: 1 : IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO.2498 OF 2008 NOTICE OF MOTION NO.2498 OF 2008 NOTICE OF MOTION NO.2498 OF 2008 IN IN IN SUIT NO.3452 OF 2004 SUIT NO.3452 OF 2004 SUIT NO.3452 OF 2004 Reveira Institute of Education Pvt. Ltd. .. Plaintiffs. Versus Mantri Real Estate Pvt. Ltd. & Ors. .. Defendants. Mr.M.S.Doctor i/b.M/s.Bachubhai Munim & Co. for plaintiffs. Ms.Sheetal Kamble i/b.PRS Legal for defendant No.1. Dr.V.V.Tulzapurkar with T.N.Subramaniyam i/b.Ms.C.Salgaonkar-Radia for defendant Nos.2 to 5. CORAM : R.Y. GANOO, J. CORAM : R.Y. GANOO, J. CORAM : R.Y. GANOO, J. DATE : 25th September, 2008. DATE : 25th September, 2008. DATE : 25th September, 2008. JUDGEMENT :- JUDGEMENT :- JUDGEMENT :- 1. The present notice of motion is taken out by defendant Nos.2 to 5 to have order dated 6.6.2007 passed : 2 : by this court in notice of motion No.2116 of 2005 set aside. Parties have completed the pleadings in the motion and the same is being disposed of by this order. 2. Few facts necessary for the disposal of this motion are as under :- 3. The plaintiffs herein executed a Memorandum of Understanding with M/s.Anjir Properties Pvt. Ltd. on 23.10.2003 for the purchase of the land, more particularly, described in the plaint (hereinafter referred to as "suit land"). The total consideration payable was Rs.7,58,85,000/- and the earnest money paid by the plaintiffs was to the tune of Rs.50.00 lacs. After the institution of the suit, the name of the original defendant No.1 M/s.Anjir Properties Pvt. Ltd. is changed to M/s.Mantri Real Estate Pvt. Ltd. and that is how by a suitable amendment, this change was brought about. The present suit came to be filed by the plaintiffs asserting that the defendant No.1 has no title to the suit land and, therefore, plaintiffs are entitled to get back the sum of Rs.50.00 lacs which was paid by them as and by way of earnest money alongwith the interest thereon. : 3 : 4. The plaintiffs had filed a notice of motion No.3516 of 2004 so as to seek an order directing defendant No.1 to furnish security in the sum of Rs.50.00 lacs as and by way of Bank Guarantee or any other security and restraining the defendants from creating any third party rights in respect of suit land etc. That motion was withdrawn because plaintiffs had taken out new motion namely Motion No.2116 of 2005. The plaintiffs had in June, 2005, taken out a chamber summons No.727 of 2005 to amend the plaint and add certain averments regarding the enforcement of the charge and other related aspects and it is at that point of time, the notice of motion No.2116 of 2005 was taken out in the month of July, 2005 and reliefs asked therein were; (i) Appointment of Court Receiver; (ii) An order of injunction restraining defendants from creating any third party rights etc. 5. That motion came to be decided by order dated 6.6.2007 and the court was of the view that Receiver, High Court, Bombay is necessary and, therefore, Receiver, High Court, Bombay was appointed in respect of Plot Nos.1,2,3,8,9,12 and 13 with certain directions as regards royalty etc. At the time of passing of this order dated 6.6.2007, present defendant Nos.2 to 5 were not parties to : 4 : the suit. 6. The record shows that present defendant Nos.2 to 5 had taken out chamber summons No.628 of 2006 so as to implead them as defendant Nos.2 to 5 in the suit and that chamber summons was withdrawn as per the order dated 15.10.2007 and that was done for the purposes of taking out a new chamber summons. A new chamber summons No.1788 of 2007 was taken out some time in October, 2007 and that was for being joined as party defendant Nos.2,3,4 and 5. That chamber summons was made absolute on 10.6.2008. Thereafter, the present notice of motion has been taken out by defendant Nos.2 to 5 in July, 2008 to see that the order dated 6.6.2007 in Motion No.2116 of 2005 is set aside. 7. Certain other facts which are required to be mentioned are as follows, namely :- 8. The suit land was owned by one Mr.Nanabhai Mody and one Mr.Nagindas Bilakhia. Mr.Mody expired on 10.7.2005 and present defendant No.2 is the heir of said Mr.Mody. Said Bilakhia expired on 6.9.2004 and present defendant Nos.3 to 5 are the heirs of said Bilakhia. : 5 : 9. The title certificate dated 6.4.2004 in regard to the suit land issued by Mr.Manoj Wadekar and another title certificate issued by M/s.Kanga & Co. were available to the plaintiffs. Irrespective of whatever is stated in the said title certificate, it is clear that the plaintiffs approached this court with a case that defendant No.1 with whom plaintiffs had entered into a Memorandum of Understanding had no title whatsoever in regard to the suit land. This is being stated on the basis of averments in para 16(ii) and 16(xi) of the plaint. If one peruses the plaint, it is seen that the plaintiffs have approached this court with a positive case that the defendant No.1 practised fraud upon the plaintiffs and defendant No.1 did not have a title to the suit land and that the plaintiffs are entitled to get back the sum of Rs.50.00 lacs which was paid by them as and by way of earnest money. In the plaint, initially there was no prayer for creation of a charge as understood under Section 55(6)(b) of the Transfer of Property Act, 1882 (hereinafter referred to as the said "Act"). However, at a later point of time, after amendment of plaint pursuant to Chamber Summons No.727 of 2005, the plaintiffs had prayed that the repayment of the sum of Rs.50.00 lacs should be secured by a charge on the : 6 : said suit land to the extent of defendant’s interest in the property and that the plaintiffs are entitled to enforce the charge on the suit land. The plaintiffs had also prayed that the plaintiffs should be ordered to sell the suit land and recover the sum of Rs.50.00 lacs. 10. All this will clearly go to show that on the date when the suit was filed, plaintiffs had accepted the position in law that the defendant No.1 did not possess any title to suit land. An order dated 6.6.2007 was passed so as to see that the Court Receiver is appointed in respect of certain plots of lands out of suit land. A perusal of the order dated 6.6.2007 goes to indicate that the court came to the conclusion that certain interest was created in favour of defendant No.1 and in regard to the plot Nos.1,2,3,8,9,12 and 13 and that is how, the court felt it fit and proper to appoint a Receiver in respect of those plots. 11. Learned Senior Counsel Dr.Tulzapurkar appearing for defendant Nos.2 to 5 had advanced following submissions to show that the order dated 6.6.2007 is required to be revoked / set aside :- : 7 : i) On the date when the suit came to be filed, plaintiffs had accepted that defendant No.1 had no title and, therefore, in law, no charge would be created in accordance with the provisions of Section 55(6)(b) of the said Act and if that is so, there was no question of securing the interest of the plaintiffs qua the suit land to the extent of defendants interest in the property; ii) If defendant No.1 had no title in respect of the suit land, there was no question of the Receiver being appointed in respect of the property and therefore, the order appointing Receiver in respect of suit property is required to be set aside; iii) If the plaintiffs admit that defendant No.1 had no right, interest and title in respect of property, there was no question of creation of an interest in favour of defendant No.1 and as such no order could have been passed thereby appointing Receiver in respect of certain plots of lands; : 8 : iv) Even if it is accepted for a moment that a charge is created in accordance with the provisions of Section 55(6)(b) of the said Act, the procedure for enforcement of a charge would be as understood in Section 100 of the said Act and, therefore, reading the provisions of Section 100 of the said Act and the provisions of Order 34 Rule 1 of the Code of Civil Procedure, it was necessary for the plaintiffs to join all the parties having interest in the suit property. v) It was submitted that in the present case, the defendant Nos.2 to 5 will be the persons having interest in the property and, therefore, the plaintiffs ought to have joined defendants 2 to 5 before moving the court for appointment of the Court Receiver or any other relief and that not having been done, the order dated 6.6.2007 is required to be revoked. vi) That on account of appointment of Court Receiver, the rights of defendant Nos.2 to 5 as owners of the suit property are in jeopardy and since no charge would be created in regard to the : 9 : suit land, an order appointing Receiver in respect of the suit property could not have been granted. vii) It was obligatory on the part of the plaintiffs to investigate the title of the suit land as to who are the real owners in respect of suit land, join them and then apply for whatever reliefs they wanted to seek. viii) Order dated 6.6.2007 has been passed without hearing defendant Nos.2 to 5, who have ownership rights and, therefore, the order dated 6.6.2007 should be revoked and liberty should be given to the plaintiffs to move for appropriate reliefs by taking out a fresh motion. 12. Learned Senior Counsel Dr.Tulzapurkar appearing on behalf of defendant Nos.2 to 5 submitted that this motion is taken out in view of the provisions of Section 151 of the Code of Civil Procedure because this court had granted injunction in the notice of motion No.2116 of 2005. 13. Learned Advocate Mr.Doctor appearing on behalf of plaintiffs had contended that the defendant Nos.2 to 5 had : 10 : the knowledge that interim reliefs are being asked against defendant No.1 and that at one stage said defendant Nos.2 to 5 had taken out chamber summons No.622 of 2006 and had withdrawn the same and it is only when order dated 6.6.2007 was passed appointing Court Receiver, defendant Nos.2 to 5 came out with the new chamber summons. Mr.Doctor had, therefore, submitted that defendant Nos.2 to 5 had suffered the order of appointment of Receiver and today they cannot say that the order dated 6.6.2007 is required to be revoked. 14. It was argued by learned Advocate Mr.Doctor that defendant Nos.2 to 5 have entered into the development Agreement dated 4.3.2005 in favour of a firm by name M/s.Mantri Developers Pvt. Ltd. and, therefore, as of today, no specific prejudice could be said to have caused to defendant Nos.2 to 5 as a result of order dated 6.6.2007, particularly, when defendant Nos.2 to 5 in the said development Agreement dated 4.3.2005 have admitted that the entire consideration payable by the said developer namely M/s.Mantri Developers Pvt. Ltd. has been paid to defendant Nos.2 to 5. 15. It was argued by learned Advocate Mr.Doctor that : 11 : if defendant Nos.2 to 5 are aggrieved by order dated 6.6.2007, they should have challenged the order dated 6.6.2007 by filing appropriate proceedings and the present course of action by defendant Nos.2 to 5 is not proper and that the notice of motion is required to be dismissed. 16. It was also argued by learned Advocate for the plaintiffs that one Mr.Thepde has been figuring as a key person in the entire matter and there is a collusion between defendant No.1 and defendant Nos.2 to 5 and the involvement of Mr.Thepde is injurious to the interest of defendant Nos.2 to 5 and, therefore, defendant Nos.2 to 5 are not entitled to an order of injunction. Learned Advocate Mr.Doctor had prayed for dismissal of the notice of motion. 17. In reply to the arguments advanced by the learned Advocate Mr.Doctor, learned Senior Counsel Dr.Tulzapurkar submitted that statutory charge would be created if the person in whose favour a charge is alleged to have been created is in possession of the property involved. He had submitted that in the present case, it is not the case of the plaintiffs that plaintiffs are in possession of the suit property. : 12 : 18. I have considered the rival submissions and for reasons to follow, I am inclined to set aside the order dated 6.6.2007. 19. A perusal of the entire plaint and, in particular, paragraph 16(ii) and 16(xi) would go to show that the plaintiffs had approached the court with a positive case that defendant No.1 had no title to the suit land at the time of execution of the Memorandum of Understanding. If this be so, it cannot lie in the mouth of plaintiffs to say that defendant No.1 had semblance of a right in respect of certain plots of lands, namely, plot of land Nos.1,2,3,8,9,12 and 13 in regard to which the Receiver has been appointed. The record clearly goes to show that the plaintiffs had the benefit of the 2 search reports and, therefore, at some stage, the plaintiffs had the knowledge that defendant No.1 is not the real owner of the property and defendant Nos.2 to 5 are the owners of the property. Nothing is stated in the plaint as to what steps were taken by the plaintiffs to investigate as to who are the real owners and join them in respect of the property. : 13 : 20. The suit in the beginning was filed so as to seek recovery of Rs.50.00 lacs and nothing beyond that. The plaintiffs subsequently introduced the concept of creation of a statutory charge under Section 55(6)(b) of the said Act and wanted to protect the interest of the plaintiffs to the extent of defendants interest in the property. The provisions of Section 55(6)(b) do indicate that a charge would be created in the property to the extent of the seller’s interest in the property. Therefore, the words "to the extent of seller’s interest in the property" "to the extent of seller’s interest in the property" "to the extent of seller’s interest in the property" are important. In the present case, the plaintiffs while seeking creation of a charge in regard to the suit property has undoubtedly used the term "to the extent of "to the extent of "to the extent of defendants’ interest in the property". defendants’ interest in the property". defendants’ interest in the property". This will mean that the plaintiffs had conceded that if at all a charge is said to have been created, the said charge would be to the extent of defendants interest in the property. The averment in the plaint by which the appointment of a Receiver is sought to be justified is at para 19C and the relevant portion of the said averment is as follows :- "19C. The plaintiffs submit that pending the hearing and final disposal of the suit, in order to safeguard and protect the plaintiffs aforesaid statutory charge on the said property, it is absolutely just, necessary and proper that the Court Receiver, High Court, Bombay or some other fit and proper person be appointed Receiver of the : 14 : said property with all the powers under Order XL Rule 1 of the Code of Civil Procedure, 1908 including the power of sale". 21. This averment pre-supposes that a statutory charge is created to the extent of defendants’ interest in the property and the said charge is required to be protected by appointment of a Court Receiver. 22. If the plaintiffs have approached this court with a clear assertion that the defendant No.1 had no title to suit land, it will be clear that defendant No.1 had no right in the suit land and, therefore, there is no question of creation of a charge as understood in Section 55(6)(b) of the said Act. Hence, there is no question of safeguarding and protecting the plaintiffs aforesaid statutory charge on the suit land. In substance, the record clearly goes to show that no charge was created in favour of the plaintiffs in regard to the suit land and as such there was no need to protect such an interest of the property by appointment of a Court Receiver. 23. The argument advanced by learned Senior Counsel Dr.Tulzapurkar that the charge could be created under Section 55(6)(b) of the said Act only when the person against whom charge is claimed should be in possession of : 15 : the property is required to be accepted in view of the judgement in the case of Ganpati Ram Bhande and Ors. v/s. Ganpati Ram Bhande and Ors. v/s. Ganpati Ram Bhande and Ors. v/s. Baliram Raghunath Jadhav reported in AIR 1974 Bom.155. Baliram Raghunath Jadhav reported in AIR 1974 Bom.155. Baliram Raghunath Jadhav reported in AIR 1974 Bom.155. 24. The plaint nowhere mentions as to what steps were taken by the plaintiffs to investigate as to who are the real owners and the plaintiffs proceeded to file notice of motion No.2116 of 2005 by not placing before the court appropriate facts as to who are the real owners. 25. The stand of the plaintiffs that the development Agreement dated 4.3.2005 in favour of M/s.Mantri Developers Pvt. Ltd. has the effect of taking away the rights of defendant Nos.2 to 5 in respect of suit land cannot be accepted. Having gone through the said development Agreement, it is clear that though defendant Nos.2 to 5 have received full consideration in respect of development Agreement, the defendant Nos.2 to 5 have yet to perform certain obligations i.e. to execute certain documents in favour of a cooperative society or any other body which may be formed in accordance with the terms of the suit agreement. The defendant Nos.2 to 5 continue to be the owners of suit land and to that extent, the order appointing Receiver violates their ownership rights where : 16 : no charge is created under Sec.55(6)(b) of said Act. 26. The argument advanced by learned Senior Counsel Dr.Tulzapurkar with reference to the provisions of Section 100 of the said Act and Order 34 Rule 1 of the Code of Civil Procedure is required to be accepted inasmuch as if at all the plaintiffs wanted to introduce the concept of charge and operation of the same to the extent of defendants’ interest, the plaintiffs were to take steps in terms of Section 100 of the said Act and, therefore, it was necessary for the plaintiffs to implead all the parties i.e. defendant No.1 and the real owners, namely, defendant Nos.2 to 5 and then apply for proper reliefs. No explanation is coming forth from the plaintiffs as to why the plaintiffs did not join defendant Nos.2 to 5 in the suit before moving the court for relief in terms of motion No.2116 of 2005. 27. The defendant Nos.2 to 5 have taken out chamber summons No.628 of 2006 for being joined as party defendants. It is seen that the copy of the said chamber summons was served upon the plaintiffs on the date when the said chamber summons was allowed to be withdrawn on 15.10.2007. That chamber summons was taken out in the : 17 : month of May, 2006. This will mean that the plaintiffs had notice of the rights claimed by defendant Nos.2 to 5 in the suit property and despite this notice, plaintiffs did not apply for amendment of plaint to have defendant Nos.2 to 5 joined as party defendants. The argument advanced by learned Advocate Mr.Doctor that the defendant Nos.2 to 5 did not take active interest in the litigation and allowed the chamber summons No.628 of 2006 to remain unattended is not a ground to be considered. In my view while deciding this motion, it is required to be seen whether the plaintiffs had acted in a bonafide manner or not. In my view, considering the conduct of the plaintiffs, as discussed above, the said conduct of the plaintiffs cannot be termed as bonafide. In fact the conduct of the plaintiffs clearly goes to show that though they had a specific knowledge that the defendant Nos.2 to 5 are claiming interest in the suit land or claiming rights over the suit land, they did not make efforts to inform the court that defendant Nos.2 to 5 are claiming some interest in the suit land and they should be brought before the court. The record shows that the plaintiffs sought the order dated 6.6.2007 in the motion behind the back of defendant Nos.2 to 5. : 18 : 28. If defendant Nos.2 to 5 would have been brought before the court prior to taking out Notice of Motion No.2116 of 2005, certainly, defendant Nos.2 to 5 would have pointed out to the court the relevant record to show that defendant No.1 had no title to the property and that there was no question of creation of a statutory charge as is claimed by the plaintiffs. The defendant Nos.2 to 5 would have vehemently opposed for appointment of Court Receiver and then court would have been in a position to pass order which would have met the ends of justice. 29. In my view, the manner in which the plaintiffs have conducted themselves in the matter of prosecution of the suit and, in particular, notice of motion No.2116 of 2005, it is clear that the plaintiffs had no mind to place before the court true facts in the matter and the plaintiffs were interested in securing an order of appointment of a Court Receiver behind the back of defendant Nos.2 to 5. As a result of appointment of a Receiver, may be in respect of certain plots, the valuable rights of defendant Nos.2 to 5 are in jeopardy. 30. The argument advanced by learned Advocate Mr.Doctor that defendant Nos.2 to 5 should have challenged : 19 : the order dated 6.6.2007 before an appropriate forum and the present notice of motion is not maintainable cannot be accepted. It is pertinent to note that defendant Nos.2 to 5 were not the parties before the court at the time of passing of the order dated 6.6.2007 and, therefore, there is no question of they challenging the said order by filing appropriate proceedings before the appellate court. The course adopted by the defendant Nos.2 to 5 is proper inasmuch as defendant Nos.2 to 5 have approached this court for setting aside the order of appointment of a Court Receiver passed behind their back. In my view, the argument advanced by learned Senior Counsel Dr.Tulzapurkar that the present notice of motion was taken out in accordance with the provisions of Section 151 of the C.P.C. so as to invoke inherent jurisdiction of this court is right and it is in that context, I have made the aforesaid observations. 31. For the reasons mentioned aforesaid, I am inclined to observe that this is a fit case where the court should intervene and set aside the order dated 6.6.2007. 32. For the reasons mentioned aforesaid, I am inclined to allow the notice of motion and set aside the order : 20 : dated 6.6.2007 passed on the motion No.2116 of 2005. In the peculiar facts and circumstances, I am not inclined to saddle the plaintiffs with the costs of this motion. Hence the order :- O R D E R O R D E R O R D E R i) The