1 IN THE HIGH COURT OF JUDICATURE OF BOMBAY IN THE HIGH COURT OF JUDICATURE OF BOMBAY IN THE HIGH COURT OF JUDICATURE OF BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO.1339 OF 2007 IN SUIT NO.1052 OF 2007 Bhanu Vijay Gandhi & Ors. ..Plaintiffs. V/s. S.M.Builders & Anr. ..Defendants. And Golden Acres Co-operative Housing Society Limited. ..Respondents. WITH NOTICE OF MOTION NO.2005 OF 2007 WITH NOTICE OF MOTION NO.2311 OF 2007 WITH NOTICE OF MOTION NO.3061 OF 2007 IN SUIT NO.1451 OF 2007 Shri Sushil Gupta HUF & Ors. ..Plaintiffs. V/s. Bhanu Vijay Gandhi & Ors. ..Defendants. Mr.Arif Bookwala,Sr.Advocate a/w. Mr.Snehal Shah a/w. Ms.M. Shah i/b. Pandya Gandhi & Co. for Plaintiffs. Mr.Kevic Setalvad a/w Mrs. Toral Shah i/b. Tyabji Dayabhai for Defendant Nos. 1 to 4. Ms.Rajni Iyer, Sr.Advocate a/w Mr.Rajesh Mishra for Defendant No.5. CORAM: A.M.KHANWILKAR,J CORAM: A.M.KHANWILKAR,J CORAM: A.M.KHANWILKAR,J DATE : DECEMBER 11, 2007. DATE : DECEMBER 11, 2007. DATE : DECEMBER 11, 2007. P.C. : P.C. : P.C. : 2 1. By this common order, the aforesaid four Motions are being disposed of together. 2. The description of the suit property, common to both the suits, is, Plot No.1 admeasuring 1000 square yards approximately equivalent to 836.2 square meters with bungalow No.18 known as Gurukripa, situated at Juhu, Mumbai, which is a part of larger part of plot comprising of Plot Nos. 1 to 17 forming part of Ruia Park Estates, situated at Juhu, Mumbai(Property "A"). 3. The larger property (Property-A) was acquired by one S.M Builders from the original owners M/s.Ramnarain & Sons Private Ltd. Thereafter, the said property-A was divided into property-B and property-C to construct two bungalow type colonies on ownership basis. Property-B comprises of "Golden Beach Bungalows Scheme"; whereas property-C comprises of "Golden Acres Bungalows Scheme". For the present, we are concerned with the suit property, which is a part of property-C falling under "Golden Acres Bungalows Scheme". 4. The Gandhis have filed Suit before this Court being Suit No. 1052 of 2007 asserting that they are 3 the absolute owners of the suit property. It is their case that on account of conveyance in their favour in relation to the suit property, they have acquired absolute right therein, which admeasures about 1000 sq.yards. It is their case that they were the absolute owners not only of the plot No.1, but also bungalow standing thereon being Bungalow No.18, with further right to the unutilised FSI admeasuring 2604 sq.ft.. According to the Gandhis, as they were the absolute owners and in possession of the suit property pursuant to conveyance, that property could not be transferred and conveyed to Golden Acres Cooperative Housing Society Ltd. by their predecessor S.M. Builders. On this assertion Gandhis filed Suit against S.M.Builders in this Court for the following relief. "(a) this Hon’ble Court be pleased to declare that the Plaintiffs are the owners of the Suit Plot (which is more particularly described in Exhibit A to the Plaint) and are entitled to exclusive and unrestricted possession and occupation thereof; (b) this Hon’ble Court be pleased to declare that the Defendants have no right, title or interest to the Suit Plot (which is more particularly described in Exhibit A to the Plaint), or any part thereof, and that the Defendants have no right or power to deal with, transfer, convey or execute any documents or conveyance in respect thereof, either pursuant to the undertaking recorded in the Order dated 13th March, 2007(being 4 Exhibit M to the Plaint), or in any manner howsoever. (c) this Hon’ble Court be pleased to pass an order of permanent injunction to restrain the Defendants by themselves or through their servants and agents and/or through any person acting for or on behalf of the Defendants from in any manner transferring, conveying, dealing with, entering upon and/or executing any deed or conveyance or any document in respect of the Suit Plot (which is more particularly described in Exhibit A to the Plaint), or any part thereof; (d) pending the hearing and final disposal of the Suit, this Hon’ble Court be pleased to pass an order of temporary injunction to restrain the Defendants by themselves or through their servants and agents and/or through any person acting for or on behalf of the Defendants from in any manner transferring, conveying, dealing with, entering upon and/or executing any deed or conveyance or any document in respect of the Suit Plot (which is more particularly described in Exhibit A to the Plaint), or any part thereof either pursuant to the undertaking recorded in the Order dated 13th March, 2007 (being Exhibit M to the Plaint), or in any manner howsoever; (e) For interim and ad-interim reliefs in terms of prayer (d) hereinabove; (f) For costs; (g) For such further and other reliefs as the nature and circumstances of the case may require." In the same suit Gandhis took out Notice of Motion No.1339 of 2007 praying for interim reliefs during the pendency of the Suit, which read thus: "(a) That pending the hearing and final disposal of the Suit, this Hon’ble Court be 5 pleased to pass an order of temporary injunction to restrain the Defendants by themselves or through their servants and agents and/or through any person acting for or on behalf of the Defendants from in any manner transferring, conveying, deal with, entering upon and/or executing any deed or conveyance or any document in respect of the Suit Plot (which is more particularly described in Exhibit A to the Plaint), or any part thereof either pursuant to the undertaking recorded in the Order dated 13th March, 2007 (being Exhibit M to the Plaint), or in any manner howsoever; (b) For ad-interim reliefs in terms of prayer (a) above; (c) That the costs of this Notice of Motion be provided for; (d) For such further and other reliefs as the nature and circumstances of the case may require." 5. For the nature of reliefs prayed by the Gandhis, it was thought appropriate to require them to implead the Society atleast in the said Motion, so that Golden Acres Co-op. Hsg.Socy. Ltd. can be heard on relevant aspects as the proposed relief was to inevitably affect that Society. Consequent thereto, Gandhis have impleaded the Society as Respondent in the Notice of Motion only. This Court after considering rival submissions, by order dated 12th April, 2007 granted ad-interim relief in favour of Gandhis in terms of prayer clause (a) of their Motion. 6 6. It appears that, after the said ad-interim order was passed, Gandhis entered into an Indenture of conveyance (registered), conveying the suit property to M/s. Blue Estate Private Ltd. (hereinafter referred to as Blue Estate) for a sum of Rs. 3,75,00,000/-(Rupees Three Crores Seventy Five Lakhs only), on 19th April, 2007. For that reason, the second suit being Suit No.1451 of 2007, has been filed by Guptas in this Court on the assertion that there was a prior valid and subsisting agreement in their favour, executed by Gandhis in relation to the suit property on 29th February, 2000. According to the Guptas therefore, Gandhis could not have dealt with the suit property, much less conveyed the same to M/s.Blue Estate. It is on this assertion Guptas in their Suit have asked for reliefs including to declare that the sale of the suit property in favour of the Blue Estate by Gandhis was liable to be set aside. Relief claimed in the suit filed by Guptas against Gandhis and Blue Estate, read thus: "(a) that this Hon’ble Court be pleased to declare that the said Agreement dated 29th February 2000 Exhibit "B" to the plaint is valid, subsisting and binding; (b) that this Hon’ble Court be pleased to order and decree the Defendants to 7 specifically perform the said Agreement dated 29th February, 2000 Exhibit "B" to the Plaint and for such purpose the Defendants be directed to do all such acts, deeds and things including but not limited to executing the Conveyance in favour of the Plaintiffs and putting the said Plaintiffs in possession of the said property more particularly described in the Exhibit "A" to the Plaint; (c) that this Hon’ble Court be pleased to declare that purported sale by Defendants Nos. 1 to 4 in favour of Defendant No.5 is illegal and that the same is liable to be and be set aside. (d) that in the event of this Hon’ble Court coming to the conclusion that the Plaintiffs are not entitled to a decree of specific performance, then and in that event the Defendants be ordered and decreed to pay to the Plaintiffs (i) a sum of Rs.79,00,000/- (Rupees Seventy Nine Lacs only) as per Particulars of Claim Exhibit "T" hereto together with further interest thereon on the said sum of Rs.34,50,000/- at the rate of 18% p.a. from 25th April, 2007 till payment or realization (ii) a sum of Rs.23,70,00,000/-(Rupees Twenty Three Crores Seventy Lacs only) as and by way of damages as per Particulars of Claim Exhibit "U" hereto with interest thereon at the rate of 18% p.a. from the date of the suit till payment and/or realization; (e) that this Hon’ble Court be pleased to declare that the repayment by the Defendants Nos. 1 to 4 of the said sum of Rs.79,00,000/-(Rupees Seventy Nine Lacs only) and further interest and costs of the suit is secured by a statutory charge on the said property at Exhibit ‘A’ to the Plaint and that the same be sold by and under the direction of this Hon’ble Court and the net sale proceeds thereof be appropriated towards the Plaintiffs Claim as per particular referred to hereinabove; (f) that pending the hearing and final disposal of the suit, this Hon’ble Court be pleased to appoint the Court Receiver, High 8 Court, Bombay or any other fit or proper person as the Receiver of the said property described in Exhibit ‘A’ to the Plaint with all powers under Order XL, Rule 1 of the Code of Civil Procedure, 1908; (g) that pending the hearing and final disposal of the suit, this Hon’ble Court be pleased to restrain the Defendants, their servants and/or agents by an order of injunction from selling, alienating, encumbering, transferring, developing, creating third party rights in respect of or parting with possession of the said property described in Exhibit ‘A’ to the Plaint; (h) that pending the hearing and final disposal of the suit, this Hon’ble Court be pleased to restrain Defendants Nos. 1 to 4 from taking any further steps in pursuance of the alleged sale in favour of Defendants No.5 including handing over possession of the said property to Defendant No.5. (i) for interim and ad-interim reliefs in terms of prayers (f) to (h) above; (j) for the costs of the suit; (k) for such further and other reliefs as the nature and circumstances of the case may require;" During the pendency of the said Suit filed by Guptas, they have taken out Notice of Motion No.2005 of 2007 for interim injunction praying for the following reliefs: "(a) that pending the hearing and final disposal of the suit, this Hon’ble Court be pleased to appoint the Court Receiver, High Court, Bombay or any other fit and proper person as the Receiver of the said property 9 described in Exhibit ‘A’ to the Plaint with all powers under Order XL, Rule 1 of the Code of Civil Procedure, 1908; (b) that pending the hearing and final disposal of the suit, this Hon’ble Court be pleased to restrain the Defendants, their servants and/or agents by an order of injunction from selling, alienating, encumbering, transferring, developing, creating third party rights in respect of or parting with possession of the said property described in Exhibit ‘A’ to the Plaint; (c) that pending the hearing and final disposal of the suit, this Hon’ble Court be pleased to restrain Defendants Nos. 1 to 4 from taking any further steps in pursuance of the alleged sale in favour of Defendants No.5 including handing over possession of the said property to Defendant No.5. (d) for interim and ad-interim reliefs in terms of prayers (a) to (c) above; (e) for the costs of the Notice of Motion; (f) for such further and other reliefs as the nature and circumstances of the case may require;" 7. The said Notice of Motion filed by Guptas was considered for grant of ad-interim relief on April 27, 2007, when Counsel appearing for Blue Estate made a statement that the said party would not create third party interest or part with the possession of the suit property and also maintain status quo thereof as on that day till the hearing of the Notice of Motion. It is on that assurance the Court went on to record that it is not necessary to pass any order 10 for ad-interim reliefs, as prayed. It is seen that Guptas later on filed Notice of Motion No.2311 of 2007 in the same Suit making grievance that the said Blue Estate had willfully breached the solemn assurance given to the Court, as recorded on the earlier occasion, for which reason ought to be proceeded under Order 39 Rule 2A of C.P.C. In the said Notice of Motion No.2311 of 2007, Guptas have asked for following reliefs: "(a) that pending the hearing and final disposal of the suit, it is just, necessary and convenient that this Hon’ble Court be pleased to attach the suit property described in Exhibit "A" to the Plaint for breach of the order dated 27th April, 2007 under Order XXXIX Rule 2A of the Code of Civil Procedure 1908; (b) that pending the hearing and final disposal of the suit, this Hon’ble Court be pleased to detain Defendant No.5 in Civil Prison for breach of the order dated 27th April, 2007 under Order XXXIX Rule 2A of Code of Civil Procedure 1908; (c) for interim and ad-interim reliefs in terms of prayers (a) and (b) above; (d) for the costs of the Notice of Motion; (e) for such further and other reliefs as the nature and circumstances of the case may require;" 8. The said Blue Estate on the other hand, have taken out Notice of Motion No.3061 of 2007 on the 11 assertion that they have not committed any breach in relation to the assurance given to the Court on their behalf. According to them, the work which was continued in the bungalow was of repair and renovation of the bungalow in respect whereof no statement was made on their behalf. According to Blue Estate, statement made on their behalf to the Court was in the context of reliefs claimed by Guptas in the Notice of Motion, which in no way prohibit repair and renovation work of the bungalow. It is the case of Blue Estate that even if the reliefs as prayed by Guptas in their former Motion were to be granted as it is, it would not have precluded Blue Estate from carrying on repair and maintenance work of the bungalow whereof they were admittedly in possession; and could have done so for beneficial enjoyment of the bungalow. On this basis Blue Estate in the Motion taken out by them have asked for the following reliefs; "(a) That pending the hearing and final disposal of this suit, this Hon’ble Court may be pleased to clarify and /or alter the Order of status quo granted on 27.4.2007 and 1.6.2007 so as to enable the Defendant No.5 to carry out suitable tenantable repairs, renovations, decorations in the bungalow namely "Gurukripa" in the suit property on such terms and conditions as this Hon’ble court shall deem fit and proper. 12 (b) That pending the hearing and disposal of this Notice of Motion, ad-interim relief permitting protective enclosure of the standing structure with plastic/tarpaulin be permitted. (c) That costs of this Notice of Motion be provided for. (d) For such other relief as this Hon’ble Court may deem fit, proper and necessary in the facts of the case." 9. As aforesaid, Gandhis have approached this Court praying for declaration in respect of the suit property that they have absolute right in Plot No.1 admeasuring 1000 sq.yards alongwith bungalow No.18 standing thereon known as "Gurukripa" situated at Juhu, Mumbai, including the unutilised FSI 2604 sq.ft in respect of the suit plot. That claim is founded on the registered Indenture of Conveyance executed in favour of Gandhis on 8th February, 1994 by their predecessor in title M/s. Mira Janak Trust. It is the case of the Gandhis that after the registered Conveyance, their names have been entered as owners of the suit property in the Index II and Property card and that since then Gandhis are paying property tax, municipal and other charges in respect of the suit property. It is the case of Gandhis that the Golden Acres Cooperative Housing Society Ltd., formed by the purchasers of the plots and bungalows of 13 property-B and property-C was not entitled for conveyance of the suit property being Plot No.1 from M/s.S.M. Builders, as M/s.S.M. Builders has already transferred the said property in favour of Mira Janak Trust, who in turn has conveyed the same to Gandhis by a registered Conveyance. It is the case of Gandhis that they were entitled to deal with the suit property-Plot No.1 in their own rights and for that reason, Consent Decree between M/s. S.M. Builders and the said Society(Golden Acres Cooperative Housing Society Ltd.) cannot be the basis to convey the Plot No.1 to the Society by M/s. S.M. Builders. It is on this assertion, the relief of declaration and permanent injunction is prayed by Gandhis in the Suit instituted by them. 10. In so far as the Suit instituted by Guptas, it is the case of Gandhis that the claim of Guptas is untenable. In the first place, contends Counsel for Gandhis that the agreement for sale executed in favour of Guptas on 29th February, 2000 stood terminated. For, Guptas had failed to discharge their obligations under the said agreement, which forced the Gandhis to terminate the agreement. Besides, on account of subsequent negotiation between Gandhis and Guptas, the suit agreement for sale was 14 abandoned and instead fresh terms were agreed upon to convey the suit property to Intel Land Developers Private Ltd. on certain terms and conditions. The said Intel Land Developers Pvt.Ltd. however, has not come forward to claim any relief against Gandhis by way of a substantive suit; and that Guptas are not claiming through Intel Land Developers Private Ltd. so as to pursue the present action. In short, the case of Gandhis is that as there was no subsisting agreement in respect of the suit property between Gandhis and Guptas, they were free to convey the suit property to third party, which in fact has been done on 19th April, 2007 by executing the registered Conveyance in favour of the Blue Estate for consideration of Rs.3,75,00,000/-. The Earnest Money which was deposited by Guptas in terms of agreement for sale dated 29th February, 2000 was returned by them. According to Gandhis, Guptas were never ready and willing to comply with their obligations under the agreement for sale. On this basis Gandhis are opposing for grant of any relief to Guptas. 11. In so far as Blue estate is concerned, according to them, they had reason to believe from the circumstances on record that Gandhis were free to transfer the suit property to third party, as the 15 agreement for sale in favour of Guptas had already been terminated. In short, stand of Blue Estate is not only to support the stand of Gandhis, but in addition to contend that they are bonafide purchasers of the suit property for consideration, having reason to believe that Gandhis were free to transfer the suit property to third party. 12. In so far as grievance of Guptas that the Blue Estate have committed breach of solemn assurance given to the Court by continuing to repair and renovate the bungalow is concerned, it is the stand of Blue Estate that the assurance of maintaining status quo of the suit property was in the context of the interim relief claimed by Guptas in their Motion in prayer clause (b). In prayer clause (b) of the Motion, the only relief claimed by Guptas was to restrain the Defendants(which includes Blue Estate) from selling, alienating, encumbering, transferring, developing, creating third party rights or part with possession of the suit property. It is the specific case of the Blue Estate that the work undertaken by them and continued after the order dated 27th April, 2007 was only of repair, renovation and decoration of the bungalow. Reliance is placed on the report of the Commissioner as well as the photographs to 16 support the stand that the work undertaken by Blue Estate was only of repair, renovation and decoration. According to the Blue Estate work of repair, renovation and decoration does not amount to development of the property as such, which alone would have resulted in breach of the assurance given on their behalf to the Court. The Blue Estate, in addition has taken out formal Notice of Motion praying for clarification of the Order dated 27th April, 2007. 13. In so far as Guptas are concerned, it is their case that the agreement for sale executed in their favour dated 29th February, 2000 in respect of the suit property was still valid and subsisting. The Guptas have relied on circumstances to buttress their above stand and would contend that they were entitled for a relief of specific performance. According to Guptas, as their agreement for sale was valid and subsisting, Gandhis had no right to convey the property in favour of the third party(Blue Estate). The Guptas contend that the argument of Gandhis that there was novation of contract, is misplaced. The Guptas further contend that the parties were only negotiating about the modalities of completing the documents. That did not affect the 17 right of Guptas, which had already crystalised in terms of agreement for sale dated 29th February, 2000 and which agreement was still valid and subsisting. It is the case of Guptas that the termination letter issued by Gandhis has been waived by Gandhis themselves, which position can be demonstrated from the circumstances on record. It is agreed that for the nature of controversy, this is a fit case where Court Receiver ought to be appointed, as Gandhis have hastened the whole matter by executing Conveyance in favour of Blue Estate on 19th April, 2007. Accordingly, Guptas were entitled for preservation of property, which has been assured to be sold to them in terms of agreement for sale dated 29th February, 2000. According to Guptas, Blue Estate is the purchaser of the suit property with notice of the right of the Guptas thereon and will have to suffer the consequences therefor. Guptas also assert that Blue Estate, inspite of assurance given before this Court through the Counsel have committed breach of that assurance by continuing with the work on the suit property, resulting in altering the status quo of the suit property as existed on 27th April, 2007. For that reason, Blue Estate is liable to be proceeded under Order 39 Rule 2A of C.P.C. 18 14. In so far as Golden Acres Co-op. Housing Society Ltd., which has been arraigned as Respondent in the Notice of Motion No.1339 of 2007 taken out by Gandhis, it is fairly stated on behalf of the society that the Society was accepting that the bungalow/structure on Plot No.1 is not owned by the Society. But, it is asserted that the land underneath the structure belongs to the Society. It is their case that the suit plot forms part of larger property-A, which is required to be conveyed to the Society by M/s. S.M.Builders, who had divided the same into Property-B and Property-C to construct two bungalow type colonies on ownership basis. The purchasers of the plots in