1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO.2116 OF 2005 IN SUIT NO.3452 OF 2004 Reveira Institute of Education Pvt. Ltd ....Plaintiff V/s. Mantri Real Estate Pvt. Ltd. & Ors. ....Defendants Mr.M.S. Doctor with Mr.Nimay Dave i/b Bachubhai Munim & Co. for the Plaintiff. Mr.Girish Godbole with Ms.C. Salgaocar – Radia for Defendant Nos.2 to 6. CORAM : S.J. VAZIFDAR, J. DATE : 10TH NOVEMBER, 2009. P.C. :- 1. The suit is filed to recover a sum of Rs.50,00,000/- with interest at 12% p.a. from 23.10.2003 till payment. By an amendment, the Plaintiff has also sought a declaration that the claim stands secured by a charge on a suit property and the enforcement of the said charge. 2. Under an M.O.U. dated 23.10.2003 Defendant No.1 (formerly known as Anjir Properties Pvt. Ltd.) agreed to sell the Plaintiff a property admeasuring 20,700 sq.mtrs. for a consideration of Rs.7,58,85,000/-. A sum of Rs.50,00,000/- was paid as earnest money on the execution of the M.O.U. Clauses 6 and 7 of the M.O.U. read as under :- “6. If the Purchaser fails to pay the balance of Rs. 7,08,85,000/- (Rupees Seven Crores Eight Lacs Eighty 2 Five Thousand Only) within 90 days after execution of this Memorandum of Understanding subject to obtaining clear and marketable title from the Vendor, the Vendor shall be entitled to cancel this agreement, by giving at least fifteen days notice to the purchaser to that effect for cancellation of the said Memorandum of Understanding. Upon cancellation the Purchaser will be entitled for the refund of earnest money which will be repaid by the Vendor within a period of 15 days from cancellation. 7) If the Vendors makes default in making clean, clear and marketable title, within stipulated period, the Purchasers shall have the right to cancel this agreement by giving at least fifteen days notice in writing to the Vendor to that effect and upon cancellation the Purchaser will be entitled for the refund of earnest money back from the Vendor within a period of 15 days from cancellation.” The Plaintiff was therefore entitled to a refund of the sum of Rs. 50,00,000/- even if it failed to pay the balance consideration. 3. The Plaintiff was furnished with a title certificate issued by the advocates of Defendant No.1 which certified that Defendant No.1 was the owner of only some of the plots agreed to be sold. The Plaintiff also relied upon a title certificate dated 15.4.2004 issued by its advocates. It is sufficient for the purpose of this Notice of Motion to proceed on the basis of the title certificate issued by the advocate of Defendant No.1 as the injunction sought is restricted to the plots stated therein as belonging to Defendant No.1 or wherein Defendant No.1 has an interest. 4. In view of Defendant No.1 not having made out a marketable title to the entire plot agreed to be sold under the M.O.U., the Plaintiff by a letter dated 10.6.2004, terminated the agreement and sought the refund of the said amount of Rs.50,00,000/-. Defendant No.1 by a letter dated 21.10.2004 purported to forfeit the earnest money. It is in these circumstances that the present suit was filed. 3 5. The suit was filed on 30.11.2004 only against Defendant No.1. The Plaintiff took out Notice of Motion No.3516 of 2004 for an order directing Defendant No.1 to provide security for the said sum of Rs. 50,00,000/- and for an injunction. Ad-interim reliefs were refused by an order dated 11.3.2005. The Plaintiff filed Appeal No.365 of 2005 challenging the said order and took out Notice of Motion No.1147 of 2005 therein seeking an order restraining the Defendants from creating third party rights in the property. By an order dated 15.3.2005, the Division Bench, to which I was a party, directed Defendant No.1 to maintain status- quo. By an order dated 4.5.2005, the Appeal was allowed to be withdrawn. The Plaintiff withdrew the Appeal in order to enable it to meet the defence that there was no prayer for the enforcement of a charge on the said property. By the said order, the ad-interim relief granted on 15.3.2005 was continued till 15.6.2005. On 21.5.2005, the Plaintiff filed Chamber Summons No.727 of 2005 for an amendment. By an ad-interim order dated 7.6.2005, the interim orders granted by the Division Bench were continued pending the hearing of the Chamber Summons. The Chamber Summons was allowed by an order dated 18.7.2005 and the ad-interim relief was extended for two weeks. The Plaintiff thereafter took out the present Notice of Motion No.2116 of 2005 for the appointment of a Court Receiver and for an injunction. By an ad-interim order dated 12.8.2005, the parties were directed to maintain status-quo for a period of two weeks. This order was 4 continued pending the hearing of this Notice of Motion by an order dated 24.8.2005. Defendant Nos.2 to 5 who were then yet to be impleaded, took out Chamber Summons No.628 of 2006 on 8.6.2006 seeking to intervene in the suit. Before Chamber Summons No.628 of 2006 was disposed of, the above Notice of Motion was disposed of by an order dated 6.6.2007. By the said order, the learned Judge appointed a Court Receiver only in respect of seven plots viz. Plot Nos. 1, 2, 3, 8, 9, 12 and 13 which were set out in the first Defendant’s advocates title certificate as belonging to Defendant No.1. Notice of Motion No.3516 of 2004 was permitted to be withdrawn by an order dated 1.12.2007 in view of the order dated 6.6.2007 appointing the Court Receiver. Chamber Summons No.628 of 2006 was allowed to be withdrawn by an order dated 15.10.2007. Defendant Nos.2 to 5 took out Chamber Summons No.1788 of 2005 seeking to be impleaded in the suit and for setting aside the order dated 6.6.2007. By an order dated 10.6.2008, the Chamber Summons was allowed to the extent of impleading Defendant Nos.2 to 5. The Plaintiff took out Chamber Summons No.1717 of 2008 for impleading Defendant No.6, which was allowed by an order dated 5.12.2008. 6. The order dated 6.6.2007 directed the Court Receiver to appoint the person found in possession of the property, as an agent of the Court Receiver. Defendant No.6 having been found in possession of the 5 property was appointed as the agent of the Court Receiver. It is not necessary to refer to the proceedings adopted challenging the terms and conditions of the agency fixed by the Court Receiver. That is the subject matter of a separate Chamber Summons and I do not in any event intend appointing a Court Receiver in the present Notice of Motion. 7. On 17.7.2008, Defendant Nos.2 to 5 took out Notice of Motion No.2498 of 2008 for setting aside the order dated 6.6.2007. The Notice of Motion was allowed by an order and judgment dated 25.9.2008. The order was however stayed for a period of four weeks. The Division Bench by an order dated 14.11.2008, dismissed the Plaintiff’s Appeal (Lodging) No.675 of 2008. The stay however was continued for a period of one week by the Division Bench. Thereafter the same has been extended from time to time by this Court and is in operation todate. 8. To complete the record, Chamber Summons Nos.118 of 2009 and 124 of 2009 filed by Defendant No.6 for rejection of the plaint for want of leave under clause XII of the Letters Patent and under order VII Rule 11 of the Code of Civil Procedure respectively were rejected by the orders of the learned single Judge dated 13.2.2009. Appeal Nos.108 of 2009 and 109 of 2009 filed against the said order were dismissed by the Division Bench by an order dated 2.9.2009. 9. I have earlier set out the Plaintiff’s case. Defendant No.1 has remained absent. The case of Defendant Nos.2 to 5 is that Defendant No. 1 was not the owner of and had no right, title or interest of any nature in the suit property or any part thereof which it could have transferred in favour of the Plaintiff. Further by an agreement dated 4.3.2005, Defendant Nos. 2 to 6 5 had transferred their rights in the property to Defendant No.6. In fact two agreements referred to as development agreements both dated 4.3.2005 were entered into between Defendant Nos.2 to 5 on the one hand and Defendant No.6 on the other. The terms and conditions are almost identical except that in one of the agreements, there is no consideration payable to Defendant No.1. I will therefore, refer to the development agreement which provides for payment of Rs.1,85,00,000/- out of the consideration of Rs. 2,35,00,000/- to Defendant No.1. It is important to note the recitals in this agreement, for prima-facie at least they indicate two things. 10. Firstly, Defendant No.6 was aware of the transaction between the Plaintiff and Defendant No.1. This is evident from the fact that both these agreements have been executed by one Amit Thepade on behalf of Defendant No.6. In these agreements he is referred to as the authorized signatory of Defendant No.6. In an agreement dated 18.2.2004 between some of the erstwhile owners and Defendant No.1, he has been described as a partner of Defendant No.1. The power of attorney executed pursuant to this agreement is in favour of the said Amit Thepade, where he has been described as the director of Defendant No.1. Prima-facie therefore, it is difficult to believe that Defendant No.6 was oblivious of the agreement between the Plaintiff and Defendant No.1. Mr.Doctor also relied upon the fact that the main shareholders of Defendant Nos.1 and 6 are brothers. Though not by itself, in the facts and circumstances of the case, this is yet another factor which would indicate the knowledge of Defendant No.6 of the suit agreement. 11. Secondly, the contents of the agreements dated 4.3.2005 7 establish that Defendant No.1 did have an interest in the suit property having acquired the same not only from the owners thereof/their transferees but also from third parties in whose favour certain interests had been created as stated therein. The same negates the contention of Defendant Nos.2 to 6 that Defendant No.1 had no transferable interest when it entered into the suit agreement and that the Plaintiff therefore acquired no interest in the property. The following recitals of the development agreements dated 4.3.2005 are important in this regard :- “ WHEREAS all that piece and parcel of property bearing S. No.196/1-B, admeasuring 2 Hectares 07 Ares situate at Lohegaon, within the limits of Pune Municipal Corporation, Taluka Haveli, District Pune and hereinafter referred to as the “said land” originally stood in the name of Mr. Nanabhai Mathurdas Mody i.e. the Owner No.1 alongwith Mr. Nagindas Harilal Bilakhia having acquired the same from M/s. Dhanda Engineers vide sale Deed dated 26/06/1974 vide Sale Deed dated 26/6/1974 registered at the Office of the Sub-Registrar Haveli 11 at serial No. 593/78. AND WHEREAS the aforesaid Owners i.e. the land Owners alongwith Shri. Harilal V. Ruperelia, Shri. Kantilal Shah, Shri. Pheroz Bharucha and Ms. Meher Barucha formed a Partnership in the name and style of M/s. Kirti Land Development Corporation alias M/s. Kirti Industrial Corporation on 28/01/1974 for the purpose of carrying Business of dealing in land Development by sub-dividing the said land. AND WHEREAS the said M/s. Kirti Industrial Corporation caused/effected a private layout of the said land into smaller sub-plots with common road and open space. AND WHEREAS the said M/s. Kirti Industrial Corporation entered into Agreement/s of sale of the said sub-plots in favour of various purchasers from 1974 to 1976. AND WHEREAS the said M/s. Kirti Industrial Corporation stood dissolved w.e.f. 09/12/1975. AND WHEREAS one M/s. Anjeer Properties Pvt. Ltd. 8 (former name of Defendant No.1) thereafter negotiated with some of the plot holders having interest or charge over the said property pursuant to all Agreements entered into by M/s. Kirti Industrial Corporation in their favour and settled their claims by making payments of the consideration and also negotiated with Shri. Hiralal V. Ruperelia, Shri. Kantilal Shah, Shri. Pheroz Bharucha and Ms. Meher Barucha regarding assignment/acquisition of their rights as the ex-partners of M/s. Kirti Industrial Corporation and acquired all their right title and interest in the sub-plot Nos.1, 2, 3, 8, 9, 12 & 13 vide necessary writings. AND WHEREAS all rights, title & interests with respect to the undivided interest/share of the other partners i.e. Mr. Nanabhai Mody & Shri. Ashok Nagindas Bilakhia and regarding the assignment/acquisition of their rights as the erstwhile partners of M/s. Kirti Industries Corporation and together with all their right, title & interest with respect to the claim about the accounts as well as an interest in the said land being the remaining plots bearing Nos. 4, 5, 6, 7, 10 & 11 came to the share of one Mr. Satish Mody. 2. The Developers in consideration of such grant of development rights and agreement to absolutely transfer the said property to the Developers or its nominee/s on “as is where is basis” have paid by way of total consideration a sum of Rs.23,500,000/- (Rupees twenty three million five hundred thousand only) paid in full upon the execution of these presents as under : i. A sum of Rs.5,000,000/- (Rupees five million only) paid to Mr. N.M. Mody vide: Chq. No. dated Amount Drawn on Rs. 120301 04/02/05 50,00,000/- ICICI Bank Ltd. Shivajinagar Branch, Pune ii) A sum of Rs.18,500,000/- (Rupees eighteen million five hundred thousand only) paid to M/s. Anjeer Properties Pvt. Ltd. on behalf of Mr. N.M. Mody vide : Chq. No. dated Amount Drawn on Rs. As per separate receipt 9 for releasing the rights in the said property in favour of the Owners (the receipt of which full & final consideration the Owners acknowledge, release, discharge and acquit the Developers therefrom and the Developers are not liable to see the application thereof).” 12. The above recitals indicate that the land which was originally owned by said Mody and Bilakhia was brought into the partnership firm, M/s.Kirti Industries Corporation which dealt with the same in all respects including making sub-plots thereof and entering into agreements for sale of the sub-plots with third parties. The recitals also establish that Defendant No.1 settled the claims of such third parties and acquired all the right, title and interest of the partners of the said firm in the said property. The language is wide. It states that Defendant No.1 acquired all the rights, title and interest in the said plots vide necessary writings. Thus the recitals which find place in the agreement between Defendant Nos.2 to 5 on the one hand and Defendant No.6 on the other establish that Defendant No.1 acquired the said property from the original owners. This is a clear admission by the Defendants to the effect that Defendant No.1 did acquire the rights in respect of the property. What is even more important to note is that under clause 2 Rs.1,85,00,000/- i.e. over 75% of the consideration was to be paid to Defendant No.1. If Defendant No.1 had not acquired all the right, title and interest in the said plots, it is difficult to understand how or why it would have been paid a substantial part of the consideration. 13. Faced with this, Mr.Godbole submitted when the suit agreement was entered into, Defendant No.1 had not acquired the ownership of the said property – that the same were acquired only subsequently by Defendant No.1. 10 14. It is not necessary for me to consider whether Section 55(6) of the Transfer of Property Act would come to the aid of the Plaintiff in the event of Defendant No.1 having acquired the title to the suit property after the suit agreement was entered into. This is in view of the fact that in any event, Mr.Doctor’s reliance upon section 43 of the Transfer of Property Act is well founded. Section 43 of the Transfer of Property Act reads as under :- “34. Transfer conditional on performance of act, time being specified. - Where an act is to be performed by a person either as a condition to be fulfilled before an interest created on a transfer of property is enjoyed by him, or as a condition on the non-fulfilment of which the interest is to pass from him to another person, and a time is specified for the performance of the act, if such performance within the specified time is prevented by the fraud of a person who would be directly benefited by non- fulfilment of the condition, such further time shall as against him be allowed for performing the act as shall be requisite to make up for the delay caused by such fraud. But if no time is specified for the performance of the act, then, if its performance is by the fraud of a person interested in the non-fulfilment of the condition rendered impossible or indefinitely postponed, the condition shall as against him be deemed to have been fulfilled.” 15. I have already noted that the agreement was terminated by the Plaintiff only on 10.6.2004, whereas Defendant No.1 acquired the said right, title and interest even according to Mr.Godbole in February, 2004 i.e. during the subsistence and validity of the suit agreement dated 23.10.2003. The alleged agreements dated 4.3.2005 having been entered into thereafter between Defendant Nos.2 to 5 on the one hand and Defendant No.6 on the other cannot defeat the Plaintiff’s right under sections 43 and 55(6) of the Transfer of Property Act. 11 16. The least that must be said in favour of the Plaintiff is that it has made out a strong prima-facie case for protection of its rights in respect of the part of the said property in respect whereof Defendant No.1 admittedly had a right. 17. The recitals to the effect that Defendant No.1 had thereafter revoked and recended their agreement with respect to the said plots and that the same reverted back to the original owners cannot possibly constitute an admission against the Plaintiff for the obvious reason that the Plaintiff was not a party to the said document. The recitals relied upon by the Defendants read as under :- AND WHEREAS the said M/s. Anjeer Properties Pvt. Ltd. thereafter revoked and rescinded their arrangement in and with respect to the plot Nos.1, 2, 3, 5, 9, 12 & 13 alongwith open space and road whereby all the rights, title & interest to the same reverted back to the Owners herein. AND WHEREAS the said Mr. Nagindas Harilal Bilakhia expired at Mumbai on 06/09/04 and his share and interest in the said property has devolved upon us as his sole legal heirs i.e. the Owners No. 2 herein. There is no evidence whatsoever which establishes what is stated in these recitals. More important, there is nothing on record which affects the Plaintiff’s right under its agreement based on the alleged revocation by Defendant No.1 of its rights in respect of the said plots. Even assuming that it did so, it would not affect the rights vested in the Plaintiff by virtue of the suit M.O.U. 18. I am however, not inclined to appoint a Court Receiver in respect of the said property. In the facts and circumstances of the case, an 12 injunction would suffice. Further the Plaintiff is not entitled to an injunction in respect of all the plots. It would be entitled to an injunction only in respect of the said plot Nos.1, 2, 3, 8, 9, 12 and 13. Further still I see no reason to prevent the exploitation of even these plots by Defendant No.6 as the value thereof is considerably higher than the claim in suit. Though I do not have benefit of a valuation that appears to be so. 19. In the circumstances, the Notice of Motion is disposed of by the following order :- (i). Pending the hearing and final disposal of the suit, the Defendants are restrained from alienating, encumbering, parting with possession of or creating any third party right, title and/or interest in, to, upon or in respect of the said plot Nos.1, 2, 3, 8, 9, 12 and 13. (ii). The above injunction shall stand vacated upon the Defendants or any of them furnishing security to the satisfaction of the Prothonotary and Senior Maser to the extent of the claim in suit together with interest at 12% p.a. upto the date of the filing of the suit and thereafter at the rate of 8% p.a. The rate of interest is ad-hoc and shall be subject to the final orders at the hearing of the suit. It is clarified that the Defendant shall also be at liberty to offer any property including a part of the suit property as security. (iii). The costs shall be costs in the cause.