and proved by him to be legally entitled to. The proviso to this sub-section (2), however, says that where the plaintiff has not specifically claimed these reliefs in his plaint, in the FAO (OS) No.108/2008 25 of 25 initial stage of the suit, the court shall permit the plaintiff at any stage of the proceedings, to include one or more of the reliefs, mentioned above by means of an amendment of the plaint on such terms as it may deem proper. The only purpose of this newly enacted provision is to avoid multiplicity of suits and that the plaintiff may get appropriate relief without being hampered by procedural complications.” 13. In first blush, one gets an impression that the judgment of the Supreme Court in Adcon Electronics (supra) is in conflict with Babu Lal (supra) in so far as the interpretation of Section 22 of the Specific Relief Act is concerned. Dr. Singhvi, learned senior advocate appearing for the appellant (plaintiff), however, made an endeavour to demonstrate that there was no such contradiction and the two cases could be reconciled. His submission was that though it was necessary to make a prayer for decree of possession to claim that relief as held in Adcon Electronics (supra), at the same time it was only an “enabling” provision and therefore, even if this relief is not claimed at the initial stage, amendment at subsequent stage to include this relief was permissible. Though this argument is contentious, we refrain from expressing a final view since this aspect does not arise for consideration. However, we would refer to the judgment in Babu Lal (supra) for other purpose at the appropriate stage. 14. Reverting back to the issue at hand, we move on to discuss another judgment of the Supreme Court in the case of Harshad Chiman Lal Modi v. DLF Universal Ltd. and another, AIR 2005 SC 4446. Incidentally, this was the FAO (OS) No.108/2008 25 of 25 case relating to the same defendant, namely, DLF Universal Ltd. The property in that case also, which was the subject-matter of agreement to sell, was situated in Gurgaon, Haryana. Suit for specific performance was filed in the Delhi High Court. Defendants had their head office at Delhi and the agreement was also entered into between the parties at Delhi. Payments were to be made at Delhi and some installments were, in fact, paid in Delhi. The factual position in the said case was, thus, somewhat identical to that of the present case. In that case also the defendants moved an application under Order 7 Rule 10 of the Code with the plea that Delhi court will not have territorial jurisdiction to entertain the suit in view of Section 16 of the Code. The plaintiff, on the other hand, referred to and relied upon the provisions of Section 20 of the Code and contended that since the defendants had their office in Delhi and also agreement was entered into in Delhi and thus, cause of action having arisen in Delhi, Delhi court had the requisite jurisdiction to entertain the suit. Identical conflict had, thus, arisen, namely, Section 16 vis-à-vis Section 20 of the Code and the Court was to determine as to which provision was applicable. The Apex Court held that as the property was situated in Gurgaon, Haryana, namely, outside the territorial jurisdiction of Delhi, Delhi courts will not have the jurisdiction to entertain the suit and thus, confirmed the judgment of this Court whereby the plaint of the plaintiff was rejected and returned for want FAO (OS) No.108/2008 25 of 25 of territorial jurisdiction. It would be of interest to reproduce the following discussion relevant for our purposes:- “14. Section 16 thus recognizes a well established principle that actions against res or property should be brought in the forum where such res is situate. A court within whose territorial jurisdiction the property is not situate has no power to deal with and decide the rights or interests in such property. In other words, a court has no jurisdiction over a dispute in which it cannot give an effective judgment. Proviso to Section 16, no doubt, states that though the court cannot, in case of immovable property situate beyond jurisdiction, grant a relief in rem still it can entertain a suit where relief sought can be obtained through the personal obedience of the defendant. The proviso is based on well known maxim “equity acts in personam, recognized by Chancery Courts in England, Equity Courts had jurisdiction to entertain suits respecting immovable properties abroad through personal obedience of the defendant. The principle on which the maxim was based was that courts could grant reliefs in suits respecting immovable property situate abroad by enforcing their judgments by process in personam, i.e. by arrest of defendant or by attachment of his property. 15. In Ewing vs. Ewing, (1883) 9 AC 34: 53 LJ Ch 435, Lord Selborne observed: “The Courts of Equity in England are, and always have been, courts of conscience operating in personam and not in rem; and in the exercise of h is personal jurisdiction they have always been accustomed to compel the performance of contracts in trusts as to subjects which were not either locally or ratione domicilli within their jurisdiction. They have done so, as to land, in Scotland, in Ireland, in the Colonies, in foreign countries.” FAO (OS) No.108/2008 25 of 25 16. The proviso is thus an exception to the main part of the section which in our considered opinion, cannot be interpreted or construed to enlarge the scope of the principal provision. It would apply only if the suit falls within one of the categories specified in the main part of the section and the relief sought could entirely be obtained by personal obedience of the defendant. 17. In the instant case, the proviso has no application. The relief sought by the plaintiff is for specific performance of agreement respecting immovable property by directing the defendant No.1 to execute the sale deed in favour of the plaintiff and to deliver possession to him. The trial court was, therefore, right in holding that the suit was covered by clause (d) of Section 16 of the Code and the proviso had no application. 18. In our opinion, the submission of the learned counsel for the appellant that the parties had agreed that Delhi Court alone had jurisdiction in the matters arising out of the transaction has also no force. Such a provision, in our opinion, would apply to those cases where two or more courts have jurisdiction to entertain a suit and the parties have agreed to submit to the jurisdiction of one court.” 15. Thus, in that case also on the premise that as the relief sought by the plaintiff was for specific performance of agreement respecting immovable property coupled with relief to deliver possession to him, suit was covered by clause (d) of Section 16 of the Code and proviso had no application. 16. Before discussing the applicability of the legal principles to the facts of this case, we deem it proper to discuss two Division Bench judgments of this Court. First judgment was delivered in FAO (OS) No.213/1990 and FAO (OS) No.4/1998 on 20.7.2007 in the case entitled K.G. Ringhshia v. Smt. Prakash FAO (OS) No.108/2008 25 of 25 Kaur. Significantly, judgment in the case of Babu Lal (supra) was not noted by the Division Bench. The two appeals which were decided by a common judgment dealt with the properties existing in Mumbai in respect of which agreements to sell were entered into. Suit for specific performance was filed in Delhi. Identical issue arose for consideration, namely, whether Section 16(d) or its proviso coupled with Section 20(c) of the Code would apply. Holding that mere agreement to sell does not create any right or interest in an immovable property, the Court answered the question by opining that Section 16(d) of the Code was not applicable