1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO. 338 OF 2008 IN NOTICE OF MOTION NO. 2199 OF 2007 IN SUIT NO. 1610 OF 2007 1) Mrs Kamal Kumari Malhotra ) Indian Inhabitant, residing at 26 ) Jawharlal Nehru Road, Flat No. 17 ) and 21, 3rd Floor, Kolkatta 700 087. ) 2) Vipen Malhotra ) Indian Inhabitant, residing at 26 ) Jawharlal Nehru Road, Flat No. 17 ) and 21, 3rd Floor, Kolkatta 700 087. ) 3) Ashok Malhotra ) residing at 50, Buckle Drive ) Winnipeg, R3R2LR, Canada ) and presently residing in India ) residing at 4, Mehra Bhavan, 14A Road ) Khar (West), Mumbai 400 052. ).. APPELLANTS (Org. Plaintiffs) VERSUS Praveen Malhotra ) Indian Inhabitant, residing at 29 ) Hanuman Sharan Co-operative Housing ) Society Ltd., Bomanji Petit Road ) Bombay 400 036. ).. RESPONDENT (Org. Defendant) Mr Fredun E Devitre, Senior Advocate, with Mr I M Chagla, Senior 2 Advocate and Mr Shiraz Rustomjee i/b Federal & Rashmikant for the Appellants. Mr D D Madon, Senior Advocate, with Mr H N Thakore and Ms Jyoti Ghag i/b Thakore Jariwala and Associates for the Respondent. CORAM : SWATANTER KUMAR, C.J. AND S. A. BOBDE, J. JUDGMENT RESERVED ON : 11TH NOVEMBER 2008 JUDGMENT PRONOUNCED ON : 27TH NOVEMBER 2008 JUDGMENT (PER SWATANTER KUMAR, C.J.) Husband of Appellant No.1 and father of Appellant Nos.2 and 3 late Govardhandas Malhotra acquired interest and title in flat ad-measuring approximately 717 sq. ft. (built up area) being Flat No. 29, 6th Floor, Bomanji Petit Road, Mumbai 400036 in 1960. According to Appellant No.3, he was travelling frequently and after his visit to Canada, he returned in 1994 and learnt that the Respondent in the Appeal, his other brother, was making attempts to get the said property transferred in his sole name on the basis of the Gift Deed dated 24th February 1994 from Rekha Malhotra by making some misrepresentation. When the correct facts were pointed out, Rekha Malhotra cancelled and revoked the Gift Deed dated 24th February 3 1994 by a writing dated 17th June 1994. 2. There have been some disputes and differences between the parties in relation to the title of the said property. Eventually, a Deed of Family Settlement was executed between the parties on 27th August 1995 and as per the said Settlement, the group of sisters gave up their claim in the estate of the deceased on the basis of their having regard to the provisions made during the life time of their father. It was also agreed that Praveen Malhotra would have 50% share in the sale proceeds of the flat while Ashok Malhotra, Vipen Malhotra and Kamal Kumari Malhotra, the Appellants herein, would have collectively 50% ownership rights. The minimum consideration agreed between the parties was fixed at Rs. 1.20 crores as the minimum sale price. It appears that the parties made various attempts to sell the flat but the same could not be sold because of default of one or the other. Whereafter on 15th September 2006, it was decided to execute a Supplementary Family Agreement between the parties and it was agreed that the Appellants would relinquish their 50% share in the said flat in favour of the Respondent on his paying to 4 them Rs.28 lakhs on or before 15th March 2007, which date was agreed to be essence of the contract and the rest of the terms of the earlier Settlement were accepted to continue. The said Supplementary Agreement was entered into between the parties on 15th January 2007. 3. According to the Appellants, the Defendant did not perform their part of the contract by the cut off date and as such the Settlement came to an end and the Family Settlement dated 27th August 1995 stood revived on termination of the Supplementary Agreement. As such they have 50% right in the property and are entitled to receive the same after sale of the property. Thus, the Appellants filed a Suit for declaration that the Agreement dated 27th August 2005 was binding, valid and subsisting and the property should be sold in terms of that Agreement and the sale proceeds be divided in terms thereof. They also prayed that the Respondent be restrained from continuing to use the said property without paying any appropriate charges and/or depositing a sum of Rs.60 lakhs or such other amount as the Court may direct. They also made a prayer for 5 appointment of a Valuer to effect the valuation report for the market value of the said property. 4. Notice of Motion No. 2199 of 2007 was taken out by the Appellants praying for appointment of Receiver as well as for an order of injunction restraining the Defendant from alienating, encumbering, parting with possession of the suit flat. This Notice of Motion was contested by the Respondent. According to him, he had not committed any breach of the terms of the Agreement and in fact it were the Appellants who were responsible for causing undue delay in compliance with the terms and conditions of the contract. He further stated that he had called upon the Appellants to get the flat transferred in his name in accordance with the law in the records of the Society and then alone his liability to pay the sum of Rs.28 lakhs in terms of the Supplementary Agreement arose. 5. It appears from the record that there has been correspondence between the parties in relation to completion of all the formalities. There is no dispute to the fact that parties executed a 6 Supplementary Agreement to the Deed of Family Agreement dated 27th August 2005 on 15th January 2007. Vide Clause 2 of the said Supplementary Agreement, the earlier condition of the sale of the property was modified as follows :- “2. The parties hereto confirm that while the remaining terms of the Deed of Family Agreement remain valid and binding on the parties, the parties of the 1st, 3rd and 4th parts have at the request of the party of the second part and after mutual discussions agreed that the term requiring sale of the said flat would be modified so that the 50 per cent rights of the parties of the first part, third part and fourth part in the said flat shall be/stand released in favour of the party of the second part on the party of the second part on payment to the parties of the 1st, 3rd and 4th parts of an aggregate amount of Rs.28 lakhs on or before 15th March, 2007 (time being of the essence) with the end and intent that the party of the second part shall on the payment aforesaid be the sole owner of the said flat, without any rights or claims of the parties of the first, third and fourth part in the said flat.” It further provided that a sum of Rs.1,50,000/- had been paid at the time of execution of the said Agreement and remaining sum of Rs.26.50 lakhs were to be paid on or before 15th March 2007, time being the essence of the contract. In terms of Clause 5 of the 7 Supplementary Deed, the Appellants were to fully co-operate in releasing their 50% rights in the said flat in favour of the Respondent and were to sign all such documents as may be required in this behalf. As it appears on the plain reading of the Supplementary Deed, the Appellants were to release in favour of the Respondent their share in the part of the property. On 15th January 2007, the Respondent wrote to the Appellants, which is before the cut off date, that it had been agreed between the parties that the documents stated in paragraph 2 of the said letter are to be executed and kept escrow with the Respondent. He documents related to Deed of Release, Power of Attorney and two different Power of Attorneys and it was also stated in the said letter that if there was any default in the payment on or before the due date, the documents would be returned. The Respondent also required the Appellants to confirm the contents of the letters. There is also no dispute that this letter was confirmed duly signed by the parties concerned. Thereafter, there is no correspondence on record till 5th March 2007. It was not disputed before us that the documents stated in paragraph 2 of the said letter were executed and were placed in escrow with the 8 Respondent/Attorney. However, on 5th March 2007, the Respondent wrote to the Appellants that all the parties being beneficiary have to obtain the membership of the Co-operative Housing Society and the documents of declaration of membership application have to be signed. The letter further stated as follows :- “So in case you do not fulfill all the requirements before 15.03.2007, I will not be able to pay you the balance amount due on that day. Then it will be your responsibility for not completing the deal on or before 15.03.2007 and you can not forfeit my Earnest Money paid to your clients that please be noted.” This letter was responded to by the Appellants vide their letter dated 12th March 2007 wherein they took up the stand that the documents had already been executed and have been kept escrow so that on payment of balance amount of Rs.26.50 lakhs the same should be delivered to the Respondent and the question of signing any other documents does not arise. The Respondent replied to the letter dated 12th March 2007 vide letter dated 16th March 2007, wherein he reiterated the averments made in the earlier letter dated 5th March 2007 and stated that in order to effectively and completely transfer the 9 rights, title and interest, a final agreement may be executed between Rekha Malhotra as the Vendor, the Appellants as Confirming Parties and the Respondent as Purchaser. It may be noticed that this letter was written after the expiry of the date specified in the Agreement that was 15th March 2007. 6. At this stage of the proceedings, while dealing with interlocutory application, the Court is not called upon to determine the merits of the case and/or record findings so as to put an end to the issues involved in the Suit. The parties still have to lead evidence and prove their respective case. The Court is only concerned with prima facie view which it has to form on the basis of the pleadings and documents and the law applicable to the facts and circumstances of a given case. A Division Bench of this Court in a recent judgment in the case of M/s Avdel Tools & Services vs M/s Trufit Fasteners Private Limited, Appeal No.324 of 2008, delivered on 16th October 2008 held as under :- “8. It is a settled principle of law that the Court at this stage of the proceedings while considering 10 application for interlocutory orders is to form a prima facie view and while considering various aspects for grant or decline of injunction the Court has to balance the enquiry between the parties. In a Suit for specific performance, the Court is vested with wide discretionary powers in terms of Section 20 of the Specific Relief Act. This discretion has to be exercised in accordance with the settled precepts governing the subject and cannot be exercised arbitrarily. This principle would also be of help to the Court while deciding an interlocutory application for grant of injunction. No doubt readiness and willingness of the purchaser is a condition precedent to the grant of relief at final stage or even for that matter at interlocutory stage. Readiness and willingness must exist at all relevant times. But `readiness and willingness' is a term which has to be construed with certain clarity and has to be given a meaning relatable to the facts and circumstances of a given case. It has been repeatedly held by the Courts that readiness and willingness essentially does not mean exhibition of money by the purchaser. This attains significance and relevance for the reason that grant or refusal of injunction in a Suit for specific performance would essentially depend upon prima facie satisfaction of the ingredients essential for decree for specific performance.” 7. The learned Single Judge while dealing with Notice of Motion No. 2199 of 2007 observed that though Clause 2 of the Supplementary Agreement does mention that time is the essence of 11 the contract, the date indicated was 15th March 2007 by which the entire payment of Rs.28 lakhs was to be made. However, the Court held that on payment of a large sum of money, the Respondent was entitled to insist that he got a perfect title. The parties are bound by the terms and conditions of the original Agreement dated 27th August 1995 as well as the Supplementary Agreement dated 15th January 2007, they were called upon to discharge their obligations in terms of the Agreement. The letter dated 15th January 2007 vide which the Respondent in the Appeal had called upon the Appellants to sign the documents and keep escrow such documents which would be delivered at the time of payment, indicates the clear intention of the parties to complete the transaction within the specified time. Right from the execution of the Supplementary Agreement and even after writing the letter dated 15th January 2007, the Respondent never called upon the Appellants to sign any other documents in addition to the documents which were signed and escrowed as required by the Respondent. The parties exchanged certain letters in the month of March 2007 and there is no justification on record as to why the Respondent in Appeal did not persist with such request prior to the 12 letter dated 15th January 2007. From the language of the Agreement, it appears that the Appellants in the Appeal were required to release their share in favour of the Respondent and that was their principal obligation. The document of release as well as the Power of Attorneys had been executed and duly delivered to the Respondent/their Attorney. It is apparent from the record and in fact there is no dispute that the payment of Rs.26.50 lakhs was neither offered nor tendered on or about 15th March 2007. In these circumstances, the learned Single Judge granted the injunction, however, declined to appoint the Receiver and direct the Respondent in the Appeal to pay any amount on account of occupation and use of the property in question. 8. It can hardly be disputed that there is breach of the Supplementary Agreement as, admittedly, the amount of Rs.26.50 lakhs has not been tendered on or before 15th March 2007. According to the Respondent, further documents were to be executed, while according to the Appellants all documents had been executed and delivered in terms of the Agreement between the parties. This was so 13 confirmed vide letter dated 15th January 2007 and thereafter no objection was raised by the Respondent till issuance of letter dated 5th March 2007, a date which was quite close to the specified date i.e. 15th March 2007. This conduct of the Respondent does tilt equities in favour of the Appellants. The Court has to balance the equities between the parties while dealing with an application for grant of injunction/appointment of Receiver. The attempt of the Court would be to ensure that none of the parties suffer such prejudice which cannot be retrieved at a subsequent stage. The Court has to ensure the protection of the subject matter of the Suit as well as interest of the parties in relation to the suit property. Appointment of Receiver is not a routine matter. The Court has to exercise its discretion under Order 40 Rule 1 of the Code of Civil Procedure in accordance with the settled principles of law. The Appellants essentially must show that the property is likely to be wasted or an irreparable loss would be caused to the parties if the Receiver is not appointed to take charge or possession of the property in question. It is true that the appointment of Receiver is one of the harshest remedies which the law provides for enforcement of rights. But if it is shown that person 14 seeking an appointment of Receiver is exposed to manifest peril, a Receiver has to be appointed. The whole purpose of the Court taking possession through Receiver appointed by it is to protect the property for the benefit of the ultimate successful party. (Refer to Mulla – The Code of Civil Procedure – Seventeenth Edition by B M Prasad, page 352). 9. Unlike a mortgage Suit, the present Suit is one for declaration, injunction land consequential reliefs. The Agreement between the parties is admitted. Its consequences and the relief to which parties are entitled to is to be determined during the regular trial. There is no patent apprehension that the property in question is likely to be wasted and interest of the parties cannot be maintained. The facts and circumstances of the present case do not justify the appointment of a Receiver as status of the property has been kept in tact for number of years as the original Family Settlement between the parties was executed on 27th August 2005 while the Supplementary Agreement was executed on 15th January 2007. 15 There is not even an averment that the Respondent is proposing to dispose of the property and is intending to evade the jurisdiction of the Court which ultimately would frustrate the decree, if passed, in favour of the Appellant. In the case of S. Saleema Bi vs S Pyari Begum and another, JT 2000 (7) SC 329, the Supreme Court held that Receiver can only be appointed when it is just and convenient and also when there is a prima facie case in favour of the Plaintiff and the Respondent and the case squarely satisfies the ingredients of Order 40 of the Code of Civil Procedure. 10. We are of the considered view that the order passed by the learned Single Judge declining appointment of Receiver does not suffer from error of law or any other patent error which would justify interference of this Court. The Court has exercised its discretion which is in accordance with the settled principles. However, the order of injunction passed by the learned Single Judge needs to be modified to some extent. If the Agreement dated 15th January 2007 is treated to be subsisting and binding on the parties and it is read in conjunction with the letter dated 15th January 2007, the breach 16 appears to be on the part of the Respondent and if there is some valid reason in favour of the Respondent in not making the payment on or before 15th March 2007, which is accepted by the Court, then the Supplementary Agreement dated 15th January 2007 will stand revived and the parties would be bound by the terms of the Agreement where the minimum consideration has been provided to be Rs. 1.50 lakhs thus rendering the share of the Appellants as Rs.60 lakhs. The property admittedly is in occupation and user of the Respondent. 50% share of the Appellants is not denied and in fact cannot be denied. In these circumstances, it will be unfair to deprive the Appellants of appropriate protection during the interregnum period till decision of the Suit. Any order to balance the equities between the parties and to ensure the protection of their rights particularly keeping in view the fact that, according to the Appellants, the value of the property has tremendously increased in the meanwhile and thus their 50% interest ought to be protected in addition to payment of some money on account of use of the property by the Respondent. In these circumstances, it will be just, fair and equitable and would protect the interest of the parties fully if the injunction granted by the learned 17 Single Judge is modified to the extent that the Respondent in the Appeal is directed to deposit Rs.60 lakhs (being the 50% of the minimum price of the property agreed between the parties) within one week from today. This amount, if not withdrawn by the Appellants within four weeks from the date of deposit, the Prothonotary & Senior Master/Registrar, Original Side, shall invest the said amount in a Fixed Deposit of a Nationalised Bank. This deposit would also take care that if ultimately the Court decrees any amount in favour of the Appellants and against the Respondent for use and occupation of the property for any period as prayed by the Appellants in the Suit. 11. The Appeal is thus partially accepted and the order of injunction passed by the learned Single Judge dated 13th June 2008 is modified to the limited extent indicated above while declining to appoint the Receiver. In the circumstances of the case, there shall be no order as to costs. CHIEF JUSTICE 18 S. A. BOBDE, J. july08/judgment/app338-08final.sxw