1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. Court Receiver's Report No.143 of 2008 AND Notice of Motion No.2012 of 2008 In Suit No.631 of 2003 Mr.Ashok Kumar Dwivedi & ors. .. .. Plaintiffs v/s. M/s.Shanil Builders & ors. .. .. Defendants Mr.H. Toor with Ms.V.J . Tamhane i/by R.D. Suvarna for Plaintiffs. Mr.Kezer Kharawala i/by R.K. Associates for Defendant Nos.4 to 5. Mr.D.V. Deokar, 1st Asstt. to Court Receiver, present. ----- CORAM : SMT.ROSHAN DALVI, J. Dated : 16 th July, 2008 P.C. : 1. The original Plaintiffs are flat and shop purchasers in the building which is being constructed on a plot of land allotted to Defendant Nos.4 to 10 as members of the Armed Forces. The initial Plaint was filed by Plaintiff Nos.1 to 14. Plaintiff Nos.15 to 28 have been added thereafter on 17.6.2004. Plaintiff Nos.1 to 28 shall be referred to as “flat purchasers” or “shop purchasers” or “flat/shop purchasers” as required. 2 Defendants 1 to 3 were the initial developers of the suit plot of land. They shall be referred to as “the developers”. 2. Defendant No.4 represents Defendant Nos.5 to 10 being all the co-owners of the plot of land. They are war widows. Defendant Nos.4 to 10 shall be referred to as the “owners”. Defendant No.11 is the Mumbai Municipal Corporation (MMC). Defendant Nos.12 and 13 have been added much later on 6.8.2007. 3. The respective flats and shops sought to be purchased by the original Plaintiffs are shown in the list of particulars of their flats mentioned in Exhibit- A to the plaint. (Only Plaintiff No.28 shown in that list is not the original Plaintiff. He shall be included as a flat purchaser along with the original Plaintiffs.) No specific flats or shops are shown to have been purchased by the Plaintiffs added as party Plaintiffs after the filing of the Suit being Plaintiff Nos.15 to 27 as also Defendants added after the filing of the Suit, being Defendants 12 and 13. 4. Defendant Nos.4 to 10 have entered into a Development Agreement dated 20.10.2000 with the developers to develop the suit plot of land. The developers have entered into various Agreements with the original Plaintiffs as the 3 flat/shop purchasers. The developers did not carry out the development work as contemplated in the Agreement with the owners and did not give possession of the flats to the flat/shop purchasers as agreed under their respective Agreements with the developers. They have abandoned the suit project. 5. The Suit came to be filed against the developers, the owners and the MMC. The flat purchasers have made a grievance with regard to the construction to be put up by the developers and have prayed for a declaration that their Agreements entered into with the developers for the purchase of their flats and/or the allotment letters issued by the developers are valid and subsisting and they be put in possession of the respective flats and shops agreed to be purchased by them. No relief in the Suit is claimed against the owners. 6. The developers have not defended the Suit or this Notice of Motion. The flat/shop purchasers as well as the owners have suffered at the hands of the developers. 7. The owners entered into an Agreement dated 20.10.2000 with the developers of the suit plot. It was agreed thereunder that the developers would develop the building completely at 4 their costs utilizing the FSI of the plot and putting further TDR thereon to be bought by the developers and in the constructed building the developers would be entitled to sell and dispose of 45% of the flats and the owners, in consideration of the ownership of the plot in them, would be entitled to a preferential selection of 55% of the flats constructed for which they would not incur any costs. 8. Due to several breaches committed by the developers, the owners filed a Suit in the Bombay City Civil Court being Suit No.1659 of 2002 on 8.8.2002 for certain injunctions in which Minutes of the Order came to be passed between the owners and the developers specifying and earmarking the flats which will come to their respective shares. 9. Those flats were specifically identified and named in the Consent Terms. The developers agreed to undo the wrong. That was by handing over the locks and keys of those flats to the owners, executing deeds of cancellation with those flat purchasers, refunding to them the consideration, releasing the flats from the mortgages of banks, if any, and indemnifying the owners against future claim of those parties. 10. The developers also agreed to get building plans 5 approved to regularize the construction put up without such plans which was, until then, unauthorised. To that end the developers agreed to purchase additional TDR at their own cost. The owners were then entitled to the cost of TDR and to obtain further 55% of those flats, so regularized, on preferential selection basis. The flats so selected were also specified in the Consent Terms. In several of the flats, which would otherwise come to the share of the owners, the developers had entered into Agreements with various parties, some of them being the Plaintiffs in this Suit. 11. The Plaintiffs have relied upon the Agreements for the purchase of their flats and shops entered into by them on various dates with the developers. They, as flat/shop purchasers, were required to see and inspect the plans and specifications, with regard to the flats/shops agreed to be purchased by them as per the specific mandate under Section 7 of the Maharashtra Ownership Flats Act, 1963 (MOFA). The plans got approved by the developers in 1995 showed only two wings of the buildings A and B. The proposed DP Road was shown running on the east of the suit property alongside wing B. Six shops are shown abutting the proposed DP Road. (Shops cannot be constructed under the Development Control (DC) Regulations if they do not abut a road). The flats were to be constructed in both the 6 wings. The Agreements of the Plaintiffs do not show in which wing they have purchased their shops/flats. 12. In the Agreements of the original Plaintiffs the Agreement dated 20.10.2000 being the Agreement between the owners and the developers is recited. The document of title relating to the suit property is stated to be inspected. Hence, the original Plaintiffs had knowledge of the 55% preferential selection of the owners. 13. Under their Agreements, the developers agreed to give the flat purchasers possession in October 2002. The Agreements have been entered into well prior to that date. Neither were the flats constructed, nor was possession given to the flat purchasers at the time they entered into the Agreement of flat purchase with the developers. 14. These Agreements are stated to have been entered into by the developers with the Plaintiffs prior to the Consent Terms dated 8.8.2002. The Plaintiffs were not put in possession and their agreements were to be cancelled and consideration amounts refunded by the developers to them as per those Consent Terms. 15. As the developers failed to put the Plaintiffs in 7 possession of their respective flats agreed to be purchased by them and for which they had made certain payments, this Suit came to be filed by Plaintiff Nos.1 to 14, making grievance essentially against the developers. A reading of the Plaint shows that Defendant Nos.4 to 10, the owners of the property, are formal parties. 16. Other Suits also came to be filed by certain other flat purchasers who claim to have been duped by the developers who had also entered into similar Agreements prior to October 2002 and were to be put in possession in October 2002. 17. Court Receiver came to be appointed in respect of the suit property in this as well as other Suits from 24.3.2004. Certain directions came to be given to the Court Receiver in this Suit as well as in the other Suits, more particularly Suit No.3808 of 2003. I have been shown an order of Justice Dharmadhikari dated 1.10.2007, in Suit No.3808 of 2003, but which also recites about Suit Nos.3807 of 2003, 634 of 2003 as well as this Suit giving directions to the Court Receiver with regard to making a report relating to the construction at site, the number of flats, details of FSI, amounts paid by the flat purchasers, flats which are occupied, etc. The Court Receiver is directed not to put 8 anybody in possession of the flats after they are constructed. The possession of the flats claimed by the Plaintiffs of which they were never put in possession by the developers, has been with the Court Receiver. 18. The developers having absconded, the flat/shop purchasers in this Suit and the owners entered into Consent Terms on 6.5.2004, which came to be recorded as Minutes of the Order taken on record on 10.6.2004 in this Suit. Under the Minutes of Order, the parties accepted that the developers had abandoned the suit project by which the flat purchasers as well as the owners were put to loss. They agreed to come together and jointly proceed to regularize the irregular construction put up by the developers and apportion the flats between them. This apportionment was to be in the 45:55 ratio for the flat purchasers and the owners as per the Agreement with the developers dated 20.10.2000. This excluded all the flat/shop purchasers. The claim of the flat/shop purchasers was specifically disputed by the owners. Separate lists of flat purchasers and shop purchasers were prepared and annexed to the Consent Terms dated 6.5.2004. These are the original Plaintiffs as well as the Plaintiffs added pursuant to the amendment to the Plaint after the filing of the Suit as also 3 other persons not parties to the Suit. The additional Plaintiffs were shown 9 as such in the Plaint after the Consent Terms were signed on 6.5.2004. 19. Under the Consent Terms, by consent of the Plaintiffs, the Applicants and Defendant Nos.4 to 10, Defendant No.4 was appointed agent of the Court Receiver to complete Wings A, B and Wing C-D as per the plans to be got sanctioned from the MMC and to obtain Occupation Certificate and regularize the irregular construction put by the developers on the suit plot of land. 20. For that purpose, the flat purchasers and the owners as also the Court Receiver were to undertake specific and distinct as well as joint liabilities, have specified rights and obligations. The shop purchasers were separately considered. These must be separately enunciated thus:- Plaintiffs' liabilities : 21. Under Clause 15 of the Consent Terms, the Plaintiffs and the Applicants were to deposit their total balance dues payable in respect of their premises with the Court Receiver. I am told that those dues are deposited. The Court Receiver was to collect that amount and deposit the entire amount on account of construction costs of the said building. Hence, what was paid by each of the flat purchasers was to be used 10 for the construction of the building in which they would have their respective flats. 22. Under Clause 16 of the said Agreement, all the flat purchasers, who agreed to purchase the flat of 550 sq. feet, were to deposit Rs.50,000/- and all the flat purchasers, who agreed to purchase the flat of 825 sq. feet, were to deposit Rs.75,000/- in respect of their premises in addition to what they had to deposit as the total dues payable by them on account of the construction costs for the completion of Wings A, B and Wing C-D. Under the said Clause, they further undertook that they would further, as and when required, contribute their respective shares towards such entire construction costs . 23. Under Clause 18 of the Consent Terms, if the Plaintiffs failed to pay or deposit this amount, the amounts paid by them for their flats would stand forfeited and the Court Receiver would be entitled to dispose of their flats in open market and utilize the proceeds towards the completion of the building. All these liabilities did not apply to shop purchasers . Owners' liabilities :- 11 24. The owners agreed to jointly develop the building and to bring in TDR in the place and stead of the developers. The liability of the owners towards the TDR under Clause 19 of the Consent Terms was to deposit Rs.15 Lacs on account of the TDR and to submit the entire TDR for regularizing the unauthorised construction. (It must be remembered that in the initial agreement with the developers dated 20.10.2000 the owners had no liability to bring in any TDR and yet they, as owners, were entitled to preferential selection of 55% of the flats in the building to be constructed.) 25. Under Clause 20 of the Consent Terms, the owners were to pay a further sum of Rs.6 Lacs in respect of TDR for 200 sq. meters submitted by the developers to the MMC, for which the amount of Rs.4 Lacs was already paid to the MMC. Joint Liability :- 26. Under Clause 21 of the Consent Terms, the parties were to share the charges of the security equally. Rights of the Plaintiffs and owners :- 27. Under Clause 22 of the Consent Terms, after completion of the building, the Court Receiver was to put the Plaintiffs in possession of their flats retaining the absolute 12 right of Defendant Nos.4 to 10 as the land owners for further development of the property. The Plaintiffs accepted that the owners would enjoy their lawful rights as the original land owners. Consequently, in Clause 23 of the Consent Terms, 45% of the property earlier of the share of the developers was to go together to the Plaintiffs and the Applicants shown in the Annexure thereto and 55% of the property was to go to the owners. This did not give any rights to the shop purchasers . Court Receiver's obligations :- 28. Under Clause 24 of the Consent Terms, the Court Receiver was to keep accounts and distribute the balance amount, if any, after the completion of construction. Specific Terms regarding shop purchasers :- 29. Under Clause 25 of the Consent Terms, five shops on the Ground Floor, which are claimed by the shop purchasers as the Applicants in the Consent Terms, were disputed. The possession of those premises was to remain with the Receiver until the completion of the construction of the entire project as per the sanctioned plans of the MMC, after which the Receiver, on verification of the documents, was to prepare a report and the disputed premises were to be decided by the Court. (That stage has yet not come). Under 13 that Clause, if the Court passed an order in favour of the owners, then the amount deposited by the purchasers of those premises was to be refunded to them by the Court Receiver. Hence, the rights, if any, of the shop purchasers have been separately and differently specified in the Consent Terms . 30. It may be mentioned that the Defendant No.4, as the agent of the Court Receiver, had to get the plans sanctioned in respect of the further construction of the suit building. He got plans sanctioned on 15.7.2005. The proposed DP Road had shifted by then. The suit building does not abut any DP Road. Hence, as per the DC Rules, no shops can be constructed in any of the wings of the suit building. The sanctioned plan dated 15.7.2005 got sanctioned by Defendant No.4 as the agent of the Court Receiver naturally shows only flats to be constructed in wings A and B of the suit building. 31. As per the preferential selection of 55% of the construction made by the owners in the Consent Terms entered into by them with the Developers in the BCC on 8.8.2002, they were to get same flats in Wing A, and the entire Wings C-D. Hence, the flat purchasers, who have to be 14 accommodated in the remaining 45% share of the developers would be only in the Wing B and partly in Wing A. They have nothing to do and no rights to claim in Wings C-D. The initial disclosure of the flats sold by the developers made in the said Consent Terms were 8 flats in Wing A, Ground and 1 st Floors in Wings C-D. No shops were shown constructed in Wing A in the sanctioned plan of 1995. Nothing was shown sold in Wing B. There were no wings C or D sanctioned in 1995. The 4 wings are shown for the first time in the Consent Terms of 2002. 32. None of the Agreements of the shop purchasers show any allotment /agreement of any shop in any particular wing. In the last sanctioned plan of 2005 no shops are shown in B Wing as no DP Road abuts the suit building. The photographs produced by the owners show this fact. The entire ground, 1 st and 2 nd floors of Wings C-D are claimed by the owners as their preferential selection. The Plaintiffs claim to be allotted premises in all the wings including Wings C-D. The Advocate of the Plaintiffs has alleged that the construction of Wings C-D is purposely and fraudulently made to show a Hall without walls therein. It is not understood how or why this Court should go into the kind of construction in Wings C-D which is completely falling in the selected share of the owners. 15 33. Even for the portion of Wings A & B which fell in the share of the developers, now claimed by the Plaintiffs, they are entitled only as per the Consent Terms dated 6.5.2004. A reading of the Consent Terms shows that those of the Plaintiffs who are flat purchasers on the one hand and Defendant Nos.4 to 10 as the owners on the other, who were both duped by the developers, agreed to salvage the suit plot and develop it. This development was to be upon the cost of construction to be incurred by the Plaintiffs and the cost of TDR to be incurred by the owners. Both the partners would have to incur further costs then under their previous agreements with the developers. 34. The price for the flats purchased by the Plaintiffs paid to the developers was a completely different transaction. The flats remained undeveloped. The possession could not be given to the Plaintiffs well after October 2002 as agreed in the Agreement for purchase of the flats. Similarly the owners did not get their 55% of the flats in the building duly developed and constructed by the developers. Hence, the flat purchasers agreed to pay additional amount for construction of the flats and the owners agreed to put in extra finance to obtain the TDR which was otherwise to be obtained by the 16 developers. 35. It may be mentioned that the flat purchasers stepped into the shoes of the developers with regard to the construction costs. The effort was entirely of Defendant No.4. Under the initial Agreement dated 20.10.2000 the owners were to get the plot developed by the developers and obtain 55% of the flats without any further payment. The developer was to exploit the FSI, bring in additional TDR, construct the building as per the sanctioned plans and towards such entire costs, he was entitled to sell 45% of the flats on the suit plot of land. 36. The flat purchasers' Attorneys by their letter dated 8.12.2004, to the then Architects called upon them to expedite the work of construction. In paragraphs 4 and 9 of that letter they admitted and confirmed that the flat purchasers had to pay the entire construction cost of the building and that they were ready and willing to deposit the entire construction cost as and when required, as agreed in the Consent Terms. This letter is annexed as Exhibit- 7 to the additional affidavit of the owners. Despite that they have not deposited the entire cost with the Court Receiver. They have made payments of specified amounts 3 times to the Court Receiver as shown in their Statement, Exhibit- A to 17 their Affidavit to the Court Receiver's Report and Exhibit- C to their Affidavit in support of their Notice of Motion. 37. The main question that has arisen and which has caused serious dispute between the parties is whether after the construction, which is put up and the earlier irregular construction, which is regularized as per the sanctioned plans, the flat purchasers must get their flats without making any further payment of the entire additional construction for the costs incurred as per the specific agreement set out in the Consent Terms dated 6.5.2004. 38. The flat purchasers contend that under Clause 16 of the Consent Terms, they were required to pay only liquidated amounts mentioned therein i.e. Rs.50,000/- for flat of 550 sq. feet and Rs.75,000 /- for the flat of 825 sq. feet. Clause 16 shows that these amounts were to be paid on account of the construction costs for the completion of Wings A, B and C-D. The flat purchasers undertook to pay their respective shares towards such entire construction costs under the said Clause itself. The Court Receiver's Report shows further amounts required to be paid for which he wants directions. That is in respect of the bill of Om Sai Construction, the contractors for Rs.22,48,344 /- and the bill of M/s.Nadkarni & Company, Architects for their 18 professional charges. The bills of the contractors are shown to be pending since April 2007 as per letters written by the contractors to the owners who have demanded payment in their letters dated 5.4.2007 and 3.5.2007. Both the parties do not desire to pay that amount. The flat purchasers contend that they have made enough payments. Their payment to the developers is completely gone in vain. They have made further payment of Rs.50,000/- and Rs.75,000/- as required. They were required to make payments “in respect of their each premises” which was the aforesaid payment made by them. They do not desire to make any further payments towards construction costs. It must be appreciated that the construction costs has been incurred essentially for and on account of the Plaintiffs. In fact it is seen that several other parties, who claim to be duped by the developers sought to be added as Plaintiffs to the Suit and are referred to as “Applicants” in the Consent Terms, (because until then, they were not added as party Plaintiffs). They also claim a lion's share in the building constructed pursuant to the efforts of Defendant No.4 as an agent of the Court Receiver and TDR of the owners. 39. The Plaintiffs have got the Court Receiver appointed. Several orders from time to time have been passed. The amount paid by the Plaintiffs of Rs.50,000/- and 19 Rs.75,000/- is certainly not sufficient. Under Clause 15 of the Consent Terms, the flat purchasers were to deposit the total balance dues in respect of their premises with the Court Receiver. The extent of the balance dues are computed and shown by the owners in the statement, Exhibit- 26 to their additional affidavit to the Court Receiver's Report. Further payment had to be made under Clause 16 of the Consent Terms in respect of “such entire construction costs”. The Plaintiffs have already made further payments to the Court Receiver as per their statement Exhibit- C to the Affidavit in support of their Notice of Motion totalling to Rs.44,78,500 /- . This shows that the Plaintiffs have conceded that more amounts than Rs.50,000 /- and Rs.75,000/- mentioned in the Consent Terms were payable by them. Yet these amounts have proved insufficient for the construction cost. Further amount of construction cost incurred by the contractor is payable.` No liquidated amount for further construction costs could have been computed at the time the Consent Terms