Case Note & Summary
The appeal arises from an order of a learned Single Judge declining relief in a Notice of Motion taken out by the appellants in a suit for specific performance. The appellants are developers who entered into an agreement dated 25 September 2007 with respondents 1 to 3, the owners of a property known as Padmavati Sadan at Matunga, Mumbai. The property is a cessed building in dilapidated condition occupied by tenants. The agreement conferred full development rights upon the appellants for a total consideration of Rs.1.38 Crores, plus the owners were entitled to ownership rights in 2000 sq. ft. residential and 800 sq. ft. commercial area in the new building. The appellants were to negotiate with tenants and obtain vacant possession. The appellants paid Rs.1.25 Crores and obtained possession of some portions. However, disputes arose and the respondents allegedly attempted to sell the property to third parties. The appellants filed a suit for specific performance and sought an interim injunction restraining alienation. The learned Single Judge declined the injunction. In appeal, the Division Bench held that the appellants had made out a prima facie case, the balance of convenience was in their favor, and they would suffer irreparable injury if the property was alienated. The court noted that the property was unique and damages would not be an adequate remedy. The court allowed the appeal and granted an injunction restraining the respondents from alienating, transferring, or creating third-party rights in the suit property pending the disposal of the suit. The court also directed the appellants to deposit Rs.13 lakhs in court within four weeks as security.
Headnote
A) Specific Performance - Interim Injunction - Prima Facie Case - The court considered whether the appellants had made out a prima facie case for the grant of an interim injunction in a suit for specific performance of a development agreement. The agreement conferred development rights and the appellants had paid substantial consideration. The court held that a prima facie case was established as the agreement was valid and the appellants had performed their obligations. (Paras 1-10) B) Specific Performance - Balance of Convenience - Irreparable Injury - The court examined the balance of convenience and irreparable injury. The property was the subject matter of the suit and any alienation would render the suit infructuous. The court held that the balance of convenience was in favor of granting injunction as the appellants would suffer irreparable injury if the property was alienated. (Paras 11-15) C) Specific Performance - Section 41(b) Specific Relief Act, 1963 - Adequate Remedy - The court considered whether damages would be an adequate remedy. The property was unique and the agreement involved development rights. The court held that damages would not be an adequate remedy and the appellants were entitled to an injunction. (Paras 16-20)
Issue of Consideration
Whether the appellants are entitled to an interim injunction restraining the respondents from alienating, transferring, or creating third-party rights in the suit property pending the disposal of the suit for specific performance.
Final Decision
The appeal is allowed. The order of the learned Single Judge is set aside. The respondents are restrained by an order of injunction from alienating, transferring, or creating third-party rights in the suit property pending the disposal of the suit. The appellants are directed to deposit Rs.13 lakhs in court within four weeks.
Law Points
- Specific performance
- Balance of convenience
- Prima facie case
- Irreparable injury
- Injunction against alienation
- Development agreement
- Cessed building
- Tenants' rights
- Section 41(b) Specific Relief Act
- 1963
