- 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.2690 OF 2008 OF MOTION NO.2690 OF 2008 OF MOTION NO.2690 OF 2008 IN IN IN SUIT SUIT SUIT NO.2336 OF 2008 NO.2336 OF 2008 NO.2336 OF 2008 Dr.Smita Sandeep Patil ...Plaintiff vs. Himmatrao Kondu Patil ...Defendant Mr.Harinder Toor a/w Mr.Nandu Pawar for the plaintiff Ms Kamal Khata a/w Mr.S.Nagvadaria for the defendant CORAM CORAM CORAM: A.S.OKA,J. A.S.OKA,J. A.S.OKA,J. DATE DATE DATE : NOVEMBER 12,2008 : NOVEMBER 12,2008 : NOVEMBER 12,2008 P.C.: P.C.: P.C.: 1. The submissions of the learned counsel for the parties were heard yesterday. Though the submissions were heard, order was not passed to enable the parties to explore the possibility of settlement. Today, the learned counsel for the defendant stated that amicable settlement could not be arrived at. Hence, I proceed to dispose of the notice of motion. 2. Briefly stated, the suit has been filed for declaration that the agreement dated 23rd February 2007 executed by and between the plaintiff and the defendant in respect of the suit premises more particularly described in the plaint is valid and subsisting and the defendant is liable to specifically perform his part of the agreement. The other substantive prayer is for specific performance of the suit agreement. 3. The defendant is admittedly the owner of the Flat No.5 - 2 - admeasuring 1600 sq. feet carpet area on 2nd floor of the building Smith House more particularly described in paragraph 1 of the plaint. The defendant is a member of the Smith House Co-operative Housing Society Limited. Reliance has been placed on the agreement for sale dated 23rd February 2007 (hereinafter referred to as the suit agreement). The suit agreement records that the defendant was desirous of selling a portion admeasuring 700 sq. feet of carpet area out of the said flat No.5 and he was intending to retain the remaining portion admeasuring 900 sq. feet of carpet area for himself. The recitals in the suit agreement record that the portion of the said flat admeasuring 700 sq. ft. carpet area will be designated as Flat No.5-B and the remaining portion of the flat which will be retained by the defendant will be designated as Flat No.5-A. The total consideration agreed to be paid by the plaintiff was Rs.27,50,000/-. The agreement records that at the time of execution of the suit agreement, a sum of Rs.2,00,000/- was paid by the plaintiff to the defendant. There is some controversy as regards the time, if any, fixed under the said agreement for payment of the balance consideration. Therefore, it will be necessary to reproduce the relevant clauses in the agreement. Clauses (2) and (3) the said agreement read thus: "(2) The purchaser agrees to pay to the seller the said consideration amount of Rs.27,50,000/- (Rupees twenty - 3 - seven lacs and fifty thousand only) as under : a) Rs.2,00,000/- (Rupees two lacs only) by cheque no.393614 dated 23.2.2007 drawn on SBI Bank, Chopda Branch as a earnest money/ part payment on or before the execution hereof (the payment and receipt of whereof the seller hereby admits and acknowledge); b) The balance consideration amounts of Rs.25,50,000/- (Rupees twenty five lacs and fifty thousand only) to be paid on or before handing over to the purchaser quiet vacant and peaceful possession of the smaller flat admeasuring 700 sq. ft. carpet out of 1600 sq. ft. carpet of flat no.5. c) The sale shall be completed on or before 20 days of against the payment of balance consideration of Rs.25,50,000/- (Rupees Twenty five lacs and fifty thousand only) by the purchaser to the seller. The seller of the portion of the flat has already applied to the Management and the management of Smith House Co-op Hsg. Society has already given the NOC to sale flat no.5 to anybody of his choice on 23.10.2005 and copy of the same is provided to the purchaser, who has selected and appreciated Eastern portion from the dividing wall for purpose to which seller shown his willingness and agreed to - 4 - sale the same to purchaser, Dr.Mrs.Smita Sandeep Patil. (3) The seller herein is aware that relying upon the aforesaid representations and declarations, the purchaser has agreed to purchase the said smaller flat without share certificates no.41 to 45 bearing Certificate No.9 to purchaser." 4. The said portion of the flat admeasuring 700 sq. ft. carpet area which is to be designated as Flat no.5-B will be hereinafter referred to as "the suit premises". The case of the plaintiff is that at the time of execution of the suit agreement, the defendant had represented that he had obtained a no objection certificate from the co-operative society for the sale of the said flat and a copy of the said letter dated 23rd October 2006 was handed over to the plaintiff. The case of the plaintiff is that it was agreed under the suit agreement that after execution of the suit agreement, the plaintiff will apply for loan on the basis of the said agreement for the purpose of making payment of balance consideration to the defendant. Further case of the plaintiff is that when she applied to the ICICI Bank for grant of housing loan, her application was not considered on the ground that there was no division of the said flat No.5 made under a valid permission of the Mumbai Municipal Corporation. Therefore, the plaintiff requested the defendant to get the - 5 - flat physically divided by approaching the concerned department of Mumbai Municipal Corporation. The case of the plaintiff is that the defendant requested the plaintiff to comply with the formalities by getting the permission of the Municipal Corporation and get the said flat divided and the defendant agreed to sign the requisite applications in that behalf. It is stated that an application was submitted by an Architect to the Municipal Corporation on 30th July 2007 for grant of approval to the proposal of sub division of the said flat. The case of the plaintiff is that in November 2007 she obtained sanction of loan from a co-operative bank for making payment of balance consideration to the defendant. According to the case of the plaintiff, demand drafts dated 14th November 2007 drawn in favour of the defendant for balance consideration of Rs.25,50,000/- were kept ready. It is stated that the defendant expressed his inability to hand over actual possession of the suit premises as the same was not physically partitioned. According to the plaintiff the defendant requested her to make payment of the balance consideration on obtaining requisite permission from the Mumbai Municipal Corporation for sub-division. Xerox copies of the said demand drafts totally amounting to Rs.25,50,000/- dated 14th November 2007 drawn in favour of the plaintiff have been annexed to the plaint. 5. It is stated that on 10th March 2008, the Mumbai Municipal - 6 - Corporation approved the proposal submitted by the Architect. On the basis of the said approval, on 28th March 2008 the Architect applied to the Assistant Engineer of the said Corporation for sub division of the said flat. Reliance has been placed on the letter dated 12th May 2008 issued to the Architect by the Assistant Engineer of the said Corporation recording no objection for issuing commencement certificate as per the plan approved on 10th March 2008. On 14th May 2008, the Architect appointed by the plaintiff informed the Executive Engineer of the Building Proposal Department of the Corporation that the work has been started on that day and a compliance has been made with the terms of the permission granted. The case of the plaintiff is that though she was ready and willing to pay the balance consideration on delivery of vacant possession of the suit premises, the defendant informed the plaintiff that the possession will be handed over in the first week of June 2008. The plaintiff received a letter dated 3rd June 2008 from the defendant stating that the plaintiff had agreed to pay balance consideration within a period of 20 days from the date of execution of the suit agreement. It was stated in the said letter that on the basis of the assurance given by the plaintiff to pay the balance consideration within a period of 20 days, he entered into a transaction for purchasing a factory for his son and paid a sum of Rs.1,00,000/- as an advance to the owner of the factory. He stated that he had assured the vendor of the - 7 - factory to pay the balance price within a period of one month relying upon the representation made by the plaintiff that the balance amount will be paid by her within a period of 20 days. In the said letter, the defendant stated that on the request made by the plaintiff, he had extended the time by a period of one month. It is stated that the agreement will be treated as cancelled. He, however, stated that he was ready and willing to execute the sale deed provided the plaintiff was ready to pay the current market value. It was stated that there are customers who are ready to purchase the flat at the present market value. Thereafter, there was a exchange of the correspondence between the parties, and ultimately the present suit has been filed. 6. The first prayer in the notice of motion is for injunction restraining the defendant from creating any third party interests in respect of the suit premises and from parting with possession of the suit premises. The second prayer is for appointment of the Court Receiver of the suit premises with a direction to the Court Receiver to appoint the plaintiff as his agent without payment of royalty or security. A reply has been filed by the defendant to the notice of motion. Various contentions have been raised in the reply. The case made out by the defendant is that the plaintiff was fully aware that the flat could not be sub-divided as desired by the plaintiff as the society denied the permission to sub - 8 - divide the said flat. With full knowledge of this fact, the plaintiff agreed to purchase the suit premises without share certificate of the society. It is pointed out that under the agreement, the transaction was to be completed within a period of 20 days. Considering the need of the defendant, the time frame of 20 days was made the essence of the contract and therefore the contract cannot be enforced after lapse of about one year and four months. It is submitted that the plaintiff never communicated to the defendant her readiness and willingness to pay the balance consideration in or around November 2007 and in fact no such communication was issued by the plaintiff to the defendant. It is submitted that the plaintiff failed and neglected to obtain permission from the society. The defendant denied the allegation made in the plaint that the suit premises were already divided by a wall. The defendant denied that any wall was constructed in the said flat no.5. 7. The defendant pointed out that the plaintiff is his distant relative and during the year 1988-89 when the plaintiff was studying Medicine in Mumbai, he had allowed her to stay in the said flat. He stated that he attended the marriage of the plaintiff sometimes in the year 1999, though he had undergone a heart surgery. He stated that only because the plaintiff was his close relative, he agreed to sell a portion of the said flat no.5 to the plaintiff. It is stated - 9 - that a letter of extension dated 14th March 2007 was got prepared by the plaintiff and was sent for his signature. Reliance is placed on the said letter by which the period of 20 days was extended by a further period of 30 days. It is stated that as the plaintiff never came forward to make payment, he had orally communicated in or around May 2008 that the agreement was rescinded. He stated that he even offered to repay the amount taken from the plaintiff. It was submitted that the present market value of the suit premises is Rs.90,00,000/-. It is contended that there is delay and latches on the part of the plaintiff and therefore, she is not entitled to any relief. The constituted attorney of the plaintiff has filed a rejoinder along with several documents. 8. The learned counsel for the plaintiff invited my attention to the relevant clauses of the suit agreement and submitted that the time of 20 days was not fixed to pay the balance consideration. He submitted that the balance consideration was to be paid by the plaintiff on the defendant handing over possession of the suit premises to the plaintiff and the sale was to be completed on or before 20 days from the payment of balance consideration. It is submitted that the agreement itself shows that the plaintiff was to obtain loan for the payment of balance consideration. He invited my attention to clause (13) of the agreement. He also invited my attention to the recitals in the agreement. He submitted that in any case - 10 - no specific time was fixed under the agreement for payment of balance consideration. He invited my attention to the several documents and writings by the defendant to show that even the defendant did not come out with a case that the time was essence of the contract and that the contract came to an end on expiry of alleged extended period of one month. He submitted that the permission for sub-division was granted in May 2008. He submitted that at no stage, the defendant handed over or delivered possession of the suit premises. He stated that the plaintiff is ready and willing to deposit the balance consideration in this court within the time fixed by this court. He submitted that the plaintiff is entitled to appointment of the Court Receiver and the plaintiff be ordered to be placed in possession of the suit premises as an agent of the Court Receiver. 9. The learned counsel for the defendant submitted that though the suit agreement was executed on 23rd February 2007, at no stage the plaintiff offered balance consideration to the defendant. He pointed out that there is no correspondence made by the plaintiff before notices were exchanged by the Advocates. Inviting my attention to the relevant clauses in the agreement and in particular clause (2) of the agreement, he submitted that there was a clear intention reflected from the agreement that the parties intended to make the period of 20 days as the essence of contract. Inviting my attention to - 11 - writing executed in March 2007, he submitted that time was extended by the defendants only for a limited period. He submitted that even according to the case made out in the plaint, there was already a sub division made carving out the suit premises and therefore, the plaintiff should have offered balance consideration against which the defendant could have handed over possession. He submitted that no intimation of the receipt of demand drafts which are annexed to plaint was ever given by the plaintiff to the defendant. He submitted that as the plaintiff is a relative of the defendant, on the representation made by the plaintiff to pay the balance amount within a stipulated period of 20 days, the defendant agreed to transfer the suit premises. He submitted that there is a gross default on the part of the plaintiff and in any case, considering the default committed by the plaintiff and delay on the part of the plaintiff, she is disentitled to claim any equitable relief. He submitted that in the year 2007, the plaintiff has paid a sum of Rs.2,00,000/- and since then the market value of the suit premises has substantially increased. He, therefore, submitted that no case is made out for grant of interim relief. 10. I have carefully considered the submissions. The execution of the suit agreement is not disputed. In order to consider whether the plaintiff has made out a prima facie case, it is necessary to consider whether the agreement - 12 - provided for any time limit in which the balance consideration was to be paid and if such time was provided, whether the same was the essence of the contract. The sub-clause (b) of clause (2) of the agreement provides that the balance consideration of Rs.25,50,000/- was to be paid by the plaintiff on or before the defendant handing over to the plaintiff peaceful possession of the suit premises. The sub clause (c) of clause (2) of the agreement provides that the sale shall be completed on or before 20 days from the date of payment of balance consideration of Rs.25,50,000/-. Clause (c) records that the management of the society has given no objection certificate for sale of Flat No.5. It is specifically stated that the plaintiff selected the portion of the said flat on the eastern side of the dividing wall. The said clause shows the existence of a dividing wall. On plain reading of the clause (2) and particularly sub clauses (b) and (c), it is very difficult to accept the contention of the defendant that the balance consideration was to be paid within a period of 20 days from the date of execution of the suit agreement. The balance consideration was to be paid on or before handing over the vacant and peaceful possession of the suit premises by the defendant to the plaintiff. The period of 20 days is provided to complete the sale transaction from the date on which the balance consideration is paid by the plaintiff. Primafacie, from the aforesaid clauses it appears that no such time limit of 20 days was agreed upon to pay the balance consideration - 13 - and the time was not made essence of the contract. Clause (4) of the agreement records that the plaintiff was to obtain housing loan from ICICI bank, Jalgaon, District Jalgaon. This is one more factor which shows that the time of 20 days was not fixed for the payment of balance consideration. 11. My attention has been invited to the letter dated 19th May 2007 which is sent by the defendant himself on the letterhead of the society addressed to the Manager of ICICI Bank, Jalgaon. In the said letter, the defendant has stated that flat No.5 is divided in two parts designating the same as 5A and 5B. He has stated that the suit premises i.e. flat no.5B will be sold to the plaintiff and the society had no objection to the plaintiff raising loan from the ICICI bank against the mortgage of the suit premises. In the latter part of the said letter it is stated that he had received no objection certificate from the society for sale of this flat. It is stated that Flat no.5B will be transferred in the name of the plaintiff after completion of the sale before the Deputy Registrar. The said letter written by the defendant on 19th May 2007 prima facie shows that as on that date the suit agreement was valid and subsisting. If the time limit of 20 days was fixed for payment of balance consideration and if the time was essence of the contract, the defendant could not have written such a letter in May 2007. Thus, the case of the defendant that the time was extended by a period of one month - 14 - under the writing dated 14th march 2007 cannot be accepted. 12. As of today, it seems to be an admitted position that when the suit agreement was executed there was no permission obtained from the Mumbai Municipal Corporation for sub- division of the flat. To the rejoinder filed by the plaintiff, a copy of the letter dated 1st June 2007 addressed by the defendant to the Ward Officer of the Municipal Corporation has been annexed. By the said letter, a request was made by him to grant no objection certificate to make an additional door for separating the flat No.5B. It is stated that he was intending to sell the flat no.5B. On 30th July 2007, the defendant appointed one Mr.T.H.Khadilkar as an Architect to process the proposal for sub division of Flat No.5. A letter of appointment of the said Architect in prescribed form was signed by the defendant. Reliance is placed on a letter dated 10th March 2008 addressed to the said Architect, by the Executive Engineer of the (Building Proposal) of the Municipal Corporation in which it is recorded that the plans for the sub-division of the flat have been approved subject to the conditions set out in the said letter. There is a further letter dated 12th May 2008 sent by the Assistant Engineer of the Mumbai Municipal Corporation to the Architect recording no objection to grant of commencement certificate as per the sanctioned plan. Notice of the commencement of work was given by the said Architect on 14th - 15 - May 2008. 13. Thus, permission to sub divide the said flat appears to have been granted in March 2008 and commencement certificate has been issued in June 2008. Prima facie it appears to me that the defendant could not have parted with the possession of the suit premises without there being a lawful sub division of the suit premises. It must be stated here that in paragraph 6 of the reply filed by the defendant he has denied that any wall was already constructed in the flat. In the said paragraph he has stated that the plaintiff’s Architect at the instance of the plaintiff has addressed a letter to the Mumbai Municipal Corporation for creating a false record. It primafacie appears to me that the Architect was appointed with the consent of the defendant as the defendant himself has signed the letter of appointment of the Architect. The fact that the sub division was permitted in March/May 2008 on the basis of an application made by the Architect appointed by the defendant also indicates that the time was not essence of the contract. It must be stated here that by issuing any communication in that behalf the defendant has not made the time as the essence of the contract. The letter dated 3rd June 2008 signed by the defendant proceeds on the footing that the transaction was to be completed within a period of 20 days and that the time was thereafter extended in March 2007 only a period of one month. - 16 - 14. Thus, a prima facie case has been made out by the plaintiff. There are several triable issues involved in the case. 15. The suit is of the year 2008 which is likely to remain pending for a long time considering the pendency of the very old suits in this court. Xerox copies of the demand drafts issued by the co-operative bank in favour of the defendant on 14th November 2007 representing the entire balance consideration have been annexed to the plaint. The demand drafts show that at least in November 2007, the plaintiff had kept the balance consideration ready by obtaining loan from the bank. The plaintiff has taken steps on the basis of the suit Agreement. The balance of convenience is in favour of the plaintiff. It is true that there is no letter was written by the plaintiff offering balance consideration or informing the defendant that the demand drafts/cheques were kept ready on 14th November 2007. 16. The case of the defendant is that after date of the suit agreement, prices of the immoveable property have considerably gone up. Considering this aspect, this is not a case where the plaintiff can be put in