: 1 : nms-1962-06-Judgment=.sxw USJ IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO. 1962 OF 2006 IN SUIT NO. 1776 OF 2006 Radhika Rani Gupta & Anr. .. Plaintiffs v/s. Pathare Constructions & Investments Pvt. Ltd. & Anr. .. Defendants ......... Mr. Sanjay Jain i/b Gabriel Pillai for the plaintiffs Mr. Virag Tulzapurkar, Sr. Counsel, Mr. Tanawade i/b Kadam & Co. for defendant no.1. Mr. V.R. Dhond with Ms. Apeksha S. i/b Murudkar & Co. for defendant nos. 2 and 3. ......... CORAM : R.Y.GANOO, J. DATE : 23rd November, 2010 ORAL JUDGMENT : 1. The suit came to be filed by Mr. Brij Mohan Gupta in his capacity as Karta of Brij Mohan Gupta, HUF. During the pendency of this suit, said Brij Mohan (hereinafter referred to as Brij Mohan) has expired and that is why Smt. Radhika Rani Gupta and Ranveer Vikram Gupta are brought on record as heirs. The suit is being prosecuted by these two persons. Brij Mohan approached this Court for specific performance of Agreement dated 2nd September, 1995 at Exh. “B” to the plaint. : 2 : nms-1962-06-Judgment=.sxw According to the plaintiffs, defendant no.1, a construction company entered into an arrangement with Brij Mohan for Sale of flat No. 1602 more particularly set out in the plaint in the building known as “Avarsekar Heights, situate at Worli, Mumbai. According to the plaintiffs on account of the said Agreement at Exh. “B”, defendants were required to comply with the terms and conditions of the said agreement and that Brij Mohan was ready and willing to perform his part of the contract. The plaintiffs have come out with the case that Brij Mohan had paid to defendant no.1 a sum of Rs.11 lakhs at the time of entering into the arrangement dated 2nd September, 1995 and was ready and willing to perform his part of the contract till his death. It has been the case of the plaintiffs that in terms of letter dated 1st May, 2001 defendant no.1 were to call upon Brij Mohan from time to time to make the payments in terms of the text of the Arrangement dated 2nd September, 1995 and no such demands were made. Said Brij Mohan waited till about 2006 and instituted this suit on 21st June, 2006 for specific performance of the suit agreement. Brij Mohan moved for ad- interim reliefs in terms of this motion and by order dated 23rd July 2006, Brij Mohan was directed to deposit a sum of Rs. 44 lakhs being the balance consideration and ad-interim reliefs were granted in terms of order dated 23rd July, 2006. Brij Mohan did deposit a sum of Rs. 44 lakhs. During the pendency of the suit, plaintiffs came to know that : 3 : nms-1962-06-Judgment=.sxw defendant no.1 have transferred suit flat in favour of defendant nos. 2 and 3 in terms of arrangement dated 10th July, 2004 and that is why defendant nos. 2 and 3 were joined as party defendants. They were also joined as defendants in the motion. Defendant no.1 have filed affidavit-in-reply. Defendant nos. 2 and 3 have filed a common affidavit-in-reply. 2. I have heard learned Counsel on both sides. Learned Counsel for the plaintiffs pleaded that in the absence of demand from the defendant no.1, plaintiffs could not deposit the monies from time to time and it is only when plaintiffs realized that defendant no.1 has no desire to perform his part of the contract, plaintiffs had no alternative but to institute the present suit. It was argued by learned Counsel Mr. Jain for the plaintiffs that defendant no.1 has entered into an Agreement dated 2nd September, 1995 and, therefore, the relief sought in the present notice of motion is also required to be granted as against defendant nos. 2 and 3. 3. Learned Counsel for the plaintiffs had submitted that the arrangement sought to be placed before the Court by defendant no.1 with defendant nos. 2 and 3 in terms of letter dated 10th July, 2004 is a sham arrangement and has put up only to defeat the claim of the : 4 : nms-1962-06-Judgment=.sxw plaintiffs. He had also submitted that the letters placed by defendants before the Court being letters dated 5th February, 2002, 2nd December, 2003 and 24th December, 2003 were not served upon the plaintiffs and no such demands were made. Effort was made by learned counsel for the plaintiffs to point out to the Court that various information was received by the plaintiffs by exercising their right to have the information under the Right to Information Act. According to the plaintiffs the stand of the defendants that they had carried out construction from time to time and were entitled to receive installments towards purchase price as set out in the table reflected in the affidavit- in-reply should not be accepted as the stage of construction reflected in the said table does not tally with facts as regards stage of construction stated in affidavit-in-rejoinder. It was also sought to be contended by learned Counsel Mr. Jain that the letter dated 30th January, 2004 on which reliance is placed by defendant no.1 to say that the earlier letters demanding various installments were received by plaintiffs i.e. Brij Mohan Gupta in his capacity as a Karta of Brij Mohan Gupta, HUF cannot be accepted because the said letter is signed by Rajkumar Gupta who had no authority on behalf of Brij Mohan Gupta, HUF to write said letter. In substance, it has been the stand of the plaintiffs that plaintiffs were ready and willing to perform their part of the contract and that defendant no.1 have attempted to dispose of the suit flat in : 5 : nms-1962-06-Judgment=.sxw favour of defendant nos. 2 and 3 in violation of terms of arrangement. Mr. Jain submitted that the plaintiffs have deposited balance consideration of Rs.44 lakhs as per orders of the Court and, therefore, the plaintiffs are entitled to possession of the suit premises as Agent of the Court Receiver in terms of prayer clause (a). 4. Defendant no.1 has filed affidavit-in-reply and have opposed the notice of motion. The points raised by defendant no.1 are as follows. (i) According to defendant no.1 the arrangement dated 2nd September, 1995 was a mere arrangement to enter into an Agreement to Sale and, therefore, same cannot be enforced by institution of the suit for specific performance. (ii) The text of the document dated 2nd September, 1995 shows that Brij Mohan Gupta, HUF and Mrs. Deepika Gupta were the beneficiaries of the said arrangement. Suit filed by Brij Mohan Gupta, HUF alone is not maintainable as proper parties are not before the Court. (iii) Defendant no.1 had demanded money from the plaintiffs from time to time as per the stages of construction and letters dated 5th February, 2002, 2nd December, 2003, 24th December, 2003 were sent to Brij Mohan Gupta, HUF demanding monies and that no installments were paid despite such demands and, therefore, plaintiffs are in breach of the arrangement dated 2nd September, 1995 and are defaulters. It : 6 : nms-1962-06-Judgment=.sxw was also contended that plaintiffs were liable to pay interest on delayed payment and no such interest has been paid or willingness is shown to pay such interest. (iv) According to defendant no.1 as the plaintiffs did not comply with payment schedule, the arrangement between the plaintiffs and defendant no.1 was terminated by defendant no.1 in July, 2004 and thereafter, arrangement was entered into with defendant nos. 2 and 3 in terms of document dated 10th July, 2004 and thereafter defendant nos. 2 and 3 have paid consideration as agreed and that possession of the suit flat has been handed over to defendant nos. 2 and 3 in lawful manner and, therefore, today plaintiffs cannot secure any reliefs against defendant no.1 and or defendant nos. 2 and 3. (v) In the body of the plaint or even otherwise there is no explanation as to why the plaintiffs did not file the suit from 2001 and in any case there has been a delay on the part of the plaintiffs in establishing their rights and instituting a suit for specific performance. According to defendant no.1 if plaintiffs had collected information about stage of construction as claimed in the rejoinder, the plaintiffs should have been vigilant. (vi) It was also argued by Mr. Tulzapurkar, learned Senior Counsel for defendant no.1 that affidavit-in-rejoinder filed by the plaintiffs clearly indicates that plaintiffs were knowing that stages of the construction at : 7 : nms-1962-06-Judgment=.sxw site and, therefore, it was necessary for the plaintiffs to approach defendant no.1 and make enquiry as regards plaintiffs responsibility to pay balance consideration from time to time. Learned Senior Counsel Mr. Tulzapurkar submitted that the plaintiffs’ failure to approach defendant no.1 to make the payment from time to time is vital defect in the case of the plaintiffs and that on the basis of it plaintiffs are not entitled for injunction whatsoever. With all these points, it was prayed by learned Senior Counsel for defendant no.1 that plaintiffs’ notice of motion must be dismissed. 5. Learned Counsel appearing on behalf of defendant nos. 2 and 3 had adopted the submissions advanced by learned Counsel for defendant no.1 and had submitted that defendant no.1 had duly transferred the suit flat in favour of defendant nos. 2 and 3 and that defendant nos. 2 and 3 are in possession of the suit flat and, therefore, the order of injunction cannot be granted against defendant nos. 2 and 3 as they are bonafided purchasers for value without notice of earlier events. 6. Learned Counsel appearing on behalf of the plaintiffs had taken me through the affidavit-in-rejoinder filed by the plaintiffs to point out that the claim of defendant no.1. that construction proceeded as per : 8 : nms-1962-06-Judgment=.sxw the chart mentioned in the affidavit-in-reply is false. By this, learned Counsel for the plaintiffs wanted to suggest that even if Court accepts that monies were demanded by defendant no.1 from time to time as claimed, defendant no.1 were not entitled to receive said amounts and as such plaintiffs cannot be treated as defaulters. 7. I have considered the rival submissions. The record clearly indicates that Brij Mohan in his capacity as Karta of Brij Mohan, HUF along with Deepika Gupta had entered into an arrangement with defendant no. 1 in regard to the suit flat. A perusal of the said arrangement at Exh.”B” shows that the terms of the said arrangement were crystal clear and were agreeable to both the sides and that is how respondent no.1 had received a sum of Rs.11 lakhs as and by way of earnest money. If this is be so, stand of defendant no.1 that the said arrangement cannot be enforced, cannot be accepted at the stage of disposal of Notice of Motion. I am inclined to accept the stand of the plaintiffs that defendant no.1 had entered into an agreement with Brij Mohan in his capacity as Karta of Brij Mohan Gupta, HUF to sell and dispose of the suit flat. The fact that Rs.11 lakhs were received by defendant no.1 is admitted in terms of letter dated 1st May, 2001. 8. In the letter dated 1st May, 2001, the Managing Director of : 9 : nms-1962-06-Judgment=.sxw defendant no.1 informed Mr. Brij Mohan that the construction activity would be commenced and that said Brij Mohan should keep his installments ready and same should be paid on receipt of letter from defendant no.1. This will mean that it was clear to defendant no. 1 that as and when monies are required to be paid, the same has to be received after making a formal demand. If this is so, it was necessary for defendant no.1 to produce before the Court satisfactory material that defendant no.1 did demand from Brij Mohan monies as they become due depending upon the stage of construction. Defendant no.1 has relied upon 3 letters being letter dated 5th February, 2002, 2nd December, 2003 and 24th December, 2003. These letters are addressed to Brij Mohan Gupta, HUF. Perusal of these letters go to show that defendant no.1 demanded a particular amount as disclosed in the letter being the amount payable by Brij Mohan. It is to be noted that Brij Mohan was required to make the payment from time to time depending upon the stage of construction. The letters relied upon are not for the consecutive period. It is pertinent to note that in the affidavit-in-reply no specific averments are made to say that defendant no.1 did send the said letters and such other letters demanding money from Brij Mohan. The reference to these letters in the affidavit-in-reply is made in curious manner and the said reference is found in paragraph 13 of the affidavit-in-reply and the relevant portion is as under. : 10 : nms-1962-06-Judgment=.sxw “13...It is also pertinent to note that in the compilation of documents on which the plaintiff is relying, he has referred to letters dated 5th February, 2002, 2nd December, 2003 and 24th December, 2003, all addressed by the defendant no.1 to the plaintiff, requiring him to make payment of installments due. On concurrent of these three letters, it also reveals that the plaintiff had failed to make payment of earlier installment, which therefore was clubbed and demanded in the immediately next installment. I crave leave to refer to and rely upon the said three letters when produced. From these letters it becomes amply clear that no revised understanding regarding schedule of payment, as contended by the plaintiff was ever arrived at and that the plaintiff had consecutively defaulted in payment of installments due to the defendant no.1”. 9. A perusal of the relevant reference in para 13 in my view, clearly indicates that defendant no.1 have not come out in crystal clear manner that these letters were sent by defendant no.1 to said Brij Mohan. An attempt made by defendant no.1 to rely upon them to show that the said letters were sent, cannot be accepted. It was argued by learned Senior Counsel for defendant no.1 that these letters are acknowledged by one Mr. Rajkumar Gupta in terms of letter dated 30th January, 2004 addressed to defendant no.1. The said letter is not signed by Brij Mohan and, therefore, the said letter cannot be used by : 11 : nms-1962-06-Judgment=.sxw defendant no.1 to support their stand the 3 letters on which defendant no.1 have placed reliance were in fact received by Brij Mohan. Plaintiffs took steps to get information from the Bombay Municipal Corporation as regards the progress of construction of the building at various stages. A reading of the said affidavit-in-rejoinder would clearly go to show that the defendants could not have demanded monies from plaintiffs as per the table which is reflected in the affidavit-in-reply. I am not inclined to accept the stand of defendant no.1 that defendant no.1 had demanded from Brij Mohan monies from time to time depending upon the progress of the work. It is required to be noted that the total consideration for the suit flat was Rs.55 lakhs. Brij Mohan had paid to defendant no.1 1/5th of the consideration i.e. Rs.11 lakhs at the time of entering into the arrangement. Surely, if Brij Mohan would have been called upon to make the payment depending upon the stage of work completed by defendant no.1, there appears to be no difficulty on the part of Brij Mohan to make the payment from time to time. I am inclined to observe that after the Court passed an order directing the plaintiffs to deposit in this Court a sum of Rs.44 lakhs being the balance consideration, plaintiffs have deposited the said amount of Rs. 44 lakhs. 10. For these reasons, I am inclined to observe that stand of : 12 : nms-1962-06-Judgment=.sxw defendant no.1 that monies were demanded from time to time and plaintiffs failed to make the payment cannot be accepted. To that extent, stand of defendant no.1 that the defendant no.1 was justified in terminating the arrangement dated 2nd September 1995, cannot be accepted. 11. It has been the case of defendant no.1 that defendant no.1 terminated the arrangement entered into with Brij Mohan in July, 2004. It is pertinent to note that defendant no.1 have not come out with specific date on which the said arrangement was terminated and the averments in the affidavit-in-reply are absolutely vague. In the course of arguments, learned Senior Counsel Mr. Tulzapukar stated across the bar that the arrangement was terminated by way of an oral termination. This will mean that no letter was forwarded to Brij Mohan thereby informing him that the arrangement is terminated. The termination by way of oral termination is required to be disbelieved. 12. The plaintiffs had addressed a letter to the sister concern of defendant no.1. Said concern viz. Unity Infraprojects Ltd. had come out with a public issue. In connection with the said matter, defendant no.1 had addressed a letter to Unity Infraprojects Ltd. being letter dated 1st May, 2006. Copy of the said letter is on record along with Exh.”F”. : 13 : nms-1962-06-Judgment=.sxw Execution of the said letter by defendant no.1 is not at all disputed by defendant no.1. It is to be noted that the said letter is dated 1st May, 2006. By the said letter, defendant no.1 has reiterated its stand that a sum of Rs.11 lakhs was paid by the plaintiffs as and by way of earnest money and no monies were paid thereafter. This letter dated 1st May, 2006 is required to be considered along with the stand of defendant no. 1 where defendant no.1 have come out with contention that the arrangement with Brij Mohan was terminated in July, 2004. If the stand of defendant no.1 that arrangement with Brij Mohan was terminated in July, 2004, certainly, in the letter addressed by defendant no.1 to Unity Infraprojects Ltd. in the year 2006 there ought to be a reference of termination of the arrangement with Brij Mohan and entering into a new arrangement with defendant nos. 2 and 3. Absence of such a mention makes me to hold that the stand of defendant no. 1 that the arrangement was entered into with defendant nos. 2 and 3 in July, 2004 is required to be disbelieved and to that extent, I am inclined to accept the stand of the plaintiffs that said defendant nos. 2 and 3 have been put forward by defendant no.1 to defeat the claim of the plaintiffs. 13. It has been the stand of defendant no.1 that possession in regard to the suit flat was handed over to defendant nos. 2 and 3. It is pertinent to note that the date on which such possession was handed : 14 : nms-1962-06-Judgment=.sxw over is not mentioned in the affidavit of defendant no.1 or that of defendant nos. 2 and 3. Letter dated 9th January, 2006 is relied upon to show that possession was handed over to defendant nos. 2 and 3. In the absence of specific date on which possession was handed over, said letter dated 9th January, 2006 cannot be accepted as document which inspires the confidence of Court. This will mean that the stand of defendant no.1 that possession has been handed over to defendant nos. 2 and 3 cannot be accepted. According to defendant nos. 2 and 3 they agreed to pay Rs.77,50,000/- by way of consideration. Defendant no.1 have produced receipts for having received a sum of Rs. 27,50,000/- from defendant nos.2 and 3. No further receipts are produced and the last receipt produced is of 18th May, 2005. This will mean that defendant no. 1 have handed over possession of the suit flat to defendant nos. 2 and 3 only on payment of Rs.27,50,000/-. In the affidavits, defendant no.1 as well as defendant nos. 2 and 3 have stated without disclosing full particulars that full consideration in respect of suit flat has been paid by defendant nos. 2 and 3. It is pertinent to note that no Agreement to Sale is produced before the Court to show that suit flat has been agreed to be sold to defendant nos.2 and 3. No documents are produced to show that full consideration was paid by defendant nos. 2 and 3. I am inclined to observe that stand of defendant no.1 that possession in respect of suit flat has been handed : 15 : nms-1962-06-Judgment=.sxw over to defendant nos.2 and 3 after the receipt of full consideration and after terminating the arrangement with plaintiffs is required to be disbelieved. I am inclined to observe that defendant no.1 have introduced defendant nos. 2 and 3 in the transaction in order to defeat the claim of the plaintiffs. 14. With the aforesaid observations, I am inclined to observe that during the pendency of this suit interest of the present plaintiffs is required to be protected as they have been able to make out a prima- facie case that they are interested in purchasing the suit flat and they are ready and willing to perform their part of the contract. 15. The present Notice of Motion is taken out for two reliefs. By prayer clause (a) plaintiffs want that Receiver should be appointed in regard to the suit flat and plaintiffs should be put in possession of the suit flat as Agent of the Receiver. By prayer clause (b), injunction is sought restraining the defendants from creating third party rights and / or parting with possession in respect of the suit flat. 16. The question before the Court is whether the plaintiffs have been able to make out prima-facie case for grant of Receiver. For reasons to follow, I am inclined to observe that plaintiffs have failed to make out : 16 : nms-1962-06-Judgment=.sxw case for appointment of the Court Receiver. It is pertinent to note that the arrangement was entered into with defendant no.1 in the year 1995. The record indicates that for various reasons defendant nos. 1 could not take steps to construct till 2001. Reading of letter dated 1st May, 2001, it is clear that defendant no.1 could take up construction in or about 2001. Affidavit-in-rejoinder filed by the present plaintiffs clearly goes to show that steps were taken by Brij Mohan for the purposes of ascertaining the stage of construction and other related matters. It is also required to be noted that Brij Mohan expired on 27th June, 2009 i.e. 3 years after the institution of the suit. This will show that said Brij Mohan who was interested in purchase of the suit flat was aware of various developments in regard to the suit flat. Despite this, the plaint is silent as to why said Brij Mohan did not institute the suit after he realized that defendant no.1 is not interested in complying with the terms of the agreement. Said Brij Mohan waited till 2006 and instituted the suit in the year 2006. In my view, said Brij Mohan has not been able to place on record adequate material to show as to why he delayed filing of the present suit. Delay in institution of the suit is a point which goes against the interest of the plaintiffs for the purposes of seeking appointment of the Court Receiver. It is true that present plaintiffs have deposited a sum of Rs.44 lakhs after ad-interim order was passed on 23rd July, 2006. However, that in my view, would not : 17 : nms-1962-06-Judgment=.sxw help the present plaintiffs for the purposes of securing appointment of Court Receiver. For these reasons plaintiffs are not entitled to appointment of the Court Receiver and consequently the plaintifs are not entitled to get the possession of the suit flat as an agent of the Receiver. Notice of Motion is dismissed so far as prayer clause (a) is concerned. 17. As indicated earlier, the interest of the plaintiffs is required to be protected and in my view such interest