1 mpt IN THE HIGH COURT OF JUDICATURE OF BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO. 2199 of 2007 IN SUIT NO.1610 of 2007 1. Mrs.Kamal Kumari Malhotra 2. Vipen Malhotra 3. Ashok Malhotra .. Plaintiffs versus Praveen Malhotra .. Defendant ... Mr.F. Devetri Sr.Advocate with Mr.F.Dubhash i/b Federal & Rashmikant for the plaintiffs. Mr.H.N.Thakore with Ms.Jyoti Ghag i/b M/s.Thakore Jariwala & Associates for defendant. CORAM : D.G.KARNIK, J DATED : 13th June 2008 P.C.: 1. Heard counsel for the parties. 2. By this motion, plaintiffs pray for 2 appointment of a receiver for the suit flat and also for an order of injunction restraining the defendant from alienating/encumbering or parting with the possession of the suit flat and further injunction restraining him from using the suit flat. 3. Plaintiff nos.2, 3 and the defendant are brothers and plaintiff no.1 is their mother. The suit flat belonged to Goverdhandas Malhotra, husband of plaintiff no.1 and the father of plaintiff nos.2, 3 and the defendant. However, the flat stood in the name of the brother and sister in law of Goverdhandas. In the family arrangement between Goverdhandas and his collaterals, it was recognised that the suit flat belonged to Goverdhandas though it stood in the name of his brother and sister in law. After the death of Goverdhandas, family arrangement was arrived at between the plaintiffs and defendant on 27th August 1995 (Exhibit"A" to the plaint) under which it was agreed that the plaintiffs would have 50% share in the suit flat and the defendant would have the remaining 50% share. It was also agreed that the suit flat would be sold for a consideration of not less than 1.2 crores and the total sale proceeds would be divided between the parties in the proportion of their shares agreed in the family arrangement. Despite several attempts the flat could 3 not be sold though each of the parties have alleged that the suit flat could not be sold because of the default of the other. Finally, on 15th September 2006 a supplementary family arrangement was entered into between the plaintiffs and defendant under which it was agreed that the plaintiffs would relinquish their 50% share in the suit flat in favour of the defendant on his paying them Rs.28 lakhs on or before 15th March 2007. According to the plaintiffs, the date of 15th March 2007 fixed for payment was essence of the contract and has been so mentioned in the deed of supplementary family arrangement dated 15th September 2006. 4. According to the plaintiffs, the defendant did not perform his part of the contract by paying the sum of Rs.28 lakhs on or before 15th March 2007 and therefore the supplementary family arrangement came to an end. According to the plaintiffs, the earlier family arrangement of 27th August 1995 stood revived on termination of the supplementary family arrangement dated 15th September 2006 and consequently the plaintiffs do have 50% share in the suit flat. On that basis the plaintiffs claim for appointment of receiver and injunctive reliefs as mentioned earlier. 4 5. When the motion came up for hearing, at the ad-interim stage, by an order dated 25th June 2007, the Single Judge of this court declined to grant ad-interim relief but directed the defendant, to show his bonafide to deposit in the court Rs.28 lakhs being the amount agreed under the deed of supplementary family settlement dated 15th September 2006. Accordingly, the defendant has deposited in this court Rs.28 lakhs which have been invested in the nationalised bank on plaintiffs declining to withdraw the same. At the ad-interim stage, though this court declined to appoint a Court Receiver, it directed the defendant to maintain status quo in respect of the suit flat till the disposal of the motion. In appeal (Appeal no.527 of 2007) against that order a Division Bench of this Court declined to interfere but only observed that the observations made in the order of the Single Judge dated 25th June 2007 were only prima facie and would not be binding on the parties. 6. Mr.Devetri learned counsel for the plaintiff submitted that the time for payment of Rs.28 lakhs in the supplementary family settlement dated 15th September 2007 was the essence of the contract and as defendant had failed to pay the money by the date the supplementary family arrangement stood cancelled in 5 terms of paragraph no.3 thereof. He further submitted that apart from the fact that it was specifically mentioned that the time for payment was the essence but surrounding circumstances also shows so. The initial family arrangement was in the year 1995 under which the plaintiffs were entitled to 50% of sale consideration which was to be not less than Rs.1.20 crores consequently the plaintiffs would have received not less than Rs.60 lakhs. Since the sale could not be effected, according to the plaintiff, on account of the obstructive attitude of the defendant and being fed up with not being able to receive a penny the plaintiffs agreed to receive a sum of Rs.28 lakhs only which was far less than the market value. This was by way of concession and this concession was given only because the time for payment was made the essence of the contract of supplementary family settlement. 7. Per contra, the learned counsel for the defendant submitted that the time was not the essence of the contract. It is settled principle of law that in respect of transactions relating to immovable properties time is generally not the essence. Even if the document specifically mentions that the time is an essence, the court cannot accept the mere statement in the document that the time is the 6 essence but is required to look to the whole of the document and surrounding circumstances to decide whether time is the essence of the to the conclusion that the time is an essence of the contract. 8. In order to decide whether time is the essence of a contract, parties would be required to adduce evidence and it is only after the evidence that it can be decided whether the time in a particular case was the essence of the contract. At the interim stage, since no oral evidence has been adduced by the parties, it is difficult to record any finding on whether the time in the present case was the essence of the contract. On the basis of material on record, I am unable to hold, even prima facie, that time was the essence of the contract contained in the deed of supplementary family settlement. 9. It is true that recital in and paragraph no.2 of the deed of supplementary family settlement dated 15th September 2006 does say that the time is the essence of the contract. However paragraph no.5 of the deed specifically states that the parties of 1st, 3rd and 4th part (i.e. the plaintiffs) shall co-operate in releasing their 50% rights in the suit flat in favour of the party and second part (i.e. 7 the defendant) and shall also sign such documents as may be required in that behalf. This contemplated that the plaintiffs were to perform something more than what they had already performed before 15th September 2006. It is the contention of the defendant that the plaintiffs were required to obtain the consent of sister in law of Goverdhandas. One cannot brush aside this contention lightly in as much as the flat did not stand and does not stand in the name of Goverdhandas and even today stands in the name of the sister in law of Goverdhandas in the records of the society. On payment of a large sum of money of Rs.28 lakhs the defendant was entitled to insist that he got a perfect title. He appears to be justified in claiming that he must get the good title in his own name in the records of the society so that he, in future, and if he desired, was able to sell and transfer it in his own right without being required to run after his aunt or the plaintiffs for her/their consent. In any event, the defendant, prima facie, was entitled to insist that the suit flat was transferred in his name on or at the time of the payment. At this stage, Mr.Devetri learned counsel for the plaintiff submitted that Rekha, sister in law of Goverdhandas has already granted a Power of Attorney in favour of plaintiff no.3 and defendant jointly and has also signed the transfer 8 form in the name of the society. Mere consenting the suit flat is one thing and actual transfer is another. The fact remain that the suit flat has not been transferred in the name of defendant and defendant was, prima facie, is entitled to insist on the transfer at the time of payment. Since these obligations were required to be performed by the plaintiffs, time could not regarded as the essence unless the plaintiffs were willing to perform their part. 10. The surrounding circumstance show that there was correspondence between the parties after 15th September 2006. In the correspondence the defendant had been insisting that all formalities for transfer of the suit flat must be completed before payment of the money. This surrounding circumstance also shows that performance by the defendant was dependant upon the performance by the plaintiffs and the time may not have been the essence of the contract. 11. In the circumstances, in my view this is not a fit case for the appointment of court receiver. However the interest of the plaintiff can be protected by injuncting the defendant from selling, alienating, transferring or parting with the possession of the suit flat. In my view, that would 9 sufficiently protect the interest of the plaintiff pending the hearing of the suit. Accordingly, I pass the following order. O R D E R . The prayer for appointment of court receiver is rejected. So also the prayer for restraining the defendant for not using the flat is rejected. However the defendant is restrained by an order of injunction from selling, transferring, alienating or encumbering, or parting with the possession of the suit flat without the prior permission of the court . When asked whether the plaintiffs want to withdraw the money which has been deposited in the court, learned counsel for the plaintiffs states that the plaintiffs do not wish to withdraw the money. I, therefore, direct that the money which has been deposited by the defendant in the court shall continue to be invested in a nationalised bank in fixed deposit for 13 months, to be renewed from time to time on maturity for the like periods till the disposal of the suit. 10 (D.G.KARNIK, J)