NMS2344-09 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO.2344 OF 2009 IN SUIT NO.1598 OF 2009 K.Marmo Pvt.Ltd. .. Plaintiff Versus National Flask Industries Ltd. .. Defendants Mr.Zal Andhyarujina with H.N.Thakore & Jyoti Ghag i/b. Thakore Jariwala & Associates for plaintiff Mr.R.S.Apte, Senior Advocate with N.R.Bubna for defendant No.1. CORAM : S.C.DHARMADHIKARI, J. DATE : 19th November 2010. P.C.: 1] The plaintiff is a company incorporated under the Companies Act, 1956 so also is the defendant No.1. 2] First defendant as owner of the property (Industrial plot) more particularly described at Exh. A to the plaint, agreed under an MOU to sell it to the plaintiffs on the terms and conditions particularly set out NMS2344-09 2 therein. The MOU and the supplemental writing are annexed as Exh.B and C to the plaint. Under the MOU, a total sum of Rs.2.95 Crores was to be paid by plaintiff to defendant No.1. 3] Clause 3 of the MOU states that the property was mortgaged to State Bank, Shamrao Vitthal Bank and North Canara Bank and to release from the mortgage the Banks’ NOC was required. The obligations of the first defendant are set out. These obligations, according to plaintiff, are absolute and unconditional. The NOC could not be obtained but the case of the plaintiff is that such a condition was capable of being waived and was accordingly waived by them. Therefore, by mutual agreement, time to obtain NOC was extended. It is in such circumstances, when the time is extended and the extension is yet to come to an end, there is no question of terminating the said MOU. In any event the alleged termination is based on the fact that the bank resorted to Securitisation Act and initiated measures under section 13 thereof. However, the application under Securitisation Act has succeeded and the bank has been directed NMS2344-09 3 to make over the possession of the property to the first defendant. It may be that an Appeal from the said order of the DRT is pending before the DRAT. However, mere pendency of the same does not mean that the property cannot be disposed of or in any event further steps under the MOU cannot be taken. 4] It is in such circumstances that the suit is filed for a declaration and Mr.Andhyarujina, learned Counsel appearing for the plaintiff has invited my attention to the terms and conditions of the MOU and particularly in relation to the obligation of the first defendant. He submits that the Vendors confirm that the property is mortgaged with the bankers but they will obtain, within two weeks from the execution of the MOU, a discharge from their bankers to the fact that the monies which have been disbursed against the security have been repaid and the banks have no charge. Alternatively, the vendor was to obtain NOC from these banks that they have released the mortgaged property. NMS2344-09 4 5] Mr.Andhyarujina submits that the letter dated 29th July 2006 from the Vendor – first defendant to the plaintiff makes it clear that the NOC was to be obtained within two months and it has still not been obtained and it confirms the mutual agreement that the NOC will be obtained at the earliest. Thereafter, Mr.Andhyarujina submits that the letter addressed to the first defendant would confirm that there was an agreement and the time has been extended. Therefore, the NOC should be obtained. The letter from the second defendant would also confirm this. It is in such circumstances that the termination sought to be effected by the letter of 28th March 2009 and particularly on the ground stated in paras 3 and 5 thereof is illegal. Mr.Andhyarujina submits that if the condition is to the benefit of the purchaser – plaintiff, then it is capable of being waived in law. He relies upon the principles in that behalf under the Contract Act and some decisions of the English Court. 6] On the other hand, Mr.Apte, learned Senior Counsel appearing for first defendant submits that the correspondence preceding the NMS2344-09 5 termination would show that the parties could not comply with the respective obligations until 2009. They waited for good three years and more but the agreement could not be implemented. Mr.Apte submits that it has been stated as to what attempts were made by the vendor to obtain the NOC. However, the agreement had to be called off because the securitisation application before the DRT had to be filed. Prior thereto, as pointed out on affidavit, the bank resorted to the Securitisation Act and issued public notice. Further, there is a reference to the settlement talks but on account of failure to obtain discharge certificate due to the circumstances beyond the control of the Vendor that the agreement / MOU stood frustrated. 7] On instructions, Mr.Apte submits that although the securitisation application No.33 of 2007 has succeeded, the bank has preferred an appeal therefrom. The possession of the immovable property has been retained by the bank and it is yet not handed over. In these circumstances, no useful purpose will be served by granting an injunction order. NMS2344-09 6 8] With the assistance of the learned Counsel for parties, I have perused the plaint and annexures so also the affidavits placed on record. The first defendant in the affidavit in reply has pointed out that the plaintiffs proposed in the month of March 2006 to purchase the property of the company i.e., first defendant. The first defendant made it clear that at that time itself that the property was mortgaged to several banks for credit facilities. It was also informed that the company is negotiating with the bankers for one time settlement. The plaintiff thoroughly examined the documents relating to facilities and, thereafter, agreed to purchase the property. However, the terms and conditions clearly point out that only after the discharge letter or NOC from the bankers is received, the obligation would be performed. He MOU, according to first defendant, was depending upon the discharge or NOC. The efforts undertaken by the first defendant to enter into settlement are set out and it is then contended that the bankers did not agree and adopted aggressive attitude and have taken possession of the property under the SARFAESI Act. NMS2344-09 7 9] Although, it may be true that Application No.33 of 2007 has been allowed, yet, the appeal therefrom is pending. In that behalf, it could be said that the proceedings are still continuing. Moreover, physical possession of the property has been taken over by the banker. The fact remains that vendor was unable to obtain the discharge or the NOC. There are several banks involved and in fact they have been impleaded as parties as well. To my mind, therefore, MOU which was entered into in 2006 has been terminated in March 2009 by the notice of termination dated 20th March 2009, it cannot be said that no attempts were made by the first defendants to obtain discharge letter or the NOC. The matters with regard to the bankers are to the knowledge of the plaintiffs. In such circumstances, prima facie, it cannot be said that the termination is unlawful or that the challenge to the same is pending, interim injunction should be issued, restraining defendant Nos.1 from disposing of or transferring the property. Mr.Andhyarujina would submit that the plaintiff is ready and willing to take over the property on as is where is basis but that is not the term NMS2344-09 8 and condition of the MOU. I must consider the matter within the ambit of the terms and conditions of the MOU. If that is the document which alone decides the issue, at this prima facie stage, I am of the view that the stand taken by the defendants that the agreement cannot go through because the proceedings under the Act and their inability to obtain the letter of discharge or NOC cannot be said to be prima facie contrary to the terms and conditions of the MOU or vitiated by the conduct of the first defendant in any manner. The first defendant so also the plaintiff waited for considerable period of time before termination letter was issued by the defendants. In such circumstances, prima facie, the plaintiff is not entitled to any interim reliefs. 10] Suffice it to note that that the argument that the terms and conditions of the MOU are to the benefit of the plaintiff and, therefore, capable of being waived is concerned, first of all there is no pleading to that effect. Secondly, it may be that such waiver is permissible in law, however, from the material placed on record, NMS2344-09 9 prima facie, it cannot be said that such a condition was understood as being for the benefit of the plaintiff and, therefore, waived by the plaintiff. All the time, it was understood that the obligation was to obtain the NOC in two months but considering that number of banks were involved and time was taken to convince each of them, the period was extended. It is on that basis that the termination is challenged. For all these reasons, even this contention cannot be accepted. 11] In the result, the notice of motion fails and the same is accordingly dismissed. (S.C.DHARMADHIKARI, J)