Industries Limited Vs. S. P. Real Estate Developers P. Ltd. & ANR.  INSC
1400 (6 August 2009)
SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL
NOS......................... OF 2009 (Arising out of SLP (C) Nos. 11964-11965
of 2009) ECE Industries Limited ... Appellant VERSUS S. P. Real Estate
Developers P. Ltd. & Anr. .... Respondents
These two appeals have been filed from a common order passed by
the High Court of Andhra Pradesh at Hyderabad, by which the High Court had
affirmed an order of the Second Additional City Civil Judge at Hyderabad,
disposing of an application for injunction filed at the instance of the
plaintiff-appellant on two applications for injunction in a suit for recovery
of possession and damages. The plaintiff/appellant alleged in their plaint that
they are the owner of 67,824.50 sq. yards of land, situated at Borabanda,
Fathenagar, Ashok 1 Marg, Hyderabad (hereinafter referred to as the suit
property). The plaintiff-appellant as well as the defendants/respondents
executed a Development Agreement cum Power of Attorney on 21st of September,
2007. Under the said Agreement, the defendants/respondents agreed to pay an
aggregate sum of Rs. 30.50 crores in the following manner :-
13.50 crores by way of non-refundable amount.
16.72 crores for utilizing the consultations, advice and services of the
petitioner over the suit property along with service tax o the said amount for
which invoices had been raised by the plaintiff/appellant.
28,36,525/- towards the cost of land.
It is the case of the plaintiff-appellant that since the
defendants/respondents had acted in breach of the agreement, the same was duly
terminated. Some of the breaches of the agreement in question, as alleged by
the plaintiff/appellant, are as follows :- i) The respondent No. 1 issued 12
post dated cheques for a total sum of Rs. 16.72 crores - 2 11 post dated
cheqeus for Rs. 1.40 crores each and one post-dated cheque for a sum of Rs.
respondent did not furnish a Bank Guarantee for the amount of Rs. 16.72 crores
and also did not pay the service tax payable on the said amount.
of the 12 post dated cheques given by the Respondent, 2 cheques were honoured,
4 of Rs. 1.4 crores each were dishonoured on presentation and balance cheques
were not presented.
respondent no. 1 did not carry out construction in accordance with the
respondents entered into agreement with third parties without furnishing any
respondents were selling dwelling units to persons who cannot be termed as
members of the weaker sections of the society."
Since the agreement was terminable and when it was found by the
plaintiff-appellant that the defendants/respondents were proceeding to change
the nature and character of the suit property, a suit has been filed by the
plaintiff/appellant for recovery of possession and damages.
In the aforesaid suit, two applications for injunction under Order
39 Rule 1 and 2 read with Section 151 of the Code of 3 Civil Procedure were
filed by the plaintiff-appellant. In one application, the main relief that was
claimed by the plaintiff- appellant was to restrain the defendants/respondents
from alienating or transferring the suit property including the structures
coming up thereon and in the other, for injunction over the suit property from
changing the nature and character thereof pending disposal of the suit.
While dealing with the applications for injunction, the Second
Additional City Civil Judge at Hyderabad had appointed an Advocate Commissioner
to find out the extent of construction raised by the defendants/respondents in
the suit property as the plaintiff-appellant sought to contend that there was
no construction at all in the suit property. The Advocate Commissioner
appointed by the trial Court submitted his report, which is already on record.
While deciding the applications for injunction, the said report was taken into
consideration by the trial Court and after hearing the learned counsel for the
parties, the trial Court was prima facie satisfied that substantial
construction was undertaken and completed by the 4 defendants/respondents,
which had required them to invest crores of rupees. The trial Court,
considering this fact that substantial construction was completed, refused to grant
an order of injunction in favour of the plaintiff-appellant from making any
further construction in the suit property but the applications for injunction
were, however, disposed of with the following conditions :- "1) That the
defendants/respondents shall deposit the balance value of the property, which
comes to around Rs. 28,00,000/- into Court within one month.
it shall furnish bank guarantee for the value of the unrealized post dated
cheques, and pay/deposit the value of four cheques, which were dishonoured,
within one month from today.
the defendants/respondents shall not claim equities over the construction made
in the land and they are bound by the decision in the suit. The
Defendants/respondents shall furnish the particulars of the prospective buyers
of the residential units in advance to the Competent Authority/Urban Land
Ceiling, and it must be made clear to the prospective buyers that their
purchases are subject to the result of the suit by making a `specific recital'
in the agreement of sale or sale deed, as the case may be."
Aggrieved by the order of the trial Court, two appeals were
preferred by the plaintiff/appellant before the High Court of Andhra Pradesh at
Hyderabad, which by the impugned order, 5 had affirmed the order of the trial
Court on the question of construction in the suit property, but set aside the
directions given by the trial Court so far as Clause Nos. 1 and 2, as mentioned
above, are concerned in the order of the trial Court.
these concurrent orders, which are now under challenge before us in these
At the time of admission of this matter, caveat had already been
filed by the defendants/respondents. In that view of the matter, we fixed the
hearing of the matter on 22 nd of July, 2009. While hearing the petitions on
merits, Mr. R. F. Nariman, learned senior counsel appearing for the
plaintiff/appellant, invited us to the report of the Advocate Commissioner and
after taking us through the same, sought to contend that in fact, no construction
has been made by the defendants/respondents and, therefore, in view of the
admitted fact that the agreement, having been already cancelled, the
defendants/respondents cannot be permitted to proceed with the construction on
the suit property and the application for injunction, therefore, must be
allowed. On the other hand, Dr. A. M. Singhvi, learned senior 6 counsel
appearing for the defendants/respondents also took us to the report of the
Advocate Commissioner and other materials on record and at the same time, also
had produced recent photographs, which were not produced in the Courts below
and contended that the High Court was fully justified in affirming the orders
of the trial Court inter alia holding prima facie that a substantial
construction has already been made in the suit property, for which the
defendants/respondents have invested huge sum of money and in that view of the
matter, the question of grant of injunction at this stage could not arise at
After hearing the learned senior counsel for the parties and after
going through the Advocate Commissioner's report and the impugned order of the
High Court as well as of the trial Court, application for injunction and
counter filed to the same, we were of the prima facie view that before deciding
these appeals finally on merits, it would be for ends of justice to find out
the actual position of the suit property and for that reason, we appointed an
Advocate Commissioner from this Court by our Order dated 23rd of July, 2009,
who would inspect the suit 7 property and submit a report by 27th of July, 2009
on the following points :- i) Whether constructions have been made on the
different blocks of the suit property and how many blocks are still remaining
vacant ? ii) If constructions have been made, what is the nature and extent of
such constructions ? iii) Whether such constructions can be said to be
substantial constructions or not ;
Whether constructions have been completed in some blocks of the suit property
and the flats constructed in such blocks are ready for use and occupation ;
to see the local features.
Accordingly, the learned Advocate Commissioner visited the spot
and submitted his report, which was also taken up for consideration along with
the main matter. The report of the Advocate Commissioner may be kept on record.
On behalf of the plaintiff-appellant, Mr. Nariman, learned senior
counsel, submitted that even from the report submitted by the Advocate
Commissioner appointed by this Court, it would be clear that substantial
construction has not been made in the suit property, whereas Dr. Singhvi,
learned senior counsel, also has drawn our attention to the report of the
Advocate Commissioner of this Court and submitted that there cannot be any
doubt that a substantial construction has already been made by the
defendants/respondents, for which a huge sum of money has already been
invested. On the question of extent of construction made by the
defendants/respondents in the suit property, we have, therefore, considered the
findings of the High Court as well as of the trial Court and also the report
submitted by the learned Advocate Commissioner in this Court.
Court as well as the trial Court concurrently found, after going through the
report of the Advocate Commissioner, which was appointed by the trial Court,
that substantial construction has already been made in the suit property. Since
no objection was raised by either of the parties to the report of the learned
Advocate Commissioner, we accept the same 9 without any objection and direct
that the same may be kept on record.
It is well settled now by catena of decisions of this Court that
when two Courts concurrently rejected the application for injunction, it would
not be open for the third Court to interfere with the said concurrent findings
until and unless it is brought to the notice of the third Court that such
findings are perverse or arbitrary. So far as the findings of the trial Court
regarding construction on the suit property is concerned, let us look into its
said findings on the question of construction, which are as follows :- "In
the light of the above circumstances, I find that, already as per the report of
the commissioner and also as per the photographs produced by him, major
construction work was undertaken and completed, it must have required the
respondent to invest crores of rupees."
So far as the findings of the High Court on the question of extent
of construction is concerned, it is also the finding of the High Court that the
defendants/respondents have already taken over possession and made substantial construction,
as would be evident from the record and also from the report of the Advocate
Commissioner, who was appointed by the trial Court.
the two concurrent findings of fact arrived at by the High Court as well as by
the trial Court on the question of extent of construction on the suit property.
Still, in order to be satisfied on the question of construction in the suit
property, as noted her in earlier, we appointed an Advocate Commissioner, who
submitted its report.
We have carefully examined the report of the Advocate Commissioner
appointed by us, from which, following points may be noted :
The Defendants/respondents' Counsel had supplied the layout of the site plan of
the project. Principally, the entire project is divided into 8 Blocks. The plan
for construction of 8 Blocks is approved by the authorities.
photocopy of the approved site plan of the project is annexed as Annexure C-2.
Each Block is divided into various Rows. There is no evenness in the number of
Rows for each Block. Some Blocks have more Rows 11 and some Blocks have less
Rows. The Blocks are numbered in the site plan attached herewith as Annexure
C-3. For better understanding and for better description of the areas in the
Blocks, I had given numbers for the Rows in each Block separately in the site
plan. The layout is as under :
1 Block -
I 2 Rows (60 Apartments) 295 . Apartments
- II 2 Rows (150 Apartments) in the
- III 2 Rows (85 Apartments) Triangular area. Work has not been started.
- IV 6 Rows (330 Apartments)
- V 7 Rows (385 Apartments) 1,555
Block-VI 2 Rows (240 Apartments) Apartments
Block-VII 6 Rows (300 Apartments) in the
Block-VIII 6 Rows (300 Apartments) Rectangula r area.
progress at various stages.
5. It is
stated that each Block will have ground floor (car park) + 5 floors."
A perusal of the report of the learned Advocate Commissioner
therefore shows that out of 1800 flats to be constructed in the suit property
in 8 Blocks, only in 295 apartments in the Triangular area, work has not been
started, whereas in the rest 1,555 apartments in 5 Blocks, work is in progress
at various stages. Therefore, it is evident from the perusal of the report of
the Advocate Commissioner filed in this 12 Court that substantial progress has
been made in the matter of construction on the suit property as it is evident
that such substantial construction has been completed at least 50% in the
rectangular pieces of the suit property whereas work for Blocks IV to VIII are
going on except Row Nos. 3 to 6 in Block No. VII where there is a mound of soil
to a height of about 2 floors and also boulders of granite rock cut into
rectangular pieces of identical sizes lying in the area. It is also found from
the report that the constructions have been completed in Row Nos. 1 and 2 in
Block No. VIII.
Apart from that, 98% of the work is also completed on 1st, 2nd and
3rd floors of Row Nos. 1 and 2 of Block No. VIII. Since the roads have not been
laid and the parking has not been made available, according to the learned
Advocate Commissioner, the purchasers would not be in a position to occupy the
flats. So far as other Blocks are concerned, the learned Advocate Commissioner
was of the view that huge construction activity on a war-footing basis is
under-way in respect of the disputed area which includes Blocks- IV to VIII.
Therefore, in view of the concurrent findings of the Courts below
and also from the findings arrived at by the Advocate Commissioner appointed by
this Court in his report, we cannot but hold that substantial construction has
been made and therefore, the submission of Mr. Nariman that substantial
construction has not been made, cannot be accepted.
Keeping this in mind, let us now proceed to consider whether
substantial injury would be faced by the plaintiff- appellant in the event an
order of injunction is not granted to them. As noted hereinearlier, the
Development Agreement- cum-General Power of Attorney was entered into by the
defendants/respondents with the plaintiff-appellant and as per the terms and
conditions, parties agreed that a sum of Rs. 13.50 crores had to be paid
besides 16.72 crores for the service of consultancy and Rs. 28,36,175/- was the
cost, which comes to Rs. 30.50 Crores. It was further agreed that it was only
after the payment of the amount agreed upon, necessary documents were to be
executed. That apart, under the 14 Agreement, the defendants/respondents had to
furnish bank guarantee in regard to the amount stated to have been paid in four
cheques. In the plaint as well as in the application for injunction, it was
alleged by the plaintiff-appellant that the defendants/respondents, after
paying first installment, had failed to pay the balance installments as agreed
upon by them because of an order of injunction obtained by the
plaintiff/appellant against the defendants/respondents in a writ petition filed
by them in the High Court of Andhra Pradesh at Hyderabad. It is true that the
defendants/respondents, after paying the first installment, had failed to pay
the other installments payable within the time specified, under the Agrement,
but it is an admitted position that although, the deposits were belatedly made
but the entire amount under the Agreement has already been deposited and in
compliance with the Agreement, a Bank Guarantee has also been furnished.
Such being the state of affairs, i.e. substantial construction has
been made on the suit property in respect of which crores of money have been
invested by the 15 defendants/respondents and since the defendants/respondents
have already paid/deposited the amount payable in terms of the agreement,
although belatedly, to the plaintiff/appellant, we do not think that the
plaintiff-appellant will suffer any substantial injury if the construction work
is not stopped by an order of injunction. It is well settled that when
construction has been made on a land, which is of considerable magnitude, and
when the plaintiff shall not face any substantial injury, if no order of
injunction is granted because of payment/deposit of the entire amount payable
by the defendant to the plaintiff under the Agreement, though belatedly, we are
of the view that the Court will not, as a matter of course, pass an order of
injunction against the other party restraining the other party from raising any
construction on the suit property till the disposal of the suit.
ultimately, the suit filed by the plaintiff-appellant is decreed, he can be
compensated in damages or the defendants/respondents may be directed to pull
down the construction and deliver vacant possession to the plaintiff/appellant
when no equity can be claimed for such construction by the
defendants/respondents. On the other 16 hand, in our view, if at this stage, an
order of injunction is granted against the defendants/respondents from
proceeding with further construction in the suit property, it will undoubtedly
destroy the constructions already made by the defendants/respondents and the
defendants/respondents will suffer irreparable loss and injury for not allowing
them to make construction on the suit property. That apart, in view of our
discussions made hereinabove, the entire amount payable by the
defendants/respondents having been paid/deposited in favour of the
plaintiff/appellant, there is no reason to pass an order of injunction against
the defendants/respondents when the plaintiff/appellant would not face
substantial injury for permitting the defendants/respondents to proceed with
the construction in the suit property.
Accordingly, in view of our discussions made hereinabove, we are,
therefore, of the view that the balance of convenience lies against granting an
order of injunction, which, if granted, will substantially and irreparably
injure and prejudice the defendants/respondents. For the reasons aforesaid, we
are, 17 therefore, of the view that the High Court was fully justified in
affirming the order of the trial Court refusing to grant any order of
injunction in favour of the plaintiff/appellant.
That apart, in our view, when the High Court as well as the trial
Court had refused to grant injunction in favour of the plaintiff/appellant
based on consideration of materials on record and after considering the balance
of convenience and inconvenience of the parties and when such findings of the
High Court as well as of the trial Court do not suffer from any perversity or
arbitrariness, it is not open for this court to interfere with such order of
the High Court as well as of the trial Court.
However, there is one another aspect of the matter. As noted
hereinearlier, the trial Court, while refusing to grant injunction in favour of
the plaintiff/appellant, has given certain directions to the
defendants/respondents, which have already been noted hereinearlier. In view of
the fact that the Clause Nos. 1 and 2 have already been complied with by the
defendants/respondents, those clauses need not remain. So 18 far as Clause No.
3 is concerned, it appears to us that the said clause should remain, that is to
say, the defendants/respondents shall not claim equities over the construction
made in the suit property and they would be bound by the decision in the suit.
Furthermore, the defendants/respondents, as directed by the trial Court, shall
furnish particulars of the prospective buyers of the residential units in
advance to the Competent Authority/Urban Land Ceiling as it must be made clear
to the prospective buyers that their purchases are subject to the result of the
suit by making a `specific recital' in the agreement of sale or sale deed, as
the case may be.
In view of our discussions made hereinabove, we do not find any
merit in these appeals.
We, however, make it clear that whatever observations we have made
while deciding these two appeals, would not stand in the way of the Courts
below from deciding the merits of the suit and it is also made clear that the
trial Court shall not be 19 influenced by any of the observations or findings
made in this order or of the High Court, while deciding the application for
Considering the facts and circumstances of the present case, we
direct the trial Court to dispose of the suit at an early date, preferably
within six months from the date of filing the written statement by the
defendants/respondents. The defendants/respondents are directed to file their
written statement within four weeks from this date, if not filed in the
The appeals are thus dismissed. There will be no order as to
..................................J [ TARUN CHATTERJEE ]