((-1-)) mst IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO.2344 OF 2008 IN SUIT NO.1960 OF 2008 Jiten Zaverchand Gala Plaintiff versus Ganesh Gopal Joshi Defendant Kapil Moye a/w D.G.Rangras for plaintiff. None for defendant. CORAM : A.S.OKA, J. DATE : 02nd December 2008 PC : 1. I have heard the submissions of the learned counsel appearing for the plaintiff in support of the Notice of Motion on the last date. None appeared for the defendant. Today the learned counsel appearing for the plaintiff states that a banker’s cheque in the sum of Rs.50.00 lakh (Rs.Fifty lakh only) drawn in favour of the Prothonotary & Senior Master is kept ready. Today when the matter is called out, none appears for the defendants. 2. The suit is for a declaration that the Memorandum of Understanding ("MOU" for short) dated 8th January 2008 executed by and between ((-2-)) the plaintiff and the first defendant is valid and subsisting. A prayer is also made for a declaration that the purported termination of the MOU by the first defendant is illegal and contrary to the said MOU.. There is a prayer made for specific performance of the terms and conditions of the MOU.. 3. According to the plaintiff the first defendant represented to the plaintiff that under an agreement dated 19th February 2003 he had agreed to acquire from the original owners the property more particularly described in Exhibit-A to the plaint. The case of the plaintiff is that the first defendant represented that he brought the said property in the fifth defendant partnership firm of which the first defendant and the second to fourth defendants are partners. The share of the first defendant in the partnership is 30%. The business of the partnership i.e. fifth defendant was to redevelop the said property. 4. By MOU dated 8th January 2008 the first defendant agreed to sell in favour of the plaintiff 30% share of the first defendant in the building which is being constructed on the ((-3-)) said property by the fifth defendant firm. The MOU related to four flats admeasuring 1,847 sq.ft. of carpet area. The consideration was agreed @ Rs.7,700/- per sq.ft. aggregating to Rs.2.02 crores. 5. The schedule of payment of consideration has been provided under the said MOU.. The case of the plaintiff is that by letter dated 22nd January 2008 he called upon the first defendant to provide separate agreement for sale in respect of sale of the said four flats. By advocate’s letter dated 9th April 2008 the plaintiff called upon the first defendant to perform his obligations under the said MOU.. The first defendant by his advocate’s letter dated 26th April 2008 came out with a case that the plaintiff committed breaches of the terms and conditions of the MOU.. Therefore, the first defendant purported to terminate the MOU.. The first defendant purported to return a sum of Rs.5.00 lakh which was received by him under the MOU.. The plaintiff responded by advocate’s letter dated 2nd May 2008 and returned the cheque in the sum of Rs.5.00 lakhs. Thereafter, the plaintiff has filed the present suit. ((-4-)) 6. The prayer for injunction in the Notice of Motion reads thus :- "(a) That pending the hearing and final disposal of the suit the Defendant no.1 by himself, his servants and agents be restrained by an order and injunction of this Hon’ble Court from selling, alienating, disposing off, creating any third party right, parting with possession of, or otherwise dealing with his 30% share in the building under construction the said property described in Exhibit "A" hereto, consisting of four flats having an aggregate carpet area of 1847.76 sq.ft." 7. There is no reply filed by the first defendant. There is a reply filed by the second defendant for himself and the fifth defendant. The said defendants admitted the execution of the Reconstitution Deed of Partnership dated 10th April 2008. Reference has been made to clause 19(a) of the said reconstitution deed of partnership and it was contended that the first defendant has not performed his obligations set out in the said clause. The second to fifth defendants stated that 30% area of the first defendant has not been earmarked and the said saleable area available to the first defendant has not been identified. It is pointed out that out of 30%, 10% area cannot be disposed of by the first ((-5-)) defendant until completion of the project. Another contention raised in the reply is that the first defendant was desirous of liquidating his share in the partnership and therefore, requested the other defendants to honour his entitlement in the partnership in terms of money in lieu of his share. It was contended that the first defendant has already received a sum of Rs.30.00 lakh in that behalf from the other defendants. 8. The learned counsel appearing for the plaintiffs has taken me through the averments made in the plaint and the documents annexed to the plaint. He submitted that the plaintiff has abided by the terms and conditions of the MOU dated 8th January 2008. He submitted that a sum of Rs.50.00 lakhs was payable on completion of separate agreements for sale of four flats. He submitted that the first defendant has not executed such separate agreements. He, however, submitted that the plaintiff is ready and willing to deposit Rs.50.00 lakhs in this Court. He submitted that in the present Notice of Motion, interim injunction is sought only against first defendant and plaintiff is filing a separate ((-6-)) Notice of Motion for seeking reliefs as against other defendants. He submitted that the first defendant cannot be allowed to transfer his 30% share. 9. I have carefully considered the submissions. Clause 3 to 6 of the MOU dated 8th January 2008 are relevant which reads thus:- "3. The Seller shall give Four Flats totalling 1847.70 sq.feet carpet area. The Saleable area of the Four Flats is 2,600 sq.feet. AT the agreed Sale Price of Rs.7770/- per sq.feet; the total consideration works out to Rs.2,02,00,000/- (Rupees Two Crores Two Lakhs only), payable by the Buyer as under: i) Rs.5,00,000/- on or before execution of this present. ii)Rs.50,00,000/- on or before 15.1.2008 and on execution of Separate Agreement for Sale for the four flats, whichever is later. iii) Rs.85,00,000 within 15 days of clause (ii). iv) Rs.20,00,000/- on completion of Over Head Tank of Sale Building. v) Rs.42,00,000/- on possession of all the four flats complet in all respect, with municipal water conne- ction and electric meter connection. ----------------- ((-7-)) Rs.2,02,00,000/- Total ----------------- 4. It is explicitly understood that if the BMC carpet area in the project increases than as shown in the Approved Plan, then the proportionate share in the additional area of the Seller shall also be purchased by this buyer at the same terms as agreed in clause 2 hereinabove. 5. The Seller shall hand over possession of all the Four flats on or before 31.12.2008. The Seller shall get the same confirmed from the other partners of M/s.Akruti Developers and Builders by way of an Registered Undertaking, as the other partners of the Seller are responsible for the completion of the entire project in all respects. 6. The Seller shall get the Four Flats marked on the Typical Floor Plan and get the same confirmed by all the other partners of M/s.Akruti Developers and Builders on or before 15.1.2008 i.e. prior to payments to be made under clause 3(2) herein above." 10. Clause provides that the project has to be completed on or before 31st March 2009. The MOU discloses that the first defendant has received a sum of Rs.5.00 lakhs. Perusal of the sub clause 2(ii) of clause 3 of the MOU shows that the further amount of Rs.50.00 lakhs was payable by the plaintiff on or before 15th January 2008 or on execution of separate agreement for sale for the four flats, whichever is later. Prima facie, it appears to me that the separate agreements of sale have not been executed. ((-8-)) 11. In letter dated 26th April 2008 sent by the advocate for the first defendant addressed to the advocate for the plaintiff, the first defendant came out with a case that 50% of the amount of consideration was agreed to be paid by the plaintiff on or before execution of the agreement for sale and balance payment as per the progress of the work. The reply further states that on request made by the first defendant, the plaintiff agreed to pay a further sum of Rs.1.40 crores before execution of the agreement. However, the said amount was not paid. Prima facie, it appears to me that the said contentions are contrary to clause 3 of the MOU the execution of which is not disputed by the first defendant. 12. It will be necessary to refer to sub clause (d) of clause 19 of the Reconstitution Deed of Partnership dated 10th April 2003. In the said Deed, the first defendant has been shown as continuing partner. The said sub clause (d) reads thus : "d) It is specifically agreed between the partners herein that as and by way of 30% share in the profits, which is to be arrived at in the abovementioned manner, ((-9-)) the Continuing Partner shall be entitled to retain with him the 30% sellable area (i.e.30% of total sellable residential area and 30% of total sellable commercial area) of the proposed building to be erected on the said property under the said redevelopment scheme. Thus, the Continuing Partner shall have exclusive right of sale, alienation, transfer and/or retention of the said 30% area and shall be entitled to sell and/or alienate the said 30% area of sellable premises to any person/s of his choice upon such terms and conditions, and upon such consideration as may be deem fit and proper by him, but such sale agreement shall be executed only after casting of 1st slab of the proposed building. Upon sanctioning of the plans, such 30% area, which is to be retained by the Continuing Partner or reserved for the Continuing Partner shall be decided and earmarked in the form of premises and requisite arrangement shall be made for sale and transfer of all such premises exclusively by the Continuing Partner. However, out of the 30% area, 10% of area shall not be disposed off by the Continuing Partner till completion of the project." 13. Thus, the said clause records that the first defendant can execute the sale agreement in respect of 30% of the saleable area only after casting of first slab of the proposed building. It is further provided that upon sanctioning of the plans the said 30% area which is to be retained by the first defendant shall be decided and earmarked in the form of premises. It is stated that out of 30% area, 10% area shall not be disposed of by the first defendant till completion of the project. ((-10-)) 14. There is prima facie evidence on record to show that the first defendant agreed to sell in favour of the plaintiff 30% area referred to in sub clause (d) of clause 19 of the Reconstitution Deed of Partnership. Prima facie, it appears to me that as of today the stage of payment of Rs.50.00 lakhs as per sub clause (ii) of clause 3 of the MOU has not reached as separate agreements for sale have not been executed and the first defendant has not shown any willingness to execute such agreements. The amount payable under the said sub clause-(ii) has been kept ready by the plaintiff in the form of banker’s cheque in the sum of Rs.50.00 lakhs drawn in favour of the Prothonotary & Senior Master of this Court. The plaintiff is ready to deposit the said amount in this Court. There is no document produced by the 2nd and 5th defendants in support of their contention that the 1st defendant agreed to liquidate the said 30% share and accepted a sum of Rs.30,00,000/- as a part consideration. 15. Thus, a prima facie case has been made out by the plaintiff. During pendency of the suit, ((-11-)) the first defendant cannot be allowed to create third party interests or transfer the saleable area to which he is entitled to under the Reconstitution Deed of Partnership. If the first defendant is allowed to dispose off or transfer the said area, the plaintiff will suffer irreparable loss. The balance of convenience is in favour of the plaintiff as he has offered to deposit a sum of Rs.50.00 lakhs in this Court. 16. Hence, Notice of Motion is disposed of by passing following order :- (a) The statement made by the advocate for the plaintiff that the plaintiff will deposit a sum of Rs.50.00 lakh (Rs.Fifty lakhs only) in this Court is accepted. It is obvious that the deposit of the amount will be without prejudice to the rights and contentions of the parties; (b) Till disposal of the suit, the first defendant is restrained from creating any third party interests in respect of the saleable area available to the first defendant in accordance with sub clause (d) of clause 19 of the Reconstitution Deed of Partnership dated 10th ((-12-)) April 2003. The first defendant is also restrained from parting with possession of the premises constituting the said 30% area in favour of any third party. (c) On the failure of the plaintiff to deposit a sum of Rs.50.00 lakhs in this Court within a period of three weeks from today, the interim relief granted under this order will stand vacated without further reference to the Court; (d) This order will not preclude the plaintiff from taking out a separate Notice of Motion seeking appropriate interim reliefs against other defendants and all contentions in that behalf are expressly kept open; (e) The Registrar (O.S.)/Prothonotary and Senior Master of this Court to act upon an authenticated copy of this order and accept the deposit of Rs.50.00 lakhs (Rs.Fifty lakhs only) if made by the plaintiff within a period of three weeks from today. (A.S.OKA, J.)