Careful scrutiny is called for in suits of specific performance to a greater degree since after the amendment to Section 10 of the Specific Relief Act: High Court of Delhi

 IN THE HIGH COURT OF DELHI AT NEW DELHI Pronounced on: 22nd October 2021 CS(OS)33 2021 I.As.790 2021 & 1206 2021 read with Section 151 CPC for filing of additional documents) ASHWANI KUMAR Plaintiff Through: Mr. Jayant Mehta Sr. Advocate with Mr. Sambit Nanda and Ms. Anu Srivastav Advocates ADITYA MANNOHAR BHIDE AND ORS. Through: Ms.Malavika Rajkotia Mr.Vivek Singh and Ms. Akriti Tyagi Advocates for D 1 HON BLE MS. JUSTICE ASHA MENON JUDGMENT The plaintiff Ashwani Kumar has filed the present suit for specific performance of an oral agreement to sell property bearing No.E 63 Vasant Marg Vasant Vihar New Delhi 110057 measuring 1240 sq. yds. hereinafter referred to as the “Suit Property”). The four defendants are the owners of the suit property. It is to be noted that summons in the suit had not been issued as Ms.Malavika Rajkotia learned counsel for the defendant No.1 appearing on advance notice submitted that the suit was without cause of action and deserves to be rejected. In between the CS(OS) 33 2021 parties were referred to the Delhi High Court Mediation and Conciliation Centre to enable them to work out an amicable settlement. However the Mediation Centre reported that the efforts had failed. 2. Mr. Jayant Mehta learned senior counsel for the plaintiff submitted that the question of maintainability could be raised by the defendants after the summons and the notice were issued and if necessary a preliminary issue in this regard could also be framed. There was no occasion to allow the defendants to raise objections to the maintainability of the suit without even the defendants being summoned in this suit. It was submitted that the defendants could not be heard at this juncture. It was also submitted that the question of existence and non existence of an oral agreement would be a matter of trial and evidence. Relying on the various emails placed on the record at pages No.6 to 28 and 30 to 34 in the “Documents Folder” of the E file filed by the plaintiff it was submitted that it was clear that the defendants were interested in selling the suit property and the plaintiff was interested in its purchase. The sale price was fixed at Rs.70 crores. However subsequently on 10th November 2020 the defendant No.1 became dishonest and sought a higher sale consideration of Rs.80 crores which derailed the entire process. It was submitted by the learned senior counsel that at all times the plaintiff was ready and willing to perform its part of the contract and had kept the required amount in the bank for immediate payment of the consideration as was reflected in the Certificate dated 11th January 2021 issued by the State Bank of India. Learned senior counsel for the plaintiff also pointed out that the CS(OS) 33 2021 law recognized oral agreements to sell and the courts had enforced such oral agreements directing the vendor to execute sale deeds in terms of the said oral agreements. Learned senior counsel argued that the court can consider only the averments made in the plaint and look into the documents that were relied upon by the plaintiff to determine this question as to whether there was a cause of action disclosed and could not consider the stand taken by the defendants at this juncture. Reliance has been placed on several judgments being Kollipara Sriramulu v. T. Aswatha Narayana 3 SCR 387 Aloka Bose v. Parmatma Devi 2009) 2 SCC 582 Brij Mohan v. Sugra Begum 4 SCC 147 Nathulal v. Phoolchand 3 SCC 120 Devender Singh v. Malik Buildcon Pvt. Ltd. 2018 SCC OnLine Del 10920 Ravinder Singh v. Chuckles Kohli 2010 SCC OnLine Del 4271 and Chuckles Kohli v. Ravinder Singh 2012 SCC OnLine Del 2135 in support of these contentions. In this regard it was also submitted that the plaintiff had filed an application under Order VII Rule 14(3) the Code of Civil Procedure 1908seeking to place on record a recorded conversation between the plaintiff Sh.Virendra Sahlot and the defendants No.1 and 2 along with its transcript to show that in actual fact an oral agreement had been reached between the parties which the plaintiff could legitimately seek to enforce. Thus it was submitted that the suit was maintainable and the summons be issued the pleadings be completed and the interim protection be granted restraining the defendants from creating any third party interests in the suit property. Learned counsel for the defendant No.1 referred to an order dated CS(OS) 33 2021 23rd July 2021 of a Co ordinate Bench of this Court in Tajunissa v. Vishal Sharma 2021 SCC OnLine Del 3803 to submit that the courts had the powers to determine the maintainability of a suit even before the issuance of summons and at that stage to permit the defendants to make their submissions to point out how the suit was not maintainable. Reliance was also placed on the decisions of the Supreme Court in Saleem Bhai v. State of Maharashtra 1 SCC 557 and in Dahiben v. Arvindbhai Kalyanji Bhanusali 7 SCC 366 in support of this submission. It was submitted that there was no concluded agreement between the parties. The sale consideration had not been determined as the discussions were being carried out by Sh.Virendra Sahlot on behalf of the plaintiff and the wife of the defendant No.1 whereas the confirmation of the remaining defendants of the sale consideration being Rs.70 crores had not been conveyed to the purchaser. Learned counsel submitted that even if the transcript of the recorded conversation was to be considered it would show that the defendants No.3 and 4 were not participating in the discussions and there was nothing to show that they had agreed to the sale price being Rs.70 crores. In any case it was submitted that the other terms of the agreement were not settled. Relying on Brij Mohan and Ors. v. Sugra Begum and Ors.4 SCC 147 learned counsel submitted that until and unless the parties were ad idem in respect of the material aspects of the agreement such as the sale consideration the payment schedule the execution of documents possession etc. no agreement can be held to have come into existence. According to learned counsel the emails reflected negotiations and nothing more. The parties were still working out a final agreement and CS(OS) 33 2021 which was to be either the agreement to sell followed by a sale deed or a straight sale deed. A tenant was in occupation of the suit premises and the tenancy had also to be completed and vacant possession handed over before the transaction was to be effected. These dates were also still not decided. Moreover pointing out to the contents of these emails the learned counsel submitted that the wife of the defendant No.1 had also asked the purchaser for a firm offer which was never sent and a draft agreement was not finalized. It was also submitted by learned counsel for the defendant No.1 that though the plaintiff claims that Sh.Virendra Sahlot was the common representative at no point of time had the defendants authorized Sh.Virendra Sahlot to finalize the deal on their behalf. Even the manner of payment of his commission was not decided. Thus the learned counsel for the defendant No.1 submitted that even if the averments in the plaint were accepted on demurrer the dots did not connect. No sale consideration including earnest money had been paid by the plaintiff to the defendants. Thus nothing in the nature of an agreement oral or otherwise existed the specific performance of which could be sought by the plaintiff. There is no doubt that the court on receipt of a plaint acts well within its powers to consider whether the summons have to be issued or whether the suit as framed was maintainable or not. These powers are drawn from Order VII Rule 10 and Rule 11 CPC. A Co ordinate Bench of this Court has already observed in Tajunissathat even at the pre summoning stage the court could hear both the parties on the question of CS(OS) 33 2021 the maintainability of the suit under Order VII Rule 11 CPC. This Court finds no reason to take a different view. It has been held in Devender Singh that an oral agreement to sell of an immovable property can be enforced though the existence of an oral agreement to sell would have to be based on cogent facts and evidence. Another Co ordinate Bench of this Court in Hardip Kaur v. Kailash 2012 SCC OnLine Del 2937 was dealing with a case in which the appellant’s suit for possession and mesne profits was dismissed by the trial court. The court observed that the appellant had received the total consideration and had handed over the vacant peaceful possession of the suit property to the defendant No.1 in that suit despite which the suit for possession was filed. In that background the court made the following observations: “26. False claims and defences are really serious problems with real estate litigation predominantly because of ever escalating prices of the real estate. Litigation pertaining to valuable real estate properties is dragged on by unscrupulous litigants in the hope that the other party will tire out and ultimately would settle with them by paying a huge amount. It is a matter of common experience that Court s otherwise scarce time is consumed or more appropriately wasted in a large number of uncalled for cases.” Keeping this cautionary advice in mind the present case needs to be considered carefully. It is no longer res integra that when the court is considering the question of maintainability under Order VII Rule 11 CPC it has to consider whether clever drafting is creating illusions of a cause of action. This careful scrutiny is called for in suits of specific CS(OS) 33 2021 performance to a greater degree since after the amendment to Section 10 of the Specific Relief Act w.e.f. 2018 it is now an obligation on the court to enforce the specific performance of a contract subject to Sub section 2 of Section 11 Section 14 and Section 16. As rightly pointed out by the learned counsel for the defendant No.1 a higher threshold will have to be crossed. 9. While the contentions of the defendants that Mr. Adarsh Agrawal had no authority the wife of the defendant No.1 had no authority the powers of attorney executed by the defendants No.2 3 & 4 were only reflective of an intention to sell the property are all contentions that would reflect the defence available to the defendants and need not be considered at this juncture this Court can certainly consider whether in fact an oral agreement to sell had been reached by the parties. Learned senior counsel for the plaintiff argued that even in Brij Mohanrelied upon by learned counsel for the defendant No.1 the decision had been rendered after trial and therefore such an opportunity must be granted to the plaintiff in the present case as well. However it is to be noted that the plaintiff has built his case on the foundation of the emails exchanged between the parties and the transcript of a recorded conversation. Since all the emails WhatsApp messages and the transcript are already on record this Court can consider whether the emails relied upon by the plaintiff establish the existence of such an oral agreement. We may therefore turn to the emails placed on the record and as highlighted by the learned senior counsel for the plaintiff. These emails are dated 16th June 2020 onwards and the last email is dated 15th CS(OS) 33 2021 November 2020. The transcript of the recorded call which has been sought to be placed on the record is dated 12th July 2020. 10. On 16th June 2020 an email was sent by Sh. Virendra Sahlot to Smt. Sunita Bhide wife of the defendant No.1 with an attachment. The attachment placed at page No. 7 in the “Document Folder” of the E file filed by the plaintiff is with a subject “confirmation of agreed service facilitation charges of 1% amount Rupees Seventy Lacs of the sale value of your property bearing No. 63 Vasant Marg Vasant Vihar New Delhi” 33 2021 words meant that the parties had in their mind the execution of a written agreement to sell. This was the position on 15th June 2020. It appears that a response was sent on behalf of the defendant No.1 to this letter which email is at the bottom of page No.8 and running into page No.9 of the “Documents Folder” filed by the plaintiff. This email on behalf of the defendant No.1 sought to clarify certain aspects. While it was expressed that the defendants were agreeable to pay cumulatively a fee of 1% for the sale of the property at the rate of Rs.70 crore they expressed that Rs.35 crores would be paid “at the time of signing the agreement” and a further Rs.35 crores “15 days prior to the handing over the property” which they expected would happen in January 2021. The commission was to be paid 50% “at the time of signing the sale deed” and balance 50% “at the time of handing over the property”. It was clarified that the delay in the schedule was not acceptable. It was further recorded in this email “kindly confirm and get the buyer’s confirmation that this would be acceptable”. From this email it is clear that the terms of the agreement were still under negotiations till June 2020. The parties were yet to decide the payment schedule the sequence of handing over vacant possession execution of sale deed and payment of commission. Most importantly it again shows the intention of the parties to enter into a written agreement to sell. That this was the position is evident from the next email dated 16th June 2020 sent by Sh.Virendra Sahlot which is placed at page No.8 of the “Documents Folder” recording “payment schedule for buyer CS(OS) 33 2021 is very clear” which was that the payment would be made within one month on vacation of the property by the tenant. It also recorded that “the buyer would like to go for a one time sale deed by all the sellers as and when happens but in case time was taken for the tenant to vacate “the plaintiff would like to have an agreement for sale now and sale deed for entire property” later in January 2021. Again confirmation of these terms were sought from the defendants. In any case the mail reiterates the intent to enter into a written agreement to sell. 11. The emails dated 17th June 2020 18th June 2020 22nd June 2020 and 29th June 2020 relate to “due diligence”. The email dated 20th July 2020 sent by the defendant No.4 Radhika Dilip Rasgotra to Sh.Virendra Sahlot is of a copy of the power of attorney without the High Commission attestation. This also seems to be part of “due diligence”. The WhatsApp messages sent by the defendant No.3 Rahul Aswhini Bhide were also in relation to the power of attorney again in furtherance of the requirement of “due diligence”. None of these emails and WhatsApp messages reflect the conclusion of an agreement but seem to be part of the negotiation process. 12. There is another email placed at page No.13 of the “Documents Folder” sent by the plaintiff which is dated 21st June 2020. This was addressed to Smt. Sunita Bhide wife of the defendant No.1. A perusal of this email once again shows that confirmation of the price of Rs.70 crores for the suit property was still being worked out. It records that “the purchaser i.e. the plaintiff was willing to increase the consideration from Rs.68 crores to Rs.70 crores subject to finalization of the other terms CS(OS) 33 2021 33 2021 was required to be done for which all details were required from Sh.Virendra Sahlot and once again it is recorded that the confirmation was required from the side of the plaintiff “so that I can proceed accordingly for due diligence and thereafter can enter in an agreement for sale”. This again means that no agreement was concluded. The material aspects of the sale transaction were yet to be completed including “due diligence” from both sides. The payment schedule of the sale consideration has also not been determined and accepted by both parties even if it was to be taken that sale consideration could be Rs.70 crores. Even up to 29th August 2020 the parties were still in the “due diligence stage” with no terms of the transactions finalized. 15. The emails are the only documents on the basis of which the plaintiff seeks to prove his case of there being a concluded oral agreement to sell. The emphasis is only on the so called consent of the defendants No.1 and 2 through Sh.Adarsh Aggarwal that the defendants had agreed to sell their property for a sum of Rs.70 crores. Even if this fact was conceded that the sale price had been agreed to by the parties it is very clear from the emails that the parties were yet to work out the payment schedule the schedule for handing over vacant possession and the execution of the sale deed. The parties were not ad idem because the emails show that they were moving back and forth on these terms. In the cases relied upon by the learned senior counsel for the plaintiff the facts are vastly different in that in those cases either consideration had been paid by the plaintiff or there was a written agreement executed and partly acted upon. Even in Devender Singhthe fact was that the 70% CS(OS) 33 2021 of the consideration had already been paid. Admittedly not a penny has been paid by the plaintiff to the defendants. In the present case the intention of the parties was clear as recorded in these emails that a written agreement to sell be executed. This intention of the parties cannot be overlooked only because the plaintiff seeks to pin the defendants down to Rs.70 crores as the sale consideration. In the absence of a written agreement to sell it cannot be held that there is any agreement to sell the specific performance of which the plaintiff can seek to enforce. It has been held by the Supreme Court in Brij Mohanthat in order to determine the binding nature of a contract between the parties the mere acceptance of the sale price is not sufficient. The other terms of the contract such as the schedule of payment the amounts to be paid the handing over of vacant possession by the tenant execution of the sale deed etc. were also important terms of the contract which are to be accepted by both sides before a contract of a binding nature could come into existence. It was highlighted that an agreement to sell relates to valuable property and the intention of the parties to reduce the terms of the agreement into writing had to be kept in mind before determining the existence of an oral agreement which was binding. This case held that while an oral agreement could be enforced but for such an enforceable oral agreement the sale consideration the time of completion of the sale deed and the mode of payment were all vital terms on which the parties ought to have been in agreement to result in a binding oral agreement. 17. Thus it is clear on facts and in law the plaintiff has no cause of action as no oral agreement as claimed had ever come into existence CS(OS) 33 2021 and neither was such an oral agreement intended by the parties as they repeatedly referred to a written agreement to sell in the emails on which the plaintiff relies. Without a binding agreement between the parties there is nothing to enforce specific performance of. 18. Thus the present suit is rejected as disclosing no cause of action under Order VII Rule 11(a) CPC along with the pending applications. 19. There is no order as to cost. 20. The judgment be uploaded on the website forthwith. ASHA MENON) OCTOBER 22 2021 CS(OS) 33 2021 

Summary: It is no longer res integra that when the court is considering the question of maintainability under Order VII Rule 11 CPC, it has to consider whether clever drafting is creating illusions of a cause of action as held by the High Court of Delhi through the learned bench led by Justice Asha Menon in the case of Ashwani Kumar v. Aditya Mannohar Bhide and Ors. (CS(OS)33/2021, I.As.790/2021) The Brief facts of the case are that the plaintiff/Ashwani Kumar has filed the present suit for specific performance of an oral agreement to sell a property in New Delhi. The four defendants are the owners of the suit property. It is to be noted that summons in the suit had not been issued as Ms. Malavika Rajkotia, learned counsel for the defendant No.1, appearing on advance notice, submitted that the suit was without cause of action and deserves to be rejected. In between, the parties were referred to the Delhi High Court Mediation and Conciliation Centre to enable them to work out an amicable settlement. However, the Mediation Centre reported that the efforts had failed. The Hon’ble High Court held, “It was highlighted that an agreement to sell relates to valuable property and the intention of the parties to reduce the terms of the agreement into writing had to be kept in mind before determining the existence of an oral agreement which was binding. This case held that while an oral agreement could be enforced, but for such an enforceable oral agreement, the sale consideration, the time of completion of the sale deed and the mode of payment, were all vital terms on which the parties ought to have been in agreement to result in a binding oral agreement. Thus, it is clear on facts and in law, the plaintiff has no cause of action, as no oral agreement, as claimed, had ever come into existence and neither was such an oral agreement intended by the parties, as they repeatedly referred to a written agreement to sell in the emails on which the plaintiff relies. Without a binding agreement between the parties, there is nothing to enforce specific performance of. Thus, the present suit is rejected as disclosing no cause of action under Order VII Rule 11(a) CPC, along with the pending applications.”