1 ao977-11 judgm..sxw IN THE HIGH COURT OF JUDICATURE OF BOMBAY CIVIL APPELLATE JURISDICTION. Appeal from Order No. 977 of 2011 WITH Civil Application No. 1299 of 2011 in AO Mr. Rafique Barkatulla Khan Aged 37 years, Occ: Business M/s. Market Enterprises, Shop no.2, ‘Barkat Manzil’, Barkat Street, Sonaji Nagar, Mumbra, Dist. Thane 400 612. ....Appellant v/s. Mr. Shahenshah Hussain Iqbal Munshi An adult Indian, R/at: Room no. 301, 3rd floor, Mansi Apartment, New Mill Road, Kurla (W), Mumbai 400070. 2. Thane Municipal Corporation, Having its headquarters at Mahapalika Bhavan, Chandan Wadi, Panchpakhadi, Thane (W) 400602. 3. Mr. Arif Nawas Iraqi aged adult, Indian r/at: flat no.4, 1st floor, C/11, Shamshad Nagar, Mumbra, Dist. Thane 400612. ....Respondents Mr. Shriram S.Kulkarni i/b. Law One Associates for the appellant. Mr. P.B.Shah i/b. R.Y. Thorve for respondent no.3. CORAM: R.M. BORDE, J. 28th September, 2011 2 ao977-11 judgm..sxw ORAL JUDGMENT: The original plaintiff-appellant is taking exception to the judgment and order passed below exhibit 56 in Special Civil Suit No. 82/2008 by the 6th Joint Civil Judge, Senior Division, Thane on 28th July, 2011. The plaintiff instituted Special Civil Suit No. 82/2008 claiming declaratory decree that the Development Agreement dated 20th April, 2006 as well as the power of attorney of the same date executed by defendant no.1-respondent no.1 herein in favour of the plaintiff pertaining to the development of the property as valid and subsisting. The plaintiff has also sought a declaration that the plaintiff is only and exclusively entitled to develop the said property and construct buildings thereon in pursuance of the agreement dated 20th April, 2006 as well as the General Power of Attorney executed on the same date and in furtherance thereof, the plaintiff is solely entitled to the exclusive,quiet, vacant and peaceful possession of the said property to the exclusion of any other person/s whatsoever. The plaintiff has also sought an direction to defendant no.2 Thane Municipal Corporation to demolish any such illegal constructions that the defendant no.1 may put up on the said property and/or may get the same constructed through his agents, servants or any persons claiming through the defendant no.1. The plaintiff has sought a declaration that defendant no.1 or 3 or any person claiming through them do not have any right of development on the suit property and further hold that the plaintiff has exclusive rights of 3 ao977-11 judgm..sxw development of the suit property in exclusion of any other person including defendants 1 and 3. Plaintiff has sought restraining orders by way of permanent injunction from doing any construction work on the said property or any part thereof so also for restraining them from disturbing the peaceful possession of plaintiff on the suit property by encroaching upon suit property or any part thereof. The plaintiff has sought restraining orders against defendant no.2 Thane Municipal Corporation by way of perpetual injunction from entertaining any application by defendant no.1 or 3 or any other person/s claiming through them including application for sanctioning of development plant and permanently cancel any sanction and permission granted to them or any other person/s except the plaintiff. Plaintiff has sought a declaration that the Development Agreement executed on and between defendant no.1 and defendant no. 3 registered in the year 2008 be declared as null and void. 2. According to the plaintiff the defendant no.1 had granted development rights in respect of suit property and accordingly executed the Development Agreement and general power of attorney on 20th April, 2006 in favour of the plaintiffs. There is a mention in the Development Agreement that the suit property is clear and marketable. The plaintiff has paid an amount of Rs. 1,50,000/- by way of refundable security deposit in consideration of award of development rights of the suit property. It is the contention of the plaintiff that after execution of the development agreement it was realized that the property 4 ao977-11 judgm..sxw is declared as a private forest and there is a revenue entry recorded to that effect. The plaintiff as such took serious efforts and because of the efforts made by the plaintiff, the entry has been deleted and an order to that effect came to be passed by the revenue officials on 30th May, 2006. There was also a problem relating to Urban Land (Ceiling and Regulation) Act, 1976 (hereinafter referred to as ULC Act) which was also required to be resolved and plaintiff took serious efforts for resolving that problem and was also required to incur expenses for securing an appropriate clearance under ULC Act. Ultimately, according to the plaintiff the problem was resolved and property was released on 4th August, 2007. Plaintiff thereafter realized that owner is trying to alienate the property. Such realization occurred to the plaintiff on 23rd October, 2007. Thereafter, the defendant no.1 proceeded to terminate the Development Agreement and the general power of attorney executed in favour of the plaintiff and a notice-cum-intimation letter came to be issued to the plaintiff at the instance of defendant on 3rd December, 2007. The plaintiff tendered his reply and putforth his case. He also transmitted a notice on 8th January, 2008 which was followed by a police complaint against defendant no.1 on 25th January, 2008. Ultimately the plaintiff instituted the suit and filed an application claiming interim orders on 29th January, 2008. The plaintiff also registered the suit as contemplated by Section 52 of the Transfer of Property Act on 1st February, 2010. After registration of lis-pendence the defendant no. 1 has created interest in favour of defendant no.3 and executed an agreement 5 ao977-11 judgm..sxw thereby transferring the development rights in favour of defendant no.3. There was a registered deed executed in favour of defendant no.3 on 10th March, 2008 which necessitated the amendment in the plaint. The plaintiff as such amended the plaint and sought additional reliefs which are referred to in the above noted paragraph. 3. Initial applications tendered by the plaintiff seeking interim order was not considered favourably by the trial Court. The plaintiff tendered an application at exhibit 54 after seeking an amendment to the plaint and sought a restrained order against the defendant no.1 as well as defendant no.3. The plaintiff requested Court to issue a restrain order against defendants 1 and 3 and all the persons claiming through them from doing any construction work on the suit property or any part thereof and direct them to stop any construction activities on the suit property pending disposal of the suit. The plaintiff also seeks an order of temporary injunction against the defendants 1 and 3 and all the persons claiming through them from disturbing the possession of the plaintiff over the suit property by encroaching upon suit property or any part thereof. An order is also sought against defendant no.2 TMC to stay the construction permission and sanction plan granted to defendant no.1 and/or defendant no.3 or any other person claiming through them. An interim order is sought against defendants 1 and 3 and all persons claiming through them restraining them from selling, transferring or alienating or dealing with the suit property or any part thereof or 6 ao977-11 judgm..sxw until disposal of the suit. 4. The application tendered by the plaintiff has been opposed by the respondents by filing written-statement. The adverse allegations made have been refuted. It is the case of the defendants that the plaintiff did not comply with the assurance given while entring in the agreement and as such a legal notice was issued on 3rd December, 2007 for cancellation of Development Agreement. The defendant no.1 has alienated the property in favour of defendant no.3 on 10th March, 2008 for valuable consideration. The document executed in favour of defendant no.3 is registered one. It is the contention of the defendants that the plaintiff does not have a prima-facie case nor likely to succeed in the suit. The document on which reliance is placed by the plaintiff, apart from being ambiguous and inadmissible, cannot be a basis for grant of injunction. 5. Turning to the documents executed in favour of the plaintiff which is dated 20th April, 2006 the owner has declared that he is absolute owner of the property and is entitled to deal with the same as absolute owner. It is also stated by the owner that property and every part thereof is free from all encumbrances, charges, equities and demands and title of the owner to the said property and every part thereof is clear and marketable. The developer/plaintiff agreed to acquire and undertake development rights in 7 ao977-11 judgm..sxw respect of the property with a view to undertake construction of multistoried buildings on the said property in accordance with plans and specifications sanctioned by the Gram Panchayat and to sell the units of the proposed buildings to the proposed purchaser and to form a co-operative housing society of the purchasers of the unit of the proposed building together with the land below the same in favour of or in the name of such co-operative housing society. In paragraph 2 of the Development Agreement it is stated thus: “That in consideration of the Owner granting and assigning the right of development in respect of the said property to the Developer herein, the Developer shall allot free of cost and on ownership basis ___ Sq. Ft. of the total F.S.I. ____ Sq. Ft granted by the Gram panchayat on the said property in respect of the said proposed building. The said F.S.I. Shall be in the shape of residential units in form of ‘A’ and ‘B’ Wings of the proposed buildings to be constructed on the property fully constructed together with standard amenities as usually granted, which amenities are specified in Schedule ‘B’ hereunder written. The Developer shall incurred ball and whatsoever expenses for the construction of the proposed building. That the developer shall alone be entitled to the balance ____ Sq. Ft. F.S.I. granted by the Gram panchayat to the Developer. It is specifically declared by the parties hereto that the Developer shall allot above said 22% F.S.I. In the shape of residential units, proportionately 22% on each floor of the said proposed building. That after sanction of plans and specifications by the Thane Municipal Corporation, the floor plan of the said proposed building will be attached to this agreement and will be shown in red colour boundary and which floor plan shall be attached and treated the part of this agreement.” 6. In para-3 of the Development Agreement it is declared that in the event the developer is not able to allot exact 22% F.S.I. on one floor, the same may be adjusted on the last floor. The refundable security deposit is payable amounting to Rs. 1,50,000 as noted in paragraph 4 of the Development 8 ao977-11 judgm..sxw Agreement. Paragraph 6 of the Development Agreement refers to the sanction of development plans and specifications by the Gram Panchayat. In paragraph 9 of the Development Agreement the defendant has undertaken that if the construction work is held up or abandoned for the reason of non-availability of material in market, Act of nature, Civil War or any act, deed and matter beyond the capacity of the developer that particular period may not be counted in the construction work period cited herein before. In para 11(b) the defendant no. 1 has reiterated that the property and the part thereof is free from all encumbrances, charges, equities and demands and his title to the property is clear and marketable. In para-15 of the agreement, the agreement is reached between the parties that because of delay on the part of the owner or delay in removing any defects in the said property after commencement of development activities on the said property by the developer, for such delayed period, the owner shall be given relaxation for such period of completion of the said work. Paragraph no. 19 relates to termination of agreement. It is as quoted below:- “ If any dispute arise between the parties about delay in the construction work notwithstanding anything herein mentioned, either party at liberty to terminate this agreement by giving advance notice to each party by one month and the security deposit shall be refunded to the Developer after due settlement mutually agreed by and between the parties.” 7. Thus it is the contention of the plaintiff that the delay attributable for execution of the work is because of defects in the title of the defendant. Although it is declared that property is clear from all encumbrances and is fully 9 ao977-11 judgm..sxw marketable, it was found that there was reservation in respect of private forest and there was also problems relating to securing saction as per provisions of ULC Act. The plaintiff had to take steps for getting the property cleared and for removing the entries in respect of private forest and for securing appropriate orders from ULC authorities. The entry in respect of the private forest was deleted only in the month of May 2006 whereas the corrections in the revenue record were recorded only in the year 2007. The problem relating to securing sanction undaer provisions of ULC Act is concerned, it was resolved only on 4th August, 2007. Therefore, the period required for securing the marketable title and for removing the defects ought to be excluded. It cannot be inferred that the plaintiff is instrumental in delaying the development work and the notice issued by the defendant no.1 terminating the Development Agreement is not only erroneous but is also against the express provisions contained in the agreement. It is contended that apart from taking steps for getting the property cleared and securing the entries in respect of private forest removed, the plaintiff has also taken steps for developing property and approached the Municipal Corporation with the applications for division of larger area and also have taken certain steps for development of the property. 8. It is urged that the creation of third party interest during the subsistence of the agreement and during the subsistence of litigation even after registration of lis-pendence is illegal. According to Counsel appearing for plaintiff- 10 ao977-11 judgm..sxw appellant the creation of third party interest in favour of the defendant no.3 by defendant no.1 after registration of lis-pendence is not only illegal but the said transaction ought to be branded as void. The defendant no.3, therefore, cannot get any right to enter into property and develop the property during the pendency and disposal of the litigation. The trial Judge has committed a serious error in refusing to grant protection as asked for during the pendency of the suit. The learned Counsel appearing for plaintiff has also canvassed that the plaintiff is successful in pointing out that there are serious triable issues involved in the matter. The plaintiff has fair chance of success in the suit. It is also contended that plaintiff has established the prima-facie case. Balance of convenience lies in favour of the plaintiff and if development is permitted to be continued during the pendency of the suit, irreparable injury is likely to be caused and whatever development would take place during the continuation of litigation cannot be reasonably and properly undone in the event of success of the suit. The plaintiff as such contends that the order passed by the trial Court suffers from serious errors and is liable to be quashed and set aside. 9. The learned Counsel appearing for respondent-original defendant contends that the agreement if read at its face value is not capable of being put to a proper interpretation. It is full of infirmities. There are blank spaces left in the agreement. The reference in the agreement in respect of securing permission or sanction from the Gram Panchayat authority is not only 11 ao977-11 judgm..sxw misleading but has an effect of rendering the whole agreement incapable of being put to execution. It is also contended that the possession is stated to have been delivered in the agreement. The agreement is not registered nor proper stamp duty is paid. The document is conveyance within meaning of Bombay Stamp Act which is required to be affixed with necessary stamps. In the absence of payment of adequate stamp duty, the document cannot be taken into consideration for any purpose as mandated by Section 34 of the Act. It is also contended by the defendant that the document executed in favour of the defendant no.3 is for valuable consideration of more than 20 lacs. The amount has been paid by defendant no.3 in favour of defendant no.1. The defendant no.3 has started construction activities over the property. The Thane Municipal Corporation has issued Commencement Certificate in the year 2010 itself and the development activities are in full swing. It is contended that the alleged agreement in favour of the plaintiff has been terminated by defendant no.1 on 3rd December, 2007. There is no challenge to the notice of termination in the plaint. There is no prayer made in the plaint for setting aside or quashment of notice/communication terminating the Development Agreement of the plaintiff. In the absence of such a prayer, the plaintiff is not likely to succeed in the suit. It is contended that the Development Agreement allegedly executed in favour of the plaintiff cannot be specifically enforced and the only remedy available in law for the plaintiff is to claim damages. The plaintiff has not quantified the damages nor has ascertained his monetary claim in the plaint. It is contended 12 ao977-11 judgm..sxw that effect of the transaction between the defendant no.1 and defendant no.3 after registration of lis is as stated in Section 52 of the Act. Creation of third party interest would be subject to limitations of Section 52 of the Transfer of Property Act. It is contended that balance of convenience does not lie in favour of the plaintiff nor he has made out any prima-facie case and as such request is made for dismissal of the Appeal. 10. The first question that arise for consideration is as to what is the effect of the transaction taken place between defendant no.1 and defendant no.3 after registration of lis by the plaintiff. The provisions of Section 52 of the Transfer of Property Act as is applicable to State of Maharashtra is as quoted below. “52. Transfer of property pending suit relating thereto.- (1) During the pendency in any Court having authority within the limits of India excluding the State of Jammu and Kashmir established beyond such limits by the Central Government, of any suit or proceeding which is not collusive and in which any right to immovable property is directly and specifically in question, if a notice of the pendency of such suit or proceeding is registered under section 18 of the Indian Registration Act, 1908, the property after the notice is so registered cannot be transferred or otherwise dealt with by any party to the suit or proceeding so as to affect the rights of any other party thereto under any decree or order which may be made therein, except under the authority of the Court and on such terms as it may impose. (2) Every notice of pendency of a suit or proceeding referred to in sub-section (1) shall contain the following particulars, namely:- (a) the name and address of the owner of immovable property or other personw hose right tot he immovable property is in question; 13 ao977-11 judgm..sxw (b) the description of the immovable property the right to which is in question; (c) the Court in which the suit or proceeding is pending; (d) the nature and title of the suit or proceeding; and (e) the date of which the suit or proceeding was instituted. [Explanation. -For the purposes of this section, the pendency of a suit or proceeding shall be deemed to commence from the date of the presentation of the plaint or the institution of the proceeding in a Court of competent jurisdiction, and to continue until the suit or proceeding has been disposed of by a final decree or order and complete satisfaction or discharge of such decree or order has been obtained, or has become unobtainable by reason of the expiration of any period of limitation prescribed for the execution thereof by any law for the time being in force.]” 11. Simultaneously, Section 18 of the Registration Act was also amended to provide for registration of notice in pending suit. Principle of lis perdana is considered in the matter of Guruswamy Nad v/s. P. Lakshmi Ammal (dead) through Lrs & ors. (2008) 5 SCC page 796. In paragraph no. 10 onwards the Apex Court has observed as below: “10. The principle of lis pendens is still settled principle of law. In this connection, the Full Bench of the Allahabad High Court in Smt. Ram Peary (supra) has considered the scope of Section 52 of the Transfer of Property Act. The Full Bench has referred to a decision in Bellamy v. Sabine (1857) 44 ER 842 at p.843)wherein it was observed as under: It is scarcely correct to speak of lis pendens as affecting a purchaser through the doctrine of notice, though undoubtedly the language of the Courts often so describes its operation. It affects him not because it amounts to notice, but because the law does not allow litigant parties to give to others, pending the litigation, rights to the property in dispute, so as to prejudice the opposite party. Where a litigation is pending between a plaintiff and a 14 ao977-11 judgm..sxw defendant as to the right to a particular estate, the necessities of mankind required that the decision of the Court in the suit shall be binding, not only on the litigant parties, but also on those who derive title under them by alienations made pending the suit, whether such alienees had or had not notice of the pending proceedings. If this wsere not so, there could be no certainty that the litigation would ever come to an end. 11. Similarly the Privy Council in Faiyaz Husain Khan v. Munshi Prag Narain where the Court lay stress on the necessity for final adjudication and observation that otherwise there would be no end to litigation and justice would be defeated. 12. The Full Bench of Allahabad High Court further referred to the work of Story on Equity IIIrd Edition,(para 406) which expounded the doctrine of lis pendens in the terms as follows: (Ram Peary case AIR p319 para6) Ordinarily, it is true that the judgment of a court binds only the parties and their privies in representations or estate. But he who purchases during the pendency of an action, is held bound by the judgment that may be made against the person from whom he derives title. The litigating parties are exempted from taking any notice of the title so acquired; and such purchaser need not be made a party to the action. Where there is a real and fair purchase without any notice, the rule may operate very hardly. But it is a rule founded upon a great public policy; for otherwise, alienations made during an action might defeat its whole purpose, and there would be no end to litigation. And hence arises the maxim pendent elite, nihil innovetur; the effect of which is not to annul the conveyance but only to refer it subservient to the rights of the parties in the litigation. As to the rights of these parties, the conveyance is treated as if it never had any existence; and it does not vary them. 13. Normally, as a public policy once a suit has been filed pertaining to any subject matter of the property, in order to put an end to such kind of litigation, the principle of lis pendens has been evolved so that the litigation may finally terminate without intervention of a third party. This is because of public policy otherwise no litigation will come to an end. Therefore, in order to discourage that same subject matter of property being subjected to subsequent sale to a