1 IN THE HIGH COURT OF JUDICATURE OF BOMBAY IN THE HIGH COURT OF JUDICATURE OF BOMBAY IN THE HIGH COURT OF JUDICATURE OF BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION SUIT NO.35 OF 1979 1. Haji Rajabali P.Ebrahim(deceased) ) 1(a) Shakir Mohamed Ebrahim. ) ) 2. Haji Mahomed R. Ebrahim. ) ) 3. Haji Mahomed S.Mithawani(deceased) ) 3(a) Smt.Fajila H.Ebrahim, ) ) All of Bombay Indian Inhabitants ) being the trustees of Shirinbanoo ) H.P.Ebrahim Trust having their ) registered office at 111, Bhandari ) Street, Bombay 400 003. )..Plaitniffs. V/s. Bhajanlal Khialiram Agarwal(deceased) ) ) 1. Vidhyadevi wd/o Bhajanlal Agarwal ) (deleted as dead) ) ) 2. Chunilal Bhajanlal Agarwal ) ) 3. Balkishan Bhajanlal Agarwal ) ) 4. Madhav Bhajanlal Agarwal ) ) 5. Kunjvihari Bhajanlal Agarwal ) ) 6. Omprakash Bhajanlal Agarwal ) ) All of Bombay Indian Inhabitants ) residing at 67, Bhajan Bhavan, ) Block No.14, Jyotiba Phule Road, ) Naigaum, Dadar, Bombay-400 014. )..Defendants. Mr.M.H.A.Sayyid for plaintiffs. Mr.C.N.Gole for defendant Nos. 3 to 6. CORAM: A.M.KHANWILKAR,J CORAM: A.M.KHANWILKAR,J CORAM: A.M.KHANWILKAR,J DATE : JANUARY 5, 2009. DATE : JANUARY 5, 2009. DATE : JANUARY 5, 2009. JUDGMENT : JUDGMENT : JUDGMENT : 1. The Plaintiffs claiming to be the Trustees of 2 the Public Trust registered under the Provisions of Bombay Public Trust Act, 1950 bearing No.B-892(B) of 1967 known as Mrs.Shirin Banoo, wife of Khan Bahadur Haji Hasanali P. Ebrahim Trust have filed the present Suit for relief of specific performance of the Agreement dated 1st July, 1970, as varied in the correspondence between the parties and Charity Commissioner and for direction against the Defendants to pay the balance of the agreement price. The Plaintiffs have claimed for further reliefs to which reference will be made at the appropriate stage. 2. The case made out in the plaint is that the first Plaintiff has been the Chairman of the said Public Trust at all material times. The Original Defendant had agreed to purchase a plot of land belonging to the Plaintiffs bearing No.68, situated at Naigaon estate, more particularly described in Exh.‘A’ to the Plaint, admeasuring 740 sq.yards or 618 sq.mtrs. under an agreement dated 1st July, 1970. 3. It is stated that on or about 17th December, 1942 one Shirin Banoo w/o Khan Bahadur Haji Hasanali P. Ebrahim had applied to the Municipal Commissioner for Greater Bombay for entering into an Agreement in relation to the building lease of the Plot No.68 3 situated at Naigaon Estate as described in Exh.‘A’ to the plaint. On or about 12th March, 1943, Municipal Corporation,Greater Bombay accepted the offer of said Shirin Banoo for the building lease of the said plot. Thereafter, she paid usual deposit and also the commutation deposit to the Corporation. Consequent to which the Corporation gave possession of the suit plot to said Shirin Banoo on or about 18th August, 1944. It is stated that at that time, there were some unauthorised structure standing on the suit plot. It is then stated that the said Shirin Banoo created a Trust by settling sum of Rs.50,000/- and appointed Trustees thereof by a Deed dated 15th October, 1944 which is registered under S.No.5075 of Book No.IV of the Registrar of Assurance of Bombay. As unauthorised huts and/or structures were standing in the suit plot and said Shirin Banoo was not in a position to get the same removed, in or about May, 1951, she transferred her right, title and interest in the said plot to the Trustees of the said Trust with the consent of the Corporation. Thereafter, the names of the then Trustees were entered in the Municipal record as lessees of the said plot and the right, title and interest of the said Shirin Banoo in relation to the suit plot vested in the Trustees of the said Trust. It is then stated that in due course, some of the Trustees died and some have 4 resigned and that the Plaintiffs became the Trustees from 9th January, 1964 and are continuing to be so. It is further stated that the suit plot was reserved by the Corporation for a public urinal. As a result, it could not be developed. 4. It is the case of the Plaintiffs that in or about 1958, the Original Defendant with full knowledge of the encroachment as well as reservation on the suit plot approached the Trustees with a request to sell the said plot to him on getting the reservation removed and/or cancelled. The Trustees informed the Original Defendant that they would consider the request upon the reservation being removed or cancelled. Thereafter, efforts were made for removing and/or cancellation of the reservation, which was eventually removed and cancelled. It is stated that the original Defendant had informed the then Trustees that he has engaged an Architect and had incurred expenses for removal of the reservation. Attempts were made for removal of encroachment. The original Defendant requested the Trustees to give him Power of Attorney authorising him to take steps to get the encroachment removed. It is stated that as per the negotiations between the parties, the then Trustees had executed Power of Attorney in favour of the original Defendant on or about 30th May, 1967 for 5 that purpose. It is stated that on or about 3rd October, 1967, Agreement to sell was entered into between the original Defendant and the Plaintiffs for sale of the rights of the Plaintiffs as Trustees in the suit plot, which the original Defendant agreed to purchase the same at the price of Rs.125/- per sq.yard. The original Defendant also paid a sum of Rs.5,000/- as earnest money before execution of the said agreement. It is stated that since the original Defendant could not remove the encroachment on the suit plot till 1970, no application for sanction of the Charity Commissioner could be made. 5. Thereafter, on or about 1st July, 1970 fresh agreement for sale was entered into between the Trustees and the original Defendant for the sale of the Trustees’ rights, title and interest in the suit plot on terms and conditions stated therein. Under the said Agreement, it is asserted that the Plaintiffs authorised the original Defendant to get plans of the building, to be constructed by the original Defendant on the suit plot, sanctioned by the Municipal Corporation. It is further stated that one Chakkiwala was occupying portion of the suit plot and it was agreed between the parties that he would be allowed to continue there till alternative accommodation was provided to him. It is then stated 6 that the above said agreement dated 1st July, 1970 was expressly made subject to the sanction of the Charity Commissioner. In that, it was made clear that if no sanction of the Charity Commissioner was obtained within the specified time, then in that event the said Agreement would be treated as null and void and the Plaintiffs would refund the earnest money of Rs.5,000/- to the original Defendant. It is further stated that under the said Agreement, sale was to be completed within a period of one year from the date of the agreement, which period was subsequently extended from time to time and ultimately on or about 7th March, 1974 upto 5 years therefrom. It is stated that sanction obtained from the Charity Commissioner was also extended. Plaintiffs have then referred to valuation report obtained from M/s. V.M.Aga and Co. in relation to the market value of the land as of March, 1972. The said report mentions the market value of the suit plot as on 31st March, 1972 at the rate of 300/- per sq. yard. and the total value of the plot at Rs.2,22,000/-. The Plaintiffs have then referred to the fact that agreement dated 1st December, 1972 was entered with one tenant(Smt.Jamanabai daughter of Mohanlal Chakkiwalla) keeping in mind that plans for construction of building on the suit plot were submitted to the Corporation. As per the said 7 agreement, alternative accommodation was to be provided to the said tenant. In paragraph-8 of the plaint, reference is made to the meeting in the office of M/s. N.P.Samant and Company between the business consultants of the original Defendant and the Trustees and in the said meeting issue regarding preparing agreement to sell executed between the Plaintiffs as Trustees and the original Defendant was discussed, which was noted in the letter dated 11th January, 1973. Thereafter, Defendant’s consultant addressed letter to the Managing Trustees dated 21st February, 1973, enclosing draft, to be sent to the Charity Commissioner for obtaining sanction of the sale of the said plot of land. The original Defendant’s consultant requested the Plaintiffs to complete all formalities and forward the papers to the Charity Commissioner. It is stated that on 23rd January, 1974 Plaintiffs submitted application to the Charity Commissioner for permission under section 36 of the Bombay Public Trust Act for sale of the Plaintiffs’ right, title and interest in favour of original Defendant at the price of Rs.125/- per sq. yard. It is stated that the Plaintiffs and the original Defendant appeared in the proceedings before the Charity Commissioner, who in turn issued order dated 17th May, 1974 sanctioning sale of the Plaintiffs’ right, title and interest in the suit 8 property under section 36 of the Act for the price of Rs.1,67,500/- consisting of Rs.92,500/- at the rate of Rs.125/- per sq.yard and a further sum of Rs.75,000/- in addition. The Charity Commissioner directed the original Defendant to pay the balance of Rs.92,500/- plus Rs.75,000 aggregating to Rs.167,500/- after giving credit for Rs.10,000/- paid as earnest money within six months from the date of the said order. It is stated that the original Defendant accepted the said order and agreed to abide by the same. 6. It is then stated by the Plaintiffs that by the letter dated 17th June, 1974, the Plaintiffs informed the Municipal Corporation of the intended sale and had requested the Corporation to sanction the proposed sale by giving licence to assign right, title and interest of the suit plot to the original Defendant. It is the case of the Plaintiffs that the original Defendant also supported the said Application for grant of licence. The Municipal Corporation by communication dated 15th July, 1974 granted necessary licence and consented to the assignment by the Trustees of the said Trust to the original Defendant and or his nominees of the Plaintiffs’ right, title and interest and benefit under the said agreement of lease between the Trust 9 and Municipal Corporation, with a right to take up the lease to be granted according to the terms and conditions of the said agreement. Since the final documents could not be completed, the Plaintiffs applied for extension of time for six months. The Plaintiffs by their letter dated 10th October, 1974 addressed to the Charity Commissioner requested for extension of time for six months for completion of sale as the title deeds were not available. 7. In paragraph-11 of the plaint, it is stated that the Plaintiffs repeatedly called upon the original Defendant to complete the same, but the original Defendant asked for extension of time on various grounds. It is stated that the original Defendant also approached the Charity Commissioner for extension of time for payment on various grounds. It is stated that inspite of such indulgence, the original Defendant failed and neglected to pay net balance of the price and complete the sale inspite of several reminders of the Plaintiffs and the Charity Commissioner. In this background, third Plaintiff on or before about 6th August, 1975 moved the Charity Commissioner for revocation of the sanction to the proposed sale. The Charity Commissioner issued notice to the original Defendant, who filed statement wherein expressed his willingness to complete the 10 sale and to deposit with the Charity Commissioner a sum of Rs.50,000/- forthwith towards payment of balance agreement price. The Plaintiffs assert that the original Defendant however, avoided to complete the sale on one pretext or the other. It is then stated that the Joint Charity Commissioner by Order dated 3rd April, 1976 rejected the application of the third Plaintiff for revocation of the said sanction. 8. In paragraph-12 of the plaint, it is stated that inspite of best efforts made by the Plaintiffs, the original Defendant has not completed the sale. For that reason, the Deputy Joint Commissioner issued notice on 6th October, 1976 calling upon the Plaintiffs as Trustees to show-cause why the sale was not completed and whey the Plaintiffs should not be held responsible for the loss. The Plaintiffs assert that the original Defendant submitted his statement on 20th October, 1976 to the Charity Commissioner and enclosed a cheque for Rs.50,000/- towards balance agreement price. It is stated that the original Defendant asserted that he had filed statement with the Competent Authority under section 27 of the Urban Land (Ceiling and Regulation) Act, 1976 and forwarded copy thereof to the Plaintiffs. The Plaintiffs also assert that in the meeting held before the Deputy Charity Commissioner on 29th October, 1976, the 11 original Defendant agreed and undertook to pay the entire balance of Rs.1,67,500/- on 15th November, 1976 by cheque in favour of the Trustees. On 15th November, 1976, the original Defendant applied for further time for a week to the Deputy Charity Commissioner, who deferred the meeting till 22nd November, 1976 to enable the original Defendant to pay the balance agreement price. It is stated that in the meeting before the Deputy Charity Commissioner held on 6th December, 1976, the original Defendant gave a cheque for Rs.One Lakh, but falsely alleged for the first time that sum of Rs.43,649.20ps. was due and payable to him by the Trust. The Plaintiffs have then referred to the meeting, which took place before the Deputy Charity Commissioner on 7th December, 1976 and on 22nd December, 1976 to enable the original Defendant to pay the balance agreement price and complete the sale. According to the Plaintiffs, the original Defendant everytime asked for time to complete the sale but failed to pay the balance purchase price and to complete the same. The Plaintiffs assert that meeting took place on 5th January, 1977, 13th January, 1977 and 24th January, 1977 before the Deputy Charity Commissioner to enable the original Defendant to pay the balance of the agreement price and to complete the sale. 12 9. In paragraph-14 of the plaint, the Plaintiffs have referred to the letter dated 4th January, 1977 sent by the third Plaintiff through the Advocate inquiring from the Solicitors of the said trust whether the conveyance was ready and placing on record that he was ready and willing to execute the said conveyance. It is then stated that in the meeting held on 5th January, 1977 before the Charity Commissioner, the original Defendant requested for further time to make payment, which was granted till 13th January, 1977; but on 13th January, 1977, the meeting was adjourned till 24th January, 1977 at the request of the original Defendant on which date the Charity Commissioner expressed dissatisfaction about time taken to complete the sale and later on issued notice to the Plaintiffs on 2nd March, 1977. 10. In paragraph-15 of the Plaint, it is stated that by advocate’s letter dated 4th March, 1977, the Plaintiffs called upon the original Defendant to pay the balance of the agreement price and complete the sale, failing which the Plaintiffs would charge interest at the prevailing market rate on the balance agreement price. The Plaintiffs then assert that the original Defendant by son’s letter dated 9th March, 1977 gave a vague reply. The Plaintiffs then assert that by their advocate’s letter dated 19th March, 13 1977 have reminded the original Defendant that he had taken draft conveyance from the Plaintiffs’ advocate and that the original Defendant was asked to sign the application under section 27 of the Urban Land Ceiling Act. Besides, original Defendant was called upon to produce conveyance. Copy of the said letter was sent to the Deputy Charity Commissioner. It is then stated that by letter dated 10th April, 1977, the original Defendant informed the Plaintiffs advocate that draft conveyance was under scrutiny and would be returned as early as possible. It is the case of the Plaintiffs that the original Defendant made several other queries in order to delay the completion of sale. 11. In paragraph-16 of the plaint, reference is made to the notice issued by the Charity Commissioner dated 4th May, 1977 calling upon the Plaintiffs to explain about the delay in completion of sale and for the alleged loss caused to the Trust. It is then stated that the cheque given by the Defendant was not encashed and in due course had lapsed on 20th May, 1977. However, the original Defendant did not send the balance of the purchase price nor returned the approved draft of the conveyance, but kept on giving evasive reply to the Plaintiffs. On the other hand, the original Defendant asked for time from the 14 Charity Commissioner with the dishonest intention of getting time and delaying completion of sale. The Plaintiffs have asserted that inspite of several extensions given from time to time, the original Defendant failed to complete the agreement and failed to pay the balance agreement price. It is in this backdrop, the Plaintiffs have filed the present Suit on 21st December, 1978. During the pendency of the suit, the original Defendant died and the present Defendants have been brought on record as his heirs and legal representatives. In the context of this development, the plaint was amended by inserting paragraph-16A as well as corresponding amendment to prayer clause was made. Prayer clauses in the plaint read thus: "(a) That the Defendants be ordered and decreed to specifically perform the said agreement for sale dated 1st July, 1970 as varied in the correspondence between the parties and the Charity Commissioner, referred to in the Plaint, and the Defendants may be ordered to pay the balance of the purchase price as per particulars annexed hereto and marked Ex.‘E’ to the Plaint; out of the estate and assets of the deceased original Defendant in the hands of the Defendants. (b) That in the event of this Honourable Court decreeing the specific performance as claimed in prayer (a) above, then in that event, the Defendants be ordered and decreed to pay to the Plaintiffs the amount of Rs.2,08,189/- with further interest thereon at the rate of 18% p.a. as per particulars hereto annexed and marked Ex.E’ to the plaint: out of the estate and assets of the 15 said deceased in the hands of the Defendants. (c)(i) In the event of this Honourable Court decreeing specific performance and the Defendant not paying the purchase price, as mentioned in prayer (b) above, then in that event, it may be declared that the Plaintiffs have a first Statutory charge on the property described in Ex.‘A’ to the Plaint, together with the buildings and the structures standing thereon, including those constructed by the original Defendant, in repayment of the amount mentioned in prayer (b) above; (c)(ii) That in default of payment of the amount mentioned in prayer (c)(i) above, within such time that may be fixed by this Honourable Court, in that behalf for the purposes of redemption of the said property described i Ex.‘A’ to the Plaint, including the buildings and structures constructed thereon, including those constructed by the original Defendant and the original Defendant’s and the Defendants interest therein be sold by and under the directions of this Hon’ble Court in realisation of the Plaintiffs’ statutory first charge and the net sale-proceeds thereof be paid to the Plaintiffs in payment of the Plaintiffs’ claim towards the purchase price and interest in respect of the property described in Ex.‘A’ to the Plaint; (c)(iii) In the event of their being any deficiency liberty may be reserved to the Plaintiffs to apply for a personal decree against the Defendants for the amount of such deficiency to the extent of the assets belonging to the said estate in their hands. (c)(iv) In the event of this Hon’ble High Court not decreeing the specific performance, then in that event, it may be declared that the original Defendant has committed breach of the said Agreement mentioned in prayer (a) above; (d) That the Defendants may be ordered to hand over vacant and peaceful possession of the property described in Ex.‘A’ to the Plaint after removing the structures constructed thereon by the original Defendant within such time as may be ordered by this 16 Honourable Court and in the event of the Defendants not removing the structures therein with the structures thereon; (e) That the Defendants may be ordered to pay to the Plaintiffs damages for breach of the contract in the sum of Rs.50,689/- as per particulars hereto annexed and marked Ex.‘E’ to the Plaint with further interest thereon at the rate of 18% p.a. from the date of the suit till payment or realisation; out of the assets of estate of the original defendant in the hands of Defendant Nos.1 to 6. (f) That pending the hearing and final disposal of the suit the Defendants, their servants and agents and Contractors should be restrained by an order an injunction of this Honourable Court from making any constructions or putting up any building on the said plot of land, viz. Plot No.68 described in Ex.‘A’ hereto and/or from using the said plot of land and/or the structures constructed by the original defendant or giving or parting with possession of the said land or the building or the structures thereon constructed by him or any part thereof to any one else; (g) That pending the hearing and final disposal of the suit the Defendants, their servants agents and Contractors be restrained by an order and injunction of this Honourable High Court from in any manner dealing with or disposing of or encumbering, charging, transferring, alienating the said property described fully in Ex.‘A’ to the Plaint and the structures standing thereon or any part thereof and also from recovering any rent/or income from the tenants or occupiers of the buildings and/or structures or parting with possession of the said property or any part thereof or the said buildings or structures or any part thereof; (h) That pending the hearing and final disposal of the suit Court Receiver High Court, Bombay or some other fit and proper person be appointed as Receiver of the suit property described in Ex.‘A’ to the Plaint and also of the original Defendant on the said plot No.68, with all powers under Order 40, Rule 1 of the Code of Civil Procedure and 17 also with a power to take possession thereof and to recover rents and profits and income thereof; (i) Ad-interim reliefs in terms of prayers (f), (g) and (h) be granted to the Plaintiffs; (j) The Defendants may be ordered to pay to the Plaintiffs the costs of this suit; out of the assets of the estate of the original Defendant in their hands. (k) The Honourable Court be pleased to grant such other and further reliefs as this Honourable Court may deem fit and proper in the facts and circumstances of this case;" 12. The original Defendant during his life time had filed Written Statement. Significantly, the fact that agreement was executed on 1st July, 1970 has been admitted by the original Defendant. The terms and conditions of the said agreement have been adverted to in paragraph-3(g) and in particular 3(h) of the Written Statement. The original Defendant in the Written Statement has not only admitted existence of the agreement at Exh. B to the plaint, but also the contents thereof. However, the case of the original Defendant is that it is the Plaintiffs who failed and neglected to complete the sale within the specified time or for that matter extended time. That was on account of differences between the Plaintiffs interse. According to the