1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO.62 OF 2009 IN NOTICE OF MOTION NO.2589 OF 2007 IN SUIT NO.493 OF 2007 WITH NOTICE OF MOTION NO.986 OF 2009 IN APPEAL NO.62 OF 2009 M/s.Star Apparels Pvt.Ltd. .. Appellants Vs. Parampreet Singh Bindra & Ors. .. Respondents Mr.V.V. Kanade i/b M/s.Shiralkar & Co. for the appellant Mr.P.K. Samdhani, Sr.Advocate with Mr.H.C. Mehta and Mr.S.Nagvadaria i/b M/s.Mehta & C. for respondent no.1 Mr.F.D Vitre, Sr.Advocate with Mr.A.Y.Bookwala, Sr.Advocate i/b M/s.Bagla ’ Dandekar and Co. for respondent nos.3 to 6 Mr.V.R.Dhond i/b M/s.Prakash & Co. for respondent no.7 CORAM : J.N. PATEL & SMT.R.P.SONDURBALDOTA, JJ DATE : 15TH SEPTEMBER, 2009 2 P.C. (PER J.N.PATEL, J): 1. The Appellants are the original plaintiffs who have preferred an appeal impugning the judgment and order dt.21.8.08 passed by the learned single Judge dismissing the Notice of Motion No.2589 of 2007 wherein the appellants (original plaintiffs) have sought the following reliefs : (a) that pending hearing and final disposal of the suit, the Court Receiver, High Court, Bombay or some other fit and proper person be appointed Receiver on the said lands with all powers under Order XL, rule 1 of the Code of Civil Procedure, 1908; (b) that pending the hearing and final disposal of the suit, the Defendants, their servants and/or agents be restrained by an order and injunction of this Hon ble Court from in any manner developing, ’ disposing of, selling, transferring, alienating, encumbering, creating third party rights of any nature whatsoever in or putting up any construction on the suit lands on any part thereof; (c) that pending the hearing and final disposal of this Notice of Motion, the Defendants, the Respondents and/or their servants, agents, contractors or sub-developers be restrained by and under an order and 3 injunction of this Hon ble Court from entering into any agreement or ’ arrangement with the Tenants/occupants occupying the Suit Property or any part of parcel thereof; (d) ad-interim reliefs in terms of prayer clauses (a) to (c) above; (e) for such further and other reliefs as this Hon ble Court may deem ’ fit and proper in the circumstances of the case. 2. The appellants (original plaintiffs) have filed a suit no.493 of 2007 in this court against the respondents (original defendants) wherein they have sought a decree for declaration that the Agreement / Memorandum of Understanding dt.18.5.06 entered between the appellants and M/s. Dream Developers of which the respondents (original defendant nos.1 and 2) are partners is valid, subsisting and binding on the parties and therefore, the termination of the said Agreement is unlawful and illegal and that the respondents (original defendant nos.3 to 6) be ordered and directed to specifically perform the said M.O.U. dt. June 2005 and for that purpose do all required acts, deeds and things and execute all such writings, documents as may be necessary. In the alternative, it has also sought for declaration that the said alleged 4 agreement dt.26.12.2006 be declared as null and void to the extent it is contrary to and / or inconsistent with the order dt.26.7.06 passed by the Charity Commissioner for sanctioning the sale and as regards clause 5.2 of the said Agreement dt.26.12.06 and to the extent it is prejudicial to the rights of the plaintiffs. It has also sought that the documents executed between the defendants dt.29.1.07 be declared null and void as it has no effect in law and that the respondents (original defendants) should be jointly and severally directed to order and decree to deliver- up / hand over the said document dt.26.12.06 and the joint development agreement dt.29.1.07 to the plaintiffs for cancellation and appropriate orders claiming that the plaintiffs have priority in claiming rights of the suit property and that the respondents (original defendant no.7) is bound by the suit agreement and for other ancillary reliefs and in alternative to specific performance, they have sought a decree in the sum of R.50.0 crores by way of damages and / or compensation in lieu of specific performance and refund of sum of Rs.51 lacs with interest @ 18% per annum from the date of filing of the suit till payment and also claim charge over the suit property along with interim relief in the nature of appointment of Court Receiver and injunction which has been sought by taking out the notice of motion which came to be dismissed by the trial court. 5 3. It is the case of the appellants (original plaintiffs) that the M.O.U. came to be executed between the appellants and respondent nos.1 and 2 (original defendant nos.1 and 2) on 18.5.06 pursuant to which the respondents have agreed to allow the appellant company to develop and utilize the said plot of land on the terms and conditions mentioned therein. It is their case that the respondents have agreed with the appellant company for transfer and assignment of the suit property with characteristics described in clause 2 after fulfilling the conditions described in clause 1 of the said Agreement / M.O.U. for a price of Rs.9.50 crores, out of which a sum of Rs.51.0 lacs by way of security for repayment was required to be deposited with one Vinod B. Agarwal of M/s.Vjil Juris, Solicitors in escrow and so on. 4. According to the appellants, the respondent nos.1 and 2 rather than performing their part of the contract entered into development agreement with respondent (original defendant no.3) and thereafter with respondent (original defendant no.7). 5. It is the case of the appellants (original plaintiffs) that the cause of action in the suit arises on the respondents (original defendant nos.1 and 2) cancelling the suit agreement / M.O.U. dt.18.5.06 by their letter dt. 5.10.06 and by their subsequent letter dt.20.11.06 took a stand that there 6 was no concluded agreement between the parties as the appellant was not agreeing with the material terms and conditions and offered to return the sum of Rs.51 lacs along with interest by enclosing a cheque in the sum of Rs.52,71,025/- which was not accepted by the appellants (original plaintiffs) and, therefore, the suit came to be filed. 6. It appears that during the pendency of the suit, the appellants took out the Chamber Summons No.91 of 2007 for amendment of the plaint and impleaded defendant nos.4 to 7 as party defendants to the suit and also amended the pleadings and added the additional prayer clause. 7. On behalf of the respondents, particularly defendant no.1 affidavit in reply to the Notice of Motion came to be filed wherein the respondents took a stand that the appellants (Org.plaintiffs) are not entitled for specific performance of the agreement / M.O.U. as they have failed to make out a prima facie case for grant of any relief either in the suit or in the Notice of Motion. It was further contended that the balance of convenience is also not in their favour and that the appellants (org.plaintiffs) will not suffer any irreparable loss. On the other hand, it is their contention that the appellants (org.plaintiffs) were well aware that the said M.O.U. dt.18.5.06 did not materialize for failure on the part of the appellants and they are well aware that after the termination of 7 negotiations with the appellants which was communicated by advocates letter dt.28.11.2006, the respondent (org.defendant no.1) was negotiating with the 3rd party to go ahead with the development of the property of the respondent trust which is evident from the correspondence between the parties on which reliance is placed. It is the case of the respondent that by virtue of joint development agreement dt.29.1.07 entered between the respondent nos.1 and 2 on one side and respondents (original defendant nos.3 to 6) which came to be registered on 12.3.07, the respondents have agreed to develop the suit property jointly with defendant no.7 at and for the consideration and on the terms and conditions related therein wherein the respondent nos.1 and 2 have retained 60% of the share whereas respondent (org. defendant no.7) is entitled to 40% in the said development and that pursuant to the said joint development agreement, respondent (org.defendant no.7) has paid a sum of Rs.2,85,58,000/- against 40% share of the mutually agreed value of the suit property, on as is where is basis. 8. It is the case of the respondents that the respondent no.2 was not a partner in the firm of M/s.Dream Developers, as on the date of filing of the suit and has retired from the said partnership firm, due to which defendant no.1 became sole proprietor of M/s.Dream Developers and negotiated with the trustees of respondent (defendant no.3) for acquiring 8 the development rights only of the suit property and that respondent (Defendant no.1) never negotiated with appellants (original plaintiffs) for the development right of the suit property and that the M.O.U. dt.1805.06 amongst them was only an understanding to enter into an agreement in future, on compliance of certain obligations and conditions recorded therein. It was not a final and binding agreement between respondent (org.defendant no.3 and defendant no.1). It is also contended that pursuant to the M.O.U. dt.30.6.05, the respondent (defendant no.3) had applied to the Charity Commissioner, Greater Mumbai Region for obtaining permission for granting of development rights of the suit property to its proprietory firm and there was no arrangement between the respondents that the respondents (org.defendant nos.3) was intending to sell the suit property to the firm or respondent (org.defendant no.1) was intending to acquire any right in the favour of the said firm. The respondents have placed reliance on the order passed by the Joint Charity Commissioner dt.26.7.06 which has been granted in favour of the proprietory firm of respondent (org.defendant no.1) and that respondent (org.defendant no.3) have never recognized the said partnership firm either as the developers or purchasers of the suit property and that at all times they have been negotiating for the purpose of the development of the property of the trust. 9 9. In so far as the case of the appellants (org.plaintiffs) are concerned, it is stated that the M.O.U. dt.18.5.06 was entered between the parties as a tentative understanding between defendant no.1 as a partner of the firm and the appellants (org.plaintiffs) and have agreed to enter into an agreement in future, after due negotiations and deliberations and finalizing all material terms and conditions and therefore, it cannot be said that it was a concluded contract of which specific performance can be sought with the partnership firm which has agreed to transfer and assign to the appellants (org.plaintiffs) the right to utilize the suit property. 10. It is the contention of the respondent (org. defendant no.1) that the sum of Rs.51 lacs was paid by the appellants (org.plaintiffs) by way of finalizing the project as it is the case of the appellants (org.plaintiffs) themselves that the said sum was secured by treating it as a loan against the security for repayment thereof and interest thereon of the same was treated as part of the consideration, only on arrival of effective and binding contract. In short, the respondent (org.defendant no.1) have denied that they have entered into any agreement / M.O.U. with the appellants which can be considered to be a concluded contract capable of being enforced by seeking specific performance of the same. 10 11. The learned single Judge has gone into the issue and has arrived at a finding that on going through the agreement between the various set of parties being respondent (org.defendant no.3 and defendant no.1, defendant no.1 and plaintiff and defendant no.1 and defendant no.7 shows that from the inception, defendant no.3, who are the owners of the land require a unique development of their land under which they would sell CTS No.82 and obtain vacant possession of CTS No.61 and that defendant no.3 knew and accepted that for such development, defendant no.1 was not to be the only contracting party and defenant no.3 allowed the plaintiffs to give public notice for clearance of the title of CTS No.82 and that they have allowed defenant no.1 to sub- contract their rights by a sub-development agreement or a joint development agreement provided that defendant no.1 remained personally liable. 12. The learned single Judge also arrived at a finding that negotiations between two sets of parties Defendant no.3 and defendant no.1, – Defendant no.1 and the plaintiffs moved simultaneously and therefore, the initial MOU between defendant no.1 and plaintiffs came to be modified from time to time by both the parties orally as well as in writing. The learned single Judge has also taking cognizance of the various meetings which came to be held between from them from time 11 to time until 24.11.06 and that nothing has materialized. Defendant no.7 came into picture from 25.11.07 and that the initial payment made by defendant no.7 was not conditional as was the payment of the plaintiffs. Therefore, it was, as would be accepted in a Development Agreement - as earnest money paid before an agreement could be executed, which would be enforced by the parties. 13. The learned single Judge also found that the plaintiffs have sought specific performance of their initial MOU dt.18.5.06 in the suit and the plaintiffs Attorneys letters sent from time to time to the Attorneys for ’ defendant no.1 do not spell out the requirement of specific performance of the agreement. In fact, their letter dt.30.11.06 did not show which was the binding agreement and their letter dt.28.11.06 showed new modified terms and has prepared a comparative statement and held that there was no specific agreement between the plaintiffs and defendant no.1 that can be specifically enforced and on the said basis dismissed the notice of motion. 14. The only point which arise for our determination is as to whether the impugned order calls for any interference by the appellate court. Needless to say that the contract is an agreement between two or more persons intended to create a legal obligation between them and to be 12 legally enforceable. The contract is discharged and terminated by agreement, by due performance or payment, by waiver of performance, by replacement by a new contract, by supervening impossibility or illegality of performance, by frustration through the happening of some event which renders performance, if not impossible, at least fundamentally different from what was contemplated and by breach of the fundamental respect, if the innocent party treats the breach as a repudiation of the contract. 15. It is a well settled law that the court will look into the substance of a document than to the nomenclature which is also a contention of the learned counsel of the appellants. Therefore, in order to ascertain whether the appellants have a prima facie case and if so, whether the balance or convenience lies in their favour and they would suffer irreparable loss, the court will have to refer to the documents on the basis of which the appellants (org. plaintiffs) are seeking specific performance of the contract. 16. MOU executed between the plaintiffs and defendant nos.1 and 2 i.e. M/s.Dream Developers carrying on business of builders and developers stipulates that the transferor i.e. Defendant nos.1 and 2 have acquired right to develop a piece or parcel of land admeasuring 3645 sq. mts. on 13 which TDR No.3645 sq.mts. is capable of being loaded which is situated at Village Mulgaon, Taluka Andheri as described in the Schedule and having acquired such rights under the MOU between it and one All India Soverdia Sangam Trust i.e. Respondent (org.defendants). The transferor i.e. Defendant nos.1 and 2 have agreed to allow the plaintiff to develop and utilize the said plot of land on the said terms and conditions hereinafter mentioned. So there is no ambiguity as to the nature of the MOU which was entered between the parties to develop and utilize the plot of land which is the suit property. The said MOU was subject to certain terms and conditions. There is no dispute over the description of the suit property of the plot. Clause 3 of the said MOU clearly records that the transferor i.e. Defendant nos.1 and 2 hereby agrees with the Company i.e. The appellants (org.plaintiffs) for transfer and assessment of the said plot with characteristics described in clause 2 i.e. Description of the plot, after fulfilling the conditions described in clause 1 i.e. Condition, for a consideration of Rs.9.50 crores, out of which at the time of execution of MOU, the sum of Rs.51 lacs came to be deposited with Vinod B. Agarwal of M/s.Vigi Jiris, Solicitors in escrow and the balance amount of Rs.8.99 crores was to be paid on fulfillment of all the terms and conditions and execution of documents in favour of the company. 14 17. Apart from the other usual terms and conditions, it is also specifically mentioned in clause no.7 that any terms which requires to be deliberated, will be discussed and finalized with the consent of respective Solicitors and further Memorandums may be executed from time to time on this behalf. Therefore, the plain reading of the MOU entered between the parties clearly indicates that the appellants (org. plaintiffs) paid a sum of Rs.51 lacs to the respondents (defendants) to participate in the project and the execution of a formal agreement for sale made a condition of bargain. Therefore, prima facie, it can be said that the said MOU was a contract unconcluded until execution of a formal agreement. This in our opinion, is sufficient to justify the finding arrived at by the learned single Judge. 18. Therefore, we have no hesitation to record that the appellants (org.plaintiffs) have failed to establish prima facie case in their favour for the interim reliefs sought for in the notice of motion like appointment of Court Receiver, interlocutory injunction and other ancillary reliefs. On the other hand, if such reliefs are granted in favour of the appellants (org. plaintiffs), it may result in adversely affecting the interest of defendant no.1 and 2 which has been created in their favour by respondent (org. defendant no.3) by entering into an MOU dt.30.06.05 for development of their property which would rather 15 cause irreparable injury to the respondents who have invested substantial funds and any injunction preventing them from developing the property would rather cause irreparable loss to the respondents compared to the stake that the appellants (org. plaintiffs) has invested while entering into the MOU on the foundation of which the suit is filed. 19. The question of balance of convenience does not arise at all. We therefore, do not find any merits in the appeal. The same is dismissed with no order as to costs. In view thereof, Notice of Motion no.986 of 2009 does not survive. The same is dismissed as infructuous. J.N.PATEL, J SMT.R.P.SONDURBALDOTA, J