IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO. 1948 OF 2009 IN S.C. SUIT NO. 1267 OF 2009 M/s.Truly Creative Developers Pvt. Ltd. ..... ..... ...Plaintiff V/s Samata Nagar Coop. Hsg. Soc. Union Ltd. & Ors. ..... ..... ...Defendants Mr.D.D.Madon, Sr. Adv. i/by Mr.G.N.Salunke, Adv. for the plaintiff. Mr.Aspi Chinoy, Sr. Adv. With Mr.Shailesh Naidu, Mr.Afroz Shah, Mr.Kamlesh Karande and Ms.Vijaya Mishra-Ingule, i/by India Law Alliance, Adv. for the defendant No.1. Mr.S.G.Aney, Sr.Adv. i/by Ms.Rina Pujara, Adv. For defendant No.2. Mr.Siddharth Ingule, Adv. For defendant No.5. CORAM: A.P.DESHPANDE, J. 14th July, 2009. PC: The Maharashtra Housing and Area Development Board which is a statutory authority had constructed buildings during the period from the year 1978 to 1982 for providing houses to the weaker sections of general public. MHADA had constructed 162 buildings and initially the flats/rooms in the said buildings were let out to different tenants. The tenants in occupation of the said buildings formed about 55 societies forming group of buildings as per the directions issued by MHADA. Out of the 55 societies, 47 societies sometime 1 prior to the year 1988 formed the registered body viz. the Federation under the provisions of Maharashtra Cooperative Societies Act, 1960. The Federation was formed by the Societies with a view to develop, maintain and create common facilities for the members of the societies. In the present suit the Federation is impleaded as defendant No.1 which represents 47 societies and the members of the said societies who are flat owners. After the Societies were formed the societies approached MHADA with a view to acquire the said property and on payment of consideration and lease premium the defendant No.3 MHADA executed separate lease deeds for the lands of the respective societies independently and also executed sale deeds for the buildings constructed on the said land which was owned by MHADA. Lease deeds are executed for a period of 99 years. Thereafter the tenants became the members and the Societies became the owners of the land and buildings. 2. As the condition of the buildings had deteriorated, the defendant No.1- Federation took a decision to redevelop the property meaning thereby demolition of the old buildings and reconstruction of new buildings by engaging services of a developer. The decision taken by defendant No.1 to redevelop the property was endorsed by individual societies who are members of the defendant No.1. With a view to redevelop the property initially one M/s.Kshitij Developers was appointed as a developer but as he did not develop the property the plaintiff had taken over the project. The plaintiff and 2 defendant No.1 thus entered into an agreement dated 31.1.98. According to the plaintiff the property was to be developed in a phased manner having regard to the magnitude of the project and large number of flat owners. Under the terms of the agreement the plaintiff was to obtain all NOCs and necessary permissions from all the departments and by investing money, was to construct buildings and allot the flats in redeveloped property to the members. The property admeasures about 2,13,000 sq. mtrs. According to the plaintiff in consideration of obtaining NOCs and necessary permissions, on payment all requisite fees/premium and construction of the buildings the plaintiff obtained a right to use the FSI over and above 51000 sq. mtrs. Averments in relation to the entitlement of the plaintiff to FSI are to be found in para 8(b). It is categorically averred that the plaintiff was obliged to construct total 1784 flats of carpet area having double the carpet area of existing flats to accommodate members of the societies with maximum limit of such FSI to be utilized for the benefit of defendant No.1-federation being upto 51000 sq. mtrs. The redeveloped premises were to be provided to the members of the societies affiliated to defendant No.1-Federation. Thus according to the plaintiff for construction of 1784 flats FSI upto limit of 51000 sq. mtrs. was to be exhausted for the defendant No.1 and in consideration of the work of redevelopment the defendant No.1 transferred all rights, title and interest in the suit property i.e. balance FSI as defined in the agreement as FSI 3 over and above 51000 sq. mtrs. The plaintiff under the agreement was entitled to construct by consuming the balance FSI simultaneously and had a right to sale and dispose of flats, shops etc. so constructed out of utilization of balance FSI. 3. According to the plaintiff, with a view to effectively and smoothly implement the terms of the agreement dated 31.1.98 and to facilitate the redevelopment of the property the defendant No.1 also executed a power of attorney in favour of the plaintiff on 29.11.1999. The plaintiff did carry out some construction over a period of time, but could not make any substantial progress. Record reveals that much time was consumed in obtaining sanction of the approved lay out. A lay out which was submitted in the year 1999 was sanctioned on 28.4.05. In the mean time the plaintiff was allowed to carry out the construction under concession granted by defendant No.3. According to the plaintiff the delay in sanction of the lay out was on account of dispute between MHDA and Municipal Corporation of Greater Mumbai touching the Development Control Rules and that the plaintiff is not responsible for the delay. On 24.4.05 stop work notices were issued by MHADA on the ground that the construction was being carried on in breach of the rules and without payment of premium. It is undisputed that obligation to pay the premium and to obtain NOC was on the plaintiff. Stop work notices also came to be issued by the Corporation on the ground that the plaintiff’s construction was 4 illegal and contrary to section 53 of the MRTP Act. Stop work notices were also issued on the ground that the property in question is covered by private forest and thus no construction could be carried on the property. Thus from the year 2006 there was no progress on account of stop work notices being issued. 4. In the above mentioned situation the plaintiff inducted one M/s.Labha Shubha Properties Pvt. Ltd. as sub-developer possibly with a view to raise the finance as M/s.Labha Shubha Properties had financed the plaintiff for other projects and it is so stated in para 21 of the plaint. Even after inducting Labha Shubha properties there was no progress either in having the stop work notices set aside or withdrawn for legally commencing the construction of the buildings. The plaintiff hence terminated the services of M/s.Labha Shubha properties Pvt. Ltd. on the ground that it had started claiming itself to be the direct developer instead of sub-developer appointed by the plaintiff. The plaintiff thereafter claims to have inducted the defendant No.2 as sub- developer who is stated to be a subsidiary of defendant No.5. It is stated in para 28 of the plaint that the plaintiff and defendant No.2 agreed that the defendant No.2 will carry out the work and out of the profits the plaintiff would get 30% of the profit and defendant No.2 was to retain 70% profit. A MOU was also executed between the plaintiff and defendant No.2 after defendant No.2 paid amount of Rs.65 lacs under two cheques one each for Rs. 5 50 lacs dated 26.10.06 and Rs.15 lacs dated 16.10.2006. The MOU between the plaintiff and defendant No.2 was signed on 29.9.06. It is the case of the plaintiff that the amount it received was only a small portion of the payment by way of advance and the major chunk of the consideration was not paid and was to be paid at the time of execution of final joint venture agreement. It is then contended by the plaintiff that defendant No.2 was a financier and while working as sub-developer has acted fraudulently and has cheated the plaintiff. As there was no progress in the construction defendant No.1 after issuing notices to plaintiff convened a meeting and unanimously passed a resolution terminating the agreement of development executed with the plaintiff and allotted the redevelopment work to defendant No.2. Apprehending dispossession on termination of the agreement, the plaintiff instituted a suit in the City Civil Court claiming relief of injunction simpliciter and obtained leave under order 2 Rule 2 of Code of Civil Procedure to institute a separate suit for specific performance of the agreement and for challenging the termination notice and the Resolution passed by defendant No.1. The plaintiff filed suit for injunction simpliciter in the City Civil Court vide SC Suit No.1065 of 2007. The plaintiff has now challenged the notice of termination dated 9.1.07 issued by defendant No.1 canceling the agreement dated 31.1.98 and revoking the power of attorney dated 29.11.99 by filing the present suit. The City Civil Court protected the possession of the plaintiff over the property by 6 passing interim order. The notice of motion was allowed and parties were directed to maintain status quo. The said order passed by City Civil Court was challenged before the learned Single Judge of this Court by filing an appeal against order and in the said appeal, a stay application was moved seeking stay of the order passed by the City Civil Court. Allowing the stay application by a reasoned order this Court has stayed the order passed by the City Civil Court. It has come on record that after termination of the agreement by defendant No.1 entered into with plaintiff and after appointment of defendant No.2 as developer, the 2nd defendant has deposited entire premium with MHADA on behalf of defendant No.1 which is in the sum of about Rs.3.5 crores and has got the stop work notices/order withdrawn or set aside. Necessary permissions are also obtained from forest department, Collector, MHADA and the Corporation and the construction work is in progress. 5. It will not be out of place to mention that some writ petitions were filed touching the dispute between the parties and touching the stop work notices and/or challenging actions of MHADA and some other proceedings were also initiated, however I am not referring to those proceedings and orders passed therein as the same do not have any bearing on the issues arising for adjudication in the present suit. 6. The averments in regard to the possession of the plaintiff are to be found in para 16 of the plaint. It is stated that “the plaintiff after receiving 7 possession of the said property as per the agreement, has taken actual possession of 12584 sq. mtrs. Of plot of land on which constructions are started by demolishing old structure ...........”. The plaintiff is claiming that the total area of the property owned by defendant No.1 is admeasuring 2,13,000 sq. mtrs. The whole of the property was comprised of flats in occupation of the members hence the plaintiff was put in de jure possession of the entire property and after demolition of some of the old buildings the plaintiff is in actual possession of 12584 sq. mtrs. According to the defendant No.1 the possession of the entire property is with defendant No.1 and the property is in occupation of the members. It is claimed by the defendant No.1 that after demolition of some of the buildings for the purpose of reconstruction the plaintiff has been given licence to enter upon the premises with a view to construct and redevelop the properties. 7. Learned senior counsel Mr.Madon appearing for the plaintiff contended that having regard to the nature of the agreement and the rights and obligations flowing there from the defendant No.1 could not have terminated the agreement. It is submitted that the plaintiff was put in possession of the entire property in part performance of the contract under section 53A of the Transfer of Property Act. The plaintiff was and is ready and willing to perform its part of contract. The said agreement contemplates transfer of immovable property by defendant No.1 in favour of the plaintiff and hence the Court 8 ought to presume that the plaintiff cannot be adequately compensated in terms of money and thus specific performance of contract ought to be granted. It is submitted that as the plaintiff’s possession is referable to section 53A of the Transfer of Property Act the plaintiff cannot be dispossessed on termination of the agreement and the possession of the plaintiff need to be protected. Touching the revocation of Power of Attorney learned counsel submitted that section 202 of the Contract Act forbids termination of POA when the agent himself has an interest in the property which forms subject matter of the agency. It is the case of the plaintiff that defendant No.1 has created an interest in the plaintiff under the agreement in the entire property and on this premise revocation of the POA is objected to. 8. Per contra, Shri Aspi Chinoy, learned senior counsel for defendant No.1 has contended that in the first place the property which is to be developed is not the suit property. Inviting my attention to the specific averments made in the plaint it is pointed out that the balance FSI alone is the suit property. It is reiterated that the balance FSI is the FSI available to the plaintiff only after consumption of 51000 sq. mtrs of FSI by defendant No.1. Para 4 of the plaint clearly states that the suit property is the balance FSI arising out of the said property. The plaintiff has consciously used the expression the `suit property’ and the `said property’ in the plaint at various places denoting the suit property to be the balance FSI in relation to which the plaintiff is claiming 9 rights and the reliefs. It is then submitted that in lieu of obtaining NOCs and necessary permissions from the authorities and constructing buildings for housing members of the societies affiliated to defendant No.1 the plaintiff was to be paid consideration and the consideration agreed to be paid was in the form of FSI which was available with defendant No.1. Just because the defendant No.1 agreed to part with FSI in favour of the plaintiff thereby permitting additional construction, the same cannot be construed as transfer of immovable property or creation of an interest in the immovable property, as no immovable property was intended to be transferred by the defendant No.1 to the plaintiff. The under lined object of the agreement is Redevelopment of the property and construction of tenements which were to be retained by members of defendant No.1. Hence it is urged that there is no transfer of immovable property by defendant No.1 in favour of plaintiff nor was there any agreement to transfer interest in the immovable property. What was agreed was transfer of FSI by way of consideration to be paid to the plaintiff by utilization of which it was to construct flats, shops etc. and sell them for realization of the amount. The next limb of this submission is that the plaintiff, if aggrieved by termination of agreement, can be adequately compensated in terms of money in as much as the balance FSI is capable of being valued in terms of money. The submission thus is that no specific performance of the agreement can be granted. The submission touching 10 section 202 is that in a development contract the developer cannot claim any interest in the immovable property which could be said to form subject matter of agency and hence section 202 has no application. Under such an agreement interest is not created in the immovable property but interest is created in the product which is to come into existence after use of the agency agreement. Learned counsel has placed reliance on section 14 of the Specific Relief Act to contend that contract of this nature is not capable of being specifically enforced, firstly, because the non-performance of it could be adequately compensated in terms of money; secondly, that the performance of contract involves minuet and numerous details which is dependent on the volition of the parties and that it would not be feasible for the Court to supervise the continued performance of the contract. Touching sub-section 3(c) of section 14 the submission is that a developer cannot satisfy the criteria laid down in sub-section (c)(iii). Reliance is placed on an unreported judgment of the learned Single Judge (Justice D.K.Deshmukh) of this Court to substantiate the said contention. It is lastly submitted that there is no transfer of immovable property as such under the agreement for the obvious reason that transfer of immovable property by defendant No.1 to the plaintiff was never in contemplation and never intended. Thus section 53A of the Transfer of Property Act is not applicable. Touching equitable consideration it is pointed out that the members of 11 defendant No.1 are from weaker section of the society and though the development agreement was entered in the year 1998 despite passage of 10 years time construction has not seen any substantial progress. It is a matter of record that only 12% of the construction work has been completed and if and in case, the interim relief is granted the same would result in depriving the weaker section of society of the benefit of redevelopment of the property for a long long period. As of now the buildings are said to be in a dilapidated condition. It is also stated that the plaintiff was never in a position to redevelop the property of the suit magnitude and nor was the plaintiff ready and willing to perform the contract. The plaintiff has been inducting one or the other party as sub-developer solely with a view to finance the project as he himself is not having the capacity to invest and perform his obligations under the agreement. It is lastly submitted that though the suit for injunction was filed more than two years before and temporary injunction was obtained the present suit has been filed belatedly and without any explanation much less satisfactory there for. 9. Shri Aney, learned senior counsel appearing for the defendant No.2, pointed out the averments made in the plaint and submitted that on the own showing of the plaintiff, the plaintiff had entered into an agreement with defendant No.2 which culminated in execution of the MOU under which the plaintiff has transferred all his right, title and interest in the entire property in 12 consideration of receiving 30% share in the profits. Defendant No.2 under the MOU is entitled to retain the balance 70% profits. Thus it is contended that on execution of MOU between the plaintiff and defendant No.2 the plaintiff has ceased to have any right whatsoever in the `said property’ or the `suit property’ and the plaintiff can only claim a right to 30% share in the profits. It is then submitted that for holding that the plaintiff has made out prima facie case inter se dispute between the plaintiff and defendant No.2 will also have to be adjudicated upon, in the absence of which no interim relief can be granted. It is then submitted that after appointment of defendant No.2 as the developer by defendant No.1 necessary steps are taken earnestly and with due diligence as a consequence of which stop work notices are either withdrawn or set aside and payments are made to authorities after seeking regularization of the illegal construction put up by the plaintiff or its sub-developer. It is also submitted that defendant No.2 has paid premium for regularization on behalf of defendant No.1 which is in the sum of Rs.3.5 crores and IODs and CCs have been obtained. The defendant No.2 claims to have invested huge amount in the project and the work is stated to be in full swing. The balance of convenience is claimed to be on the side of the defendant No.2. 10. Having regard to rival contentions referred to herein above the following main questions arise for prima facie consideration and the same are: a) Whether in the facts of the present case can it be said that the 13 defendant No.1 has transferred the immovable property in favour of the plaintiff in part performance of contract and put the plaintiff in possession thereof as contemplated by section 53A of the Transfer of Property Act? b) Whether decree for specific performance of the suit contract can be granted in view of bar of section 14 of the Specific Relief Act? c) Whether revocation of POA is bad in law being hit by section 202 of the Contract Act? 11. Section 53A of the Transfer of Property Act envisages situation when any person contracts to transfer any immovable property. The development agreement has been executed between the plaintiff and defendant No.1 solely with a view to redevelop the property so that members of the defendant No.1 can obtain the new flats with double the area comprised in existing flat. Thus the main object was to redevelop the property. The Development agreement cannot be read as contract to transfer immovable property by defendant No.1 in favour of the plaintiff. What was agreed to be transfered was the balance FSI and not the immovable property. After redevelopment and on construction of building no doubt the plaintiff has right to sale the flats or shops but this creation of interest is not transfer of immovable property but creation of an interest in the product that is to come into being after the redevelopment of the property. I am of the clear opinion that the defendant 14 No.1 did not contract to transfer the immovable property and hence even if it is assumed that the plaintiff was put in possession, the said possession is not referable to the possession under section 53A of the act. The possession taken by the plaintiff cannot be said to be in part performance of the contract of transfer of immovable property. The possession has been taken by the plaintiff with a view to demolish the existing dilapidated buildings and in its place to reconstruct new buildings. As defendant No.1 did not intend to transfer immovable property to the plaintiff for consideration the de jure possession of the plaintiff cannot constitute possession taken in part performance of the contract. I am of the prima facie view that under the agreement for development the plaintiff has not been put in possession in part performance of contract as there was no contract to transfer the immovable property as contemplated by section 53A of the act. 12. Learned senior counsel for the defendant has rightly contended that having regard to the mandate of section 14 of the Specific Relief Act suit contract is not capable of being specifically performed for the reason that the plaintiff can be adequately compensated in terms of money and as the contract runs into such minute and numerous details, the performance of which is depending on the volition of the parties, and as it involves a continuous duty to supervise the performance, which the Court cannot perform. Sub-section (3)(c) specifically deals with enforcement of contract for 15 construction of building with which we are concerned. Section 14(3)(c) lays down that where the suit is for enforcement of a contract for the construction of any building the Court may enforce the specific performance in the event if conditions stipulated in sub-clauses (i), (ii) and (iii) are satisfied. The condition laid down in clause (c)(iii) cannot be complied with by a developer/builder but is a situation or a condition which can only be complied with in a suit instituted against the developer/builder. Learned counsel for the defendant No.1 has relied upon an unreported judgment in (Notice of Motion No.3820/06 in Suit No.3151 of 2006 - M/s.Shah & Jhaveri Developers v. M/s.Classic Developers Pvt. Ltd. & Anr.,) (Justice D.K.Deshmukh) dated 13.4.2007. Learned Judge has held that : “Perusal of sub-section (3) of section 14 shows that despite what is contained in clause (b) of sub-section (1) of section 14, a decree for specific performance of a contract including others, a contract for construction