-:1:- IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORDINARY ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION SUIT SUIT SUIT NO. 1480 OF 1986 NO. 1480 OF 1986 NO. 1480 OF 1986 1. Col. Surinder Kapur, M.V.C.(Retd.), } of Bombay, Indian Inhabitant, } residing at "Meera", East Avenue, } Santacruz (West), Bombay - 400 054. } } 2. Shri Sandip kapur of Bombay, } Indian Inhabitant, residing at } "Meera" East Avenue, Santacruz(West), } Bombay - 400 054. } } AND } } 3. Smt. Renu Kapur of Bombay, } Indian Inhabitant, residing at } 29, Niharika Bungalows, Opp. } Himatlal Park, Ambawadi, } Ahmedabad - 380 015. } Plaintiffs. V/s. 1. M/s. Systems Communication, } a Partnership Firm, registered } under the Indian Partnership Act, } 1932, and having its place of } Business at 20-A, Tulsiani Chambers, } Nariman Point, Bombay - 400 021. } } 2. Shri Shyam Dwarkasingh Chhabria } of Bombay, Indian Inhabitant, } Residing at 137, Maker Tower ‘B’ } Cuffe Parade, Bombay - 400 005. } } 3. Shri Deepak Dwarkasingh Chhabria } of Bombay, Indian Inhabitant, } Residing at 131, Maker Tower‘B’, } Cuffe Parade, Bombay - 400 005. } } 4. The Court Receiver, High Court, } Bombay, having his office at } Bank of India Building, M.G.Road, } Bombay - 400 023. } } 5. Abud-Dhabi Commercial Bank Ltd., } a Banking Company, incorporated } under the laws in force in the } United Arab Emirates, and having } its Registered Office in Abu-Dhabi } and a Branch Office at Rehmat } Manzil, 75-B, Veer Nariman Road, } Bombay - 400 020. } -:2:- 6. ICICI Bank Ltd. } Registered office at Landmark, } Race Course Circle, } Vadodara - 390 007. } } AND } } 7. The State Bank of Mysore Ltd., } a Banking Company, incorporated } under the Companies Act, 1956 } and having its Registered Office } at Mysore, Karnataka, and the } Main Branch Office at ‘Mittal } Court’, ‘C’ Wing, 224, Nariman } Point, Bombay - 400 021. } Defendants. ..... Mr. S.P. Dalal i/b. Dalal & Co. for the Plaintiffs. Ms. Mamta Sadh with Ms. Sarika Mehra i/b. LJ Law for Defendant Nos. 1 to 3. Mr. Rahul Kapoor i/b. Kanga & Co. for Defendant No.5. ..... CORAM CORAM CORAM : A.S. OKA, J. : A.S. OKA, J. : A.S. OKA, J. DATE DATE DATE : 23rd AUGUST 2007. : 23rd AUGUST 2007. : 23rd AUGUST 2007. ORAL ORAL ORAL JUDGMENT : JUDGMENT : JUDGMENT : . The subject matter of the suit is office premises No.6-B, on the 2nd floor of the building known as "Arcadia", situated at Plot No. 195, Nariman Point, Bombay 400 021. 2. The first prayer in the suit is for declaration that all mortgages, charges, securities, arrangements or any other interest purportedly created or entered into by the Defendant Nos.1,2 and 3 or any of them, in favour of a third party in respect of the suit premises are null and void, invalid, illegal, -:3:- unenforceable in law and not binding on the Plaintiffs. A declaration is also claimed that purported equitable mortgages alleged to have been created by Defendant Nos.1,2 and 3 or any of them in favour of the 5th and 6th Defendants in respect of the suit premises are null and void, invalid, illegal, unenforceable at law and not binding on the Plaintiffs. Various other declarations are prayed by the Plaintiffs. They have also prayed for a decree of possession of the suit premises. A prayer is also made directing the Defendants to pay arrears of interest/compensation for the period from 1st June 1983 till 31st July 1984 together with interest thereon. A prayer is also made against the 1st, 2nd and 3rd Defendants for payment of arrears of outgoings in respect of the suit premises with interest. A prayer is made for a direction against the 1st to 3rd Defendants for payment of mesne profits at the rate of 11,000/- per month from the date of the filing of the suit till the date on which the vacant possession of the suit premises is handed over to the Plaintiffs. 3. It will be necessary to refer to the case made out by the parties in their pleadings. The Plaintiffs claim to be the owners of the suit premises. According to the case of the Plaintiffs, by an agreement in writing dated 26th November 1979 executed by them in favour of the 1st Defendant, they -:4:- agreed to sell the suit premises to the 1st to 3rd Defendants for consideration of Rs.5,17, 500/-. The 1st to 3rd Defendants paid a sum of Rs.48,000/- to the Plaintiffs at the time of execution of the said agreement. According to the case of the Plaintiffs, it was agreed that the balance consideration of Rs.4,69,500/- was to be paid on or before 1st December 1984. It is alleged that the said time limit was the essence of the contract. It is stated that as per the agreement the possession of the suit premises was handed over to the 1st to 3rd Defendants. The suit premises was to be transferred in the name of the purchasers after payment of the entire balance consideration on or before 1st December 1984. The agreement further provided that if the 1st to 3rd Defendants fail to pay the balance consideration within the stipulated time, the agreement shall stand cancelled and the purchasers under the agreement shall hand over vacant and peaceful possession of the suit premises to the Plaintiffs and against delivery of possession, the Plaintiffs will refund the amount of Rs.48,000/-. 4. It is stated that it was agreed between the parties that pending the payment of balance consideration, the purchasers under the agreement will pay to the Plaintiffs a sum of Rs.4,000/- per month being the compensation on the said consideration on or -:5:- before 10th day of every month in advance commencing from 1st December 1979. It was also agreed that till the payment of balance consideration by the 1st to 3rd Defendants, the said Defendants shall be liable to pay all the Municipal Taxes, maintenance charges, lease rent and all other outgoings payable in respect of the suit premises to the Society/builders regularly and punctually. The agreement further provided that in the event the purchasers under the agreement committing default in payment of any two instalments of Rs.4,000/- per month, the Plaintiffs shall be entitled to terminate the agreement after giving 60 days notice in writing to the purchasers under the agreement. It is further provided that on such termination being made, the purchasers under the agreement shall be liable to hand over vacant and peaceful possession of the suit premises to the Plaintiffs and in such event the Plaintiffs shall refund the earnest money of Rs.48,000/-. 5. It is alleged in the plaint that in July 1984 the Plaintiffs visited the suit premises. At that time the Plaintiffs discovered that the suit premises were locked and on its door there was a board stating that the suit premises were under a pledge in favour of the 7th Defendant. According to the case of the Plaintiffs it was learnt that the 1st to 3rd Defendants had created a mortgage in respect of the -:6:- suit premises in favour of the 5th and 6th Defendants and the said two Defendants had filed suits for recovery of their alleged dues and for enforcement of the securities in their favour. The Plaintiffs learnt that the 2nd and 3rd Defendants had obtained cash credit facility from the 7th Defendant against the pledge of certain goods allegedly belonging to them and allegedly stored in the suit premises. The Plaintiffs learnt that the said two Defendants allowed the 7th Defendant a lock and key arrangement in respect of the suit premises and thus, the 7th Defendant had put up a board as aforesaid that the suit premises were under its lock and key. 6. The Plaintiffs by their Advocate’s notice dated 3rd August 1984 addressed to the 1st to 3rd Defendants terminated the suit agreement dated 26th November 1979 and called upon the said Defendants to forthwith vacate and hand over quiet and peaceful possession of the suit premises to the Plaintiffs. The said Defendants were also called upon to pay to the Plaintiffs a sum of Rs.1,38,596.65 towards the arrears of monthly compensation/interest payable on the balance consideration and arrears of outgoings in respect of the suit premises upto the period ending 31st July 1984. -:7:- 7. The 5th and 6th Defendants had filed Suit Nos. 2286 of 1983 and 2626 of 1983 respectively against the 1st to 3rd Defendants. On a Notice of Motion taken out by the 5th Defendant in Suit No. 2286 of 1983, by the order dated 5th March 1984 the 4th Defendant herein (the Court Receiver, High Court, Bombay) was appointed as the Receiver in respect of the suit premises. Even in the suit filed by the 6th Defendant, by an order dated 9th July 1984, the 4th Defendant was appointed as the Receiver of the suit premises. The 7th Defendant also filed a Summary suit No.2483 of 1983 and obtained a money decree against the 2nd and 3rd Defendants. 8. The order of learned Single Judge of this Court passed in Suit No.2286 of 1983 appointing the Court Receiver was confirmed by the Division Bench of this Court and the said order was affirmed by the Apex Court with a modification. It was directed that the Court Receiver shall not dispossess the 1st to 3rd Defendants but will allow them to continue in possession as the agents. The 1st to 3rd Defendants were directed not to create any third party interests in respect of the suit premises without permission of the Court. 9. It must be stated that the suits filed by the 5th and 6th Defendants ended in compromise. By order -:8:- dated 22nd June 1999 passed by this Court in Notice of Motion No.1585 of 1998 taken out in the present suit, the 4th Defendant was appointed as the Receiver in respect of the suit premises. By the said order dated 22nd June 1999, this Court made the said Notice of Motion absolute in terms of prayer clauses (b), (c), (d) and (e). This Court directed the 1st to 3rd Defendants to pay/deposit with the 4th Defendant - Court Receiver the arrears in respect of the suit premises pursuant to clause 10 of the agreement dated 26th November 1979 with effect from 27th April 1984. This Court directed the 1st to 3rd Defendants to make payment as computed in Receiver’s Report dated 27th February 1998 upto 1st January 1998. They were also directed to pay the arrears from 1st January 1998 till the date of passing order. The amounts were directed to be deposited within the time granted in the said order. 10. The suit was contested by the 1st to 3rd Defendants by filing their written statement. It was contended by the 1st to 3rd Defendants that they were put in possession of the suit premises in part performance of the suit agreement dated 26th November 1979. It is stated that the said Defendants were always ready and willing to carry out their part of the obligations under the suit agreement. The said Defendants alleged that though they were ready and -:9:- willing to carry out their part of the obligations under the suit agreement, the Plaintiffs insisted that the balance consideration need not be paid but the said Defendants should continue to pay a sum of Rs.4,000/- per month. It is stated that on account of the insistence on the part of the Plaintiffs, the said Defendants paid to the Plaintiffs a sum of Rs.4,000/- per month almost for a period of 4 years. It is contended that since the said Defendants realised the device of the Plaintiff to make money at the cost of the said Defendants, on or about May 1983 the said Defendants offered to pay the entire balance consideration to the Plaintiffs. It is stated that the Plaintiff refused to receive a balance consideration and therefore the said Defendants had no option but to stop making payment of sum of Rs.4,000/- from June 1983. It is stated that the said Defendants were required to face multiple litigations and therefore, they could not write any letter offering balance consideration to the Plaintiffs. The said Defendants denied that they had no right, title or interest in respect of the suit premises. The said Defendants denied that the Plaintiffs were entitled to recover possession of the suit premises. 11. The 5th Defendant filed written statement. The 5th Defendant pointed out that a consent decree was passed in Suit No.2286 of 1983 filed by the 5th -:10:- Defendant. The 6th Defendant also filed written statement. The 6th Defendant relied upon the decree passed by this Court in the year 1988 in Suit No.2626 of 1983 filed by the said Defendants in this Court. The said Defendants contended that an equitable mortgage was created by the 1st to 3rd Defendants in respect of the suit premises in favour of the said Defendants. 12. On 2nd April 2002, this Court framed the issues. The said issues read thus :- (1) Do the Plaintiffs prove that the Plaintiffs have validly terminated Agreement of Sale dated 26th November 1979 for defaults and breaches committed by the Defendants 1 to 3 as per the Exhibit ‘C’ to the plaint ? (2) Do the Plaintiffs prove that the appointment of the Court Receiver in Suit No.2626 of 1983 at the instance of 5th, 6th and 7th Defendants was wrongful and illegal ? (3) Do Plaintiffs prove that the Defendant Nos.5 & 6 were and are deemed to have been aware that the Defendant Nos.1 to 3 or any of them have no rights, titles and interests in the suit premises ? -:11:- (4) Do the Plaintiffs prove that the purported possession of the suit premises by Defendant Nos.1 to 3 or any of them to 5th Defendant and/or 7th Defendant is illegal, wrongful and consequently the lock and key purported to have been put on the suit premises by them was also wrongful and illegal as alleged in paragraph No.9 of the plaint ? (5) Do the Plaintiffs prove that the Plaintiffs are entitled to forfeit earnest money Rs.48,000/- (Rupees forty eight thousand only) paid by the Defendant Nos.1 to 3 ? (6) Do the Plaintiffs prove that the Plaintiffs are entitled to recover from the Defendants or such of the Defendants the possession of the suit premises ? (7) Do the Plaintiffs prove that the Defendant Nos.1 to 3 are liable to indemnify them against all claims and demands in respect of the outgoing of the suit premises and to procure all necessary discharge ? (8) Do the Plaintiffs prove that the Plaintiffs are entitled compensation and/or mesne profit ? -:12:- (9) Whether the suit is barred by the Law of Limitation ? (10) Do the Defendant Nos.1 to 3 prove that suit is bad for non-joinder of the parties as alleged in para 1 of the written statement ? (11) Do the Defendant Nos. 1 to 3 prove that suit is bad for mis-joinder of parties ? (12) In absence of Notice under Section 80 of Civil Procedure Code the suit is not maintainable and liable to be dismissed with costs ? (13) Whether the suit is bad and not maintainable for want of notice under Section 80 of the Civil Procedure Code ? (14) Do the Defendant Nos.1 to 3 prove that the Plaintiffs insisted them not to pay balance consideration but to pay sum of Rs.,4000/- (Rupees four thousand only) per month ? (15) Whether the Defendant No.6 proves that the suit false, frivolous and vexatious as -:13:- alleged in paragraph 1 of the written statement ? (16) Do the Plaintiffs prove that the mortgage/charge created in favour of Defendant No.6 by Defendant Nos. 1 to 3 in respect of the suit property is null and void or illegal, invalid or unenforceable or not binding on the Plaintiffs ? (17) Whether the suit is maintainable in respect of the suit premises in the absence of a challenge to the decree dated 2.9.1988 passed by the Court in Suit No.2626 of 1983 filed by Defendant No.6 ? (18) Do the Defendant Nos. 1 to 3 prove that they were ready and willing to perform their obligations under the suit agreement dated 26.11.1979 as claimed in paragraphs 5 and 11 of the written statement ? (19) Do the Defendant Nos. 1 to 3 prove that they offered to pay to the Plaintiffs and the Plaintiffs refused to receive the balance consideration as alleged in paragraph 9 of the written statement ? -:14:- (20) Do the Plaintiffs prove that they sent/caused to be sent the notice dated 3.8.1984 to Defendant Nos. 1 to 3 as stated in paragraph 8 of the plaint ? (21) Do the Defendant Nos. 5 & 6 prove that valid and subsisting equitable mortgage has been created by Defendant Nos. 1 to 3 on the suit property in their favour ? (22) What order ? 13. The Plaintiffs examined the 1st Defendant by filing his affidavit in lieu of examination in chief. The Plaintiffs also examined one Shri Lalitkumar Gupta as their second witness. The 1st to 3rd Defendants examined the Second Defendant as their witness by filing his affidavit in lieu of examination in chief. None of the other Defendants have led any evidence. The Plaintiffs have placed various documents on record in respect of their claim. 14. The learned Counsel appearing for the 1st to 3rd Defendants has taken me through the relevant portion of the pleadings and notes of evidence. The learned Counsel for the said Defendants invited my attention to the Issues settled by this Court. She -:15:- pointed out that Issue Nos.1,5 and 20 relate to the alleged termination of the suit agreement by the Plaintiffs. She pointed out that Issue Nos.4,6,8,14,18 and 19 relate to the possession of the suit premises and Issue Nos. 3, 16 and 21 are on the legality and validity of the alleged mortgage. She submitted that in so far as Issue Nos.2 and 7 are concerned, the burden is on the Plaintiff to prove the said issues. She pointed out that in so far as Issue Nos.5,9,10,11 and 12 are concerned, the burden was on the 1st to 3rd Defendants to prove. She pointed out that Issue Nos.16 and 17 relate to the 6th Defendants. 15. The learned Counsel for the 1st to 3rd Defendants submitted that the said Defendants are protected by Section 53-A of the Transfer of Properties Act, 1882 (hereinafter referred to as the said Act of 1882). She invited my attention to averments made in the Written Statement as well as the statement made in affidavit in lieu of examination in chief of the 2nd Defendant. She submitted that the specific case of the Defendants is that though they were ready and willing to pay the balance consideration within the time stipulated in the said agreement, the Plaintiffs insisted that the said amount need not be paid and the said Defendants should continue to pay sum of Rs.4,000/- per month. She invited my attention to assertion made in paragraph 7 -:16:- of the affidavit in lieu of examination in chief of the 2nd Defendant. She submitted that it is clearly stated by the 2nd Defendant that the Plaintiffs were not traceable and could not be contacted in the year 1983. She submitted that in so far as the said assertion is concerned, there is no cross examination of the said witness made by the Advocate for the Plaintiffs. She pointed out that there is no cross examination made on the readiness and willingness of the 1st to 3rd Defendants to comply with their obligations under the suit agreement. 16. She submitted that the 1st to 3rd Defendants were admittedly put in possession of the suit premises in part performance of the suit agreement and the said Defendants have taken steps in furtherance of the said agreement by paying sum of Rs.48,000/- as earnest money and by paying sum of Rs.4,000/- per month to the Plaintiffs till May 1983. She submitted that as the readiness and willingness has been pleaded and proved by the 1st to 3rd Defendants, the protection under Section 53-A of the said Act of 1882 is certainly available to the said Defendants. She invited my attention to orders dated 21st May 1998 and 15th February 2005 passed by this Court and she submitted that compliance has been made by the 1st to 3rd Defendants by making payment of outgoings and other amounts in respect of the suit premises to the 4th -:17:- Defendant - Court Receiver. She submitted that the alleged termination of the suit agreement purportedly made by the Plaintiffs is not legal and proper. She contended that the termination is merely on the failure to pay the balance consideration. She pointed out that as the Plaintiffs themselves were not interested in taking balance consideration from the 1st to 3rd Defendants, there could not have been termination on the ground of non-payment of sum of Rs.4,000/- per month by the 1st to 3rd Defendants. She pointed out that if the Plaintiffs had accepted the balance consideration from the 1st to 3rd Defendants within the time provided in the suit agreement, there was no question of the said Defendants paying a sum of Rs.4,000/- per month. In fact for a period of 4 years, the Plaintiffs have taken sum of Rs.4,000/- per month from the said Defendants. She submitted that as the 1st to 3rd Defendants are protected by doctrine of part performance and as the alleged termination of the suit agreement is not legal and valid, the Plaintiffs are not entitled to any relief. She relied upon various decisions of this Court, Apex Court and other High Courts. A reference to which is made in later part of this judgment. 17. The learned Counsel for the Plaintiffs submitted that there was a clear default made by the -:18:- 1st to 3rd Defendants in payment of sum of Rs.4,000/- per month. He invited my attention to orders dated 23rd October 1997 and 5th December 1997 passed by this Court. It is pointed out that after the 1st and 3rd Defendants were appointed as the agents of the Court Receiver, they have committed defaults and they have not paid the dues or the charges of the Receiver. He invited my attention to various clauses in the suit agreement. He submitted that there is already a settlement between the Plaintiffs and the 5th Defendant. He submitted that in any event no evidence has led by the 5th and 6th Defendants to show that there is a valid mortgage created in their favour by the 1st to 3rd Defendants. He, therefore, submitted that the Plaintiffs have proved their case. 18. The learned Counsel for the 1st to 3rd Defendants pointed out that the prayer made in the plaint for grant of mesne profits at the rate of Rs.11,500/- is totally misconceived and the same cannot be granted. The learned Counsel for the 1st to 3rd Defendants submitted that the said Defendants were not served with notice dated 3rd August 1984. 19. I carefully considered the submissions made by the learned Counsel appearing for the parties. I have also perused the various decisions relied upon by the learned Counsel for the 1st to 3rd Defendants. I have -:19:- perused the pleadings and notes of evidence. 20. It will be necessary to refer to the terms of the suit agreement. The suit agreement has been admitted in evidence and marked as Exhibit P-2. Clause 5 of the said agreement records that