Case Note & Summary
The plaintiff, Swaran Salaria & Associates, filed a suit for specific performance of an agreement dated 22 November 2007 with the first defendant, Himalayan Heli Service Pvt. Ltd., for acquisition of 50% stake in the defendant company. The plaintiff also sought an injunction restraining the defendants from transferring or alienating 52% shares in the first defendant company. The defendants opposed the motion, contending that the agreement was not binding and that the plaintiff had failed to show readiness and willingness. The court analyzed the nature of the agreement, holding that a contract for sale of shares is a contract for sale of goods and not for specific performance of immovable property. The court further held that the plaintiff had not pleaded or proved continuous readiness and willingness to perform his part of the contract. Consequently, the court dismissed the notice of motion, finding no prima facie case or balance of convenience in favor of the plaintiff.
Headnote
A) Specific Relief Act, 1963 - Section 10 - Specific Performance of Contract for Sale of Shares - An agreement for transfer of shares is a contract for sale of goods and not for sale of immovable property; specific performance is not available as a matter of right unless the shares are unique or damages inadequate. (Paras 10-12) B) Specific Relief Act, 1963 - Section 16(c) - Readiness and Willingness - Plaintiff must plead and prove continuous readiness and willingness to perform his part of the contract; failure to do so disentitles him to any relief. (Paras 13-15) C) Code of Civil Procedure, 1908 - Order 39 Rules 1 and 2 - Injunction - An injunction cannot be granted to restrain transfer of property when the underlying contract is not specifically enforceable and the plaintiff has not shown a prima facie case or balance of convenience. (Paras 16-18)
Issue of Consideration
Whether the plaintiff is entitled to an injunction restraining the defendants from transferring shares pending the suit for specific performance of an agreement to sell shares.
Final Decision
Notice of Motion dismissed with costs. Interim order, if any, stands vacated.
Law Points
- Specific performance of contract for sale of shares is not enforceable as contract for sale of immovable property
- Readiness and willingness must be continuous
- Injunction cannot be granted to enforce a contract that is not specifically enforceable
