1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO.1538 OF 2007 IN SUIT NO.1186 OF 2007 Bharat Shantilal Shah & Anr. ....Plaintiffs Versus The Royal Palms (I) Pvt. Ltd. Ors. ....Defendants WITH NOTICE OF MOTION NO.1553 OF 2007 IN SUIT NO.1194 OF 2007 Anoop Virajlal Mehta ...Plaintiffs Versus The Royal Palms (I) Pvt. Ltd. Ors. ....Defendants WITH NOTICE OF MOTION NO.1973 OF 2007 IN SUIT (L) NO.1314 OF 2007 Bina Bharat Shah & Anr. ....Plaintiffs Versus The Royal Palms (I) Pvt. Ltd. Ors. ....Defendants WITH 2 NOTICE OF MOTION NO.1974 OF 2007 IN SUIT (L) NO.1316 OF 2007 Solo Real Estate Developers Pvt. Ltd. ....Plaintiffs Versus The Royal Palms (I) Pvt. Ltd. Ors. ....Defendants WITH NOTICE OF MOTION NO.1975 OF 2007 IN SUIT NO.1258 OF 2007 Dia Anoop Mehta ....Plaintiffs Versus The Royal Palms (I) Pvt. Ltd. Ors. ....Defendants WITH NOTICE OF MOTION NO.1976 OF 2007 IN SUIT (L) NO.1318 OF 2007 Rajiv B. Shah ....Plaintiffs Versus The Royal Palms (I) Pvt. Ltd. Ors. ....Defendants WITH NOTICE OF MOTION NO.1977 OF 2007 IN SUIT (L) NO.1317 OF 2007 Rashesh B. Shah & Anr. ....Plaintiffs 3 Versus The Royal Palms (I) Pvt. Ltd. Ors. ....Defendants WITH NOTICE OF MOTION NO.1978 OF 2007 IN SUIT NO.1959 OF 2007 Devanshu Anoop Mehta ....Plaintiffs Versus The Royal Palms (I) Pvt. Ltd. Ors. ....Defendants WITH NOTICE OF MOTION NO.1979 OF 2007 IN SUIT NO.1741OF 2007 Reshma Rashesh Diamonds Pvt. Ltd. ....Plaintiffs Versus The Royal Palms (I) Pvt. Ltd. Ors. ....Defendants WITH NOTICE OF MOTION NO.1980 OF 2007 IN SUIT NO.1740 OF 2007 Jyothawat Constructions Pvt. Ltd. ....Plaintiffs Versus The Royal Palms (I) Pvt. Ltd. Ors. ....Defendants WITH 4 NOTICE OF MOTION NO.1981 OF 2007 IN SUIT NO.1724 OF 2007 Vishal Rajeev Diamonds Pvt. Ltd. ....Plaintiffs Versus The Royal Palms (I) Pvt. Ltd. Ors. ....Defendants WITH NOTICE OF MOTION NO.1982 OF 2007 IN SUIT NO.1689 OF 2007 Reshma R. Mehta & Anr. ....Plaintiffs Versus The Royal Palms (I) Pvt. Ltd. Ors. ....Defendants WITH NOTICE OF MOTION NO.2123 OF 2007 IN SUIT NO.1725 OF 2007 Banyan Properties Pvt. Ltd. ....Plaintiffs Versus The Royal Palms (I) Pvt. Ltd. Ors. ....Defendants WITH NOTICE OF MOTION NO.2124 OF 2007 IN SUIT NO.1199 OF 2007 Mohit Anoop Mehta ....Plaintiffs Versus 5 The Royal Palms (I) Pvt. Ltd. Ors. ....Defendants WITH NOTICE OF MOTION NO.2125 OF 2007 IN SUIT NO.1269 OF 2007 Anoop Mehta (Son and Legal heir of late Mr.vrajlal C. Mehta ....Plaintiffs Versus The Royal Palms (I) Pvt. Ltd. Ors. ....Defendants WITH NOTICE OF MOTION NO.2126 OF 2007 IN SUIT NO.1638 OF 2007 Desai Trade credits Pvt.Ltd. ....Plaintiffs Versus The Royal Palms (I) Pvt. Ltd. Ors. ....Defendants WITH NOTICE OF MOTION NO.2127 OF 2007 IN SUIT NO.1638 OF 2007 Desai Equipment Finance Pvt. Ltd. ....Plaintiffs Versus The Royal Palms (I) Pvt. Ltd. Ors. ....Defendants WITH NOTICE OF MOTION NO.2128 OF 2007 IN 6 SUIT NO.1688 OF 2007 Desai Home Finance Pvt. Ltd. ....Plaintiffs Versus The Royal Palms (I) Pvt. Ltd. Ors. ....Defendants WITH NOTICE OF MOTION NO.2842 OF 2007 IN SUIT NO.1267 OF 2007 Desai Auto Credits Pvt. Ltd. ....Plaintiffs Versus The Royal Palms (I) Pvt. Ltd. Ors. ....Defendants WITH NOTICE OF MOTION NO.2843 OF 2007 IN SUIT NO.1268 OF 2007 Desai Built-In-Finance Pvt. Ltd. ....Plaintiffs Versus The Royal Palms (I) Pvt. Ltd. Ors. ....Defendants Mr.Virag Tulzapurkar, Senior Counsel with Mr.Vaibhav Krishna i/b. Juris Consiuis for the Plaintiff (In Notice of Motion No.1538 of 2007) Mr.Ravi Kadam, Advocate General with Mr.Vaibhav Krishna i/b Juris Consiuis for the Plaintiffs (In Notice of Motion No.1558 of 2007) Mr.Janak Dwarkadas, Senior Counsel with Mr.Vaibhav Krishna i/b Juris Consiuis for the Plaintiffs (In Notice of Motion No.1978 of 2007) Mr.Vaibhav Krishna i/b Juris Consiuis for the Plaintiff in all other matters. 7 Mr.T. R. Andhyarujina, Senior Counsel with Mr.J. J. Bhatt, Senior Counsel with Mr.Pankaj Sawant, Mr.Cyrus Ardheshir, Mr.Pradip Kapadia, Mr.Prasanna Jave and Mr.Kamlesh Rajwani i/b Vigil Juris for the Defendants (In all the matters.) CORAM : S.J. VAZIFDAR, J. DATE : 30TH OCTOBER, 2007. ORAL JUDGMENT : 1. The above suits are filed for specific performance of each of the agreements entered into by the respective Plaintiffs and the Defendants, for a declaration that the suit properties are in the possession of the respective Plaintiffs and for orders protecting the same. All the above suits also contain the usual alternative prayer for damages. 2. The Plaintiffs broadly belong to two groups, the Shah group and the Mehta group. Each group comprises of the members of the respective families and their associate concerns/firms. 8 Defendant Nos.2, 3 and 4 are the directors of Defendant No.1. For convenience, the reference in this judgment to `the Defendants' refers to Defendant No.1. Defendant No.1, formerly known as Amir Parks And Amusements Pvt. Ltd., carries on business as a builder and developer and deals in real estate in Mumbai. 3. Defendant No.1 is the owner of land admeasuring about 240 acres at Andheri, Mumbai. The property falls in a no development zone, wherein only certain restricted/controlled and limited development is permissible under the Development Control Regulations for Greater Mumbai, 1991. Defendant No.1 had proposed such development on the said property including a golf club, amusement park and residential structures with limited FSI as part of the project referred to as Royal Palms Estate. 4. As part of the project, the Defendants offered for sale plots admeasuring about 2.5 acres each. In the year 1993, the Plaintiffs in each of the suits agreed to purchase from the Defendants a plot admeasuring 2.50 acres. These twenty plots are the subject matter of the above suits. Ten suits each have been filed by the members of the Shah and the Mehta groups. 9 5. The facts in the above suits are similar. For convenience Counsel confined their arguments to Notice of Motion No.1538 of 2007 in Suit No.1186 of 2007. I will accordingly refer to the facts therein. 6. By an agreement in writing dated 27.9.1993 Defendant No.1 agreed to sell to the Plaintiffs the suit plot for a consideration of Rs.7,50,000/-. Clauses 1, 2, 3, 5, 9, 15, 17, 18, 19, 21 and 23 of the agreement are relevant and read as under :- 1. The Vendor shall sell and the Purchaser shall purchase from the Vendor all that the said premises delineated on the plan hereto annexed and thereon surrounded by a yellow coloured boundary line at or for the price of Rs.7,50,000/- (Rupees seven Lakhs and Fifty Thousand only) payable as follows :- (a). A sum of Rs.75,000/- as earnest money and/or deposit on or before the execution hereof (the payment and receipt whereof the Vendor doth hereby admit and acknowledge); (b). A sum of Rs.67,500/- being part of the consideration price within 10 days from the site mobilization by the Vendor on or before the 30th day of September 1993 on the part of the Vendor time being the essence of the contract; (c ). A sum of Rs.67,500/- being part of the consideration price within 7 days from the plot demarcation by the Vendor on or before the 30th 10 day of September 1993 on the part of the Vendor time being the essence of the contract; (d). A sum of Rs.67,500/- being part of the consideration price within 7 days from the completion by the Vendor of the road (base) upto the entry of the said premises on or before the 30th day of September 1993 time being the essence of the contract on the part of the Vendor; (e). A sum of Rs.67,500/- being part of the consideration price within 7 days of the Vendor laying Storm-Water Drains along the road abutting the said premises on or before the 30th day of October 1993 time being the essence of the contract on the part of the Vendor; (f). A sum of Rs.67,500/- being part of the consideration price within 7 days of the Vendor putting up sufficient street lights as per guidelines issued by the Municipal Corporation of Greater Bombay & other concerned bodies and authorities on or before the 30th day of October 1993 on the part of the Vendor time being the essence of the contract; (g). A sum of Rs.67,500/- being part of the consideration price within 7 days from the construction and installation by the Vendor of main drainage line upto the entrance of the said premises enabling the Purchaser to connect his drainage line thereto on or before the 30th day of November, 1993 time being of the essence of the contract on the part of the Vendor; (h). A sum of Rs.67,500/- being part of the consideration price within 7 days of the Vendor installing and of putting up the electric cables with 11 30 KW connection upto the said premises on or before the 31st day of December 1993 time being the essence of the contract on the part of the Vendor. The amounts of deposits payable to BSES Ltd./MSEB in respect of the said connections shall be payable by the Purchaser; (i). A sum of Rs.67,500/- being part of the consideration price within 7 days from the Vendor completing the asphalting of the road upto the entrance of the said premises on or before the 31st day of December 1993 time being the essence of the contract on the part of the Vendor; (j). A sum of Rs.67,500/- being part of the consideration price on the Vendor obtaining the sanction of Lay-out and plans & specifications on or before the 30th day of April, 1994 time being the essence of the contract on the part of the Vendor; (k). A sum of Rs.67,500/- being the balance of the consideration price on completion and on execution of the Indenture of Conveyance of the said premises; 2. The tenure of the said premises is freehold and the area thereof is 2.5 Acres equivalent to 10090 square meters (including proportionate area under Road). 3. The sale shall be completed within twelve months from the date hereof time being the essence of the contract, subject however to the Vendor carrying out their parts of this agreement within the time stipulated herein. 5. The Vendor shall make out a 12 marketable title to the said premises free from all encumbrances and reasonable doubts and shall at its own costs and expenses get in all outstanding claims on or to the said premises including all claims by way of sale, exchange, mortgage, gift, trusts, inheritance, possession, easement, lease, lien or otherwise. 9. It is hereby agreed that the Purchasers shall pay to the Vendors after the entire infrastructure of the said premises is completed the proportionate cost of the maintenance of the common amenities, facilities, security charges, maintenance of landscaping in proportion to the area occupied by the Purchasers including the cost of maintenance of the drainage plaint to be installed by the Vendor in the said larger property. It is agreed by and between the parties hereto that such amenities and services shall be maintained by the Vendor by itself or through its contractors appointed on professional basis, for the maintenance of the aforesaid and the Purchasers shall pay the same on the bill being submitted to him. 15. The Vendor shall, on completion of sale, put the Purchaser into vacant and peaceful possession of the said premises. 17. The Vendor shall provide at their own costs necessary infrastructure such as water pipeline, electricity supply upto 30 KW, drainage line, street light upto the entry of the said premises. The Vendor declares and represents that the F.S.I. available on the said premises is 0.04, being 0.025 for principal purpose and 0.015 for ancillary including Varandah, Balcony, Garages, Store Rooms, Watchman Cabin etc. In 13 the event the said F.S.I. as declared and represented by the Vendor is not available on the said premises, the Vendor shall without prejudice to the Purchaser’s rights make available to the Vendor the whole of the said F.S.I. or the deficit thereof from the other portions of the larger property. 18. The Vendor shall have the plans for construction of the building and structures on the said premises sanctioned on behalf of the Purchaser. The Purchaser shall however bear and pay the cost of the sanctioning of the said plans. 19. It is agreed by and between the parties hereto that the Vendor shall get the larger property sub-divided by the Municipal Corporation of Greater Bombay and other concerned bodies and authorities on or before the 30th day of April 1994 time being of the essence of the contract at its own costs and expenses. However, in the event the sub-division is not sanctioned by the Municipal Corporation of Greater Bombay and other concerned bodies and authorities then the Vendor shall demarcate the said premises and convey the same to the Purchaser. 21. The Purchaser is fully aware that the said premises falls under No-Development Zone and the construction of a building is permissible only as per the Development and Control Regulations of the Municipal Corporation of Greater Bombay. As per Rules 60 & 61 of the said Development Control Regulations of the Municipal Corporation of Greater Bombay the Purchaser shall be entitled to construct to the extent of only 0.04 F.S.I. on the said premises. 14 23. It is agreed by and between the parties hereto that the Vendor shall get the said premises sub-divided at its own costs and expenses with a right to access to the said premises from the main road as shown on the plan thereof annexed hereto and shall give necessary covenant for the Right of Way to the Purchaser. However, the Purchaser hereby agrees with the Vendor that he will not further sub-divide the said premises after the sub-division is sanctioned and use the same for residential purposes only and shall construct only one house with maximum F.S.I. of 0.04 as provided hereinabove in clause 21. and shall give necessary covenant to the Vendor as and when Conveyance is executed.” 7. At the outset, it is necessary to note four important and admitted facts. The Plaintiffs in all the suits admittedly paid the entire purchase price even before the time for payment stipulated under the agreements. The Defendants had applied for and obtained permission from the concerned authorities under the Bombay Municipal Corporation Act for construction on each of the twenty plots. The Plaintiffs in each of the suits have also paid the amounts demanded by the Defendants from time to time towards the costs of obtaining permission from the authorities for constructing the bungalows and developing their respective plots. The Defendants had demarcated the plots as per the Plaintiffs' request. The Defendants have however 15 not stated the particulars regarding the same on affidavit. 8. Though the Defendants have admitted the above facts they have resisted the Notice of Motion on the following grounds :- (1) The suit is barred by the law of limitation. The period of limitation according to them started running on 29.1.2003 and in any event on 17.1.2004 and the suit was filed on 18.4.2007. (2) The Plaintiffs had lost interest in the agreements. (3) The Plaintiffs are not entitled to specific performance on the ground of delay in filing the suit. (4) The Plaintiffs are not entitled to the discretionary relief of specific performance in view of the alternate development proposed and undertaken by the Defendants after they allegedly terminated the agreements. This contention was based on the orders obtained by the Defendants under the SEZ Act and in view of the construction having commenced by the Defendants on some of the suit plots. (5) The Plaintiffs are not entitled to specific performance as sub- division of the larger plot is not permissible. (6) The Plaintiffs had failed to identify the suit plots. 16 (7) The balance of convenience is in favour of the Defendants. FACTS 9(A). In July, 1995, the Defendants' Architects M/s.Bipin Barot prepared a plan inter-alia for the construction of a bungalow on each of twenty plots and submitted the same to the Municipal Corporation of Greater Mumbai. Pursuant to clause 18 of the agreement, the Defendants on 20.7.1995, submitted the same in their name but for the benefit of the Plaintiffs for construction of cottages on the suit plots. (B). The BMC issued an IOD dated 25.9.1995 bearing No.E.B./CE/6772 BS/Ap in respect of the plot in Suit No.1186 of 2007. Similarly, IODs were also issued in respect of the remaining nineteen plots. It is pertinent to note that in the IOD addressed to the Defendants, the BMC stated : “With reference to your Notice, letter No............... and the plans, Sections, Specifications and Description and further particulars and details of your building at.........” (C )(i). The Defendants thereafter submitted to the Plaintiffs a debit note dated 1.12.1995 for a sum of Rs.1,30,000/- being the charges paid by them on behalf of the Plaintiffs towards IOD deposit, debris 17 deposit, staircase premium etc. paid on behalf of the Plaintiffs “in respect of one cottage”. (D). M/s.Bipin Barot, the Defendants Architects and Engineers by a letter dated 12.1.1996 addressed to the Executive Engineer, B. M. C. stated that “the layout was already submitted ......... However, the same is to be amended due to declaration of the slum of some of the pockets of the holding under reference and due to change in the location and size of the buildings in the layout ..............” (E)(i). Under cover of a letter dated 3.8.1996, the Defendants forwarded to the Plaintiffs the said IOD. The Defendants stated : “We are pleased to inform you that the IOD in respect of your bungalow has been received. Enclosed please find photocopy of the IOD conditions along with copy of the plan for your reference and record.” (ii). The Plaintiffs paid the same as evidenced by a receipt executed by the Defendants dated 8.12.1995. 10. Debit notes were also forwarded by the Defendants/their sister concern Amir Constructions and Motel Pvt. Ltd. for proportionate costs for infrastructural work on the said plots. Each of the Plaintiffs 18 has admittedly paid the amounts so demanded as evidenced by the receipts executed by the Defendants. The Plaintiffs in Suit No.1186 of 2007 in respect of a debit note dated 7.6.1996 paid a sum of Rs.7,00,000/- as evidenced by receipts dated 12.6.1996 and 4.7.1996. 11(A). The Defendants by a letter dated 1.9.1996 informed the Plaintiffs that they had appointed New Town Management Technology Pvt. Ltd. (for short “ NTM”) as the maintenance company in respect of Royal Palms Estate. The Defendants stated that they had explained the terms of the said agreement. It is important to note that the subject matter of the letter is stated to be the maintenance of each of the cottages. The name of NTM was changed to Royal Palms Property Pvt. Ltd. The Plaintiffs case is that it is an associate/sister concern of the Defendants. (B). NTM in turn addressed a letter dated 1.9.1996 to the Plaintiff introducing themselves and enumerating the scope of services. In their letter dated 1.9.1996 addressed to the Plaintiffs, NTM stated :- 19 “We have gone through the Master Plan identified, individual precints like Residence, Club House, Golf Course, Landscaping, Roads etc. and have developed a maintenance programme.” 12. The Defendants obtained a Commencement Certificate (C.C.) dated 14.9.1996 on behalf of the Plaintiffs. Though the CC does not specify the plot it refers to and is in relation to the relevant IOD. 13. NTM in its letters dated 7.12.1998 addressed to the Plaintiffs referred specifically to the plot number of each of the Plaintiffs and stated that the C. C. would be expiring and needed to be renewed. NTM demanded the payment towards the BMC charges for renewal of the C. C. and its process fees. NTM further stated that it would not have the C. C. renewed unless the payment was received from the Plaintiffs in advance along with the maintenance dues and alleged that the maintenance charges had been outstanding for over a year. 14. Prior thereto in the year 1997, it was represented by the Defendants to the Plaintiffs that it would not be possible to sub-divide the said plots and that therefore, the plots would be notionally sub- 20 divided and instead of a conveyance a document of lease would be executed by Defendant No.1 in favour of the Plaintiffs whereby the Plaintiffs would be granted a perpetual lease for a period of 999 years. Negotiations in this regard ensued between the parties. (A). By a letter dated 27.3.2002, the Defendants admitted the negotiations regarding the lease. They further stated that they had prepared a draft deed of lease and that the same had been forwarded to the Plaintiffs' consultant and many meetings were held without any result. The Defendants alleged that the Plaintiffs failed to complete the formalities in connection therewith to avoid payment of maintenance charges and other outgoings in respect of the plots. The Defendants stated that if the arrears of maintenance aggregating to Rs.11,13,197/- were not paid they would take appropriate action. (B). The Plaintiffs by their letter dated 18.4.2002 stated that a survey of the plots agreed to be purchased was done in the year 1999 in the presence of all the parties and that poles were installed by their surveyor for the purpose of demarcation. The Plaintiffs alleged that the poles had been dismantled without intimation to them and that the Defendants had wrongly realigned and altered the demarcation. The 21 Plaintiffs stated that they were ready and willing to take vacant possession of the plot duly surveyed and demarcated and called upon the Defendants to arrange for a joint survey for demarcation. They further stated that upon demarcation and upon their being permitted to put up the poles, they would take vacant possession of the plots and execute the lease deed and other documents. (C). The Defendants by their letter dated 19.5.2002 expressly contended that the demarcation of the plots as requested by the Plaintiffs had been done in the year 2000 itself and that joint inspection could be done against the execution of necessary documents and payment of maintenance and dues by the Plaintiffs. The Defendants admitted that a survey of the plots had been done in the year 1999 but alleged that the same had been done unilaterally by the Plaintiffs. The Defendants further stated that the Plaintiffs had installed the poles after the survey but alleged that the same had been done in a high handed manner, was unauthorized and therefore not acceptable. The Defendants admitted that a joint survey was carried out in the year 2000 but alleged that for the reasons best known to them the Plaintiffs had chosen not to finalise the lease deed and take possession of the 22 plot and complete the transaction. The Defendants agreed for another joint survey of the plots and also demarcation thereof but only on the condition that necessary documents were finalised and arrears of the maintenance charges were cleared prior thereto. The Defendants concluded by stating that they were ready to discharge their obligations as far as demarcation of the plots was concerned provided the Plaintiffs finalised the documents and made the payments of the arrears of the maintenance charges. The Defendants alleged that the infrastructure had been completed and was in place. (D). The Plaintiffs contend that a plan dated 10.6.2002 prepared by the Defendants' Architect M/s. R.V. Jaykar and Surveyor was handed over to Plaintiff No.1 on behalf of all the Plaintiffs and that the plan showed all the plots as also the corresponding IOD's obtained in respect of each of the plots. It is important to note that the Defendants do not deny the plan. Nor do they deny the demarcation shown thereon. They contend that it showed only a proposed demarcation which was not actually carried out at site. They further deny that the plan was handed over to the Plaintiffs. 23 (E). By a letter dated 29.9.2002 the Defendants once again called upon the Plaintiffs