MARG CONSTRUCTIONS LIMITED, REP BY ITS MANAGING DIRECTOR, G R K REDDY Vs. SOUTH INDIA CORPORATION (AGENCIES) LIMITED

JUDGEMENT

(1.) This Letters Patent Appeal calls in question the judgment and order dated 27.12.2004 of the learned single Judge in Application No. 841 of 2004 in C.S. No. 811 of 2004 and arises under the following circumstances.

(2.) The appellant, which is the plaintiff in the suit, is a company incorporated under the provisions of the Indian Companies Act. The first respondent, which is the first defendant in the suit, is also a company incorporated under the Indian Companies Act. The second respondent is the Managing Director of the first respondent. The first respondent is the owner of the property mentioned in Schedule A to the plaint. The first respondent has entered into agreements of sale with various owners of schedule B schedule and has obtained powers of attorney from them. It is the case of the appellant that the first respondent is heavily indebted and to discharge the dues to the third respondent/State Bank of India, Commercial Branch, Chennai, decided to sell Schedule A and B properties together as it constituted one block. On coming to know that the first respondent was interested in completing the bargain the appellant approached the first respondent on 27th July 2004 and negotiated for the purchase of both A and B Schedule properties and terms of an agreement of sale were mutually agreed upon by both the parties. The terms that were agreed upon during the discussion held at the office of the first respondent on 27th July 2004 were that the appellant had to pay sale consideration at the rate of Rs. 19 lakhs per acre for the A and B Schedule properties measuring totally 46.915 acres; that the first respondent had to obtain the necessary no-objection certificate from the third respondent/ State Bank of India and get release of the documents of title with respect to Schedule A property; that the appellant should complete the sale within three months from the date of receipt of No Objection Certificate from the State Bank of India with respect to Schedule A property. It is the further case of the appellant that the second respondent representing the first respondent as the Managing Director also forwarded a draft agreement through his E-mail to the plaintiff on 28th July 2004 containing essential terms of the contract as agreed to on 27th July 2004. However, as some doubts were raised about the Schedule B property a further meeting between the parties was held on 2nd August 2004 and it was then agreed and finalised that the rate per acre of Rs. 19 lakhs will stand unaltered but the first respondent shall obtain No Objection Certificate from the third respondent for purchase of both Schedule A and B properties. The signing of formal agreement of sale was not necessitated as the parties agreed to complete the sale on receipt of No Objection Certificate from the third respondent. It is the further case of the appellant that on the request of the respondents the appellant agreed to keep the sale advance of Rs. 200 lakhs in a Non lien-Fixed Deposit account with the fourth respondent i.e., State Bank of India, Bazullah Road Branch. The original FDRs were agreed to be in the custody of Advocate Mr. P.B. Ramanujam till the No Objection Certificate is issued by the third respondent. In pursuance of the agreement reached between the parties, the appellant sent a cheque of Rs. 200 lakhs favouring the first respondent to the fourth respondent for being kept in a No-Lien Fixed Deposit. The fourth respondent issued FDRs which were kept in the custody of Advocate Mr. P.B.Ramanujam. The appellant specifically mentioned in their letter dated 3rd August 2004 to the first respondent that the said sum of Rs. 200 lakhs was paid towards the purchase of schedule A and B properties for which No Objection Certificate was solicited and release of title deeds requested. It is the further case of the appellant that the appellant has thus performed its part of the contract and is ready and willing to pay the balance price and take the sale deed within three months from the date of the first respondent obtaining No Objection Certificate from the third respondent as agreed for both Schedule A and B properties. But even after a lapse of more than two months, the respondents 1 and 2 had not evinced any interest to obtain any No Objection Certificate from the third respondent. The appellant by their letter dated 2nd September 2004 brought to the notice of the respondents 1 and 2 that they are ready and willing to complete the sale of the property, but in vain. The respondents 1 and 2 have not responded at all and are attempting to sell A and B Schedule properties to some other party for a higher consideration. The appellant, therefore, filed C.S. No. 811 of 2004 for specific performance of the contract of sale entered into between the parties on 27th July 2004 and 2nd August 2004 for A and B Schedule properties.

(3.) Along with the suit, the appellant took out O.A. No. 841 of 2004 seeking an order of interim injunction restraining respondents 1 and 2 from in any way alienating or encumbering the A and B Schedule properties, pending disposal of the suit. On 13th October 2004 an exparte injunction came to be issued. Pursuant to the notice, the first and second respondents appeared and filed their counter affidavits.