NON REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS.………….……….. OF 2009  (Arising out of SLP (C) Nos. 11964-11965 of 2009)

ECE Industries Limited                                 … Appellant

VERSUS

S. P. Real Estate Developers  P. Ltd. & Anr. .... Respondents  

J U D G M E N T

TARUN CHATTERJEE,J.

1. Leave granted.    

2. These two appeals have been filed from a common order  

passed  by  the  High  Court  of  Andhra  Pradesh  at  

Hyderabad,  by  which  the  High  Court  had  affirmed  an  

order  of  the  Second  Additional  City  Civil  Judge  at  

Hyderabad, disposing of an application for injunction filed  

at  the  instance  of  the  plaintiff-appellant  on  two  

applications  for  injunction  in  a  suit  for  recovery  of  

possession and damages.  The plaintiff/appellant alleged  

in  their  plaint  that  they are the owner of  67,824.50 sq.  

yards of land, situated at Borabanda, Fathenagar, Ashok  

1

Marg,  Hyderabad  (hereinafter  referred  to  as  the  suit  

property).   The  plaintiff-appellant  as  well  as  the  

defendants/respondents  executed  a  Development  

Agreement cum Power of Attorney on 21st of September,  

2007.   Under  the  said  Agreement,  the  

defendants/respondents agreed to pay an aggregate sum  

of Rs. 30.50 crores in the following manner :-

i)  Rs. 13.50 crores by way of non-refundable amount.   

ii)  Rs. 16.72 crores for utilizing the consultations, advice and  

services  of  the  petitioner  over  the  suit  property  along  with  

service  tax  o  the  said  amount  for  which  invoices  had  been  

raised by the plaintiff/appellant.   

iii)  Rs. 28,36,525/- towards the cost of land.   

3. It  is  the  case  of  the  plaintiff-appellant  that  since  the  

defendants/respondents had acted in breach of the agreement,  

the same was duly terminated.  Some of the breaches of the  

agreement in question, as alleged by the plaintiff/appellant, are  

as follows :-

i)  The respondent No. 1 issued 12 post dated  cheques for a total sum of Rs. 16.72 crores –  

2

11  post  dated  cheqeus  for  Rs.  1.40  crores  each and one post-dated cheque for a sum of   Rs. 1.32 Crores.   ii)   The  respondent  did  not  furnish  a  Bank  Guarantee for the amount of Rs. 16.72 crores  and also did not pay the service tax payable  on the said amount.   iii)  Out of the 12 post dated cheques given by   the Respondent, 2 cheques were honoured, 4  of Rs. 1.4 crores each were dishonoured on  presentation  and balance cheques were  not   presented.   iv)   The respondent  no.  1 did  not  carry out   construction  in  accordance  with  the  sanctioned scheme.   v)  The respondents entered into agreement   with third parties without furnishing any details  thereof.   vi)   The  respondents  were  selling  dwelling  units  to  persons  who  cannot  be  termed  as  members  of  the  weaker  sections  of  the  society.”  

4.  Since the agreement was terminable and when it was found  

by the plaintiff-appellant that the defendants/respondents were  

proceeding  to  change  the  nature  and  character  of  the  suit  

property,  a  suit  has  been  filed  by  the  plaintiff/appellant  for  

recovery of possession and damages.   

5.  In the aforesaid suit,  two applications for injunction under  

Order 39 Rule 1 and 2 read with Section 151 of the Code of  

3

Civil  Procedure  were  filed  by  the  plaintiff-appellant.   In  one  

application,  the  main  relief  that  was  claimed by the  plaintiff-

appellant  was  to  restrain  the  defendants/respondents  from  

alienating  or  transferring  the  suit  property  including  the  

structures coming up thereon and in  the other,  for  injunction  

over the suit property from changing the nature and character  

thereof pending disposal of the suit.   

6.    While  dealing  with  the  applications  for  injunction,  the  

Second Additional City Civil Judge at Hyderabad had appointed  

an  Advocate  Commissioner  to  find  out  the  extent  of  

construction raised by the defendants/respondents in the suit  

property as the plaintiff-appellant sought to contend that there  

was no construction at all in the suit property.  The Advocate  

Commissioner appointed by the trial Court submitted his report,  

which is already on record.  While deciding the applications for  

injunction, the said report was taken into consideration by the  

trial Court and after hearing the learned counsel for the parties,  

the  trial  Court  was  prima  facie  satisfied  that  substantial  

construction  was  undertaken  and  completed  by  the  

4

defendants/respondents,  which  had  required  them  to  invest  

crores  of  rupees.   The  trial  Court,  considering  this  fact  that  

substantial  construction  was  completed,  refused  to  grant  an  

order  of  injunction  in  favour  of  the  plaintiff-appellant  from  

making  any  further  construction  in  the  suit  property  but  the  

applications for injunction were, however, disposed of with the  

following conditions :-        

“1) That  the  defendants/respondents  shall   deposit  the balance value of the property, which  comes to around Rs. 28,00,000/- into Court within  one month.   2) That it shall furnish bank guarantee for the  value of the unrealized post dated cheques, and  pay/deposit the value of four cheques, which were  dishonoured, within one month from today. 3) That  the  defendants/respondents  shall  not   claim equities over the construction made in the  land and they are bound by the decision in  the   suit.   The  Defendants/respondents  shall  furnish  the  particulars  of  the  prospective  buyers  of  the  residential  units  in  advance  to  the  Competent  Authority/Urban Land Ceiling, and it must be made  clear  to  the  prospective  buyers  that  their   purchases are subject to the result of the suit by  making a ‘specific recital’ in the agreement of sale  or sale deed, as the case may be.”

7. Aggrieved  by  the  order  of  the  trial  Court,  two  appeals  

were preferred by the plaintiff/appellant before the High Court of  

Andhra Pradesh at Hyderabad, which by the impugned order,  

5

had  affirmed  the  order  of  the  trial  Court  on  the  question  of  

construction in  the suit  property,  but  set  aside the directions  

given  by the  trial  Court  so  far  as  Clause  Nos.  1  and  2,  as  

mentioned above, are concerned in the order of the trial Court.  

It  is these concurrent orders, which are now under challenge  

before us in these appeals.  

8. At  the  time  of  admission  of  this  matter,  caveat  had  

already been filed by the defendants/respondents.  In that view  

of the matter, we fixed the hearing of the matter on 22nd of July,  

2009.  While hearing the petitions on merits, Mr. R. F. Nariman,  

learned  senior  counsel  appearing  for  the  plaintiff/appellant,  

invited us to the report of the Advocate Commissioner and after  

taking us through the same, sought to contend that in fact, no  

construction  has  been  made  by  the  defendants/respondents  

and, therefore, in view of the admitted fact that the agreement,  

having  been  already  cancelled,  the  defendants/respondents  

cannot be permitted to proceed with the construction on the suit  

property and the application for injunction, therefore, must be  

allowed.  On the other hand, Dr. A. M. Singhvi, learned senior  

6

counsel appearing for the defendants/respondents also took us  

to the report of the Advocate Commissioner and other materials  

on  record  and  at  the  same  time,  also  had  produced  recent  

photographs, which were not produced in the Courts below and  

contended that the High Court was fully justified in affirming the  

orders  of  the  trial  Court  inter  alia holding  prima facie  that  a  

substantial  construction  has  already  been  made  in  the  suit  

property,  for which the defendants/respondents have invested  

huge sum of money and in that view of the matter, the question  

of grant of injunction at this stage could not arise at all.     

9. After hearing the learned senior  counsel for the parties  

and after  going through the Advocate Commissioner’s  report  

and the impugned order of the High Court as well as of the trial  

Court, application for injunction and counter filed to the same,  

we  were  of  the  prima  facie  view that  before  deciding  these  

appeals finally on merits, it would be for ends of justice to find  

out the actual position of the suit property and for that reason,  

we appointed an Advocate Commissioner  from this Court  by  

our Order dated 23rd of July, 2009, who would inspect the suit  

7

property  and  submit  a  report  by  27th of  July,  2009  on  the  

following points :-

i)  Whether  constructions  have  been  made  on  the  

different  blocks of  the suit  property  and how many  

blocks are still remaining vacant ?

ii) If constructions have been made, what is the nature  

and extent of such constructions ?

iii) Whether  such  constructions  can  be  said  to  be  

substantial constructions or not ;

iv) Whether constructions have been completed in some  

blocks of the suit property and the flats constructed in  

such blocks are ready for use and occupation ;

v) Also to see the local features.  

10. Accordingly, the learned Advocate Commissioner visited  

the spot and submitted his report, which was also taken up for  

consideration along with  the main matter.   The report  of  the  

Advocate Commissioner may be kept on record.   

8

11. On behalf of the plaintiff-appellant, Mr. Nariman, learned  

senior counsel, submitted that even from the report submitted  

by  the  Advocate  Commissioner  appointed  by  this  Court,  it  

would be clear that substantial construction has not been made  

in  the  suit  property,  whereas  Dr.  Singhvi,  learned  senior  

counsel,  also  has  drawn  our  attention  to  the  report  of  the  

Advocate Commissioner of this Court and submitted that there  

cannot be any doubt that a substantial construction has already  

been made by the defendants/respondents, for which a huge  

sum of money has already been invested.  On the question of  

extent of construction made by the defendants/respondents in  

the suit property, we have, therefore, considered the findings of  

the High Court as well as of the trial Court and also the report  

submitted by the learned Advocate Commissioner in this Court.  

The High Court as well  as the trial Court concurrently found,  

after going through the report of the Advocate Commissioner,  

which  was  appointed  by  the  trial  Court,  that  substantial  

construction has already been made in the suit property.  Since  

no objection was raised by either of the parties to the report of  

the  learned  Advocate  Commissioner,  we  accept  the  same  

9

without any objection and direct that the same may be kept on  

record.    

12. It is well settled now by catena of decisions of this Court  

that when two Courts concurrently rejected the application for  

injunction, it would not be open for the third Court to interfere  

with the said concurrent findings until and unless it is brought to  

the notice of the third Court that such findings are perverse or  

arbitrary.   So far  as the findings of  the trial  Court  regarding  

construction on the suit property is concerned, let us look into  

its said findings on the question of construction, which are as  

follows :-            

“In the light of the above circumstances, I find that,   

already as per the report of the commissioner and  

also  as  per  the  photographs  produced  by  him,  

major  construction  work  was  undertaken  and  

completed, it must have required the respondent to  

invest crores of rupees.”    

10

13. So far as the findings of the High Court on the question of  

extent of construction is concerned, it is also the finding of the  

High Court that the defendants/respondents have already taken  

over possession and made substantial construction, as would  

be  evident  from  the  record  and  also  from the  report  of  the  

Advocate Commissioner, who was appointed by the trial Court.  

These are the two concurrent findings of fact arrived at by the  

High  Court  as  well  as  by  the  trial  Court  on  the  question  of  

extent of construction on the suit property.  Still, in order to be  

satisfied on the question of construction in the suit property, as  

noted herinearlier,  we appointed an Advocate Commissioner,  

who submitted its report.   

14. We have carefully examined the report of the Advocate  

Commissioner  appointed  by  us,  from which,  following  points  

may be noted :   

“4.  The Defendants/respondents’ Counsel had supplied  the layout of the site plan of the project.  Principally, the  entire  project  is  divided  into  8  Blocks.   The  plan  for   construction of 8 Blocks is approved by the authorities.   A photocopy of the approved site plan of the project is   annexed as Annexure C-2.  Each Block is divided into  various Rows.  There is no evenness in the number of   Rows for each Block.  Some Blocks have more Rows  

11

and  some  Blocks  have  less  Rows.   The  Blocks  are  numbered  in  the  site  plan  attached  herewith  as  Annexure C-3.  For better understanding and for better  description  of  the  areas  in  the  Blocks,  I  had  given  numbers for the Rows in each Block separately in the   site plan.  The layout is as under :

1 .

Block – I 2 Rows (60 Apartments)

2. Block – II 2 Rows (150 Apartments) 3. Block – III 2 Rows (85 Apartments)

295  Apartments  in  the  Triangular  area.  Work  has  not  been  started.   

4. Block – IV 6 Rows (330 Apartments) 5. Block – V 7 Rows (385 Apartments) 6. Block-VI 2 Rows (240 Apartments) 7. Block-VII 6 Rows (300 Apartments) 8. Block-VIII 6 Rows (300 Apartments)

1,555  Apartments  in  the  Rectangula r  area.   Work  in  progress  at   various  stages.   

5.  It is stated that each Block will have ground floor (car   park) + 5 floors.”   

15.   A  perusal  of  the  report  of  the  learned  Advocate  

Commissioner  therefore  shows  that  out  of  1800  flats  to  be  

constructed  in  the  suit  property  in  8  Blocks,  only  in  295  

apartments in the Triangular area, work has not been started,  

whereas in the rest 1,555 apartments in 5 Blocks, work is in  

progress at various stages.  Therefore,  it  is evident from the  

perusal of the report of the Advocate Commissioner filed in this  

12

Court that substantial progress has been made in the matter of  

construction  on  the  suit  property  as  it  is  evident  that  such  

substantial construction has been completed at least 50% in the  

rectangular pieces of the suit property whereas work for Blocks  

IV to VIII are going on except Row Nos. 3 to 6 in Block No. VII  

where there is a mound of soil to a height of about 2 floors and  

also  boulders  of  granite  rock  cut  into  rectangular  pieces  of  

identical sizes lying in the area.  It is also found from the report  

that the constructions have been completed in Row Nos. 1 and  

2 in Block No. VIII.   

16. Apart from that, 98% of the work is also completed on 1st,  

2nd and 3rd floors of Row Nos. 1 and 2 of Block No. VIII.  Since  

the roads have not  been laid  and the parking has not  been  

made  available,  according  to  the  learned  Advocate  

Commissioner,  the  purchasers  would  not  be in  a  position  to  

occupy the flats.   So far as other Blocks are concerned, the  

learned  Advocate  Commissioner  was  of  the  view  that  huge  

construction  activity  on  a  war-footing  basis  is  under-way  in  

respect of the disputed area which includes Blocks- IV to VIII.   

13

17.  Therefore, in view of the concurrent findings of the Courts  

below and also from the findings arrived at  by the Advocate  

Commissioner appointed by this Court in his report, we cannot  

but  hold  that  substantial  construction  has  been  made  and  

therefore,  the  submission  of  Mr.  Nariman  that  substantial  

construction has not been made, cannot be accepted.   

18.   Keeping  this  in  mind,  let  us  now  proceed  to  consider  

whether  substantial  injury  would  be  faced  by  the  plaintiff-

appellant in the event an order of injunction is not granted to  

them.   As  noted  hereinearlier,  the  Development  Agreement-

cum-General  Power  of  Attorney  was  entered  into  by  the  

defendants/respondents with the plaintiff-appellant and as per  

the  terms  and  conditions,  parties  agreed  that  a  sum of  Rs.  

13.50  crores  had  to  be  paid  besides  16.72  crores  for  the  

service of consultancy and Rs. 28,36,175/- was the cost, which  

comes to Rs. 30.50 Crores.  It was further agreed that it was  

only after the payment of the amount agreed upon, necessary  

documents  were  to  be  executed.   That  apart,  under  the  

14

Agreement,  the  defendants/respondents  had  to  furnish  bank  

guarantee in regard to the amount stated to have been paid in  

four  cheques.   In  the plaint  as well  as in  the application for  

injunction,  it  was  alleged  by  the  plaintiff-appellant  that  the  

defendants/respondents,  after  paying  first  installment,  had  

failed to pay the balance installments as agreed upon by them  

because  of  an  order  of  injunction  obtained  by  the  

plaintiff/appellant against the defendants/respondents in a writ  

petition filed by them in the High Court of Andhra Pradesh at  

Hyderabad.   It  is  true  that  the  defendants/respondents,  after  

paying  the  first  installment,  had  failed  to  pay  the  other  

installments  payable  within  the  time  specified,  under  the  

Agrement,  but  it  is  an  admitted  position  that  although,  the  

deposits were belatedly made but the entire amount under the  

Agreement has already been deposited and in compliance with  

the Agreement, a Bank Guarantee has also been furnished.     

19. Such  being  the  state  of  affairs,  i.e.  substantial  

construction has been made on the suit property in respect of  

which  crores  of  money  have  been  invested  by  the  

15

defendants/respondents and since the defendants/respondents  

have already paid/deposited the amount payable in terms of the  

agreement, although belatedly, to the plaintiff/appellant, we do  

not  think that  the plaintiff-appellant  will  suffer  any substantial  

injury if  the  construction work is  not  stopped by an order  of  

injunction.  It  is well  settled that when construction has been  

made on a land, which is of considerable magnitude, and when  

the plaintiff shall not face any substantial injury, if no order of  

injunction is granted because of payment/deposit of the entire  

amount  payable  by  the  defendant  to  the  plaintiff  under  the  

Agreement, though belatedly, we are of the view that the Court  

will  not,  as  a  matter  of  course,  pass  an  order  of  injunction  

against the other party restraining the other party from raising  

any construction on the suit property till the disposal of the suit.  

If ultimately, the suit filed by the plaintiff-appellant is decreed,  

he  can  be  compensated  in  damages  or  the  

defendants/respondents  may  be  directed  to  pull  down  the  

construction  and  deliver  vacant  possession  to  the  

plaintiff/appellant  when  no  equity  can  be  claimed  for  such  

construction  by  the  defendants/respondents.   On  the  other  

16

hand,  in  our  view,  if  at  this  stage,  an  order  of  injunction  is  

granted  against  the  defendants/respondents  from proceeding  

with further construction in the suit property, it will undoubtedly  

destroy  the  constructions  already  made  by  the  

defendants/respondents  and  the  defendants/respondents  will  

suffer irreparable loss and injury for not allowing them to make  

construction on the suit  property.   That apart,  in view of  our  

discussions made hereinabove, the entire amount payable by  

the  defendants/respondents  having  been  paid/deposited  in  

favour of the plaintiff/appellant, there is no reason to pass an  

order  of  injunction  against  the  defendants/respondents  when  

the  plaintiff/appellant  would  not  face  substantial  injury  for  

permitting  the  defendants/respondents  to  proceed  with  the  

construction in the suit property.    

20.  Accordingly, in view of our discussions made hereinabove,  

we are, therefore, of the view that the balance of convenience  

lies against granting an order of injunction, which, if  granted,  

will  substantially  and  irreparably  injure  and  prejudice  the  

defendants/respondents.   For  the reasons aforesaid,  we are,  

17

therefore, of the view that the High Court was fully justified in  

affirming the order of the trial Court refusing to grant any order  

of injunction in favour of the plaintiff/appellant.     

21.  That apart, in our view, when the High Court as well as the  

trial  Court  had  refused  to  grant  injunction  in  favour  of  the  

plaintiff/appellant based on consideration of materials on record  

and  after  considering  the  balance  of  convenience  and  

inconvenience  of  the  parties  and  when such  findings  of  the  

High Court as well as of the trial Court do not suffer from any  

perversity  or  arbitrariness,  it  is  not  open  for  this  court  to  

interfere with such order of the High Court as well as of the trial  

Court.   

22.  However, there is one another aspect of the matter.  As  

noted  hereinearlier,  the  trial  Court,  while  refusing  to  grant  

injunction in favour of the plaintiff/appellant, has given certain  

directions to the defendants/respondents, which have already  

been noted hereinearlier.  In view of the fact that the Clause  

Nos.  1  and  2  have  already  been  complied  with  by  the  

defendants/respondents,  those clauses need not remain.   So  

18

far as Clause No. 3 is concerned, it appears to us that the said  

clause  should  remain,  that  is  to  say,  the  

defendants/respondents  shall  not  claim  equities  over  the  

construction made in the suit property and they would be bound  

by  the  decision  in  the  suit.   Furthermore,  the  

defendants/respondents,  as  directed  by  the  trial  Court,  shall  

furnish particulars of the prospective buyers of the residential  

units in advance to the Competent Authority/Urban Land Ceiling  

as it must be made clear to the prospective buyers that their  

purchases  are  subject  to  the  result  of  the  suit  by  making  a  

‘specific recital’ in the agreement of sale or sale deed, as the  

case may be.   

23.  In view of our discussions made hereinabove, we do not  

find any merit in these appeals.     

24.    We, however,  make it  clear that  whatever observations  

we have  made while  deciding  these two appeals,  would not  

stand in the way of the Courts below from deciding the merits of  

the suit and it is also made clear that the trial Court shall not be  

19

influenced by any of the observations or findings made in this  

order or  of the High Court,  while  deciding the application for  

injunction.      

25. Considering the facts and circumstances of the present  

case, we direct the trial Court to dispose of the suit at an early  

date,  preferably  within  six  months from the date of  filing the  

written  statement  by  the  defendants/respondents.   The  

defendants/respondents  are  directed  to  file  their  written  

statement within four weeks from this date, if  not filed in the  

meantime.   

26. The appeals are thus dismissed.  There will be no order  

as to costs.               

…………………………….J [  TARUN CHATTERJEE ]

NEW DELHI                           ……………………………J. AUGUST 06, 2009                                  [ R. M. LODHA ]

20