1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION Notice of Motion No.1670 of 2007 IN Suit No.3808 of 2003 Jayshree Vinod Shah .. .. Plaintiff v/s. M/s.Shanil Builders & ors. .. Defendants WITH Notice of Motion No.1671 of 2007 IN Suit No.3807 of 2003 Chetna Jayesh Morakhia .. .. Plaintiff v/s. M/s.Shanil Builders & ors. .. Defendants Mr.Rajiv Narula i/by S.K. Jain for Plaintiffs. Mr.K. Kharawara i/by R.K. Associates for Defendant Nos.5 to 10. Mr.S.S. Kulkarni i/by V.S. Bheskamkar for Defendant Nos.12 to 14. ---- CORAM : SMT.ROSHAN DALVI, J. Dated : 11 th June, 2008 P.C. : 1. There are three Plaintiffs in Suit No.3807 of 2003 and one Plaintiff in Suit No.3808 of 2003. They shall be referred to as 2 the “Plaintiffs”. The Plaintiffs claim to be the purchaser under registered Agreements dated 6.6.2002, signed by and between the Plaintiffs and the partners of Defendant No.1, who were given a contract for construction of a building by Defendants 4 to 10, who own the land below the building (“the owners”). The owners are retired Armymen. They required a plot of land allotted to them to be constructed upon. They entered into an Agreement dated 7.3.2000 and later an Agreement dated 20.10.2000 with Defendants 1 to 3, builders for development of their property (“the developers”). 2. Under the said Agreement, the consideration for the development was payable in kind. It was agreed between the parties that the developers would be entitled to 45% of the flats constructed on the suit property and the owners would be given 55% of the flats for the residential use of each of them. The owners were to have a first preference in the selection of the flats and premises under Clause- 6 of the said Agreement. The developers were not to hand over possession of the 45% flats which would come to their share unless and until the owners were put in possession of 55% of the total constructed area under Clause 19 of the said Agreement. Further the owners were to have a first lien on the flats of the developers which would continue until they obtain 3 possession of their flats under Clause 20 of the said Agreement . 3. The Plaintiffs, as the flat purchasers, have obtained rights under the Agreements entered into by them which are subject to the Agreements entered into between the owners and the developers. 4. Under their Agreements for purchase of their respective flats, the Agreements between the owners and the developers have been specifically recited as valid, subsisting and binding upon the parties. It is further recited that the Plaintiffs have taken inspection of all the documents of title. Needless to mention that it means and implies the Agreement dated 20.10.2000, under which the developer could sell 45% of the constructed area only after the owners receive their 55% share. Despite seeing such documents of title, it is seen that the Plaintiffs have neither made inquiries nor acted upon any inquiry if made, into the 55% share of the owners or entitlement of the developers and their consequent right to transfer by way of such Agreements any of the flats in the suit property to the Plaintiffs. 5. It is the case of the Plaintiffs that they were put in physical 4 possession of the flats purchased by them on the date of the transfer itself under the possession letters relied upon by the Plaintiffs dated 6.6.2002. 6. It is sought to be shown by the owners that the Plaintiffs could not have been put in possession as claimed by them as the building itself was not constructed and the flats could not be occupied. Under Clause 9(a) of the Agreement, the Plaintiffs were to be put in possession in October 2002. The term in the Agreement relating to the giving of possession shows the date of possession being October 2002 being mentioned in ink. The letters of possession, if any, are, therefore, directly contradictory to the terms of the Agreement specifically entered into between the parties thereto. 7. Each of the Plaintiffs has paid Rs.2 Lakhs or less as consideration for the suit flats by cheques. 8. The Plaintiffs' Advocate has produced the original Agreements as well as the letters of possession. The receipt clause in the Agreements of each of the Plaintiffs shows cheque numbers under which the payments were made. Two of the cheque numbers of two of the four Plaintiffs in the above two Suits are shown to be the same drawn on the 5 same Bank. Inspection of the Bank Accounts is not furnished by the Plaintiffs to the Advocate of the owners, despite notice. 9. It is the owners' contention that the Plaintiffs are the nominees of the builders and are put up by the builders to prejudice the rights of the owners. They contend that the Agreements have been executed for less than adequate consideration. Though between the same parties inadequacy of consideration may not invalidate the Agreement, to consider the rights of the owners in the Suit, the adequacy or inadequacy of the consideration paid would have to be prima facie seen to understand the bona fides, if any, of the Plaintiffs' case. It may be remembered that the consideration of Rs.2 Lakhs is paid for a flat admeasuring 550 sq. ft. area in Goregaon in June 2002. 10. It is the case of the owners that the builders played a fraud from the inception. The builders did not act as per the Agreements between the parties and put up construction without sanctioning the plans. Since the construction was unauthorised, it was sought to be demolished by the Bombay Municipal Corporation (“BMC”). The owners filed a Suit in the Bombay City Civil Court being Suit (Lodging) No.1659 of 2002 in which the Minutes of Order came to be 6 passed by and between the owners and the developers specifying and earmarking the flats which would come to their respective shares. Upon filing of the Suit on 2.4.2002, the owners obtained status quo order for a limited period. After their Suit was filed, the builders entered into the aforesaid Agreements for sale of four flats on 6.6.2002. When the parties filed Consent Terms in the City Civil Court Suit on 26.8.2002 the builders did not disclose the transactions, if any, with the Plaintiffs to the owners. The allotment and earmarking of the flats in the Minutes of Order filed by the parties on 26.8.2002 show the flats now claimed by the Plaintiffs in this Suit as having been allotted to the share of the owners. The owners contend that possession was handed over to them by the developers in the BCCC Suit at the time of the execution of the Consent Terms. 11. The Agreement between the owners and the builders/developers is valid and subsisting. It is recited in the Agreement of the Plaintiffs. The Plaintiffs are shown to have taken inspection of the documents of title. The Plaintiffs were put to notice that the developers/builders would be entitled to sell to them the flats only out of their 45% share in the constructed area. The developers were sued in the City Civil Court by the owners prior to the date of the 7 execution of the Agreements entered into by them with the Plaintiffs. They filed Consent Terms in that Suit after the execution of the Agreements in this Suit. The developers did not inform the owners about the Agreements executed by them to the Plaintiffs. They did not inform the Plaintiffs about the Suit filed by the owners in the City Civil Court against them. The Agreements are executed for four of the flats of the building. All those four flats have been allotted to the share of the owners. 12. The fact remains that the Plaintiffs as the purchasers of the flats did not make the requisite inquiry about the specified 45% share of the developers which is the unique feature of the Agreement dated 20.10.2000 which is recited in their Agreements for sale giving a unique right to the owners pursuant to the mode of consideration having been paid in kind to the developers by the owners. 13. In the ad- interim Application taken out by the Plaintiffs in the earlier Notice of Motion upon filing of these Suits, Consent Terms were sought to be executed between the Plaintiffs and the developers – Defendants 1, 2 and 3. The developers sought to pay to the Plaintiffs Rs.19 Lakhs in full and final settlement of the Plaintiffs' claim. The status quo order between the parties was directed to be maintained 8 until 24 th March 2004. That order came to be passed on 10th December 2003 by Justice Chandrachud. The order was passed without prejudice to the rights and contentions of the owners. The Consent Terms were executed only between the Plaintiffs and Defendants 1, 2 and 3. The owners were not made party thereto. 14. The status quo order in this Suit came to an end on 24 th March 2004. The owners could deal with and dispose of the flats which came to be allotted to their share as per the Agreement between the owners and the developers dated 20.10.2000 as reflected in the Consent Terms filed in the City Civil Court, which included the suit flats. The owners have sold these flats. The Defendants, who have thereafter been joined in this Suit, have purchased the flats for consideration. 15. In another Suit filed by other flat purchasers being Suit No.631 of 2003, in this Suit in respect of the suit building, certain Interim Applications were taken out on 24 th March 2004. Court Receiver came to be appointed in that Suit in respect of the entire property, which included the flats which were allotted to the owners as well as the builders and which, therefore, included the suit flats. The Court Receiver was directed to take possession of the entire construction as 9 also the flats which were locked by some of the occupants, seize records, documents and papers and take charge of the site of the developers also. 16. Consequently, it is seen that Court Receiver has been appointed in respect of the suit premises in another litigation filed by other flat purchasers. 17. A Chamber Summons came to be taken out in Suit No.631 of 2003 filed by the aforesaid flat purchasers under which the parties agreed to bring in further finance and TDR on consideration to develop the suit property so that the unauthorised construction put up by the developers could be regularized. The Court Receiver appointed in that Suit took possession of the suit premises from the owners. The Court Receiver's Report made in Suit No.631 of 2003 shows possession of these premises being handed over to him by Defendant No.4. (Mr.Narula on behalf of the Plaintiffs raised a controversy that the Defendants, who are shown to be owners of the suit property, were shown to be “purchasers” in the Court Receiver's Report. That is how they have been described by the Court Receiver). The fact remains that the keys of the suit flats were with Defendant No.4 as one of the owners and were handed over to the Court Receiver. 10 18. The Plaintiffs have failed to show their legal right in the suit premises despite the production of registered Agreements for sale. The argument with regard to the inadequacy of consideration has been shown prima facie to be made good by the Defendants who have purchased the suit flats from the owners from the rate at which the Plaintiffs purchased the suit premises in June 2002. The consideration, which is shown to be total consideration, reflects the rate of less than Rs.400/- per sq. ft. in June 2002. The Consent Terms entered into between the owners and the developers in the City Civil Court reflects a consideration of Rs.1500/- per sq. feet in October 2002. 19. The Plaintiffs have not taken undue care and caution required to be taken by all bonafide purchasers of immovable property. 20. The Plaintiffs obtained the status quo order only until 24.3.2004 pursuant to the Consent Terms entered into by them only with Defendants 1, 2 and 3. Defendants 4 to 10, as the owners of the suit property, came to be entitled to deal with the suit property after 24.3.2004. The further rights created by them are subject to the rights of the Plaintiffs. The Plaintiffs not having shown any lawful right to the suit premises, the right of the further purchasers of 11 those premises upon payment of consideration is seen. 21. The case of possession made out by the Plaintiffs is also not shown. The Agreement for sale entered into by the Plaintiffs themselves shows that possession would be handed over to them in October 2002. Consequently, a mere statement of the developers that they have handed over physical possession in the possession letters cannot be accepted. The fact that Defendant No.4 had the key of the suit premises and handed over the suit premises to the Court Receiver shows the actual possession that remained with him on behalf of the owners, until such handing over. 22. Mr.Narula on behalf of the Plaintiffs made much ado about the fact that the owners have sought to create rights in favour of third parties who are further Defendants in this Suit and the Plaintiffs in Suit No.631 of 2003 which they could not do in view of the Plaintiffs' rights under Agreements for sale entered into by them and those parties have got Court Receiver appointed in respect of the flats in possession of the Plaintiffs. The arguments are entirely contradictory. The argument is made on behalf of the Plaintiffs in their capacity as the initial flat purchasers as also in their capacity as parties in possession of the suit premises not as the Plaintiffs but as the parties whom the 12 Court Receiver has sought to remove upon he acting as agent of the Plaintiffs. Consequently, Mr.Narula has sought to mix up the rights of the Plaintiffs under Order 39 Rule 2 of the Code of Civil Procedure and as parties in possession claiming reliefs under Order 40 Rule 1(2) of the C.P.C. Under the latter provision, any party in physical possession, who could not be removed by a party to the Suit could not be removed by the Court Receiver. The Plaintiffs are not such parties. 23. The Court Receiver has been appointed at the instance of other flat purchasers in another Suit being Suit No.631 of 2003 and further directions have been passed upon such appointment as per the order of Justice Dharmadhikari as aforesaid in this Suit. The Court Receiver has been appointed after the the status quo order in this Suit came to an end. It must be remembered that the Plaintiffs have not got appointed the Court Receiver in their Notice of Motion and have not obtained the injunction against the owners in the first Notice of Motion taken out by them. In fact no reliefs were applied for or granted against the owners in those Notices of Motion. Those Notices of Motion ended with the order dated 10.12.2003 of Justice Chandrachud, resulting in Consent Terms only between the Plaintiffs and Defendants 1, 2 and 3 and the status quo order which 13 remained in force only until 31 st March 2004. That order was passed without prejudice to the rights and contentions of the owners. In this Notice of Motion, the Plaintiffs seek relief of injunction for the first time against Defendants 4 to 14 being the owners and the present flat purchasers of the suit flats to whom the flats came to be allotted by the owners from their 55% share. 24. The Plaintiffs not having made out a prima facie case of having entered into the Agreements for sale and having been put in possession pursuant thereto, cannot be granted any reliefs against the owners and their transferees. 25. Both the Notices of Motion are accordingly dismissed. No order as to costs. 26. Mr.Jain on behalf of the Plaintiffs has drawn my attention to the order dated 3.5.2007 directing to maintain the status quo with regard to the suit property, pending these Notices of Motion. Hence, that order shall further continue for a period of four weeks. [SMT.ROSHAN DALVI, J.]