Bharat Karsondas Thakkar vs M/S. Kiran Construction Co. & Ors

2. On 27th May, 1949, the Collector of Thane recorded a grant in favour of Mr. Sowar Ramji Vaity 4 entitling him to lease of lands relating to Survey Nos.83 to 91 in Village Mulund for a term of 999 years. Mr. Sowar Ramji Vaity died in the year 1965, leaving behind him surviving Jagannath, Babu, Vishnu and Bhaskar (hereinafter referred to as `the Vaitys') as his legal representatives to succeed to his estate. On 1st October, 1973, the Vaitys entered into an agreement to sell their rights and interests in the aforesaid lands to one Mr. K.L. Danani (the Respondent No.44 herein) for a total consideration of Rs.2 lakhs. Under the Agreement, Mr. Danani was required to obtain lease of the suit lands from the Collector in favour of the Vaitys within a period of two years. During the months of April and June, 1974, Mr. Danani constituted a partnership firm with Mr. K.V. Thakkar and Mr. S.S. Thakkar under the name of M/s Swas Construction Company. The Appellant herein, who was then a minor, was admitted to the benefits of the partnership firm. The time for completion of the 5 sale under the agreement dated 1st October, 1973, was extended by two months till after the land was converted to non-agricultural use or the Vaitys made a clear and marketable title to the suit land, whichever was later. It was recorded that M/s Swas Construction Company had been put in possession of the suit lands in part performance of the agreement dated 1.10.1973.

3. In the meantime, the Urban Land (Ceiling and Regulation) Act, 1976, was enacted and Mr. K.L. Danani claiming possession under the said Agreement filed a statement with the Urban Land Ceiling Authorities in terms of Section 6(1) of the Act. On 12th June, 1979, pursuant to a decision arrived at in April, 1978, the Government of Maharashtra executed a lease in favour of the Vaitys for a period of 60 years. Immediately thereafter, on 18th June, 1979, the Vaitys entered into an Agreement with M/s Modern Development Corporation, the 6 Respondent No.24 herein, granting them development rights in respect of the suit lands. On 24th August, 1979, M/s Modern Development Corporation is alleged to have entered into an agreement with the Respondent No.1, M/s Kiran Construction Company, to transfer its beneficial interests in the suit lands, except for Serial No.91, in favour of the Respondent No.1. Clause 12 of the Agreement specifically required M/s Modern Development Corporation to obtain confirmation from M/s Thakkar & Associates that there was no subsisting agreement for sale in their favour in respect of the property agreed to be sold.

5. It appears that in February, 1980, in Notice of Motion No.283 of 1980 filed in the said Suit, Mr. K.L. Danani undertook not to part with possession of the suit lands pending disposal of the Notice of Motion, which was disposed of on 9th October, 1980, by the Bombay High Court by appointing the Court Receiver over the properties.

6. On 15th May, 1981, the Vaitys terminated the Agreement dated 18th June, 1979, entered into with M/s Modern Development Corporation (the Respondent No.24). This prompted the Respondent No.1 to file Suit No.1578 of 1981 against the Vaitys and the partners of M/s Modern Development Corporation on 7th September, 1981, for specific performance of the purported Agreements dated 18th June, 1979 and 24th August, 1979. On 1st July, 1982, the Bombay High Court passed an order restraining the Vaitys and 8 the partners of the Respondent No.4 from selling, transferring, encumbering, alienating or further parting with possession of the suit lands pending disposal of Suit No.1578 of 1981. After the death of Mr. Babu Vaity on 1st May, 1994, all the parties to Suit No.252 of 1980, entered into a comprehensive settlement with the Vaitys, Mr. K.L. Danani (the Respondent No.44) and one Mulchand G. Mehta (the Respondent No.47) and in order to give effect to the settlement, the Vaitys and the Respondent No.47 were joined as defendants in Suit No.252 of 1980. On the very same day, the Bombay High Court decreed the suit on consent terms. Pursuant to the terms and conditions arrived at between the parties, the Respondent No.48 took out Notice of Motion No.140 of 1999 in Suit No.1578 of 1981, praying that the order dated 1st July, 1982, be vacated. The Vaitys also took out Notice of Motion No.2700 of 1999 in the said Suit, praying for the same order. In August, 2000, M/s Kiran 9 Construction Company took out Chamber Summons No.1203 of 2000 in Suit No.1578 of 1981, seeking to amend the plaint so as to join the Respondent Nos.13 to 19 as defendants and also to incorporate a challenge to the decree dated 6.5.1998 passed by the Bombay High Court in Suit No.252 of 1980. The said Chamber Summons was dismissed by the learned Single Judge of the Bombay High Court on 21st June, 2001, and the injunction granted on 1st July, 1982, was vacated. The said order of injunction was also vacated by a common order of even date passed in Notices of Motion No.140 and No.2700 of 1999.

9. It is also not disputed that on 18th June, 1979, the Vaitys entered into a development agreement with M/s Modern Development Corporation which was an unregistered partnership firm. The said partnership firm, in its turn, entered into an agreement with M/s Kiran Construction Company on 24th August, 1979. Mr. Rohtagi submitted that both Modern Development Corporation and Kiran Construction Company had knowledge of the existing agreements entered into by the Vaitys for sale of the lands. It is on account of such knowledge that the Respondent No.1 in its agreement with Modern Development Corporation included a clause that the latter would cause the Vaitys to make out a 12 marketable title to the property, and if they failed to make out a marketable title, all the monies paid to Kiran Construction Company would be returned to it with interest at the rate of 12% per annum. As indicated hereinbefore, the agreement which was entered into between the Vaitys and Modern Development Corporation on 18th June, 1979, was terminated by the Vaitys on 15th May, 1981, prompting Kiran Construction Company to file Suit No.1578 of 1981 in the Bombay High Court in which an interim order was passed by the Bombay High Court restraining the Vaitys and the partners of Modern Development Corporation from selling, transferring or further parting with possession of the suit lands.

10. Mr. Rohtagi submitted that in view of the said order of injunction, on 10th November, 1981, Babu Vaity filed an affidavit in Notice of Motion No.1271 of 1981 indicating that on 15th May, 1981, 13 the Vaitys had terminated the agreement dated 18th June, 1979, with Modern Development Corporation and that a separate agreement had been executed in favour of one Mr. Ashok Kumar Goyal and Mr. Gosalia granting them development rights in respect of the suit lands. Despite the above, on 1st July, 1982, the Bombay High Court passed an order in Notice of Motion No.12671 of 1981 in the suit filed by the Respondent No.1 and restrained the Vaitys and the partners of Modern Development Corporation from selling, transferring, encumbering, alienating or from further parting with possession of the suit lands, pending disposal of the suit filed by the Respondent No.1 herein. Mr. Rohtagi submitted that on 27th March, 1984, the Respondent No.1 was informed by a letter written on behalf of the appellants regarding the claims of the appellants herein, the filing of Suit No.252 of 1980 and the appointment of the Court Receiver who had taken over possession of the suit properties. 14

14. Mr. Rohtagi submitted that from the orders passed by the Division Bench of the Bombay High Court on 17th November, 2006, disposing of Appeal Nos. 747 and 748 of 2001 arising out of the orders 17 passed by the learned Single Judge in Notices of Motion No.2700 and 140 of 1999, it would be evident that the said appeals were allowed merely as a consequence of the order passed earlier on 16th November, 2006, in Appeal No.745/2001 in connection with the Chamber Summons No.1203/2000 taken out by Kiran Construction Company. Mr. Rohtagi submitted that no reasons, other than what has been indicated hereinabove, were given for allowing the said appeals and accordingly, while Civil Appeal No.2573/2008 was disposed of, consequential orders were passed whereby the other appeals were also disposed of.

25. In our view, the claim attempted to be set up by Kiran Construction Company is highly tenuous and is entirely dependent upon the claim of Modern Development Corporation which has so far not attempted to establish such claim. In such circumstances it would be wholly inequitable to 25 allow the interim order to continue. The same is accordingly vacated.

26. Accordingly, the appeals filed by the Official Receiver and the Vaitys must succeed and are allowed. Simultaneously, Interlocutory Application Nos.4, 6 and 7 for clarification of the judgment and order dated 9th April, 2008, passed in Civil Appeal No.2573/2008 and Interlocutory Application No.8 for filing additional documents are also disposed of by virtue of this judgment. Further more, the following clerical mistakes have been pointed out in paragraph 7 of the I.A.No. 4 with regard to the judgment dated 9.4.2008 passed in Civil Appeal No. 2573 of 2008:

28. There will, however, be no order as to costs.

________________J.

(ALTAMAS KABIR) ________________J.

(CYRIAC JOSEPH) New Delhi Dated: May 15, 2009