-1- IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO. 93 OF 2009 IN CHAMBER SUMMONS NO. 1323 OF 2008 IN SUIT NO. 2341 OF 2007 M/s. Anand Lakshmi Enterprises, ) a partnership firm, duly registered under the Indian ) Partnership Act, 1932 having their registered office at ) A-601,Silver Bells, Off. L.M. Marg, Navagaon, ) Dahisar (W), Mumbai-400 068 )..Appellants versus 1. Vasant Balu Mhatre of Raigad, adult, Indian ) Inhabitant, residing at and Post Pen, Tal. Pen, ) Dist. Raigad ) 2. Eknath Balu Mhatre of Raigad, adult, ) Indian Inhabitant, residing at and Post Pen, Tal. Pen, ) Dist. Raigad ) 3(a) Sandeep Laxman Bhagat, ) of Raigad, adult, Indian Inhabitant, being the son ) and the heir and legal representative of the ) deceased Vijaya Laxman Bhagat, the original ) Respondent No.3, residing at and Post Dhavate, ) Tal. Pen, Dist.Raigad. ) 3(b) Santosh Laxman Bhagat, ) of Raigad, adult, Indian Inhabitant, being the son ) and the heir and legal representative of the ) deceased Vijaya Laxman Bhagat, the original ) Respondent No.3, residing at and Post Dhavate, ) Tal. Pen, Dist.Raigad. ) -2- 3(c) Sanjay Laxman Bhagat, ) of Raigad, adult, Indian Inhabitant, being the son ) and the heir and legal representative of the ) deceased Vijaya Laxman Bhagat, the original ) Respondent No.3, residing at and Post Dhavate, ) Tal. Pen, Dist.Raigad. ) 4. Smt. Vijaya Madhukar Bhingardive ) of Mumbai, adult, Indian Inhabitant, residing at ) Room No.3, Shiv Shakti Siddi Vinayak Chawl, ) Kurar Village, Laxman Nagar, Behind Shankar ) Temple, Malad (East), Mumbai-400 097 ) 5. Smt. Laxmibai Janardhan Mhatre of Raigad, ) adult, Indian Inhabitant, residing at Mankule, ) Post Hashiware, Tal. Alibaug, Dist. Raigad ) 6. Smt. Sunita Gajanan Patil of Raigad, ) Adult, Indian Inhabitant, residing at Mankule, ) Post Hashiware, Tal. Alibaug, Dist. Raigad ) 7. Smt. Karuna Kishor Mhatre of Raigad, adult, ) Indian Inhabitant, residing at and Post Pen, ) Tal. Pen, Dist. Raigad. ) 8. Puja Kishor Mhatre, ) 9. Arati Kishor Mhatre, ) 10. Sonal Kishor Mhatre ) 11. Monali Kishor Mhatre, ) the Defendants Nos. 8 to 11 abovenamed being ) minors through their mother and natural guardian ) the said Smt. Karuna Kishor Mhatre, residing at and ) Post Pen, Taluka Pen, District Raigad ) 12. Pravin Viram Satra carrying on business in the firm ) name and style of M/s. Darshan Developers, as ) Proprietor thereof having his office at Thosar House, ) Hanuman Cross Road No.1,Vile Parle (East), ) Mumbai-400 057 ) -3- 13. M/s. A-1 Developers, ) 7, Mafatlal Building, 1st floor, Tejpal Road, ) Mumbai-400 057 )..Respondents Mr. Aniruddha Joshi with Mr. Simil Purohit, instructed by M/s. Subhash Pradhan & Co., for the appellants. Mr. Dhiren Shah with Ms. P. Mani, instructed by M/s. Vimla & Co., for respondent Nos. 12 and 13. CORAM: P.B. MAJMUDAR & R.V. MORE, JJ. DATE: NOVEMBER 30, 2009. ORAL JUDGMENT: (Per P.B. Majmudar, J.) This is a thoroughly misconceived appeal filed by the appellants challenging the order of the learned single Judge dated 30th September, 2008, by which the learned single Judge has rejected the plaint of the appellants- original plaintiffs by resorting to Order VII Rule 11 (d) of the Civil Procedure Code. 2. The appellants who are in construction business have filed the aforesaid suit on the basis of an agreement to sell dated 30th April, 1989. By the said agreement, the appellants were given development rights by the respondents to develop the suit property and also gave a power of attorney to them dated 30th April, 1989. It is the case of the appellants that on the basis of -4- the said agreement, the appellants were required to develop the disputed suit property but subsequently they came to know in the year 2002 that the respondents are not going to honour the said agreement and, therefore, by way of an oral agreement in July/August, 2002, the respondents agreed to pay Rs. 11 lakhs to the appellants and on that basis the appellants agreed to give up their right on the basis of the aforesaid development agreement as they were willing to accept the aforesaid sum of Rs. 11 lakhs. It is the case of the appellants that in the year 2005 when they realised that somebody is trying to develop the suit property and that the respondents are not going to honour the oral agreement entered into in the year 2002 that they ultimately filed the aforesaid suit on 10th August, 2007 with the following prayers. “(a) That this Hon’ble Court be pleased to declare that the documents at Exhibit “E” i.e. The said Agreement for development dated 30th April, 1989 and Exhibit “F” i.e. The said Power of Attorney dated 30th April, 1989, are still valid, subsisting, in force and are binding upon the defendants herein; (b) that the Defendants be ordered to pay to the Plaintiffs the sum of Rs. 50,01,000/- as per Particulars of Claim hereto annexed and marked Exhibit “N” or such other sum as may be decreed in favour of the Plaintiffs by this Hon’ble Court for the breach of the said Agreement for development dated 30th April, 1989 being Exhibit “E” hereto. (c ) that it be declared that the payment of the aforesaid sum of Rs. 50,01,000/- mentioned in prayer (b) hereinabove would be secured by a charge on the suit property under the provisions of Section 55 (6) (b) of the Transfer of Property Act. (d) that in the event of the defendants failing to pay to the -5- plaintiffs the aforesaid sum of Rs. 50,01,000/- mentioned in prayer (b) hereinabove or such other sum as may be decreed in favour of the plaintiffs by this Hon’ble Court within such time as may be allowed to the defendants by this Hon’ble Court the suit property be sold by an order and directions of this Hon’ble Court and the sale proceeds be appropriated in or towards payment of such amount as may be decreed in favour of the plaintiffs.” 3. During the pendency of the aforesaid suit, a Chamber Summons was taken out by the Respondents being Chamber Summons No. 1323 of 2008 for rejection of the plaint on the ground that it is barred by Law of Limitation. The learned single Judge thereafter considered the question as to whether the plaint is to be rejected under the provisions of Order VII Rule 11 (d) of the Civil Procedure Code. After hearing the parties at length, the learned single Judge came to the conclusion that the suit of the appellants is hopelessly time barred as the prayer regarding declaration sought in the plaint is beyond the period of limitation in view of the fact that the suit is not filed within three years from the execution of the said agreement of the year 1989. The learned single Judge also found that even the claim of the appellants which is based on the basis of oral agreement of 2002 is also time barred as the suit is filed in the year 2007. The learned single Judge accordingly found that since the suit is instituted beyond the period of limitation, the plaint is required to be rejected under Order VII Rule 11 (d) of the C.P.C. and accordingly rejected the same. The aforesaid order of the learned single Judge is impugned at the instance of the appellants- original plaintiffs by way of this appeal. -6- 4. The learned counsel appearing for the appellants vehemently submitted that the learned single Judge has committed a grave error in rejecting the plaint by resorting to Order VII Rule 11 (d) of the CPC. The learned counsel submitted that while deciding the application under Order VII Rule 11 (d), the Court is only required to see the averments made in the plaint and the defence taken out by the other side cannot be taken into consideration at this stage. It is submitted that in the original agreement of 1989, time limit for performance of the contract has not been mentioned and, therefore, the appellants were entitled to wait till there is refusal on the part of the respondents in connection with the suit agreement. Learned counsel further submitted that the appellants ultimately agreed to accept Rs. 11 lakhs in lieu of giving up their rights under the agreement dated 30th April, 1989, and accordingly an oral understanding took place between the appellants and the respondents in the year 2002 and subsequently in the year 2005 the appellants realised that the respondents are likely to transfer the suit property for development to third parties that the appellants filed the aforesaid suit in August, 2007. The learned counsel, therefore, submitted that the suit is filed within limitation and is not barred by the law of limitation. 5. The learned counsel for the appellants further submitted that whether the oral agreement is genuine or not is the question which can be -7- decided in the application for rejection of plaint under Order VII Rule 11 (d) of the CPC as the same is required to be decided at the time of trial, after appreciating the evidence on record. The learned counsel further submitted that ultimately the Court may dismiss the suit, if it is found that the oral agreement is not believable and that the suit is frivolous and false, but that can be done only at the time of deciding the suit finally and not at the time when the application under Order VII Rule 11 (d) is to be decided. It is submitted that the appellants have given up the development rights which were given to them as per the agreement dated 30th April, 1989 in view of the oral understanding arrived at in July/August, 2002. If the respondents are not acting on the basis of such oral understanding, then the appellants right to claim specific performance still subsists. According to him, even the suit for specific performance is also within limitation as only in the year 2005 the appellants realised that the respondents are not going to act on the basis of the suit agreement of 1989. 6. The learned counsel appearing for respondent Nos. 12 and 13, on the other hand, submitted that filing of the suit is nothing but an abuse of process of law. It is submitted that the appellants had entered into an agreement in the form of a Memorandum of Understanding on 30th April, 1989. Thereafter the appellants had not taken any steps and have never tried to enforce that agreement for variety of reasons. He submitted that the theory of -8- so-called oral agreement of 2002 is created only with a view to make out a case that the appellants are entitled to recover Rs. 11 lakhs in view of such oral agreement. According to the learned counsel, if the averments in the plaint are taken as a whole, it is clear that as per the say of the appellants, the oral agreement took place in the year 2002 and admittedly the suit is filed after about five years and on that ground the suit is hopelessly barred by law of limitation. It is submitted that filing of such a suit is nothing but an attempt on the part of the appellants to take a chance to get whatever money they may get by way of such vexatious proceedings taken out against the respondents. It is submitted that under these circumstances, the appeal should be dismissed with heavy compensatory costs. 7. We have heard the learned counsel appearing for the parties at great length and have gone through the relevant documents annexed with the appeal memo. We have also gone through the agreement, averments made in the plaint and the order of the learned single Judge. 8. The learned counsel for the appellants has strongly placed reliance on various submissions made in the plaint. He has mainly relied upon the averments made in the plaint viz. Paragraphs 15, 16, 17, 18 and 23. The relevant averments in the said paragraphs are as under. -9- “15. The plaintiffs state that in or about July/August, 2002, the Defendant Nos. 1, 2 , the said late Kishore Balu Mhatre and the said late Pushpa Balu Mhatre informed the plaintiffs that they were considering engaging some other developer for development of the suit property and requested the plaintiffs to release, relinquish and surrender their rights under the said agreement for development dated 30th April, 1989. The plaintiffs state that it was at the instance of the defendants Nos. 1, 2 the said late Kishore Balu Mhatre and the said late Pushpa Balu Mhatre that a number of meetings were held between the defendants Nos. 1, 2, the said late Kishore Balu Mhatre and the said late Pushpa Balu Mhatre one Shri Pravin Satra and Ms. Vimla M. Shah of M/s. Vimla & Co., Advocates and Solicitors who were acting for the said Pravin Satra. The plaintiffs state that the defendants are and have always been fully aware of the rights and interest of the plaintiffs in the suit property. The plaintiffs state that one of such meetings for considering appointment of some other developer were held at the residence of the Solicitor of the Defendants No.8 the said Ms. Vimla M. Shah when the defendants Nos. 1, 2, the said late Kishore Balu Mhatre and the said late Pushpa Balu Mhatre their Advocate Shri A.S. Rao, the said Ms. Vimla M. Shah and Shri V.R. Babu, a representative of the plaintiffs were present. The plaintiffs state that at the said meeting xerox copies of the said deed of assignment and transfer dated 20th January, 1989 made and executed between the said M/s. Noble Enterprises and the plaintiffs, the original partnership deed of the plaintiffs and the said agreement dated 30th April, 1989 and some other documents were produced for the perusal before Ms.Vimla M. Shah at the request and instruction of Advocate Shri A.S. Rao by his letter dated 1st November, 2002 addressed to the plaintiffs representative, the said V. Ramachandra Babu referring therein to the claim of the plaintiffs with regard to the suit property. 16. The plaintiffs state that at the aforesaid meeting repeated requests were made to the said V.Ramachandra Babu on behalf of the plaintiffs to surrender and relinquish the right and claim of the plaintiffs in and with respect to the suit property under the said agreement for development dated 30th April, 1989 and have the same duly cancelled and terminated by mutual consent and offered to pay to the plaintiffs some amount as and by way of refund of the amount paid by the plaintiffs to the defendants Nos. 1, 2 , the said late Kishore Balu Mhatre and the -10- said late Pushpa Balu Mhatre and reimbursement of the costs and expenses incurred by the plaintiffs in pursuance of the said agreement for development dated 30th April, 1989. The plaintiffs state that after prolonged discussions and repeated requests on the part of the defendants it was mutually agreed that a sum of Rs. 11,00,000/- as and by way of refund and reimbursement of the amounts paid and costs and expenses incurred in pursuance of the said agreement for development dated 30th April, 1989 (hereinafter referred to as “the said agreed amount”) would be paid by the defendants to the plaintiffs and thereupon the plaintiffs would release and relinquish all their right and interest in and with respect to the suit property under the said agreement for development dated 30th April, 1989. The plaintiffs agreed to accept the said sum of Rs. 11,00,000/- by way of settlement although the plaintiffs had actually paid sums aggregating Rs. 15,80,000/- under the various agreements made with the said Noble Enterprises, the said Ramesh Hari Dhuri and another and through them to the defendants Nos. 1, 2 and the said late Kishore Balu Mhatre and the said late Pushpa Balu Mhatre in respect of the suit property and the said land bearing final plot No. 80 and for obtaining vacant possession from three tenants of the tenements respectively occupied by them in the old structures which existed on the suit property as mentioned in clause 13 hereinabove. The plaintiffs state that the Defendants have not so far paid to the Plaintiffs the said amount of Rs. 11,00,000/- or any part thereof. 17. The plaintiffs state that on or around February 2005 their representatives visited the said suit property and were shocked, surprised and baffled as they observed that the structures existing on the said suit property had been demolished. The said representatives of the plaintiffs thereafter observed a board displaying the name of M/s. A-1 Developers, the defendants No. 13 herein on the site of the suit property. 18. The plaintiffs state that thereafter the plaintiffs by letter dated 9th March, 2005 from the Solicitors and Advocates of the Plaintiffs called upon the defendants to stop the construction activities on the suit property with immediate effect and also called upon the defendants to remove all materials, labourers, workers, contractors and sub-contractors from the site and to clear the site. The plaintiffs also stated through the said letter dated 9th March, 2005 that they were at all times and were and -11- have always been ready and willing to perform the obligations on their part under the said agreement for development dated 30th April, 1989. The plaintiffs also further pointed out by the aforesaid letter that any transaction entered into by the defendant Nos. 1, 2, the said late Kishore Balu Mhatre and the said late Pushpa Balu Mhatre with the defendants No. 13 was not binding on the plaintiffs and that no rights could accrue to the defendants No. 13 under the alleged documents if any. The plaintiffs also called upon the defendants Nos. 1, 2 the said late Kishore Balu Mhatre and the said late Pushpa Balu Mhatre to immediately furnish the details of the transaction entered into with defendants No. 13 and stated that in the event of defendants Nos. 1, 2, the said late Kishore Balu Mhatre and the said late Pushpa Balu Mhatre failing to furnish the information asked for under the said letter dated 9th March, 2005 of the plaintiffs’ Solicitors and or stop the construction activities forthwith and/or remove all materials, labourers, workers, contractors and sub-contractors from the site of the suit property, the plaintiffs would be compelled to take such steps as may be advised including to lodge a complaint against the defendant Nos. 1, 2, the said late Kishore Balu Mhatre and the said late Pushpa Balu Mhatre for criminal breach of trust, cheating and/or to file a suit for appropriate reliefs. 23. The plaintiffs state that as the defendants failed and neglected to pay to the plaintiffs the said sum of Rs. 11,00,000/- as agreed in the said meeting held in August, 2002 and on the other hand the construction activity of the defendants No. 13 continued in full swing on the suit property, the plaintiffs by their letter dated 10th June, 2006, addressed to Advocate Shri A.S. Rao recorded the facts and circumstances and the transaction transpired between the defendants and the plaintiffs in respect of the suit property. The plaintiffs by the said letter dated 10th June, 2006 called upon the defendants Nos. 1, 2 the said late Kishore Balu Mhatre and the said late Pushpa Balu Mhatre to pay to the Plaintiffs within a period of 7 days from the date of receipt of the said letter by the defendants a sum of Rs. 11,00,000/- as agreed between the defendants Nos. 1, 2, the said late Kishore Balu Mhatre and the said late Pushpa Balu Mhatre on the one hand and the plaintiffs on the other hand as and by way of consideration (refund and reimbursement of the amount paid under and in pursuance of the said agreement for development dated 30th April, 1989) for the release and relinquishment of the right and -12- authority of the plaintiffs to develop the said property under the said agreement for development dated 30th April, 1989 together with the sum of Rs. 9,00,000/- as and by way of loss and damage caused to the plaintiffs by reason of breach of the contract committed by the defendants and further stating that in the event of failure on the part of the defendants to comply with the aforesaid requirements the plaintiffs would have no option but to adopt legal proceedings against the defendants in the proper court of law. The plaintiffs state that it was also made clear to the defendants that the plaintiffs had not initiated and/or adopted appropriate legal proceedings till 10th June, 2006 having regard to and owing to longstanding relationship the plaintiffs had with the defendants. The plaintiffs state further in the said letter dated 10th June, 2006 that the plaintiffs would be happy to avoid to approaching the court of law for initiating the proceedings necessary for recovery of the amount due and payable to the plaintiffs. The plaintiffs further requested the defendants to stop in the meantime the development of and construction on the suit property.” 9. It is required to be noted that the main prayer in the plaint is for a declaration to the effect that the agreement for development dated 30th April, 1989 is still valid, subsisting, in force and is binding upon the respondents. It cannot be disputed that so far as the prayer for declaration is concerned, such suit is required to be filed within three years from the date when the right to sue first accrues under Article 58 of Part III of Schedule-I of the Limitation Act. In the instant case, the suit is filed in the year 2007 for a declaration that the agreement of 1989 is still subsists. Such prayer is made after about 18 years. The learned counsel for the appellants submits that looking to the nature of dispute, the Court should come to the conclusion that it is also a suit for specific performance, though no specific prayer in this behalf is made. He submitted that -13- if an opportunity is given to amend the plaint, the appellants may amend the plaint by taking a specific plea of specific performance. We are not in a position to accept such a submission at this stage as, even otherwise, the agreement for development of the suit property was executed in 1989. It is also interesting to note that in the year 2002, as per the say of the appellants, it was the appellants who agreed to relinquish their right under the said agreement and agreed to accept Rs. 11,00,000/- in all. Though, prima facie, it is not possible to swallow this submission that the appellants, who are engaged in the construction business, would agree to accept Rs. 11 lakhs by way of oral agreement without obtaining anything in writing. However, since this point cannot be examined by us while deciding the application under Order VII Rule 11 (d), we presume that the said say of the appellants may be correct. In that eventuality, even subsequently also the appellants had not taken any steps to enforce the so-called oral agreement for more than five years. It can safely be said that in view of the say of the appellants themselves that in the year 2002 they realised that the respondents are not likely to honour the agreement and that is how they entered into fresh agreement for receiving certain amount. In view of that development, the suit for specific performance on the basis of the agreement of 1989 can said to be hopelessly time barred as the appellants knew that in the year 2002, the appellants are not going to honour that agreement. Still no steps were taken within three years from 2002 for recovering the said amount or even filing a suit for specific performance in connection with the agreement of -14- 1989. Subsequently