1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO.2399 OF 2007 IN SUIT NO.3896 OF 1990 Ashford Developers Pvt. Ltd. ) a Company registered under ) the Companies Act, 1956 having) its office at 3-B, Court ) Chambers, 351, New Marine ) Lines, Bombay-400 020. )..PLAINTIFF Vs. 1.Pravin Dalpatram Desai, ) of Bombay, Indian Inhabitant) residing at “Advent”, Near ) Sachivalaya, Nariman Point, ) Bombay-400 021 ) 2.Jambivli Estates ) Agricultural & Allied ) Products Pvt. Ltd., a ) Company registered under the) Companies Act, 1956 having ) 2 its office at 5/64, Bombay ) Mutual Chambers, Hamam ) Street,Fort, Bombay-400 023.) 3.Gayatri Estates Agricultural) & Allied Products Pvt. Ltd.) having its office at 5/64, ) Bombay Mutual Chambers,Hamam) Street,Fort, Bombay-400 023.) 4.Rachana Foundation (Bombay) ) Pvt. Ltd., a Company ) registered under Companies ) Act, 1956 having ) its office at 5/64, Bombay ) Mutual Chambers, Hamam ) Street,Fort, Bombay-400 023.) 5.Messrs Samarth Buildings, ) a Partnership having its ) Office at Patil Bhoir ) Apartments, Room No.25, 2nd ) Floor, Near Municipal ) Office, Dombivli (East) )..DEFENDANTS 3 WITH NOTICE OF MOTION NO.3507 OF 2007 IN SUIT NO.3896 OF 1990 Ashford Developers Pvt. Ltd. ) a Company registered under ) the Companies Act, 1956 having) its office at 3-B, Court ) Chambers, 351, New Marine ) Lines, Bombay-400 020. )..PLAINTIFF Vs. 1.Pravin Dalpatram Desai, ) of Bombay, Indian Inhabitant) residing at “Advent”, Near ) Sachivalaya, Nariman Point, ) Bombay-400 001 ) 2.Jambivli Estates ) Agricultural & Allied ) Products Pvt. Ltd., a ) Company registered under the) 4 Companies Act, 1956 having ) its office at 5/64, Bombay ) Mutual Chambers, Hamam ) Street,Fort, Bombay-400 023.) 3.Gayatri Estates Agricultural) & Allied Products Pvt. Ltd.) having its office at 5/64, ) Bombay Mutual Chambers,Hamam) Street,Fort, Bombay-400 023.) 4.Rachana Foundation (Bombay) ) Pvt. Ltd., a Company ) registered under Companies ) Act, 1956 having ) its office at 5/64, Bombay ) Mutual Chambers, Hamam ) Street,Fort, Bombay-400 023.) 5.Messrs Samarth Buildings, ) a Partnership having its ) Office at Patil Bhoir ) Apartments, Room No.25, 2nd ) Floor, Near Municipal ) Office, Dombivli (East) )..DEFENDANTS 5 WITH NOTICE OF MOTION NO.552 OF 2008 IN SUIT NO.3896 OF 1990 Ashford Developers Pvt. Ltd. ) a Company registered under ) the Companies Act, 1956 having) its office at 3-B, Court ) Chambers, 351, New Marine ) Lines, Bombay-400 020. )..PLAINTIFF Vs. 1.Pravin Dalpatram Desai, ) of Bombay, Indian Inhabitant) residing at “Advent”, Near ) Sachivalaya, Nariman Point, ) Bombay-400 001 ) 2.Jambivli Estates ) Agricultural & Allied ) Products Pvt. Ltd., a ) Company registered under the) 6 Companies Act, 1956 having ) its office at 5/64, Bombay ) Mutual Chambers, Hamam ) Street,Fort, Bombay-400 023.) 3.Gayatri Estates Agricultural) & Allied Products Pvt. Ltd.) having its office at 5/64, ) Bombay Mutual Chambers,Hamam) Street,Fort, Bombay-400 023.) 4.Rachana Foundation (Bombay) ) Pvt. Ltd., a Company ) registered under Companies ) Act, 1956 having ) its office at 5/64, Bombay ) Mutual Chambers, Hamam ) Street,Fort, Bombay-400 023.) 5.Messrs Samarth Buildings, ) a Partnership having its ) Office at Patil Bhoir ) Apartments, Room No.25, 2nd ) Floor, Near Municipal ) Office, Dombivli (East) )..DEFENDANTS 7 Mr. Aspi Chinoy, Senior Counsel with Mr. P.K. Shroff, Ms. Radhika Kalpatrai, Ms. Bharati Bhagwat i/b. P.K. Shroff & Co., for Plaintiff in Notice of Motion No.2399 of 2007 and Notice of Motion No.5523 of 2008. Mr. S.U. Kamdar with Mr. C.S. Kapadia, Mr. P.K. Shroff, Ms. Radhika Kalpatrai, Ms. Bharati Bhagwat i/b. P.K. Shroff & Co., in Notice of Motion No.3507 of 2007. Mr. Shailesh Shah with Mr. A.G. Damle for Defendant No.1. Ms. Rajani Iyer, Senior Counsel with Mr. Vaibhav Krishnan i/b. Juris Consillis for Defendant No.2. None for Defendant No.3. Mr. C.S. Balsara with Mr. S.D. Parab for Defendant No.4. CORAM: S.J. VAZIFDAR, J. DATE : 29TH AUGUST, 2008. JUDGMENT: The above Notices of Motion Nos.2399 of 2007, 3507 of 2007 and 552 of 2008 taken out by Defendant Nos.2,1 and 4 respectively are, with the consent of the parties, disposed of by this common judgment and order. 8 2. The above Notices of Motions have been taken out to set aside consent terms dated 8th June, 1998 and an order also dated 8th June, 1998 by a learned single Judge of this Court disposing of the above suit in terms of the consent terms. Defendant No.5 has not challenged the consent terms or the order. 3. The matter in a nutshell is this. That the consent terms were signed by/on behalf of all the parties and their advocates is admitted. There is some dispute as to who signed the consent terms on behalf of Defendant No.4 but that is of no consequence inter-alia for the reason that Defendant No.4 does not even claim a right in the suit property. Defendant No.5 has accepted the consent terms. Defendant Nos.2, 3 and 4 are closedly held private limited companies. Defendant No.3 is a wholly subsidiary of Defendant No.2. Defendant No.1 controls Defendant Nos.2 and 3. The challenge to the consent terms and the order falls in three broad categories. The various other contentions raised are in support thereof. 9 Defendant No.1 has challenged the consent terms on the ground that they were signed only to enable a Director of the Plaintiff, one Shyamji Gogri to raise finances and were not intended to be filed in Court. I have this case to be entirely unsubstantiated and impossible to believe. Defendant No.2 sought to distance itself from Defendant No.1 by filing a separate appearance through another advocate for the purpose of these Notices of Motion Defendant Nos.1 to 4 had for seventeen years prior thereto been represented by common advocates. The affidavit in support of the Notice of Motion filed by Defendant No.1 is filed by the wife of Defendant No.1. I have found this attempt on the part of Defendant No.2 to distance itself from Defendant No.1 a mere charade. Based on this attempt Defendant No.2 has raised contentions regarding Defendant No.1 not having had the necessary authority to enter into the consent terms on its behalf. Defendant Nos.1 to 4 have also contended 10 that in the order dated 8.6.1998 their appearance has not been shown is, therefore, void. I have rejected this contention. Defendant Nos. 1 to 4 also contended that they were unaware of the filing of the consent terms and of the order being passed from 1998 upto April, 2006. I have disbelieved this case as well. I will deal with the facts relied upon by both the parties in respect of these contentions at the appropriate stage. 4. (A) The suit is filed for specific performance of an agreement for sale dated 27th October, 1988 between the Plaintiff and Defendant Nos. 2 to 4 by which Defendant Nos. 2 to 4 agreed to sell the suit land to the Plaintiff and for a declaration that an alleged agreement dated 5th September, 1985 between Defendant No.3 and Defendant No.5 in respect of a portion of the suit land is not valid and binding upon the Plaintiff and does not affect the Plaintiff's rights under the agreement dated 27th October, 1988. 11 (B) It is not necessary for the purpose of deciding these Notices of Motion to consider the facts leading to the filing of the suit and to the merits of the contentions in respect of the suit agreement.The only question that falls for consideration is as to the validity of the consent order and the consent terms dated 8th June, 1998. 5. The suit was filed on 7th December, 1998. The Plaintiff made an application for urgent ad-interim reliefs in terms of a draft Notice of Motion. By an ad-interim order dated 21st December, 1990 the learned Judge recorded the Plaintiff's contention that it was in possession of the suit property pursuant to the agreement dated 27th October, 1988. The learned Judge also recorded the admission by Defendant Nos. 1 to 4 that the Plaintiff was in possession of the suit property. Defendant No.5, however, disputed the same contending that it was in possession thereof. The learned Judge held that prima facie it was not possible to accept the contention that the Plaintiff was in possession of the property. 12 The Plaintiff and Defendant No.5 have settled their disputes as I will shortly indicate and Defendant No.5 has now no claim against the Plaintiff in respect of the suit property. 6. It is necessary to note a few facts that preceded the filing of the consent terms. 7. (A) By their Advocates letter dated 19th October, 1995 Defendant Nos. 1 to 4 stated that they were ready and willing to perform their part of the contract; that they were agreeable for a decree being passed against them as prayed and to convey the property to the Plaintiff; that draft consent terms had been prepared, but for reasons known to the Plaintiff it was not taking the conveyance of the property by paying the balance purchase price and was not interested in taking the consent terms and decree. It was stated that the Defendants could not wait indefintely and the notice was given to the Plaintiff to pay the balance purchase price within thirty days making 13 time for payment as of the essence of the contract. It was further stated that on the Plaintiff returning the draft consent terms duly approved they would obtain suitable orders from the Court. It was further stated that if the Plaintiff did not comply with the said requisitions the Defendants would forfeit the earnest money and apply for the dismissal of the suit on the ground that the Plaintiff had filed a bogus suit and was not ready and willing to compete the transaction. 8. Defendant Nos.2, and 4 by a letter dated 31st May, 1997 addressed to the Plaintiff stated that notwithstanding the prior correspondence the suit agreement and power of attorney both dated 27th October, 1988 were valid and subsisting and were binding upon them. They further stated that it was mutually agreed that the Plaintiff should approach Defendant No.5 and settle their claim under the said agreement dated 5th September, 1982 in respect of a portion of the suit property and for that purpose the Plaintiff was at full liberty and 14 was authorised to enter into any agreement for settlement including any agreement of release in favour of the Plaintiff or any cancellation agreement with Defendant No.5 and for withdrawal of the suit filed by Defendant No.5 before the Civil Judge, Junior Division, Ulhasnagar and the Civil Revision Application filed in this Court. They stated that any settlement arrived at with Defendant No.5 would be binding on them and that they would fully cooperate for recording any settlement and/or for withdrawing the proceedings before the Civil Judge, Junior Division, Ulhasnagar. 9. It is not necessary to refer to the Plaintiff's detailed reply to the letter dated 19th October, 1995 on merits. The significance of these two letters is that the attempts at settling the suit and implementing the suit agreement had been made. 10. Pursuant to the above letter dated 31st May, 1997 the Plaintiff in fact entered into an 15 agreement dated 4th June, 1997 with Defendant No.5. Under this agreement the Plaintiff paid a sum of Rs.31.00 lakhs in full and final settlement of all the claims of Defendant No.5 under the said agreement dated 5th September, 1985. Defendant No.5 in turn agreed to withdraw the said suit filed before the Civil Judge, Junior Division, Ulhasnagar and consented to the withdrawal of the Civil Revision Application filed in this Court and to the interim orders passed therein being vacated. Defendant No.5 handed over the original agreement dated 5th September, 1995 to the Plaintiff duly cancelled and acknowledged and confirmed that they had no claim in respect of the suit property. Defendant No.5 also executed an irrevocable power of attorney in favour of the Plaintiff inter alia to execute any consent terms on their behalf including in the above suit and to obtain such order or orders as may be found necessary in the above suit and to execute documents recording the settlement of their claims in this Court. 16 11. By a letter dated August, 1997 addressed to the Plaintiff himself Defendant No.1 stated that he had signed the consent terms for himself and also as the authorised signatory of Defendant Nos. 2,3 and 4. He further stated that by resolutions passed by the Board of Directors of Defendant Nos. 2, 3 and 4 he was named as the authorised person to sign the consent terms on their behalf and that the copies of the resolutions would be forwarded to the Plaintiff for its record. 12. This brings me to four facts immediately proximate and integral to the filing of the consent terms and the order in terms thereof dated 8th June, 1998. (I) A consent pracipe dated 27th April, 1998 was filed in this Court by the Plaintiff's Advocate. It is addressed to the Prothonotary & Senior Master of this Court and reads thus:- “Sir, Upon reading the Consent of the Advocates for the Defendants, we have to request you to 17 place the above suit on Board of Hon'ble Shri R.J. Kochar on 4th day of May, 1998 for Consent Decree. A copy of the Consent Terms executed between the parties is also enclosed in advance herewith for your ready reference. Dated this 27th day of April, 1998. Yours truly, For Parimal K. Shroff & Co. Sd/- Proprietor, Advocates for the Plaintiff We consent: 1)For M/s.Thakordas & Madgaokar Sd/- Proprietor Advocates for Deft. Nos. 1 to 4 (emphasis supplied) 2)For M/s. I.R. Joshi & Co., Sd/- Advocates for Deft. No.5. (II). The cause list/daily board of this Court listed the above suit under the caption “FOR FILING CONSENT TERMS”. The appearances of the Advocates of all the parties including Defendant Nos. 1 to 4 was shown. 18 (III). On 8th June, 1998 the following order was passed:- “Mr. Parimal Shroff i/b. P.K. Shroff for Plaintiffs Ms. Lata Bachan, for Defendant No.5. CORAM: R.J. KOCHAR, J. 8th June, 1998. P.C. The learned Advocates for the Parties have filed the Consent Terms duly signed by the parties and their advocates. The suit is disposed of in terms of the Consent Terms. The Consent Terms are taken on record and marked as Exh.A. Refund of half of institution fees. Certified copy expedited. The decree is also expedited.” I have set out the entire order including the appearances as arguments were based on the same as well. (IV). The Consent Terms had been signed by all the parties and their respective Advocates. That they had been signed by all the Advocates is 19 not disputed.That they had been signed by/on behalf of Defendant Nos. 1,2, 3 and 5 is not disputed. There is some dispute as to who signed the consent terms on behalf of Defendant No.4, but as I shall indicate later the same is of no consequence. Clauses 1 to 4 of the consent terms deal with the rights between the Plaintiff and Defendant No.5. Defendant No.5 honoured its commitment under the said agreement dated 4th June, 1997 in respect of the portion of the suit property upon which they had claimed a right and has given up all rights in respect thereof. Clauses 6 to 11 deal with the rights between the Plaintiff and Defendant Nos.3 to 5. These Clauses too are pursuant to and in confirmation of the agreement between the Plaintiff and Defendant No.5 dated 4th June, 1997.It is important to note that Clause 9 in terms refers to Defendant No.5 having received from the Plaintiff the said sum of Rs.31.00 lakhs prior to the execution of the consent terms. Defendant No.5 has not raised any dispute or challenged either the consent terms or the order. 20 The remaining Clauses viz., Clauses 5 and 12 to 27 pertain to the settlement between the Plaintiff and Defendant Nos. 1 to 4. By Clause 5 Defendant Nos.1 to 4 confirmed having handed over possession of the property on 2nd November, 1988 and having put the Plaintiff in exclusive use, possession and occupation thereof. By Clauses 12 to 27 Defendant Nos. 1 to 4 inter alia confirmed the suit agreement and the validity of the Power of Attorney both dated 27th October, 1988 and stipulated the schedule of payment as well as the conditions to be fulfilled by Defendant Nos. 1 to 4, entitling them to receive the payment. Clauses 14, 15 and 23 and the Schedule to the agreement read as under:- 14. The Defendants Nos. 1 to 4 agree, confirm and declare that under the Plaintiffs' agreement for 1148 Acres the total consideration money at the rate of Rs.60,000/- per acre payable by the Plaintiffs to Defendants Nos. 2 to 4, subject to verification of area by joint survey comes to Rs.6,88,80,000/- (Rupees Six Crores Eighty Eight lacs and Eighty Thousand only) out of which the Plaintiffs have made payment of a sum of Rs.1,82,30,000/- (Rupees One Crore Eighty Two Lacs and Thirty Thousand only)and the balance of Rs.5,06,50,000/- (Rupees Five Crores Six lacs and Fifty 21 Thousand only) is payable by the Plaintiffs to Defendants Nos. 2 to 4. 15. Agreed, confirmed and declared that the Plaintiffs would pay to the Defendants Nos. 2 to 4 the balance of the consideration money viz. Rs.5,06,50,000/- (Rupees Five Crores Six Lacs and Fifty Thousand only) by instalments set out in the Second Schedule hereunder written.The Plaintiffs' liability to pay the said instalments however shall not commence till the Defendants Nos. 1 to 4 comply with the following requirements:- (a) Hand over duly registered Indentures of Conveyance obtained in favour of Defendants No.2 in respect of 150 acres of the suit property set out in the First Schedule hereunder written together with Indexes II in respect thereof as well as 7/12 extracts along with all mutation entries made pursuant thereto from the concerned bodies and authorities. (b) Defendants Nos. 1 to 4 agree, confirm and declare that they shall grant, convey and transfer to the Plaintiffs and/or their nominee or nominees an area of equivalent value out of the suit property to the extent of the consideration moneys less earnest deposit of Rs.51,30,000/- (Rupees Fifty One lacs Thirty Thousand only) already paid by the Plaintiffs to them and at the same time produce before the Plaintiffs and/or their nominee or nominees the certificate under Section 230A of the Income Tax Act for due registration of the Indenture or Indentures of Conveyance for the transfer of the said area of the suit property as well as obtain all requisite permissions under the applicable statutes for transfer of the said areas in favour of the Plaintiffs and/or their nominee or nominees and hand over to them all the title deeds 22 in respect of the area so conveyed and transferred. 23. It is agreed and declared that in the event the Defendants Nos. 1 to 4 fail to obtain the Indentures of Conveyance in respect of the said remaining portion of about 183 acres of Survey No.31 of the suit property from the original owners and furnish Indexes II to the Plaintiffs in respect of such remaining portion of the suit property within the said period of six months from the date of these consent terms, the payment of instalments by the Plaintiffs to the Defendants Nos. 1 to 4 shall stand postponed by a period equivalent to the period of delay from the expiry of the said six months till the said remaining portion of the suit property, have the same duly registered and furnish Indexes II in respect thereof to the Plaintiffs. All further instalments payable by the Plaintiffs to Defendants Nos. 1 to 4 hereunder shall likewise stand postponed from the date of the payment of the first instalment after the said Indentures of Conveyance in respect of the said remaining portions of the suit property hereunder written are duly registered and Indexes II in respect thereof have been furnished to the Plaintiffs. In the event of such postponement of instalments non-payment for such period shall not be treated as breach or breaches committed by the Plaintiffs in payment of the said instalments and the Plaintiffs' agreement shall continue to remain valid and subsisting and these consent terms shall also remain valid and subsisting and in full force and effect subject to the postponement of the said instalments. THE FIRST SCHEDULE-ABOVE REFERRED TO: ALL THOSE pieces or parcels of land or 23 ground together with the buildings and structures standing thereon situate, lying and being at Mouje Jambivali, Taluka Ulhasnagar in the Registration Sub-District of Ulhasnagar District Thane, bearing Survey Nos. 31, 26/2, 26/3, 28, 29, 34/9, 39/1 and 39/2 and admeasuring 1,148 Acres or thereabouts. THE SECOND SCHEDULE ABOVE REFERRED TO: Instalments of Rs.50,00,000/- (Rupees Fifty Lacs only) per annum the first of such instalments to be paid on or before the 31st day of July 1998 and the subsequent instalments on or before the 31st day of July in every succeeding year till the balance of the consideration money which subject to verification of area by joint survey is Rs.5,06,50,000/- (Rupees Five Crores Six Lacs and Fifty Thousand only) is paid in full. Provided however that if the Plaintiffs hereafter transfer the benefits of the agreement for Sale dated 27th October 1988 in respect of suit property or any part or parts thereof to any person or persons the Plaintiffs shall pay to the Defendants Nos. 2 to 4 a sum of Rs.30,000/- (Rupees Thirty Thousand only) per acre less the payment already made by them per acre on the basis of 1148 acres of land in respect of the said portion of the suit property.” 13. Mr.Shah, the learned Counsel appearing on behalf of Defendant No.1 in support of Notice of Motion No.3507 of 2007 submitted that the consent terms had been entered into for the reasons and in the circumstances stated in the 1st Defendant's 24 affidavit in support. I find the 1st Defendant's case in this regard so totally unsustainable in every respect that instead of summarising Mr.Shah's submissions, I will set out the portion relied upon by him in the affidavit in support verbatim. It reads thus:- “June,1997 Mr.Shamji Gogri (a director in the Plaintiff Company had approach approached the Applicant and required him to sign few pieces of papers purportedly a proposal to enable Mr.Shamji Gogri to raise finances. He had conveyed that on the basis of such proposal he would be able to raise capital from his financers. On a bonafide basis with a view to help Mr. Shamji Gogri as his friend in his attempt to raise finances, the Applicant had bonafide without any obligation to carry out and implement the writing signed the said papers. It being unmistakably clarified and conveyed to Mr. Shamji Gogri that since the said papers had reference to the Suit Property and since it had reference to Defendant No.2 to 4 and the Defendant No.2 being the owner the entire exercise was in good faith and casual with no legal sanctity, binding or obligation and as such was only a help to Mr. Shamji Gogri in his individual capacity. It was also clarified that the entire proposal was meaningless, invalid and with no legal sanctity. Mr. Shamji Gogri had assured that the said proposal was only for the purpose of raising financies from his financer on the basis that the Suit Property is to be acquired and would not be misused and misutilized and that in any event he did not desire or intend to 25 purchase/acquire the Suit Property.” 14. There is nothing on record which even remotely supports the 1st Defendant's allegation. On the other hand there are various factors which militate against and belie the same. 15.The suit had been pending for eight