Delhi HC Declines To Halt Proposed Defence Colony Sale, Saying 2017 Receipt Signed During Status Quo Order May Be Unenforceable

Jairaj Developers LLP sought specific performance of an Advance Payment Receipt (APR) dated 30 June 2017, allegedly executed by Kamal Kumar in relation to property D-38, Defence Colony, and challenged a subsequent Memorandum of Family Settlement (MoFS).

The plaintiff’s application for interim relief alleged that defendant no. 1 had agreed to sell the property to Loxy Infrastructure Private Limited and that the sale deed had been presented for registration.

In an earlier partition suit, the court passed a preliminary decree declaring one-third shares for each of the three parties, including Kamal Kumar; her appeal was dismissed, and the preliminary decree was not successfully challenged further.

Following Kamal Kumar’s death, defendant no. 1 was impleaded as her legal heir, the MoFS was placed on record, and a final consent decree was passed.

The plaintiff’s suit, initially rejected under Order VII Rule 11 CPC, was restored on appeal; this application was its second application for interim relief.

Under Order XXXIX Rules 1 and 2 CPC, interim injunctive relief requires the applicant to establish a prima facie case, balance of convenience in its favour, and likely irreparable injury.

Section 97 CPC provides that a party who does not appeal a preliminary decree cannot dispute its correctness in an appeal from the final decree; in a partition suit, the preliminary decree determines the parties’ shares, while the final decree works out those shares.

The Court cited Mool Chand v. Director, Consolidation, (1995) 5 SCC 631, and Venkata Reddy v. Pethi Reddy, 1962 SCC OnLine SC 320, in support of the Section 97 principle.

It also considered whether the APR was enforceable, referring to the requirements for an agreement to sell discussed in Aggarwal Hotels (P) Ltd. v. Focus Properties (P) Ltd., 1996 SCC OnLine Del 354, and Amarjeet Singh v. Sharda Obhrai, 2006 SCC OnLine Del 1143; these authorities were raised by the purchaser, while the Court expressed only a prima facie view on enforceability.

The Court considered that the APR was executed while an earlier status quo order concerning title and possession was in force; Kamal Kumar later denied intending to sell, disputed receipt of the consideration, and stated that the cheque had not been deposited by her.

The preliminary decree fixed her share at one-third, and the Court considered that determination final after her appeal was dismissed and no further challenge succeeded. The Court therefore considered the plaintiff’s claim to a one-half share, founded on the alleged Will, untenable at this interim stage.

It also noted that the plaintiff had not taken action to assert its alleged rights between the preliminary decree and the final decree, and had not challenged the final consent decree.

In light of those circumstances, the APR’s enforceability was doubtful prima facie, and the plaintiff had not established the requirements for an injunction.

It dismissed the application and declined to grant interim orders against defendant no. 1 or the purchaser.

The Court clarified that its observations were not an expression on the merits of the suit.