1 mgj IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION Notice of Motion No.2068 of 2008 in Suit No.1539 of 2008 Rational Art and Press Pvt.Ltd. ..Plaintiff vs. 1 Our Lady of Salvation Church and others ..Defendants Mr.Virag Tulzapurkar with Ms.Saumya Srikrishna i/b Kanga and Co. for plaintiff. Mr.P.K.Dhakephalkar, Sr.Counsel with Mr.Clive D Souza for defendant nos.1 to 6. CORAM: S.J.KATHAWALLA J. 23rd June, 2009 P.C. 1 The plaintiff is a company carrying on business inter alia of printing of paper and leasing of assets including real estate. Defendant No.1 is a Public Charitable Trust registered under the provisions of the Bombay Public Trust Act, 1950. Defendant Nos. 2 to 6 are the Trustees of defendant no. 2 1 Trust known as Our Lady of Salvation Church (Trust). The Trust is the owner of the piece and parcel of immovable property being plot no.951 admeasuring about 1165.37 sq. meters along with the building thereon and situate at Appasaheb Marathe Marg, Prabhadevi, Mumbai 400 025 (the suit property). 2 The present suit is filed by the plaintiff against the defendants seeking order and decree against the defendants to specifically perform in favour of the plaintiff the suit agreement dated 24th May 2007 as set out in paragraph 12 of the plaint including the performance of all obligations of the defendants as set out therein including making an application to and obtaining the permission of Charity Commissioner and to execute a conveyance and/or such other document as may be required for performing the terms of the suit 3 Agreement in favour of the plaintiff. In the said suit, the plaintiff has in the alternative sought refund of Rs.25,00,000/- paid by them to the defendants with interest thereon and has also sought damages to the tune of Rs.10,00,00,000 (Rupees ten crores) only. 3 In the said suit, the plaintiff has taken out a Notice of Motion seeking direction against the defendants to make an application for sanction of the sale of the suit property to the Charity Commissioner, Mumbai, under the provisions of the Bombay Public Trust Act, 1950. The plaintiff has also sought appointment of the Court Receiver and injunction restraining the defendants from disposing of or parting with possession of the suit property. The said Notice of Motion is taken up for hearing and final disposal. 4 Some of the relevant facts as stated 4 in the plaint are set out hereunder. i) In or about the beginning of the year 2006, the plaintiff had purchased the plot adjoining to the suit property being plot no.951A from defendant no.1 after following due process of law including permission from the Charity Commissioner. According to the plaintiff, when the plaintiff purchased the said adjoining plot, the plaintiff had shown keen interest to purchase the suit property from defendant no. 1. ii) On or about 1st May, 2007 defendant no.1 Trust issued a public notice in Free Press Journal and Navshakti inviting offers for outright sale of the suit property on as is where is basis . The public notice interalia contained the following relevant information. a) That the sale of the suit property is subject to a long term lease granted to one 5 M/s S.P.Marathe and Co. which was also the subject of proceedings in the Court of Small Causes; b) that offers should be made by 7th May, 2007 and should be accompanied by pay order/banker s cheque for Rs.25 lacs c) that the said property would be sold on as is where is basis; and d) that the sale would be subject to the sanction of the Charity Commissioner, Maharashtra as well as subject to sanction of any other authority. iii) The plaintiff thereafter collected the terms and conditions for sale which contained the same conditions as mentioned in the public notice and by letter of offer dated 5th May 2007 made an offer to purchase the said property for a fixed lump sum consideration of Rs.85,00,000/-(Rupees Eighty five lacs) The plaintiff also enclosed a Bankers cheque for the earnest money 6 amount of Rs.25,00,000/- iv) On 24th May, 2007 at 4 p.m. the defendants conducted the auction for outright sale of the suit property. The said auction was attended by the plaintiff representative and also by the representative of one Hira Enterprises. After giving an opportunity to both the bidders to increase their offer, the offer of the plaintiff of Rs.95,50,000/- (Rupees Ninety five lacs fifty thousand) was the highest. The minutes of auction held on 24th May, 2007 were prepared on the same day whereunder the trustees (defendant nos.2 to 6)duly accepted the plaintiff enhanced offer of Rs.95,50,000/- (Rupees Ninety five lacs fifty thousand only). As recorded hereinafter it is admitted by the plaintiff that on 24th May, 2007 before the trustees accepted the offer of the plaintiff, the trustees had informed the plaintiff that the Trust internally requires to obtain the approval of 7 the Archbishop of Mumbai which was only a formality and would be obtained very soon. v) Thereafter the plaintiff by its letter dated 25th May 2007 after setting out certain facts requested the defendants to confirm and inform the plaintiff about the further procedures to be completed. vi) According to the plaintiff, the plaintiff thereafter repeatedly called upon the defendants to move the matter forward and to inform the plaintiff of the procedure to be followed to complete the transaction of the suit property in terms of the suit agreement. However, the plaintiff has not produced any correspondence pertaining to such repeated requests between 26th May 2007 and 19th October 2007 before this Court. vii) The plaintiff has by its Advocate s letter dated 20th October, 2007 (wherein no reference is made to any repeated requests as alleged) inter alia recorded that on making 8 enquiries in the office of the defendants, the plaintiff have understood that the matter has been referred to the office of Archbishop of Mumbai for formal approval and the plaintiff has not received any further communication from the defendants since then. By the said letter the defendants have been requested to let the plaintiff know whether the formal approval of Archbishop of Mumbai has now been received by the defendants and whether they have applied for necessary permission of the Charity Commissioner, Maharashtra State under the provisions of the Bombay Public Trust Act, 1950. Reminder letters dated 21st November, 2007 and 4th January, 2008 were also addressed by the Advocate for the plaintiff to the defendants. viii) The Advocates for the plaintiff once again addressed a letter to the defendants dated 8th February 2008. In this letter for the first time the Advocate for 9 the plaintiff admitted that before the offer of the plaintiff was accepted on 24th May, 2007 i.e. when the plaintiff raised its offer it was represented to the plaintiff that the Trust internally requires to obtain the approval of the Archbishop of Mumbai which was only a formality and would be obtained very soon. It was recorded that the defendants have failed and neglected to carry out their statutory and contractual obligations in respect of the sale of the suit property. The defendants were called upon to obtain the required sanction of the Charity Commissioner and the formal approval of Archbishop of Mumbai and to take all further steps to complete the sale of the property in favour of the plaintiff within 30 days from the receipt of the said notice failing which the plaintiff shall adopt appropriate legal proceedings against the defendants. 10 ix) The plaintiff thereafter filed the present suit in which at the ad-interim stage an order directing the parties to maintain status quo has been passed. 5 The defendants have filed their reply dated 2nd July, 2008 wherein they have inter alia stated that the plaintiff was aware that the defendants required the permission of the Archbishop of Mumbai and in absence of such permission, there cannot be any concluded agreement between the parties and the suit for specific performance of the purported agreement is without any basis and not maintainable. The defendants have also filed an additional affidavit dated 18th June,2009 wherein they have annexed the letter dated 29th July, 2008 addressed by the Acting Secretary of Archbishop s House to the defendants setting out that at the meeting of the college of Consultors of the Archdiocese of Bombay held on 29th July, 2008 at the 11 Archbishop s house and presided over by the Archbishop of Bombay, a proposal for sale of plot no.951 belonging to the Trust in favour of the plaintiff was discussed and the College of Consultors as well as Archdiocesan Finance Committee at their meeting held on 4th July 2008 have not approved the sale of the suit property as they did not find the reasons for alienation of the said plot mentioned in the proposal for sale in favour of the plaintiff, convincing enough. 6 The plaintiff has filed an affidavit dated 22nd June, 2009 wherein the plaintiff has contended that the Archbishop is not a statutory authority and his permission is not required to be obtained as condition precedent to formation of the contract and in any event defendant no.1 is deemed to have obtained his permission prior to issuance of the terms and conditions of the sale. It is contended that the plaintiff 12 being a third party is unaware of and not bound by any internal permissions/approvals required by defendant no.1 for sale of the property in so far as the same do not form part of the terms and conditions of sale. It is also contended that the letter dated 29th July, 2008 is a got up document created deliberately to thwart the plaintiff valuable rights under the suit agreement, the same having been brought on record for the first time in the additional affidavit at a belated stage. It is contended that if the document had been genuine, defendant no.1 would have brought the same on record in July/August, 2008 and not almost a year thereafter. 7 Mr.Tulzapurkar, the learned Senior Advocate appearing for the plaintiff has reiterated the facts/ submissions set out in the plaint and in the affidavit dated 22nd June 2009. He has submitted that the 13 condition set out in the Advertisement viz. that the sale would be subject to the sanction of any other authority can never include the approval by the Archbishop because subsequently in the terms and conditions it is mentioned that the sale would be subject to the sanction of any other statutory Authority. It is submitted that the Archbishop cannot be referred to as statutory authority . Mr.Tulzapurkar has therefore submitted that, obtaining of approval of Archbishop was not a condition laid down under the terms and conditions of sale and the defendants cannot be heard to say, that in the absence of permission of Archbishop or that Archbishop declining to give his approval to the sale, the suit agreement is not a concluded agreement and, therefore, not valid and/or binding on the plaintiff. 8 Mr.Tulzapurkar has submitted that 14 the scheme does not have any force of law and clause 23.1 of the scheme provides that if there is any dispute as to the interpretation of any clause of the scheme or of any of the rules or byelaws framed thereunder except for religious matter, the same shall be referred to the Charity Commissioner having jurisdiction, for decision. He has submitted that the issue pertaining to the permission of Archbishop can, therefore, be decided by the Charity Commissioner at the time of according sanction to the sale of the Trust property under section 36 of the Bombay Public Trusts Act, 1950. 9 Mr. Tulzapurkar has relied on the decision of the Hon ble Supreme Court in Manzoor Ahmed Magrey Vs. Gulam Hassan Aram reported in A.I.R.2000 S.C.191 and pointed out that in that case a suit was filed for specific performance of the agreement to sell 15 orchard land. Under section 3 of J.& K. Prohibition on Conservation of Land and Alienation of Orchards Act, 1975, no person could alienate an orchard except with the previous permission of the Revenue Minister or such officer as may be authorised by him in this behalf. The Hon ble Supreme Court while considering the aforesaid section held that the prohibition on transfer of orchards is not absolute and the question of obtaining previous permission as contemplated under section 3(1)(a) would arise at the time of execution of the sale deed on the basis of decree for the specific performance. It was held that section 3 does not bar the maintainability of the suit and permission can be obtained by filing proper application after the decree is passed. It was held that, therefore, it cannot be stated that the decree for specific performance is not required to be passed. Mr.Tulzapurkar also 16 relied on the decision of the Full Bench of Hon ble Gujarat High Court in Shah Jintendra Nanalal, Ahmedabad Vs.Patel Lallubhai Ishwarbhai Ahmed and others reported in A.I.R.1984 Guj 145. Mr.Tulzapurkar pointed out that it was held by the Hon ble Court that a conditional decree for specific performance subject to exemption being obtained under sec. 20 of the Urban Land (Ceiling and Regulation) Act, 1976 (Act No.33 of 1976) is permissible. 10. Mr.Tulzapurkar relying on the aforestated decisions, therefore, submitted that even in the instant case, the plaintiff cannot be told at this stage that the suit for specific performance will not lie against the respondent Trust/trustees since the Archbishop s permission is required under the scheme. It is submitted that the dispute pertaining to the permission of Archbishop can also be decided under clause 23.1 of the 17 Scheme by the Charity Commissioner at any time subsequently or at the time when the Charity Commissioner s sanction is sought under the Bombay Public Trust Act, 1950. 11 Mr.Dhakephalkar, learned Senior Advocate appearing for the defendants pointed out that there is a scheme for the Management and Administration of the said Trust which is approved by the Charity Commissioner and also sanctioned by the City Civil Court, Bombay by its order dated 24th July, 1995. He has pointed out that clause 11 of the said scheme pertains to the duties and functions of the Board of Management of the Trust and one of the duties prescribed under Clause 11.7 is to decide about alienation of immovable property belonging to the Trust. Clause 20.2 of the scheme provides that in case of such alienation the Board shall also obtain the concurrence of Archbishop for such transaction. He has, therefore, submitted 18 that it is mandatory for the Board to obtain the concurrence of Archbishop for such alienation. He has submitted that in the instant case as can be seen from the letter of the plaintiffs Advocate addressed to the defendant dated 8th February, 2008 it is admitted by the plaintiff that on the day they increased their offer from Rs. 85,00,000/- to Rs.95,50,000/- and the minutes were signed by the parties, the plaintiff was informed that approval of Archbishop of Bombay will have to be obtained. He has submitted that the plaintiff was, therefore, aware that acceptance by the Trustees of their offer would interalia be subject to the approval of the Archbishop of Bombay. He has submitted that the Trustees never represented to the plaintiff as alleged that the approval of Archbishop was a formality or that it was an internal requirement and even if such a 19 representation was made it cannot be held that the Archbishop of Bombay was duty bound to give his concurrence to alienation of the suit property because the scheme does not provide that the approval of Archbishop is a formality or only an internal requirement. He has also submitted that the plaintiff is aware that the defendant is a Public Trust and that all the documents pertaining to the Trust are available with the office of the Charity Commissioner. In fact under Regulation 5 of the Bombay Public Trusts Rules 1951, every public Trusts Registration Office is required to maintain a register of Public Trusts in the form of Schedule I thereto in respect of Public Trusts registered or deemed to be registered under the Act. Column 25 of Schedule I pertains to particulars of the Scheme, if any, relating to the Trust . The particulars of the Scheme pertaining to the plaintiff trust were 20 available in the register of public trusts maintained by the office of the Charity Commissioner. The scheme is, therefore, a public document and the plaintiff cannot be heard to say that they were not aware of the scheme. Mr.Dhakephalkar has also submitted that in the initial affidavit of the defendants though it is set out that the plaintiff was aware that the permission of Archbishop had to be obtained in respect of the said alienation, the letter of Archbishop not approving the alienation was brought on record only on 18th June, 2009 because it is only when the defendants approached him with their matter he advised them to first bring on record the said letter dated 29th July, 2008 recording that the Archbishop has not granted his approval to alienate the suit property pursuant to which the same was brought on record. It is submitted that the allegation that the said letter is not 21 genuine etc. are baseless and not tenable. It is submitted that in fact the Archbishop- has also relied on the College of Consultors for the purpose of giving his approval and the College of Consultors further relies on the Archdiocesan Finance Committee which Committee in the meeting held as far back as on 4th July, 2008 have not approved the sale of the suit property. Though this is mentioned in the letter dated 29th July, 2008 it is not the case of the plaintiff that the decision of the said Finance Committee is not genuine or is wrongly referred to in the letter dated 29th July, 2008. Mr.Dhakephalkar has, therefore, submitted that the purported agreement in the form of minutes is not a concluded agreement in absence of the approval of Archbishop and the question, therefore, of the purported agreement being valid, concluded or binding does not arise and no specific performance can be sought. He 22 has submitted that the plaintiff have in the alternative claimed damages and if this Court ultimately comes to the conclusion that the plaintiff are entitled to any damages from the defendants a decree would follow in favour of the plaintiff and against the defendants. 12 I have considered the submissions made on behalf of the plaintiff as well as the defendant Trustees. The fact remains that in the interest of the proper management or administration of a public trust a scheme may be framed for the management or administration of a public trust under section 50A of the Bombay Public Trust Act, 1950. In the instant case, such a scheme has been framed and sanctioned by the Charity Commissioner and later by the City Civil Court, Bombay by its order dated 24th July, 1995 for the management and administration of the defendant no.1 Trust. Clause 11 of the 23 said Scheme pertains to the duties and functions of the Board of Management of the Trust and one of the duties prescribed under clause 11.7 is to decide about the alienation of immovable property belonging to the Trust. Under clause 25.2 of the Scheme, it is provided that in case of such alienation, the Board shall also obtain the concurrence of Archbishop for such transaction. Though Mr.Tulzapurkar has submitted that the said Scheme does not have the force of law, in my view, once such a scheme for management and administration of the Trust is being framed and the same comes into force, it is mandatory for the trustees of the Trust to follow what is provided in the scheme until the scheme has been amended or any changes are effected therein as per the procedure laid down in law. The plaintiff is deemed to have knowledge of the fact that the office of the Charity Commissioner maintains a 24 register of every public trust and in view of Regulation 5 of the Bombay Public Trust Rules 1951, in column 25 of Schedule I particulars of the scheme, if any, relating to the Trust are set out. It is the plaintiff s own case, as recorded by its Advocate s letter dated 8 th February, 2008 addressed to the defendant, that on the day the plaintiff increased their offer from Rs. 85,00,000/- to Rs.95,50,000/- and the minutes accepting the said offer were prepared by the parties, the plaintiff was informed that the approval of Archbishop of Bombay will have to be obtained. The plaintiff was, therefore, aware that the acceptance by the Trustees of its offer would inter alia be subject to the approval of Archbishop of Bombay. Even if it is assumed that the trustees of the Trust had represented to the plaintiff that approval of Archbishop was a formality or that it was an internal requirement, it cannot be held that 25 the Archbishop of Bombay was duty bound to give his concurrence to the alienation of the suit property because the plaintiff ought to have examined/taken inspection of the scheme and upon such examination/inspection would have noted that the scheme does not provide that the approval of Archbishop was only a formality or was only an internal requirement. The scheme is a public document and any reasonable or prudent purchaser of the Trust property giving an offer of approximately Rs.1 crore is expected to take inspection of the Trust record/s maintained with the office of the Charity Commissioner. The plaintiff, therefore, cannot be heard to say that the plaintiff was not aware of the scheme. In my view, the plaintiff was aware or deemed to be aware that the alienation of the suit property by the trustees of the 1st defendant Trust in favour of the plaintiff would be subject to the concurrence of the 26 Archbishop as provided under clause 20.2 of the scheme. The concurrence so required was not granted by the Archbishop but was rejected and, therefore, it cannot be said that the offer of the plaintiff to purchase the suit property belonging to the 1st defendant Trust was accepted by the Trust and that the plaintiff is entitled to the specific performance of agreement as set out in paragraph 12 of the plaint. 13 In view of the plaintiff accepting the fact that before the plaintiff raised its offer, the plaintiff was informed that the permission of the Archbishop will have to be obtained by the trust and further in view of the plaintiff writing letters to the defendants after the purported acceptance of sale calling upon them to obtain the permission of the Archbishop, the plaintiff now also cannot be allowed to contend that the permission of the Archbishop is deemed to 27 have been granted before the auction sale. 14 The case law cited by Mr.Tulzapurkar, learned senior advocate appearing for the plaintiff will not be of much assistance to the plaintiff because in the cases cited permission/exemption of the Government or the appropriate authority required to be obtained under the statute was not obtained and, therefore, decree of specific performance subject to the condition of obtaining permission/exemption was held to be valid. The said decisions would have come to the assistance of the plaintiff if the defendants had not sought permission of the Archbishop or having sought permission were awaiting his response. In the instant case, permission of the Archbishop was sought and was expressly rejected. In view of the Archbishop having not granted/rejected his concurrence for alienation of the suit property, the question of granting a decree 28 of specific performance on any condition or the issue being subsequently decided inter alia by the Charity Commissioner under clause 23.1 of the scheme or otherwise does not arise. Clause 23.1