1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO.3308 OF 2007 AND NOTICE OF MOTION NO.3989 OF 2008 IN SUIT NO.2482 OF 2007 AVRESHKAR & SONS PVT LTD. ..PLAINTIFF VS. Dr. DHANANJAY SHIVDAS VARDE & ORS ..DEFENDANTS Mr. Virag Tulzapurkar Sr. Advocate with Mr. Sanjay Kadam with Shobha Khavnekar with Apeksha Sharma i/b Kadam & Co. for Plaintiff Mr.D.D.Madan i/b Vaghani & Co. for Defendant No.1 to 3 Mr. J. Reis i/b Y.Chandhani for Defendant No.4 CORAM: SMT ROSHAN DALVI, J. DATED: 27 th February, 2009 P.C.: 1. The Plaintiff, one Nalini Kalewar, (since deceased) and Defendants No.2 & 3 entered into an Agreement for development of the suit property on 28.06.1992 which the Plaintiff has sought to specifically enforce. Defendant No.1 is 2 stated to be an executor of the estate of the said Nalini, though her Will has not been probated. 2. The aforesaid agreement was for development of the suit property consisting of several chawls having 110 tenants. Under the said Agreement the Vendors were to obtain consent / Agreement from the tenants for giving them permanent alternate accommodation in the developed property. The Plaintiff, as a purchaser, was given liberty to negotiate with the tenants for execution of such agreements. The Plaintiff was to pay Rs.4.5 lacs as earnest which has been paid. The Plaintiff further had to obtain commencement certificate for reconstruction of the building which was on FSI 1:2. This was to be obtained within 6 months unless that period was mutually extended. The Plaintiff was to complete the project within 3 years from the date of commencement of the work. 3. The Plaintiff was to make further payments of Rs.4.5 lacs upon the Vendors obtaining the consent / agreement of the 110 tenants on the suit property. The Plaintiff was to make further payment of Rs.54 lacs within one week of obtaining commencement certificate and Rs.18 lacs within 12 months of the date of the commencement of the construction. 3 4. The sale was to be completed within 3 years of the commencement of the construction and upon the Plaintiff's failure to make the payment aforesaid or to complete the construction, the Vendors could terminate the Agreement. 5. Therefore, in essence the Vendors had to obtain consent of the tenants and the purchasers had to obtain the commencement certificate and start the construction work. 6. The Vendors could not obtain consent / agreement from all 110 tenants on the suit property. They have admittedly obtained consent / agreement from 70% of the tenants as per the Plaintiff's case. In fact it is their case that they have obtained consent / agreement from 80% of the tenants. The FSI for reconstruction was 1:2. That was under the specific Development Control Regulation (DCR) 33(7) which relates to redevelopment and reconstruction of old tenements where 70% of the tenants are required to be rehoused in the new construction. 7. The Plaintiff submitted plans for reconstruction and applied for commencement certificate. The Plaintiff was issued IOD which inter alia required the condition of obtaining the consent of all the tenants. The Plaintiff carried on lengthy correspondence with the Maharashtra Housing Area 4 Development Authority (MHADA) showing that it was difficult for the Plaintiff to obtain consent / agreement from 30% of the tenants who raised unreasonable demands. The Plaintiff obtained NOC from MHADA for reconstruction. The Plaintiff could not develop the property for as long as 9 years under sanctioned plan and consequently the NOC was cancelled. The Plaintiff got the NOC revalidated. However, the Plaintiff could not obtain consent / agreement from the remaining 30% of the tenants. The Plaintiff has not taken steps under Section 95A of MHADA for that purpose. 8. The Plaintiff's agreement has been entered into since 1994. The inability of the Plaintiff to obtain the Commencement certificate continued until 2006 when the Vendors sought to terminate the agreement between the parties. The termination notice is dated 18.05.2006 giving several reasons for termination. The vendors inter alia sought to terminate on the ground that the commencement certificate was not obtained and the payments as per the schedule in the agreement between the parties were not made and the sale was not completed within 3 years of the Agreement. 9. The Plaintiff contends that the notice of termination is unlawful as the Vendors were to perform their part of the reciprocal promises. It is only if the Vendors fully performed 5 their part of the first reciprocal promise in obtaining consent / agreement from 110 tenants that the Plaintiff, as the purchaser, could apply for and obtain commencement certificate and start construction, make payment and complete the sale. Since the primary obligations of the Vendors was not fulfilled, the Plaintiff contends that there was no question of the Plaintiff performing any other obligations under the contract. 10. It is indeed correct that all the tenants did not give consent / agreement for reconstruction of the suit property. Nevertheless admittedly 70% of the tenants did give their consent / agreement. The provisions relating to the development under DCR 33(7) was complied. That was sufficient compliance to enable the purchasers to get the plans sanctioned and commence construction under the aforesaid provision of MHADA. 11. Mr. Tulzapurkar argued that the permission / NOC of MHADA and approval of BMC for having plan sanctioned upon the conditions in the IOD being specified are two entirely different matters and hence though there may be sufficient compliance with regard to rule 33(7) for commencing construction, the Plaintiff could not commence construction for want of the plan having being sanction. 6 12. If the Plaintiff is entitled to insist upon 100% of the tenants giving their consent / agreement for redevelopment / reconstruction of the suit property, the very purpose of rule 33(7) could be frustrated. It was for the Plaintiff to commence construction for redevelopment of the property with the consent of 70% of the tenants. The plaintiff could not do so from 1994 until 2006. The failure of the Vendors to obtain consent / agreement of few of the tenants was not such failure as would not enable the plaintiff to perform his part of the contract for such a long period to time. 13. It is important to see that in clause 2(ii)(a) of the agreement between the parties the commencement certificate which was to be obtained by the plaintiff as the purchaser was for permission to reconstruct the suit building on 1: 2 FSI. For that purpose the Plaintiff had to obtain not only the permission of the BMC but also of MHADA. Hence it is seen that the development of the property was necessarily involving the DCR 33(7). It was not for construction of a new building; it was for reconstruction of the old tenanted building having special FSI 1:2 for that purpose. 14. It is seen that the Plaintiff unfortunately could not and did not commence construction within the agreed period of 6 7 months or even thereafter as would be mutually agreed between the parties. The Plaintiff also did not make any further payment which were payable upon the commencement certificate being obtained and the construction being commenced. 15. The vendors cannot be expected to allow their property to remain undeveloped for an inordinately long period. The Vendors have terminated the agreement with the Plaintiff on 18.05.2006. They have given a public notice of termination on 25.05.2006. They thereafter entered into an agreement with Defendant No.4 on 29.12.2006. 16. It is contended by Mr. Tulzapurkar that refusal to grant injunction would mean that the the party which is primarily a defaulter would be given court protection to the exclusion of the party who can claim the rights under the Agreement upon such defaults. It is true that the vendors have partly defaulted in their prime obligation under the contract. It is also seen that the Plaintiff, despite efforts, has not been able to discharge the same obligations in their place and stead of the vendors. The Vendors may be liable in damages to the Plaintiff. Further, in view of the inordinate delay which has unfortunately resulted from the impasse created by the some of the tenants not giving consent / agreement for 8 redevelopment of the suit property, the other 70% of the tenants would be prejudiced if the suit property not being redeveloped. 17. Mr. Tulzapurkar argued that Defendant No.4 has entered into an agreement for development of the suit property with notice of the plaintiff's claim. The notice was given by the Plaintiff to Defendant No.4 on 18.01.2006, upon the Plaintiff coming to know of the agreement which the Vendors were to enter into with Defendant no.4. Mr. Tulzapurkar has, therefore, contended that Defendant No.4 would not be entitled to the benefit of the section 19(b) of the Specific Relief Act (the Act) whilst the final relief in the suit would be granted and the Plaintiff would be entitled to relief against Defendant No.4, since defendant no.4 was not a transferee for value bonafide and without notice. However, the Plaintiff is entitled to either the relief of specific performance or the relief of damages u/s 19(b) of the Act. 18. This is not a case for granting of the relief of injunction pending the suit on the aforesaid facts. Hence the Notice of Motion No.3308 of 2007 is dismissed. There shall be no order as to costs. 19. Defendant No.4 shall be entitled to start the process of 9 redevelopment of the suit property under DCR 33(7). The Plaintiff shall not be entitled to obstruct in that process. Hence Notice of Motion No.3989 of 2008 is made absolute in terms of prayer (a). No order as to costs. 20. Ad-interim reliefs shall continue for two weeks. (Smt Roshan Dalvi, J)