Supreme Court of India
Ambalal Sarabhai Enterprise … vs Ks Infraspace Llp Limited on 6 January, 2020Author: Navin Sinha

Bench: Navin Sinha, Krishna Murari



CIVIL APPEAL NO(s). 9346 OF 2019
(arising out of SLP (Civil) No(s). 23194 of 2019)




CIVIL APPEAL NO(s). 9347 OF 2019
(arising out of SLP (Civil) No(s). 23200 of 2019)


CIVIL APPEAL NO(s). 9348­49 OF 2019
(arising out of SLP (Civil) No(s). 27311­27312 of 2019)


Signature Not Verified

Digitally signed by
Date: 2020.01.06
17:41:30 IST



The present appeals arise from a common order dated

30.08.2019, passed in three separate miscellaneous appeals filed by

the appellants before the High Court affirming an order of

injunction. K.S. Infraspace LLP Ltd., respondent no.1, filed Special

Civil Suit Nos.322 of 2018 and 323 of 2018 before the Court of

Principal Civil Judge at Vadodara against the appellants in Civil

Appeal No.9346 of 2019 (Ambalal Sarabhai Enterprise) and Civil

Appeal No.9347 of 2019 (Haryana Containers Ltd.) respectively,

which are sister concerns. The appellant in Civil Appeal No.9348 of

2019 (Neptune Infraspace Private Ltd.) was impleaded as defendant

no.2 in the latter suit. The parties shall be referred to by their

respective position in the Civil Suit, for the sake of convenience.

2. The plaintiff filed the two suits for declaration and specific

performance against the defendant sister concerns with regard to a

total area of 19,685 square meters of lands situated in Village

Wadiwadi, Subhanpura, District Vadodara in Gujarat. The plaintiff

contended that there existed a concluded contract with the
defendants after negotiations for sale of the suit lands for a total

sum of Rs.31,81,73,076/­ and 58,26,86,984/­ respectively. The

plaintiff had duly communicated its acceptance of the final draft

memorandum of understanding (MoU) dated 30.03.2018. Only the

formal execution of contract documents remained as a formality. A

sum of Rs.2.16 crores had also been paid as advance. The plaintiff

was ready and willing with the balance amount. Alternately, it was

claimed that there existed a concluded oral contract between the

parties. The Defendants had surreptitiously entered into a

registered agreement for sale with defendant no.2 on 31.03.2018

and thus the suit and prayer for injunction.

3. The Principal Civil Judge by order dated 18.02.2019 held that

by inference the terms and conditions for sale stood finalised by the

e­mail dated 29.03.2018 and 30.03.2018. A token amount of

Rs.2.16 crores had already been paid and the plaintiff was ready

and willing with the balance amount. Creation of third party rights

would lead to further litigation. Thus by an order of temporary

injunction the defendants were restrained from executing any

further documents including a sale deed or creating further charge,

interest or deal with the suit lands in any manner.

4. The High Court by its order dated 30.08.2019 affirmed the

order of injunction holding that the communication of acceptance to

the draft MoU sent by e­mail dated 30.03.2018 coupled with the

exchange of WhatsApp correspondences between the parties

amounted to a concluded contract.

5. We have heard learned senior counsel Shri Kapil Sibal, Shri

C.U. Singh and Shri Huzefa Ahmadi, appearing on behalf of

defendant nos. 1 and 2, who are the appellants before us. Shri

Sibal, making the lead arguments on behalf of the defendant sister

concerns submitted that they had decided to sell the lands in view

of financial stringency and their inability to meet financial

commitments inter­alia leading to attachment of immovable

properties by the Income Tax Department for dues of

Rs.48,74,45,929/­ apart from other statutory liabilities, employee

related liabilities and business liabilities. The negotiations with the

plaintiff did not attain finality but remained at the stage of

discussions only. The wavering conduct of the plaintiff to meet the

Income Tax liability of the defendants as part of the consideration

amount to facilitate sale by lifting of the attachment, left the

defendants with no other choice but to negotiate afresh with

defendant no.2. The contention that execution of the agreement

remained a formality was disputed. This is evident from the

alternative contention in the suit that there existed an oral contract.

6. The plaintiff’s response of acceptance to the final draft MoU

dated 30.03.2018 was belated. The plaintiff was well aware all along

that the defendants were negotiating with two others also apart from

it. The plaintiff knew before 30.03.2018 that the deal with it was not

coming through and that the defendant was going ahead with

another. The deal with defendant no.2 was finalised by execution of

a registered agreement for sale on 31.03.2018 after defendant no.2

had cleared the Income Tax dues of the sister concerns on

30.03.2018 to the extent of Rs.17.69 crores and Rs.2.20 crores

respectively enabling lifting of the attachment orders for the lands

by the Income Tax department on 26.04.2018 followed by further

payments by defendant no.2 aggregating Rs.45.84 crores till

16.01.2019. A sum of Rs. 36.20 crores, from the sale proceeds has

already been utilized by the defendants towards payment of other

statutory liabilities and employee related liabilities etc. It was

therefore a bona fide action. The plaintiff’s e­mail of acceptance of

the draft MoU dated 30.03.2018 as claimed, was not sent by it on

31.03.2018 at 07.43 AM but was received by the defendant on

31.03.2018 at 01.13 PM.

7. Despite the full awareness and knowledge as far back as

30.03.2018 and refund through RTGS of Rs.2.16 crores on

31.03.2018 itself, the plaintiff published a public notice only on

03.04.2018 advising all concerned not to deal with the property

which was duly replied and refuted by another public notice dated

04.04.2018 published by the defendants. The cause of action in the

suit is based on the email dated 30.03.2018 coupled with the public

notice dated 03.04.2018. Acknowledging the refund also on

31.03.2018, it admits the signing of a registered agreement for sale

with defendant no.2 on 31.03.2018 but does not make even a

whisper of a suggestion why the suit was filed more than 7 months

later. In commercial dealings with high stake matters delay is vital.

This specific objection on behalf of the defendant taken before the

High Court relying on K.S. Vidyanadam & ors. vs. Vairavan,

1997 (3) SCC 1, has been noticed at paragraph 37 of the judgment

but does not find any consideration.

8. Reliance was also placed on Mandali Ranganna and ors. vs.

T. Ramachandra and ors., 2008 (11) SCC 1 to submit that the

grant of the injunction was contrary to the basic principles

governing injunction more so in a suit for specific performance

relying on Mayawanti vs. Kaushalya Devi, 1990 (3) SCC 1.

9. Shri Huzefa Ahmadi, learned senior counsel appearing on

behalf of defendant no.2, submitted that it was a bona fide

purchaser for value. The plaintiff was well aware of the

simultaneous negotiations with it. The defendant no.2 had made

substantial payments on 30.03.2018 only after obtaining a written

confirmation from the defendant dated 26.03.2018 that it had not

signed any other agreement or received payment from another with

regard to the subject lands. The registered agreement for sale dated

31.03.2018 was followed by delivery of possession much prior to the

institution of the suit. A specific objection with regard to delay was
taken in the reply to the injunction application which was not


10. Dr. A.M. Singhvi, learned senior counsel appearing on behalf of

the plaintiff, submitted that his clients at no stage had declined to

meet the Income Tax liabilities of the defendant sister concerns, as

part of the consideration amount. The negotiations were widespread

over time both by WhatsApp messages and exchange of e­mails.

These collectively have correctly been interpreted to hold a prima

facie case in favour of the plaintiff. The terms and conditions of

payment, were all finalized which prima facie reflect the existence of

a concluded contract. The fact that the e­mail dated 30.03.2018

referred to the enclosure as a draft MoU cannot be decisive as it has

to be understood on a cumulative assessment of facts. In any

event, the plaintiff had communicated its acceptance without delay

and also protested the refund of the advance of Rs.2.16 crores the

same day followed by a public notice.

11. The hurried manner in which the defendants proceeded to

finalise the deal on 30.03.2018 itself, manifests the desire of the

defendants to cause harm to the plaintiff. Defendant no.2 cannot

claim to be a bona fide purchaser as it was all along aware of the

negotiations taking place between the plaintiff and the defendant

sister concerns and that it was at a very advanced stage.

12. Dr. Singhvi framed the question, whether concurrent findings

of the Special Civil Judge and the High Court by two detailed well

considered orders were such as to warrant interference so as to

dissipate the substratum of the suit. In support of his submissions,

Dr. Singhvi relied on Wander Ltd. and another vs. Antox India P.

Ltd., 1990 Suppl. SCC 727, Brij Mohan and others vs. Sugra

Begum and ors., (1990) 4 SCC 147, Motilal Jain vs. Ramdasi

Devi (Smt.) and ors., (2000) 6 SCC 420, Moharwal Khewaji Trust

(Regd.), Faridkot vs. Baldev Dass, (2004) 8 SCC 488, and Aloka

Bose vs. Parmatma Devi and ors., (2009) 2 SCC 582.

13. On the aspect of the delay in institution of the suit, relying on

Mademsetty Satyanarayana vs. G. Yelloji Rao and ors., 1965 (2)

SCR 221, it was submitted that the delay did not induce the

defendant to do anything further than that already done earlier, to

their prejudice. In any event the plaintiff is ready and willing to pay

to the defendant no.2 the amount of the Income Tax dues paid by it

and proceed with the contract with the defendant sister concerns.

14. We have been addressed by the counsel for the parties at

length, as also have been taken through the several WhatsApp

messages and e­mails exchanged. We have also considered the

respective submissions. Litigation at the initial stage of injunction,

where the claims of the parties are still at a nebulous stage, has

stalled the progress of the suit. We are of the considered opinion

that at this stage we ought to refrain from returning findings of facts

or express any opinion on the merits of the suit, except to the extent

necessary for purposes of the present order, so as not to prejudice

either party in the suit.

15. Chapter VII, Section 36 of the Specific Relief Act, 1963

(hereinafter referred to as ‘the Act’) provides for grant of preventive

relief. Section 37 provides that temporary injunction in a suit shall

be regulated by the Code of Civil Procedure. The grant of relief in a
suit for specific performance is itself a discretionary remedy. A

plaintiff seeking temporary injunction in a suit for specific

performance will therefore have to establish a strong prima­facie

case on basis of undisputed facts. The conduct of the plaintiff will

also be a very relevant consideration for purposes of injunction. The

discretion at this stage has to be exercised judiciously and not


16. The cardinal principles for grant of temporary injunction were

considered in Dalpat Kumar vs. Prahlad Singh, (1992) 1 SCC

719, observing as follows :

“5…Satisfaction that there is a prima facie case by
itself is not sufficient to grant injunction. The Court
further has to satisfy that non­interference by the
Court would result in “irreparable injury” to the
party seeking relief and that there is no other
remedy available to the party except one to grant
injunction and he needs protection from the
consequences of apprehended injury or
dispossession. Irreparable injury, however, does not
mean that there must be no physical possibility of
repairing the injury, but means only that the injury
must be a material one, namely one that cannot be
adequately compensated by way of damages. The
third condition also is that “the balance of
convenience” must be in favour of granting
injunction. The Court while granting or refusing to
grant injunction should exercise sound judicial
discretion to find the amount of substantial
mischief or injury which is likely to be caused to
the parties, if the injunction is refused and
compare it with that which is likely to be caused to
the other side if the injunction is granted. If on
weighing competing possibilities or probabilities of
likelihood of injury and if the Court considers that
pending the suit, the subject matter should be
maintained in status quo, an injunction would be
issued. Thus the Court has to exercise its sound
judicial discretion in granting or refusing the relief
of ad interim injunction pending the suit.”

17. The negotiations between the plaintiff and the defendant is

reflected in approximately 17 e­mails exchanged between them

commencing from December 2017 to 31.03.2018. The file size of the

attachment to the mails has varied from 48­50­52­48­57­56 KBs

indicating suggestions and corrections from time to time. The

WhatsApp messages which are virtual verbal communications are

matters of evidence with regard to their meaning and its contents to

be proved during trial by evidence­in­chief and cross examination.

The e­mails and WhatsApp messages will have to be read and

understood cumulatively to decipher whether there was a concluded

contract or not. The use of the words ‘final draft’ in the e­mail dated

30.03.2018 cannot be determinative by itself. The e­mail dated

26.02.2018 sent by the defendant at 11:46 AM had also used the

same phraseology. The plaintiff was well aware from the very
inception that the defendant was negotiating for sale of the lands

simultaneously with two others. The plaintiff was further aware on

30.03.2018 itself that the deal with it had virtually fallen through as

informed to the escrow agent. The fact that a draft MoU christened

as ‘final­for discussion’ was sent the same day cannot lead to the

inference in isolation, of a concluded contract. There is no evidence

at this stage that the acceptance was communicated to the

defendant before the latter entered into a deal with defendant no.2

on 30.03.2018 and executed a registered agreement for sale on

31.03.2018. Defendant no.2 paid Rs.17.69 crores and Rs.2.20

crores towards the income tax dues of the defendant the same day,

as part of the consideration amount. It is only thereafter the plaintiff

purports to have communicated its acceptance to the defendant on

31.03.2018 at 01.13 PM. The prolonged negotiations between the

parties reflect that matters were still at the ‘embryo stage’ as

observed in Agriculture Produce Market Committee, Gondal and

ors. vs. Girdharbhai Ramjibhai Chhaniyara and ors., (1997) 5

SCC 468. The plaintiff at this stage has failed to establish that there

was a mutuality between the parties much less that they were ad­

18. The pleadings in the suit acknowledge the awareness of the

plaintiff of the ongoing negotiations with defendant no.2. The

advance of Rs.2.16 crores was refunded to the plaintiff in the

evening on 31.03.2018 by RTGS. No effort was made by the plaintiff

to again remit the sum by RTGS immediately or the next day. Only

a public notice was published on 03.04.2018 refuted by the

defendant on 04.03.2018. The suit was then filed seven months

later on 01.10.2018. The explanation that the plaintiff waited

hopefully for a solution outside litigation as a prudent businessman

before finally instituting the suit is too lame an excuse to merit any


19. In a matter concerning grant of injunction, apart from the

existence of a prima facie case, balance of convenience, irreparable

injury, the conduct of the party seeking the equitable relief of

injunction is also very essential to be considered as observed in

Motilal Jain (supra) holding as follows :

“6. The first ground which the High Court took note
of is the delay in filing the suit. It may be apt to
bear in mind the following aspects of delay which
are relevant in a case of specific performance of
contract for sale of immovable property:
(i) delay running beyond the period prescribed
under the Limitation Act;
(ii) delay in cases where though the suit is within
the period of limitation, yet:
(a) due to delay the third parties have acquired
rights in the subject­matter of the suit;
(b) in the facts and circumstances of the case,
delay may give rise to plea of waiver or otherwise it
will be inequitable to grant a discretionary relief.”

20. The defendant no.2, in addition to the dues of the Income Tax

department as aforesaid, made further payments to the defendant of

Rs.25,44,57,769/­ by 16.01.2019 aggregating to a total payment of

Rs.45,84,71,869/­. The defendants had also proceeded to utilize a

sum of Rs.36.20 crores also and had therefore materially altered

their position evidently by the inaction of the plaintiff to institute

the suit in time and having allowed third party rights to accrue by

making substantial investments. In Madamsetty (supra) it was

observed :

“12…..It is not possible or desirable to lay down the
circumstances under which a court can exercise its
discretion against the plaintiff. But they must be
such that the representation by conduct or neglect
of the plaintiff is directly responsible in inducing
the defendant to change his position to his
prejudice or such as to bring about a situation

when it would be inequitable to give him such a

Similar view has been expressed in Mandali Ranganna (supra).

21. We are therefore of the considered opinion that in the facts and

circumstances of the present case, and the nature of the materials

placed before us at this stage, whether there existed a concluded

contract between the parties or not, is itself a matter for trial to be

decided on basis of the evidence that may be led. If the plaintiff

contended a concluded contract and/or an oral contract by

inference, leaving an executed document as a mere formality, the

onus lay on the plaintiff to demonstrate that the parties were ad­

idem having discharged their obligations as observed in Brij Mohan

(supra). The plaintiff failed to do show the same on admitted facts.

The draft MoU dated 30.03.2018 in Clause C contemplated payment

of the income tax dues of Rs.18.64 crores as part of the

consideration amount only whereafter the agreement was to be

signed relating back to the date 29.03.2008. Had this amount been

already paid or remitted by the plaintiff, entirely different

considerations would have arisen with regard to the requirement for

execution of a written agreement remaining a mere formality.

Needless to state the balance of convenience is in favour of the

defendants on account of the intervening developments, without

furthermore, inter­alia by reason of the plaintiff having waited for

seven months to institute the suit. The question of irreparable

harm to a party complaining of a breach of contract does not arise if

other remedies are available to the party complaining of the breach.

The High Court has itself observed that from the negotiations

between the parties that “some rough weather was being reflected

between the plaintiff and the defendant ……….”. The Special Civil

Judge failed to address the issue of delay. The High Court noticed

the arguments of the defendants with regard to delay in the

institution of the suit but failed to deal with it.

22. In M.P. Mathur vs. DTC, (2006) 13 SCC 706, this Court

observed :

“14. The present suit is based on equity…In the
present case, the plaintiffs have sought a remedy
which is discretionary. They have instituted the
suit under Section 34 of the 1963 Act. The
discretion which the court has to exercise is a
judicial discretion. That discretion has to be
exercised on well­settled principles. Therefore, the
court has to consider—the nature of obligation in
respect of which performance is sought,
circumstances under which the decision came to be
made, the conduct of the parties and the effect of
the court granting the decree. In such cases, the
court has to look at the contract. The court has to
ascertain whether there exists an element of
mutuality in the contract. If there is absence of
mutuality the court will not exercise discretion in
favour of the plaintiffs. Even if, want of mutuality is
regarded as discretionary and not as an absolute
bar to specific performance, the court has to
consider the entire conduct of the parties in
relation to the subject­matter and in case of any
disqualifying circumstances the court will not grant
the relief prayed for (Snell’s Equity, 31st Edn., p.

23. Wander Ltd. (supra) prescribes a rule of prudence only. Much

will depend on the facts of a case. It fell for consideration again in

Gujarat Bottling Co. Ltd. vs. Coca Cola Co., (1995) 5 SCC 545,

observing as follows :

“47….Under Order 39 of the Code of Civil
Procedure, jurisdiction of the Court to interfere
with an order of interlocutory or temporary
injunction is purely equitable and, therefore, the
Court, on being approached, will, apart from other
considerations, also look to the conduct of the
party invoking the jurisdiction of the Court, and
may refuse to interfere unless his conduct was free
from blame. Since the relief is wholly equitable in
nature, the party invoking the jurisdiction of the
Court has to show that he himself was not at fault
and that he himself was not responsible for
bringing about the state of things complained of
and that he was not unfair or inequitable in his
dealings with the party against whom he was
seeking relief. His conduct should be fair and

24. The aforesaid discussion leaves us satisfied to conclude that in

the facts and circumstances of the present case, the grant of

injunction to the plaintiff is unsustainable. Resultantly the orders of

injunction are set aside. Nothing in the present order shall be

deemed or construed as any expression of opinion or observation by

us at the final hearing of the suit which naturally will have to be

decided on its own merits. The High Court has already given

directions to expedite the hearing of the suit and we reiterate the


25. The appeals are allowed.

(Ashok Bhushan)

(Navin Sinha)
New Delhi,
January 06, 2020



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