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Ambalal Sarabhai Enterprise Limited v. KS Infraspace LLP Limited

Civil Appeal · 2020 INSC 4Decided 6 Jan 2020
Civil Appeal No. 9346 of 2019
Justice Ashok Bhushan · Justice Navin Sinha

Background

K.S. Infraspace claimed it had a concluded agreement to buy about 19,685 sq. m. of land in Vadodara from Ambalal Sarabhai Enterprise and its sister concerns for over Rs. 90 crore, based on prolonged email and WhatsApp negotiations and a "final draft" MoU. Before the deal was formally signed, the sellers instead sold the land to a third company after that buyer cleared the sellers' outstanding income-tax dues. K.S. Infraspace sued for specific performance and obtained a temporary injunction from the trial court (affirmed by the Gujarat High Court) restraining the sellers from dealing further with the land.

Decision Breakdown

The Supreme Court held that the plaintiff had not shown a strong prima facie case of a concluded contract: the negotiations remained at a "draft"/"embryo" stage, with no clear proof that acceptance was communicated before the sellers finalized the sale to the third party. The plaintiff's own conduct counted against it: it accepted a refund of its advance payment without objection, waited seven months before suing, and let the new buyer invest over Rs. 45 crore in reliance on the sale. Since the balance of convenience and the plaintiff's delay favored the sellers, the Court set aside the injunction (while leaving the underlying suit to be decided on its merits at trial) and allowed the appeals.

Lesson Learnt

In high-value commercial dealings, informal communications like emails and WhatsApp messages over a "draft" proposal may not amount to a binding, concluded contract; and a party seeking an injunction must act promptly: long delay in approaching court can itself defeat the claim for interim relief.

Official source (sci.gov.in)View Judgment (PDF)

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