1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION Amk NOTICE OF MOTION NO. 4122 OF 2009 IN SUIT NO. 2207 OF 2000 Jet Speed Developers Pvt. Ltd. & Ors. .. Plaintiffs Vs. Le Chateau Co-op. Housing Society Ltd. & Ors. .. Defendants Mr. A. Bookwala with Jaydeep Raut i/b Ranjit & Co. for the Plaintiffs. Ms. Rajani Iyer with Mr. Kirit N. Damania & Co. for Defendant Nos.2 & 3. Mr. R. D. Suvarna for Defendant No.1. CORAM : MRS. R. S. DALVI, J. DATE : 7th April, 2010. ORAL ORDER 1. 1st plaintiff is a company carrying on business as Developers and Contractors. The 2nd and the 3rd plaintiffs are the directors of the 1st plaintiff (plaintiffs). The plaintiffs were to develop the property of the 1st defendant society. They have been allotted two flats in the new construction which was to be put up in the 1st defendant society premises. The 2nd and the 3rd defendants (defendants) are the members of the 1st defendant society (society) and were allotted two flats in the new construction of the society which was to be put up by the plaintiffs under the Resolution passed at the meeting of society held on 2 24.04.1996. 2. The plaintiffs have sued for damages of Rs.2 crores upon defamation and for an injunction against the defendants from making any claim, demand or claiming any right, title and interest in the two flats allotted to the plaintiffs. 3. This Notice of Motion is taken out by the defendants for rejection of the plaint for want of cause of action on the date of filing of the suit only in respect of the relief of injunction sought. 4. The plaintiffs entered into an agreement with the society for development and construction of a tower in the society premises on 18.06.1996. The plaintiffs claim that the construction began on 16.04.1997. The plaintiffs claim that Rs.77.4 lacs came to be due and payable to the plaintiffs by the society on 15.05.1998. 5. The plaintiffs have not shown the commencement of the construction by the Commencement Certificate obtained before 16.04.1997. 6. On 30.03.1998 the society addressed a letter to the 2nd defendant that he had defaulted in payments due to the society for more than 60 days and accordingly incurred disqualification to be a member and hence had ceased to be a member. 7. In the Annual General Meeting (AGM) of the society held on 24.07.1998, the society terminated the membership of the defendants in respect of the two flats allotted to them being Flat Nos. 701 & 702 in the new 3 construction to be put up in the society’s premises referring to the society’s letter dated 21.07.1997. The society also resolved to make the allotment of the said flats to the plaintiffs in lieu of the outstanding payment of the society. 8. On 3rd September, 1998 the society wrote to the plaintiffs that they were allotted Flat Nos.701 & 702 in lieu of their outstanding dues. 9. Though not a part of the plaint, the defendants have stated in their affidavit-in-reply that on 19.12.1998 a Resolution came to be passed by the society to re-transfer the flats to the plaintiffs. This was confirmed in the Managing Committee Meeting of the society held on 17th January, 1999. The plaintiffs are shown to have admitted that Resolution in the written statement filed by them in a dispute filed by the defendants in the 2nd Co-operative Court, Mumbai being dispute No.CC/II/26 of 1999 and in an affidavit filed by another member of the society one K. C. Mankani on behalf of the society. 10. The defendants have challenged the Resolution passed at the AGM held on 24.07.1998 on the ground that it was not ratified in the next AGM held on 30.05.1999 of the society. 11. In the above dispute filed by the defendants, they failed to get any interim order as the plaintiffs herein were not made parties thereto. 12. The defendants took inspection of the records of the society after the dispute came to be filed. They have been shown that TDR was purchased by the plaintiffs on 4 24.05.1999 and the Commencement Certificate was obtained by the plaintiffs from the Mumbai Municipal Corporation (MMC) on 08.06.1999. They claim that the construction actually commenced only in June, 2002. 13. From the inspection of the records of the society more specially of the “J” Register required to be maintained by the society showing the names of the members of the society as on specified dates and the counterfoils Share Certificates of the Share Certificates issued by the society and kept by the society in the ordinary course of its conduct, the defendants claim that on 24.07.1998 when the resolution for allotment of the flats earlier allotted to the defendants being Flat Nos.701 & 702 was passed allotting the said flats to the plaintiffs, the plaintiffs were not members of the society and could not be allotted the said flats. The defendants claim that these flats were to be allotted only to the members. 14. Ms. Iyer on behalf of the defendants took me through the “J” Register and the Share Certificates in this behalf. 15. The Share Certificate No.8 showing the name of Smt. Tulsa Chetandas Mankani for Flat No.402 dated 29.12.1985 is shown to be transferred to the plaintiffs on 06.07.2001 pursuant to Resolution passed at the AGM of the society held on 21.08.2000 read with Resolution passed at the AGM held on 24.07.1998. Ms. Iyer claimed that this endorsement shows that even the Resolution was not passed in 1997 when the plaintiffs claim to have acquired 5 rights. The Share Certificate No.14 marked part of Exh.E to the affidavit-in-reply of the defendants has been issued in the name of the plaintiffs only on 3rd March, 1999. 16. The suit has been filed on 5th June, 2000. On the date of the suit the Share Certificate had been issued to the plaintiffs. 17. The Share Certificate No.11 in respect of Flat No. 601 has been issued in the name of the 2nd defendant since 29.12.1985. Similarly Share Certificate No.12 for Flat No.602 has been issued in the name of 3rd defendant on 29.12.1985. Since defendant Nos.2 & 3 were the members of the society they were to be allotted Flat Nos.701 & 702. They were required to make payment of TDR for the construction of another building in the society Premises. They contend that the document of the plaintiffs inspected by them shows that TDR was purchased in 2000. Hence they contend that there was no amount payable by them in 1997 or 1998 when the notice dated 30.03.1998 was issued to the defendants or when the Resolution came to be passed in AGM held on 24.07.1998 which they have challenged. 18. They also contend that the documents of the plaintiffs inspected by them show that the Commencement Certificate was obtained only on 08.06.1999 and hence the plaintiffs’ case that Rs.77.4 lacs was due and payable to the plaintiffs as on 15.05.1998 is false. 19. The defendants further contend that there are several members of the family of Mankani in the 1st defendant society. The plaintiffs are related to them. The 6 society has, therefore, in collusion with the plaintiffs wrongly sought to remove the 2nd and 3rd defendants as members. Ms. Iyer took me through Form “J” and the Share Certificate of the society to show me several members who are Mankanis. 20. The plaintiffs have sued on 15.06.2000. The defendants have filed their written statement on 24.12.2003. The written statement is filed after the inspection of the aforesaid documents is taken. Despite that the defendants have not taken up the contention that there was no cause of action in the suit on the date of the filing of the suit. In view of Commencement Certificate that has been obtained by the plaintiffs on 08.06.1999 and the TDR which is shown to be purchased on 24.05.1999, the defendants claim that no amount was due to the plaintiffs on 15.05.1998 as claimed by the plaintiffs and no amount was due and payable by the defendants on 24.07.1998 when the AGM was held and the allotment of Flat Nos.701 & 702 of the defendants was terminated. 21. Ms. Iyer contends that these facts have been brought to the notice of the defendants upon inspection of the documents of the society and of the plaintiffs. She contends that the plaintiffs were enjoined to rely upon and produce their documents showing the purchase of the TDR and the Commencement Certificate in the suit. She contends that on the date on which the plaintiffs’ membership was terminated by the Resolution passed in the AGM held on 24.07.1998 the plaintiffs were not 7 members. They were made members thereafter. No amount was due and payable by the defendants on account of the purchase of the TDR. A liquidated amount could be paid only after the TDR was purchased. Hence, the termination of the membership is illegal and wrongful and the plaintiffs could not have been made members on 24.07.1998 as per Resolution of 1st defendant society. 22. The Share Certificate of the plaintiffs shows that they were made members, however wrongfully, in 1999 prior to the filing of the suit. 23 This application is for rejection of the plaint. The plaint is required to be rejected under the provision of Order VII Rule 11 of the Civil Procedure Code. If the plaint does not disclose a right to sue the plaint could be rejected. The plaintiffs’ right to sue for injunction in respect of the suit Flat Nos.701 & 702 is upon allotment of the suit Flats which were initially allotted admittedly to the defendants. The plaintiffs claim that the suit Flat Nos.701 & 702 were not allotted to the defendants as that allotment would take place only upon payment of the amount for the flats which was not paid by the defendants. Though the plaintiffs claim that the allotment was made by the Resolution passed in the AGM held on 24.07.1998 and they are shown to have been made members in 1999 that claim of the plaintiffs would have to be agitated in the suit. The plaintiffs have been allotted the suit Flat Nos.701 & 702 upon the allotment made in favour of the defendants being terminated in lieu of their outstanding amounts. The issue of the 8 Commencement Certificate on 08.06.1999 would prima facie show that no amounts were outstanding on 24.07.1998 when the Resolution for allotment of the suit flats in favour of the plaintiffs came to be passed. 24. It will have to be seen whether merely upon the fact of the issue of the Commencement Certificate, which is indeed prima facie proof of the commencement of the construction, it could be concluded that there were no outstanding payments of the contractors before that date. It would be for the plaintiffs to prove the extent of the outstanding payment. It is not known whether that was for purchase of construction material or other purpose. It is not known whether these expenses were rightfully or wrongfully incurred by the plaintiffs. The plaintiffs would be liable to be cross-examined on that score. However it will be to much to non suit the plaintiffs before trial only because the Commencement Certificate is of the date after the date of the Resolution passed at the AGM held on 24.07.1998. 25. Of course the plaintiffs were not members when they were allotted the suit flats. The Resolution dated 24.07.1998 makes that position clear. The plaintiffs were outsiders but allotted the suit flats in lieu of the payment to be made by the society for the construction work. It will have to be seen at the time of trial whether allotment made to the plaintiffs when they were not members of the society would be void ipso facto on that ground. 26. As held by the Division Bench of this Court in 9 the case of M. V. “Sea Success I” Vs. Liverpool and London Steamship Protection and Indemnity Association Ltd. and another (AIR 2002 BOMBAY 151 the plaintiff must show a clear right to sue, the failure of which must necessarily entail in rejection of the plaint. The plaint must be rejected upon “the allegations in the plaint as they stand”, if it does not disclose any cause of action. For that purpose the Court is required to see the allegations made in the plaint itself and not go beyond it to see whether a bogus, wholly vexatious or frivolous litigation has been initiated by the plaintiff. 27. The plaint as filed in this case does disclose a cause of action. The cause of action is that amounts were due and payable to the plaintiffs. The amounts were due and payable by the defendants. Those amounts were not paid and hence the flats could not have been allotted to the defendants. The documents of the plaintiffs as also the society may disclose that amounts were then not payable by the defendants, but that is not a part of the plaint. Consequently it cannot be said that the cause of action was not disclosed in the plaint. 28. It must be appreciated that what must be seen by the Court for rejection of the plaint is that the plaint does not disclose the cause of action and not that the plaintiff has no cause of action for the suit. Hence, if the plaint discloses a cause of action even though there is indeed no cause of action, the suit would be dismissed, but after hearing ; the plaint cannot be rejected. If the plaint itself does not 10 disclose a cause of action, which can be seen only from the averments in the plaint, the plaint can be rejected before trial. Consequently the test is that if upon the allegations in the plaint being accepted as true also no case is made out for granting any relief, the plaint can be rejected. But the Court has not to see whether the claim made by plaintiff is likely to succeed at the time of the rejection of the plaint. In the case of Sea Success (Supra) referring to the judgment of the Supreme Court in the case of Mohan Rawale Vs. Damodar Tatyaba, (1994) 2 SCC 392 : (1994 AIR SCW 2028) and Vijay Pratap Singh Vs. Dukh Haran Nath Singh (AIR 1962 SC 941) the Division Bench of this Court held that the Court cannot enter upon a trial of the issues affecting the merits of the claim made by the plaintiff. It cannot take into consideration the defence or see whether the allegations are true in fact or whether the plaintiff will succeed in the claim made by him. Consequently in para 51 of the judgment in the case of Sea Success (Supra) the Court made a distinction between non disclosure of the cause of action and absence of the cause of action and held that the ground for rejection of the plaint is the failure to disclose the cause of action and not that there is no cause of action in the suit. 29. The argument of Ms. Iyer based upon the aforesaid documents shows that there is no cause of action in the plaint on the date the suit was filed. It does not show that the plaintiff has not disclosed a cause of action in his plaint. Seeing the absence of the cause of action would relate to appreciating the correctness or otherwise of the 11 allegations in the plaint. Seeing the non disclosure of the cause of action in the plaint would be only upon the averments made in the plaint without testing the correctness of such averments and taking those averments as true. 30. This is not a case for rejection of the plaint albeit for the relief of injunction only. It would be premature to prejudge the plaintiffs’ case. 31. The Notice of Motion is dismissed. No order as to costs. (R. S. DALVI, J.)