1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION jmi NOTICE OF MOTION NO.49 OF 2008 IN SUIT NO. 9 OF 2008. Dr. K.V. Bhimani. ..Plaintiff. vs. Vasant K. Vikamsey & Ors. ..Defendants. .... Mr. Atul G. Damle, for Plaintiff. Ms. Pooja Tidke, i/b. ALMT Legal, for Defendant No.1. Mr. Sanjay S. Gawde, for Defendant No.2. .... CORAM : S.J.KATHAWALLA, J. DATE : 27th NOVEMBER 2009. P.C. By this suit, the Plaintiff has sought a decree directing the Defendants for specific performance of the agreement dated 20th March 2007 entered into between the Plaintiff and Defendant No.3 in respect of the premises in shop No.6A, admeasuring 200 square feet on the ground floor situated in Three View Co-operative Society, A.M. Marg, Prabhadevi, Mumbai-400 025 (the suit premises). In the notice of motion taken out in the above suit, the Plaintiff has sought an appointment of Court Receiver of the suit premises and has also sought an injunction restraining the defendants, their agents, servants and/ or any person claiming through them from selling, transferring or creating third party interest in respect of the suit premises. 2 2. The facts as the record shows are as under :- (i) The Plaintiff is a Dental Surgeon. Defendant Nos. 1 and 2 were earlier the partners of M/s. ORBIT-A, a Partnership Concern which was subsequently converted into a Private Limited Company i.e. Defendant No.3. Defendant nos. 1 and 2 are the Directors of Defendant No.3 having equal shareholding. The suit premises is owned by Defendant No.3. (ii) By an agreement dated 20th March 2007, the Plaintiff and the defendants executed a Memorandum of Understanding in which it is agreed that the defendants will sell the suit premises to the Plaintiff for a total consideration of Rs. 60,00,000/-. On the same day, the Plaintiff paid an amount of Rs. 2,00,000/- by cheque to the defendants and agreed to pay the balance payment of Rs.58,00,000/- before 10th April 2007. It is provided in the Memorandum of Understanding / Agreement that the advance amount of Rs. 2,00,000/- will be forfeited if the Plaintiff fails to pay the balance amount in time. Admittedly, on 20th March 2007, when the Memorandum of Understanding was executed the share certificate pertaining to the suit premises stood in the name of the partnership and the name of Defendant No.3 was to be first substituted, before transferring the share certificate in favour of the plaintiff. According to the plaintiff, the defendants at the time of execution of the Memorandum of Understanding dated 20th March 2007 had assured the Plaintiff that they will obtain 3 necessary No Objection Certificate from the society and also effect the transfer on or before 10th April 2007. It is submitted that in view of this assurance by the defendants, it was mentioned in the Memorandum of Understanding that the balance payment of Rs.58,00,000/- is to be paid on or before 10th April 2007. These submissions are not denied/ disputed in the affidavit filed by Defendant No.2. (iii) On 27th March 2007, Defendant No.1 as Director of Defendant No.3 company wrote a letter to the Chairman/ Secretary of the Three View Co-operative Society (the Society), wherein he inter-alia recorded that originally the suit premises was purchased in the name of the partnership i.e. “ORBIT” because of which the society records show the said premises in the name of the partnership. It is further recorded that the said name was changed to “Orbit Tours & Trade Fairs (P) Limited” on 28th June 1995 and the Directors of the said company are Defendant nos. 1 and 2. The society was therefore, requested to change the name in the society’s records and also on the share certificate. It was further recorded - “As you know, we are selling our premises to Dr. K.V. Bhimani and our share certificates will be his property, after it is sold.” (iv) By another letter of the same date, i.e. 27th 4 March 2007, Defendant No.3 forwarded a cheque of Rs.25,000/- in favour of the society for its Repair Fund and requested for a No Objection Certificate for carrying out certain plumbing work in the suit premises. In the said letter, it was further recorded - “Incidently, we are selling our premises to Dr. K.V. Bhimani who is a practicing Dental Surgeon and he stays in the building between the Three View Society and Midway Premises. Please inform in your above letter, that you have no objection for our selling the premises to him.” (v) The society by its letter dated 28th March 2007 rejected the request of Defendant No.3 for carrying out plumbing and drainage connection work on the ground that the same would damage the civil structure of the building. The society returned the cheque of Rs.25,000/- forwarded by Defendant No.1 towards the repair fund. The society further recorded in its letter - “Regarding your selling of shop no.6 to Mr. K.V. Bhimani, we can issue NOC to you once you introduce buyer to Committee Members and payment of any dues and transfer charges.” (vi) In response to the letter from the society dated 28th March 2007, Defendant No.3 vide its letter dated 2nd April 5 2007 pointed out to the society that their contention that the plumbing work would damage the civil structure of the building, is not correct. In the said letter, Defendant No.3 further stated : - “Regarding introducing our buyer Mr. K.V. Bhimani to your Committee, please inform your convenient date and time for the same. We appreciate, if you will please inform pending dues if any from us. Regarding the transfer charges, the same will be paid by the buyer, at the time of submitting all the documents.” (vii) Defendant No.3 Company by its letter dated 20th June 2007 (signed by Defendant No.1 as Director) inter-alia forwarded to the society Rs.25,000/- admittedly paid by the Plaintiff towards the transfer premium and requested the society to process the application of Defendant No.3 for immediate transfer of the name to “Orbit Trade Fairs & Tours (P) Limited” (i.e. Defendant No.3) on the share certificate. By the said letter, the society was further requested as follows :- “Please also issue your NOC letter for selling the premises to Dr. K.V. Bhimani, who was already introduced to you as desired by you.” (viii) In the meantime, i.e. in May 2007, a dispute 6 arose between Defendant No.1 and 2 and Defendant No.1 filed a petition under sections 398 and 402 of the Companies Act, 1956 before the Company Law Board. The Plaintiff through his letter dated 23rd October 2007 informed the defendants that any settlement before the Company Law Board should take care of the agreement of the sale of the suit premises to the plaintiff. However, the defendants failed and neglected to reply to the said letter of the Plaintiff because of which the Plaintiff approached this Court with the above suit praying for specific performance of the Memorandum of Understanding/Agreement dated 20th March 2007. (ix) In the above notice of motion, the Plaintiff made an application and sought ad-interim reliefs when Defendant No.1 was represented by his Advocates. By an ad-interim order of this Court dated 15th January 2008, the defendants are restrained from selling, transferring or creating third party interest in respect of the suit premises. (x) Defendant No.2 has filed his affidavit in reply to the above notice of motion on 27th March 2008, wherein he has set out some of the aforestated facts and has submitted to the orders / directions of this Court. In the said affidavit, it is not the case of Defendant No.2 that any of the facts/ submissions set out by the Plaintiff in the plaint are incorrect or that the 7 Plaintiff is not entitled to specific performance of the agreement dated 20th March 2007. Though at the time when ad-interim orders were passed on 15th January 2008, Defendant No.1 was represented by his Advocates, M/s. ALMT Legal, who have also filed their Vakalatnama on 5th February 2008, Defendant No.1 failed and neglected to file his reply to the notice of motion in the last almost two years. Today, when the notice of motion was called out for final hearing, an affidavit-in-reply was sought to be tendered on behalf of Defendant No.1 which is not taken on record by this Court on the ground of gross delay. 3. The learned Advocate appearing for the Plaintiff submitted that the Plaintiff was at all times ready and willing to perform his part of the Agreement/contract. He continues to be ready and willing to perform his part of the Agreement. However, the Defendants in view of their problems inter-se have till date failed and neglected to even get the share certificate issued by the society in respect of the suit premises, transferred from the name of the partnership to the name of the Defendant Company. It is submitted that the Memorandum of Understanding / Agreement dated 20th March 2007 is subsisting and binding qua the parties and the Plaintiff is entitled to seek directions from this Court against the Defendants for specific performance of the same. It is submitted that if the interim reliefs sought by the Plaintiff are 8 not granted to him, grave and irreparable harm, loss, damage, injury and prejudice will be caused to the Plaintiff. It is submitted that in view of the aforestated conduct of the Defendants, the Plaintiff is unable to shift his dental clinic to the suit premises. If the reliefs sought by the Plaintiff are granted, it will not cause any harm, loss, damage, injury or prejudice to the Defendants who have kept the suit premises vacant and locked since a substantial period of time. It is submitted that the balance of convenience is in favour of the Plaintiff. It is also submitted on behalf of the Plaintiff that since the suit premises is admittedly lying locked and vacant, this Court should at the interim stage allow the Plaintiff to use the said premises on such terms and conditions as this Court deems fit and proper. 4. Though affidavit-in-reply sought to be tendered on behalf of Defendant No.1 is not taken on record, this Court informed the Advocate for Defendant No.1 that she is free to make legal submissions in the matter. However, the only submission made by the Advocate for Defendnat No.1 is that the Plaintiff is not entitled to any reliefs in the notice of motion since the Plaintiff failed to make the balance payment of Rs. 58,00,000/- on or before 10th April 2007, as set out in the Memorandum of Understanding / Agreement dated 20th March 2007. This argument advanced on behalf of Defendant No.1 9 deserves to be forthwith rejected. The Plaintiff has set out in the plaint that Defendant No.1 had agreed to obtain necessary No Objection Certificate from the society and effect the transfer on or before 10th April 2007 and hence, it was mentioned in the Memorandum of Understanding that the balance payment of Rs. 58,00,000/- is to be paid on or before 10th April 2007. This is supported by the letter dated 20th June 2007 written by Defendant No.1 himself in his capacity as a Director of Defendant No.3, forwarding an amount of Rs. 25,000/- being transfer premium to the society admittedly paid by the plaintiff, and requesting the society to issue their No Objection Certificate letter to the defendants to enable them to sell the suit premises to the Plaintiff who is already introduced to the society as desired by the society. It is, therefore, clear that the Plaintiff is right in his contention that he had agreed to pay Rs. 58,00,000/- to the defendants on or before 10th April 2007, since the defendants had represented to the Plaintiff that they will obtain the necessary No Objection Certificate from the society and also effect the transfer on or before 10th April 2007. It is obvious that the Defendants have not insisted on the balance payment of Rs.58,00,000/- not only on 10th April 2007 but also thereafter, since as can be seen from the letter dated 20th June 2007 written by Defendant No.1 to the society, until 20th June 2007 the share certificates in respect of the suit premises stood in the name of the partnership i.e. “ORBIT” and were not even 10 transferred in the name of Defendant No.3, i.e. “Orbit Trade Fairs & Tours (P) Limited”. Admittedly, there is not a single letter from the Defendants calling upon the Plaintiff to pay the balance of Rs.58,00,000/- on the ground that the same has become due and payable on 20th April 2007, under the Memorandum of Understanding/ Agreement dated 20th March 2007. It is, therefore, clear that Defendant Nos. 1 and 2 in view of their disputes inter-se have not pursued the matter with the society any further and have thereby failed to perform their part of the contract for which the Plaintiff cannot be held responsible. Atleast, Defendant No.2 has been honest with the Court and has in his affidavit-in-reply set out the correct position in the matter and submitted to the orders of the court. However, Defendant No.1 has tried to raise the aforestated dishonest defence, which stands rejected. The balance of convenience is also in favour of the plaintiff. 5. Under the circumstances, I pass the following order :- (i) The Plaintiff shall within a period of six weeks from today deposit the balance amount of Rs.58,00,000/- with the Prothonotary and Senior Master of this Court. (ii) Upon the said amount being deposited, the Prothonotary and Senior Master shall invest the said amount in a fixed deposit of a Nationalised Bank, renewable every year 11 until disposal of this suit. (iii) Pending the hearing and final disposal of the suit , the defendants, their agents, servants and/or any person claiming through them are restrained by an order of temporary injunction from selling, transferring or creating third party interest in respect of the suit premises situated at shop No.6, Three View Co-operative Society, Veer Savarkar Marg, Prabhadevi, Mumbai-400 025. (iv) If the Plaintiff fails to deposit the balance amount as directed in clause (i) above, the injunction order granted in clause (iii) above shall stand vacated without further reference to this Court. (v) After the Plaintiff deposits the said balance amount as directed in clause (i) above, the Plaintiff will be at liberty to move an application before this Court seeking permission to use the suit premises on such terms and conditions as this Court deems fit. It is clarified that such application when made will be decided by this Court on its own merits. 6. Notice of motion is accordingly disposed of with no order as to costs. [ S.J.KATHAWALLA, J. ]