abs IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO. 3050 OF 2007 IN SUIT NO. 1743 OF 2007 Akhil Anand Jathan & Ors. .. Plaintiffs V/s Narendra Gupta & Anr. .. Defendants Mr.G.N. Salunkhe for the plaintiffs, in support. Mr.Pradeep Sancheti i/b Mr.Milind More for the defendant no.1. Mr.D.S. Dhanure i/b M.V. Kini & Co. for the defendant no.2. CORAM : D.G. KARNIK, J. DATE : 21ST APRIL 2008 P.C. P.C. P.C. : 1. Heard. 2. By this motion, the plaintiffs, the flat purchasers, pray for appointment of the Court Receiver as the Receiver of flat no.603, 6th Floor, Building No.1, "B" Wing, Thakur Village, Kandivali (E), Mumbai-400 101 (hereinafter referred to as "the suit - 2 - flat") and to put the plaintiffs in possession thereof as agents of the Court Receiver. 3. The defendant no.1 is a builder and promoter. The defendant no.2 is the bank from whom the plaintiffs have borrowed money for purchase of the suit flat. The defendant no.3 is the person with whom the defendant no.1 claims to have entered into a subsequent agreement of sale of the suit flat. 4. By an agreement of sale dated 29th August 2005, the defendant no.1 as builder and promoter agreed to construct and sell to the plaintiffs the suit flat. The price agreed was Rs.32,22,400/- payable in instalments as per the progress of the construction. It is not in dispute that prior to January 2007, the plaintiffs have paid to the defendant no.1 a sum of Rs.22,88,995/-. According to the defendant no.1, till January 2007 the plaintiffs fell in arrears of instalments to the extent of Rs.8,33,369/-. By a demand letter dated 29th January 2007, the defendant no.1 demanded from the plaintiffs a sum of Rs.8,33,369/- towards the arrears of instalment and also demanded interest of Rs.80,154/-. The plaintiffs, who had agreed to borrow part of the consideration from the defendant no.2, requested it to make the payment forthwith. Accordingly, the defendant no.2 made payment of Rs.8,33,369/- on behalf of the - 3 - plaintiffs to the defendant no.1 by a cheque dated 24th February 2007. Including the amount of that cheque, the plaintiff has made payment to the defendant no.1 by the said cheque, the plaintiffs have made the total payment of Rs.31,32,365/- and only a sum of Rs.1,00,035/- is payable at the time of possession of the suit flat and not earlier. However, according to the defendant no.1, the plaintiffs are also liable to pay interest of Rs.80,154/- for delayed payment and on that count it has not encashed the last cheque. 5. By a notice dated 5th March 2007, the defendant no.1 purported to terminate the agreement with the plaintiffs on the ground of delay in making payment. Clause 7 of the agreement of sale dated 29th August 2005 provides that on purchaser making any delay or default in payment of any of the instalments on their due dates, the developer would be entitled to terminate the agreement by giving 14 days prior notice in writing. This clause is similar to clause 7 of the Model agreement prescribed under the Maharashtra Ownership Flat Rules, 1964 (for short "the Rules"). First proviso to clause 7 of the Model agreement under the said Rules provides that the right to terminate the agreement shall not be exercised by the promoter unless and until the promoter has given to the purchaser 15 days prior notice of his intention to terminate the agreement and of the - 4 - specific breach or breaches of the terms and conditions in respect of which the promoter intends to terminate the agreement and the default is continued by the flat purchaser in remedying the breach of breaches within a reasonable time after receipt of such notice. The defendant no.1 had not given any notice to the plaintiffs as provided under clause 7 of the Model agreement provided under the Rules. The defendant no.1 had also not given notice as provided under clause 7 of their agreement which contemplated 14 days prior notice. All that the defendant no.1 had done was made a demand on 29th January 2007 without specifying that in case of continued breach the agreement would be terminated. The plaintiff had complied with the said demand by making the payment by cheque dated 24th February 2007. The defendant no.1 did not return the cheque. It also did not issue any further notice that interest was not paid and therefore the agreement would be terminated for non-payment of the interest. In the circumstances, the plaintiffs have made out a prima facie case for specific performance of the agreement of sale. 6. That takes me to the question whether a receiver should be appointed in the present case. Order 40 Rule 1 of the Code of Civil Procedure empowers the court to appoint a receiver where it appears to be just and convenient to do so. This court has often appoint - 5 - receivers to protect the property from deterioration and for its maintenance. The flat is ready and unoccupied. The parties have agreed to maintain the status quo and the same has been ordered by the Court by its order dated 21st September 2007. The flat is in possession of the defendant no.1 and is unoccupied. No useful purpose would be served by keeping the flat vacant pending decision of the suit. In fact, the flat would deteriorate by passage of time if it is not properly maintained till the suit is decided. It would therefore be just and convenient to appoint the Court Receiver as the receiver in respect of the suit flat. 7. The plaintiffs have paid Rs.31,33,365/- out of the total agreed consideration and only a small part of Rs.1,00,035/- is due and payable at the time of possession. The plaintiffs can therefore be appointed as agents of the Court Receiver subject to payment of balance of Rs.1,00,035/- as also Rs.80,154/- which is alleged to be interest on the delayed payment. Needless to say that the defendant no.1 is entitled to encash the cheque of Rs.8,33,369/- which has been paid by the plaintiffs to them. The plaintiffs shall also cooperate with the defendant no.1 for extending the validity of the said cheque in the event the cheque has run out of date. - 6 - 8. The defendant no.1 claims to have entered into an agreement with the defendant no.3 subsequently. Obviously, the defendant no.3 has purchased the flat with the knowledge of the plaintiffs’ rights. The agreement for sale dated 29th August 2005 with the plaintiffs has been registered with the Sub-Registrar of Assurances and the defendant no.3 therefore had notice of the plaintiffs’ claim. The defendant no.3 therefore cannot claim any equity against the plaintiffs. The defendant no.3 is however free to take such action against the defendant no.1 as is available to him in law. 9. For these reasons, I pass the following order:- (a) The Court Receiver, High Court, Bombay is appointed as the receiver in respect of the suit flat. The Court Receiver is directed to take possession of the suit flat and appoint the plaintiffs as agents of the Receiver subject to the plaintiffs depositing the sum of Rs.1,00,035/- being the balance consideration and the sum of Rs.80,154/- being the alleged arrears of interest. These amounts shall be paid by the plaintiffs to the Receiver within 4 weeks of the demand and shall be invested by the receiver in a nationalised bank in usual course. - 7 - (b) The plaintiffs need not pay other security or royalty charges to the Court Receiver, but shall pay all outgoings and shall enter into an agreement with the Court Receiver in usual form. . At the request of the learned counsel for the defendant no.1, the operation of this order is stayed for 2 weeks. (D.G. KARNIK, J.)