1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.6041 OF 2009 Jayantilal K. Binaykiya & Anr. .. Petitioners versus M/s.Modi Properties & Ors. .. Respondents Mr.S.S.Patwardhan for the petitioners. Mr.A.A.Kumbhakoni i/by Mr.P.B.Shelke with Mr.K.A.Darvekar for respondent Nos.1 and 2. CORAM : A.S.OKA, J. DATE : 5th May 2010. JUDGMENT: . The submissions of the learned counsel appearing for the parties were heard on the earlier date. By order dated 23rd February 2010, this Court directed that the petition will be disposed of finally at the stage of admission. 2. The petitioners are the original plaintiffs and the respondents are the defendants. The petitioners filed a suit claiming a relief of specific performance of the document styled as a Memorandum of Understanding dated 7th April 2007 executed by the 1st to 3rd respondents. The second prayer is for mandatory injunction enjoining the 1st to 3rd respondents to execute and register appropriate conveyance in respect of the suit property in favour of the petitioner. There are consequential reliefs claimed including the relief of perpetual injunction. 2 3. The petitioners are relying upon the Memorandum of Understanding dated 7th April 2007 executed by the 1st to 3rd respondents in their favour. As per the case of the petitioners, under the said Memorandum of Understanding, the said respondents agreed to sell to the petitioners, on ownership basis, three office premises more particularly described in the said document. The consideration was set out under the document. Various terms and conditions of sale were also incorporated therein. 4. The respondents made an application under section 9A read with Rule 11 of Order VII of the Code of Civil Procedure, 1908 contending that the suit is not properly valued. It was contended in the application that the Memorandum of Understanding cannot be termed as an agreement contemplated by section 4 of the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (hereinafter referred to as the said Act of 1963). It was contended in the application that the suit is for specific performance of an Agreement for Sale of immovable property and therefore the valuation of the suit made in accordance with section 6(4)(j) of the Bombay Court Fees Act, 1959 (hereinafter referred to as the said Act of 1959) was incorrect. It was submitted that the suit will be governed by section 6(xi) of the said Act of 1959. It was contended that if the suit was properly valued, the Court of Civil Judge, Junior Division will not have jurisdiction to entertain and try the suit. Therefore, the prayer in the application was for rejection of the plaint on the 3 ground was that the same was undervalued. The application was opposed by the petitioners. By the impugned judgment and order, the learned trial Judge directed the petitioners to pay the Court fees as per section 6(xi) of the said Act of 1959. The learned Judge was of the view that the suit was for specific performance of an agreement for sale of immovable property. The learned Judge held that the Memorandum of Understanding was not an agreement under section 4 of the said Act of 1963. The learned Judge also directed that a preliminary issue of pecuniary jurisdiction of the Court shall be framed. 5. The learned counsel appearing for the petitioners invited my attention to the recitals in the Memorandum of Understanding and to the averments made in the plaint. He submitted that the document is nothing but an agreement for sale which will be governed by section 4 of the said Act of 1963. Inviting my attention to the averments made in the plaint he submitted that essentially the Memorandum of Understanding was for the sale of flats as defined by the said Act of 1963 and essentially the suit was filed for enforcing the statutory obligations of the 1st to 3rd respondents who are the promoters within the meaning of said Act of 1963. He submitted that only on the basis of prayer clause (a), the nature of the suit cannot be determined. He submitted that if averments made in the plaint are read with the prayer clauses and in particular prayer clause (b), it is apparent that the suit is for enforcing the obligations of the promoter under the provisions of the said Act 4 of 1963. He invited my attention to section 4A of the said Act of 1963. 6. The learned counsel appearing for the 1st and 2nd respondents submitted that the Memorandum of Understanding which is the subject matter of the suit by no stretch of imagination can be said to be an agreement within the meaning of section 4 of the said Act of 1963. He submitted that even assuming that the document can be termed as an agreement in accordance with section 4 of the said Act of 1963, the same was not duly stamped. He submitted that the agreement is admittedly not registered in accordance with the provisions of the Indian Registration Act, 1908 (hereinafter referred to as the said Act of 1908). He submitted that section 4A of the said Act of 1963 dispenses with the requirement of registration only in a suit for specific performance under the Specific Relief Act, 1963. He submitted that at highest unregistered agreement under section 4 of the said Act of 1963 can be read as an evidence of part performance of a contract or an evidence of a collateral transaction. He submitted that the agreement cannot be read in evidence in a suit for enforcing statutory obligations of the promoters under the said Act of 1963. He also invited my attention to decision of the Division Bench of this Court in the case of The Association of Commerce House Block Owners Ltd Vs. Vishndas Samaldas (83 Bombay Law Reporter 339). Thus, his submission is that even if the case made out by the petitioners is accepted, the section 4A of the said Act of 1963 will not be applicable. He urged that the petition be 5 dismissed. 7. I have given careful consideration to the submissions. There are only three issues involved in this writ petition. The first is what is nature of the suit and the second is whether the suit has been properly valued for the purposes of Court fees. The third question to be decided is whether the Memorandum of Understanding can be said to be an agreement which will be governed by section 4 of the said Act of 1963. 8. Under section 4(1) of the said Act of 1963, a promoter who intends to construct or constructs a building consisting of flats and if the promoter intends to sell the flats therein , he is under an obligation to execute a written Agreement for Sale with each purchaser. Sub-section 1 of section 4 provides that the agreement shall be in a prescribed form and the same shall be registered under the said Act of 1908. Sub-section 1A of section 4 of the said Act of 1963 provides that certain particulars shall be incorporated in the agreement. Section 4A of the said Act of 1963 reads thus: “4A. Effect of non-registration of agreement required to be registered under section 4.- Where any agreement of sale entered into under sub-section (1) of section 4, whether entered into before or after the commencement of the Maharashtra Ownership Flats (Regulation of the promotion and construction, sale, management 6 and transfer) (Amendment and Validating Provisions) Act, 1983 (Mah.V of 1984), remains unregistered for any reason, then notwithstanding anything contained in it may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1963 (XLVII of 1963), or as evidence of part performance of a contract for the purposes of section 53A of the Transfer of Property Act, 1882 (IV of 1982), or as evidence of any collateral transaction not required to be effected by registered instrument].” 9. There is no dispute that the 1st to 3rd respondents are promoters within the meaning of clause (c) of section 2 of the said Act of 1963. The agreement shows that the 1st respondent agreed to sell to the petitioners office premises in the building constructed by the 1st to 3rd respondents. 10. It will be necessary to consider the recitals in the agreement. In the agreement, the 1st respondent has been described as a developer of the property appointed by the owner. There is a clear recital that the sale will be effected in accordance with the provisions of the said Act of 1963. Clause 1 of the agreement specifically refers to the consent under section 7 of the said Act of 1963. Thus, the said document is an agreement made by promoters within the meaning of said Act of 1963 in which the terms and conditions of the sale of flats to the purchasers have been recorded. Under 7 sub-section 1 of section 4 of the said Act, it is the obligation of promoters to execute the agreement in the prescribed form and to get the same registered. Assuming that the agreement may not be in the prescribed form, the promoters/builders cannot take advantage of their own wrong. After considering the recitals in the agreement and the relevant clauses incorporated therein , there is no doubt that it is an agreement for sale of flats executed by a promoter with a flat purchaser. Therefore, it will be governed by sub-section 1 of section 4 of the said Act of 1963. 11. Under the said Act of 1963, apart from obligation of executing an agreement for sale, there are other statutory obligations incorporated therein. One of the obligations is to deliver possession of the flats agreed to be sold. There are further obligations of executing a conveyance etc. 12. Going back to the averments made in paragraph 19 of the plaint though the petitioners have stated that the suit is for specific performance, it is further stated that the suit was for enforcement of the obligations contemplated by the said Act of 1963. As far as this Court is concerned, it cannot be disputed that the settled law is that a suit for enforcing statutory obligations of the promoters under the said Act of 1963 will be governed by section 6(4)(j) of the said Act of 1959 and the same will not be governed by section 6(xi) which applies to suits for specific performance. If averments made in various paragraphs and in particular paragraph Nos.4, 8, 14 and 19 8 are perused, it leaves no doubt that the grievance of the petitioners in the suit is that the respondent Nos.1 to 3 have failed and neglected to perform their statutory obligations under the said Act of 1963. Conjoint reading of the prayers shows that in substance the suit is for enforcing the obligations of promoters under the said Act of 1963. Such a suit cannot be treated as a suit for specific performance of the Memorandum of Understanding dated 7th April 2007. The trial Court has committed an error by holding that the agreement incorporated in the said Memorandum of Understanding cannot be termed as an agreement under section 4 of the said Act of 1963. Under sub-section 1 of section 4, it is the obligation of the promoter to execute an Agreement for Sale of flat while receiving advance payment. The second error committed by the learned Judge is as regards nature of the suit. The plaint will have to be read as a whole which shows that the suit was for enforcing the obligations under the said Act of 1963. The effect of non- registration of the document on its admissibility in evidence will have to be considered at appropriate stage of hearing of the suit. The issue of non- registration of the agreement has no bearing over the nature of the suit. Whether the petitioners will get a decree or not is a matter of merits of the suit. As of today, the issue regarding insufficiency of stamp does not arise. As and when the document is sought to be tendered in evidence, if the Court is of the view that the same is not duly stamped, necessary steps contemplated by section 33 and 34 of the Bombay Stamp Act , 1958 will have to be taken by the Court at that stage. 9 13. In the circumstances, the view taken by the learned trial Judge that the suit is for specific performance is completely erroneous. The suit will be governed by section 6(4)(j) of the said Act of 1959. The suit is pending in the Court of Civil Judge, Junior Division. Therefore, issue of pecuniary jurisdiction of the Court will not arise in view of applicability of section 6(4)(j) of the said Act of 1959. 14. Hence, I pass the following order: : O R D E R : (a) The impugned order is quashed and set aside and the application made by the 1st and 2nd respondents at Exhibit 50 stands rejected. (b) It is made clear that the issue of insufficiency of stamp as well as issue of consequences of non-registration of the Memorandum of Understanding are kept open which will be decided by the trial Court at appropriate stage in accordance with law. (c) The Petition is disposed of accordingly. (A.S.OKA,J)