- 1 - IN THE HIGH COURT OF JUDICATURE AT BOMBAY O.O.C.J. APPEAL NO.370 OF 2004 IN SUIT NO.1053 OF 1981 ... Sharad Chhajjuram Aggarwal & Anr. ...Appellants v/s. Bombay Builders Company Ltd. & Anr...Respondents AND APPEAL NO.391 OF 2004 IN SUIT NO.1053 OF 1981 ... I.D.B.I. ...Appellants v/s. Sharad Chhajjuram Aggarwal & Anr...Respondents ... Mr.A.Y.Bookwala, Sr.Advocate with Mr.Rishabh Shah, Mr.Deepak Thakkar, Mr.Kalpesh Parikh i/b Pragna Thakkar & Co. for the Appellant in Appeal No.391 of - 2 - 2004 and for Respondent No.2 in Appeal No.370 of 2004. Mr.D.D.Madon, Sr.Advocate with Mr.O.S.Kutty i/b P.S.Shah for the Appellant in Appeal No.370 of 2004 and for Respondents Nos. 1 & 2 in Appeal No.391 of 2004. Ms.R.C.Nichani for Respondent No.3. ... CORAM: D.K.DESHMUKH & A.A.SAYED, JJ. DATED: 13th March, 2009 P.C.:(PER D.K.DESHMUKH, J.) 1. Both these Appeals are directed against the same judgment and decree passed by the learned single Judge of this court in Suit No.1053 of 1981. Therefore, both these Appeals can be conveniently disposed of by a common order. 2. The facts that are material and relevant for deciding these Appeals are, Sharad Chhajjuram Aggarwal and Poonam @ Poornima Sharad Aggarwal filed a suit being Suit No.1053 of 1981, to which the Bombay Builders Company Pvt.Ltd. was joined as Defendant No.1 and Industrial Development Bank of - 3 - India was joined as Defendant No.2. (The parties will be referred to by their designation in the suit). The Plaintiffs claimed in the suit that the Plaintiffs entered into an agreement dated 17th May, 1979 with Defendant No.1, which is a company incorporated under the Companies Act. The Defendant No.1 was constructing a building called "Mahendra Towers" on plot of land admeasuring about 3000 sq.ft. situated at 72, Bomanji Petit Road, Cumballa Hill, Bombay 400 026. According to the Plaintiffs, by an agreement dated 17th May, 1979 the Defendant No.1 agreed to sell to the Plaintiffs Flat No.903, on the 9th floor of the Building for the total consideration of Rs.2,90,000/-. Out of the agreed amount of consideration, an amount of Rs.2,61,000/- was paid by the Plaintiffs to the Defendant No.1. According to the Plaintiffs, though the balance amount of Rs.29,000/- was also sent to the Defendant No.1, Defendant No.1 did not encash the cheque, therefore, payment of that amount remains due. The Plaintiffs claimed that they were informed by 2nd Defendant by letter dated 14th May, 1981 that the entire property known as "Mahendra Tower" has been sold by Defendant No.1 to the second Defendant under a conveyance executed in April, 1980 and that the second Defendant - 4 - was in possession of the property. The second Defendant IDBI is statutory body constituted under the Industrial Development Bank of India Act, 1964. It appears that they have purchased the property for their staff quarters. 3. The Plaintiffs, in this situation, filed a civil suit. In the civil suit by prayer clause (a) they claimed a decree of specific performance of the agreement dated 17th May, 1979 against both the Defendants. By prayer clause (b) in the alternative a decree for damages is claimed only against Defendant No.1. It appears that though the Defendant No.1 initially appeared in the suit, he did not thereafter appear. However, the Defendant No.2 contested the suit. The Defendant No.2 filed written statement. On the basis of rival pleadings by order dated 27th November, 2001 the court framed following issues: I S S U E S (1) Whether the Plaintiffs prove that there is a valid agreement dated 17-5-1979 entered into with the defendant No.1 for purchase of - 5 - flat No.903 on the 9th floor of building known as "Mahendra Towers" which was then under construction together with a covered ‘car parking space’ in the said building for a price of Rs.2,90,000/- and the same is subsisting and specifically enforceable against the defendants? (2) Whether the Plaintiffs prove that they have already paid cheques amounting to Rs.2,75,500/- as against the total consideration of Rs.2,90,000/- payable under the Agreement dated 17-5-1979? (3) Whether the Plaintiffs prove that they are ready and willing to pay the balance amount of consideration, but it was not paid only because of the breach of contract committed by defendant No.1? (4) Whether the defendant No.2 proves that it acquired right, title and interest over 7035 sq.metrs., of the property under the Article of Agreement dated 5th April 1980 (Ex.1 to the written statement) Indenture of sub-lease - 6 - dated 22nd April 1980 (Ex-2 to the written statement), Tripartite Agreement dated 23rd April, 1980 (Ex-3 to the written statement) and Deed of Conveyance dated 24th April, 1980 (Ex-4 to the written statement)? (5) Whether the defendant No.2 prove that they were not aware of the plaintiffs’ contract with defendant No.1, prior to execution of Tripartite Agreement dated 5th April, 1980, Indenture of sub-lease dated 22-4-1980, Agreement dated 23rd April, 1980 and Deed of Conveyance dated 24th April, 1980? (6) Whether the Plaintiffs prove that in case of defendant No.1’s failure to perform their part of obligation under the agreement dated 17-5-1979 Plaintiffs would be entitled for refund of money together with interest thereon, so also for damage as claimed in the suit for the breach of contract committed by defendant No.1? (7) Do the Plaintiffs prove that they have - 7 - already issued cheques amounting to Rs.2,75,500/- as against the total consideration of Rs.2,90,000/- payable under the agreement dated 17-5-1979 as stated in paragraph 5 of the plaint? (8) Do the Plaintiffs prove that out of the cheques of Rs.2,75,500/- issued to the Defendant No.1 against the consideration of Rs.2,90,000/- payable, the defendant No.1 has already encashed cheques worth Rs.2,46,500/-, leaving only two cheques of Rs.14,500/- each unencashed as stated in para 5 of the plaint? (9) Does the defendant No.2 prove that in view of plaintiffs agreeing with defendant No.1 to cancel agreement and to collect refund of payment made by him with interest, Plaintiffs are not entitled for specific performance of the agreement against defendants and the remedy is only against defendant No.1 for recovery of amount paid as per the agreement as stated in para 10 of their written statement? - 8 - (10) Whether the Plaintiffs prove that they are entitled to receive from the defendants sum of Rs.30,98,425/- together with further interest at 18% p.a., on 30,30,000/- if decree for specific performance cannot be granted as stated in paragraph 18 of the plaint? (11) What order? Subsequently on 14th November, 2003, issue No.5 was recast and the following issue framed: "Does defendant No.2 prove that the first defendant had obtained cancellation of the agreement for sale entered into by him (defendant No.2) with various purchasers of flats by the time sub-lease was executed? 4. It appears that on 12-2-2004, the Court passed an exparte decree in terms of prayer clause (a) in favour of the Plaintiffs and against the Defendant No.1. Thus a decree of specific performance of the agreement dated 17th May, 1979 was passed against the Defendant No.1 by order dated 12-2-2004. Thereafter, - 9 - the learned single Judge by his order dated 11/12th March, 2004 decided the suit between the Plaintiffs and the Defendant No.2. By that order the learned single Judge declined to pass a decree of specific performance of the agreement dated 17th May, 1979 against the Defendant No.2, but passed a decree of damages against the Defendant No.2 directing the Defendant No.2 to pay an amount of Rs.30,98,425/- with interest at the 10% p.a. from the date of the institution of the suit till the date of realisation. 5. The Plaintiffs have filed Appeal No.370 of 2004 challenging the judgment and decree dated 11/12th March, 2004, in so far as it does not grant decree of specific performance of the agreement in favour of the Plaintiffs. The Defendant No.2 has filed Appeal No.391 of 2004 challenging the judgment and decree passed by the learned single Judge passing a decree for payment of damages against the 2nd Defendant. 6. So far as Appeal filed by the Plaintiffs is concerned, an objection was raised on behalf of the 2nd Defendant to the maintainability of the appeal on the ground that the Plaintiffs have accepted the order passed by the learned single Judge declining to - 10 - pass a decree of specific performance in favour of the Plaintiffs in as much as the Plaintiffs have put the decree for damages passed by the learned single Judge to execution. It was pointed out that during the pendency of the appeal the decree dated 11/12th March, 2004 was put to execution by the Plaintiffs by filing an execution application dated 18-10-2007, and therefore, the second Defendant was forced to move the appeal court for stay of the execution. It was submitted that the Plaintiffs have lost their rights to challenge the decree dated 11/12th March, 2004 by their conduct of putting the decree passed by the learned single Judge to execution. It was also submitted that the Plaintiffs also cannot put the decree passed against the Defendant No.1 for specific performance of the agreement to execution because the court has declined to pass a decree of specific performance against the 2nd Defendant with full knowledge that the property is in the hands of the 2nd Defendant and it is impossible for the first Defendant to specifically perform the agreement dated 17th May, 1979. The learned counsel appearing for the Plaintiffs did not dispute that the Plaintiffs during the pendency of the appeal had put the decree to execution. However, the learned counsel submitted - 11 - that that conduct of the Plaintiffs cannot be taken to debar the Plaintiffs from challenging the judgment and decree dated 11/12th March, 2004 declining to pass a decree of specific performance of the agreement in their favour. 7. So far as the Appeal filed by the 2nd Defendant is concerned, it was contended on behalf of the learned counsel appearing for the 2nd Defendant that there is no prayer in the suit claiming decree for damages against the 2nd Defendant. It was claimed that sub-section 5 of Section 21 of the Specific Relief Act contains a provision disentitling the court to pass any decree for compensation in the absence of prayer in the plaint for payment of compensation. Admittedly, in the plaint filed by the Plaintiffs there is no prayer made claiming a decree of compensation against the 2nd Defendant and therefore, for this sole reason the decree awarding compensation is liable to be set aside. It was also submitted that in view of clause 9 of the agreement, even if there was a prayer made in the suit only a decree for refund of the amount paid with interest could have been passed. - 12 - 8. On behalf of the Plaintiffs it was submitted that though it is true that there is no prayer in the plaint claiming a decree of compensation against the Defendant No.2 , but there is a prayer in the suit claiming decree of compensation against Defendant No.1. The learned single Judge has rightly considered, according to the Plaintiffs, the situation and has held that as evidence has already been recorded, now it is not necessary for the Plaintiffs to amend the plaint so as to pray for damages against the 2nd Defendant. 9. Now, first taking up the Appeal filed by the Plaintiffs for consideration, from the record it is apparent that the 2nd Defendant has purchased the property for housing its’ staff. The learned single Judge found it as a fact and has , therefore, held that it will not be proper to pass a decree of specific performance against the 2nd Defendant. The learned single Judge has also found that in view of the pendency of the suit in the city civil court, where there is an order of temporary injunction made, construction of the building is still incomplete and therefore, in this situation, a decree for specific performance of the agreement cannot be granted - 13 - against the Defendant No.2. In our opinion, these are relevant considerations which have gone into recording a finding that the Plaintiffs are not entitled to a decree of specific performance against the 2nd Defendant. In our opinion, the conduct of the Plaintiffs of putting the decree for damages passed by the learned single Judge against the 2nd Defendant to execution also disentitles the Plaintiffs to claim a decree for specific performance of the agreement, because decree for compensation is passed only after declining to pass a decree for specific performance. If the Plaintiffs want the decree for the compensation to be executed, obviously by their conduct they have given up their demand for a decree of specific performance. In our opinion, therefore, looking at the matter from any point of view, no fault can be found with the order of the learned single Judge declining to pass a decree of specific performance against the 2nd Defendant. It was also contended that in view of the fact that there is already a decree of specific performance of agreement passed against the Defendant No.1, a decree of specific performance against the Defendant No.2 ought to have been passed. In our opinion, submission is not well founded. Though it is a fact - 14 - that the Defendant No.2 is claiming through the Defendant No.1, the circumstances for which the passing of decree for specific performance of the agreement become impossible have arisen after the Defendant No.2 came on the scene, like pendency of the suit before the city civil court and the purpose for which the property is purchased by the 2nd Defendant. The decree dated 11/12th March, 2004 is subsequent to the exparte decree passed against the Defendant No.1. The court with full knowledge that the property is not in the hands of the Defendant No.1 has declined to pass a decree of specific performance against the Defendant No.2. In our opinion, therefore, the subsequent decree passed by the learned single Judge makes the decree passed against the Defendant No.1 also unexecutable. In our opinion, the learned single Judge did not commit any error in declining to pass a specific performance against the Defendant No.2 even after passing a decree of specific performance against the Defendant No.1. Thus, in our opinion, there is no substance in the appeal filed by the Plaintiffs and it is liable to be dismissed. 10. So far as Appeal filed by the 2nd Defendant is - 15 - concerned, admittedly there is no prayer made in the plaint seeking a decree for compensation against the 2nd Defendant. There is also no prayer made in the plaint seeking refund of the amount paid to the Defendant No.1. Provisions of sub-section 5 of Section 21 of the Specific Relief Act, therefore, becomes relevant. They read as under:- 21(5) No compensation shall be awarded under this section unless the plaintiff has claimed such compensation in his plaint: Provided that where the plaintiff has not claimed any such compensation in the plaint the Court shall, at any stage of the proceedings, allow him to amend the plaint, in such terms as may be just, for including a claim for such compensation. Explanation:- The circumstance that the contract has become incapable of specific performance does not preclude the Court from exercising the jurisdiction conferred by this section. 11. Perusal of the above provisions makes it clear that unless there is a prayer made in the plaint claiming compensation no decree for compensation can be passed by the court. In other words, in the absence of any prayer in the plaint, whereby the Plaintiff claim a decree for payment of compensation against the second Defendant, the court could not have made a decree against the second Defendant for - 16 - payment of compensation. Perusal of the proviso shows that there is power in the court to permit the Plaintiff to amend the plaint at any stage to include the claim for compensation. Perusal of the judgment of the learned single Judge shows that the learned single Judge has observed that it is not necessary at this stage to amend the plaint and without even amending the plaint a decree for compensation can be passed against the second Defendant, because the second Defendant has stepped into shoes of the first Defendant. In our opinion, the learned single Judge is in error in making those observations. An amendment in the plaint would be necessary to give notice to the second Defendant as to on what basis the compensation is claimed against him. The Plaintiff also will have to lead evidence to prove as to what will be the proper amount of compensation? The second Defendant will then get an opportunity to lead the evidence in rebuttal. If without following such procedure, a decree for payment of compensation is passed, then the decree would be violative of principles of natural justice and the provisions of sub-section (5) of Section 21. In our opinion, therefore, the learned single Judge was not at all justified in passing a decree for payment of - 17 - compensation against the second Defendant. At the hearing, when we found that the decree for payment of compensation against the Defendant No.2 cannot be sustained, we put it to the learned counsel appearing for the second Defendant, whether the second Defendant is willing to make payment as per clause (9) of the agreement. The learned Counsel appearing for the Defendant No.2, after taking instructions, stated before us that the second Defendant is willing to pay to the Plaintiffs the amount paid by them with interest at the rate of 10% p.a. which is the rate of interest mentioned in Clause (9) of the agreement and that the second Defendant is willing to pay the double the amount which may be arrived after calculating the interest at the rate of 10% p.a. on the amount paid by the Plaintiffs to the first Defendant. But this offer was declined by the Plaintiffs, and therefore, we cannot pass a decree by consent to that effect. 12. In the result, therefore, the appeal filed by the Plaintiffs being Appeal No.370 of 2004 fails and is dismissed. Appeal No.391 of 2004 filed by the second Defendant succeeds and allowed. The judgment and decree dated 11/12th March, 2004 passed by the - 18 - learned single Judge is set aside. No order as to costs. (D.K.DESHMUKH, J.) (A.A.SAYED, J.) - 19 - IN THE HIGH COURT OF JUDICATURE AT BOMBAY O.O.C.J. CROSS OBJECTION (L) NO.4 OF 2004 IN APPEAL NO.370 OF 2004 IN SUIT NO.1053 OF 1981 ... Sharad Chhajjuram Aggarwal & Anr. ...Appellants v/s. Bombay Builders Company Ltd. & Anr...Respondents ... Ms.R.C.Nichani for the Cross-objectioners. CORAM: D.K.DESHMUKH & A.A.SAYED, JJ. DATED: 13th March, 2009 P.C.: This cross-objection is taken out by the first Defendant in Suit No.1053 of 1981. Decree against the first Defendant has been passed by an order dated 12-2-2004. This appeal challenges the decree passed by the learned single Judge dated 11/12th March, 2004, by which the learned single Judge declined to pass a decree of specific performance against the second Defendant. The decree challenged in the appeal does not at all operate against the first - 20 - Defendant and therefore, the first Defendant is not entitled to file any cross-objection in this appeal. Cross-objection is, therefore, not maintainable and is rejected. (D.K.DESHMUKH, J.) (A.A.SAYED, J.)