1 IN THE HIGH COURT OF JDICATURE AT BOMBAY ORDINARY ORIGINA CIVIL JURISDICTION NOTICE OF MOTION No. 3538 OF 2006 IN SUIT No. 2913 OF 2006 Omprakash Roopnariyan Gupta & Another ......plaintiffs V. Qubaa Enterprises & others .......Defendants Mr. R.D. Dave for the plaintiffs Mr. Dhananjay Singh for the defendant No.2 Mr. Sanjeev Singh for defendant No.3 CORAM : A.A. SAYED, J. DATE : 3RD JULY, 2009. P.C. 1 The above Notice of Motion is taken out by the plaintiffs for injunction and appointment of Court Receiver in respect of flat No. 203, admeasuring 596 sq. ft on the second floor, Building "A" Wing at village Kole-Kalyan, Survey No. 313, Hissa No.2 (part), CST No. 4894, 4891/A, 4891/B ('flat No. 203' for short) 2 The suit is filed for specific performance of the agreement dated 7th June, 1993 ('the said agreement' for short) in respect of flat No. 203. The said agreement was signed and executed between the plaintiffs and defendant No.1 firm for purchase of flat No. 203 in the building to be constructed by defendant No.1. 2 3 It is the case of the plaintiffs, in the affidavit in support of notice of motion, that the plaintiffs have paid to defendant No. 1 firm an amount of Rs. 1,34,100/- on the execution of the said agreement and the balance amounts were to be paid, as per progress of the construction as set out in the said clause 2 of the said Agreement. The plaintiffs have also paid certain other amounts towards the Society shareholders deposit, Municipal taxes, correspondence charges, legal charges, etc. It is contended by the plaintiffs that the defendant No.1 has only done the foundation work on the site and there was no further progress in the development and therefore, as per the said agreement there was no question of making any further payment to the defendant No.1. The plaintiffs have stated that they used to regularly visit the site as also the office of defendant No.1 to make enquiries as to why the development has not progressed. However, the partners of defendant No.1, including defendant No.2 and the office bearers, stated that there was some problem which was to be resolved and that development would restart thereafter. It is the further case of the plaintiffs that when they visited site in 1st week of April, 2006 the plaintiffs learnt that defendant No.1 through the defendant No.2, who is a parter of defendant No.1, have sold all their rights, title and interest in respect of development to defendant No.3. The plaintiffs averred that defendant No.2, who is a partner defendant No.1, is also the Director of defendant No.3 company. In view of the subsequent development, the plaintiffs addressed Advocate's letter dated 15th April, 2006 to defendant Nos.1 and 3 pointing out that the plaintiffs were ready and willing to perform their part of the said agreement and also recorded that the said agreement was subsisting, valid and binding. 4 In reply to the said letter, defendant no.2 vide letter dated 1st June, 3 2006 admitted the execution of the said agreement, however, they denied their liability. Defendant No.3 also vide their letter dated 7th June, 2006 replied to the plaintiffs' Advocate's letter and stated that they have purchased the property from the original owner under a Deed of Conveyance dated 17-02-2005. The plaintiffs thereafter vide their Advocate's letter dated 19th June, 2006 called upon defendant Nos.2 and 3 to disclose the understanding between the defendants inter se and give inspection of the relevant documents. It is the plaintiffs' further case, that in the first week of September, 2006, on making inquiry with the security guards on the site in question, they were informed that defendant No.3 was developing the plot of land and that the flats which were proposed to be constructed were available for sale. It is further alleged that prospective customers were also visiting the suit site and making enquiries for the purpose of buying flats and that the plaintiffs apprehend that the defendants may create 3rd party rights in respect of the suit flat. 5 Learned Counsel for the plaintiffs submitted that till date there is no termination of the agreement dated 7th June, 1993. He further submitted that further payments under the agreement, as set out in clause 2, were not due from the plaintiffs as there was no progress in the construction. He further submitted that the plaintiffs were and are ready and willing to perform their part of the contract. The learned counsel contended that there is no question of limitation inasmuch as no cause of action had arisen and till date there is no termination of agreement. He, therefore, urged that the plaintiffs' right and interest are required to be protected. The learned Counsel for the plaintiffs has relied upon the case of (1) Kharkov and others V. Rasil Singh and others, reported in AIR 1954 J. & K. 33, (2) Shrikrishna Keshav 4 Kulkarni and others Vs. Balaji Genesh Kulkarni, reported in AIR 1976 Bombay 342, (3) Panchanan Dhara and others V. Monmatha Nath Maity, reported in (2006) 5 SCC 340 and (4) Balwantigir Ganpatgir Giri v. Mansi Construction and Developers, reported in (2006) (5) Mh.L.J. 306., essentially in support of his contention that as there was no notice of termination, the question of limitation does not arise. The learned Counsel for the plaintiffs submitted that in spite of calling upon the defendants to give inspection of the documents, the same has not been given to the plaintiffs. The learned Counsel for the plaintiffs also pointed out section 54 of the Contract Act and various provisions of the Maharashtra Ownership of Flats Act, 1963 in support of his contention of the binding nature of the said Agreement. 6 The defendant No.2 has filed his reply opposing the notice of motion. It is contended by defendant No.2 that the suit is bad for non-joinder of necessary parties as the said agreement of 7-6-1993 was entered between the plaintiffs and defendant No.1 and its two partners, one being the defendant.2 and another being one Mr. Munir A. Patel, who expired on or about 6th October, 2002 and that the heirs and legal representative of Mr. Munir A Patel have not been joined as defendants in the suit. It is further stated in the reply that the partnership firm of Defendant No. 1 came to be dissolved under Deed of Dissolution dated 18th December, 1998. The agreement of 7-6-1993 is deemed to have been terminated as the payments were not made by the plaintiffs as per clause 2 of the said agreement. The said Agreement is neither stamped nor registered. The defendant No.3 has acquired the property, upon which the building was proposed to be constructed by the defendant No.1, from its original owner under Deed of Conveyance and 5 therefore the right of the plaintiffs could be enforceable only against the defendant No.3. The defendant No. 2 has no concern with defendant No.3. It is further stated that the plot where upon the proposed building was to be constructed has been declared as slum by Notification dated 15th February, 2007. 7 Affidavit-in-reply has also been filed by defendant No.3. It is the contention of defendant No.3 that the suit is time barred. Defendant No.3 is not signatory to the agreement dated 7th June, 1993. It is further stated in the reply that the plot of land was purchased by defendant No. 3 from the original owners and that public notices were issued in the news papers viz. Free Press Journal and Nav Bharat Times dated 12-11-2004 inviting claims against defendant No.3 purchasing the development right of the said property. The said property was purchased by defendant No.3 vide Deed of Conveyance dated 17th February, 2005 which was duly stamped and registered with the office of the Sub Registrar of Assurances, Mumbai. The defendant No.3 intends to redevelop the plot under SRA Scheme by accommodating the slum dwellers at site. It is further stated that defendant Nos.1 and 2 are no way concerned with the suit plot. Since redevelopment is being carried out on the suit plot under SRA Scheme, it is not possible for the plaintiffs to seek specific performance of the said agreement. The Defendant No.3 is not necessary and proper party as the dispute is essentially between the plaintiffs and defendant Nos. 1 and 2. Defendant No. 3 has further stated that defendant No.2 and one of the Director of defendant No.3 are residing in the same locality and that somewhere in the year 2004, defendant No.2 informed the Director of defendant No.3 that one Mr. Richard D'Souza is looking for buyer for his property and accordingly, 6 defendant No. 3 had showed interest in the property and ultimately purchased the property. It is stated that the defendant No.3 was not aware of any transaction between defendant No.1 and the original owner Richard D'Souza as also between defendant No.1 and the plaintiffs. It is further stated that defendant No.2 was admitted as Director of Company merely on good faith and he had never contributed any amount towards purchase of property nor was he concerned with the development of the plot. The defendant No.2 was removed from the directorship of the company sometime in March, 2006 and that defendant No.2 has infact cheated defendant No.3 by not disclosing the alleged agreement and therefore defendant No.3 cannot be held responsible for the liabilities of defendant Nos. 1 and 2. The learned Counsel for defendant No. 3 submitted that since defendant No.3 would be developing the suit plot under the SRA Scheme, defendant No.3 is not bound by the agreement dated 7th June, 1993. The learned Counsel submitted that defendant No. 2 was the partner of defendant No.1 at one point of time and he had already retired from the partnership firm. The learned Counsel submitted that on one hand the plaintiffs' claim that foundation work is done and on the other hand it is claimed by the plaintiffs that construction is done upto plinth level and therefore it was obligatory on the part of the plaintiffs to pay the amounts as set out in the said agreement without any intimation in that regard to them and having failed to pay the further instalment under the said agreement, the agreement stood cancelled. The learned Counsel for defendant No.3 also relied upon the case of Rozan Mian V. Tahera Begam and others,reported in AIR 2007 S.C. 2883 in support of his contention that since the said Agreement has become impossible to perform, no decree for specific performance can be passed. 7 8 I have heard the learned counsel for the parties and perused the material on record. In my view, the plaintiffs right are required to be protected. Merely because defendant No.3 has now come in picture and purchased the suit property and was likely to construct the same under SRA Scheme, would not mean that it would not be bound by the agreement or would not be liable under the agreement entered between the plaintiffs and defendant No.1. It is to be noted that admittedly defendant No. 2, was a Director of defendant 3, though it is now alleged by defendant No.3 that defendant No.2 was no more Director of defendant No.3 and that defendant No.2 has cheated defendant No.3. There is nothing placed on record in respect of any action taken by defendant No. 3 against defendant No.2 for having allegedly cheated defendant No.3. Clause 2 of the agreement clearly stipulates as to the phase wise payments to be made under the said agreement. From the photographs shown by the learned Counsel on behalf of defendant No.3 across the bar, it appears that the construction has not proceeded beyond the foundation and admittedly there were slums on the plot in question. Pertinently execution of the said agreement dated 7th June, 1993 has not been denied and the payments made by the plaintiffs to the defendant No.1 are also not disputed . It is further pertinent to note that admittedly there is no notice of termination of the agreement dated 7th June, 1993. Prima facie, therefore, the period of limitation would begin only after correspondence in the year 2006 when for the first time the defendants denied their liability. If the defendant No.3 has purchased the suit property, it has done so subject to rights of the plaintiffs. The rights of the plaintiffs cannot be defeated by subsequent transfer by which the defendant No.3 has now come into picture. It is not disputed that the plans in respect of the 8 development by defendant No.1 were sanctioned by BMC. Merely because the development is now to be carried out under the SRA Scheme by defendant No.3, the rights of the plaintiffs cannot be denied by the defendants. The ruling cited by the learned Counsel for defendant No.3 cannot be of any assistance to further the case of the defendant No.3 inasmuch as in that case the Agreement in respect of the transfer was prohibited by law. In the instant case there is no such prohibition in law. In the circumstances, I am satisfied that the plaintiffs have made out prima facie case and balance of convenience is in their favour and unless the rights of the plaintiffs are protected the plaintiffs will suffer irreparable loss. 9 At the ad-interim stage, this Court had passed an order dated 19th October, 2006, which reads as under:- "In the circumstances, pending the hearing and final disposal of the Notice of Motion, Defendant No.3 shall be permitted to continue construction but shall be bound and liable to keep an area not less than 596 sq.ft. vacant and unencumbered on the second floor of any proposed construction." 10 Considering the overall facts and circumstances, and in the interest of justice, in my view, the said order is required to be continued till the hearing and final disposal of the suit. It is accordingly ordered. 11 Notice of Motion is disposed of in the aforesaid terms. A.A. SAYED J. 9 .