1 IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORDINARY ORDINARY ORIGINAL CIVIL JURISDICTION. ORIGINAL CIVIL JURISDICTION. ORIGINAL CIVIL JURISDICTION. NOTICE NOTICE NOTICE OF MOTION NO.2285 OF 2006 OF MOTION NO.2285 OF 2006 OF MOTION NO.2285 OF 2006 IN IN IN SUIT SUIT SUIT NO.2035 OF 2006 NO.2035 OF 2006 NO.2035 OF 2006 Kishore Jamnadas Morzaria and Anr. : Plaintiffs versus Daulat M. Morabia & ors. : Defendants. Mr.Bipin Joshi for the plaintiffs. Mr.Q.M.Ashfaq a/w Mr.P.R.Shenoy i/by Legaleye Associates for Defendant No.3. Mr.M.K.Upadhyay i/by Vinod Sampat & Co. for Defendant Nos.1 and 2. CORAM CORAM CORAM : S.J.VAZIFDAR, J. : S.J.VAZIFDAR, J. : S.J.VAZIFDAR, J. DATED DATED DATED : 05th February 2008. : 05th February 2008. : 05th February 2008. P.C. P.C. P.C. 1. The notice of motion was heard finally on 23rd January 2008 and was adjourned to 29th January 2008 for orders. Thereafter the matter 2 was adjourned at the request of the parties whose counsel stated that they were trying to settle the entire matter. I am now informed that the matter has not been settled. 2. The suit is filed for a declaration that an agreement dated 16.1.2006 entered into between the plaintiffs on the one hand and the defendants on the other is legal, valid, subsisting and binding and for specific performances thereof. 3. The notice of motion is for the usual reliefs for injunction and appointment of Court Receiver in a suit for specific performance. 4. Defendant Nos.1 and 2 had been granted various facilities by Defendant No.3 - Shri Arihant Co-operative Bank Limited. As the dues had not been repaid, proceedings were adopted by Defendant No.3 against Defendant Nos. 1 and 2 in the Co-operative 5th Court at Mumbai being ABN Dispute No.269 of 2002. The dispute was settled by the parties in terms of Consent Terms dated 23rd July 2005. An order in terms of the Consent Terms was passed on 25th July 2005. Clauses 2 and 3 of the Consent Terms read as under :- 3 "2. It is further agreed, admitted and declared that the Opponent No.3 will sell the flat described in above referred para only after confirmation of sale price in writing from the Disputants and deposit the entire sale proceeds in an Escrow account to be opened with the Disputants in the name of Mr.Daulat M. Morbia, Proprietor of Opponent Nos. 1 and 2. After receipt of entire sale proceeds only, the Disputants will appropriate same towards liquidation of the outstanding dues in part of Opponent Nos. 1 and 2 by debiting to Escrow account. 3. It is agreed, admitted and declared that Mr.Daulat, M. Morbia, Principal Borrower, will sell the shop No.2, at Vikrant Building, Tilak Road, Ghatkopar (East), Mumbai - 400 077 as well as Garage at Vandana Building, New Ashoka Co-operative Housing Society Limited, Ghatkopar (East), Mumbai 400 077 4 at price approved with prior confirmation in writing by Disputants and deposit the entire sale proceeds of both the above premises in the aforementioned Escrow account. After receipt of entire sale proceeds of each property, the Disputants will appropriate same towards adjustment of the outstanding dues of Opponents Nos.1, 2 by debiting to Escrow account." There followed detailed provision as to manner in which the sale was to be conducted and the sale proceeds were to be appropriated 5. Pursuant to the Consent Terms, Defendant Nos.1 and 2 have deposited with Defendant No.3, original title deeds and documents pertaining to the flat which is the subject matter of the suit and authorised Defendant No.3 to sell the same. Defendant Nos. 1 and 2 also confirmed that they were agreeable to the sale/transfer of the tenancy rights in respect of the shop and to the deposit of the amounts as indicated in the Consent Terms. 6. Pursuant to the aforesaid Consent Terms 5 and what is stated above, an advertisement was published by Defendant No.3 for the sale of the flat. The plaintiffs responded to the said advertisement. The plaintiffs further evinced an interest in acquiring the tenancy rights as referred to in the Consent Terms. 7. Ultimately the said MOU dated 16.1.2006 was entered into between the plaintiffs on the one hand and the defendants on the other. There is no dispute about the MOU having been entered into between them. . Having recited the aforesaid facts, the MOU provided inter-alia as follows :- "a. Mrs.Bhavini Jhaveri agreed to sell the said flat described in para "5(a)" above to the purchaser for lump sum amount of Rs.32.25 lacs and also authorised the purchaser to deposit the entire amount with the bank in the Escrow account to be opened in the name and style of Mrs.Bhavini Jhaveri. b. Mrs.Bhavini Jhaveri has agreed to 6 execute the Sale Deed in respect of said flat in favour of the purchaser and to extend full co-operation in registering the sale deed. e. Mr.Daulat M Morabia will execute the required document for effecting the transfer of Tenancy Rights, of the said shop in favour of the purchaser. The purchaser shall deposit the compensation amount of Rs.20,00,000/- (Rupees Twenty Lacs) with the bank. All drafting, expenses, out of pocket expenses for registering / transferring the said tenancy rights will be done and borne by the purchaser alone. h. The purchaser shall on execution of this memorandum of understanding deposit Rs.2,25,000/- (Rupees Two lakhs twenty five thousand only) , vide Chq No.149045 as token amount for the above transaction. The purchaser shall ensure to complete the transaction on or before 28th March 2006, failing which the bank will treat this MOU as cancelled and in 7 that event Bank /Borrower & guarantor are free to sell the said flat / shop to any other person." 8. On execution of the MOU, a sum of Rs.2,25,000/- was paid by the plaintiffs. On 19th January 2006, further sum of Rs.91,000/- was paid. On 23rd January 2006 the plaintiffs paid the dues of the society to the extent of Rs.86,293/-. The plaintiffs thereafter, on 1st March 2006, paid stamp duty in respect of the said flat in the sum of Rs.1,15,000/-. 9. It is contended on behalf of Defendant Nos.1 and 2 that the said sum of Rs.86,293/- was paid by them. Even assuming that to be so, it would make no difference at least at this stage. The execution of the Consent Terms and the MOU is not disputed. Payment of the other amounts, referred to above, is not disputed. There is nothing to suggest that the plaintiffs have not been ready and willing to perform all the terms and conditions of the MOU. In the circumstances, the plaintiffs’ rights in the suit are required to be protected. 8 10. It was contended that the alteration of the date from 28th February 2006 to 28th March 2006 in clause (h) of the MOU was unauthorised. 11. Firstly the alteration has been initialled by Defendant Nos. 1 and 2. They have disputed their signature. It is not possible at this stage to non-suit the plaintiffs on the basis of this denial. It is important to note that Defendant No.3 has not denied the alteration. . Secondly even assuming that the allegation is well founded, it would make no difference to the plaintiffs’ case. Time is not of the essence of such an agreement. Time was not made an essence of the agreement. Thus in view of the judgment of the Supreme Court reported in AIR 1979 SC 720, it cannot be said that the plaintiffs have lost their rights under the MOU. 12. In the peculiar facts of this case, mere grant of injunction would not meet the ends of justice. It must be remembered that the Consent Terms were arrived at between Defendant No.3 and 9 Defendant Nos. 1 and 2. This was to ensure the receipt by Defendant No.3 of its dues. The MOU was entered into pursuant to and in accordance with the Consent Terms. As a result of Defendant Nos.1 and 2 not performing the MOU, Defendant No.3 is left without recovering its dues despite the Consent Terms. There is no question of requiring the plaintiffs to deposit any amount under the agreement without letting the plaintiffs have the benefit of the MOU. 13. However, as a matter of indulgence, I do not intend appointing a Court Receiver in respect of the residential premises. 14. The notice of motion is, therefore, made absolute in terms of prayer clause (b) except the word bracketed in red viz. "dealing with". . The notice of motion is also made absolute in terms of prayer clause (a) only in respect of Shop No.2. In other words, the notice of motion is made absolute in terms of prayer (a) except the words bracketed in red which pertain to the said flat. 10 10 10 15. The Court Receiver shall in the first instance appoint Defendant No.1 as his agent without security but subject to payment of royalty. If Defendant No.1 refuses to accept the agency, the Court Receiver shall appoint any third party as his agent. In that event, the Court Receiver shall also insist on security. 16. This order, in so far as it pertains to prayer clause (a), is stayed for a period of six weeks from today to enable Defendant Nos.1 and 2 to challenge the same. 17. The notice of motion is disposed of in above terms. ********** ********** **********