1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION APPEAL FROM ORDER NO. 578 OF 2006 W I T H CIVIL APPLICATION NO. 754 OF 2006 IN APPEAL FROM ORDER NO. 578 OF 2006 Ainamid Engineering & Metal Works P.Ltd .....Appellant V/s. Samson Controls P.Ltd and anr. .....Respondent --------- Mr.A.G.Damle i/by.M/s.D.S.K. Legal, adv.for appellant. Mr.Karl Shroff with Mr.Dushyant Pagare i/by. M/s.Dhruv & Co. adv.for respondent no.1. CORAM: SMT.R.P.SONDURBALDOTA, J. DATED: 14TH OCTOBER, 2008. P.C.: 1. This appeal arises from an order granting interim reliefs in a suit for specific performance. The appellant is original defendant no.1. Respondent no.1 is the original plaintiff and respondent no.2- Maharashtra Industrial Development Corporation (for short referred to as 'MIDC') is original defendant no.2. 2 2. Respondent no.1 filed the instant suit for specific performance of the Memorandum of Understanding dated 19th January, 2006 and for possession of the suit property. It also sought a permanent injunction to restrain respondent no.1 inter-alia from creating any third party rights over the suit property or parting with its possession. As regards respondent no.2-MIDC, it seeks permanent injunction to restrain MIDC from granting any permission or “no objection” for transfer of the suit property by the appellant in favour of any party other than respondent no.1. The appellant is the lessee of MIDC in respect of the suit property vide lease deed dated 27th February, 1984. The appellant opposes the relief of specific performance of the Memorandum of Understanding on the ground that the same is not enforceable in law. It is secondly contended that, time was essence of the contract under the Memorandum of Understanding. Respondent no.1 could not maintain the time schedule provided in the agreement and therefore it is not entitled for specific performance. 3. Since both the contentions of the appellant arise out of the contents of the agreement, it is necessary to set out at this place in some detail the terms of the Memorandum of Understanding. The Memorandum of Understanding signed by the appellant and respondent no.1 describes the appellant as the 3 assignor and respondent no.1 as the assignee. The recital B of the agreement is in respect of the representations made by the appellant to respondent no.1. The representations relevant for the present purposes are that the original of the lease deed is available with the appellant. Respondent no.1 shall at its own cost obtain requisite permission of MIDC for assignment of the lease in its favour. The appellant shall provide all help to respondent no.1 in procuring the same, as well as, for making the suitable changes in the record of Maharashtra State Electricity Board (M.S.E.B), Collector, Municipal Authorities and Revenue Authorities etc. Clause-2 of the agreement provides for sale of the suit property by the appellant to respondent no.1 for total consideration of Rs.2,15,00,000/-. The sale is subject to terms of the Memorandum of Understanding and the appellant making out marketable title to the suit property acceptable to respondent no.1. Clause-3 concerns the schedule for payment of the consideration. As per the schedule, respondent no.1 was to pay a sum of Rs.43,00,000/- as earnest money to the appellant on the execution of the Memorandum of Understanding. The second installment of Rs.1,61,25,000/- was to be paid within 60 days of signing the Memorandum of Understanding, subject to, (i) receipt of the transfer order from MIDC by respondent no.1 and (ii) to the appellants putting respondent no.1 in vacant possession of 4 the suit property. The balance amount of Rs.10,75,000/- was to be paid after execution and registration of the deed of assignment. Under Clause-4A, the appellant, immediately on signing of the Memorandum of Understanding, was to forward either to respondent no.1 or their solicitors M/s.Dhruv & Company certified true copies of original documents of title for the purpose of prima-facie investigation into the title of the appellant. Clause-4B provided, that if required, the appellant shall produce the original documents of title for their verification by M/s.Dhruv & Company. Clause-5 of the Memorandum of Understanding, casts responsibility of issuing a public notice in the newspaper within seven days from execution of the Memorandum of Understanding inviting claims, if any, to the suit property. Clause-6 provided, that if the solicitors of respondent no.1 do not prima-facie accept the title of the appellant within 30 days of receiving the documents, the Memorandum of Understanding will come to an end and earnest money of Rs.43,00,000/- shall be refunded to respondent no.1 without interest, immediately. 4. The first payment of Rs.43,00,000/- as per the schedule was made by respondent no.1 to the appellant on execution of the Memorandum of Understanding. Respondent no.1 had issued public 5 notices in the newspapers on 28th January, 2006. No claim was received from any person in respect of the suit property in response to the advertisement. The appellant however failed to immediately forward certified true copies of the original documents of title to respondent no.1 or their solicitors M/s.Dhruv & Company for the purpose of prima-facie investigation into the title. It is seen that after waiting for some time, respondent no.1 wrote to the appellant reminding it of its responsibility under Clause-4A. However, the appellant responded by its letter dated 4th February, 2006 stating that the copies of the title documents i.e. lease deed dated 27th February, 1984, was provided to respondent no.1 at the time of signing of the Memorandum of Understanding. According to the appellant, that was the only document of title to the suit property. This letter cannot strictly be said to be compliance of Clause 4A of the Memorandum of Understanding. It is because, what is contemplated under Clause-4A is forwarding of certified true copies of the original documents of title. It is not the case of the respondent that the copy given at the time of signing the Memorandum of Understanding was a certified true copy. In any case, respondent no.1 by its letter dated 7th February, 2006 informed the appellant that upon going through the lease deed and U.L.C. order dated 1st December, 2005, it was noticed by its 6 solicitors that all the documents mentioned in the lease deed were not sent for investigation. Therefore, a request was made for certified true copies of the documents. Instead of complying with the request, the appellant sent letter dated 13th February, 2006 stating that it was unaware of the order dated 1st December, 2005 and it refused to produce the original deed of lease for inspection, despite, the specific provision made therefor at Clause-4B of the Memorandum of Understanding. The respondent thereafter by its letter dated 2nd March, 2006 contended that since the solicitors of respondent no.1 had not prima-facie accepted title of the appellant to the suit property, the Memorandum of Understanding had come to an end and forwarded a cheque in the sum of Rs.43,00,000/- towards refund of the earnest money to respondent no.1. Perusal of Clause-6 of the agreement, makes it clear that the period of 30 days specified therein, was to start from the date of receiving the documents by respondent no.1. The appellant neither complied with Clause-4A nor Clause-4B of the Memorandum of Understanding. Therefore, prima- facie the period of 30 days specified under Clause-6 did not commence at any time. As per the schedule of payment, at Clause- 3 of the Memorandum of Understanding, the second installment was to be paid within 60 days of signing the Memorandum of Understanding, but it was contingent upon receipt of transfer 7 order from MIDC by respondent no.1 and against the appellant putting respondent no.1 in vacant possession of the suit property. Since none of the two conditions were fulfilled, the time to make the payments of the second installment also did not arise. The contention of the appellant that time was essence of the contract cannot be accepted on a prima-facie view, since the appellant itself has not treated time to be the essence of contract. Clause-4A required the appellant to immediately forward certified true copies of original documents of title to respondent no.1 or their solicitors. This was not done by the appellant. Further, though Clause 3 provided for a period of 60 days for payment of the second installment, there is nothing on record to show that any steps were taken by the appellant to put respondent no.1 in vacant possession of the property. Mr.Shroff, learned counsel for respondent no.1, submits relying upon a decision of the apex court in the case of Govind Prasad Chaturvedi V/s. Hari Dutt Shastri and Anr. reported in A.I.R. 1971 S.C. page 1005, that though the contract fixes the time period within which the contract has to be performed, the same by itself does not make the stipulation as to time the essence of the contract. When a contract relates to sale of immovable property, it is normally presumed that time is not the essence of the contract. The intention to treat time as the essence of the 8 contract, must be evidenced by the circumstances which should be sufficiently strong to displace the normal presumption. In the instant case, it is seen that the conduct of the appellant shows that though the Memorandum of Understanding specified the period for the payment of money, as well as, prima-facie satisfaction of the title of the appellant, the same was not treated as essence of the contract. The appellant itself had not maintained the time line given in the Memorandum of Understanding. 5. It is contended by the appellant, that the agreement sought to be enforced being only a Memorandum of Understanding is not enforceable. It is prima-facie clear from the contents of the documents that though it is titled as an Memorandum of Understanding, it is infact an agreement of assignment of lease hold rights in the suit property to respondent no.1 for the consideration of Rs.2,15,00,000/-. In the above circumstances, there is no substance in the contention. 6. The learned trial judge has rightly appreciated all the aspects of the matter. He has further observed, that it is necessary to preserve the suit property during the pendency of the suit, so that appropriate orders can be passed at the time of final disposal of the suit. I find no need whatever to interfere 9 with the impugned order. Hence, the Appeal from Order is dismissed. 7. With the dismissal of the appeal from order, the Civil Application does not survive. The same is accordingly disposed off. [SMT.R.P.SONDURBALDOTA]