1 IN THE HIGH COURT OF BOMBAY AT GOA FIRST APPEAL NO. 266 OF 2004 AND FIRST APPEAL NO. 267 OF 2004 FIRST APPEAL NO. 266 OF 2004 M/s Vijay Engineers & Developers by their proprietor Shri Naresh Sakharam Salgaonkar, major, married, businessman, r/o Plot No.4, Service Industries, Taleigao, Goa. ... Appellants versus Suryadarshan Co-op. Housing Society Ltd., having its office at Alto Betim, Bardez, Goa, through their Chairman Shri Ankush R. Hoble, r/o “Maya Niwas”, Wadi, Merces, P.O.St. Cruz, Ilhas, Goa. ... Respondent Shri J. E. Coelho Pereira, Senior Advocate with Shri V. Braganza, Advocate for the Appellant. Shri S. D. Lotlikar, Senior Advocate with Shri H. Kankonkar, Advocate for the Respondent. FIRST APPEAL NO. 267 OF 2004 Suryadarshan Co-op. Housing Society Ltd. having its office at Alto Betim, Bardez, Goa, through its Chairman Shri Ankush R. Hoble, residing at “Maya Niwas” Wadi-Merces, P.O. St. Cruz, Ilhas, Goa. ... Appellants 2 versus M/s. Vijay Engineers & Developers by its Proprietor Shri Naresh Salgaonkar having its office at 206, LQF, New Housing Board, Alto Betim, Bardez Goa-403-501. ... Respondents Shri S. D. Lotlikar, Senior Advocate with Shri H. Kankonkar, Advocate for the Appellants. Shri J. E. Coelho Pereira, Senior Advocate with Shri V. Braganza, Advocate for the Respondent. CORAM : S. C. DHARMADHIKARI & F. M. REIS, JJ. DATE OF RESERVING THE JUDGMENT: 16TH MARCH, 2011. DATE OF PRONOUNCING THE JUDGMENT : 6TH MAY, 2011. JUDGMENT(Per F. M. REIS, J.) Both the above appeals are taken up together for final hearing as both challenge the same Judgment and Decree dated 13-8-2004 passed by the learned Civil Judge, Senior Division at Mapusa in Special Civil Suit No.102/1999. The parties shall be referred to in the manner they so appear in the cause title of the impugned Judgment. The Appellant in First Appeal No.266 of 2004 are the Plaintiffs in the said 3 suit whereas the Appellants in First Appeal No.267 of 2004 are the Defendants in the said suit. 2. The Plaintiffs filed a suit on the ground that on 19-1-1989 the Defendants invited tenders through newspaper from Civil Contractors to develop the land purchased by the Defendants admeasuring an area of 14,300 sq. meters situated at Britona village of Village Panchayat area of Penha de Franca and surveyed under No.13/6 of village Penha de Franca which included infrastructural development as also construction of houses for its members who were 31 in number. It is further the contention of the Plaintiffs that they submitted the tender to the Defendants and the contract for the said development of the said property was allotted to the Plaintiffs on turn key basis by its work order dated 6-3-1989. The Plaintiffs further contend that they got a portion of the suit property changed to settlement zone from the concerned authorities which took about two years as the Plaintiffs had to get the said land re-surveyed by the survey authorities which took another one year. The Plaintiffs contend that pursuant to the said work order dated 6-3-1989, the Plaintiffs prepared blocked level contour plans of the suit property so as to enable the authorities to change the land into settlement 4 zone and the fees thereof for the portion of the said plans worked out to Rs.83,000/- out of which the Defendants paid Rs.41,500/-. RCC designs were also prepared for which the total fees incurred was Rs.11,000/- which was not paid by the Defendants. Infrastructural development contemplated in the said order according to the Plaintiffs included carrying out of works such as road drainage, levelling of land, construction of culvert, development of wall, etc. The Defendants decided to develop the suit land as a group housing scheme under which infrastructural development and the construction of houses was to be simultaneously taken up for development by the Plaintiffs. The Plaintiffs further state that in terms of the said work order, the Plaintiffs were entitled for mobilization advance to the tune of Rs.10,00,000/- for commencement of the work for infrastructural structure development and a further sum of Rs.15,75,000/- as the first instalment before construction of houses with 90% escalation thereof. It is further their case that the Defendants expressed their inability to pay mobilization advance of Rs.10,00,000/- and as such they offered to the Plaintiffs a suggestion whereby a portion of the suit land which was in excess after providing the land for houses for all the 31 members, would be given to the Plaintiffs for development on their own account and appropriate 5 receipts thereof so as to meet the infrastructural development costs of Rs.14,55,217.60 for the suit land. The proposal was accepted by the Plaintiffs and the agreement for development was executed on 21-11-1993 between the parties hereto. The Plaintiffs contend that Defendants also agreed to accept the escalation contemplated in the work order dated 6-3-1989 as incorporated in the said agreement dated 21-11-1993. The Plaintiffs further state that the total area given to the Plaintiffs by the Defendants for the said development towards the costs of the said infrastructural development costs was totally admeasuring an area of 2,800 sq. meters as identified in Clause 2 of the said agreement. It is further their case that the Defendants took about one year to decide about the type of houses to be constructed in the said suit land to its members though 10 members out of 31 members selected from the building plans prepared by the Plaintiffs for the construction of the said houses. After securing the licences for the construction of the said houses, all the remaining 21 members selected the plans for their respective houses and the licences for the construction of the said 21 houses were submitted to the Panchayat though the same were not collected by the Defendants till about 18-11-1996. It is further their case that after obtaining the licences from the Village Panchayat dated 6 19-4-1994 for the construction of the 10 houses for the 10 members and the construction of 7 buildings of the blocks of flats and 2 bungalows to be constructed in the said portion allotted to the Plaintiffs, the Plaintiffs started the work of construction. The development carried out by the Plaintiffs included laying the foundation for the internal road to the extent of 140 meters, construction of RCC culvert and 2 wells and a retaining wall. The land was also cut to an appropriate gradient and levelled to suit the construction of houses and the building sites of 300 sq. meters each for the 31 members. The Plaintiffs also commenced construction of the flats in three portions of the suit land as per the agreement dated 21-11-1993. Agreements were also entered into for selling the flats proposed to be constructed by the Plaintiffs in the said portion of the land and the work of the said three buildings had reached the height of the first floor slab of one building plinth level of the second building and half plinth level and first floor level of the third building. The investment incurred by the Plaintiffs was amounting to Rs.28,50,000/- in the suit land for the infrastructural development therein. It is further their case that in August, 1995, five of the members initiated proceedings against the Defendants objecting to the work carried out by the Plaintiffs, by filing arbitration proceedings. A 7 temporary injunction was also obtained in the said proceedings which was subsequently vacated. The contention of the said five members was that the work of development was carried out by the Defendants in violation of the scheme of the Defendants of putting up construction of houses therein. 3. It is further the case of the Plaintiffs that by letter dated 26-9-1995, they called upon the Defendants to effect the payment of mobilization amount of Rs.20,00,000/- for construction work of the said 10 bungalows/houses for the 10 members and there was no response from the Defendants to the said letter. Ultimately, by reply dated 14-6-1996 to the letter dated 16-5-1996, the Plaintiffs requested the Defendants to call for a meeting of its Managing Committee but, however, the Plaintiffs boycotted the said meeting as according to them there were strangers along with the office bearers. It is further their case that the development was supposed to be completed by the Plaintiffs within 24 months from the date of the receipt of all the approvals/permissions from the concerned authorities for the said development but, however, till November, 1996 permissions were received for only part development of the suit land whereas the 8 permissions for putting up construction of the remaining land were not obtained. It is further their case that the Plaintiffs performed all their obligations under work order dated 6-3-1989 and the agreement dated 21-11-1993 and was ready and willing to perform their obligations under the said agreements and are still ready and willing to perform their obligations under the said work order and the said agreement. It is further their case that the Defendants have failed to perform their said obligations under the said work order/agreement and did not even pay the initial mobilization amount of Rs.15,75,000/- and Rs.12,00,000/- payable for commencement of the work. It is further their case that in view of the ex-parte Order obtained by the said members, the work had come to a stand still and even after the work order was vacated the Plaintiffs did not commence the work since they did not want to create any further misunderstanding with the Defendants. It is further their contention that the Plaintiffs have invested a sum of Rs.28,50,000/- in the suit land including infrastructural development and out of the said amount a sum of Rs.26,50,838.44 belongs to the prospective flat purchasers. The Plaintiffs stated that on 8-11-1996, a public notice was published in the Navhind Times wherein it was stated that the agreement between the Plaintiffs and the Defendants was terminated from 9 8-11-1996 and thereafter on 9-11-1996 the Plaintiffs received a letter/ notice from the advocate of the Defendants. The grounds for such termination was that the Plaintiffs neglected and failed to comply with the agreement and the road was not constructed and no sub-divisions of the said property into plots had been carried out nor has the work been carried out from the date of the execution of the work contract. It is further their case that the Plaintiffs were not liable to do any sub-division of the land nor that the Plaintiffs had not commenced the work as contemplated in the work order and the agreement. The Plaintiffs disputed the said grounds raised by the Defendants to terminate the said agreement and the said notice was replied on 12-11-1996 to the advocate of the Defendants. It is further their case that when they went to the suit plot on 12-11-1996 they saw some unknown people doing some work and found some G.I. sheets missing from the suit land which according to the Plaintiffs' estimate was Rs.2,46,000/-. Immediately thereafter Arbitration Case was filed by the Plaintiffs on 18-11-1996 before the Assistant Registrar of Co-operative Society as a dispute under Section 91 of the Maharashtra Co-operative Societies Act, 1960. In the said proceedings, an application for temporary injunction was also filed and that by Order dated 9-12-1996 the authority held that he had no 10 jurisdiction to entertain and try the said case. An appeal was also preferred by the Plaintiffs against the said Judgment before the Co-operative Tribunal and by its final order dated 7-7-1999 the proceedings were remanded back to the Assistant Registrar to record a finding as to whether the Plaintiffs are entitled for temporary injunction in respect of the said area of 2,800 sq. meters as the Plaintiffs found that they could not obtain the effective reliefs to the said proceedings. The Plaintiffs filed the present suit and withdrew the said proceedings before the Assistant Registrar of Co-operative Tribunal. At para 50 of the said plaint, the Plaintiffs have contended that they have valued the work of infrastructural development carried out by the Plaintiffs in the said land. According to the Plaintiffs, a total amount spent works out to Rs.21,06,940/- and the particulars thereof are found at para 50 of the plaint. The Plaintiffs have also stated that they have started the construction of three buildings in the plot allotted to him and collected a sum of Rs.26,15,838.44 from the flat purchasers and invested a total amount of Rs.28,50,000/- in the suit land. It is further their case that they are in possession of the suit land pursuant to work order dated 6-3-1989. The Plaintiffs further contend that they are also entitled for a fixed compensation of Rs.18,05,000/- with escalation as mentioned in the said 11 agreement and that the Plaintiffs had spent a total amount of Rs.21,06,940/- and as such are entitled to recover a sum of Rs.6,55,722/- which is in excess spent by the Plaintiffs. They also claimed a sum of Rs.2,46,000/- towards the loss of materials in the said land and further in the alternative claimed for compensation of Rs.28,50,000/- with interest at the rate of 18% per annum. Accordingly, the suit came to be filed praying for the transfer of the land admeasuring an area of 2,800 sq. meters in terms of the agreement of development dated 21-11-1993 and also to pay a sum of Rs.18,05,000/- towards damages and compensation for wrongful termination of the agreement dated 21-11-1993 together with interest besides a sum of Rs.2,46,000/- towards the said material and in the alternative to prayer (a) for specific performance for a sum of Rs.28,50,000/- together with interest at the rate of 18% per annum. 4. The Defendants on being served filed their written statement. It is their case that the Plaintiffs are not entitled for any relief in the said suit. They have disputed that the Plaintiffs had carried out any infrastructural development in the said property. It is further their case that since inception, the Plaintiffs had not carried out any work in the suit land. It is further their case that the Plaintiffs had not even started the 12 construction of the road as contemplated in the said agreement nor carried out any activity in terms of the agreement for carrying out the infrastructural development as contemplated therein. The Defendants have also denied that they were liable to pay mobilization advance of Rs.10,00,000/- in respect of infrastructural development and Rs.15,75,000/- towards the first instalment before construction of the houses was started in the said property with 90% escalation as claimed by the Plaintiffs. It is also denied that the Defendants had expressed their inability to pay the said amount of Rs.10,00,000/-. It is further disputed that a sum of Rs.14,55,217.60 were the expenses incurred by the Plaintiffs in the suit land as according to the Defendants no infrastructural development was carried out in the suit property. It is further contended by the Defendants that for the first time, the Plaintiffs started doing construction in the year 1995 and stopped some time in December, 1995. The allegation that the Plaintiffs had cut the land to a gradient was also disputed by the Defendants in their written statement so also that the houses claimed to have been constructed and in a broken condition. The Defendants also disputed that the Plaintiffs had rendered their services to change the zone of part of the land as settlement zone as according to the Defendants the said act was performed by the members 13 of the Defendants themselves. It is further their case that the past members of the Society were hand in glove with the Plaintiffs and had executed one sided agreement. It is further their case that the work had to be completed within 24 months and that the Plaintiffs are misguiding. The allegation that there were any material and/or equipment in the suit property has also been disputed by the Defendants. With regard to the contents of para 50 of the plaint wherein the particulars of the expenses incurred by the Plaintiffs have been pleaded, the Defendants only denied the said allegations and put the Plaintiffs to strict proof. 5. Along with the written statement, the Defendants have also filed a counterclaim and claimed that the Plaintiffs did not start the work in the right earnest and as such, on account of inflation in the construction costs and infrastructural development, it is claimed by the Defendants that the costs in the year 1999 works out to Rs.3,46,92,195/- and considering the difference in the index from the year 1989, the difference in the costs according to the Defendants is Rs.1,25,35,911/- which they claim they are entitled to recover. A written statement to the said counterclaim was also filed by the Plaintiffs disputing the said amount as according to the Plaintiffs the Defendants are not entitled to 14 any amount from the Plaintiffs as the delay was not occasioned on the part of the Plaintiffs. In view of the amendment of the plaint carried out by the Plaintiffs, an additional written statement was also filed by the Defendants on 22-6-2001. 6. On the basis of the pleadings, the learned Judge framed the issues and recorded the evidence adduced by the Plaintiffs as well as the Defendants. After hearing the parties and on appreciating the evidence on record, the learned Judge by Judgment and Decree dated 13-8-2004 partly decreed the said suit and directed the Defendants to pay to the Plaintiffs a sum of Rs.28,50,000/- with 2% penal interest per annum from 8-11-1996 till payment and also a sum of Rs.18,05,000/- by way of compensation. The counterclaim filed by the Defendants came to be dismissed. 7. Being aggrieved by the said Judgment, the Defendants have preferred the above appeal challenging the decree in favour of the Plaintiffs and the refusal of the counterclaim whereas the Plaintiffs also preferred the above appeal seeking for a modification of the impugned Judgment and Decree and praying for the compensation towards the 15 materials as well as the modification of the rate of interest as awarded in the impugned Judgment. 8. Shri S. D. Lotlikar, learned Senior Counsel appearing for the Defendants has assailed the impugned Judgment and pointed out that on perusal of the reliefs sought by the Plaintiffs in the suit, the Plaintiffs have prayed for the specific performance of the said agreement at prayer (a) and for compensation at prayer (b) besides the costs of the materials at prayer (d) and for compensation in the alternative to prayer (a) in prayer (e). The learned Senior Counsel accordingly submitted that the question of the learned Judge granting compensation in the alternative to the tune of the alleged amount of Rs.28,50,000/- would be justified only in case the Plaintiffs had been in a position to establish that they were ready and willing to perform their part of the agreement. Learned Senior Counsel further submitted that on the basis of the material on record, it is clear that the Plaintiffs were not ready and willing to perform their part of the agreement nor the Plaintiffs performed any activities as per the work order and the agreement which would justify their claim for compensation in the alternative. Learned Senior Counsel further submitted that the learned Judge lost sight that once the Plaintiffs had 16 claimed compensation in the alternative to the claim for specific performance, the case for granting compensation for the termination of the said agreement to the tune of Rs.18,50,000/- would not arise at all. Learned Senior Counsel further submitted that the very fact that the learned Judge granted the said two reliefs itself disclose that the learned Judge misconstrued the pleadings as well as the case advanced by the Plaintiffs and came to an erroneous conclusion that the Plaintiffs were entitled to such relief. Learned Senior Counsel further submitted that in any event, on the basis of the evidence on record, it is evident that the Plaintiffs failed to establish that in fact the Plaintiffs have incurred expenses to the tune of Rs.28,50,000/- as claimed by them on account of infrastructural development charges. The learned Senior Counsel further submitted that the Plaintiffs had failed to adduce any material to establish that in fact such expenditure had been incurred by them but only relied upon the evidence of an Engineer who cannot be believed. Learned Senior Counsel further submitted that the Engineer examined by the Plaintiffs was not at all associated with the so-called infrastructural development carried out by the Plaintiffs and as such, the question of the Engineer giving evidence to that effect would not arise. Learned Senior Counsel took us through the evidence on record and pointed out that as 17 per the said agreement, the Plaintiffs were to construct a road so as to enable the Defendants to carry out the development therein but, however, no activity was carried out nor there is evidence on record to establish that the Plaintiffs had carried out any construction of such road. Learned Senior Counsel further submitted that the so-called infrastructural development carried out by the Plaintiffs was only in respect of the plots which were sought to be allotted to the Plaintiffs and as such, such work does not inhere any benefit to the Defendants, as such construction activity was dishonestly carried out by the Plaintiffs at their own risk. Learned Senior Counsel further submitted that the evidence on record establishes that the work of development had not at all taken off at the instance of the Plaintiffs as according to them, even the change to settlement zone was carried out by the members of the Defendants. Learned Senior Counsel has further submitted that the Defendants have examined an expert who has categorically stated that no activity carried out by the Plaintiffs was visible at the site and the Defendants had to incur expenditure for the purposes of carrying out the work as pleaded in the counterclaim. Learned Senior Counsel further submitted that the Plaintiffs have miserably failed to establish that they were ready and willing to perform their part of the agreement and as such, the question 18 of granting specific performance and/or in the alternative any compensation to the Plaintiffs would not arise at all. Learned Senior Counsel has taken us through the pleadings and the evidence on record and pointed out the infirmities in the evidence of the Plaintiffs and submitted that the Plaintiffs have failed to establish that they are entitled for any reliefs and as such the learned Judge completely misdirected itself in partly decreeing the said suit. The learned Senior Counsel has further submitted that as per the case advanced by the Plaintiffs themselves, the work for development of the suit property has not been completed. Learned Senior Counsel has finally summarized his submission and pointed out that the agreement executed between the parties is only for infrastructural development and not for putting up construction therein. He further pointed out that there was default committed by the Plaintiffs in completing the work within 24 months from the date of the agreement and further that the evidence discloses that the licences for construction of the work were obtained by the Plaintiffs only in April, 1994 which would not help the Plaintiffs to get any extension of time to complete the infrastructural development. He pointed out that the plaintiffs were not entitled to carry out the development of the land in the area of 2,800 sq. meters agreed to be 19 allotted to him side by side with the infrastructural development which was not even completed by the Plaintiffs. The learned Senior Counsel further submitted that the amount awarded by the trial Court is much in excess to the one even contemplated in the agreement executed between the parties for the purpose of the expenses towards infrastructural development which in any event the Plaintiffs are not entitled as they had defaulted in complying with the term of the agreement to complete the work within 24 months from the date of the agreement. The learned Senior Counsel further submitted that the learned trial Judge was in