Supreme Court Upholds High Court Decision on Temporary Injunction in Property Dispute: Saketa Vaksana LLP vs. Kaukutla Sarala (2019)

LEGAL ISSUE: Whether a temporary injunction should be granted in a property dispute where possession and payment of consideration are contested.

CASE TYPE: Civil Property Dispute

Case Name: Saketa Vaksana LLP & Anr. vs. Kaukutla Sarala & Ors.

Judgment Date: 17 December 2019

Date of the Judgment: 17 December 2019
Citation: (2019) INSC 123
Judges: Uday Umesh Lalit, J., Indu Malhotra, J., Krishna Murari, J.
Can a court grant a temporary injunction when there are serious disputes about who possesses a property and whether payment has been made? The Supreme Court of India recently addressed this question in a case involving a land sale agreement. The core issue was whether the High Court was correct in vacating a temporary injunction that had been granted by the Trial Court. The Supreme Court upheld the High Court’s decision, finding that the disputes over possession and payment needed to be decided during a full trial. The judgment was delivered by a three-judge bench comprising of Justice Uday Umesh Lalit, Justice Indu Malhotra, and Justice Krishna Murari.

Case Background

The case involves a dispute between Saketa Vaksana LLP (the “Appellant” or “Developer”), and Kaukutla Sarala and others (the “Respondents” or “Landowners”). The dispute arose from an Agreement of Sale dated 17 November 2017, where the Landowners agreed to sell 54 acres and 13 guntas of agricultural land to the Developer for Rs. 46,00,000 per acre. The land was divided into five schedules, with each schedule to be sold upon payment of proportionate consideration. The Agreement stated that physical possession of the entire land was handed over to the Developer on the day the agreement was executed. The Agreement of Sale was an unregistered document executed on a stamp paper of Rs. 100 and the stamp duty was paid by the Developer on 27 August 2018.

Out of the total land, the Landowners executed four registered Agreements of Sale cum General Power of Attorney for 36 acres and 21 ½ guntas in favor of the Developer. The first two agreements were executed on 3 January 2018, the third on 24 March 2018, and the fourth on 31 March 2018. The Developer claimed to have paid Rs. 17,25,00,000 for these agreements, while the Landowners disputed this, stating that only Rs. 14,25,00,000 was paid. This dispute led to disagreements over the balance consideration for the remaining 17 acres and 31 ½ guntas (“suit property”).

Timeline

Course of Proceedings

The Developer filed a suit for Specific Performance (O.S. No. 213/2018) in the Trial Court, seeking the execution of a Sale Deed for the suit property and access to the land already transferred. The Landowners filed a counter-claim seeking payment of the balance consideration for the 36 acres 21 ½ guntas already transferred and damages for the suit property. The Trial Court granted a temporary injunction restraining the Landowners from interfering with the Developer’s possession of the suit property, excluding a 12,000 sq. ft. parcel, and also restrained them from creating third-party interests subject to the Developer depositing the balance sale consideration. The Developer challenged the Trial Court’s orders before a Single Judge of the High Court, while the Landowners filed a cross-appeal. The Single Judge modified the Trial Court’s order, extending the injunction to the entire suit property and removing the condition of depositing the balance sale consideration. However, a division bench of the High Court set aside the Trial Court’s order, stating that the Developer had not established a prima facie case for a temporary injunction.

Legal Framework

The case involves an application for temporary injunction under Order XXXIX Rule 1 and 2 of the Code of Civil Procedure (CPC). The court considered the following:

• Order XXXIX Rule 1 and 2 of the CPC: This provision deals with the grant of temporary injunctions in civil suits, aimed at preserving the status quo and preventing irreparable harm during the pendency of a case.

Arguments

Appellant (Developer)’s Submissions:

• The Developer argued that Clause 7 of the Agreement of Sale dated 17 November 2017 stated that physical possession of the entire land was handed over to them on the day of the agreement.
• They contended that they had developed and sold plots on the 36 acres 21 ½ guntas of land to third parties.
• The Developer submitted that unless an Agreement of Sale with respect to the suit property is registered in their favour, they cannot provide ingress and egress to the plots already sold by them, and the purchasers of those plots have been threatening to initiate criminal proceedings against the Appellant – Developer.
• The Developer claimed to have paid Rs. 17,25,00,000 to the Landowners, with only Rs. 3,72,03,750 remaining as balance payable for the suit property.

Respondents (Landowners)’s Submissions:

• The Landowners argued that only symbolic possession was given to the Developer, while physical possession remained with them. They claimed to be growing vegetables and having a guest house, servant quarters, and a shed on the suit property.
• They submitted that the Developer has ingress and egress to the 36 acres 21 ½ guntas of land which has already been transferred.
• The Landowners contended that the Developer had paid only Rs. 14,25,00,000 and was still liable to pay Rs. 10,73,95,000 towards the balance sale consideration for the entire suit property, as well as some part of the land already transferred.
• They argued that the Developer had not paid any consideration for the suit property, and thus, the Agreement of Sale dated 17 November 2017 stood cancelled with respect to the suit property.

Innovativeness of the argument: The Developer’s argument that they need the suit property to provide access to plots they have already sold is a practical point that highlights the potential harm they would suffer if the injunction is not granted.

Issues Framed by the Supreme Court

The Supreme Court identified the following key issues:

1. Whether possession of the suit property was handed over to the Appellant – Developer or not.
2. Whether part consideration for the suit property was paid by the Appellant – Developer to the Respondent – Landowners or not.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Supreme Court did not rely on any specific cases or books in this interim order. The Court’s decision was based on the facts of the case and the principles governing the grant of temporary injunctions.

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

The Court considered the legal framework for granting temporary injunctions under Order XXXIX Rule 1 and 2 of the Code of Civil Procedure (CPC). The court observed that due to the seriously disputed questions of fact, the temporary injunction was not warranted.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the presence of seriously disputed questions of fact regarding possession and payment. The Court emphasized that these issues could only be resolved through a full trial, where evidence could be presented and assessed. The Court also noted that the High Court had already granted a temporary injunction restraining the Landowners from alienating the suit property, which sufficiently protected the Developer’s interest in ownership. The Court did not find sufficient grounds to interfere with the High Court’s decision to vacate the temporary injunction regarding possession.

Fact:Law Ratio

The Court’s decision was more influenced by the factual disputes (70%) than the legal principles (30%) in this case.

Logical Reasoning

The Supreme Court considered alternative interpretations, but rejected them, noting that the factual disputes were too significant to grant a temporary injunction at the interim stage. The court emphasized that these issues required evidence and would be decided at trial. The Court decided to uphold the High Court’s decision, and stated that the interest of the Appellant – Developer has been sufficiently protected with respect to ownership of the suit property.

The Supreme Court stated, “We find that there are seriously disputed questions of fact involved in this matter. The first issue is whether possession of the suit property was at all handed over to the Appellant – Developer or not.”

Further, the Court noted, “The second issue is whether part consideration for the suit property was paid by the Appellant – Developer to the Respondent – Landowners or not.”

The Court concluded, “Since both the issues raised are seriously disputed which will be decided during the course of trial, we are of the view that the Orders dated 14.08.2019 passed by the division bench of the High Court do not warrant any interference.”

There were no dissenting opinions in this case. The three-judge bench unanimously agreed on the decision.

The Court’s decision underscores the importance of establishing a clear prima facie case for temporary injunctions, especially when there are significant factual disputes. The Court also emphasized that the purpose of a temporary injunction is to maintain the status quo, and not to determine the final rights of the parties.

Key Takeaways

• Temporary injunctions are not granted when there are serious disputes about possession and payment.
• Courts prioritize the resolution of factual disputes through a full trial.
• The purpose of a temporary injunction is to maintain the status quo, not to decide the final rights of the parties.

Directions

The Supreme Court directed the Trial Court to expedite the hearing of O.S. No. 213/2018 and dispose of it preferably within one year from the date of the judgment.

Development of Law

The ratio decidendi of this case is that temporary injunctions should not be granted when there are seriously disputed questions of fact regarding possession and payment, and such issues need to be decided during the full trial. The Supreme Court did not change any previous positions of law, but rather reaffirmed the existing principles governing the grant of temporary injunctions.

Conclusion

The Supreme Court dismissed the civil appeals, upholding the High Court’s decision to vacate the temporary injunction. The Court emphasized that the disputes over possession and payment needed to be resolved through a full trial and that the existing injunction on alienation was sufficient to protect the Developer’s interest in the property. The Supreme Court directed the Trial Court to expedite the suit and dispose of it within a year.