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 ORDINARY ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION APPEAL NO.590 OF 1994 APPEAL NO.590 OF 1994 APPEAL NO.590 OF 1994 IN IN IN SUIT NO.942 OF 1973 SUIT NO.942 OF 1973 SUIT NO.942 OF 1973 Bomi Munchershaw Mistry of Bombay ) Indian Inhabitant residing at ) Manech-Abad, 26-F, Nepean Sea ) Road, Bombay 400 036. ) ..Appellant. ) V/s. ) ) 1. The Kesharwani Co-operative ) Housing Society Ltd., a ) society registered under ) the Maharashtra Co-operative ) Societies Act, 1960 (Regi- ) stered No.B/2894/60) and ) having its registered ) office at 26, Nepean Sea ) Road, Bombay - 400 036. ) ) 2(a) Lalchand Hirachand (Original ) Defendant No.2) of Bombay ) Indian Inhabitant (Receiver ) appointed by the Bombay High ) Court in suit No.304 of 1954),) by his legal representatives ) at Neela House, G. Deshmukh ) Marg, Bombay - 400 026 and ) having their office at ) Construction House, Ballard ) Estate, Bombay - 400 001. ) ) 2(b) Vinod Doshi and other heirs ) of Lalchand Hirachand ) (Original Defendant No.2 who ) had been impleaded in the ) suit as Receiver appointed by ) the Bombay High Court in Suit ) No.304 of 1954) care of ) Construction House, Ballard ) Estate, Bombay - 400 001. ) ) 3. Rajesh Ratanchand Doshi ) 4. Arvind Ratanchand Doshi ) both of Bombay Indian ) Inhabitants Executors and ) Trustees of the late ) Ratanchand Hirachand dated ) 13th August,1979 having their ) office at Construction House, ) Ballard Estate, Bombay-400 001.) ) 5. Pankaj Gajendra Zaveri, Indian ) Inhabitant the son and heir of ) the late Gajendra Gopaldas ) Zaveri (Original Defendant ) No.4) residing Breeze Society ) Building, C/6, Flat 11, Jeevan ) Bima Nagar (LIC Colony), ) Borivali(West), Bombay 400 103.) ) 6. Kirit Gajendra Zaveri, Indian ) Inhabitant the other son and ) heir of the Original 4th Deft. ) care of Pankaj G.Zaveri, Breeze) Society Building, C/6, Flat 11 ) Jeevan Bima Nagar (LIC Colony) ) Borivali(West), Bombay 400 103.) ) 7. Dadi Sorabji Mistry of Bombay ) Indian Inhabitant, residing at ) 32,Sleater Road,Bombay 400 007.) ) 8A. Jamshed Hormusji Wadia of ) Bombay Indian Inhabitant ) residing at Bakhtawar, N. ) Dabholkar Road Bombay 400 006 ) being the third trustee of the ) Deed of Settlement dated ) 17-3-1961. ) ) (Respondents 7 and 8A being ) the surviving Trustees of the ) Deed of Settlement dated ) 17.3.1951. ) ) 9A. Bomi M. Mistry ) 9B. Homi B. Mistry ) 9C. Naushad B. Mistry ) ) [Respondents 9A, 9B & 9C being ) the executors of the Will of ) the deceased Respondent No.9 ) (Original Defendant No.7)] ) ..Respondents. -=: 3 :=- Mr.R.Dada, senior advocate with D.J.Khambatta i/b. Payne & Co. for appellants. Mr.J.B.Chinai, senior advocate with Sanjay Jain, Swapnil Bangur and Darshan Mehta i/b. D.Liladhar & Co. for respondent No.2. Ms.A.B.Kapadia, advocate i/b. Dafatary, Feriera & Divan for respondent Nos.3 & 4. Mr.F.D’Vitre, advocate with Mohan Salian i/b. Gagrat & Co. for respondent Nos.7 & 8A. AND AND AND CROSS OBJECTION (L) NO.4 OF 1996 CROSS OBJECTION (L) NO.4 OF 1996 CROSS OBJECTION (L) NO.4 OF 1996 IN IN IN APPEAL NO.170 OF 1994 APPEAL NO.170 OF 1994 APPEAL NO.170 OF 1994 IN IN IN L.C. SUIT NO.942 OF 1973 L.C. SUIT NO.942 OF 1973 L.C. SUIT NO.942 OF 1973 1. Dadi Sarabji Mistry of Bombay ) Indian Inhabitant, residing at ) 32,Sleater Road,Bombay 400 007.) ) 2. Adi Maneckshaw Cooper of Bombay) Indian Inhabitant, residing at ) Baria Building No.1, Gamadia ) Colony, Tardeo, Bombay-7 ) (deleted) (deleted) (deleted) ) ) (being two of the present ) ..Appellants Nos. Trustees of the Deed of ) 1 & 2 to the Settlement dated 17-3-1951) ) Cross Objections ) (Orig. Defendant ) Nos.5 & 6). V/s. ) ) 1. Rajas Ratanchand Doshi ) ) 2. Arvind Ratanchand Doshi ) ) both of Bombay Indian ) Inhabitants the Executors and ) Trustees under the Will dated ) 13th August, 1979 of the late ) Shri Ratanchand Hirachand ) having their office at ) Construction House, Ballard ) Estate, Bombay 400 001. ) -=: 4 :=- ) 3. The Kesharwani Co-operative ) Housing Society Ltd.,a society ) registered under the Maharash- ) tra Co-operative Societies Act,) 1960 (Registered No.B/2894/60 ) and having its registered ) ..Respondents Nos. office at 26, Napean Sea Road, ) 1 to 3 (Orig. Bombay 400 006. ) Defendant Nos. ) 3A, 3B and 1). ) 4. Bomi Munchershaw Mistry ) ..Respondent No.4. ) (Orig. Plaintiff) ) 5. Shernavaj Munchershaw Minstry ) (deleted) (deleted) (deleted) ) ) 5A. Bomi M. Mistry ) ) 5B. Homi B. Mistry ) 5C. Naushad B. Mistry ) [Respondents 5A, 5B & 5C being ) the executors of the Will of ) the deceased Respondent No.5 ) (Original Defendant No.7)] ) ) 6. Geeta (alias Dhun) Hiroo ) Chainani the last five are of ) Bombay Indian Inhabitants ) residing at Manech-Abad, 26-F, ) Nepean Sea Road, ) ..Respondent. Bombay 400 03. ) (Orig.Defendant). Mr.F.D’Vitre, advocate with Mohan Salian i/b. Gagrat & Co. for cross-objectionists. Mr.R.Dada, senior advocate with D.J. Khambatta i/b. Payne & Co. for respondent No.4. Mr.J.B.Chinai, senior advocate with Sanjay Jain, Swapnil Bangur and Darshan Mehta i/b. D. Liladhar & Co. for respondent No.3. Ms.A.B.Kapadia, advocate i/b. Dafatary, Periera & Divan for respondent Nos.1 & 2. CORAM : R.M. LODHA AND CORAM : R.M. LODHA AND CORAM : R.M. LODHA AND J.P. DEVADHAR, JJ. J.P. DEVADHAR, JJ. J.P. DEVADHAR, JJ. DATED : 29TH JUNE, 2005 DATED : 29TH JUNE, 2005 DATED : 29TH JUNE, 2005. -=: 5 :=- JUDGMENT (Per J.P. Devadhar, J.) 1. The issue raised in Appeal No.590 of 1994 and in cross objection (L) No.4 of 1996 filed in Appeal No.170 of 1994, being common, both these matters are heard together and disposed of by a common Judgment. The cross objectionists are the surviving trustees of the Trust created under a deed of settlement dated 17/3/1951. The appellant in appeal No.590 of 1994 is a beneficiary and reversioner under the aforesaid trust. Both the appellant (hereinafter referred to as ‘the plaintiff’) and the cross objectionists have common interest in these proceedings. 2. The sole grievance of the plaintiff and the cross objectionists in these proceedings is that the learned trial Judge grossly erred in declining to cancel the deed of conveyance dated 31/3/1967 executed by Lalchand Hirachand (original defendant No.2) in favour of Kesharwani Co-operative Housing Society (original defendant No.1) even after holding that the said deed was ante dated with a view to defraud the revenue and that the said deed casts a cloud on rights of the plaintiff to enjoy the trust property. By the impugned Judgment dated 3/12/1992 passed in Suit No.942 of 1973, the learned -=: 6 :=- trial Judge, instead of cancelling the deed of conveyance, declared that the said deed of conveyance dated 31/3/1967 shall be inoperative and of no effect to the extent it expressly or by implication seeks to whittle down the rights of the adjoining land owners namely the trustees under the deed of settlement dated 17-3-1951, its beneficiaries and reversioners (including the plaintiff). 3. The facts relevant for the purpose herein are that prior to 1951, Ratanchand Hirachand was owner of a bungalow known as Ratan Villa with outhouse, guest house, servant quarters and garages constructed on a large piece of land admeasuring about 6000 to 7000 sq.yds. bearing City Survey No.2/590 and 2A/590 situated at Napean Sea Road, Bombay. 4. By a deed of conveyance dated 20th March, 1951, the said Ratanchand Hirachand sold 565 square yards of land being part of City Survey No.2/590 to Munchershaw P.Mistry and others (Trustees under a Deed of Settlement dated March 17, 1951). The said conveyance deed contained restrictive covenants to the effect that Ratanchand Hirachand, his heirs, executors, administrators and associates and all persons desiring and claiming title from him shall not build any structure -=: 7 :=- at any time thereafter higher than the then existing garages on the remaining land bearing Survey No.590 (Part) nor any structure in front of towards South or on the Central passage or in the garden in front of the property known as Ratan Villa as more particularly set out in the plan annexed thereto. 5. During the period 1954-55, a building named ‘Maneck-Abad’ consisting of ground plus two floors was constructed on the plot of land purchased by the Trust under the deed of conveyance dated 20th March, 1951. The plaintiff is residing at Maneck-Abad as the beneficiary and as a reversioner and the plaintiff is entitled to a share in the corpus of the said trust created under the Deed of settlement dated March 17, 1951. 6. Ratanchand Hirachand had filed a suit bearing Suit No.304 of 1954 in the High Court at Bombay seeking partition of the joint family properties including the property on which Ratan Villa bungalow existed. In that suit, Lalchand Ratanchand was appointed as a private Receiver in respect of the lands belonging to Ratanchand Hirachand. 7. The said Lalchand Hirachand entered into an agreement with G.G.Zaveri on 2nd July, 1966 (Exhibit ‘A- -=: 8 :=- 111’) for sale of 5325 square yards of land bearing City Survey No.590(Part) together with structures standing thereon for Rs.21,50,000/-. Clause 2 of the said agreement for sale provided that the said Lalchand shall at the time of completion of sale give to Zaveri vacant possession of the entire property agreed to be sold and shall also remove the restrictive covenants attached to the said property under the conveyance dated 20th March, 1951. 8. The said G.G.Zaveri in turn entered into an agreement with Kesharwani Co-operative Housing Society Limited on 23rd July, 1966 (Exhibit A-112) for sale of the lands which he had agreed to purchase from Lalchand, for a total consideration of Rs.25,00,000/-. Clause (9) of the said agreement for sale dated 23rd July, 1966 reads as under : "9. The Vendor has agreed with Manchersha Phiroze Mistry and the owner of the adjoining property to give to them lease of 400 sq.ft. of land as shown on the plan hereto annexed and thereon surrounded by green coloured boundary line for a period of 98 years at the monthly rent of Rs.10/- on the Lessees agreeing to keep the said land unbuilt upon and open to the sky in consideration of the said Lessees agreeing to waive the covenant against the height restriction on the main bungalow. The purchaser shall abide by the said agreement and shall be entitled to the benefit and bounded by the burden thereof." 9. Thereafter, by a deed of conveyance (Exhibit-J) -=: 9 :=- Lalchand Ratanchand (hereinafter referred to as ‘the vendor’) conveyed 5765 square yards of land bearing City Survey No.590 (part) to the Kesharwani society (hereinafter referred to as ‘the purchaser’) for Rs.21,50,000/-. Mr.G.G.Zaveri was shown as a confirming party in the said deed of conveyance. Although the said deed of conveyance was dated 31/3/1967, the plaintiff came to know that the said deed of conveyance was actually executed on 30/11/1967 but the same was ante dated with a view to defraud the revenue. Moreover, the plaintiff noticed that the plan annexed to the said deed of conveyance wrongfully and illegally purported to convey part of the adjoining land to which the plaintiff was entitled to as beneficiary under the trust deed dated 17/3/1951. Further the said conveyance deliberately omitted to incorporate the restrictive covenants attached to the lands which prejudically impaired the rights of the plaintiff to enjoy the trust property. 10. In these circumstances, the plaintiff filed Suit No.891 of 1970 in the High Court at Bombay on 5/12/1970 against the purchaser society and the vendor inter alia seeking a declaration that the purchaser society has no right, title and interest in respect of the portion of the Trust property shown delineated in yellow hatched lines on the plan annexed as Exhibit-B to the said -=: 10 :=- plaint and a declaration that the property shown in yellow hatched lines in that plan belongs to the trustees under the Deed of Settlement dated 17/3/1951. The plaintiff sought further declaration to the effect that in view of the restrictive covenants contained in the conveyance deed dated 20/3/1951 the purchaser society is not entitled to build any structure higher than 13 feet - 1.1/2 inches on the land purchased by them under the impugned deed of conveyance dated 31st March, 1967. 11. During the pendency of the aforesaid suit, the plaintiff filed another suit in the City Civil Court at Bombay on 27/3/1973 seeking a declaration that the deed of conveyance dated 31st March, 1967 is void and an order for cancellation of the said deed inter alia on the ground that the said conveyance was ante dated with a view to defraud the revenue and such a document executed in contravention of the public policy is liable to be cancelled. The said suit was returned by the City Civil Court for being presented before the proper Court. Thereupon, the said suit was filed in the High Court at Bombay on 21/9/1973 and was numbered as Suit No.942 of 1973. 12. Both the above suits filed by the plaintiff i.e. Suit No.891 of 1970 as well as Suit No.942 of 1973 -=: 11 :=- were heard together and by a Judgment and order dated 3/12/1992 passed in Suit No.891 of 1970 the learned trial Judge decreed the suit by passing the following order:- "(i) Declared that Defendant 1 is not the owner of the land shown by yellow hatched lines in Ex.B (being an annexure to the plaint) and that this land belongs to the trustees, the beneficiaries and the reversioners (including plaintiff) of the deed of settlement dated 17.3.1951. Defendant 1 is permanently prohibited from laying any claim to this land or interfering with the possession and enjoyment thereover of the trustees, beneficiaries and reversioners inclusive of plaintiff aforementioned. (ii) Defendant 1 is prohibited from erecting any structure exceeding in height 13’- 1.1/2" on the vacant land of the erstwhile Ratan Villa as it was on 20.3.1951. This prohibition, which shall be perpetual is restricted to the said land whether buildable or otherwise according to building regulations of any authority - then or now in force. Declared that this restraint shall operate perpetually in favour of the trustees, beneficiaries or reversioners including plaintiff and / or their successors as the case may be. Defendant 1 do remove from the land vacant as on 20.3.1951 any structure put after 20.3.1951 in Ratan Villa campus. This removal be effected in six weeks as from this day. In the event of the above directive not being complied with, plaintiff will be entitled to get an order for such removal in execution and the expense therefor shall be saddled upon defendant 1. (iii) Defendant 1 perpetually restrained from putting any structure or cluttering up with mobile objects the portion in front towards south, the central passage or garden shown in burnt-sienna colour in Plan B to Ex.B dated 20.3.1951. This area shall be kept unbuilt upon and in the state it was on 20.3.1951. -=: 12 :=- (iv) Ex.B to the plaint and Plans A and B to Ex.B dated 20.3.1951 shall form part of the decree. Plaintiff to furnish copies of the said exhibit and plans. (v) Plaintiff to get 3/4ths of his costs from defendant 1 and bear the remaining 1/4ths himself. Defendants do bear their own costs. " 13. By another Judgment and order also dated 3rd December, 1992 the trial Judge decreed the Suit No.942 of 1973 by passing the following order :- "Declared that Ex.J is inoperative and of no effect to the extent it expressly or by implication seeks to whittle down the rights, the owners and beneficiaries of Maneckabad (inclusive of plaintiff) have under Ex.B. Copies of the two conveyances to be annexed herewith. Defendants 1 and 2 shall pay the costs of the plaintiff. These defendants, as also the remaining ones, shall bear their own costs - those of the trustee-defendants 5 and 6 to come out of the trust funds. Let a copy of that part of the judgment which deals with defendant 2’s evasion of proper tax on capital gains, be sent to the Commissioner of Income Tax Bombay for such action as may be deemed necessary." 14. Both the vendor and the purchaser society have accepted the decree passed in Suit No.891 of 1970 as well as the decree passed in Suit No.942 of 1973. It may be noted that the legal representatives of the original vendor had filed Appeal No.170 of 1994 challenging the Judgment and decree passed in Suit No.942 of 1973 to the extent it holds that the deed of conveyance was ante dated by the vendor with a view to defraud the revenue. In that appeal, cross-objection was filed by the trustees to -=: 13 :=- challenge the decision of the learned trial Judge in so far as it pertains to declining to order cancellation of the deed of conveyance dated 31/3/1967. When the said appeal No.170 of 1994 was taken up for final hearing on 6/6/2005, the legal representatives of the vendor chose to withdraw the said appeal. Thus, in the absence of any challenge to the decree, the findings given by the learned trial Judge have attained finality against the vendor and the purchaser. The only surviving issue in these proceedings initiated by the plaintiff and the cross objectionists is, whether, the learned trial Judge was justified in declining to order cancellation of the deed of conveyance dated 31-3-1967. 15. Mr.R.A.Dada, learned senior advocate appearing on behalf of the plaintiff submitted that in the present case, the deed of conveyance dated 31st March, 1967 (Exhibit-J) has been found to be (a) ante dated with a view to defraud the revenue, (b) the plan annexed to the said deed illegally purports to convey part of the property belonging to the trust to which the plaintiff is entitled to as a beneficiary and reversioner under the deed of settlement dated 17/3/1951 and (c) the said deed deliberately omits to incorporate the restrictive covenant attached to the land in question. He submitted that once it is established that the deed Exhibit-J is ante dated -=: 14 :=- with a view to defraud the revenue and the said deed casts a cloud on the plaintiff’s right to enjoy the trust property, the learned trial Judge ought to have cancelled the said conveyance as a matter of course. He submitted that the vendor in Exhibit-J was a receiver appointed by the Court and when a deed executed by an officer of the Court is found to be forged, then the public interest demands that such a fraudulently executed document should been cancelled. He submitted that the learned trial Judge committed an error in holding that although the plaintiff has proved that the deed of conveyance (Exhibit-J) is a fraud on the revenue and casts a cloud on the rights of plaintiff to enjoy the trust property, the proper remedy is to grant declaration and not cancellation of the deed Exhibit-J. 16. Elaborating his arguments, Mr.Dada submitted that the learned trial Judge has upheld the contention of the plaintiff that the conveyance deed (Exhibit-J) was ante dated on the basis of the following evidence on record :- a) Although the deed of conveyance is dated 31/3/1967, the plan annexed to the said deed bears the date 30/11/1967. When the plan annexed to the deed was drawn on 30/11/1967, -=: 15 :=- obviously, the deed must have been executed on or after to 30/11/1967 and not on 31/3/1967. b) The deed refers to a tripartite agreement dated 21/3/1967 (Exhibit-K) entered into by and between the vendor, Zaveri and the purchaser, wherein it is recorded that in view of the reduction of F.S.I. from 2 to 1.33 in respect of the lands in question, the consideration amount has been reduced from Rs.25,00,000/- to Rs.21,50,000/-. The said tripartite agreement refers to the excess payment of Rs.1.75 lakhs made by the society to the vendor. From the evidence on record, it is seen that, in fact, the payment of Rs.1.75 lakhs was made by the society on 5/7/1967. If the payment of Rs.1.75 lakhs itself was made by the society on 5/7/1967, it could not be stated in the tripartite agreement dated 21/3/1967 (Exhibit-K) that the society has made excess payment of Rs.1.75 lakhs. Since the tripartite agreement dated 21/3/1967 is referred in the deed dated 31/3/1967, it is evident that both the tripartite agreement as well as the deed of conveyance dated 31/3/1967 were ante dated. -=: 16 :=- c) By a letter dated 19th July, 1967 (Exhibit A -121 collectively) the advocate for the vendor had made a grievance to the advocate for Zaveri, that the conveyance deed has not yet been executed even though the draft conveyance has been approved on 29/3/1967. d) In the audited annual accounts finalised by the society for the year ending 30th June, 1967, the property in question is not shown as an asset of the society but it is stated in the said accounts that the society has agreed to purchase the land and part payment has been made in respect thereof. Thus, from the aforesaid accounts it is clear that till 30th June, 1967 the deed of conveyance was not executed. e) In the letter dated 30/11/1967 (Exhibit A-102) addressed to the society’s advocates it is recorded that on ‘that date’ i.e. 30/11/1967 the sale has been completed. f) In the letter dated 20th December, 1968 (Exhibit A-104), advocate for the vendor had -=: 17 :=- informed the tenants that Ratan Villa property i.e. the property mentioned in the deed Exhibit-J has been sold to the society on 30th November, 1967. g) Lalchand - an officer of the Court did not enter the witness box obviously for fear of being exposed. 17. Mr.Dada further submitted that the plaintiff has also established that the deed of conveyance (Exhibit-J) was ante dated with a view to defraud the revenue. He submitted that under the Finance Act 2 of 1967 applicable to the assessment year commencing from 1/4/1967 the income tax liability was enhanced. As result, the capital gains tax payable by the vendor on execution of the deed of conveyance on 30/11/1967 came to Rs.3,14,848/-. With a view to defraud the revenue and to evade the payment of capital gains tax amounting to Rs.3,14,848/-, the deed was ante dated to show as if the said deed was executed on 31/3/1967 (i.e. before the Finance Act 2 of 1967 came into force). The learned trial Judge has held that although the society is a party to the ante dating of the document, the society is not guilty of having abetted either the tax evasion or the forgery. According to Mr.Dada by ante dating the document not only -=: 18 :=- the vendor benefited but even the purchaser society was benefited as is evident from the following:- (a) The society in connivance with the vendor had misrepresented to the Government and the Municipal authorities by addressing various letters including letter dated 16/10/1967 (Exhibit L-1) to the effect that the society had purchased the said property on the footing that F.S.I.-2 is available and accordingly, the conveyance has been executed by the vendor in favour of the society. Believing the said representation made by the society, the Government by its letter dated 9/2/1968 (Exhibit U-1) granted its approval of F.S.I.-2 to the society. It is only when the plaintiff exposed the fraud committed by the society by filing Writ Petition No.501 of 1968, this Court by its Judgment dated 13/3/1970 declared that the society had obtained