IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD WEDNESDAY, THE TWENTY EIGHTH DAY OF APRIL TWO THOUSAND AND TEN PRESENT THE HON'BLE SRI JUSTICE VILAS V. AFZULPURKAR CIVIL REVISION PETITION No.1875 of 2008 Between: M/s. Sravanthi Constructions Pvt. Ltd. ... PETITIONER AND M/s. Sirisampada Constructions and three others. ...RESPONDENTS Counsel for the Petitioner : MR. MASTHAN NAIDU CHERUKURI Counsel for the Respondent No.1: MR. K. DURGA PRASAD Counsel for the Respondent No.2: MR. T.S. ANAND Counsel for the Respondent No.3: --NA-- Counsel for the Respondent No.4: MR. P. VENUGOPAL The Court made the following: ORDER: This revision is preferred by the second plaintiff – M/s. Sravanthi Constructions Private Limited (hereinafter referred to as ‘Sravanthi’) and is directed against the order of the lower appellate Court in CMA.No.31 of 2008 dated 24.03.2008 whereunder the temporary injunction granted by the trial Court was vacated. The first respondent – M/s. Sirisampada Constructions (hereinafter referred to as Sirisampada’), in the revision petition is defendant No.1 and respondents 3 and 4 in the revision are its partners and arrayed as defendants 2 and 3 in the suit O.S.No.1669 of 2007. The second respondent – LIC Employees’ Mutually Aided Cooperative House Building Society (hereinafter referred to as ‘Society’) in the revision petition was plaintiff No.1 along with the petitioner herein but later by order of the trial Court dated 22.02.2008, the said plaintiff No.1 is transposed as defendant No.4. Apparently, the petitioner/plaintiff and the said respondent/defendant No.4, who were together in filing of the suit and obtaining of temporary injunction, have fallen out and the said plaintiff No.1 is now supporting defendant No.1. 2. For the sake of convenience, the parties are referred to by their names as referred to above. The facts, in brief, as they emerge from the records and the contentions of both sides, which are relevant, are as follows: (a) The society succeeded in obtaining a decree of specific performance in its favour against M.A. Gafar and others, who were original owners, by virtue of a decree of the learned III Additional Chief Judge, City Civil Court, Hyderabad in O.S.No.311 of 1980 dated 11.03.1997. The suit filed by the society against the said owners for specific performance of agreement of sale dated 28.03.1974 was decreed in favour of the society. It is stated that the said decree was challenged right up to the Honourable Supreme Court and the decree was confirmed by final orders of the Supreme Court dated 12.01.2006. (b) The society had claimed an agreement regarding 16,000 sq. yards of land forming part of Sy.No.20 (new) of Yellareddyguda, Ameerpet, Hyderabad. Under the said suit agreement from M/s. Gafar and others, the society had filed O.S.No.311 of 1980, referred to above, seeking specific performance. After obtaining decree dated 11.03.1997 in the said suit, the said vendors filed appeals and obtained stay of execution of decree. The society, therefore, was apprehensive that the execution of the decree would be delayed and had entered into the Memorandum of Understanding (MOU) with Sirisampada dated 23.10.1998 marked as Ex.B1. It was agreed between the parties that the legal proceedings will be continued till final settlement and the society shall carry out all the responsibilities for conducting all Court cases and the parties had agreed that total consideration of Rs.7 crores shall be paid by Sirisampada to the society towards consideration for the decretal property. In the meanwhile, as an earnest money, Sirisampada had paid Rs.1.10 crores on the date of MOU to the society and it was agreed between the parties that the MOU could be completed expeditiously and for that purpose, the time frame of 1½ year was agreed upon and it was the responsibility of Sirisampada to ensure the execution and registration of sale deed either by brining around the judgment debtors or through the Court. Sirisampada had also undertaken to obtain all Government permissions required in the meanwhile. It was also agreed that within four months from the execution of sale deed in favour of the society the parties shall enter into a regular agreement of sale and at that time, Sirisampada shall pay an amount of Rs.37 lakhs and balance amount will be paid within one year of the agreement. It was further agreed that on completion of registration of sale deed in pursuance of the decree in favour of the society both parties had clearly understood that an agreement of sale shall be entered into by and between them and the money paid, as earnest money, shall be taken as part payment of sale consideration to set off against total sale consideration agreed upon between the parties. The payment of said amount of Rs.1.10 crores is evidenced by receipts of society – Exs.B2 and B3 both dated 23.10.1998 for Rs.80 Lakhs and Rs.30 Lakhs. (c) As stated above, the litigation arising out of the decree for specific performance dated 11.03.1997 went up to the Honourable Supreme Court and ultimately, the decree was confirmed on 12.01.2006. The society, thereafter, obtained a registered sale deed in execution of the said decree for the entire decretal extent of 16,000 sq. yards under a registered sale deed bearing Document No.3324 of 2006 dated 27.08.2001 executed by the learned III Additional Chief Judge, City Civil Court. The society also sought possession in pursuance of the said decree and sale deed and by orders of the learned III Additional Chief Judge, City Civil Court in E.P.No.14 of 1997, the society was put in possession of the entire land on 06.07.2006 and in view of the satisfaction of the decree, the said EP.No.14 of 1997 was closed on 17.08.2006. The society, therefore, became the absolute owner and possessor of the said entire property and it claims that it had obtained electricity connection and hired security personnel to protect the property. (d) Minute book of society, marked as Ex.A2, shows that the Board of Directors of the society in their meeting dated 16.07.2007 discussed the agenda item 3 for passing a resolution regarding development of residential flats on the Yellareddyguda site. The minutes of the said meeting record that the Secretary informed the meeting about the quotations received from 4 developers and that they were opened by the President and the details of the quotations were recorded in the minutes. It was, further, recorded that on comparing the quotations, it was found that the quotation of Sravanthi is found to be more favourable and beneficial to the society and its members and on further discussion, the Directors unanimously felt that they should call the developers immediately for discussion to find out whether they are prepared to give some more benefits to the society. Ultimately, resolution No.5 was passed resolving to give the land for development of residential flats on sharing basis and vide resolution No.6, four Directors were nominated and authorized to sign on petitions, representations including legal proceedings and do all necessary acts and things. A general body meeting was also held on 25.07.1997 and under agenda item 2 the general body discussed the proposal of giving land of the society for development of residential flats to developers on sharing basis. The minutes, further, record that the offer of Sravanthi including improvement of their offer and draft development agreement was read down and discussed and members in general expressed happiness and wanted the Board to expedite the matter and unanimously resolved to approve vide general body resolution No.7, the draft development agreement cum GPA be executed by the society with Sravanthi and the President and the Secretary were authorized to execute the necessary documents. (e) Based on the above resolutions, a development agreement cum GPA dated 30.07.2007 – Ex.A7 was executed by the society in favour of Sravanthi and the same was also registered as possession of the schedule property was delivered by the society to Sravanthi vide clause (4) of the said agreement. The delivery of possession was also confirmed by the society under its letter addressed to the Executive Director of Sravanthi dated 30.07.2007 – Ex.A25 and Sravanthi also acknowledged the delivery of possession under the letter addressed to the society dated 30.07.2007 – Ex.A3. (f) The plaintiffs alleged that since then they have installed security, telephone, electricity etc. Exs.A17 to A20, A22 to A24 and A26 to A32 bills are relied upon by the plaintiffs to show that they continued in possession. (g) In or about 11.08.2007 when there was alleged threatened interference with the possession, as alleged in Para 8 of the plaint apprehending that the same is the result of the pressure put by the defendants 2 and 3 on the President and Secretary of the society and apprehending stoppage of developmental work, the society as well as Sravanthi joined together as plaintiffs 1 and 2 and filed O.S.No.1669 of 2007 before the learned V Senior Civil Judge, City Civil Court, Hyderabad seeking relief of perpetual injunction against Sirisampada and its partners restraining them from interfering with the peaceful possession and enjoyment of the suit property by the plaintiffs. The suit property is described as 12,951 sq. yards situated at Sy.No.20 (new) in T.S.No.4/2, Yellareddyguda with the specific boundaries. In the said suit ad interim injunction was granted on 16.08.2007. (h) Sirisampada filed a counter to the said application for injunction, inter alia, stating that it holds an MOU dated 23.10.1998 in its favour and out of total consideration of Rs.7 crores, it has already paid Rs.1.10 cores and on account of prolonged litigation, which was the subject matter of CCCA.Nos.36 and 58 of 1998 before this Court no further proceedings could be taken till the appeals were dismissed by common judgment dated 24.11.1999 and L.P.A.Nos.151 and 150 of 2000 were also dismissed on 21.07.2000. Further, Civil Appeal Nos.6747 and 6748 of 2001 were finally dismissed by the Supreme Court on 12.01.2006. They, further, claim to have paid certain additional amounts in cash as well as towards registration, stamp duty, security etc. aggregating to Rs.39,34,000/- till July 2007 and it was claimed that the society acknowledged the receipt of the said amount from Sirisampada. It was, therefore, claimed that the alleged development agreement in favour of Sravanthi dated 30.07.2007 – Ex.A7 is obtained by connivance and fraud with the then President and Secretary of the Society and after coming to know of the same, the Board of Directors removed the said President and Secretary of the society and resolved and cancelled the said development agreement cum GPA by executing a deed of cancellation – Ex.A33 being Document No.3491 of 2007 dated 15.10.2007. It is alleged in the last preamble of the deed of cancellation that though the society never delivered possession of the said property to Sravanthi, as such, recitals are there in the said development agreement; the society decided to cancel the said development agreement as it was never acted upon and that possession remained with the society. (i) The society, thereafter, executed agreement of sale cum GPA dated 29.10.2007 – Ex.B4 in favour of Sirisampada and in clause (7) thereof, it is stated that the society has delivered vacant physical possession to the purchaser. The said document is also registered as Document No.3614 of 2007 and the schedule of the property is with respect to 16,000 sq. yards, which was the suit schedule property in the specific performance suit of the society, referred to above, being O.S.No.311 of 1980. (j) Based on the recitals in the counter affidavit, as above, the trial Court heard and passed final orders in I.A.No.1222 of 2007 on 22.02.2008 granting temporary injunction in favour of both the plaintiffs i.e. society as well as Sravanthi. The trial Court found that, prima facie, the possession of the petition schedule property was in the hands of Sravanthi on the date of filing of the suit, as under suit agreement – Ex.A1 the society had, admittedly, delivered possession to Sravanthi. The trial Court also found that the said possession was also confirmed by the society as well as Sravanthi under letters of confirmation – Exs.A25 and A3 respectively and in view of ad interim injunction granted by the Court in favour of both the plaintiffs on 16.08.2007, the subsequent deed of cancellation of development agreement of Sravanthi and subsequent new development agreement between the society and Sirisampada including a clause therein that possession is delivered to Sirisampada was, prima facie, against the documents of the plaintiffs and the ad interim injunction dated 16.08.2007. The trial Court, therefore, found that all the larger issues with respect to fraud, misrepresentation and the validity of development agreement of Sravanthi etc. will be gone into in the suit and consequently, came to the conclusion that the second plaintiff established, prima facie, case and entitled to temporary injunction. As mentioned above, the society apparently having fallen out with Sravanthi, an application was made before the trial Court to transpose the society as defendant No.4 and I am informed that by order dated 22.02.2008 the society has been transposed from the status of first plaintiff to that of defendant No.4 and now in the suit and in the injunction application Sravanthi alone is the plaintiff/petitioner. 3. Sirisampada filed an appeal being CMA.No.31 of 2008 against the said order of injunction granted by the learned III Additional Chief Judge in I.A.No.1222 of 2007 dated 22.02.2008 and under the impugned order dated 24.03.2008 the said appeal has been allowed. Hence, this revision. 4. Mr. E. Manohar, learned senior counsel, appearing for Sravanthi has traced out various dates and events with reference to the documents marked in the suit. In the opening paragraphs of this judgment all those facts are mentioned as far as possible in chronological order in order to appreciate the question involved in the matter. 5. Learned senior counsel contended that the MOU between the society and Sirisampada dated 23.10.1998 – Ex.B1 had worked itself out as Sirisampada did not adhere to the time schedule fixed under clause (3) and (8) of the said MOU. He submitted that the time for discharging of obligations for Sirisampada under the said MOU expired long back as 1½ year’s time was stipulated under the clause (3), which was never fulfilled by Sirisampada. He, therefore, relies upon the recitals in Ex.B4 development agreement cum GPA dated 29.10.2007 in favour of Sirisampada wherein the society as well as Sirisampada specifically recorded in the preamble as follows: “AND WHEREAS, one of the parties to the said MOU/Agreement dated 23.10.1998, namely Sri. Paruchuri Sri Krishna failed to discharge his obligations and in fact abandoned the same. The Vendor herein in view of the abandonment of the said MOU/Agreement by the said Sri. P. Krishna, entered into further negotiations to modify certain terms of the said MOU/Agreement dated 23.10.1998 and finalized the modified terms.” 6. Learned senior counsel submits that in the documents as relied upon by Sirisampada itself, the fact of abandonment of the MOU is accepted by the society as well as Sirisampada and in any case, neither the society nor Sirisampada had possession of the schedule property on the date of MOU. He, therefore, submitted that the society got possession only through Court when the decree for specific performance was executed and the possession was delivered to the society through the Court on 06.07.2007, which was further delivered to Sravanthi under the development agreement – Ex.A7 dated 30.07.2007. He, therefore, submits that the said possession, which is specifically recorded in clause (4) of the said development agreement, is further confirmed by Exs.A25 and A3 both dated 30.07.2007 under letter of confirmation of society and Sravanthi respectively. He also relied upon telephone bills, electricity bills, which are marked as Exs.A17 to A20, A22 to A24 and A26 to A32 to contend that on the date of suit i.e. 16.08.2007 there was abundant documentary evidence to show that Sravanthi was in possession. Learned counsel, therefore, submits that the trial Court was justified in granting ad interim injunction and further confirmed the same by issuing temporary injunction under the order of the trial Court dated 22.02.2008. Learned counsel, therefore, submits that, prima facie, satisfaction of possession and the same being lawful, as having been delivered by the owner (society) to the developer (Sravanthi) under registered development agreement was rightly been found to satisfy the existence of, prima facie, case in favour of Sravanthi and the appellate Court was clearly in error in vacating the said temporary injunction. 7. Learned counsel also criticized the contention of Sirisampada that society delivered possession to it under Ex.B4 dated 29.10.2007 and subsequent development agreement. He submitted that the unilateral cancellation of Sravanthi’s development agreement by society under Ex.A33 dated 15.10.2007 is itself illegal and consequently, by the date of the subsequent development agreement – Ex.B4 executed by the society in favour of Sirisampada, the society itself did not have possession. The recital in the said development agreement that possession is delivered to Sirisampada is, therefore, liable to be rejected as by that date the possession was already with Sravanthi under the development agreement – Ex.A7 dated 20.07.2007. Learned counsel, therefore, submits that the society had entered into the development agreement with Sravanthi after due deliberations in the meeting of the Board of Directors as well as due consideration by the general body where the draft development agreement proposed by Sravanthi was discussed and approved and only thereafter, Ex.A7 development agreement was executed and registered. He, therefore, emphatically denied any fraud, misrepresentation or connivance as alleged by Sirisampada and submitted that Sravanthi is entitled to continuation of injunction pending the suit. 8. Mr. B. Adinarayana Rao, learned counsel for Sirisampada, contended that a sum of Rs.1.10 crores having been paid by his client on the date of MOU – Ex.B1 dated 23.10.1998 is not disputed even now by the society. Further, admittedly, the decree for specific performance was subject of litigations in first appeal, LPA and civil appeal, as mentioned above, and as such, Sirisampada could not have taken further steps and only when the litigation was settled by final orders of the Honourable Supreme Court on 12.01.2006 and only after the registered sale deed is executed in favour of the society and possession is delivered to the society, the said MOU could be further worked out. He has, therefore, submitted that the contention of Sravanthi or for that matter the society that there was any abandonment of the said MOU by Sirisampada is completely misconceived and incorrect. He has, further, pointed out that the allegation of connivance and fraud against the office bearers, who executed Ex.A7 development agreement in favour of Sravanthi is established by the fact that no consideration flowed to the society under the said agreement and the terms and conditions thereof, further, show that almost 80% of the developed area is left to the developer and hardly 20% is retained by the society. Learned counsel, therefore, submits that the trial Court has not appreciated any of these aspects. 9. He, further, submitted that Sravanthi is guilty of suppression of relevant facts from the notice of the trial Court, as even before the execution of development agreement – Ex.A7, Sravanthi was aware of the MOU – Ex.B1 entered into by the society with Sirisampada. He relied upon Ex.B5 dated 30.07.2007 a letter issued by Sravanthi in favour of the society confirming and declaring that the society has apprised Sravanthi of all earlier litigations and the MOU with Sirisampada and had undertaken full responsibility of dealing with Sirisampada and settling with it without making the society liable for any consequences. He relied upon another letter Ex.B6 also dated 30.07.2007 executed by Sravanthi in favour of society wherein Sravanthi had reserved 38,000 sq. feet of built up area with proportionate undivided share in the land for meeting legal expenses and other expenses for settlement of third party claims. He states that Sirisampada has brought all these facts to the notice of the Court, but the trial Court has failed to consider that plaintiff, who had sought specific relief of injunction, is not entitled to any relief as it has approached the Court with unclean hands. 10. Learned counsel supports the impugned order of the lower appellate Court by relying upon the decisions of the Supreme Court in GUJARAT BOTTLING CO. LTD v. COCA COLA CO.[1] in support of his contention that injunction being an equitable relief the conduct of the plaintiff seeking injunction must be fair; in M. GURUDAS v. RASRANJAN[2] for the proposition that conduct of the plaintiff is very relevant and plaintiff must be bonafide in approaching the Court and there must be serious question involved, which requires trial. The principles regarding grant of temporary injunction is settled by the Honourable Supreme Court and the learned counsel relies upon a decision of the Supreme Court in SEEMA ARSHAD ZAHEER v. MUNICPAL CORPN. OF GREATER MUMBAI[3] wherein it was held that the trial Court’s order granting injunction if found to be arbitrary and capricious, the appellate Court would be justified in interfering therewith. Lastly, he relied upon AJENDRAPRASADJI NARENDRAPRASADJI PANDEY v. SWAMI K. NARAYANDASJI[4] wherein it is laid down that Court must consider cumulative factors of prima facie case, balance of convenience and irreparable loss to the plaintiff by refusal of injunction. 11. Mr. T.S. Anand, learned counsel appearing for the society, has supported Sirisampada’s contentions by stating that there was no abandonment of MOU – Ex.B1. He contended that even when the society was transposed as D4 no affidavit is filed by Sravanthi to substantiate its claim for possession. Further, Exs.A9 and A10 and payment of electricity bills, telephone bills etc. which are relied upon by Sravanthi are for such short period that they cannot be accepted as having established the possession of Sravanthi. Further, after registered cancellation deed – Ex.A33 canceling Ex.A7 development agreement executed in favour of Sravanthi, there is no privity of contract between the society and Sravanthi. He submits that even otherwise, there is no monetary transaction under Ex.A7 development agreement and now that the society is transposed as defendant No.4, being an admitted true owner, there cannot be any injunction against the society. 12. In the light of this voluminous record and elaborate contentions of the learned counsel appearing on behalf of the parties, the point that requires consideration is: “Whether Sravanthi – petitioner herein has established, prima facie case, balance of convenience and irreparable loss so as to warrant grant of temporary injunction in its favour?’ 13. The facts of the case, as narrated above, show that under Ex.A7 dated 30.07.2007 out of 16,000 sq. yards which the society had obtained under a registered sale deed dated 27.08.2001 through the Court. However, it was said to be in possession of only 12,951 sq. yards as there were encroachments with regard to 300 sq. yards to the north of the site and remaining area was used by the society for the formation of roads on Eastern and Southern site. The said development agreement was, therefore, only with respect to 12,951 sq. yards. It is also recited therein that the said property was purchased more than 33 years ago when all members of the society were young and were in service but after the litigation has come to an end, the members have retired and become financially weak and are not even in a position to secure individual housing loans and in that view of the matter, the general body unanimously gave the schedule property for development to the developer, who can fund the development by constructing residential apartments on sharing basis with all amenities and that the members of the society get flats without incurring any expenditure including registration expenses and in that background, the said development agreement was entered into with Sravanthi under Ex.A7. The minutes of the meeting – Ex.A2, referred to in the opening paragraphs of the judgment, prima facie, show that Sravanthi was selected as a developer after examination of three other quotations received by the managing committee and on comparison, the general body approved Sravanthi as the developer. Further, the draft development agreement