1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO.2164 OF 2007 IN SUIT NO.1576 OF 2007 Devang C. Goradia ....Plaintiff V/s. Kishan K. Punjabi ....Defendant Ms.Armin Wanderwalla with Mr.Hiren Mehta and Ms.Gouri Mali i/b Mr.Akshay Vani for the Plaintiff. Mr.Mayur Khandeparkar i/b M/s.Kanga & Co. for the Defendant. CORAM : S.J. VAZIFDAR, J. DATE : 7TH OCTOBER, 2009. P.C. :- 1. The suit is filed for specific performance of an M.O.U. dated 19.1.2007 entered into between the Plaintiff and Defendant No.1 and as allegedly modified by oral agreements on 4.3.2007, 8.3.2007 and 11.3.2007. The Notice of Motion is for the usual interlocutory reliefs in such a suit. Under the M.O.U. the Plaintiff had agreed to purchase the suit flat for a consideration of Rs.94,50,000/-. Admittedly, a sum of Rs. 5,00,000/- has been paid by the Plaintiff to Defendant No.1. 2(A). Under clause 4(d), an amount of Rs.9,50,000/- was to be paid by cheque by the Plaintiff to Defendant No.1 on getting the N.O.C. from the society within seven days of the receipt of the N.O.C., failing which the 2 amount of Rs.5,00,000/- was to stand forfeited. Under clause 4(c) of the M.O.U., the balance amount of Rs.80,00,000/- was to be paid by the Plaintiff to Defendant No.1 on signing all the papers and upon the Plaintiff being put in possession. The final agreement was to be executed and registered after the said final payment which was to be made within thirty days from the date of the N.O.C. failing which the amount of Rs.5,00,000/- was to be forfeited. (B). It appears that the name of the first Defendant’s mother was also on the share certificate. The share certificate issued by the society in respect of the said flat stood in the name of the first Defendant’s mother who had expired on 5.1.2002 before the said M.O.U. was signed. The following portion of clause 4(c) of the M.O.U. is relevant :- “This present MOU will remain valid for a period of 30 (thirty) days from the date of obtaining the NOC from the society by the Vendor. The Purchaser would arrange the total consideration amount as stipulated above within the said period of 30 (thirty) days or otherwise the transaction will stand cancelled and a token money of Rs.5,00,000/- (Rupees five lakh only) shall be forfeited by the Vendor. It has been mutually agreed by both the parties that if the Vendor is unable to obtain the NOC from the society within a period of 30 (thirty) days from the signing of this MOU. Then this MOU will stand cancelled and the Vendor shall return to the Purchaser the total amount paid till that date. However the Purchaser can demand the said token of Rs. 5 lakhs and if the same is not paid within three (three) day, there will pay additional interest to be calculated at the rate of 18%. However, this period of 30 (thirty) days starting 3 from the signing of this MOU to get NOC from the society is extendable by a period to decide by both the parties mutually. It has been specifically agreed by and between both the parties that the Vendor shall execute an Indemnity Bond and Affidavit and also issue a public notice in certain news papers for the satisfaction of the Purchaser.” 3. Defendant No.1 was unable to obtain the N.O.C. from the society. He therefore, by his letter dated 3.3.2007 addressed to the Plaintiff stated that the Plaintiff was aware that the Secretary of the Society was very rigid about the rules ; that they had agreed to sign a MOU valid for thirty days, to watch the reaction of the Secretary and his demands for the N.O.C. and that the Secretary now also wanted the succession certificate which would take about four to six months. In view thereof, Defendant No.1 stated that he would not like to keep the deal open for that long a time. Therefore, in accordance with the M.O.U. and in view of the above circumstances, he stated that he and his wife decided not to sell the flat and to return the token amount of Rs.5,00,000/-. He further stated that upon his return from abroad, they would try and close the deal again. 4. The above extract from clause 4(c) of the M.O.U. does indicate that if Defendant No.1 was unable to obtain the N.O.C. from the society within thirty days from the date of this M.O.U., the M.O.U. would stand cancelled. It was thereafter extendable only mutually by the Plaintiff and Defendant No.1. Thus on a plain reading of clause 4(c), the M.O.U. stood terminated in view of the inability of Defendant No.1 to obtain the N.O.C. from the society within thirty days. 4 5. It is however contended that the M.O.U. stood modified. Firstly, it is alleged that on 4.3.2007, a meeting took place between the Plaintiff and Defendant No.1 whereat, Defendant No.1 agreed to complete the transaction and simultaneously to proceed with the necessary action for obtaining the succession certificate, clearance of the entire outstanding dues of the society and obtaining the N.O.C. from the society. It is further contended that the first Defendant No.1 also orally agreed to act on an irrevocable power of attorney and an indemnity bond as well the transfer forms to protect the Plaintiff’s interest. 6. The letter dated 8.3.2007 said to refer to this oral agreement however, does not contain an unconditional agreement on the part of the Plaintiff to pay a sum of Rs.80,00,000/- on as is where is basis. Indeed it says nothing about the payment of the amount at all. 7. In paragraph 10 of the plaint, it is alleged that at a meeting held on 11.3.2007, between the brokers, the Plaintiff and Defendant No.1, it was orally agreed that the Plaintiff would carry out the transaction on an as is where is basis. It is pertinent to note that even this oral agreement refers to the modification of the transaction on as is where is basis limiting it to the parties entering into an agreement to sell by which Defendant No.1 would take steps to obtain a succession certificate and that Defendant No.1 would authorize the Plaintiff to proceed by a power of attorney. There is not a whisper about when the payment of the balance consideration of almost Rs.90,00,000/- was to be made. 8. It is difficult to accept the case of the oral agreement modifying the written agreement. In these circumstances, the Plaintiff must be 5 relegated to claim for damages if he ultimately succeeds in the suit. 9. I have come to this conclusion despite the fact that the agreement between Defendant No.1 and Defendant No.2 inspires little confidence. One factor alone is sufficient to support the Plaintiff’s case at least prima-facie that the transaction may not be genuine. The alleged agreement between Defendant No.1 and Defendant No.2 is dated 18.5.2007 i.e. exactly four months after the M.O.U. The consideration under this agreement is only Rs.46,00,000/- which is about half the consideration mentioned in the M.O.U. Further the advocate of Defendant No.1 by a letter dated 24.3.2007 addressed to the Plaintiff, stated that he was advised to have the pay order encashed and to forfeit the same. What is important to note is that this letter states that if the Plaintiff is still interested in having the M.O.U. implemented, Defendant No.1 would consider the Plaintiff’s proposal to negotiate the fresh agreement value in terms of clause 3 therein. It defies logic to presume that Defendant No.1 was suggesting a fresh agreement value with the Plaintiff lower than the value mentioned in the M.O.U. Further it is obvious that from an earlier letter which was written that Defendant Nos.1 and 2 had already entered into the alleged agreement between themselves. This is evident from the fact that a sum of Rs.4,00,000/- was paid by Defendant No.2 to Defendant No.1 on 25.3.2007. It does appear to me that Defendant Nos.1 and 2 have entered into this agreement only to obviate the Plaintiff enforcing his rights, if any, under the M.O.U. That the agreement has been registered does not by any stretch of imagination indicate that the Court ought to accept the value stated therein to be genuine. Indeed Defendant No.1’s advocates 6 said letter dated 24.3.2007 agreeing to negotiate a “fresh agreement value” indicates Defendant No.1 in fact expected a higher rate than that agreed upon in the agreement dated 19.1.2007. 10. However, as I found that prima-facie the Plaintiff is not entitled to specific performance the genuineness or otherwise of the agreement between Defendant Nos.1 and 2 cannot be a ground for granting an injunction. However in view of my having come to the conclusion prima- facie about the agreement between Defendant Nos.1 and 2, not being genuine the Plaintiff would have a charge on the property in respect of the sum of Rs.5,00,000/- paid in advance. In these circumstances, both, Defendant Nos.1 and 2 would be liable for the said amount. Defendant No. 2 would also be liable for the same but only to the extent of the value of the flat even in the event of specific performance of the agreement being refused. They must therefore deposit the amount in Court. 11. By an ad-interim order dated 22.8.2007, Defendant No.2 was restrained from taking possession of the said flat. It is however, contended that Defendant No.2 had taken possession of the said flat prior to the ad- interim order namely dated 18.5.2007. By an order dated 28.1.2008, a Court Receiver was appointed in respect of the suit flat. Unfortunately, the Court Receiver did not take possession of the said flat. It appears that the Court Receiver wrongly attempted to take forcible possession despite the order dated 28.1.2008 directing him to take only symbolic possession. 12(i). The Notice of Motion is dismissed. (ii). The Plaintiff is at liberty to file a lis-pendence. (iii). The Plaintiff shall be entitled to forthwith withdraw the amounts 7 deposited in this Court with interest, if any, thereon without prejudice to his rights and contentions in the suit. (iv). Defendant Nos.1 and 2 shall deposit a sum of Rs.5,00,000/- in this Court. The same shall be invested in fixed deposit of a nationalized bank initially for a period of three years and thereafter for like periods of three years each. (v). The order dated 28.1.2008, appointing the Court Receiver however shall continue upto and inclusive of 31.12.2009 or till the amount of Rs.5,00,000/- together with interest at 18% p.a. is deposited either by Defendant No.1 or Defendant No.2. It is made clear that this order will not prevent the Court Receiver in the meantime from taking symbolic possession of the flat as directed by the order dated 28.1.2008.