Sangam Prints Private Limited V. Union of India

SCA/20280/2017

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The case involves Sangam Prints Private Limited and two other applicants, who are the original defendants in a Special Civil Suit No.317 of 2011, against the Union of India and others. The dispute centers on a contract for the specific performance concerning a parcel of land in GIDC, Surat. The applicants sought to reject the plaint on grounds that the contract was unenforceable without prior permission from GIDC, as stipulated in the lease deed. The Commercial Court rejected this application, leading to the present challenge in the High Court. The High Court's decision focused on the legal principles governing the rejection of plaints and the specific provisions of the Contract Act and the Specific Relief Act.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 813705 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 25-09-2019
• Assessment Year: misc
• Other Referred Cases: Nutankumar and others
• Laws Referred To: Article 227 of the Constitution of India, Order VII Rule XI of the CPC, Sections 10 and 23 of the Contract Act, Specific Relief Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: SP MAJMUDAR
• Keywords: Jurisdictional Error; Rejection of plaint; Specific performance; Supervisory jurisdiction; Unenforceable contract
• Section: 10; 7; 23; 21; 227

Judgement Text

"C/SCA/20280/2017 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 20280 of 2017 ========================================================== SANGAM PRINTS PRIVATE LIMITED & 2 other(s) Versus UNION OF INDIA & 3 other(s) ========================================================== Appearance: MR SP MAJMUDAR(3456) for the Petitioner(s) No. 1,2,3 ========================================================== CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA and HONOURABLE MR.JUSTICE VIRESHKUMAR B. MAYANI Date : 25/09/2019 ORAL ORDER (PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA) 1. This application under Article 227 of the Constitution of India is at the instance of the original defendants of a Special Civil Suit No.317 of 2011 filed in the Court of the Principal Senior Civil Judge, Surat and is directed against the order dated 3rd October, 2017 passed by the Judge, Commercial Court, Vadodara below Exh.58 in the Special Civil Suit No.317 of 2011, whereby the Judge, Commercial Court, rejected the application Exh.58 preferred by the applicants herein praying for rejection of the plaint under the provisions of Order VII Rule XI of the CPC. 2. It appears from the materials on record that the respondent Nos.2 and 3 instituted the Special Civil Suit No.317 of 2011, seeking specific performance of contract in writing entered into with the applicants herein with respect to a parcel Page 1 of 5 C/SCA/20280/2017 ORDER of land situated in the GIDC, Surat. It is the case of the applicants herein that the land in question came to be unauthorizedly transferred in favour of one M/s. Crystal Interior Products Ltd., the respondent No.4 herein. Mr. Majmudar fairly pointed out that the Commercial Court has framed the issues in the suit, and one of the issues framed is with regard to limitation. However, according to Mr. Majmudar, the issue of limitation, being a mixed question of law and fact, will have to be decided only on the basis of the oral as well as the documentary evidence that may be led by the parties. However, the principal argument of Mr. Majmudar is that the contract is unenforceable in law because the agreement is hit by Sections 10 and 23 respectively of the Contract Act. According to Mr. Majmudar, the plaintiffs cannot seek specific performance of the contract without the prior permission of the GIDC. The Commercial Court, while rejecting the application, Exh.58 preferred by the applicants herein, held as under; “9. As far as the submission of the Ld. Counsel for the defendant that the present suit is hit by Section 10 and 23 of the Contract Act, as the property cannot be transferred without prior permission of the GIDC as mentioned in covenant 2 (kk) and 2 (r) of the lease deed at mark 3/6 is concerned, I have gone through the covenant 2 (kk) and 2 (r), the relevant portion of the lease deed is reproduced here as under: “ That he will not transfer, assign, under-let or part with the possession of the demised premises or any part thereof or any interest therein without the previous permission of the lessor....” Perusal of this condition clearly reveals that this Clause does not bar the transfer of property absolutely but its only regulate the transfer of property in question. The property can be transferred with the permission of GIDC therefore, agreement to sell is not hit by 2 (kk) or 2 (r) of Page 2 of 5 C/SCA/20280/2017 ORDER the lease deed. Further the agreement to sell was executed for the legal consideration and if some portion is paid by cheque and some portion is paid by cash in contradiction of provisions of Income Tax Act it does not mean that the transaction is barred the Transfer of Property Act or it has been vitiated by the public policy. When the defendant-applicant itself admitted the amount of consideration in cash to avoid tax liability, now he cannot be permitted to take the benefit of mistake as both the parties are at fault. Thus, in view of the principle of ’Peri Delicto', the contention of the Ld. Counsel for the defendant is not sustainable. 10. I have also considered the judgment of Nutankumar and others (supra) wherein the Hon’ble Allahabad High Court has held that every agreement made for or about any matter or thing which is either forbidden by any statute or would defeat the provisions of any law, or the Court regards it as opposed to public policy is unlawful and ipso facto void. The ratio of this judgment is not applicable in the present facts and circumstances of the case because, the covenant of the lease deed does not absolutely bar the transfer of the property contained in the lease deed but the bar is partial and the property can be transferred with the permission of GIDC. 11. As far as the submission of the Ld. Counsel for the defendants regarding the claiming of alternative relief of damages therefore the plaintiff is not entitled for enforcement of agreement, is concerned , as per Section 21 of the Specific Relief Act the plaintiff can also claim the alternative relief of damages along with the specific performance agreement. Section 10, 12, 14 and 21 of the Specific Relief Act has to read together and not in isolation. Even if the plaintiff has claimed damages in alternative or in lieu of the Specific performance of the agreement, the present suit is maintainable. 12. As far as the contention of the Ld. Counsel for the plaintiff that the defendant has raised all these pleas at the time of arguing the application below Exh. 5 is concerned, the findings returned by the Ld. Predecessor Court in order below Exh. 5 is of tentative nature and it is settled proposition of law that such finding is not binding in the subsequent stage of the suit, as these findings are given prima facie at initial stage i.e the very beginning of Page 3 of 5 C/SCA/20280/2017 ORDER the suit even prior to leading the oral evidence by the party. If subsequently some other material comes on record, the court can take the different view. Thus, though the pleas of the defendants were rejected at the initial stage, it does not mean that the defendant cannot raise those pleas at subsequent stage on furnishing additional material. But in the present case, the defendants-applicants have not brought on record any additional material on record which was not available before my Ld. Predecessor Court at the time of deciding the application below Exh. 5. 13. Now so far as the maintainability of the application is concerned, though there is no prayer made in the application for the rejection of the plaint, however the heading of the application clearly reveals that the application is preferred under Order VII Rule 11 of the Civil Procedure Code therefore, the contention of the Ld. Counsel for the plaintiff is not sustainable that present application for rejection of plaint is not maintainable in the absence of any such prayer.” 3. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the court below committed any error in rejecting the application, Exh.58. 4. It is well settled position of law that for the purpose of rejecting the plaint under any of the provisions of Order VII Rule XI of the CPC, the defense of the defendant cannot be taken into consideration. The plaint can be rejected, provided the averments made in the same renders the suit not maintainable in law or there is no cause of action pleaded in the suit. The argument of the applicants herein (original defendants) that the contract or rather the agreement is hit by Sections 10 and 23 is nothing but the defense of the defendants. Page 4 of 5 C/SCA/20280/2017 ORDER 5. We do not find any jurisdictional error in the impugned order passed by the Commercial Court, rejecting the application Exh.58, warranting any interference in exercise of our supervisory jurisdiction under Article 227 of the Constitution of India. 6. In the result, this application fails and is hereby rejected. (J. B. PARDIWALA, J) (VIRESHKUMAR B. MAYANI, J) Vahid Page 5 of 5 "