1 ao1140.11.sxw IN THE HIGH COURT OF JUDICATURE OF BOMBAY CIVIL APPELLATE JURISDICTION. Appeal from Order No. 1140 of 2011 WITH Civil Application No. 1517 of 2011 IN AO No. 1140 of 2011 M/s. Ronak Builders & Developers a Partnership Firm, through its Partner Mr. Vasant Devji Patel Flat No. B-702. President Park CHS Ltd. Sector No. 29, Vashi, Navi Mumbai 400 703. Through its partners: 1) Mr. Vasant Devji Patel 2) Mr. Jethalal Ranchhod Patel 3) Mr. Champshi Amba Charla ....Appellants (orig. plaintiffs) v/s. M/s. Scarlet Builders & Developers Shop No. 7 & 8, Mahavir Apartment, Plot No.20, Sector 42, Nerul (W), Navi Mumbai 400 706, through its Partners: a) Mrs. Vidya Dashrath Jaiswal b) Mr. Pulak Vinod Jayaswal 2. Mrs. Vidya Dashrath Jaiswal 3. Mr. Darshrath Nathuni Prasad Jaiswal address as above. 4. Mr. Nagesh Manohar Salvi r/at D-22, Satyajyoti CHS Ltd. Plot No. 39, Sector 42, Nerul (W), Navi Mumbai 400 706. 5. M/s. Seawood Heights Co-op. Hsg. Society Ltd. Plot No. 3, Sector 42, Nerul Node Navi Mumbai 6. Mr. P.K. Kazi 7. Mrs. Baby B. Tokade 2 ao1140.11.sxw 8. Mr. P.K. Gramopadhyay 9. Mr. A.K. Singre 10. Mrs. Geeta B. Mhatre 11. Mr. I.S.Kharkar 12. Mr. V.G. Kamothkar 13. Mrs. Alka S. Dhumde 14. Mr. Yogesh T. Ahire 15. Mr. A.A.Gaikwad 16. Mr. B.C. Wajekar 17. Mr. S.B. Dhole Respondents 6-17 being members of Respondent no.5, at M/s. Seawood Heights Co-op. Hsg. Soc. Ltd. Plot No.3, Sector 42, Nerul Node Navi Mumbai 400 706. 18. Mrs. Mathilda Thomas Correa r/at: Flat No.301, Sanskriti CHS Ltd. Plot No. 21, Sector 42, Nerul Node Navi Mumbai 400 706. 19. Mr. Sunil Chandrakant Surve c/o. M/s. Scarlet Builders & Developers 20. M/s. CIDCO of Maharashtra Ltd. CIDCO Bhavan, CBD Belapur, Navi Mumbai. 21. Navi Mumbai Municipal Corporation at Belapur Bhavan, CBD, Belapur, Navi Mumbai. ....Respondents (orig. Defendants) 3 ao1140.11.sxw Mr. Uday Warunjikar i/b. Dhir & Dhir Associates for the appellants. Mr. D. Madan, Sr. Counsel CORAM: R.M. BORDE, J. RESERVED ON: 22nd November, 2011 PRONOUNCED ON: 12th December, 2011 PC: The original plaintiff is taking exception to the order passed below Exhibit 5 in Special Civil Suit No. 576/2011 decided by Civil Judge Senior Division, Thane on 16th August, 2011. The plaintiff instituted suit against the defendants for following reliefs:- “ (a) this Hon’ble Court be pleased to hold and declare that the Suit Agreement being entered into by and between the Plaintiffs and the Defendant Nos. 1,2,3 and 5, as more particularly set out in paragraph no.14 of the Plaint with respect to the Suit Plot viz. Plot No.3, admeasuring 2159.78 square meters, lying and situate at Sector 42, Nerul, Navi Mumbai; is absolutely legal, valid, subsisting and binding upon the Defendants; (b) this Hon’ble Court be pleased to hold and declare that the Suit Development Agreement dated 28.1.2011, registered with the Sub-Registrar of Assurances at Thane, at Doc. Serial No. TNN5-00849 dated 28.01.2011 entered into and executed by and between the Defendant Nos. 1,2,3 and 5 inter-se, with respect to the Suit Property, is an absolutely illegal, unlawful, void ab-initio and not binding upon the Plaintiffs; (c) this Hon’ble Court be further pleased to Order and direct the Defendant No.1 and 5 to specifically perform their respective part of the Contract in favour of the Plaintiff and thereby assign and transfer the rights of development of, and construction on the Suit Plot unto, and to, and in favour of the said Joint Venture, more particularly set out in Para No. 12 of the Plaint above, by completing all the requisite formalities in that regard; 4 ao1140.11.sxw (d) In the event of failure of the Defendant Nos. 1 and/or 5 to specifically perform their part of the contract under the Suit Agreement, this Hon’ble Court be pleased to appoint some fit and proper person as the Court Commissioner, with the directions and authorities, to execute the Development Agreement of the Suit Property in favour of the said Joint Venture of the Plaintiffs by complying with all the necessary formalities in that regard; (e) the Defendant Nos. 1, 2, 3 and 5, including their respective agents, servants, representatives and/or any other person/s claiming through or under them be restrained by an Order of permanent injunction from carrying out or continuing with the work of development of and construction on the Suit Property; (f) The Defendant Nos. 1 to 3 & 5, including their respective agents, servants, representatives and/or any other person/s claiming through or under them be restrained by an Order of permanent injunction from dealing with or disposing off or creating any third party interest over the Suit Plot or any of the premises in the building proposed to be constructed thereon, in any manner whatsoever; (g) the Defendant Nos. 6 to 19 their heirs agents, servants, representatives and/or any other person/s claiming through or under them be restrained by an order of permanent injunction from dealing with or disposing off or creating any third party interest over their respective premises to be allotted to them in the building proposed to be constructed thereon, in any manner whatsoever; (h) the Defendant No. 20 & 21 including their officers, agents, representative, servants and any person claiming through them be restrained by an order of permanent injunction from granting any permissions, sanctions, authorizations etc including the Occupancy certificate to the Defendant No.5 in any manner of what so ever nature.” 2. Plaintiff is a registered partnership firm registered under the provisions of 5 ao1140.11.sxw Indian Partnership Act and carrying on the business of land development and building construction in and around Navi Mumbai. The defendant no.1 is also a partnership firm carrying on business of construction and development. The defendant no.2 and 3 are the partners of defendant no.1 whereas defendant no. 4 is the Mediator who took part in arriving at negotiations in respect of transaction between plaintiff and defendants 1to 5. Defendant no. 5 is a duly registered co-operative housing society under the provisions of Maharashtra Co-operative Societies Act. Defendants 6-17 are members of defendant no.5 who according to plaintiff have accepted payment in their own name and, therefore, are impleaded as party to the suit. Defendants 18 and 19 are purchasers of the flat who also according to plaintiff have accepted amount from him. According to plaintiff around February, March 2008 the partners of defendant no.1 firm through Mediator i.e. Defendant no.4 had made representation that they are engaged in business of building construction and propose to undertake the work of development of construction of the buildings for two registered Co-operative Societies M/s. Sneh-Bandh Co-operative Housing Society and Defendant no. 5 Society herein. It was also disclosed to the plaintiff that aforesaid two Societies were to get allotment of two distinct plots of land from CIDCO with a view to construct the multi- storeyed buildings for its respective members as well as for sale of remaining premises in the open market. The Society expressed desire to enter into development agreement. It was represented to the plaintiff by the defendant that they do not possess sufficient funds to undertake the project and as such plaintiff was requested to contribute for the project. According to plaintiff there was a joint venture agreement entered into between the plaintiff and defendants 2 and 3. The defendants 2 and 3 remained 50% partners in the firm and requested the plaintiff to raise necessary funds for the project. Believing upon the representation made by the defendants, the plaintiffs accepted the proposal. According to plaintiffs funds were raised for undertaking the project of plot no. 6 ao1140.11.sxw 37 for Sneh-Bandh Co-operative Housing Society and the development agreement was entered into between the said Society and the plaintiffs as per the understanding reached between the plaintiffs and defendants. The said project was undertaken by the plaintiffs and defendants as a joint venture. It is the contention of the plaintiff that in or about April 2010 there was a meeting between the partners of the plaintiff and the defendant nos.1-3 and the members of the defendant no.5 with the mediation of defendant no.4, wherein the defendant nos. 1 and 5 represented to the plaintiffs that CIDCO, i.e. Defendant no. 20 proposes to allot plot no.3 ad measuring 2159.78 sq. mtrs. situated at Sector 42, Nerul, Navi Mumbai in the name of defendant no.5 Society. It was agreed between the parties that plaintiff shall pay 50% shares of defendants 2 and 3 being consideration for releasing of rights, title and interest of defendant no.1 in the suit plot by continuing 50% shares to defendants 2 and 3 against said plots in consonance with joint venture dated 5th April, 2010 entered into between the parties by expanding the same to the extent of suit plot on the same terms and conditions. The plaintiff was required to pay amount to the members who do not desire to purchase plots in the scheme. As such the plaintiff paid an advance to the tune of Rs. 3,00,000/- each by cheque to the defendants 6 to 17 and those defendants surrendered their proposed premises in the proposed project in favour of the plaintiff. It is also contention of the plaintiff that plaintiff paid an amount to the tune of Rs. 2,03,00,000/- to defendants 1 to 3 by RTGS (Real Time Gross Settlement), the details whereof are given in the plaint. The defendants, however, instead of permitting the plaintiffs to enter into development agreement with defendant no.5 entered into an agreement in complete violation of understanding reached between them. According to plaintiff, the defendants are taking disadvantage of non-execution of the agreement in respect of suit plot by defendant no.5 with the plaintiff and are trying to continue with the development activities on the plot. It is the contention of the plaintiff that the proposed agreement was kept ready and copy 7 ao1140.11.sxw thereof was also given to defendant no.5 for purpose of execution. However, defendants 1 to 3 entered into a development agreement with the defendant no. 5 reproducing the same terms and conditions noted in the draft agreement which was forwarded by the plaintiff to the defendants. The plaintiff, therefore, claims a declaration that the suit agreement which was being entered into between the plaintiff and defendants 1 to 3 and 5 in respect of suit plot is absolutely legal, valid, subsisting and binding upon the defendants. The plaintiffs claim other reliefs as stated in detail in the plaint. 3. The defendants have resisted the suit claim by filing written-statement. The defendants 1-3 have denied the suit claim in its entirety. The defendant’s claim for rejection of the plaint on the ground set out in the written-statement and/or in the alternative request to refer the matter for arbitration for which a separate application under Section 8 of the Act will be presented. According to defendants the joint venture arrived at between plaintiffs and defendants was only in relation to Plot No. 37 allotted in favour of Sneh-Bandh Co-operative Society. The defendants 3 and 4 were adopted as partners of the plaintiff firm only for the said project having 50% share in the profit. The defendants did not have any agreement with the plaintiff in relation to suit plot. There does not exist any firm which includes defendants 3 and 4 alongwith plaintiff for undertaking development of the suit project. It is contended that in the absence of there being any joint venture agreement for undertaking the work of suit plot, the prayers made in the plaint are not liable to be granted. It is also contended that the defendant no.5 never agreed or consented for entering into the proposed development agreement with the plaintiff. Thus, there is no transaction entered into by the plaintiff with the defendants. As such the prayers made in the plaint as well as in the application are not liable to be granted. According to defendants the alleged payment made by the plaintiff is 8 ao1140.11.sxw in respect of project which was undertaken. The amount has not been paid for undertaking the suit project. The payment made to the tune of Rs. 2,03,00,000/- by RTGS by defendants 1, 2 and 3 do not and cannot be attributed to the alleged suit transaction according to defendants. Sofar as the payment of amount of Rs. 36,00,000/- by the plaintiff is concerned, it is contended that same is obtained as a loan to the defendant no.1 from Patels and have been duly refunded to sister concern of Patels M/s. Giriraj Builders and Developers by RTGS. Similarly Rs. 2,03,00,000/- is amount of contribution by defendants 1, 2 and 3 in relation to Plot No. 37, Sector 42, Nerul, Navi Mumbai. Thus, defendants denied the oral agreement allegedly arrived at between the plaintiffs and the defendants. 4. The defendant no.5 has appeared and resisted the suit by filing written- statement. According to defendant no.5, the Society has not at all adopted any resolution nor has decided to enter into development agreement with the plaintiff. Merely because the plaintiff alleges that some of the members of the defendant Society have accepted certain contribution, that itself does not amount to any decision by the Society which is having 28 members. In the absence of there being any decision on behalf of Society, the plaintiff cannot claim to have entered into any transaction in the Society. Thus, it is contended by the defendant no.5 that there is no privity of contract between the plaintiff and defendant no.5. The defendant no.5 has entered into the development agreement with defendants 1 to 3 after due deliberations and the agreement is valid and proper. The interest of defendant no.5 cannot be jeopardized or affected as a result of any alleged understanding between the plaintiffs and defendants 1 to 3. The trial Court after considering rival contentions was pleased to dismiss the application which gave rise for presenting the instant Appeal from Order. 9 ao1140.11.sxw 5. My attention is invited to Admission Deed executed on 5th April, 2010 between the plaintiff as well as the other parties and the defendants 2 and 3 who were impleaded as party of the 4th/5th part in the said deed. As per the Deed of Admission the parties of the 3rd, 4th and 5th part i.e. the defendants herein shall be deemed to have been admitted to the partnership business of M/s. Ronak Builders and Developers i.e. the plaintiff firm. As per the recital contained in paragraph 3 of the Deed of Admission, the admission of defendants 3 and 4 to the partnership is only for purpose of developing Plot No. 37 and for sharing the benefits under the agreement. Clause 3 of the Deed of Admission is reproduced as below:- “ The party of the Third and Fourth and Fifth Part jointly in equal terms with the Party of the First and Second Parts shall be entitled to the rights, title, interest in and benefits under Plot No. 37, Sector No.42, Nerul Navi Mumbai, only (hereinafter referred to as the immovable property) only and to deal with the same in any manner as the parties may deem fit. The asset and liability of the partners No. (4) And (5) shall be limited to the said immovable property only.” Thus, it is clear that admission of defendants 2 and 3 to the partnership business is only for undertaking development of plot no. 35. The alleged joint venture as contended by the plaintiff in the suit in respect of plot no.3 belonging to defendant no.5 is not reflected in the Admission Deed. The claim raised by the plaintiff on the basis of alleged oral agreement arrived at between the plaintiff and defendants 2 and 3 is not liable to be accepted. The another most important feature of the matter is that the defendant no.5 in relation to whose property the alleged joint venture is claimed between the plaintiff and defendant is not the consenting party in respect of the proposed agreement. The defendant no.5 has categorically denied all the plaint averments and has contended that there was no such understanding as claimed by the plaintiff for 10 ao1140.11.sxw developing the property belonging to defendant no.5 through the joint venture of the plaintiff and the defendants 1, 2 and 3. The defendant no.5 is the Society and the decisions of the Society are required to be taken by a methodology or procedure prescribed under the Maharashtra Co-operative Societies Act. Section 72 of the Act provides that the final authority of the every Society shall vests in the general body of the members in the general meeting summoned in such a manner as may be specified in the bylaws. Section 36 provides that the registration of the Society shall render it a body corporate by the name under which it is registered. Society may dispose of property or enter into contracts and institute and defend suits and other legal proceedings, do all such things as are necessary for the purpose for which it is constituted. Thus, the Society is a body corporate invested with powers to acquire, held and dispose of property and the final authority of the Society vests in the general body of the members. Thus, there has to be resolution of the Society in respect of acquisition or disposal of the property. In the instant matter, there is nothing spelt out in the plaint as to whether the Society has accepted the proposal of the plaintiff for entering into development of the property belonging to the Society in joint venture with the plaintiff and the defendants 1 to 3. In the absence of the Society being party to the agreement, consenting to the transactions, the contention of the plaintiff that there was a joint venture agreement for development of the property belonging to the Society between the plaintiffs and defendants 1 to 3 is not worth acceptance. Sofar as contention of the plaintiff that some of the members of the Society i.e. Defendants 6-17 have accepted certain amount as advance for relinquishing their rights to receive constructed units in the Society, it is to be noted that the alleged act of the concerned members is not in consonance with any decision of the Society. The defendants have though denied the contentions raised by the plaintiff in respect of payment to defendants 6-17 and have contended that it was infact a transaction for advancement by defendants 1-3. Still the alleged 11 ao1140.11.sxw disbursement of amount to concerned members cannot be said to be in concurrence with the Society. It is stated that Society has enrolled 28 members and any decision in relation to disposal of the property of the Society cannot be arrived at by a few members constituting a group. Thus, in the absence of there being any decision by the Society accepting the proposal in respect of the development of the property belonging to the Society by the joint venture of the plaintiff and defendants 1-3, the contention of the plaintiff that there was oral understanding between the plaintiff and defendants 1 to 3 cannot be accepted. The Counsel appearing for the plaintiff vehemently contends that the development agreement executed by defendant no.5 in favour of defendants 1-3 also do not disclose any decision for giving the property for development and the relevant clause in the agreement is kept blank. The development agreement appears to have been executed by an officer of the Society who has been authorized by the managing committee of the Society to sign the agreement. Thus, it is contended that in respect of development agreement entered into by the defendant no.5 with defendants 1 to 3, do not disclose any decision for giving the property for development the relevant clause in the agreement is kept blank. Thus it is contended that in support of the development agreement entered into by the defendant no.5 with defendants 1 to 3, also there does not appear to be any decision by the general body of the Society supporting such transaction. It is to be noted that if any member of the Society has any grievance in respect of the transaction, it would be open for the member of the Society to raise the dispute before the competent forum and impeache the transaction entered into by the defendants 1 to 3 with defendant no.5 Society. The deficiency in transaction entered into between defendants 1 to 3 and defendant no.5 does not validate or land authenticity to the alleged oral agreement of the plaintiff with defendants 1 to 3. Sofar as contentions raised by the plaintiff in respect of advancement of amount of Rs. 2,03,00,000/- to the defendants 1-3 is concerned, it has been specifically denied by the 12 ao1140.11.sxw concerned defendants that the advancement of the amount was towards the suit transaction. It is the specific contention of the concerned defendants that the advancement of the amount as alleged by the plaintiff is towards the earlier transaction in respect of which the joint venture agreement is executed. At this stage, in the absence of any evidence having been placed on record to that effect, it cannot be inferred that the advancement of the amount by the plaintiff to the defendant by RTGS mode is towards the alleged oral agreement. 6. My attention is invited to the Judgment of the Apex Court in the matter of Alka Bose v/s. Permatma Devi & Ors. reported in AIR 2009 (SC) 1527. It is urged while placing reliance on para-7 of the judgment that an oral agreement to sale is valid. Relevant portion of para 7 is reproduced as below:- “ All agreements of sale are bilateral contracts as promises are made by both – the vendor agreeing to sell and the purchaser agreeing to purchase. On the other hand, the observation in S.M. Gopal Chetty (supra) that unless agreement is signed both by the vendor and purchaser, it is not a valid contract is also not sound. An agreement of sale comes into existence when the vendor agrees to sell and the purchaser agrees to purchase, for an agreed consideration on agreed terms. It can be oral. It can be by exchange of communications which may or may not be signed. It may be by a single document signed by both parties. It can also be by a document in two parts, each party signing one copy and then exchanging the signed copy as a consequence of which the purchaser has the copy signed by the vendor and a vendor has a copy signed by the purchaser. Or it can be by the vendor executing the document and delivering it to the purchaser who accepts it. Section 10 of the Act provides all agreements are contracts if they are made by the free consent by the parties competent to contract, for a lawful consideration and with a lawful object, and are not expressly declared to be void under the provisions of the Contract Act. The proviso to section 10 of the Act makes it clear that the section will not apply to contracts which are required to be made in writing or in the presence of witnesses or any law relating to registration of documents. Our attention has not been drawn to any law applicable in Bihar at the 13 ao1140.11.sxw relevant time, which requires an agreement of sale to be made in writing or in the presence of witnesses or to be registered. Therefore, even an oral agreement to sell is valid. If so, a written agreement signed by one of the parties, if it evidences such an oral agreement will also be valid. In any agreement of sale, the terms are always negotiated and thereafter reduced in the form of an agreement of sale and signed by both parties or the vendor alone (unless it is by a series of offers and counter-offers by letters or other modes of recognized communication). In India, an agreement of sale signed by the vendor alone and delivered to the purchaser, and accepted by the purchaser,