1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION SUIT NO. 604 OF 1988 Stany Harry D’Souza, } C/o. Plot No.251, Cleanex Wadala, } Bombay – 400 031. }... Plaintiff. V/s. 1. Christopher John, } } 2. Earnest John & Co., Pvt. Ltd., } having their Registered Office at } 194, Earnest House, Nariman Point, } Bombay – 400 021. } } 3. M/s. John Builders Pvt. Ltd., } a Company incorporated under } Companies Act, having their Office at } 194, Earnest House, Nariman Point, } Bombay – 400 021. }... Defendants. Mr. Naidu for the Plaintiff. Mr. C. Balsara for the Defendants. CORAM : S.C. DHARMADHIKARI,J. RESERVED ON : 25th FEBRUARY 2009. PRONOUNCED ON : 26th JUNE 2009. ORAL JUDGMENT :- This is a Suit for specific performance. The Plaintiff prays that the Defendants be ordered and decreed to specifically 2 perform a contract for sale dated 15th October 1980 being annexure `A’ to the plaint and to hand over to the Plaintiff vacant and peaceful possession of Garage Nos.10,11,and 12 in the Building known as “Earnest House”, Plot No.194, Backbay Reclamation Scheme, Block No.3, Nariman Point, Bombay. These garages are referred to hereinafter as the Suit premises. Alternatively and without prejudice to the claim for specific performance, the Plaintiff prays for Damages/compensation to the tune of Rs.12 lakhs alongwith interest at the rate of 18% per annum from the date of the Suit till payment and/or realization. The prayer clause (c) of the plaint is for refund of earnest money of Rs.90,000/- alongwith interest at the same rate. 2. It is the case of the Plaintiff that the First Defendant is the lessee of Plot No.194, Backbay Reclamation, Nariman Point, Bombay. He is also the developer of the building known as “Earnest House”, Plot No.194, Backbay Reclamation. Defendant No.2 is a Private Limited Company floated by Defendant No.1, wherein entire shares are owned by him and his family members. 3. The Third Defendant has been joined as a Defendant to the 3 Suit because it is stated by the Plaintiff that by purported agreement dated 10th February 1982 between the Second Defendant and the Third Defendant, the entire 13th, 14th to 18th floor and portion of ground floor and garages (suit premises) have been sold to Defendant No.3. It is urged that in order to defraud the Plaintiff of his valuable right under the Suit Agreement dated 15th October 1980, Defendant Nos.1 and 2 have transferred the suit premises and some portion of the building Earnest House in favour of Defendant No.3. The Plaintiff has challenged this agreement between Defendant Nos. 2 and 3 as sham and bogus. He states that he is entitled to specific performance of his agreement against Defendant No.3 also. Therefore, all Defendants are bound and liable to comply with the obligations under the suit agreement and hand over vacant possession of the suit premises on the Plaintiff making balance payment of Rs. 10,000/- to them. 4. It is urged that Defendant Nos.1 and 2 entered into the suit agreement for sale of the suit premises for a lump sum price of Rs.1 lakh. After the agreement was executed, the Plaintiff paid to Defendant Nos.1 and 2 a sum of Rs.90,000/- in cash. The balance 4 sum of Rs.10,000/- was to be paid on delivery of possession. 5. Pursuant to this agreement, the Defendants carried out construction work of the building referred to in the agreement. They were bound and liable to hand over the Plaintiff vacant possession of the suit premises. The Plaintiff expected that Defendants would comply with the obligations. He also got the Agreement registered with sub-Registrar of Assurances at Mumbai, by making a Deed of Declaration and Confirmation dated 13th August 1986. The Plaintiff has stated that he was and is ready and willing to comply with his part of the contract and also pay the balance sum. According to the Plaintiff, the construction work was completed some time in 1987. He approached Defendant No.1 in March 1987 and requested him to complete the transaction . The First Defendant gave evasive reply. 6. The Plaintiff states that there was another transaction between him and Defendant No.2 for purchasing three other Garages bearing Nos.4,5 and 6 in the same building. They were to be sold to the Plaintiff for Rs.1 lakh. The Plaintiff’s case is that he entered into an oral agreement with Defendant No.2 for sale of 5 garage Nos.4,5 and 6. However, in paragraph 5 of the plaint as far as these garages and the other transaction is concerned, this is what is stated :- “5. The Plaintiff states that there was another transaction between the Plaintiff and Defendant No.2 for purchase of three other garages viz. Garages No.4,5 and 6 in the same building being constructed by the Defendants for the price of Rs. 1,00,000/-. Plaintiffs entered into oral agreement with Defendant No.2 some time in respect of garages 4,5 and 6. The Plaintiff had paid to Defendant No.2 a total amount of Rs.90,000/- by cheques leaving a balance of Rs.10,000/-. The Plaintiff states that the Plaintiff in instituting separate legal proceedings in respect of the said transaction for appropriate reliefs as advised. The Plaintiff states that in respect of the other said transaction also the Defendants was avoiding to comply with his statutory obligations.” 7. It is on the basis of the above averments that the reliefs are claimed. 8. After the writ of summons was duly served so also upon all interlocutory applications being contested, the written statements 6 came to be filed by Defendant Nos.1 and 2. Their defence is that the suit claim is dishonest. The suit is barred by law of limitation and in any event the suit being for specific performance, if the Plaintiff himself is guilty of delay and latches, then, he is not entitled to any discretionary or equitable relief. 9. According to the Defendants, the true facts are that the First Defendant alongwith his brothers Franklin and Ignatius floated a company known as the Second Defendant. This company applied to the Collector of Bombay for allotment of land and by an Allotment letter issued in May 1972 a plot of land admeasuring 2880 square metres at 194, Nariman Point, Bombay was allotted for construction of a commercial building. Thereafter, plans were submitted by the Second Defendant to the Bombay Municipal Corporation for construction of a building of ground plus 17 floors to be called as “Earnest House”. In or about November 1972, the proposed plans for construction of a building and demarcated open parking spaces, was sanctioned by the Bombay Municipal Corporation. In or about 1973-74, when all brothers started construction activity, one Paul D’Souza, brother of the Plaintiff, who was in Estate Agency Business, contacted them and 7 requested them to avail of his services. The said Paul D’Souza became very friendly with the brothers and was as good as a member of the family. Therefore, when the construction work was going on in 1979, the brothers approached the said Paul D’Souza for finance and he volunteered to raise the same for them. Therefore, the said Paul D’Souza, who is a partner of the Plaintiff in the partnership business, M/s. Cleanex requested the Plaintiff to advance a sum of Rs.90,000/- to the Defendant No.1 and his brother. Similarly, the said Paul D’Souza requested his father in law to advance a sum of Rs.20,000/- to Defendant No.1 and his brothers. However, the said Paul D’Souza informed the John brothers that since he is raising some of the monies by borrowing monies from a bank, the bank will require some security. The John brothers, therefore, will have to issue a letter to the bank and/or enter into an agreement showing that the John brothers have agreed to sell three open parking spaces to the Plaintiff. In consideration of this, they will receive the monies. 10. It is stated in para 2 (v) and (vi) of the Written Statement as under :- 8 “2(v). The said Paul D’Souza through his brother lent and advanced to the John brothers a sum aggregating to Rs.90,000/- at the rate of 24% per annum by three different cheques particulars of which are given herein below :- Date Amount 27.10.1979 Rs. 35,000/- 27.10.1979 Rs. 5,000/- 11.01.1980 Rs. 50,000/- ------------------- Total :- Rs. 90,000/- ======== (vi). On 11th January 1980 Mr. Paul D’Souza requested the John brothers to issue a letter to Greater Bombay Co-operative Bank Ltd., Station Road, Wadala, Bombay – 400 031, saying that they have allotted 3 garages bearing Nos.4,5 and 6 to his brother the Plaintiff herein on ownership basis against security of which he intended to borrow moneys from the said Bank. The said Paul D’Souza in order to make the security given to the said Bank more convincing requested us to use the words “Garages” and not “open parking spaces” in the said letter which was to 9 be issued to the Bank. Whilst Mr. Paul D’Souza had asked the John brothers to say that they have sold garages Nos.4,5 and 6 to his brother (the Plaintiff herein), the said Stany asked John brothers to state in the said letter that they have sold garages bearing Nos.10,11 and 12 to the Plaintiff. Unfortunately, in the confusion they issued a letter dated 11th January 1980 to the said Bombay Co-operative Bank Ltd., (Wadala), Bombay – 400 031 saying that they have sold garages Nos.4,5 and 6 to the Plaintiff. The said Paul D’Souza was fully aware that Bombay Municipal Corporation in its plan had not sanctioned to build the covered garages. The Defendants 1 and 2 accordingly issued a letter to the said Bank dated 11th January 1980 mentioned the Garage Nos.4,5 and 6 to enable the Plaintiff to avail the loan, from the Bank. It was neither the intention of the Defendant to sale the said garages to the Plaintiff, nor the intention of the Plaintiff to purchase the same. In fact, the whole transaction was out of family relations between John Brothers and Plaintiff’s brother Mr. Paul D’Souza. The Plaintiffs were benefited only by difference in the rate of interest as the rate of interest paid by John 10 Brothers was at 24% which was much more than the interest charges by the Bank for granting the loan. Defendant No.1 issued the said letter as per the instructions of said Paul D’Souza in full trust and good faith. Unfortunately, Defendant No.1 later on realised that he has issued a letter for Garages 4,5 and 6 instead of 10,11 and 12.” 11. Thereafter, it is alleged that in October 1980, the said Paul D’Souza approached the John brothers and informed them that the higher officials of the bank are not satisfied with the letter dated 11th January 1980 and they are insisting on a proper agreement between the Plaintiff and the Second Defendant. The said Paul D’Souza assured the John brothers that it is only for the name sake and it will be of no consequence once the loan is repaid to the Bank with interest. It was under these circumstances and on the assurances of Paul D’Souza that the suit agreement was executed. Whilst filling the garage numbers in the agreement, Defendant No.1 mentioned Garage Nos.10,11 and 12 under the impression that in the earlier letter dated 11th January 1980, he had mentioned these numbers. Therefore, in the suit agreement the garage numbers are mentioned as 10,11 and 12 but without realizing that in the letter dated 11th January 11 1980 addressed to the Bank, the First Defendant had in confusion mentioned number of Garages as 4,5 and 6. 12. It is a further defence of Defendant Nos.1 and 2 that the Plaintiff was paid a sum of Rs.27,000/- by cheque being part payment of the loan of Rs.90,000/- advanced by the Plaintiff to the John brothers. 13. It is also stated that by an agreement dated 16th February 1982 entered into between the Second Defendant which was represented by Defendant No.1 and M/s. John Builders represented by M/s. Franklin John the entire 13th to 18th floors and portion of the ground floor so also the car parking including the suit premises of the proposed building was agreed to be sold to M/s. John Builders for a sum of Rs.80 lakhs. This agreement was lodged for registration on 13th March 1984 with the Registrar of Assurances, Bombay. Since the suit premises alongwith the floors mentioned above were sold to M/s. John Builders, the liability with respect of the balance amount payable to the Plaintiff was that of M/s. John Builders. The Plaintiff, his brother Paul and the father- in-law of Paul D’Souza were always aware about the agreement 12 dated 16th February 1982 and as regards the balance amount payable. The said Paul D’Souza was like a family member of John brothers and was operating from the office of the Second Defendant Company at Nariman Point till November 1986. Paul’s visiting card is relied upon. Therefore, all of them were aware that Defendant No.1 was not to pay the loan amount with interest. The liability was that of M/s. John Builders. This fact is evidenced by a notice issued by the Plaintiff’s Advocate S.V. Vaidya dated 17th June 1989. The said Franklin John therefore paid a total sum of Rs.2 lakhs to the said Paul D’Souza on various occasions in full and final settlement of the loan. This has been confirmed by the said Paul D’Souza on behalf of himself and his brother the Plaintiff. The said Paul D’Souza also confirmed receipt of sum of Rs.2 lakhs by various cheques. This was towards final settlement of claim for parking spaces. Thus, the said Paul D’Souza has further confirmed that the parking spaces allotted now stand cancelled as he has received full payment and there is no amount due and payable. In these circumstances, Defendant Nos. 1 and 2 were shocked to learnt of filing of a complaint on 11th March 1987 by the Plaintiff with Inspector of Police, General Branch, C.I.D., Bombay interalia alleging cheating and 13 commission of offences punishable under the Maharashtra Flat Ownership Act. This has been done by taking advantage of the confusion in the garage numbers. There are false allegations made in the police complaint and all the parties were fully aware of the circumstances under which the suit agreement came to be executed. Thus, true facts were suppressed while filing this police complaint. In fact, in the police complaint, the Plaintiff has stated that the price of the suit premises was paid by various cheques whereas in the plaint it is stated that the amount of Rs.90,000/- was paid entirely in cash. Therefore, all correct facts were pointed out to the Inspector of Police in a letter dated 6th May 1987 addressed by Defendant No.1 and his brother Franklin. 14. On the above basis, the suit claim is defended and it is contended that it is nothing but pressurizing tactics to extract money. In these circumstances, the discretionary relief of specific performance should not be granted and the suit must be dismissed. The payment details with the relevant statements are mentioned in the written statement. 15. In paragraph 4A of the written statement, Defendant Nos.1 14 and 2 have dealt with the contents of the amended plaint paragraph 2A and in paragraph 10A of the written statement, Defendant Nos.1 and 2 have dealt with paragraph 8A of the plaint. Thus, they have very clearly stated that the agreement was not to be acted upon, they were not to give possession of the parking spaces/garages/suit premises and therefore, the transaction is not that of sale. It is, in these circumstances, that they pray that the suit be dismissed with costs. 16. These Defendants have also denied that there was another transaction between the Plaintiff and the Defendants of sale of three other garages. It is not necessary to go into the details of the defence in that behalf because the instant suit is for specific performance of an agreement with regard to garage Nos.10,11 and 12. 17. It appears that there is no written statement by Defendant No.3. 18. On these pleadings this Court framed the following Issues :- 15 “1.Whether the Plaintiff proves that agreement for sale dated 15.10.1980 was executed by the Plaintiff with Defendants and he is entitled for Specific Performance of Agreement against the Defendants ? 2. Whether the Plaintiff proves that he is ready and willing to perform the obligations under the Agreement by paying balance amount on possession being handed over to the Plaintiff by the Defendants ? 3.Whether the Defendants prove that the agreement dated 15.10.1980 is not an Agreement for Sale but it is loan agreement as alleged by the Defendants ? 4. Whether the Defendants prove that claim of the Plaintiff is barred by law of limitation ? 5. Whether the Plaintiff is entitled for damages for non- performance of contract dated 15.10.1980 ? 6. Whether the Plaintiffs are entitled for permanent injunction against the Defendants ? 7. What order ? ” (The Issues are corrected as I noticed that there were certain typographical errors. The same causes no prejudice as they are not re- casted by the Court). 16 19. My findings on the Issues as above are recorded herein below. My reasons for the same are as under. 20. The Plaintiff filed his affidavit in lieu of examination in chief on 21st October 2002. He reiterated the plaint averments. He also stated that he applied for interim reliefs but the same were not granted. He further stated that during pendency of the suit he came to know that the suit premises have been transferred by Defendant Nos.1 and 2 to Defendant No.3. He has stated that he was given to understand that the garages are covered. He has also stated that the agreement dated 15th October 1980 is registered with the Sub-Registrar of Assurances. 21. Thus, while reiterating the plaint averments, the Plaintiff has referred to the agreement and other documents which have been produced by him. 22. The Plaintiff has been extensively cross examined by Defendant Nos.1 and 2 during the course of the cross examination, the Plaintiff who is 80 years of age stated that he was in the business of Laundry and Dry Cleaning in 1980. He 17 stated that he was an Income Tax payee in 1980 and used to file his Returns. He denied that he was carrying on business at Nariman Point in 1980. He denied that he had any office premises in Earnest House. He stated that he came to know in 1980 that the suit premises are available and put up for sale through Defendant No.2. He stated that his intention of buying these garages was to utilize them for parking of Tourist Vehicles. The Plaintiff was desirous of commencing Tourist Car business. He admits that he knew Defendant No.2 because the sole selling agency of Defendant No.2 was located in the Plaintiff’s premises at Wadala, Mumbai. He stated that in 1979-80, he had taken loan from Greater Bombay Co-operative Bank. The loan amount was Rs.50,000/- and the rate of interest was 17% per annum. He stated that the loan amount was utilized for payment to Defendant No.2 in respect of garage Nos.4,5 and 6, It is stated by him that an allotment letter was issued by Defendant No.2 in respect of these garages and the date of the allotment letter is 11th January 1980. There was no security except the allotment letter for the loan taken by the Plaintiff from Greater Bombay Co- operative Bank. There was no agreement in respect of garage Nos.4 to 6 executed between the Plaintiff and Defendant No.2. 18 The agreed consideration for garage Nos. 4 to 6 was Rs.1 lakh. It is stated that he paid a sum of Rs.40,000/- initially and subsequently Rs.50,000/- after the loan was sanctioned. Thus, Rs.90,000/- in respect of the garage Nos.4 to 6 have been paid by cheque. It is stated that the suit is filed in this Court against Defendant No.2 in respect of garage Nos.4,5 and 6 and a criminal case is also filed in the Criminal Court. He stated that save and except this amount, no payment is made to Defendant No.2 after 11th January 1980. 23. The Plaintiff states that there is no letter of allotment in respect of garage Nos.10 to 12 (suit premises). He denies the suggestion that except garage Nos.4,5 and 6, there is no other security given to the Co-operative Bank. 24. The witness states that payment with regard to the suit premises was made in cash. The amount is Rs.90,000/-. While availing the loan from Greater Co-operative Bank, the Plaintiff was asked to deposit original agreement executed by the builder. Copy of the letter was directed to be deposited with Defendant No.2. The witness admits that he did not address any letter to 19 Franklin John regarding the security insisted by the Co-operative Bank but he wrote a letter to Franklin John on 25th May 1984 regarding the suit premises. The witness volunteers and stated that the letter was with regard to garage Nos.4 to 6 but inadvertently the garages involved in the present suit were mentioned in the said letter. The witness then states that the company deposit of Rs.90,000/- was given to Defendant Nos.1 and 2 and a separate suit is instituted in respect thereof. He states that he became aware of the division of properties between Defendant Nos. 2 and 3 in 1988. He became aware after an affidavit was filed by Defendant No.2 in the Notice of Motion taken out by the Plaintiff in the present Suit. The witness has stated that he has received interest of Rs.27,000/- on the deposit on 3rd March 1981. The interest was on the principal sum of Rs. 90,000/- and it was paid to him by cheque. The deposit of Rs. 90,000/- on which this interest is paid was made in cash. The witness admits that his Advocate at the time of filing of the present suit was Mr. S.V. Vaidya. In paragraphs 11 and 12 of his cross-examination, he states thus :- “11. (Attention of the witness is invited to a copy of the letter 17th June 1989 addressed by Mr. 20 Vaidya to Defendant No.3). I had instructed the Advocate to address this letter to Defendant No. 3. (Copy of Letter dated 17th June 1989 is taken on record and marked as Exh.P-11 by consent). Defendant No.3 has made payment to me directly. Defendant No.3 made payment by cheque to me and the cheque was dishonoured. The cheques were given by Defendant No.3 in June 1986. The cheques were sent along with covering letter by Defendant No.3 to me. 12. (The attention of the witness is invited to a writing dated 11th January 1986). I cannot identify the signatories thereto. The signature on this letter just now shown to me is not mine. I cannot identify the signature on this letter which is just now pointed out to me. (By consent, copy of the letter dated 11th January 1986 is marked as Exh.P-12). (The witness once again goes through the copy of the letter dated 11th January 1986). Signature marked as “2” is not of Harry D’Souza. My name is Stanny Harry D’Souza although I am called as Harry. I am not personally aware whether any talks or negotiations were held with Franklin D’Souza. The amount or the cheque given to me by Mr. Franklin John is approximately Rs.1,80,000/-. I am not aware between whom the negotiations were held before the letter Exh.P-12 21 was sent by Franklin John. The cheque of Rs. 1,80,000/- handed over by Franklin John was towards interest on the deposit of Rs.90,000/-. I know that the payment is towards interest from the contents of the covering letter.” 25. The witness also admits that there were no negotiations held for sale of Garage