*1* nms.319.10 kps IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO.319 OF 2010 IN SUIT NO.2292 OF 2009 M/s Maruti Vikas Enterprises. ..Plaintiff -Versus- Jintendra N. Patel @ Pokar and another. ..Defendants .......... Mr.S.U.Kamdar, Senior Counsel a/w Ms.K.C.Sidhwa i/b J.J.Thakkar, for the Plaintiff. Mr.Diwakar Dwivedi for the Defendant No.1. Mr.Ajay Panicker i/b Ajay Law Associates, for the Defendant No.2. .......... CORAM : S.C.DHARMADHIKARI, J. DATE : 27th September, 2010. P.C. 1 This is a suit filed by the Plaintiff M/s Maruti Vikas Enterprises seeking a declaration that the Development Agreement dated 21.04.2005 (Exhibit-C to the plaint) is valid, subsisting and binding upon the Defendant No.1 and he is liable and bound to comply with the obligations contained therein which are in respect of the Immovable property. That immovable property is more particularly described in the schedule to the agreement and in prayer clause (a) of the plaint. 2 The next relief that is claimed is of a decree of specific performance of this agreement and a direction to the Defendant No.1 to do all acts, deeds and things so as to specifically perform this agreement. 3 The other declaration that is claimed is with regard to the *2* nms.319.10 legality and validity of the notice dated 03.08.2009 and further notices published in the news papers "Janmabhoomi" and "Free Press Journal" on 04.08.2009. 4 The facts, very briefly stated, are that the property which is described at page No.3 of the plaint is owned by the Defendant No.1. On this immovable property/land there was structure/building known as "Pokar Niwas". The Defendant No.2 is a partnership firm registered under the Partnership Act and carrying on business as Builder and Developer. 4 Various representations leading to the execution of the development agreement are set out and it is then contended that the Defendant No.1 granted the development rights in favour of the Plaintiff and this development rights contemplated carrying on construction of ground and upper floors by utilizing the entire permissible Floor Space Index (FSI) and also Transferable Development Rights (TDR) in respect of the said land as permissible under the Municipal Corporation Rules and Regulations so also as per the building plans that may be sanctioned by the Bombay Municipal Corporation. 5 It is the case of the Plaintiff that the Defendant No.1 stated that the property can be developed by construction of multistoryed building consisting of ground and upper floors and the Defendant No.1 will retain with him the entire retained premises being 44% (Retained Area) of the total area constructed i.e. to say total constructed area less 56%. The constructed area required to be provided to the tenants/occupants will form part of the retained area. 6 It is the case of the Plaintiff that on execution of the agreement, Rs.2 lacs have been paid and in paragraph No.15 of the plaint it is asserted that the Plaintiff infact has paid total amount of Rs.6 lacs. In paragraph Nos.16 and 17 of the plaint, it is stated as under:- *3* nms.319.10 “16) Plaintiff states that under the said Development Agreement dated 21st April 2005 (Exhibit-C), it was the responsibility of Defendant No.1 to settle with the tenants/ occupants of the said property Pokar Niwas and to provide them transit accommodation. However, Defendant No.1 faced certain difficulties in arriving at agreement with the tenants/ occupants, and kept on requesting for time to finalize the matter with the tenants/ occupants. Whenever Defendant No.1 requested Plaintiff, the partners/ representatives of Plaintiff remained present while negotiating with any tenant/occupant and the consent of some tenants/ occupant were obtained. The Defendant No.1 could not make any substantial progress in the said matter, although he repeatedly sought time from the Plaintiff for negotiating with the tenants/ occupants. Ultimately the Defendant No. 1 requested Plaintiff to deal and negotiate with the tenants/ occupants as Defendant No.1 was unable to make any substantial progress in respect of the said issue. 17) Acting upon the said request and as the condition of the building had become very dangerous, Plaintiff agreed to negotiate and deal with tenants/ occupants strictly in order to assist the Defendant No.1 and without any variation of original obligation on Defendant No.1 to deal with said tenant/ occupants. Accordingly, the partners/ representatives of Plaintiff had meetings and discussions with various tenants/ occupants, and the efforts of Plaintiff resulted in many of the tenants/ occupants of Pokar Niwas entering into an agreement with Plaintiff for Permanent Alternate Accommodation in order to facilitate the work of redevelopment of the said property.” 7 Thus, it is the case of the Plaintiff that the Defendant No.1 represented that there are 40 units which are occupied by the tenants/ occupants as per the list annexed to the development agreement. Out of these 40 units, several tenants/ occupants have entered into agreements with the Plaintiff thereby they confirmed that the structure "Pokar Niwas" is in dilapidated condition and they will vacate and handover the possession of their respective tenements to the Plaintiff and accept *4* nms.319.10 permanent alternate accommodation as stated in the said agreements, in the new building to be constructed on the said plot. In paragraph Nos.19 and 20 of the plaint, it is stated that there are 22 agreements which the Plaintiff has executed with the tenants between the period 01st January to 03rd January, 2009. The names of tenants/ occupants together with their rooms are set out in paragraph No.20 and thereafter, it is alleged that the development agreement is duly registered. It is also alleged that the tenants/ occupants have vacated their respective premises. The Plaintiff has alleged that the agreements have been acted upon because the compensation has also been paid to some of the tenants / occupants, the details of the same are set out in paragraph Nos.24 and 24-A. It is, then, alleged that the building being in dangerous condition, the Bombay Municipal Corporation issued a notice dated 01.06.2007. After this notice was issued the partners of the Plaintiff were repeatedly requesting the Defendant No.1 to expedite the process of settling the matter with the tenants/ occupants so that the work could be commenced. Ultimately, the Defendant No.1 informed the Plaintiff that he was unsuccessful in settling the matter with the tenants and authorized the Plaintiff to negotiate and deal with the tenants/ occupants. The payments that are made are referred to in paragraph No.28 and then, it is alleged that most of the tenants have stopped using and occupying the premises and only few of them remained at site. 8 It is in such circumstances it is alleged that somewhere in December, 2008 the Plaintiff came to know that without knowledge and consent of the Plaintiff, the Defendant No.1 entered into a MoU with the Defendant No.2. The Defendant No.1, thereafter, approached the Plaintiff and inquired as to what is the position and it was informed that he entered into a MoU dated 30.04.2007 with the Defendant No.2. Even the *5* nms.319.10 Defendant No.2 had filed a suit being Suit No.2020/2008 against the Defendant No.1 for specific performance of the MoU, that suit was withdrawn. Later on, Suit (Lodging) No.3695/2008 was filed by the Defendant No.2 for the same reliefs. The details of the agreement/ MoU are set out in paragraph No.30 of the plaint. Even prior conduct of the Defendant No.1 has been referred to. The allegations in the suits filed by the Defendant No.2 are then referred to and finally it is asserted that the Plaintiff's rights would take precedence over other transactions. 9 The plaint has been amended and what the Plaintiff has impugned is termination of the development agreement by a letter dated 03.08.2009. In that behalf what the Plaintiff has asserted is the step taken including filing of suits against some of the tenants for recovery of possession and settlements therein. Thus, it is asserted that several steps have been taken and majority of the tenants have been persuaded by the Plaintiff to accept alternate accommodations to facilitate redevelopment of the property. Therefore, in such circumstances, what the Plaintiff has alleged is that all ingredients of Section 53A of the Transfer of Property Act have been satisfied inasmuch as they have been put in possession and that several steps have been taken including to settle the matter with the tenants/ occupants, the agreements in that behalf are being relied upon. In such circumstances the suit has been filed and the Notice of Motion has been moved for interim reliefs. 10 Mr.Kamdar, learned Senior Counsel appearing on behalf of the Plaintiff has taken me through the development agreement and particularly covenants and obligations of the Defendant No.1 therein. Mr.Kamdar submits that if the agreement is perused as whole it would be apparent that it is not the development agreement but an agreement for development-cum- sale. In such circumstances, the right in immovable *6* nms.319.10 property has been created. Once the right in immovable property has been created then the specific performance of such an agreement can be granted by this Court and the Plaintiff having proved prima facie that the Plaintiff always being ready and willing to perform it's obligations and has infact performed the same, then, interim injunction as prayed should be granted. Mr.Kamdar has also invited my attention to the averments in the plaint and has contended that when the tenants have been persuaded by the Plaintiff to move out from the dilapidated structure and accept compensation or temporary premises in lieu of permanent alternate accommodation, then, it would be equitable, fair, just and proper to grant an interim injunction as prayed. Mr.Kamdar has assailed the termination of agreement by urging that the letter dated 03.08.2009 does not list any breaches and what has been alleged therein is that the Plaintiff trespassed in the property without permission of the Defendant No.1 and broke open the locks in respect of Room Nos.29, 30, 31 on the second floor and Room No.43 on the third floor and committed theft of furnitures; and this is something for which the Plaintiff cannot be held to be guilty. There is no question of trespassing upon the property inasmuch as what the Plaintiff has done is in furtherance of the development agreement. It is the Defendant No.1 who has put the Plaintiff in possession of the property in pursuance of the development agreement under which consideration has been received by the Defendant No.1. Therefore, there cannot be any wrongful and illegal act much less criminal intent of the Plaintiff and therefore, prima facie, termination of the development agreement is wrongful and illegal. Further having retained the benefits under the agreement and the Plaintiff having spent money and incurred expenses, the Defendant No.1 has abruptly deprived the Plaintiff of the benefits that may flow from the development agreement. Such acts and further an *7* nms.319.10 agreement with the Defendant No.2, so also, legal proceedings arising there from, make this a fit case for grant of an interim injunction. For all these reasons, Mr.Kamdar submits that the motion be made absolute. 11 Mr.Dwivedi, learned counsel appearing on behalf of the Defendant No.1, submits that the Plaintiff has not approached this Court with clean hands. The Plaintiff has suppressed several material facts and has made false allegations. Further the development agreement is dated 21.04.2005 and the Plaintiff has approached the Court after a considerable delay and he is dis-entitled from any equitable and discretionary reliefs. It is alleged that the Defendant No.1 was in possession of four rooms namely Room Nos.29, 30 and 31 on second floor and Room No.43 on third floor and had stored certain books of antique collection, furniture, fixtures, etc.. The Plaintiff forcibly broke open the locks and doors of these rooms and took possession thereof in collusion and connivance with the Police authorities, therefore, the Defendant No.1 had to approach the Police Station. It is stated that there was no authority in favour of the Plaintiff to enter upon the property because the development agreement itself postulates that upon receipt of Commencement Certificate the owner shall grant licence to the developer to enter into and upon the said property for the purpose of carrying out the development work by using FSI and TDR. It is only after the commencement certificate is obtained and the Defendant No.1 is intimated in that behalf that the Plaintiff could have entered upon the property. However, termination of agreement is for serious breaches namely entering upon the property without any authority and trespassing in some of the rooms occupied by the Defendant No.1 and breaking open the locks and there is also allegation of forgery by making a false affidavit by forging the signature of the Defendant No.1 and therefore, the *8* nms.319.10 complaint is also filed to the Police Station. 12 Mr.Dwivedi further submits that it was responsibility of the Defendant No.1 to settle with the tenants/ occupants of the said property and provide transit accommodation to them. There was no difficulty faced in arriving at settlement with the tenants. The responsibility of the Defendant No.1 to settle with the tenants is only after the Plaintiff obtains the commencement certificate from the Bombay Municipal Corporation, therefore, there was no question of the Plaintiff being approached by the Defendant No.1 with a view to remove the tenants. The Plaintiff's assistance was never sought for negotiation with the tenants/ occupants. Therefore, there was no question of the Plaintiff negotiating and entering into agreements with the tenants. Mr.Dwivedi submits that the Defendant No.1 has denied that the Plaintiff has entered into agreements with 27 tenants. The agreements, according to him, are for 27 rooms but there are only 24 tenants. Therefore, there is no question of any registered agreement being entered into with the tenants. In such circumstances, the Plaintiff wrongfully entered the property without any permission from the Defendant No.1 and committed the highhanded acts such as commencing the demolition work at site and therefore, the agreement has been rightly terminated and such termination is binding upon the Plaintiff. 13 After this matter was argued for sometime it was brought to the notice of Mr.Dwivedi that the Defendant No.1 is facing a suit for specific performance of identical document not only from the present Plaintiff but even from the Defendant No.2 M/s Deep Construction Company as the Defendant No.2 has also filed the suit against the Defendant No.1. On instructions, Mr.Dwivedi submits that both the agreements with the Plaintiff as well as the Defendant No.2 have been terminated. On the last occasion, Mr.Dwivedi submitted that he would *9* nms.319.10 obtain instructions from the Defendant No.1 inasmuch as the Defendant No.1 who was personally present in the Court on the last occasion told that he is willing to compensate the Plaintiff so also the Defendant No.2 for the alleged expenses incurred by them and he would deposit in this Court appropriate sum so as to show their bona-fides. Mr.Dwivedi then prayed for time to file an affidavit. Accordingly, when the matter was adjourned till today for orders, Mr.Dwivedi tenders an affidavit of the Defendant No.1 which records as under :- “1. After conclusion of argument in the Notice of Motion No. 319 of 2010 in the above suit by respective advocates, it was offered by me through my advocate that I am ready to deposit the sum of Rs.35,00,000/- (Rupees Thirty-Five Lakhs only) or such other amount as directed by the Hon’ble Court in this Hon’ble Court within one month from the date of order and on depositing the aforesaid amount, the plaintiffs will accept the termination of agreement and general power of attorney both dated 21st April, 2005 and plaintiffs withdraw the suit by putting an end to the litigation. 2. In view of above, I undertake to deposit Rs.35,00,000/- (Rupees Thirty-Five Lakhs only) in this Hon’ble Court within one month from the date of order of this Hon’ble Court. The plaintiffs may be permitted to withdraw the suit and the said amount of Rs.35,00,000/- (Rupees Thirty-Five Lakhs only) from this Hon’ble Court and removed themselves, their servants, agents, etc. from the suit premises.” 14 Mr.Kamdar states that the Plaintiff is not ready and willing to abide by any of the statements made in this affidavit and reproduced above. There is no settlement to accept the money and close the matter. In other words, the Plaintiff is not agreeable to accept termination of agreement but would like to proceed with the suit and therefore, this Court may pass appropriate order particularly when there is rejoinder affidavit filed by the Plaintiff denying any wrongful acts committed and *10* nms.319.10 reiterating the steps taken including the agreements with the tenants. 15 After having heard the learned counsel for the parties at great length and with their assistance perusing the plaint and the proceedings, what emerges is that there is an agreement of which the specific performance is claimed. The agreement itself is styled as “Development Agreement”. The Defendant No.1 is described therein as “owner” and the Plaintiff as “developer”. The recitals themselves convey that the owner has purchased the land and structure by a Deed of Conveyance executed in his favour by one Ramesh Mohanlal and five others on 09.11.1992 and there is structure known as “Pokar Niwas” which consists of 40 units. A list of tenants in respect of the structure is at Annexure-1 to this agreement. It is the owner who has stated that he is desirous of constructing a new multistoreyed building consisting of ground and upper floors of residential premises and shops by utilizing the entire permissible FSI and also the entire permissible TDR in respect of the land and any other construction permissible under the Municipal Rules and Regulations as per the building plans to be hereafter sanctioned. The owner shall utilize a part of the permissible FSI personally and shall retain such premises which are described as retained premises for his exclusive benefit. The owner is desirous of authorizing some suitable developer to purchase TDR and to load the same on the said property. The structure on the property is to be demolished for construction of a new building and the existing tenants/ occupants shall be provided with the transit and thereafter, permanent alternate accommodation in lieu and instead of the existing premises occupied by them. It is the owner who has caused building plans for the purposed building to be prepared and submitted through the developer to the Municipal Authorities and the owner is desirous of developing the property through the developer. *11* nms.319.10 16 Understanding and accepting all clauses, the Plaintiff has offered to carry out development work by using FSI and TDR as desired by the owner and represented that he has requisite expertise and funds. The agreement further recites that the owner has granted permission to develop the land by utilizing the FSI and TDR but the clauses are very clear inasmuch as the entire ownership rights including the title of property is with the owner and the owner shall retain with him the entire retained premises being 44% of the total area constructed that is to say total constructed area less 56%. This 56% is described as constructed area that is to be provided to the tenants but it will form a part of retained area. The developer shall be entitled to net area of total constructed area as per agreed terms. Clauses 3, 4 and 5 of this agreement read thus:- “3. The Owner hereby grants to the Developers the right to develop the said land more particularly described in the Schedule hereunder written by constructing thereon the proposed multistoreyed building by utilising permissible FSI and the T.D.R. on the said plot such T.D.R. to be purchased and acquired by the Developer at his own cost from the open market. The said Development of the said plot shall be carried by the Developer at his own risk and costs in accordance with the building plans and specifications to be hereafter duly sanctioned by the municipal and other concerned authorities. 4. Simultaneously with the said development of the said plot, the owner shall construct on the said land the Retained Premises at the cost of the owner and for the exclusive benefit of the owner. Such development will be carried out by the owner as per building and specifications that may be sanctioned by the Municipal authorities. The said retained premises are more particularly described in the second schedule hereunder written. 5. As regards the construction as aforesaid of the Retained Premises as also the construction of the remaining portion of the proposed building, it is mutually agreed and understood as under: (a) Since it is not feasible for the owner to carry out *12* nms.319.10 construction of the Retained Premises simultaneously with and independently of the construction of the remaining portion of the new building to be carried out by the Developer and to ensure a homogeneous and uniform development of the entire construction to be carried out by the developers and the owner on the said land, the developer will cause the said Retained Premises being 44% of the total constructed premises, for the owner, which includes the area for providing alternate accommodation to the tenants/ occupants to be constructed through the services of the same Architects, Engineers, Consultants, Contractors, Suppliers etc. which are engaged by the Developer for the construction of the remaining portion of the new building to be carried out by the developer on the said land. For the purpose of construction of the Retained Premises by using the FSI of the said plot the Developer herein will be the contractors employed by the owner and shall construct the Retained Premises and handover the same to the Owner and shall be entitled to receive the construction cost which is taken into account while deciding the ratio between retained premises and developers premises. (b) The Developer shall at his cost obtain necessary approvals and sanctions in respect of the entire new building comprising of the retained premises as also the remaining portion of the new building to be carried out by the developer. (c) The specifications, amenities and facilities to be provided in the retained premises shall be as per the list at Exh-A hereto. (d) The above understanding is strictly to ensure smooth development of the entire construction to be carried out on the said property.” 17 The agreement further recites that the developer shall construct and handover the retained premises to the owner and in addition, shall pay a sum of Rs.2 lacs. Clause-10 of the said agreement *13* nms.319.10 recites that all charges and expenses for settlement with the tenants shall be paid by the owner and the developer shall not be liable for the same. The owner shall provide to the tenants the transit accommodations and bear expenses. Clause-11 permits the owner to grant licence to the developer after receipt of commencement certificate. Further acts are to be performed on receipt of Intimation of Disapproval (IoD). 18 There is a general power of attorney executed and it is then alleged that there have been agreements for permanent alternate accommodations which have been entered into with the tenants. 19 Prima facie, the above being the nature of the Agreement it is difficult to hold that this is an Agreement of Sale of the Immovable property. The transaction and the agreement itself permits the owner to hold the property even after the Plaintiff develops it. The Plaintiff is styled as a contractor. Therefore, straightaway and without any further material, it cannot be held that this is a Development-cum-Sale Agreement. That the suit agreement is of such nature will have to be prima facie established and proved. Without entering into any larger controversy and proceeding on the basis that the Plaintiff may have spent some amounts and incurred expenses for persuading the tenants to enter into agreements relied upon but the fact remains that there are serious disputes and differences and the agreement has been terminated.