ASN 1 Appeal-1153-.sxw IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO.1153 OF 2010 IN NOTICE OF MOTION NO.582 OF 2009 IN SUIT NO.353 OF 2009 Bastion Constructions. ..Appellant. Vs. Mr. Nusil N. Wadia and others. ..Respondents. WITH APPEAL LODGING NO.846 OF 2010 IN CHAMBER SUMMONS NO.1789 OF 2009 IN SUIT NO.353 OF 2009 Bastion Constructions. ..Appellant. Vs. Mr. Nusil N. Wadia and others. ..Respondents. Mr. Mukul Rohatgi, Sr. Advocate and Mr. Janak Dwarkadas, Sr. Advocate with Mr. Jatin Jhaveri, Mr. Sharan Jagtiani i/by M/s. Mahimtura & Co. for Appellant. Mr. Navroz Seervai, Sr. Advocate with Mr. S.V.Doijode and Ms. Falguni Thakkar i/by M/s. Doijode Associates for Respondents. Mr.P.Y. Ladekar, Court Receiver, High Court, Bombay present. CORAM : MOHIT S. SHAH, C.J. & S.J. KATHAWALLA, J. TUESDAY, DECEMBER 07, 2010. ASN 2 Appeal-1153-.sxw PC : The appeals are admitted. The learned advocates appearing for the respondents waives service of notice for both the appeals. 2 By consent, both the appeals are heard finally and disposed of by this common order. 3 Appeal No.1153 of 2010 challenges an order dated 18th November, 2010 of the learned Single Judge passed in Notice of Motion No.582 of 2009 in Suit No.353 of 2009 by which the learned Single Judge accepted the appellant/plaintiff’s prayer and in fact continued the ad interim order for appointment of Court Receiver but declined to grant appellant-plaintiff’s prayer for appointing the appellant-plaintiff as Agent of the Court Receiver, and vacated the ad interim order dated 13th December, 2009 appointing the applicant-plaintiff as the agent of the Court Receiver. 4 Appeal (Lodging) No.846 of 2010 is directed against the order dated 23rd November, 2010 of the learned Single Judge rejecting the plaintiff’s Chamber Summons No.1789 of 2009 in which the appellant plaintiff had prayed for directions to the Court Receiver to execute the agency agreement, on the ground that by the aforesaid order dated 18th November, 2010 the Court has already vacated the ad interim order dated 13th December, 2010 to appoint the appellant-plaintiff as the agent of the Court Receiver. ASN 3 Appeal-1153-.sxw 5 The facts leading to the present appeals briefly stated and as averred by the appellant-plaintiff are as follows. i) As owners of the land bearing CTS No.1406-G-3 (part) admeasuring 68,359.1 square meters and CTS No.1406-G-5 (part) admeasuring 31,350 square meters situated at Village Malad, Taluka Borivali, District Mumbai Suburban (hereinafter referred to as the “suit properties”), the respondents-defendants published a notice in Free Press Journal and Navhsakti newspapers dated 28th November, 2001 inviting offers for sale of the suit properties . As per the advertisement the appellant-plaintiff and other parties made their offers. Ultimately on 18th March, 2002 the respondents accepted the revised offer of the appellant to purchase the suit properties for the price of Rs.14.00 Crores and informed the appellant that the respondent shall make application to the Charity Commissioner to seek his sanction for sale of the suit properties. Accordingly, agreement dated 18th March, 2002 was arrived at between the respondent-defendant and the appellant-plaintiff for sale of the suit properties for an aggregate consideration of Rs.14 Crores (Rupees Fourteen Crores only). ii) The respondents made application dated 30th April, 2002 to the Charity Commissioner for sanctioning sale of the suit properties. By order dated 27th December, 2002, the Charity Commissioner granted sanction for sale of the suit properties on condition that the total consideration would be paid within a period of three months. The appellant paid the entire consideration amount for the suit properties aggregating to Rs.14 Crores to the respondents within the ASN 4 Appeal-1153-.sxw time limit extended by the Charity Commissioner. The respondents however, could not execute the conveyance deed for the suit properties in favour of the appellant on the ground that the suit properties were subject to the provisions of the Urban Land Ceiling Act (“the U.L.C. Act”) and the agreement to sell the suit properties required the respondent to obtain exemption or permission from the competent authorities. Respondents did make such application for exemption under the provisions of the U.L.C. Act on 3rd October, 2006 for exemption of the suit properties under Section 20 of the U.L.C. Act, 1976. iii) Upon making the entire payment by November, 2003 the appellant-plaintiff immediately thereafter took effective control of the suit properties and took up the work of completion of the retaining wall of the nala . The appellant with consent and knowledge of the respondents appointed security guards to look after the suit properties. In the year 2005, the appellant, at its cost, erected barbed wire fencing and a brick wall around the suit properties and at stategic locations on the western, northern and eastern sides the plaintiff- appellant put up security cabins to house security guards for guarding the site round the clock. iv) Writ petition (PIL) No.114 of 2006 was filed in this Court by Womanist and Multi Activists (WANA Group) inter alia against the respondent-defendant ( who were joined as respondent No.8 to the said writ petition) alleging that the mangroves which existed on the said property were destroyed by dumping debris thereon. The ASN 5 Appeal-1153-.sxw respondent (respondent No.8 therein) filed their affidavit in reply dated 5th October, 2006 to the said writ petition (Exhibit “Q” to the plaint) wherein they have inter alia categorically stated as under: “11 Pursuant to the Charity Commissioner’s sanction, respondent No.8 has received the entire consideration of Rs.14.00 Crores from Bastion Construction. 12 The formal execution of a conveyance in favour of Bastion Construction has not yet taken place, for want of permission from the competent authority under the Urban Land Ceiling Act, 1973. 13 Hence, although the formal execution of the conveyance in favour of Bastion Construction remains to be executed for all real and practical purposes and intent respondent No.8 has transferred its rights in the plot to Bastion Construction. 14 Bastion Construction is not developing the side plot as a developer engaged by respondent No.8, but in its own right. Any alleged act of Bastion Construction, is not for an on behalf of respondent No.8 but on its own account. 15 The petitioners are under the mistaken belief that respondent No.8 is developing the said plot and respondent No.8 has dumped debris on the said plot for the reasons set out above. This belief is erroneous. 16 Respondent No.8 therefore submits that it is just, fair proper and in the interest of justice that before the allegations contained in the petition are examined, the real party affected, viz. Bastion Construction ought to be made parties and heard”. ASN 6 Appeal-1153-.sxw v) Thereafter, with effect from 29th November, 2007, the provisions of the U.L.C., Act came to be repealed upon adoption of the U.L.C. Repeal Act by the State of Maharashtra. Thereafter, in February, 2008 the appellant-plaintiff requested the respondent-defendant to execute the conveyance of the suit property in favour of the appellant- plaintiff on account of repeal of the U.L.C. Act. The respondents however, called upon the appellant to obtain confirmation from the Competent Authority that the respondents could execute conveyance in favour of the appellant. The appellant however, contended that since the U.L.C. Act was repealed, there was no difficulty for the respondents to execute the conveyance deed in respect of the suit properties in favour of the appellant. The U.L.C. authorities gave such clarification on 4.10.2008. However, by letter dated 25th November, 2008 the respondents refused to execute the conveyance of the suit properties and terminated the agreement of sale dated 18th March, 2002 and forfeited the entire consideration of Rs.14 Crores paid by the appellant. 6 The appellant-plaintiff, therefore, gave notices to the respondent-defendants and ultimately on 6th February, 2009 filed suit for specific performance of the agreement dated 18 th March, 2002 and also filed Notice of motion in which the learned Single Judge at the admission stage passed order dated 17th February, 2009 appointing the Court Receiver and also appointing the appellant as agent of the Court Receiver after making the following observations: “4 The question as to whether the cancellation is ASN 7 Appeal-1153-.sxw justifiable and equitable etc. would be examined and decided only at the final hearing of this Notice of motion. But at this stage after hearing the defendants and on perusal of the relevant letter, I am not inclined to reject the plaintiff’s claim about the agreement for sale etc. The claim of the plaintiff that they virtually controlled the property and therefore should be assumed to be de facto in possession of the property, has substance. 5 In view of the large size of the suit property, the imminent possibility of encroachment on the same and the bitter conflict between the parties I think the suit property deserves to be in custodian legis. I think it is proper to appoint the Court Receiver, High Court, Bombay as the Receiver in respect of the suit property so that the property would be protected. In view of the peculiar arrangement that existed between the parties, the plaintiff should be appointed as the agent of the Court Receiver and should be allowed to engage the security arrangement at their costs for the suit property but subject to supervision of the Court Receiver. This order should not mean that the plaintiff is held to be in possession of the suit land”. (emphasis supplied). 7 When the Notice of motion came up for hearing before the learned Trial Judge, the respondent-defendants did not object to the continuation of the Court Receiver but objected to continuation of the appellant-plaintiff as agent of the Court Receiver. The learned Trial Judge accepted the submission made on behalf of the respondents, and while continuing the appointment of the Court Receiver during the pendency of the suit, discontinued the appointment of the appellant as agent of the Court Receiver. This order of the Trial Judge is challenged in Appeal No.1153 of 2010. ASN 8 Appeal-1153-.sxw 8 In the mean time, after the ad interim order appointing the appellant-plaintiff as Agent of the Court Receiver, the appellant had raised certain objections regarding some of the clauses in the draft Agency Agreement which the Court Receiver had forwarded to the appellant for execution. The appellant, therefore, in November, 2009 filed Chamber Summons No.1789 of 2009 wherein it was contended by the appellant that the standard form of agency agreement which the Court Receiver required the appellant to sign was not applicable to the facts of the present case, because the appellant-plaintiff had already paid the full consideration of Rs.14 Crores to the respondents and the appellant could not be asked to pay any security deposit or any royalty for being the agent of the Court Receiver. The appellant also contended that the appellant would not be required to pay royalty or security deposit because the suit properties are not used or enjoyed by the appellant-plaintiff but the properties being very vast i. e. admeasuring about being 99701-sq. meters are required to be protected by the appellant who has heavy stakes involved in the said properties. It is only for this limited purpose of protecting the said properties that the appellant seeks to be the agent of Court Receiver in respect of the said properties. The learned Trial Judge however, rejected the Chamber summons by order dated 23rd November, 2010 and the ad interim directions appointing the appellant-plaintiff as agent of the Court Receiver were not continued. The order of the learned Judge rejecting the chamber summons is challenged by the appellant in Appeal (L) No. 846 of 2010. ASN 9 Appeal-1153-.sxw 9 Mr. Mukul Rohatgi and Mr. Janak Dwarkadas, learned Senior Counsel for the appellant-plaintiff in the two appeals have submitted that the appellant had paid the respondents-defendants full consideration of Rs.14 Crores and the respondents in their affidavit dated 5th October, 2006 had in terms stated that though the formal execution of the conveyance had not taken place for want of permission from the competent authorities under U.L.C. Act, but for all real and practical purposes the respondents had transferred their rights in favour of the appellant and that the appellant was not developing the plot as a developer engaged by the respondents but was developing the said property in its own rights. 10 The learned Counsel for the appellant-plaintiff also submitted that the learned Trial Judge erred in refusing to grant relief to the appellant-plaintiff on the ground of the alleged conduct of the appellant-plaintiff after passing of the ad interim order. It is submitted that the appellant-plaintiff has since the year 2003 admittedly spent an amount to Rs.75 lacs for deploying security guards to protect the suit property. It is submitted that the appellant had also taken care to prevent encroachments on the suit properties and as pointed out in the affidavit filed on 16th July, 2010, when Mr. Yadav attempted to encroach on the part of the suit property on 13th May, 2010, it was appellant-plaintiff who contacted the Malad Police Station and filed NCR dated 13rd May, 2010, and also addressed letter dated 14th May, 2010 to the Senior Inspector of the Malad Police Station informing that the Court Receiver was appointed in respect of the suit property. Copy of the said letter was also addressed to the Court Receiver on 14th May, 2010 itself. It is further ASN 10 Appeal-1153-.sxw stated in the affidavit that on 8th June, 2010 said Mr. Yadav along with 14 to 15 persons carried out unauthorized construction and therefore, the appellant had informed the Court Receiver to take steps to see that the Mumbai Municipal Corporation was informed and called upon to take necessary steps. It was on account of the said steps taken by the appellant-plaintiff and the Court Receiver that the Municipal Corporation ultimately demolished the unauthorized construction on 29th November, 2010. 11 The learned Counsel for the appellant-plaintiff further submitted that the respondents having taken full consideration of Rs.14 Crores and having filed the aforesaid affidavit dated 5th October, 2010 are estopped from objecting to the appellant-plaintiff acting as agent of the Court Receiver. It is further submitted that the learned Trial Judge has also erred in not considering the objection of the appellant-plaintiff to the standard form of agency agreement in which the Court Receiver required the appellant-plaintiff to sign. It is also submitted that no prejudice will be caused to the respondent-defendants if pending the hearing and final disposal of the suit, the appellant-plaintiff is allowed to act as the agent of the Court Receiver because the appellant-plaintiff would not put up any construction on the suit properties whilst acting as agent of the Court Receiver. 12 On the other hand, Mr. Seervai, the learned Sr. Advocate for the respondent-defendants has vehementally opposed the appeals and submitted that before execution of the agreement to sell as well as much after termination of the said agreement the respondent-defendants ASN 11 Appeal-1153-.sxw are absolute owners of the suit property and therefore, the appellant- plaintiff has no right to be put in possession of the land in question. Relying on letter dated 4th April, 2005 written by the appellant to the respondents (Exh.”K” to the plaint) Mr. Seervai has submitted that the appellant had confirmed therein that the appointment of security guards at the risk and cost of the appellant-plaintiff shall not amount to deemed transfer or deemed possession of the suit property in favour of the appellant. 13 It is submitted by Mr. Seervai that the learned Trial Judge has relied on the conduct of the appellant- plaintiff in not protecting the property from encroachment and also in not being interested in getting the agency agreement executed after the ad interim order dated 17th February, 2009. It is submitted that neither any steps were taken for execution of the agency agreement till November, 2009 nor any attempt was made by the appellant-plaintiff for getting any order in Chamber Summons. It is further submitted by Mr. Seervai that the Court Receiver was justified in requiring the appellant-plaintiff to execute the agency agreement in the standard form and to execute the standard undertaking. 14 Mr. Rohatgi and Mr. Dwarkadas, learned Senior Counsel for the appellant plaintiff state that the undertaking as required by the Court Receiver was signed on 18th March, 2009 and that the appellant- plaintiff is ready and willing to execute the undertaking as required by ASN 12 Appeal-1153-.sxw the Court Receiver. It is submitted that in view of the facts and circumstances of the case the only contention of the appellant-plaintiff is that the Court Receiver should not insist on any security deposit or royalty. 15 Having heard the learned counsel for the parties, we find considerable substance in the submissions made on behalf of the appellant-plaintiff that the appellant having paid Rs.14 Crores to the respondents which is the entire sale consideration under the agreement of sale dated 18th March, 2002 sanctioned by the Charity Commissioner and the respondent-defendant having accepted the same in 2003-04 and the respondent-defendants themselves having filed an affidavit on 5th October, 2010 stating that the formal execution of a conveyance in favour of the appellant-plaintiff had not taken place for want of permission from the competent authority under the Urban Land Ceiling Act, 1973, but for all real and practical purposes the respondent- defendants had transferred its rights in the suit lands to the appellant- plaintiff and in view of the repeal of the U.L.C. Act in the State of Maharashtra with effect from November, 2007 during pendency of the suit, the appellant-plaintiff is required to be continued as agent of the Court Receiver. 16 We may now refer to the letter dated 4th April, 2005 from the appellant-plaintiff to the respondents-defendants (Exhibit-K to the plaint). Having regard to the fact that after the said letter, the respondent- defendants had filed their affidavit on 5th October, 2006 in the proceedings before this Court and the respondents-defendants have not ASN 13 Appeal-1153-.sxw subsequently disputed the appellant’s case that over and above paying full sale consideration of Rs.14 Crores, they have already spent an amount of Rs.75 lacs from 2003 onwards for the security of the suit properties. We find considerable substance in the submissions made on behalf of the appellant-plaintiff. 17 In the result, both the appeals are allowed. We direct that the appellant-plaintiff be continued as agent of the Court Receiver appointed under the order of the learned Trial Judge passed on 17th February, 2009. However, it is clarified that the appellant-plaintiff will be mere agent of the Court Receiver without any right to develop the suit properties or put up any construction on the suit properties but only for the purpose of protection of the suit properties and for constructing the compound walls/fencing etc. The observations made in the ad interim order dated 17th February, 2009 by the learned Single Judge shall also continue to operate. 18 It will be open to the appellant-plaintiff to move the Trial Court for expediting trial of the suit. We make it clear that while executing the agency agreement the Court Receiver shall not require the appellant plaintiff to pay any security deposit or any royalty for the simple reason that the appellant-plaintiff has paid the entire consideration of Rs.14 Crores to the respondents-defendants in 2003-04 and appellant-plaintiff is not allowed to use or enjoy the suit properties and is appointed agent of the Court Receiver for a limited purpose of protecting the vast suit property involving high stakes of the appellant- plaintiff. We do however, record the statement of the learned counsel for ASN 14 Appeal-1153-.sxw the appellant-plaintiff that the undertaking at Exhibit 14 shall be executed by the appellant-plaintiff without the clauses pertaining to security deposit and royalty. Appeals are accordingly allowed in the aforesaid terms. 19 Since the appeals are disposed of, the notice of motions in the respective appeals are also disposed of. CHIEF JUSTICE S.J. KATHAWALLA, J.