Full Judgment Text
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CASE NO.:
Appeal (civil) 5087-5088 of 2009
PETITIONER:
Narinder Kumar Malik
RESPONDENT:
Surinder Kumar Malik
DATE OF JUDGMENT: 04/08/2009
BENCH:
S.B. Sinha & Deepak Verma
JUDGMENT:
JUDGMENT
2009 (12) SCR 479
The Judgment of the Court was delivered by
Deepak Verma, J. 1. Leave granted.
2. Parties to the litigation are real brothers having spent their childhood
with cheer and joy in the courtyard, are here, now fighting tooth and nail
for theirf respective shares in a piece of plot admeasuring 3149.75 sq.
yds. allotted to the partnership firm, viz., M/s. Narinder Kumar Malik &
Surinder Kumar Malik at D-2, Udyog Nagar, Rohtak Road, New Delhi.
3. Even though the partnership business could never commence but the plot
in question continued to be owned by both of them as partners of the firm
to the extent of 50% each. On account of differences having arisen between
the parties, the present appellant-Narinder Kumar Malik was constrained to
file a suit bearing No. 779 of 1997 before the High Court of Delhi, later
transferred to the Court of Additional District Judge, Tis Hazari, Delhi
and was numbered as 289 of 2004, claiming 1/2 share in the aforesaid piece
of land allotted to the partnership firm.
4. The respondent filed a written statement and took an objection that the
property was owned by a partnership firm and thus the suit for partition
was not maintainable and rather a suit for dissolution of partnership firm
ought to have been filed.
5. During the pendency of the proceedings of the suit, the defendant
(respondent herein) filed an application under O.VII R. 11 of the Code of
Civil Procedure (for short, ‘CPC’) for dismissing the suit on the ground
that it did not disclose any cause of action as the property ws owned by a
partnership firm, whereas the appellant herein filed an application under
O.XII R 6, CPC praying therein that on account of admission having been
made by the respondent, judgment and decree on the said admission be
passed.
6. Both the applications came to be considered by the learned trial Judge
on 04th November 2004. By the said order, the application filed by the
respondent under O.VII R. 11, CPC came to be dismissed. However, the
application filed by the appellant herein under O.XII R.6 CPC came to be
allowed and a preliminary decree of partition was passed in the following
terms:-
"12. In view of my above discussion, the application of the defendant under
order 7 rule 11 CPC is hereby dismissed and application under order 12 rule
6 CPC is hereby allowed. A preliminary decree of partition is passed with
the direction to the parties to decide the means of partitioning the plot
in question and in case they failed to partition the plot by themselves, a
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Local Commissioner may be appointed by the court for suggesting the means.
13. The case is now adjourned for 8.12.2004 for further proceedings."
7. Feeling aggrieved and dissatisfied with the said order respondent
herein, viz., Surinder Kumar Mail was constrained to file appeal in the
High Court of Delhi at New Delhi registered as R.F.A. No. 649 of 2004
reiterating the grounds taken in the written statement and in the
application filed by him under O.VII Rule 11 of CPC.
8. It appears, during the pendency of the said appeal in the High Court,
good sense prevailed upon the two brothers and they arrived at a settlement
and pursuant thereto "Memorandum of Understanding" (hereinafter referred to
as ‘MOU’) came to be executed between themselves on 09th February 2005 at
Delhi.
9. It is pertinent to mention here that this MOU was arrvied at also on
account of the strong belief of the Division Bench of the High Court that
the parties being real brothers should settle the matter among themselves
through mediation. Accordingly, on 17th December 2004 an order was passed,
with the consent of the parties, that both the brothers would appear before
Mr. M.L. Mehta, Addl. District Judge, Delhi who was requested to be a
mediator. On 17th March 2005 it was noted by the High Court that parties
have entered into a settlement as MOU was already entered into between the
parties on 09th February 2005. However, despite settling the matter outside
the Court on their own terms and conditions, it appears that the dispute
between them did not come to an end.
10. Some of the relevant and salient terms and conditions of the MOU are
reproduced hereinbelow:
"(i) that Party No.1 has agreed to sell his share i.e. 50% area of the said
Industrial plot to party No.2 at the settled and agreed consideration of
Rupees three crores fifty lacs only and party No.2 has agreed to purchase
the said share at the said consideration.
(ii) that the second party has paid a sum of Rs. 10,00,000.00 (Rupees ten
lacs) in cash and Rs. 15,00,000.00 vide Payee’s A/c Cheque No. 131112 dated
05.02.2005 drawn on UCO Bank, Punjabi Bagh in favour of the first party as
a token money and in first party has accepted the same.
(iii) that as agreed the second party shall make the balance payment of Rs.
3.25 crores within a maximum period of 150 days the date of execution of
this, MOU i.e. upto or before 9th day of July, 2005. However, this period
of 150 days is extendable by another 10 to 20 days, if need be, with the
consent of both the parties but not more.
(iv) that on receiving the full consideration of Rupees three crores, fifty
lacs the first party shall execute the necessary documents like GPA,
Release Deed, Sale Deed etc., as advised in favour of the second party or
his nominee and hand over the physical, peaceful and vacant possession of
his share to the second party or his nominee as the case may be.
(v) that the First Party i.e. Shri Narinder Kumar Malik is presently out of
India, but his counsel/advocate Shri J.R. Bajaj along with Shri Rohit Malik
son of the first party and Shri Ashok Kumar Marwaha, Advocate, have been
authorized to sign this MOU for and on his behalf.
(vi) that both the parties shall be jointly responsible for payment of
ground rent/lease money and all other statutory taxes etc., in respect of
the Industrial Plot upto the date of execution of this MOU, but thereafter
only party No.2 and/or his nominee shall be liable to pay the same.
(vii) that all the expenses like stamp duty, registration charges etc., for
the registration of necessary documents shall be borne by party No.2 or his
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nominee in whose favour the documents of ownership are to be executed.
11. On 12th May 2005 despite having arrived at a settlement, High Court
directed them to approach the learned mediator for resolving their points
of differences, if any, but, instead of resloving the same, their
difference continued to rise.
12. A registered notice dated 22nd June 2005 was not sent to the appellant
by respondent’s advocate Mr. Harish Malhotra mentioning therein that his
client, viz., the respondent herein is ready with the balance payment as
mentioned in the said MOU and despite apporaching the appellant, he has not
been honouring the same. Appellant replied to the said notice through his
advocate Shri Anuj Sehgal on 30th June 2005 denying the averments made in
the notice and calling upon the respondent to pay the balance sum of Rs.
3.25 crores to him on 07th July 2005 at 10.00 a.m. at 885, East Park Road,
Karol Bagh, New Delhi. On payment of the aforesaid amount, it was
categorically mentioned by the appellant that necessary transfrer dcouments
for transfer of his share of the property in the name of the respondent or
his nominee would be executed.
13. It was further mentioned in the said reply to the notice that in case
there is any default committed by th respondent to pay the balance amount
on the said date or latest by 09th July 2005 as contemplated in the MOU
then in that eventuality MOU would stand cancelled and the appellant would
no longer be bound by the said MOU dated 09th July 2005.
14. It appears from the record that despite giving a fixed time to the
respondent for compliance of the terms and conditions of the MOU,
respondent did not honour the commitment and instead continued to send
notices through his advocate, which were replied to by the appellant.
15. During all this period, the appeal filed by the respondent in the High
Court remained pending and it came up for hearing before the Division Bench
on 19th July 2005. On the said date, learned counsel appearing for the
parties informed that negotiations have failed as both of them were making
allegations against each other. On the said date, it was further informed
that respondent is still ready and willing to pay the balance sum of Rs.
3.25 crores in terms of the MOU, but, counsel for the appellant said that
since no payment was received by the last date, i.e. 09th July 2005 as
mentioned in the MOU, the time cannot be extended. In the said order, it
was further directed that the amout of Rs.25 lac, which was received by the
appellant during the pendency of the appeal, be returned to the respondent
within a week.
16. In spite of the aforesaid order, the respondent filed an application
being C.M. No.12796 of 2005 before the High Court seeking a direction to
the appellant to execute necessary transfer documents in terms of the MOU.
17. On 04th April 2006, a statement was made by the parties that no
settlement is possible between them and the appeal was directed to be
listed for hearing on 14th July 2006.
18. However, on 11th October 2006, yet another statement was made by the
learned counsel appearing for the parties that they are making another
attempt to find an amicable solution and thus prayed for time.
Consequently, appeal kept on being adjourned from time to time. But it came
up for hearing again on 18th July 2007. On the said date, the Division
Bench passed an order, the relevant portion whereof is reproduced
hereinbelow :
".....
While counsel for the appellant claims that the appellant was ready
and willing to implement the settlement and had raised the funds
therefore, counsel for the respondent disputes the same. Coursel
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for both the parties are conscious of the fact that as a result of
passage of time, there have been change in the values of the assets
etc. Both of them, however, are desirous of making yet another
attempt of an amicable settlement, since appellant and the
respondent happen to be the brothers.
In these circumstances, we consider it appropriate to refer the
matter to Delhi High Court Mediation & Concilation Center for
mediation.
Mr. A.S. Chandhiok, Sr. Advocate is appointed as the mediator along
with Ms. Swati Singh as the co-mediator. Both the parties will
deposit Rs.2500/- each with Delhi High Court Mediation &
Conciliation Center and shall appear before it on 23.7.2007 at 4.30
P.M.
List this matter befor the court on 21.8.2007"
19. The aforesaid order would show that parties were once again given an
opportunity to iron out the differences between them. But despite the best
efforts made by the learned Judges of the High Court, the Mediator and the
senior advocate appointed in this behalf they were not able to convince the
parties that it is a fit case where an amicable settlement must be arrived
at. Thus, on 24th January 2008 a statement was made that mediation talks
have failed. The matter, then came up for hearing again before another
Division Bench of the High Court on 24th July 2008, but learned counsel
appearing for the parties thought that there is still light at the end of
the tunnel and prayed for two weeks’ time for arriving at a lasting
settlement between the parties. Since nothing worked on that, the matter
was, finally taken up by the High Court on 08th September 2008 and appeal
of the respondent was allowed in terms of the directions contained in para
39 of the impugned judgment which are reproduced hereinbelow :
"We thus dispose of the application and along therewith the appeal by
passing the following directions :-
(A) The appellant shall deposit Rs. 3.5 crores with the learned Trial Judge
within a period of 2 weeks from today. (The appellant is being directed to
deposit Rs. 3.5 crores becouse the appellant has received back Rs.25 lacs
pursuant to interim orders passed in the appeal).
(B) Along with the deposit, the appellant shall file a draft of the
document which the appellant desires to be execute by the respondent to
convey respondent’s 50% share in the subject property.
(C) The learned Trial Judge would thereupon finalize the document to be
executed and the respondent would thereafter execute the document drawn up
and ond execution of the same would be entited to received Rs. 3.5 crores
from the learned Trial Judge."
20. Appellant, feeling aggrieved and dissatisfied with the aforesaid
direction contained herein, has preferred this appeal.
21. Ms. Indu Malhotra, learned senior counsel appearing on behalf of the
appellant contended that in the MOU a specific date was fixed for payment
of balance consideration by or before 09th July 2005 and respondent having
failed to honour his commitment by the said date and time being the essence
of the contract, MOU could not have been directed to be implemented by the
High Court.
22. It was also contended that it being a contingent contract dependent on
execution of the terms and conditions mentioned in the M.O.U. and
respondent having failed to honour his own commitment, the same cannot be
given effect to.
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23. Mr. Raju Ramchandranm learned senior counsel appearing for the
respondent contended that at all material times, the respondent had been
ready and willing to perform his part of the contract but for some reason
or the order and also keeping in mind that the price of the disputed plot
has substantially shot up, the appellant is making excuses not to comply
with the direction as contained in the said order.
24. It was also contended by him that the appellant would be required to
pay unearned increase of the plot to the Delhi Development Authority and,
therefore, he has taken somersault from complying with the directions.
25. In the light of the aforesaid contentions, we have heard learned
counsel for the parties and perused the record.
26. It is pertinent to mention here that the amount was deposited by the
respondent only on 04th October 2008 whereas in the impugned order passed
by the High Court two weeks’ times was granted to him to deposit the sum of
Rs.3.5 crores. From the aforesaid date it would be clear that the amount,
as directed to be deposited by the impugned order, was not deposited by the
respondent within the stipulated time. Instead, the same was done much
after the last/stipulate date.
27. To ascertain if the time was the essence of the contract, we have to go
through Condition No. (iii) of the MOU which categorically mentions that
the second party, viz., the respondent herein shall make the payment of the
balance amount of Rs. 3.25 crores within a maximum period of 150 days from
the date of execution of the MOU, i.e., upto or before 09th July 2005.
However, this period of 150 days was extendable by another 10 to 20 days,
if need be with the consent of both the parties but not more.
28. High Court certainly fell into error in construing the said provision
in right perspective and erred in coming to the conclusion that since time
was extendable, the time could not have been made the essence of the
contract.
29. A bare perusal of the aforesaid provision makes it clear that
ultimately the time was fixed only upto 09th July 2005. However, with an
intention to given further leverage to the respondent herein, the time was
made extendable by 10 to 20 days and not more and that too only with the
consent of the parties. Even if it is said that 09th July 2005 could not
have been the last date, at least after 20 days the said last date expired.
Admittedly, the respondent has not honoured his commitment, within the
extendable period given to him, even though he had no right to claim the
benefit as of right for the extendable period.
30. The respondent sent the photocopies of three pay orders two of which
were for a sum of Rs.1 crore each and the third one for a sum of Rs.1.25
crore. It was neither here nor there as the originals were never tendered
to the appellant and only photocoies were sent to make a semblance that
respondent has been ready and willing to perform his part of the contract.
When MOU had already been arrived at between the parties then mere show of
readiness and willingness would not discharge the obligation resting on one
of the parties unless it is shown to be real and genuine.
31. From the conduct, behaviour and attitude of the respondent it is
clearly made out that he had not been ready and willing to perform his part
of the contract as mentioned in the MOU.
32. Ms. Indu Malhotra, learned senior counsel for the appellant has placed
reliance on a judgment of this Court in the case of Star Construction and
Transport Co. & Ors. vs. India Cements Ltd. (2001) 3 SCC 351 and laid
emphasis on paragraph 7 thereof which reads thus :
"7. In this case, application are filed under Order 23 Rule 3 CPC. This
Rule is a provision for making a decree on any lawful agrement or
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compromise between the parties during the pendency of the suit by which
claim is satisfied or adjusted. The agreement, compromise or satisfaction
may relate to the whole of the suit or part of the suit or it may also
include matters beyond the subject-matter of the suit. But Rule 3 clearly
envisages envisages a decree being passed in respect of part of subject-
matter on a compromise. Whether in fact there has been compromise or
adjustment of te suit claim or any part thereof is itself put in dispute in
this case. Unless it is clearly established that such accord or compromise
has been entered into between the parties, the powers under order 23 Rule 3
CPC could not be exercised. The respondent’s case is that the claim made in
the suit were never before the arbitrators in any form and even the figures
mentioned in the reconciliation statement also do not pertain to the suit
claim and the scope of reference to the arbitrators does not enable them to
make an award on that aspect of the matter. Those objections have to be
dealt with appropriately on full trial. That is the course now adopted by
the Division Bench of the High Court."
33. She has further placed reliance on yet another judgment of this Court
in the case of United Bank of India vs. Ramdas Mahadeo Prashad & Ors.
(2004) 1 SCC 252 particularly paragraphs 7 and 9 thereof which are
reproduced hereinbelow :
"7. Undisputedly, the respondents did not withdraw the suit filed by them
against United Bank of India, which is the condition precedent stipulated
in clause (1) of the MOU. The respondents also did not pay the guarantee
liability of Rs.2.33 lakhs. No compromise petition was filed before an
appropriate court. Therefore, by no stretch of imapination can it be said
that the terms and conditions stipulated in the MOU had been complied with
and acted upon by the parties. Apart from what has been said, subsequent to
the MOU there was also a lot of correspondence between the parties by
exchanging letters giving offers and counter-offers, as would be revealed
in the letters dated 16.6.1994, 23.12.1994, 12.6.1995, 15.6.1995 and
19.6.1995. All these correspondences would go to show that the parties
failed to arrive at a consensus even on what were the terms of the MOU.
Thus, it is clear that there was no concluded contract nor was there any
novation.
9. Mr. Ranjit Kumar, learned Senior Advocate contended that in view of the
MOU signed by the parties the original contract stood substituted by the
MOU and it is a fit case where Section 62 of the Indian Contract Act can be
invoked. We have already said that there was no concluded settlement or
novation. Even otherwise, there has been non-compliance with the terms and
conditions of the MOU by the respondents and a party in breach can hardly
seek to enforce a contract. Therefore, the MOU does not amount to novation
of contract as envisaged under Section 62 of the Indian Contract Act. The
contention of Mr. Ranjit Kumar is, therefore, legally untenable."
34. However, even without referring to the aforesaid judgments, from the
facts as have been mentioned hereinabove, it is as clear as day light that
respondent has committed default of the terms and conditions of the MOU and
had neither been ready and willing nor has been so throughout the relevant
period. Thus, MOU entered into between the parties cannot be given effect
to. We accordingly hold so.
35. Thus, judgment and decree passed by the impugned order are hereby set
aside and quashed, but, with no order as to costs.
36. The appeals are allowed accordingly.