1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION CHAMBER SUMMONS NO.231 OF 2006 IN EXECUTION APPLICATION (LDG.) NO.100 OF 2006 IN SUIT NO.567 OF 2007 Llalubhai Amichand Ltd. ..Plaintiff Vs. Akruti Nirman Ltd. & Ors. ..Defendants And M/s.Pandya & Poonawala ..Respondents. Mr.Sanjay Jain with Mr.Prakash Shinde i/b. M.Dhruva & Co. for the Plaintiff. Mr. S. H. Doctor, Senior Counsel with Mr. P. K. Dhakeparkar, Senior Counsel with Mr. Vijaykumar i/b. Mr. Prashan Kulkarni for Defendant Nos.1 to 3. Mr.Subodh Joshi with Ms. Radhika Kalpatrai and Ms. Bharti Bhagwat i/b. Parimal Shroff & Co. for Defendant Nos. 4 and 5 . Mr.Sirshika for Defendant No.8 BMC. Mr.Y. B. Pandya i/b. M/s. Pandya & Poonawala for the Respondents. Ms.Asha Bhambwani for Defendant No.6 MMRDA 2 CORAM : S.J. VAZIFDAR, J. DATED : 31ST JANUARY, 2008 AND 1ST FEBRUARY, 2008 ORAL JUDGMENT : 1. It would be convenient to set out the prayers in the Notice of Motion as they are involved and the scope thereof were the subject matter of controversy. The prayers read as under :- “a) this Hon’ble Court be pleased to declare that the Decree dated 7th July, 2005 and 11th July, 2005 passed in Suit No. 567 of 2005 has been adjusted and/or varied and/or modified to the extent that: (i) the Plaintiff is required to surrender and/or handover the Amenity land and Additional Recreation Ground area to Defendant No.6 or Defendant No.8; (ii) that such surrender or handing over of possession has to be done on or before 25th February, 2006 or such other date as this Hon’ble Court may decide and (iii) the Respondent has to pay the amount of Rs.2,00,00,000/- to the Plaintiff upon proof of possession of the Amenity space and Additional Recreation Ground; (b) that the adjustment and/or modification and/or variation of the Decree dated 7th July, 2005 and 11th July, 2005 as per prayer (a) above or to such extent as may be declared by this Hon’ble Court be certified on Decree dated 7th July 2005 and 11th July 2005 passed in Suit No. 567 of 2005; 3 (c) that this Hon’ble Court be pleased to declare that the Plaintiff has complied with his obligation under Clause No.6 and 8 of the Consent Terms dated 7th July, 2005 as adjusted and/or modified and/or varied; (d) that this Hon’ble Court be pleased to direct the Respondent/ Garnishee to pay to the Plaintiff the amount of Rs.2,00,00,000/- alongwith accretions thereto from 1st January 2006 or such other date as this Hon’ble Court may deem fit and proper; (e) that this Hon’ble Court be pleased to order and direct Defendant No.6 to forthwith handover to the Plaintiff, quiet, vacant and peaceful possession of the Service Industry land admeasuring 5245.83 sq. meters, more particularly described in the Schedule annexed hereto as Annexure-I; (f) in the alternative to prayer (e) above, this Hon’ble Court be pleased to appoint the Court Receiver, High Court, Bombay as Receiver of the Service Industry land admeasuring 5245.83 sq. meters, more particularly described in the Schedule annexed hereto as Annexure-I with power to take possession thereof from whosoever found in possession and with a direction to handover the same to the Plaintiff forthwith; (g) that upon receipt of the amount of Rs.2,00,00,000/- by the Plaintiff from the Respondent, this Hon’ble Court be pleased to certify the same on the Decree dated 7th July, 2005 / 11th July, 2005; 4 (h) that upon quiet, vacant and peaceful possession of Service Industry land being handed over to the Plaintiff, this Hon’ble Court be pleased to certify compliance of the Decree dated 7th July, 2005 / 11th July 2005 in so far as Respondent No.6 is concerned.” 2. The suit was filed for a declaration that the contract entered into between the Plaintiff and Defendant No.1 is valid, subsisting and binding upon Defendant Nos.1 to 5. Defendant Nos.2 to 5 are individuals. Defendant No.6 is the Mumbai Metropolitan Regional Development Authority (MMRDA). Defendant No.7 is the Union Bank of India and Defendant No.8 is the Bombay Municipal Corporation (BMC). The Respondents were at the material time the advocates of Defendant Nos.1 to 3 as well as the escrow agents appointed under the Consent Terms I shall refer to shortly. 3(A). It is not necessary to refer to the interlocutory proceedings taken out in the suit. By an order dated 7.7.2005, the suit was decreed in terms of the consent terms entered into between the Plaintiff and Defendant Nos.1 to 3. By the said order, Defendant Nos.6 to 8 were directed to provide all co-operation to 5 enable the Plaintiff and Defendant Nos.1 to 3 to implement and act in pursuance of the decree. The matter was directed to be put up on 11.7.2005 for further directions. Clauses 4 to 8 of the consent terms read as under :- “4. Defendant No.1 is Ordered and Decreed to pay to the Plaintiff an amount of Rs.2,00,00,000/- (Rupees Two Crores Only) in full and final settlement of its claim in the Suit. 5. Defendant No.1 undertakes to deposit the amount of Rs.2,00,00,000/- (Rupees Two Crores Only) on or before 20th July 2005 with M/s.Pandya & Poonawala, Advocates. In the event Defendant No.1 does not deposit the amount on or before 20th July 2005, then Defendants No.2 and 3 undertake to this Hon’ble Court to deposit the amount of Rs.2,00,00,000/- with M/s. Pandya & Poonawala on or before 27th July 2005. M/s. Pandya & Poonawala, Advocates will hold the amount as an escrow agent to be disbursed in the manner set out hereunder. In the event of the Defendant Nos.1 to 3 failing to deposit the sum of Rs.2,00,00,000/- on or before 27th July, 2005, the decretal amount of Rs.2,00,00,000/- shall carry interest at the rate of 15% per annum on and from 28th July, 2005 which interest will be the entitlement of the Plaintiff. 6. The Plaintiff and its Directors Mr. Paresh 6 Shah and Mr. Sunil Shah undertakes to this Hon’ble Court to surrender and/or handover the amenity and additional recreation ground area to Defendant No.8 as contemplated under Condition No.5 of the Letter of Intent dated 10th September 2003 issued by Defendant No.6 and to furnish proof on or before 31st December, 2005 of having handed over possession thereof to Defendant No.8. This undertaking shall come into effect upon compliance by Defendant Nos.1 to 3 of the deposit required under clause 5. 7. In the event, the Plaintiff commits default in producing receipt of Defendant No.8 having received possession of amenties space and additional recreational ground to M/s. Pandya & Poonawala then M/s. Pandya & Poonawala, Advocates will refund the amount of Rs.2,00,00,000/- to Defendant No.1 after expiry of a period of 4 weeks from the time stipulated for performance under clause No.6 or within the extended time as set out hereunder and the Decree for the amount of Rs.2,00,00,000/- shall stand cancelled. However all the other clauses of these consent terms shall continue to apply and bind the parties. The Plaintiff shall be at liberty to apply to the Court for extension of time by making out an appropriate case and in that event the time for performance of the obligation will be as stipulated by this Hon’ble Court. It is clarified that Defendants 7 No.1 to 3 will be entitled to oppose such application for extension of time. 8. In the event the Plaintiff produces for inspection the original possession receipt of the Defendant No.8 having received possession of amenities space and additional recreational ground to M/s. Pandya & Poonawala, then M/s. Pandya & Poonawala, Advocates will pay the amount of Rs.2,00,00,000/- to the Plaintiff and interest accrued thereon to the Defendant No.1 forthwith and on such compliance and the Decree for Rs.2,00,00,000/- shall stand marked satisfied and all other clauses of these terms will continue to apply and bind the parties.” (B). By an order dated 11.7.2005, D.K. Deshmukh, J. recorded the statement on behalf of MMRDA that it would offer to the Plaintiff possession of the area out of the larger property described in the possession receipt dated 11.8.2004 which is in its possession save and except the property which is conveyed to it under a conveyance dated 28.7.2004 within two weeks from the date of the order. The suit was accordingly disposed of. 4. By a letter dated 19.7.2005, MMRDA informed the Plaintiff that it would be handing over possession of the excess land to the Plaintiff. The letter was received by the Plaintiff in 8 September, 2005. 5. The Plaintiff's case in a nutshell is that by about December, 2005 it was agreed between Defendant Nos.1 to 3 and itself that the Plaintiff was at liberty to hand over possession of the amenities space and additional recreational ground to MMRDA (Defendant No.6) or the BMC (Defendant No.8) instead of only to the BMC as provided in clause 6 of the consent terms. The consent terms stood accordingly varied/modified/adjusted by consent. Defendant Nos.1 to 3 had agreed to an extension of time till 25.12.2006 for the Plaintiff to hand over possession to MMRDA/BMC. Possession had in fact been handed over to MMRDA by the Plaintiff long before on 11.8.2004. MMRDA had executed a writing of that day admitting the same, confirmed the same by a letter dated 8.2.2006, admitted the same in these proceedings and has no grievance that possession has not been handed over. Defendant Nos.1 to 3 have derived full benefit under the consent terms. The Plaintiffs therefore seek in this composite Chamber Summons inter-alia to have the variation/modification recorded by the Court and to execute the decree as 9 varied/modified. 6. Mr. Doctor, the learned Senior Counsel appearing on behalf of Defendant Nos.1, 2 and 3 opposed the Chamber Summons on the following grounds :- i) The consent terms had not been varied/modified entitling the Plaintiff to hand over possession to MMRDA or the BMC. Defendant Nos.1 to 3 had only agreed not to object to an extension of time for handing over possession of the lands to the BMC till 25.2.2006. ii) Assuming that the consent terms were modified/varied as alleged, possession of the land was not handed over/surrendered by the Plaintiff to MMRDA. The nature of the possession of MMRDA is not of the kind contemplated by the parties in the consent terms. iii) Assuming that the consent terms were modified/varied as alleged, possession was required to be handed over by 25.2.2006 which the Plaintiff had failed to do. iv) The Plaintiff had abandoned its application for extension of time. v) The alleged variation/modification cannot be considered as it has not been recorded by the Court under Order XXI Rule 2 of the C. P. C. vi) The executing Court does not have power to 10 record a variation/modification under Order XXI Rule 2. vii) The alleged variation/modification does not constitute an adjustment within the meaning of that term in Order XXI Rule 2 and therefore cannot be recorded by the Court. 7. I find the Plaintiff's application to be well founded. Defendant Nos.1 to 3 having derived full benefit under the consent terms and having suffered no prejudice whatsoever have raised the objections to deny unfairly the benefit of the decree to the Plaintiffs. 8. Mr. Doctor firstly denied that the Consent Terms had been varied or modified by permitting the Plaintiff to hand over possession of the said two plots to MMRDA or the BMC. He submitted that Defendant Nos.1 to 3 had agreed only not to object to an extension of time till 25.2.2006 for the Plaintiff to hand over possession of the said plots to the BMC and nothing more. The submission is belied beyond any doubt by the correspondence between the parties which I will refer to immediately. 9. The Plaintiff's advocates letter dated 19.12.2005 addressed to the advocates for Defendant Nos.1 to 3 who were 11 also the escrow agents, is important and reads as under :- “In pursuance of the discussions/negotiations between our respective clients it has been agreed that in terms of the Consent Terms filed in the Court on 7/11th July,05 your clients shall give their consent to our clients for extending the time to surrender the land to BMC/MMRDA which was to be surrendered on or before 31st December, 05, for which time shall now stand extended for a period of 8 weeks i.e. till 25/2/06. In view of the aforesaid mutual discussion, we would appreciate if you can send a letter of confirmation on behalf of your clients. Also please note that in pursuance of the said extension of time to surrender the land,you shall continue to hold/retain the amount of Rs.2.00 crores which is lying in the “escrow” as deposited by your clients which shall be forthwith handed over to our clients upon acceptance of the land by MMRDA/BMC (as the case may be)” (emphasis supplied) 10. By their reply dated 20.12.2005, the advocates for Defendant Nos.1 to 3 stated inter-alia as under :- “2. Our clients shall have no objection for the extension of time to surrender the land to Municipal Corporation of Greater Mumbai/Mumbai Metropolitan Region Development Authority, (MCGM/MMRDA), as required under clause 6 of the Consent Terms dated 7th July, 2005 filed in the subject suit before His Lordship Mr.Justice D.K. Deshmukh in the Hon'ble High Court. 12 4. Kindly inform us as to the date and time on which you shall be making application for extension of time as stated in the first paragraph of your letter, since our clients have instructed us to remain present at the time when said application for extension of time is made on behalf of your clients.” 11(A). On 28.12.2005 the Plaintiff moved an urgent application by way of a preceipe for extension of time to hand over and/or surrender possession. No orders were passed on the preceipe. (B)(i) The Plaintiff therefore on 29.12.2005 took out Chamber Summons No.27 of 2006 for extension of time by a further eight weeks to surrender and/or hand over the plots “to Defendant No.6 (MMRDA) or Defendant No.8 (BMC)”. The Chamber Summons had actually been taken out on 29.12.2005. It was filed and numbered on 13.1.2006. (ii). It is important to note that in paragraph 8 of the affidavit in support of the Chamber Summons, the Plaintiff expressly stated that Defendant Nos.1 to 3 had agreed and consented for extension of time by eight weeks to surrender the land “to Defendant No.6 (MMRDA) or Defendant No.8(BMC).” The above letters dated 13 19.12.2005 and 20.12.2005 were referred to and annexed to the affidavit. (C ). The Plaintiff made an urgent application during the Court vacation in terms of the said Chamber Summons. By an order dated 30.12.2005, the learned Judge declined to pass any order extending the time without giving the BMC an opportunity of being heard. It is pertinent to note that Defendant Nos.1 to 5 appeared before the learned Judge. The order indicates that there was no opposition on behalf of Defendant Nos.1 to 5 to the said application. (D). The Chamber Summons was ultimately dismissed for default on 14.2.2006. Suffice it to note at this stage that Defendant Nos.1 to 5 at no stage opposed the Chamber Summons. Nor did they deny any of the averments therein including the averment in paragraph 8 I have referred to namely “that it was agreed by Defendant Nos.1 to 3 that the Plaintiff shall be entitled to surrender the land to Defendant No.6 (MMRDA) or Defendant No.8 (BMC)” and not merely to Defendant No.8 as provided in the consent terms. 14 12. MMRDA by a letter dated 28.12.2005 applied to the Government of Maharashtra for acquiring the land reserved for amenity on the grounds and for the reasons stated therein which are not material for the present purpose. 13. By a letter dated 30.12.2005, MMRDA informed the Plaintiff that it intended taking over the land reserved for amenity space and additional recreation place against the TDR in accordance with the Government order dated 2.4.2005 and with the approval of the Government of Maharashtra. 14. It must be noted at this stage that the MMRDA was already in any event in possession of the amenity space and the additional recreation place. There is no dispute in this regard. It is evidenced by a possession receipt dated 11.8.2004. What was disputed by Mr.Doctor, was the nature of the possession. I shall deal with this aspect later. 15. The Plaintiff' s advocate by a letter dated 2.1.2006 informed the advocates of Defendant Nos.1 to 3 about the letter dated 30.12.2005 and in view thereof called upon them to hand over the amount of Rs.2.00 crores lying in escrow with them. It 15 was further stated that a request was made pursuant to the discussion between the parties whereat Defendant Nos.1 to 3 had confirmed that they were instructing their advocates/escrow agent to hand over the said amount to the Plaintiff. 16. It was obviously in view of the above that by a letter dated 3.1.2006, the Plaintiff informed the MMRDA that :- “possession of the entire land be retained with MMRDA (Defendant No.6) which includes the land under reservation for amenity space and additional recreation space which is to be handed over to you (Defendant No.6.)” 17(A). The advocates of Defendant Nos.1 to 3 by a letter dated 5.1.2006 addressed to the Plaintiff's advocate in reply to the Plaintiff's letter dated 2.1.2006 stated as under :- “2. Our clients shall have no objection as to refund of the amount of Rs.2,0,00,000/- (Rupees Two Crores only) deposited by our clients with us, in escrow, on your clients, through you, furnishing to us proof of surrender and/or handing over possession of amenities and additional recreation ground area to Defendant Nos.8 (BMC) and/or 6 (MMRDA) and Conveyance in respect of the said amenities and additional recreating ground area executed by your clients in favour of Defendant No.8 and/or 6 as required in clause 6 of the Consent Terms 16 executed by our respective clients and filed on 7th July, 2005 in the subject matter.” (emphasis supplied) (B). It is pertinent to note that Defendant Nos.1 to 3 did not deny that the land may be handed over to MMRDA or the BMC. The additional condition regarding execution of a conveyance by the Plaintiff in favour of MMRDA and/or BMC was not a part of the consent terms and could not have been insisted upon. 18. In reply to the letter dated 5.1.2006, the Plaintiff's advocate by a letter dated 7.1.2006 referred to their earlier letter dated 2.1.2006 under cover of which the Plaintiff's letter to MMRDA dated 30.12.2005 had been forwarded. The letter reiterated that Defendant Nos.1 to 3 had confirmed at the meeting between the parties that they would instruct their advocates/escrow agent to hand over payment of the said sum of Rs.2.00 crores. 19. The Plaintiff's advocate thereafter addressed letters dated 7.1.2006, 12.1.2006 and 18.1.2006 reiterating their earlier stand. In the letter dated 7.1.2006, it was stated that it was with the consent of the concerned Defendants that the land continued to remain with MMRDA. 17 20. Thus upto this stage the only condition insisted upon by Defendant Nos.1 to 3 was for a conveyance in respect of the said lands to be executed by the Plaintiff in favour of the BMC and/or MMRDA which clearly was not a requirement under the consent terms. 21(A). By a letter dated 18.1.2006 Defendant Nos.1 to 3 contended that MMRDA had not taken over possession of the land; that MMRDA was awaiting Government' s approval for the same; that the Plaintiff was required to obtain and produce the original possession receipt from MMRDA and to take immediate action to co-ordinate and complete due process of MMRDA taking over possession including the execution of the conveyance in favour of MMRDA as per clause 7 of a Multi Party agreement dated 28.7.2004. It was further stated that MMRDA was ready to accept the possession of the land only after obtaining sanction from the State Government and that therefore, the Plaintiff should obtain a possession receipt from MMRDA after such sanction and simultaneously execute in their favour the requisite conveyance. (B). This now was an additional ground on which Defendant 18 Nos.1 to 3 refused to permit the release of the said sum of Rs.2.00 crores to the Plaintiff. 22(A). The advocates of Defendant Nos.1 to 3 addressed another letter dated 20.1.2006 to the Plaintiff's advocate. The letter refers to Defendant No.2 having received a call from the Commissioner of MMRDA informing him about a meeting on 19.1.2006 in which it was agreed to grant the Plaintiff time upto March, 2006 to complete the formalities of handing over possession of the said areas to the BMC/MMRDA as contemplated under the Letter of Intent dated 10.9.2003. It is stated that Defendant Nos.1 to 3 instructed their advocates to co-operate in respect of the said amounts held in escrow in their capacity as escrow agent. The advocates of Defendant Nos.1 to 3 stated as under :- “However, as you are aware, we as escrow agent in the terms of the order of the consent terms of the Hon'ble Court, are bound to follow the letter of the said order/consent terms and are unable to release the said amount of Rs.2,00,00,000/- to your clients without the permission of the Court and/or without your clients furnishing to us proof of handing over possession of the amenity and additional recreation ground area to 19 Defendant No.8 (BMC) as contemplated under Condition No.5 of the Letter of Intent dated 10th September 2003 as required under clause 6 of the Consent Terms. Your clients are once again requested to kindly furnish to us either proof of satisfaction of the said condition as contained in clause 6 of the said Consent Terms and/or suitable order from the Hon' ble High Court in respect thereof.” (B). Pausing here I would only state that the escrow agent cannot really be blamed for insisting upon the strict compliance of the original unamended consent terms despite their knowledge of the fact that it had been agreed by their clients that the possession may now be handed over by the Plaintiff to MMRDA or the BMC and not merely to the BMC as provided in the consent terms prior to the variation. Their difficulty appears to be on account of their having acted in a dual capacity namely as the advocates for Defendant Nos.1 to 3 and as escrow agents. They probably correctly insisted on the Plaintiff' s furnishing proof of satisfaction of the conditions of the consent terms and/or suitable orders from the Court in respect thereof. It is indeed gratifying to note that the erstwhile advocates of Defendant Nos.1 to 3 did not hurriedly or abruptly pay over the said amounts to their clients in 20 purported compliance with the condition stipulated in clause 7 of the consent terms. Their conduct as escrow agents in the matter, if I may say with respect, is commendable. 23(A). The Plaintiff's advocates by their letter dated 23.1.2006 in addition to reiterating their earlier stand referred to the said meeting held on 19.1.2006 between the parties herein in the office of the MMRDA whereat it was confirmed by MMRDA that they were holding possession of the land and upon which one Vimal Shah on behalf of Defendant Nos.1 to 3 had agreed and confirmed that by 20.1.2006 their advocates would be instructed to hand over the amounts of Rs.2.00 crores to the Plaintiff. A copy of the Taba Patra confirming possession with MMRDA was also enclosed along with the letter. (B). A reminder dated 27.1.2006 was also addressed. There was no denial to the letter dated 23.1.2006. 24. By a letter dated 8.2.2006, MMRDA confirmed that the said additional recreation ground and amenity space would be handed over by MMRD and a conveyance in regard thereto will be prepared after the receipt of the Government approval which was 21