1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. Chamber Summons No.124 of 2009 IN Suit No.3452 of 2004 Reveira Institute of Education Pvt. Ltd. ... Plaintiffs v/s. Mantri Real Estate Pvt.Ltd. & ors. .. Defendants Mr.M.S. Doctor with Mr.Nimoy Dave i/by B. Munim & Co. for Plaintifs. Mr.G.S. Godbole with Ms.Chandana Salgaonkar for Applicants-Deft.Nos.2 & 5. ------ CORAM : SMT.ROSHAN DALVI, J. Dated : 13th February 2009 P.C. : 1.The Defendants have applied for rejection of the Plaint under Order VII Rule 11 of the Code of Civil Procedure, 1908 (CPC), on the ground that this Court has no territorial jurisdiction to try the Suit. 2.The Suit is for recovery of Rs.50 Lakhs with interest at the rate of 12% per annum from the date of the execution of the Memorandum of Understanding (MOU) dated 23rd October 2003 between the Plaintiffs and Defendant No.1 for securing the suit property by a charge on the property to the extent of 2 the interest of Defendant No.1 therein, for repayment of the aforesaid amount, for sale of the suit land and the application of the sale-proceeds towards repayment of the aforesaid amount. 3.The parties entered into a MOU under which Defendant No.1 was to allow the Plaintiffs to develop the suit property and for which the Plaintiffs made payment of Rs.50 Lakhs as earnest. Defendant No.1 had to make out a clear marketable title within the agreed period upon failure of which the Plaintiffs were directed to terminate the Agreement and recover the amount of earnest paid thereunder. 4.It is the case of the Plaintiffs that Defendant No.1 did not make out clear marketable title. The Plaintiffs terminated the Agreement and claimed return of the amount of earnest. The Defendants have failed to pay, for which this Suit is filed. 5.The Suit, as filed, was, therefore, for recovery of the amount of earnest. After the filing of the Suit, the Plaintiffs claimed a charge on the suit property under the provisions of Section 55(6)(b) of the Transfer of Property Act (TP Act) to the extent of the interest of Defendant No.1 therein for the amount of 3 purchase money/earnest paid to Defendant No.1 and consequently, for sale of the property under the directions of the Court for securing the recovery of the said amount. 6.The Agreement was executed in Mumbai and the earnest was paid in Mumbai. Upon the cancellation of the Agreement the earnest was to be refunded also in Mumbai. The Court' s territorial jurisdiction is, therefore, clearly seen. The Plaintiffs averred the aforesaid fact in paragraph 21 together also with the fact that the Defendants carried on business in Mumbai. In fact, whether or not the Defendants carried on business in Mumbai, upon the entire cause of action having arisen in Mumbai, this Court would have territorial jurisdiction to try the Suit under Clause 12 of the Letters Patent which runs thus : “ 12. Original jurisdiction as to suits.- And We do further ordain that the said High Court of Judicature at Bombay, in the exercise of its ordinary original civil jurisdiction, shall be empowered to receive, try, and determine suits of every description, if, in the case of suits for land or other immovable property such land or property shall be situated, or in all other cases if the cause of action shall have arisen, either wholly, or, in case the leave of the Court shall have been first obtained, in part, within the local limits of the ordinary original jurisdiction of the said High Court or if the defendant at the time of the commencement of the suit 4 shall dwell or carry on business, or personally work for gain, within such limits; except that the said High Court shall not have such original jurisdiction in cases falling within the jurisdiction of the Small Cause Court at Bombay, or the Bombay City Civil Court.” 7. However, the Plaintiffs have claimed a charge on the suit property for securing the repayment of the said amount and sale of the suit property under prayers (a)(i) and (a)(ii) of the Plaint. Consequent upon those added prayers, it is the case of the Defendants that the Suit, as framed, is a Suit for land and the land upon which the aforesaid statutory charge is claimed being at village Lohgaon, Taluka Haveli, District Pune, this Court would have no territorial jurisdiction. It has, therefore, to be seen whether the above is “Suit for land”. 1.In the case of India Spinning and Weaving Co. Ltd. vs. Climax Industrial Syndicate, AIR 1926 Bombay 1, a Full Bench of 3 Judges held that the Suit on a mortgage of land is a Suit for land. That judgment was overruled in the case of Hatimbhai Hassanally vs. Framroz Eduljee Dinshaw, AIR 1927 Bombay 278, which was decided by the Full Bench of 7 Judges. In that case, it was held that the Suit on a mortgage to enforce the mortgage by sale is not a Suit for land within the meaning of Clause-12 of the Letters Patent. 5 2. In view of the dispute with regard to the interpretation of the term “Suit for land”, certain observations of various Judges of the Full Bench would require a note and to which meticulous reference is made by Mr.Doctor on behalf of the Plaintiffs. 3.In paragraph 26 of the judgment, Chief Justice Marten has observed that primary element in a mortgage is the debt and not the security. Relief in a Suit on mortgage is for account of what is due under the mortgage and only in default of payment of the amount due under the mortgage the sale of the property mortgaged can be ordered. Hence, it is observed that primary relief in such a Suit is merely payment of money. Secondly, relief would be granted only if there is a default of the primary relief prayed for. The present Suit is also for a decree of money. In default of the refund of earnest, the charge is created which can be enforced by sale. Hence, that is the secondary relief. 11.In paragraph 43 of the said judgment, the term “for” in the expression “Suit for land” is explained. It would mean “to obtain or recover land”. Hence, it is observed that such Suits are substantially filed for recovery of land or its 6 equivalent. Consequently, the Suit for foreclosure, for specific performance, for damages are not Suits for land but Suits for foreclosure, specific performance or damages, respectively. This is upon the analogy that such Suits are substantially the Suits for recovery of money or for performing an act and not for recovery of the land itself. 12.Paragraph 45 of the said judgment considers the main object of the Suit. Suits for land are the ones in which the main object is not to obtain money. 13.In paragraph 46 of the said judgment, it is observed that in a specific performance against the decree involves the execution of the conveyance in favour of the purchaser and hence, it does not relate to or concern land. 14.In paragraph 52 of the said judgment, a reference is made to the case of Venkatrao Sethupathy vs. Khimji Assur Virji (22), (1916) 26 BLR 535 = 80 I.C. 442. The relevant part of that judgment runs thus:- “ .... it appears to me difficult to understand how a suit in which the mortgagee seeks 7 to have the land vested in him under his mortgage sold to somebody else by the Court is a suit for land. It is a suit to realise and dispose of his and his debtor' s interest in the land. The object of the suit is not to obtain land or to obtain a declaration of title to land or to obtain damages for interference with land but to obtain repayment of debt owing to the plaintiff and for that purpose to realise the security which has been vested in him.” This Suit also is merely to obtain recovery of the earnest which is the debt stated to be owned to the Plaintiffs, of course, subject to proof of such debt and for that purpose to realise the security vested in the Plaintiffs under the Statute itself. It may be mentioned that the execution of the MOU is not denied. Hence, at the hearing of the Suit, the entitlement of refund of earnest would have to be decided upon an interpretation of the admittedly executed documents between the parties. Consequently, this Suit is much like a Suit for enforcing a mortgage by sale, it being a Suit for recovery of the Plaintiffs' debt by enforcing the statutory security by sale. 15.In the judgment of Blackwell, J. in Bank of England referred to on page 343 in column-1 the ordinary meaning of the term “suit for land” is considered. It is held that that meaning is “a suit to obtain land”. Justice Blackwell has given a number of illustrations which bring home the 8 concept – a suit for injunction is a suit to obtain injunction; a suit for possession is a suit to obtain possession, a suit for damages is a suit to obtain damages. These are Suits “relating to” or “substantially for” injunction, possession, damages, etc. Hence, it is concluded by Blackwell, J. that the expression “suit for” would mean “suit to obtain”. Hence, the suit for land is a suit to obtain land. In the further paragraph it is observed that such suit would involve an obligation to try even a question of title to land outside the jurisdiction provided that possession of the land is not sought to be obtained. Therefore, the “suit for land” would be a suit where the question of title to the land would be involved. Consequently, it is observed that a suit for specific performance of an Agreement to sell a tea estate is not a suit for land. 16.Patkar, J. in column-1 at page-350 made a reference to the Calcutta High Court' s judgment in Kellie vs. Fraser 1877(2) Calcutta 445 and held that the suit for accounts upon dissolution of partnership was also not a suit for land merely because one asset of the partnership was immovable property. Hence, he concluded that the suit for land would be the one in which the substantial question is the right to land. Consequently, in such an action the primary object is 9 to establish claims regarding the title to the property or the possession of such property. Hence, it is held that in a mortgage suit primary object is to realize mortgage money and the ancillary relief is the sale of property. Consequently, it is essentially a Suit for recovery of mortgage debt and not a suit for land within the meaning of Section 12 of the Letters Patent. 17.This judgment came to be considered in the case of M/s.Moolji Jaitha & Co. vs. The Khandesh Spinning and Weaving Mills Co.Ltd., AIR 1950 FC 83. The Full Bench of 5 Judges once again considered the expression “suit for land”. The essential aspect was in that case to consider the applicability of the equity jurisdiction of English Courts concerning foreign lands to chartered High Courts. The parameters of the expression came to be laid down by each of the Judges on the Full Bench. 18.The Chief Justice Kania stated that the real ambit of such litigation was for the purpose of obtaining a direction for possession or a decision on the title to land. 19.Fazl Ali, J. observed that the expression “suit for land” would be applicable to suits for (1) determination of title to 10 land, (2) suits for possession of land and (3) whether the reliefs granted would directly affect title or possession. If that was so, it would be a suit for land. Similarly Patanjali Sastri, J. observed that such a suit would necessitate an adjudication upon title to the property or a determination of right or interest in the property. Mahajan, J. observed that where the suit involved a controversy about the land or immovable property and the Court was called upon to decide the conflicting claims upon such property so that the decree or order would bring about a change in the title to the property, the Suit would be a suit for land or immovable property. But if the main object of the suit was different, and some relief had to be given about the land, the suit would not fall within the 4 corners of the expression “suit for land”. 20.B.K. Mukherjee, J. also observed that the suit for land was a Suit for establishing title to that land or any interest in the land or possession or control of the land and is binding on the land itself. They considered and reiterated what was held in the case of Hatimbhai (supra) and which need not be repeated. Hence, Clause-12 of the Letters Patent was held to apply only to suits for land. The proposition laid down by the Federal Court in paragraph 15 of the judgment 11 is that one must see whether the suit is for the purpose of obtaining a direction for possession or a decision on title to land or the object of the suit is something different and whether consideration of the question of title to land is indirect. It may be mentioned that this Suit is not for obtaining a decision on who is the rightful owner of the suit property. The object of this Suit is to recover the earnest which is to be secured by a charge on the property so that upon failure of payment, the suit property could be sold. It may be mentioned that since Defendant No.1 themselves entered into the MOU upon the premise that they were the owners of the land who could enter into such an agreement with the Plaintiffs they, by such act, caused the Plaintiffs to believe such a representation to be true and would be estopped from denying the truth of such a fact, notwithstanding the fact that they may not make out a clear marketable title thereto. Consequently, the security claimed by the Plaintiffs upon statutory charge can be enforced in case of default in refunding the earnest admittedly received by Defendant No.1. Similarly since Defendant No.1 has created further rights in respect of the suit property upon receipt of further consideration amount from Defendant No.6, it would not behove them to deny their own title to the suit 12 land; an aspect which would be considered at length only upon hearing on merits. The object of this Suit, therefore, is only to obtain recovery of the earnest and securing the Plaintiffs for that purpose and not the consideration of the title of the suit land. 21.Hence for determining whether or not the Suit is a suit for land, as held by Mahajan, J. at page 105 of the judgment, what must be seen is “the essential nature of the relief sought”. Consequently, Mahajan, J. has distinguished the substance of the suit contained in the primary object of the suit and the other reliefs claimed in the Suit. Hence, he has held that when suit in substance involves a controversy about the land and the Court has to decide the conflicting claims which may bring about a change in the title of the land which would be the primary object of such litigation, it would be a suit for land. If the primary object is different being that some relief has to be given about the land, the nature of the suit is not a suit for land as the title is not raised or disputed by the Plaintiffs. Justice Mahajan has given illustrations where the dispute could not be taken to be about the title to the land. These are cases where compensation is claimed for trespass, security under a mortgage is abandoned in favour of only a money decree, etc. 13 Consequently in such cases, the Court is held enjoined to determine the true nature of the suit and to say whether it is in substance a suit which affects land or whether it falls in the category of “other cases”. Therefore, when the suit concerns itself only with the nature of the property with regard to the conflicting claims thereupon and the Court has to grant relief operating upon the property, it would be a suit for land; not otherwise. 22.Aside from this aspect, the judgment has further considered the territorial jurisdiction of the Court under Private International Law, Equity Law in England and the jurisdiction exercised by Chancery Courts in respect of lands abroad. The judgment also considered the extent of the jurisdiction of the Court under Clause 12 of the Letters Patent. In that regard, Mahajan, J. has observed that the case of India Spinning (supra) was decided on correct lines rather than the case Hatimbhai (supra) . Hence, he has observed that the suit for land could not be a suit for debt as held in the case of Hatimbhai (supra) since the decree would directly operate on the land mortgaged. Though Mahajan, J. concluded that the suit for land, foreclosure or redemption being held as a suit not for land in the case of Hatimbhai (supra) was erroneous, the proposition laid down by him for 14 considering the true nature of the suit was the “primary object” and not “some relief” to be given about the land. In essence, therefore, the majority of the Full Bench upheld the aforesaid rule enunciated in Hatimbhai (supra). 23.In the case of Adcon Electronics Pvt. Ltd. vs. Daulat & anr., (2001) 7 SCC 698, it was held that the suit for specific performance without claim for delivery of possession was not a suit for land. The majority judgment of the various Judges in the case of M/s.Moolji Jaitha & Co. (supra) was considered. The concept of “primary object” laid down by Mahajan, J. was accepted. Hence it was held, accepting the judgment of Mahajan, J. in paragraph 81 of M/s.Moolji Jaitha & Co. (supra) that where the primary object was not to claim the immovable property itself by way of its title or possession but was something quite different and “some relief had to be given about the land, the title to it not being in dispute in the real sense of the term”, the suit was not for land. In this case, the title of Defendant No.1 is not disputed by the Plaintiffs though a clear marketable title is not made out. Whatever be the title, Defendant No.1 may have, which may be less than a clear marketable title, could be utilized upon the 15 charge created for securing the Plaintiffs' claim of refund of earnest. That could be secured by sale of the property simplicitor upon default of Defendant No.1. Defendant No.1 cannot dispute its own title. Hence the title is not in dispute “in the real sense of the term” as is the case where two parties make conflicting claims of title. Consequently the ratio laid down in paragraph 15 of the judgment in Adcon's case (supra) by the Supreme Court is that the suit for land relates to title or delivery of possession and the relief relates to adjudication of title to the land or delivery of possession. This would be applicable also in a suit for specific performance. Hence, as held by Mahajan, J., if the suit is simplicitor for specific performance, it is not a suit for land. If it is a suit for a decree for possession of the land as also specific performance it is a suit for land. Applying that analogy a suit essentially for refund of earnest is not a suit for land since it is not for recovery of possession of that land or for claiming a title to that land, though it may secure a claim of the Plaintiffs by a statutory charge which can be enforced merely by the sale of the land and not by claiming possession or title. 24.Since the present suit is not a suit for land, it need not have been filed in the Court within whose jurisdiction the land is situate. Since the present suit is a suit for recovery of 16 earnest under the suit agreement which was executed and cancelled in Bombay and where the earnest was paid and had to be refunded in Bombay, it has been filed within the jurisdiction of the Bombay Court in which the entire cause of action arose. This Court is the only Court having territorial jurisdiction, the entire cause of action having arisen in Bombay. 25.It may be mentioned that the Defendants claim that they are carrying on business at Bangalore. 26.It matters not where the Defendants carry on business since the entire cause of action has arisen in Bombay. The territorial jurisdiction of the Court is not ousted by the mere fact of the Defendants' business outside Bombay. Nevertheless, it has been pointed out by Mr.Doctor that the averment in paragraph 21 of the Plaint relating to the Defendants carrying on business in Bombay has not been controverted even after the amendment to the Plaint when the newly added Defendants, in whose favour interest has been created in the suit land by Defendant No.1, filed their respective Written Statements. In the result, that averment stands undenied. 17 27.It is seen that the Court has territorial jurisdiction to try the Suit. The Plaint, therefore, cannot be rejected under Order VII Rule 11 of the CPC. In fact, the Plaint need not even be returned to any other Court for filing under the provisions of Order VII Rule 10 of the CPC. Hence, the Chamber Summons is dismissed. No order as to costs. (SMT.ROSHAN DALVI, J.)