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Arcedo Ventures & Others v/s Asian Pacific Holdings

    Civil Miscellaneous Appeal No. 144 of 2020

    Decided On, 19 June 2020

    At, High Court of for the State of Telangana

    By, THE HONOURABLE MR. JUSTICE M.S. RAMACHANDRA RAO & THE HONOURABLE MR. JUSTICE T. AMARNATH GOUD

    For the Appellants: C.V. Mohan Reddy, Senior Counsel, Ramakrishna Pativada, Advocate. For the Respondent: S. Sridhar, Advocate.



Judgment Text


M.S. Ramachandra Rao, J.

1. This Civil Miscellaneous Appeal is filed challenging the order dt.20.02.2020 in I.A.No.58 of 2020 in O.S.No.7 of 2020 of the Judge Family Court-cum-VIII Additional District and Sessions Judge, Mahabubnagar.

2. The appellants are defendants in the above suit.

3. The respondent / plaintiff filed the said suit against appellants / defendants for specific performance of an oral agreement of sale dt.10.06.2019 under which it is alleged that respondent nos.2 and 3 agreed to sell the plaint schedule property admeasuring Acs.27.28 gts to the respondent for a consideration of Rs. 3 crores.

4. Along with the suit, the 1st respondent filed I.A.No.58 of 2020 to restrain the appellants from alienating or changing the nature of the plaint schedule property or mortgaging or encumbering or leasing it out etc.

The contentions of the respondent/plaintiff

5. It is the contention of the respondent / plaintiff in the plaint as well as in the above I.A. that the 1st appellant is a registered partnership firm in which the 2nd defendant is a Managing Partner and 3rd appellant is a partner; that appellants became owners and possessors of Acs.6.33 gts. in Survey No.554 / Part situated at Chettanapally, Farooqnagar Mandal, Ranga Reddy District through a registered sale deed Ex.P2 dt.04.09.2019; that appellants also hold development rights in respect of Acs.15.31 gts. in Survey Nos.529/Part, 530/Part, 534/Part, 556/Part, 557/Part and 558/Part of the said village through an agreement of salecum- General Power of Attorney dt.22.06.2019; and the appellants had also acquired Acs.4.16 gts. in Survey No.554/Part and 534/Part in the said village through registered sale deeds dt.28.01.2019, 20.07.2019 and 04.09.2019.

6. It is contended by respondent that appellant nos.2 and 3 made the land fit for residential plots in a layout, and because of shortage of funds and keeping of the land idle, offered to sell the above extent of Acs.27.28 gts. to the respondent for Rs.3 crores which was orally accepted by the appellant nos.2 and 3 on behalf of 1st appellant. It also contended that negotiations between the Managing Partner of the respondent and appellant nos.2 and 3 began on 10.06.2019 and the agreement was arrived at orally in the presence of two witnesses by name B. Venkatesh Goud and B. Krishna.

7. According to the respondent, the total amount of Rs.3 crores was to be paid on or before 31.01.2020 or at the time of registration; that appellant nos.2 and 3 agreed to deliver peaceful possession as and when they received an amount of Rs.35 lakhs from the respondent and the registration was agreed to be got done after the appellant nos.2 and 3 received Rs.2.5 crores from the respondent.

8. According to the respondent, between 13.06.2019 and 07.01.2020, a sum of Rs.2,55,10,000/- was paid by the respondent to appellant nos.2 and 3, some portion by cash and some portion by account transfer; that by 15.06.2019 by way of cash the respondent had paid Rs.35 lakhs to the 2nd appellant; the appellants delivered peaceful possession of the suit schedule property of Acs.27.28 gts. to it.

9. The respondent contended that it had to pay only Rs.44,90,000/- on or before 31.01.2020 or at the time of registration by appellant nos.2 and 3; and after taking possession of the land by the respondent it had developed the land as housing residential plots for real estate business purpose and has also constructed a site office and workers’ rooms. It also claimed to have entered into an agreement with security agencies and appointed two Managers and five Security Guards to safeguard the property. It also claimed to have constructed a compound wall, dug borewells, levelled the land by earth filling, etc.

10. It alleged that the appellants did not come forward to fix the registration date after having received Rs.2,55,10,000/- as agreed orally on 10.06.2019, and the appellant nos.2 and 3 had committed breach of the oral contract.

11. It also claimed to have issued Legal Notice Ex.P17 dt.16.01.2020 to appellant nos.2 and 3 and also to the 1st appellant by registered post and courier on 17.01.2020 calling upon them to receive the balance sale consideration of Rs.44,90,000/- and to execute the registered sale deed in favour of the respondent.

The stand of the appellants/defendants

12. The appellants filed counter-affidavit refuting the said contentions and seeking dismissal of I.A.No.58 of 2020.

13. They admitted that the 1st appellant was the absolute owner of Acs.6.33 gts. in Survey No.554/Part of Chatenapally Village, that they hold development rights on the Acs.15.31 gts in the said village, and also that they acquired land admeasuring Acs.4.16 gts.

14. But they denied that appellant nos.2 and 3 offered to sell the plaint schedule land for Rs.3 crores orally to the respondent, and that the respondent agreed to purchase it for the said consideration. It was also denied that negotiations between appellant Nos.2 and 3 and the respondent started on 16.06.2019 and there was an oral agreement in witnessed by B. Venkatesh Goud and B. Krishna. They also denied that possession of the property was handed over to the respondent by appellant nos.2 and 3.

15. According to the appellants, they did not receive any cash from the respondent as was contended by it and that payment of cash is not evidenced by any document filed by the respondent. They denied that they received Rs.2,55,10,000/- from the respondents or that site office, workers’ rooms, etc., were built by the respondent in the subject land. They contended that appellant nos.2 and 3 had constructed a site office and workers’ rooms with their own funds.

16. They claimed that the entire extent was purchased by the appellants by expending Rs.7,72,96,000/-, and there was no necessity for them to sell it for a lesser value of Rs.3 crores to the respondent. They claimed that only a hand loan of Rs.35 lakhs was given to appellant and this was repaid through ‘RTGS’ by the 3rd respondent on 20.01.2020.

17. According to them, there was friendship between the Managing Director of the respondent and appellant nos.2 and 3, and therefore, only a hand loan was obtained and was repaid. They alleged that the Managing Director of the respondent took advantage of the hand loan taken by appellant nos.2 and 3 and concocted a story of oral agreement of sale with conditions.

18. According to appellants, the Managing Director of the respondent deposited Rs.1,10,000/- to the account of the 1st appellant on 07.01.2020 after filing of Ex.R8 complaint against the appellants on 03.01.2020 which was registered as Crime No.7/2020 at P.S. Madhapur (Guttala).

19. They contended that in the complaint Ex.R8, it was alleged by the respondent that appellants nos.2 and 3 only were the owners of the suit schedule property, but in the plaint it is alleged that 1st appellant is also owner thereof; in the complaint, it was mentioned that there was an oral agreement for sale of only Acs.23.00, but in the plaint it is pleaded by the respondent that there is an oral agreement for Acs.27.28.gts; in the complaint, it is stated that appellant nos.2 and 3 approached the respondent in May, 2019, but in the plaint it is alleged that the meeting took place on 10.06.2019; and these inconsistent pleadings show that the respondent has come to the Court with unclean hands by concocting a false story, and that the respondent was trying to grab the property at a cheap rate.

20. Before the Court below, the respondent marked Exs.P.1 to P.32, while the appellants marked Exs.R.1 to R.9.

The impugned order of the Court below

21. By order dt.20.02.2020, the Court below allowed I.A.No.58 of 2020 and granted a temporary injunction restraining the appellants from alienating or changing the nature of the suit schedule property.

22. In para no.10, it recorded that there is an admission by the appellants about the agreement between appellant nos.2 and 3 and the respondent.

23. The court below then referred to the documentary evidence filed by the parties.

24. It relied on the third-party affidavit of one of the alleged witnesses to the alleged oral agreement for sale of the suit schedule property, viz., B. Krishna who stated that appellants 2 and 3 agreed to sell the property for Rs.3 crores to the respondent and also his statement that the appellants were interfering with the possession of the plaint schedule property and were trying to alienate the same to third parties for high value.

25. The Court below then went on to note that in Reply Notice Ex.P.25, issued by the 2nd appellant, there is a reference to a loan agreement between the respondent and the appellants on 10.06.2019; that the 3rd appellant admitted to have received Rs.35 lakhs from the respondent; that the 2nd appellant admitted to have received Rs.84 lakhs from the respondent through a bank transaction; and that the appellants did not file any loan agreement which they claimed to have reached with the respondent for borrowing the money.

26. It then observed that it is inconceivable and unimaginable that a person like the respondent would lend Rs.1,19,00,000/- as hand loan to appellant nos.2 and 3 without there being any scrap of paper.

27. It observed that in the Reply Notice, the appellant nos.2 and 3 stated that they did not repay the above amount since the respondent did not return the blank cheques issued by them as security against the hand loan.

28. It rejected the plea of the counsel for appellants that no prudent man would sell for Rs.3 crores property which was purchased by the appellants for Rs.7,77,00,000/- stating that these documents came into existence after filing of the suit.

29. It observed that the questions raised by the appellants have to be considered at the stage of trial and dismissal of the suit, and at the interlocutory stage the Court cannot go into the merits of the case.

30. It also observed that the appellants did not file any scrap of paper to show that they had possession of the plaint schedule property.

31. It thus concluded that the respondent had made out a prima facie case, that balance of convenience was in its favour; and the respondent would suffer irreparable injury which cannot be adequately compensated for damages if the interim relief is not granted.

The present Appeal

32. Aggrieved by the said order, this appeal is preferred by the appellants/defendants 1 to 3.

33. Heard Sri C.V.Mohan Reddy, Senior Advocate, appearing for Sri P.Rama Krishna, counsel for appellants and Sri S.Sridhar, Counsel for respondent.

Contentions of counsel for appellants:

34. Sri C.V.Mohan Reddy, the learned Senior Counsel appearing for the appellants contended that:

(a) the Court below erred in granting temporary injunction restraining the appellants from alienating or changing the nature of the suit schedule property; that it should have disbelieved the oral agreement of sale dt.10.06.2019, set up by the respondent, on the ground that the suit schedule property having been purchased for Rs.7,72,96,000/-, it could not have been offered for sale by the appellants to the respondent for a mere Rs.3 Crores; that the respondent had alleged that several payments were made in cash but did not file any proof of such payment; and so the Court below could not have relied on the statement of payments given in the plaint by the respondent to come to the conclusion that the respondent had paid Rs.2,55,10,000/- to the appellants 2 and 3.

(b) in the account of the 2nd appellant, the respondent deposited Rs.86 lakhs by way of RTGS and also made a cash deposit of Rs.23 lakhs, and in the account of the 3rd appellant, a sum of Rs.35 lakhs was deposited through RTGS towards a loan and the respondent did not lend any further amounts to the appellants. He also contended that even these amounts were returned by the appellants to the respondent.

(c) there are serious discrepancies between the allegations leveled by the respondent in the complaint Ex.R8 dt.3.1.2020 filed by it against the appellants and the case now set up in the plaint.

(d) in the complaint Ex.R8 it is stated by the respondent that there was only an Oral Development Agreement for housing plots and marketing, without reference to the allegations now made in the plaint about the alleged oral agreement of sale, and this contradicts the story set up in the plaint by the respondent.

(e) the Court below erred in giving a finding in para 10 of it’s order that the appellants had admitted the Oral Agreement of Sale dt.10.06.2019 between the parties, and that in fact there is no such admission by the appellants.

(f) the Court below ought not to have believed the oral agreement of sale, when it disbelieved the oral loan transactions plea taken by the appellants.

According to him, the respondent had not made out a prima facie case, balance of convenience was not in favour of the respondent and it would not suffer any irreparable injury, which cannot be compensated in damages.

Contentions of counsel for respondent:

35. Sri S.Sridhar, counsel for the respondent, however, supported the order passed by the Court below.

36. He contended that sound reasons have been furnished by the Court below for allowing I.A.No.58 of 2020 and the prima facie findings recorded by the Court below did not warrant any interference by this Court in exercise of its appellate jurisdiction.

Consideration by the Court :

37. We have noted the contentions of both sides.

38. From the pleadings of the parties, it is clear that the respondent/plaintiff contends that on 10.06.2019 appellants 2 and 3 orally agreed to sell Acs.27.28 gts mentioned in the plaint schedule to the respondent’s Managing Director for Rs.3 Crores.

39. The suit was instituted on 21.01.2020 by the respondent against the appellants.

40. As already mentioned above, the Court below mentioned in para 10 of it’s order that the appellants had admitted that there was an agreement orally to sell on 10.06.2019 between the respondent and the appellants 2 & 3 in respect of Acs.27.28 guntas.

41. After perusing the pleadings of the appellants in the counter affidavit filed by them in the Court below, we find that in fact there is no such admission by the appellants.

42. Admittedly, the respondent lodged a complaint on 03.01.2020(Ex.R8) before the Station House Officer, Madhapur, Cyberabad, Telangana State, against the appellants 2 & 3 contending that they had committed cheating, breach of trust and criminal intimidation.

43. In the said complaint Ex.R8, the respondent stated that there was an oral Development agreement for housing plots and marketing in May, 2019 entered into by it with appellants 2 and 3 in respect of Acs.23.00 gts in survey No.529/part, 530/part, 534/part, 556/part, 557/part and 558/part situated at Chattanpally Village, Farooq Nagar Mandal, Ranga Reddy District. It is also mentioned therein that the said property was in possession of the appellants 2 and 3.

44. Contradicting these averments in the complaint dt.03.01.2020, in the plaint presented on 21.01.2020, the respondent mentioned the area as Acs.27.28 gts, and added an improvement that there is an oral agreement of sale entered into between the parties on 10.06.2019, and that physical possession of the property had been delivered to the respondent.

45. The Court below appears to have totally ignored these inconsistencies between Ex.R8 complaint dt.03.01.2020 and plaint filed on 21.01.2020.

46. Counsel for the respondent is unable to explain why there is an improvement between dt.03.01.2020, when the complaint Ex.R8 was lodged with the police against the appellants 2 & 3, and 21.01.2020, when the suit was instituted.

47. No doubt, the Court below relied on the third party affidavit of one B.Krishna, who claimed to have witnessed the oral agreement of sale between the respondent and the appellants.

48. Prima facie such an affidavit cannot stand in the light of the allegations leveled against the appellants by the respondent in Ex.R8 complaint dt.03.01.2020.

49. That apart it is important to note that Acs.6.33 guntas, which forms part of plaint schedule, was purchased on 04.09.2019 under Ex.P2 by the 1st appellant-firm, about 3 months after the alleged oral agreement of sale dt.10.06.2019 pleaded by the respondent.

50. It is doubtful, whether there could be an oral agreement of sale by the appellants 2 and 3 in favour of the respondent prima facie, even before they acquired title to Acs.6.33 guntas of land, which is part of the plaint schedule.

51. Likewise, in respect of Acs.15.31 guntas, which is also forming part of the plaint schedule, there is only a Development Agreement-cum- Irrevocable GPA Ex.P3 dt.14.6.2019 executed by the owners thereof in favour of the 1st appellant-firm and under the terms thereof, what was offered to the 1st appellant was only 45% share of plotted area, and the owners had retained title to the balance 55%.

52. There is no agreement of sale-cum-General Power of Attorney dt.22.06.2019 obtained by the appellants for this extent as is alleged by the respondent in the plaint.

53. Prima facie, when the appellants did not have absolute title to Acs.15.31 gts forming part of the plaint schedule land and can at best offer to sell only 45%, which they were given under the Ex.P3 Development Agreement-cum-Irrevocable GPA dt.14.06.2019, it is difficult to believe that they would offer the entire Acs.15.31 guntas orally to the respondent for sale.

54. As regards the balance extent of Ac.4.16 guntas, there is only an Agreement of sale-cum-Irrevocable GPA with possession dt.30.12.2019 (Ex.R3) between its owners and the appellant No.1 and a third party- Vipparla Vasudeva Rao.

55. It is settled law that title does not pass under an Agreement of Sale. So prima facie it is difficult to bel

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ieve that the appellants offered this item of Acs.4.16 guntas to the respondent orally for sale on 10.06.2019, six months prior to the execution of its Agreement of Sale-cum Irrevocable GPA dt.30.12.2019, that too before the appellants had even entered into Ex.R3. 56. Also, Vipparla Vasudeva Rao is also a party to this document Ex.R3, but he is not even impleaded as a party to the suit by the respondent. Therefore it is doubtful, whether relief of specific performance in respect of this extent of land could be granted at all to the respondent prima facie. 57. It is also prima facie difficult to believe that the respondent, without verifying whether the appellants had title to the plaint schedule land would have paid Rs.2.5 Crores to the appellants. 58. We prima facie do not agree with it’s view that the failure of the appellants to prove the loan transactions alleged between them and the respondent should automatically result in acceptance of the oral agreement of sale pleaded by the respondent. 59. We are of the considered opinion that these aspects had not been taken note of by the Court below and it had erroneously come to the conclusion that the respondent had a prima facie case, balance of convenience was in its favour, and irreparable injury would be caused to the respondent, which cannot be compensated in damages. Therefore, the impugned order cannot be sustained. 60. Accordingly, this Civil Miscellaneous appeal is allowed; the order dt.20.02.2020 in IA.No.58 of 2020 in OS.No.6 of 2020 of the Judge, Family Court-cum-VIII Additional District & Sessions Judge, Mahabubnagar, is set aside; and I.A.No.58 of 2018 is dismissed. 61. It is made clear that the observations made by us in this order have been recorded only to decide this Appeal and the Court below shall proceed to decide the suit uninfluenced by any observations made in this appeal. No order as to costs. 62. Consequently, miscellaneous petitions, pending if any, shall stand closed.
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