Bench:
- Navin Sinha,
- Krishna Murari
Issue:
Grant of temporary injunction
Facts:
• The appellant decided to sell the land due to attachment of the immovable property by the Income Department for due and other liability. Thus, there was a condition to clear Income Tax dues to facilitate the contract.
• The negotiations between the appellant and the respondent commenced in December 2017.
• The respondent emailed the final draft MoU on 30.03.2018 and paid an advance of Rs.2.16 crores. The email was received by the appellant on 31.03.2018 at 01.13 PM.
• On 31.03.2018, the appellant entered into a registered agreement for sale with the other party who had already paid Income Tax due enabling the lifting of attachment orders and followed by delivery of possession.
• On 31.03.2018, the appellant refunded Rs2.16 crores through RTGS to the respondent.
• The defendant published a public notice on 03.04.2018 advising all concerned not to deal with the property and on 04.04.2018 the appellant issued public notice as a reply to it.
• On 01.10.2018, 7 months later, the defendant filed two suits for declaration and specific performance against the appellant at Civil Court, Vadodara, Gujurat.
• On 18.02.2018, The Principal Civil Judge ordered a temporary injunction by holding the contract concluded.
• On 30.08.2019, The High Court also upheld the previous orders.
• An appeal was then filled in SC
Appellant’s Contentions:
• The negotiations with the defendant didn’t attain finality but remained at the stage of discussion only.
• The defendant’s response of acceptance was belated and he was well aware that the defendant was negotiating with two others also apart from it. The appellant received the email on 31.03.2018 at 01.13 PM.
• They finalized sale with the other party only after the other party has cleared the Income Tax dues followed by further payment while the conduct of the defendant was as such as hesitating to meet the liability.
• TThe appellant also contended that why the suit was filed more than 7 months later while in commercial dealings delay is vital.
Respondent’s Arguments:
• The respondent submitted that they had not declined to meet the Income Tax liabilities of the appellant.
• The hurried manner in which the appellant finalized the deal itself manifests the desire of the appellant to cause harm to the respondent.
• The negotiations, which were widespread overtime both by WhatsApp and email, hold prima facia case in his favor. The email with MoU is not decisive but to be assessed on whole with all facts.
• The delay didn't give the right to the appellant to do anything further to their prejudice.
• They were ready to pay to another party amount of Income Tax dues paid by it.
Judgment:
• The court held that whether there existed a concluded contract or not is a matter for trail to be decided on basis of evidence. In the present case, if the defendant claimed a concluded contract, it is on him to prove that there was a concluded agreement between them which he fails to prove with admitted facts
• The court held that acceptance cannot be concluded by sending an email with MoU christened as 'final for discussion'. The email dated 26.02.2018 sent by the appellant also used the same phraseology.
• There was no evidence that the acceptance was communicated before the appellant entered into an agreement with another party on 30.03.2018.
• The prolonged negotiation between the parties was at an embryo stage with no ad-idem. The defendant's explanation for the delay that he waswaiting for a solution outside litigation is of no merit to the case.
• The court held that the grant of an injunction is based on equity and cannot be decided on the existence of prima facia case only. The other aspects like balance of convenience, irreparable injury, delay in filing the suit, the conduct of the party seeking the relief of injunction are also essential to be considered while granting an injunction. Thus, the court set aside the injunction order.
Relevant Paragraph:
The court while deciding the case took into consideration different conditions cited in various case laws.The court held that prima facia case by itself is not sufficient to grant an injunction. There must be a threat of irreparable injury to the plaintiff if the court doesn't grant an injunction. The principle of irreparable injury must be defined in a wide sense. It means that the plaintiff doesn't have any other remedy and if an injunction is not granted the injury cannot be adequately compensated by way of damages. The second condition is a balance of convenience which must be in favor of granting an injunction. The court while granting an injunction must compare substantial injury which is likely to be caused if the injunction is granted and if it is not granted. While comparing the possibilities of injury if the court considers that subject matter should be maintained in the status quo, an injunction should be granted. The court also took note of the delay by the defendant in filing the suit. The court observed that the inaction of the plaintiff to institute the suit in time have allowed the other party to accrue rights by making a substantial investment. The court also looked at mutuality in the contract and observed that there were some problems between the parties.The conduct of parties also matters and the conduct of the one seeking injunction should be free from any fault. So, the court has exercised various principles before deciding the discretionary remedy.
