Case Note & Summary
The appellant, Rachanaa Co-Operative Housing Society Ltd., filed a suit for specific performance of a development agreement against the respondent developer, Rachnaa – Engineers & Developers, and others. The society claimed that the developer had agreed to develop the society's property but failed to perform its obligations. The society sought an interim injunction to restrain the developer from alienating or creating third party rights over the suit property. The trial court dismissed the notice of motion, and the society appealed. The High Court upheld the trial court's order, finding that the society had not made out a prima facie case because the alleged agreement was not signed by the developer, and the society had not paid the full consideration. The balance of convenience was in favor of the developer, who had already invested substantial amounts in the project. The court also noted that the society could be compensated by damages, and therefore, no irreparable loss would be caused. The appeal was dismissed.
Headnote
A) Specific Performance - Interim Injunction - Prima Facie Case - Balance of Convenience - Irreparable Loss - The appellant society sought specific performance of a development agreement and interim injunction to restrain the developer from alienating the property. The court held that the society failed to make out a prima facie case as the agreement was not signed by the developer and the society had not paid the full consideration. The balance of convenience was in favor of the developer who had already invested substantial amounts. No irreparable loss would be caused to the society as damages could be quantified. (Paras 2-10)
B) Contract Act - Formation of Contract - Offer and Acceptance - Section 2(b) Indian Contract Act, 1872 - The court noted that the alleged development agreement was not signed by the developer, indicating no concluded contract. The society's claim of part performance was not supported by evidence of payment of full consideration. (Paras 5-7)
C) Specific Relief Act - Discretionary Relief - Section 41(b) Specific Relief Act, 1963 - The court observed that an injunction cannot be granted when the plaintiff has an alternative remedy by way of damages. Since the society could be compensated in money, the injunction was rightly refused. (Para 9)
Issue of Consideration
Whether the appellant cooperative society is entitled to an interim injunction restraining the developer from alienating or creating third party rights over the suit property pending the suit for specific performance.
Final Decision
The appeal is dismissed. The order of the trial court refusing interim injunction is upheld.
Law Points
- Specific performance
- interim injunction
- prima facie case
- balance of convenience
- irreparable loss
- development agreement
- cooperative society
- developer's lien
- Section 41(b) Specific Relief Act
- 1963
Case Details
2011 LawText (BOM) (12) 47
Appeal from Order No. 357 of 2010
A.A. Kumbhakoni with A.M. Kulkarni i/b. Ramesh Chheda for the appellant; P.K. Dhakephalkar, Senior Advocate with Vijay Nayar i/b. P.P. Kulkarni for respondent Nos.1,2,4,5,7,8 and 9; Ms. K.K. Soran for respondent Nos.12 and 13
Rachanaa Co-Operative Housing Society Ltd.
Rachnaa – Engineers & Developers & Ors.
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Nature of Litigation
Appeal against order refusing interim injunction in a suit for specific performance of a development agreement.
Remedy Sought
The appellant sought an interim injunction restraining the developer from alienating or creating third party rights over the suit property.
Filing Reason
The appellant alleged that the developer failed to perform its obligations under the development agreement and was attempting to alienate the property.
Previous Decisions
The trial court dismissed the notice of motion seeking interim injunction.
Issues
Whether the appellant made out a prima facie case for grant of interim injunction?
Whether the balance of convenience lies in favor of the appellant?
Whether the appellant would suffer irreparable loss if injunction is not granted?
Submissions/Arguments
Appellant argued that the developer had agreed to develop the property and had received part consideration, and that the developer was attempting to alienate the property to third parties.
Respondent argued that there was no concluded contract as the agreement was not signed by the developer, and that the developer had invested substantial amounts and would suffer loss if injunction was granted.
Ratio Decidendi
For grant of interim injunction, the plaintiff must establish a prima facie case, balance of convenience in its favor, and irreparable loss. In this case, the appellant failed to establish a prima facie case as the agreement was not signed by the developer and full consideration was not paid. The balance of convenience was in favor of the developer who had invested substantial amounts. The appellant could be compensated by damages, so no irreparable loss.
Judgment Excerpts
The appellant/ original plaintiff is taking exception to the order passed in Notice of Motion No.2214/2009 in L.C.Suit No.2635/2009 by the Judge, City Civil Court, Greater Bombay on 17th March 2010.
The appellant has not been able to make out a prima facie case for grant of interim relief.
The balance of convenience is not in favour of the appellant.
No irreparable loss would be caused to the appellant.
Procedural History
The appellant filed L.C.Suit No.2635/2009 for specific performance of a development agreement and sought interim injunction via Notice of Motion No.2214/2009. The trial court dismissed the notice of motion on 17th March 2010. The appellant appealed to the High Court via Appeal from Order No.357 of 2010. The High Court reserved judgment on 25th November 2011 and pronounced on 17th December 2011, dismissing the appeal.
Acts & Sections
- Specific Relief Act, 1963: Section 41(b)
- Indian Contract Act, 1872: Section 2(b)
