Case title: 

Eldeco Housing and Industries Ltd v. Ashok Vidyarthi & Ors.

Date of Order: 

30th November 2023

Bench: 

Hon'ble Mr. Justice Vikram Nath     

Hon'ble Mr. Justice Rajesh Bindal

Parties: 

Appellant: Eldeco Housing and Industries Ltd.

Respondent(s): Ashok Vidyarthi & Ors

SUBJECT:

The Hon’ble Supreme Court (hereinafter referred to as ‘the Supreme Court’) granted the appeal in Eldeco Housing and Industries Ltd. v. Ashok Vidyarthi & Ors. The case revolves around a MOU for the sale of a disputed property. The dispute involves the timing of legal actions, particularly the filing of a suit for injunction by the appellant in 2009, the subsequent dismissal of the suit, and the eventual filing of a suit for specific performance in 2017 after the resolution of the litigation. The case encompasses issues related to the interpretation of contractual agreements, procedural rules, and the timing of legal remedies sought by the parties.

IMPORTANT PROVISIONS:

The Code of Civil Procedure, 1908 (CPC):

• Order VII Rule 11
• Order II Rule 2

OVERVIEW:

• The case involves a Memorandum of Understanding (MOU) signed in 1998 between the appellant and respondent No. 1 for the sale of a disputed property.
•  The MOU mentioned ongoing litigation within respondent No. 1's family regarding the property, and the sale deed was contingent on the resolution of this litigation.
• In 2009, the appellant discovered that respondent No. 1 was attempting to sell the property to third parties, leading to a lawsuit for an injunction.
• The lawsuit for injunction was dismissed, and the legal issues related to the property were resolved by the Supreme Court in 2015.
• Despite the resolution, the appellant found out that respondent No. 1 was once again trying to dispose of the property.
• In 2017, the appellant filed a new lawsuit seeking specific performance to enforce the earlier MOU, stating they became aware of the resolution of litigation just before filing the suit.
• Respondent No. 1 filed an application under Order VII Rule 11(d) of the Code of Civil Procedure, seeking the rejection of the plaint. The argument was that the specific performance claim should have been made in the initial suit for injunction.
• The court rejected the respondent's arguments, emphasizing that evidence and merits should not be examined at the stage of the decision under Order VII Rule 11 C.P.C.
• The Court set aside the impugned order and directed the Trial Court to proceed with the suit. The appeal was allowed based on a reportable judgment. 

ISSUES RAISED:

• Can suit for specific performance be filed after the suit was dismissed?
• Can the Court delve into the merits of the case after the rejection of the application under Order VII Rule 11 of CPC?

ARGUMENTS ADVANCED BY THE APPELLANT:

• The circumstances leading to the specific performance claim occurred after the injunction suit was dismissed.
• The specific performance claim was distinct from the injunction suit and did not arise at the time of the initial suit.
• Emphasizing the procedural nature of the rejection application under Order VII Rule 11, the court should not consider evidence or delve into the merits of the controversy at the instant stage.
• Appropriate legal procedures were followed in filing the specific performance suit after the resolution of the litigation and in accordance with the terms of the MoU.

ARGUMENTS ADVANCED BY THE RESPONDENT:

• Specific performance claims should have been made in a suit for injunction.
• If the ongoing litigation had not been decided after one year, the appellant would have had the right to get the earnest money back, as per the terms of the 1998 agreement.
• The appellant’s suit was inconsistent with the terms of the agreement.
• The filing of a separate suit for specific after the dismissal of the injunction suit was barred.

JUDGEMENT ANALYSIS:

• The cause of action for filing a suit for specific performance had not arisen when the appellant filed the suit for injunction in 2009 implying that the circumstances necessitating the specific performance claim occurred after the initial injunction suit.
• The application was rejected, emphasizing that, at the stage of deciding the application under Order VII Rule 11, no amount of evidence or merits of the controversy should be examined.
• The High Court of Allahabad set aside the impugned order, suggesting that the rejection application was not deemed appropriate based on the considerations presented.
• The High Court directed the Trial Court to proceed with the suit.
• The Supreme Court allowed the appeal in terms of the signed reportable judgment.

CONCLUSION:

The judgment, in this case, reflects a meticulous consideration of the timing and cause of action in a dispute over an MOU for the sale of a property. The court rejected the respondent's application seeking the rejection of the plaint, emphasizing the procedural limitations at the stage of such applications under Order VII Rule 11 of the Code of Civil Procedure. The court set aside the impugned order, highlighting that the circumstances for the specific performance claim had not arisen when the appellant initially filed a suit for injunction. The judgment allows the appeal, directing the Trial Court to proceed with the substantive issues of the case, signaling a significant procedural and substantive victory for the appellant in their pursuit of specific performance.
The Supreme Court granted the appeal in terms of the signed reportable judgment. Any pending application(s) stood disposed of.