: 1 : IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION APPEAL FROM ORDER NO.1042 OF 2009 ALONGWITH CIVIL APPLICATION NO.1279 OF 2009 Viraj Estates Pvt. Ltd. .. Appellants V/s. Fakrunnisabegam J. Kazi & Ors. .. Respondents Mr. V.A. Thorat, Sr. Advocate, i/b. Mr. P.S. Dani for the Appellants. Mr. G.S. Godbole i/b. Mr. A.B. Tajane for Respondent Nos.1 to 7. Mr. S.K. Shinde for Respondent Nos.26 and 27. Mr. Ravi Kadam, A.G., i/b. Mr. S.A. Sawant and Mr. Sachin Kadam for Respondent No.28. Mr. R.D. Soni i/b. M/s. Ram & Co. for the Applicants in C.A. No.1279 of 2009. AND APPEAL FROM ORDER NO.1115 OF 2009 ALONGWITH CIVIL APPLICATION NO.1372 OF 2009 Viraj Estates Pvt. Ltd. .. Appellants V/s. Zeel Grape Winary Pvt. Ltd. & Ors. .. Respondents Dr. V.V. Tulzapurkar, Sr. Advocate, i/b. Mr. S.N. Gawade for the Appellants. Mr. N.V. Walawalkar, Sr. Advocate, i/b. Mr. S.A. Sawant with Mr. Sachin Kadam for Respondent No.1. : 2 : Mr. G.S. Godbole i/b. Mr. A.B. Tajane for Respondent Nos.2 to 8. Mr. P.K. Dhakephalkar, Sr. Advocate, i/b. Mr. S.K. Shinde for Respondent Nos.27 & 28. CORAM : SMT. NISHITA MHATRE, J. RESERVED ON : 15 TH DECEMBER, 2009. PRONOUNCED ON: 4 TH FEBRUARY, 2010. P.C. : 1. These Appeals have been heard together and, by consent, are being disposed of finally at the stage of admission. 2. Appeal from Order No.1042 of 2009 has been filed against the order passed by the trial Court by which the application at Exhibit-5 filed by the plaintiffs for temporary injunction has been dismissed. Appeal from Order No.1115 of 2009 has been preferred to challenge the order passed by the trial Court on the application at Exhibit-39. This application was filed by the defendants for vacating the temporary injunction granted in favour of the plaintiffs and for seeking certain reliefs for the defendants by invoking the : 3 : provisions of Section 151 of the Code of Civil Procedure. Both these applications have been disposed of by a common order by the trial Court. 3. The factual matrix in the present case is as follows : 4. Zahuruddin, Moijuddin and Rajiyuddin all from the Kazi family (hereinafter referred to as “the vendors”) received Survey No.806/2B admeasuring 3 Hectors 12 R. in a partition effected pursuant to a decree passed by the trial Court in Special Civil Suit No.40 of 1955. This Suit was decreed on 29th January, 1957. The possession of the land was given to the vendors by the Tahasildar, Nasik and a mutation entry bearing No.16189 was recorded in their names in the revenue records with respect to the aforesaid property. A return was filed by the vendors under the Urban Land Ceiling Act in respect of the aforesaid property. 5. An order was passed in Special Darkhast No.59 of 1957 by the Civil Court, Nasik, on 5th April, 1990 reducing the shares of the vendors as decreed by the Civil Court. That order was challenged by the vendors by filing Writ Petition No.3614 of 1990 before this Court. While admitting : 4 : the Writ Petition, this Court directed the executing Court to continue with the Darkhast proceedings but not to give effect to the final order till disposal of the Writ Petition. The vendors undertook not to part with the possession or to create third party interests in the property during the pendency of the Writ Petition. 6. On 25th October, 1996, the plaintiffs, i.e. the appellants herein, entered into an agreement for sale with their vendors. By that agreement, the vendors agreed to sell to the plaintiffs land bearing Survey No.806/2B admeasuring 3 Hectors 12 R. for a total consideration of Rs.91,00,786/-. An amount of Rs.36,00,000/- has been paid by the plaintiffs to their vendors. 7. A supplemental agreement was executed between the plaintiffs and their vendors on the same day. This was, according to the plaintiffs, an explanatory deed. The first agreement of 25th October, 1996, which was the agreement of sale, stipulated that the plaintiffs would purchase the property on an “as is where is basis”. A general power of attorney was executed by the vendors in favour of the Director of the plaintiffs in order to enable him to perform : 5 : such acts as were necessary for development of the property. The plaintiffs claim that they paid an additional sum of Rs.18,00,000/- to the vendors on 25th March, 1997. The plaintiffs claim that they were put in possession of the suit property and that they have taken several steps for development of the same, including the construction of a compound wall. After the death of Zahuruddin and Rajiyuddin, defendant No.1 and defendant Nos.3 to 8, respectively were brought on record in the Suit as their legal heirs and representatives. 8. The plaintiffs became aware that defendant Nos.1 to 7 had executed a deed of partition on 5th March, 2007 with the other defendants in the Suit namely defendant Nos.9 to 23 and that the suit property was given to the share of defendant Nos.9 to 23. Defendant Nos.9 to 23 then entrusted the development rights of the suit property to defendant No.27 on 25th June, 2007 and executed a power of attorney in his favour. Immediately thereafter the development rights were sold by defendant Nos.9 to 23 to defendant No.26, with the consent of defendant No.27 on 26th July, 2007. In turn, defendant No.24 acting on behalf of defendant Nos.9 to 23 and defendant No.27, sold their : 6 : rights on 1st August, 2008 to defendant No.28. 9. Faced with these various agreements, the plaintiffs filed Special Civil Suit No.310 of 2009 before the Civil Judge, Senior Division, Nasik, seeking specific performance of the agreements which they had entered into with their vendors on 25th October, 1996. An injunction was sought against all the defendants including defendant No.28 from further alienating the suit property. Ad-interim relief was granted by the trial Court. An application, Exhibit-39, was moved by defendant No.28 for vacating the ad-interim relief and for granting an injunction against the plaintiffs from disturbing its possession. By a common order, the application at Exhibit-5 was dismissed and the application at Exhibit-39 was granted in favour of the defendants. This resulted in the ad-interim relief granted in favour of the plaintiffs being vacated and the plaintiffs were directed not to disturb the possession of the suit property which was with defendant No.28. 10. Hence, the present Appeals. : 7 : 11. Dr. Tulzapurkar, the learned Counsel appearing for the appellants, submits that the trial Court has erred in concluding that the appellants were not ready and willing to perform their part of the contract. He points out that a substantial amount, i.e. Rs.36 lacs, had been received by the vendors and the appellants were obligated to perform their part of the contract only after the vendors complied with certain clauses contained in the agreements. He, therefore, submits that there was no default on the part of the appellants in complying with the agreement and that they were always ready and willing to perform the agreement. He submits that time was not the essence of the contract, as erroneously held by the trial Court. He points out that all that the agreement provides is that defendant Nos.1, 2 and 3 would be entitled to interest @ 18% p.a. on the delayed payment, in the event there was a delay in complying with the clauses in the agreement with respect to the payment of installments. The learned Counsel then urges that the second deed of partition, by which the shares of the members of the Kazi family including the vendors, were reapportioned was contrary to the decree in the Suit No.40 of 1955. According to the learned Counsel, there could have been no rearrangement of shares especially : 8 : when the vendors i.e. the petitioners in Writ Petition No. 3614 of 1990 had made a statement before this Court that they would not part with possession of the suit property or create third party interests in the suit property during the pendency of the Writ Petition. The learned Counsel submits that despite the aforesaid statement, the suit property was allotted to the other defendants under the subsequent partition. He points out that shares allotted under the initial partition could not be changed except by an exchange, sale or the partition decree being set aside. He further points out that all the parties who were before the Civil Court were not parties to the second partition and, therefore, it must be considered to be non est. 12. With regard to the decision of the trial Court to grant relief to defendant No.28 on Exhibit-39, the learned Counsel points out that possession of the suit property was already handed over to the appellants which is apparent from clause 5 of the agreement. He submits that the appellants had erected a compound wall. According to him, defendant No. 28 was not a bonafide purchaser for value without notice because it was aware of the agreement between the plaintiffs and their vendors. Therefore, defendant No.28 was : 9 : not entitled to any relief in the Suit filed by the appellants. He submits that since the suit property had not fallen to the share of defendant Nos.9 to 23, they could not have sold it to a third party. He submits therefore all the agreements between the defendants cannot be acted upon by the parties thereto. He urges that defendant Nos.26, 27 and 28 were, therefore, not bonafide purchasers and no relief could have been granted to them. He further points out that no counter claim had been filed by the defendants, nor had they filed a substantive Suit and, therefore, relief could not have been granted to a third party in a Suit filed by the appellants for specific performance of a contract between themselves and their vendors. 13. The learned Advocate General, who appears for defendant No.28 in Appeal from Order No.1042 of 2009, submits that defendant Nos.1 to 7 who were the heirs of the original vendors of the appellants had issued a notice to the appellants requesting them to perform their part of the contract. Since there was no response from the appellants and a failure on their part to comply with the conditions in the agreement, they terminated the agreement by a notice of 20th July, 2008. A public notice was issued by defendant : 10 : No.28 despite which the appellants took no action to thwart the execution of the agreement of sale between defendant Nos.9 to 23 on the one hand and the defendant No.28 on the other. The learned Counsel points out that although the agreement of sale on the basis of which the suit was filed was of the year 1996, the appellants had taken no steps to complete the transaction. He further points out that there is no pleading in the plaint indicating the reason why the appellants could not pay the consideration as mentioned in the agreement within the time stipulated. He urges that the appellants had in fact committed a breach of the agreements and therefore were not entitled to any equitable relief. He submits, therefore, that the trial Court had committed no error in dismissing Exhibit-5 and granting Exhibit-39. 14. Mr. Walawalkar, appearing for respondent No.1 in Appeal from Order No.1115 of 2009 I.e. defendant No.28, submits that the clauses in the agreements of 25th October, 1996 indicate that time was the essence of the contract and the appellants having failed to comply with the stipulations, the defendant Nos.1 to 7 had terminated the agreement. He points out that clause 13 of the agreement indicates that till : 11 : 60% of the consideration was paid to defendant Nos.1 to 7, the appellants would be mere licensees. He further submits that the appellants did not have a complete title to the suit property and therefore were not entitled to any relief. He contends that out of a huge tract of land, they had purchased approximately 3 Hectors i.e. 8 paise share. He points out that the partition deed indicates that the share to which the appellants’ vendors were entitled was only 1.25 paise and not 8 paise, therefore, the appellants did not have a clear title. He further submits that the Suit itself is barred by limitation. He points out that by the time the Suit was filed in 2009, third party rights had already been created. He submits that the public notice issued by defendant No.27 while purchasing the suit property did not bring any reaction from the appellants although that notice is of the year 2001. He submits that at best, the appellants would be entitled to damages and, therefore, this was not a case where interim relief could be granted to the appellants. The learned Counsel further submits that the trial Court had merely restored status-quo ante, restraining the appellants from disturbing the possession of defendant No.28 of the suit property. He urges that a separate suit need not be filed for this purpose by defendant No.28. : 12 : 15. Mr. Shinde appearing for defendant Nos.26 and 27 draws my attention to several orders passed in various proceedings with respect to the suit property. He submits that the defendant Nos.1 to 7 after having withdrawn the Writ Petition on 26th November, 2007, were free to sell the property to any other person since the appellants had not complied with the clauses in the agreement. He points out that the grievance of the appellants herein was the same as the petitioners in that case i.e. the suit property could not have been subjected to partition again once a decree had been passed by the Civil Court. This Court had castigated the petitioners in that Writ Petition for having suppressed material facts and had, therefore, dismissed the Writ Petition. The vendors of the appellants who were the petitioners preferred a Special Leave Petition before the Apex Court. The matter was remanded to the High Court for fresh disposal of the Writ Petition on merits. After the remand, the vendors of the appellants withdrew the Writ Petition. He therefore urges that the appellants cannot now contend that the suit property could not have been allotted to somebody else’s share by the consent of all parties to the partition suit. : 13 : 16. Several judgments have been cited by the learned Counsel appearing for the parties, which I will presently advert to. However, before considering the judgments, it would be necessary to recapitulate certain basic facts: The appellants entered into an agreement with their vendors on 25th November, 1996 for the purchase of the suit property being 806/2B. The consideration under the agreement was Rs.91,00,000/- out of which according the appellants they have paid Rs.36,00,000/-. The parties agreed that the suit property would be sold on as is where is basis. The appellants were aware that their vendors had acquired the suit property consequent upon a decree being passed in a suit for partition being Suit No.40 of 1955. A supplemental agreement was also executed on the same day. Mutation entries had been effected accordingly in favour of the appellants’ vendors. A Writ Petition was filed by the vendors to challenge the order passed by the executing Court, reducing their shares in the partition. Although the proceedings in Special Darkhast No.59 of 1957 were not stayed by this Court, the final order was not to be given effect pending further orders. The vendors i.e. the petitioners in the Writ Petition undertook not to create third : 14 : party rights with respect to Survey Nos.806/2B and 806/4 i.e. the suit property. The Writ Petition was withdrawn on 26th November, 2007 after it was remanded by the Supreme Court to this Court. A Contempt Petition was moved in this Court by one of the parties to the family arrangement. That Contempt Petition was dismissed as the Court held that it was not possible to conclude that the vendors had violated the undertaking given to this Court that they would not create third party rights. The Court also observed that the vendors had not parted with possession, nor created third party rights in respect of the amounts in favour of respondent No.4 by executing a power of attorney. The defendants in the present case rely on these observations of this Court to contend that the suit property could not be in possession of the appellants since it had already been observed by this Court that their vendors had not parted with possession of the suit property. The subsequent agreements executed by defendant Nos.9 to 23 were executed only after the Writ Petition was withdrawn in 2007. The fresh partition deed was arrived at on 5th March, 2007 and the various agreements were executed by the defendants inter se only after the Writ Petition and the Contempt Petition were disposed of. : 15 : 17. A perusal of the documents on record indicates that the appellants had entered into an agreement with their vendors for the purchase of the suit property i.e. 806/2B which fell to their lot under a decree passed by the Civil Court in 1955. In my opinion, once the shares had been settled, the partition could not have been reopened. The properties allotted to each member of the Kazi family could not be interchanged amongst the members of the family, unless there was an exchange of properties or there was a sale of the properties or by orders of a competent Court. In my opinion, once the shares had been arrived at and there was a partition by metes and bounds which was reflected in the mutation entries made in the record of rights, the question of rearranging the partition does not arise unless parties agree to mutually exchange certain property or sell property or there is a decree of the Court. In the present case, admittedly, no such decree has been passed, nor is there any document on record indicating an exchange or sale of properties. 18. The trial Court has observed that the appellants were not willing to perform their part of the contract and, : 16 : therefore, has refused interim relief. The trial Court has observed that time is the essence of the contract and, therefore, has refused the interim relief. A perusal of the agreement indicates that there are certain clauses in the agreement which indicate that on failure to comply with the clauses in the agreement, the appellants would be bound to pay 18% interest on the unpaid amounts. Therefore, in my opinion, the trial Court was in error in not confirming the ad- interim relief granted by it and in dismissing Exhibit-5. Admittedly, a substantial sum of money has been received by the vendors of the appellants. The clauses in the agreement indicate that the agreement was arrived at subject to the result in Writ Petition No.3614 of 1990 and in a Special Darkhast No.59 of 1957. The appellants were not informed that the Writ Petition, in which their vendors had challenged the rearrangement and reapportionment of the shares by the Executing Court in the Darkhast, was going to be withdrawn by the vendors. 19. The trial Court has, in my opinion, erred by directing the appellants not to disturb the possession of defendant No.28 of the suit property. This is because there is no substantial Suit filed by defendant No.28, nor are there any : 17 : cross objections filed by them. It cannot be gain said that a Court does have the power to restore status-quo ante. However, by granting the present relief, the Court has compelled the appellants not to disturb the possession of defendant No.28 of the suit property. 20. Mr. Walawalkar urges that the agreement of which specific performance has been sought by the appellants indicates that time was the essence of the contract. He points out that the appellants had not taken any steps to complete the transaction within the period stipulated in the agreement and, therefore, the appellants are not entitled to any relief. Dr. Tulzapurkar on the other hand points out that unless all parties who had promised to perform certain acts under the agreement had complied with the same, the question of the defendants insisting on the appellants complying with certain clauses of the agreement, without performing their part cannot be sustained. He relies on the judgment of the Madras High Court in the case of Vairavan Chettiar and Ors. v/s. Kannappa Mudaliar, reported in AIR 1925 Madras 1029. The learned Counsel then points out that time cannot be the essence of the contract when the agreement is for the sale of an immovable property. He : 18 : points out the judgment of the Supreme Court in the case of Gomathinayagam Pillai & Ors. v/s. Palaniswami Nadar, reported in AIR 1967 SC 868 (V 54 C 185), in which the Apex Court has enunciated the principles for determining whether time is the essence of the contract while interpreting an agreement of sale. In paragraph 3, the Supreme Court has observed as follows : “It is not merely because of specification of time at or before which the thing to be done under the contract is promised to be done and default in compliance therewith, that the other party may avoid the contract. Such an option arises only if it is intended by the parties that time is of the essence of the contract. Intention to make time of the essence, if expressed in writing, must be in language which is unmistakable; it may also be inferred from the nature of the property agreed to be sold, conduct of the parties and the surrounding circumstances at or before the contract. Specific performance of a contract will ordinarily be granted, notwithstanding default in carrying out the contract within the specified period, if having regard to the express stipulations of the parties, nature of the property and the surrounding circumstances, it is not inequitable to grant the relief. If the contract relates to sale of immovable property, it would normally be presumed that time was not of the essence of the contract. : 19 : Mere incorporation in the written agreement of a clause imposing penalty in case of default does not be itself evidence an intention to make time of the essence. In Jamshed Kodaram Irani v. Burjorji Dhunjibhai, ILR 40 Bom 289; (AIR 1915 PC 83) the Judicial Committee of the Privy Council observed that the principle underlying S. 55 of the Contract Act did not differ from those which obtained under the law of England as regards contracts for sale of land. The Judicial Committee observed. “Under that law equity, which governs the rights of the parties in cases of specific performance of contracts to sell real estate, looks not at the letter but at the substance of the agreement in order to ascertain whether the parties, notwithstanding that they named a specific time within which completion was to take place, really and in substance intended more than that it should take place within a reasonable time. Their Lordships are of opinion that this is the doctrine which the section of the Indian Statute adopts and embodies in reference to sales of land. It may be stated concisely in the language used by Lord Cairns in Tilley v. Thomas (1867) 3 Ch A 61 :- “The construction is, and must be, in equity the same as in a Court of law. A Court of equity will indeed relieve against, and enforce, specific performance, notwithstanding a failure to keep the dates assigned by the contract, either for completion, or for the steps towards completion, if it can do justice between the parties, and if (as Lord Justice Turner said in : 20 : Roberts v. Berry, (1853) 3 De G.M. and G 284) there is nothing in the ‘express stipulations between the parties,