Gurudev Developers v. Kurla Konkan Niwas Co-op. Housing Society
1997-02-05
S.S.NIJJAR
body1997
DigiLaw.ai
JUDGMENT - NIJJAR S.S., J.:The plaintiffs and the defendants entered into an agreement on 18th January, 1985, Exhibit-B to the plaint. In the second recital of the aforesaid agreement the defendants allowed the plaintiffs to develop the property described in the schedule thereunder. The plaintiffs were to construct building or buildings thereon on the terms and conditions recorded in the said agreement. In order to facilitate the development of the said land the defendants (hereinafter called "the Society") decided to appoint one Ganeshbhai B. Mali and Dharmasi R. Patel as the Constituted Attorneys of the society to act jointly and severally for and on behalf of the society to do the acts and necessary actions as provided in the agreement. The said Constituted Attorneys are none other than the plaintiffs. They were permitted on behalf of the society to take all necessary permissions for the purpose of development. By Clause 2 it was provided that in order to carry out the scheme envisaged under the agreement and in order to enable the plaintiffs to put up the construction the society puts the plaintiffs into possession of the suit plot. It is also recorded that the society has handed over the possession of the said vacant plot of land to the plaintiffs with a view to enabling them to put up construction. It is however agreed by the parties that the possession thereby granted to the firm does not amount to creating any right, title and interest in the plot of land in favour of the firm. Clause 3 provides that the plaintiff shall get the plans for construction of the building prepared by utilising the F.S.I. of 51,000/- sq.ft. approximately and to submit the same to the Municipal Corporation of Greater Bombay for its approval and sanction. The firm was to bear and pay the expenses involved in getting the said plan prepared, the Architect's fees, scrutiny fees, deposits with the Municipal Corporation as well as any other expenses that may have to be incurred in this behalf. Clause 4 provides that the firm is to get the plans duly sanctioned. The society was to execute a Power of Attorney in favour of the firm. This, as noticed above, was done by the society. Clause 5 stipulates that the plaintiffs shall not be entitled to utilise any F.S.I. more than 51,000/- sq.ft.
Clause 4 provides that the firm is to get the plans duly sanctioned. The society was to execute a Power of Attorney in favour of the firm. This, as noticed above, was done by the society. Clause 5 stipulates that the plaintiffs shall not be entitled to utilise any F.S.I. more than 51,000/- sq.ft. It was further agreed that out of the said F.S.I. of 51000 sq. ft. the firm shall utilise the F.S.I. of 26480 sq.ft. (built up) for providing 50 flats of 465 sq.ft. (carpet area) to the members of the society at the concessional rate of Rs. 32,000/- per flat, aggregating to Rs. 16,00,000/- for the total of 50 flats. Thereafter the plaintiffs are at liberty to utilise the balance F.S.I. of 24431 sq.ft. (built up) by constructing the building or buildings to be disposed of by the firm as the firm may deem fit and proper and to appropriate the sale proceeds by itself. Even in regard to this power, preference had to be given to persons recommended by the society provided they were able to pay the price of the flats fixed by the firm. Clause 6 provides that if there is any extra F.S.I. being available on the suit land after the construction the same shall belong to the society and the plaintiffs shall not use the same except with the prior written consent of the society. Clause 7 provides that the plans prepared by the plaintiffs of the 50 flats have been approved by the society. Therefore, it shall not be open to the plaintiff to revise or submit fresh plans, alter or amend the specifications or carry out modifications to the plans in respect of the 50 flats except with the written consent of the society. Clause 8 provides that the firm shall arrange the construction of the proposed building under its supervision and in accordance with the sanctioned plans and specifications set out in Annexure-C to the said agreement. These specifications had been prepared and drawn up by Architect M/s. Kulkarni and Majgaonkar Associates which is agreed upon by both the parties. Clause 10 provides that the plaintiffs shall procure all the necessary building materials for the construction. Clause 11 provides that the 50 flats shall be allotted to the society at the rate of Rs. 32,000/- as earlier agreed.
Clause 10 provides that the plaintiffs shall procure all the necessary building materials for the construction. Clause 11 provides that the 50 flats shall be allotted to the society at the rate of Rs. 32,000/- as earlier agreed. It was also agreed in this Clause that the firm shall be entitled to sell the remaining flats, shops, offices garages etc. in the building or buildings to be constructed to such person or persons on such terms and conditions including the price as the said firm may in its absolute discretion deem fit and proper. It was also agreed that the sale proceeds shall be appropriated by the plaintiffs. The society shall have no right, title or interest or claim in respect of such sales effected by the firm nor shall the society be entitled to ask for and demand any account from the firm in respect of the construction cost. It is further agreed that the plaintiffs shall not sell the aforesaid shops, garages etc. to certain traders viz. liquor bars, manufacturing activities, workshops/garages, transport operators, tourist operators, mutton shops. Clause 12 provides that the construction work shall commence within one month from the date of the sanction and shall be completed within two years from the date of commencement. Clause 14 provides that the workers, contractors, RCC Specialists, Architects, Engineers and other personnel that may be engaged in the construction of the building shall be the employees and/or agents of the firm. It shall be the responsibility of the firm to pay them salaries, wages etc. Clause 16 provides that except the 50 flats the possession of all the flats, shops and offices shall remain with the firm till the time the entire amount payable by the society is paid. Clause 18 provides that all the necessary and requisite permissions, orders, NOC from the Government of Maharashtra, Competent Authority under the provisions of the Urban Land (Ceiling and Regulation) Act, 1976 from the Collector or Deputy Collector, Bombay or any other competent authority shall be obtained by the plaintiffs at their own cost and expense. The society agreed to append their signatures on any applications on which the signature of the society was required.
The society agreed to append their signatures on any applications on which the signature of the society was required. Clause 22 provides that if the work of construction is not completed as provided in Clause 12 then the society shall be at liberty after giving one month's notice in writing to the firm to terminate the agreement and resume the construction by itself or through other agencies at the risk and cost of the firm. It is further provided that the decision of the society in this behalf shall be final and binding on the firm. It is further provided that the firm shall not be entitled to seek any compensation of any sort whatsoever against the society. It has been pleaded that the society were to pay to the plaintiffs Rs. 3 lakhs on the signing of the agreement, a further sum of Rs. 3 lakhs was to be paid on completion of plinth. Thereafter certain other payments were to be made till the completion of the buildings. It is pleaded that though the agreement of development was arrived at on 18th January, 1985 the plaintiff could get the possession of the correct plot of land only in the first week of May, 1988. Thus for no fault of the plaintiffs for three years no work in pursuance of the said agreement could be done. It is stated that the defendants in fact were responsible for the said delay. The defendants had put the plaintiff in possession of the wrong plot. Ultimately they were given possession of the correct plot on payment of Rs. 4,24,410/-. This is evident from the letter dated 7th September, 1987, Exhibit-C to the plaint. In this letter the society has written to the plaintiffs that after the execution of the agreement some problems were faced by the society with regard to the identification and allotment of the plot by the Bombay Housing and Area Development Board. Ultimately the said Board by its letter dated 17th March, 1987 regularised the allotment to the society. But under the terms stipulated in the said letter, the society was required to pay to the Board a sum of Rs. 4,24,410/- towards land filling and development charges. It was stated that the society had no funds.
Ultimately the said Board by its letter dated 17th March, 1987 regularised the allotment to the society. But under the terms stipulated in the said letter, the society was required to pay to the Board a sum of Rs. 4,24,410/- towards land filling and development charges. It was stated that the society had no funds. Therefore, they had requested the plaintiff to arrange for the payment of the said amount on a clear agreement and understanding that the said amount shall be treated as a loan by the plaintiff to the society. The society agreed to repay the said amount within 6 months without interest. It was further agreed that the society shall repay the said amount before taking possession of the flats in terms of the agreement dated 18th January, 1985. Consequent upon this, the possession was delivered to the plaintiff on 2nd May, 1988. Thereafter further problems were created by the defendants in that they had insisted for the change of architects. The plaintiffs did not agree to the change in the Architects as the same would cause further delay in completion of the project. Ultimately the society appointed Mr. Dilip Chitnis as its Architect in place of the earlier firm. The new Architect did not fully co-operate with the plaintiffs in the matter of submission of drawings, designs and other material required for the project with reasonable despatch. Not only this, the new Architect was raising exorbitant fee bills against the plaintiffs. The plaintiffs showed their unwillingness to pay such exorbitant fees. The said Architect furnished to the plaintiffs the plans only for the plinth area. The construction upto plinth level was completed by the plaintiffs. Thereafter the Architect in spite of several reminders did not give further plans for completion of the building. The society also failed to take necessary permission from the Municipal Corporation of Greater Bombay for division of the property in order to enable the plaintiff to utilise F.S.I. i.e. 44550 sq.ft. Consequently the plans only to the extent of 27500 sq.ft. had been passed. Thus it is pleaded that the delay has been caused solely by the society and the plaintiffs cannot be held responsible for any delay which has occurred. It is further stated by the plaintiff that all this was being done because the society itself has hatched a conspiracy for taking the said construction project from the plaintiffs.
had been passed. Thus it is pleaded that the delay has been caused solely by the society and the plaintiffs cannot be held responsible for any delay which has occurred. It is further stated by the plaintiff that all this was being done because the society itself has hatched a conspiracy for taking the said construction project from the plaintiffs. The society by its letter dated 11th November, 1991 falsely complained about the slow progress of the construction work. The plaintiffs denied the allegations on 26th December, 1991. Reference in this connection is to be made to Exhibits-H and I. Exhibit I is the letter dated 26th December, 1991. In this letter it is stated that the society have not cleared sub-division of the plot from Housing Board and Wadia Trust. It is stated that it is the job of the society to get the clearance at the expense of the society. It is further stated that in view of the uncleared title, the plaintiffs are unable to sell the shops. Therefore, it is stated that the plaintiffs are not able to speed up the work. It is reiterated that before asking the completion of the society's building they should first clear the sub-division work by taking help of Wadia Trust, Housing Board, B.M.C. and the Architect. It is also requested that the plans for the first floor should be submitted to them so that they can start the work on the first floor. The letter admits that the work is going slow because it is mentioned as follows: "Some members of your society contacted me and they make some enquiries. They says, we are making payment to the society. So we have right to know all the facts. So please give us the address of all members of your society. We want to write them real facts because of which reason work is going slow." On 21st January, 1992 a letter is written by the Advocate of the society giving one month's notice in terms of Clause 22 of the agreement. It is stated that this notice was not justifiably given by the society. Therefore, the plaintiff's Advocate by letter dated 7th February, 1992 denied the allegations made in the notice. The plaintiffs, therefore, claimed that they are in possession of the suit plot.
It is stated that this notice was not justifiably given by the society. Therefore, the plaintiff's Advocate by letter dated 7th February, 1992 denied the allegations made in the notice. The plaintiffs, therefore, claimed that they are in possession of the suit plot. It is further stated that the agreement, Annexure-A, creates an interest in favour of the plaintiffs in respect of immovable property inasmuch as under the said agreement a right has been conferred upon the plaintiff to retain possession of the various shops and flats and to dispose of the same to the third parties. It is further pleaded that the agreement is in fact an agreement of agency coupled with interest and defendants are not entitled to terminate the same. The notice is clearly illegal. The society has not performed its obligations under the agreement. It is also pleaded that they are entitled to receive Rs. 3 lakhs from the society since 21st May, 1991. By amendment made in para 15-A of the plaint it has been stated that it has been wrongly declared by the society in an affidavit dated 28th February, 1992 that on 24th January, 1992 the defendants took charge and possession of the suit property from one Mr. Jadhav of S.R. Constructions. It is stated that the plaintiffs are in de jure possession of the said property. The said S.R. Constructions was appointed by the plaintiff as sub-contractors for putting up construction for and on behalf of the plaintiffs. Thus the sub-contractor cannot be said to be in possession of the suit property. Relying on these averments it is prayed that the defendants be directed to specifically perform the agreement dated 18th January, 1985. In the alternative it is prayed that the defendants be ordered to pay to the plaintiffs a sum of Rs. 1,83,07,410 by way of damages. Prayer (C) is for appointment of receiver and prayer (d) is for injunction. Suit has been filed on 15th February, 1992. Notice of motion has been taken out by the plaintiffs for appointment of receiver and also injunction. 2. Notice of Motion came up for hearing on 17th February, 1992. A perusal of the said order shows that this Court was of the view that there was uncertainty as to who was in possession of the suit property.
Notice of motion has been taken out by the plaintiffs for appointment of receiver and also injunction. 2. Notice of Motion came up for hearing on 17th February, 1992. A perusal of the said order shows that this Court was of the view that there was uncertainty as to who was in possession of the suit property. Thus a Commissioner was appointed to determine as to who was in possession of the suit property. The Commissioner submitted his report on 24th February, 1992. 3. Thereafter the matter came up for hearing on 11th March, 1992. This Court was pleased to permit the defendants to amend the plaint which has been earlier noticed. It was also ordered as follows. "Pending hearing and final disposal of the motion, the following ad interim order is passed; (1) The defendant society is at liberty to construct flats on the plot referred to in the agreement (Exhibit B to the plaint) and utilise F.S.I. to the extent of 26,480 square feet so as to provide 50 flats for its members. The defendants are restrained from utilising the balance of F.S.I. to the extent of 24,431 square feet without leave of the Court." It is noticed that both sides seem to have an arguable case. Thus the matter will have to be examined in depth at the final hearing of the motion. The defendants were given liberty to apply for vacating the ad interim order, if the Notice of Motion does not reach hearing within 8 weeks. 4. Counsel for the plaintiffs relying on these averments has submitted that they have performed all the obligations which they were enjoined to perform in the agreement. It is in fact the defendants who have been placing hurdles in the execution of the work. It was the defendants who did not hand over the possession of the correct plot. It was the defendants who did not get the F.S.I. divided as required. It was the defendants who have not paid Rs. 3 lakhs which are due to the plaintiffs. It was the defendants who have changed the Architect. It is this Architect who is playing in the hands of the defendants and has not co-operated with the plaintiff. The agreement as such has been specifically performed by the plaintiffs. The defendants cannot be permitted to take advantage of their own wrong.
3 lakhs which are due to the plaintiffs. It was the defendants who have changed the Architect. It is this Architect who is playing in the hands of the defendants and has not co-operated with the plaintiff. The agreement as such has been specifically performed by the plaintiffs. The defendants cannot be permitted to take advantage of their own wrong. Therefore, the notice of termination is illegal and void. The plaintiffs have made out a very strong prima facie case for the appointment of a Receiver as also injunction as prayed for. 5. Counsel for the defendant has on the other hand raised a number of preliminary objections. It is first argued that the suit itself is not maintainable as there has been a change in the constitution of the partnership. The change in the constitution of the partnership has not been registered with the Registrar of firms. That being so, by virtue of section 69(2) of the Partnership Act, the suit filed by the plaintiffs is clearly incompetent. Counsel has relied on 1989 Bank.J. 572(S.C.) (Shreeram Corporation v. Yasin Khan)1. In that case the Supreme Court has observed: “In the present case the suit filed by the appellants is clearly hit by the provisions of sub-section (2) of section 69 of the said Partnership Act, as on the date when the suit was filed, two of the partners shown as partners as per the relevant entries in the Register of firms were not, in fact, partners, one new partner had come in and two minors had been admitted to the benefit of the partnership firm regarding which no notice was given to the Registrar of firms. Thus, the persons suing, namely, the current partners as on the date of the suit were not shown as partners in the Register of firms. The result is that the suit was not maintainable in view of the provisions of sub-section (2) of section 69 of the said Partnership Act.......” The view taken by the trial Court and confirmed by the High Court was upheld. In that case even the plaint was amended on a later date but even that could not save the suit. The plea put forward by the defendants to the effect that the partnership was not registered on the date of the filing of the suit has not been controverted, as such.
In that case even the plaint was amended on a later date but even that could not save the suit. The plea put forward by the defendants to the effect that the partnership was not registered on the date of the filing of the suit has not been controverted, as such. What is stated in reply is that the plaintiff firm is duly registered and the plaintiff is shown as the founder member of the said firm on the record of the Registrar of firms. It is further stated that the plaintiff continues to be partner of the said firm and, therefore, the suit is properly filed and the same is maintainable. There is no reply to the averment made in para 3 of the affidavit in reply of the defendants to the effect that the defendant is not aware: “Whether the names of G.B. Mali and D.K. Shah are shown in the registration records of the Registrar of firm as partners of the plaintiff. The defendant puts the plaintiff to the strict proof of the aforesaid facts. I say and submit that in the event of it being found or discovered that the plaintiff is not a registered firm and/or the names of the said G.B. Mali and B.K. Shah are not shown in the records of Registrar of firm as partners of the plaintiff, the suit of the plaintiff be dismissed with costs on this ground alone.” That being so, the case put forward by the defendant is squarely covered by the dicta of the Supreme Court in the aforequoted extract. The Counsel for the defendant has further argued that in fact the suit is also not maintainable on account of the fact that no notice has been given as required under section 164 of the Maharashtra Co-operative Societies Act. This plea has been specifically taken in the affidavit in reply of the defendant dated 28th February, 1992 in para 9. There is no dispute that notice as alleged has not been given. Counsel for the defendant has referred to A.I.R. 1937 Bombay 231 (Dharwar Urban Co-operative Bank Ltd. v. Ramchandra G. Alnavar and others)2. On page 235 the impact of not giving the notice as required under section 70 of the Bombay Co-operative Societies Act is concerned. Section 70 of the Bombay Co-operative Societies Act corresponds to section 164 of the Maharashtra Co-operative Societies Act.
On page 235 the impact of not giving the notice as required under section 70 of the Bombay Co-operative Societies Act is concerned. Section 70 of the Bombay Co-operative Societies Act corresponds to section 164 of the Maharashtra Co-operative Societies Act. Section 70 has provided that no suit shall be instituted against a society or any of its officers in respect of any act touching the business of the society until the expiration of two months next after notice in writing has been delivered to the Registrar, or left at his office, stating the cause of action, the name, description and place of residence of the plaintiff and the relief which he claims and the plaint shall contain a statement that such notice has been so delivered or left. It is held that the wording of the section follows that of section 80 of the Civil Procedure Code. It is further held that when the requisite notice under section 80 of the Code has not been given before the inception of the suit it must be held that such an omission prevents the Court from taking cognizance of the dispute involved. This view was affirmed in a later case (Gourepore Co. Ltd. v. Chairman Naihati Municipality)3, A.I.R. 1958 Cal. 150. Although the plea was taken at the stage of the appeal even then it was held that there was no waiver of the notice by the Registrar. It was further held that it cannot be argued that because the defendant did not raise the objection on the ground of want of notice, that the Registrar in effect had waived the requisite notice. Furthermore, it has been held that the terms of section 70 of the Bombay Co-operative Societies Act are mandatory. Justice N.J. Wadia in the same judgment at page 237 has observed: “A notice under section 70, Bombay Co-operative Societies Act, has to be served not on the defendant society but on a third party, the Registrar, and it cannot be held that the conduct of the defendant in not raising the objection at the proper time could deprive the Registrar of a right which the law gives him. The section requires the fact of notice to be mentioned in the plaint and it is the duty of the Court to see that the mandatory provisions of the section are complied with.
The section requires the fact of notice to be mentioned in the plaint and it is the duty of the Court to see that the mandatory provisions of the section are complied with. There has been no waiver of notice in this case by the Registrar. The contention of the appellant bank (defendant) in Appeal No. 109 of 1931 must therefore prevail and that appeal must be allowed and the plaintiff's suit dismissed.” This authority leaves no manner of doubt that the suit of the plaintiff itself would not be maintainable in view of the fact that no notice has been given as required under section 164 of the Maharashtra Co-operative Societies Act. Counsel for the defendant has also referred to 1985(2) Bom.C.R. 357 , (C.F. Marconi v. Madhav Co-operative Housing Society Ltd.)4. Counsel contends that the agreement which was entered into between the plaintiff and the defendant was an agreement which touch the business of the society. In the aforesaid case, the Division Bench has held as follows: “It was urged by Shri Dalvi that this agreement may indirectly be concerned with the business of the society and that in terms of the Supreme Court decision that agreement may affect the business of the society. He further contended that the rights or claims under the agreement do not touch the business of the society. We are not able to accept the submission that this agreement affects the business of the society. In fact the very business of the society is to purchase and sell the lands, to construct buildings thereon and to allot flats to its members. In the backgrounds of this business of the society it would be idle to contend that the agreement which enables the society to get possession of a part of the land for reconstructing a new building thereon for the benefit of the members would not be a transaction touching the business of the society. Under thee circumstances, in our opinion, the learned trial Judge was right in holding that the suit claim arises from an act touching the business of the society.” The Counsel has further relied on 1982(2) Bom.C.R. 401 (O.N. Bhatnagar v. Rukibai N. Bhavnani and others)5. In this case the Supreme Court has held on page 495 para 17 as follows: “17.
In this case the Supreme Court has held on page 495 para 17 as follows: “17. In (Deccan Merchants Co-operative Bank Ltd. v. M/s. Dalichand Jugraj Jain)6 1970 Mh.L.J. 30, this Court had occasion to construe the meaning of the expression 'touching the business of a society' occurring in section 91(1) of the Act. It was observed that the answer depends on the words used in the Act and that the non obstante clause clearly ousts the jurisdiction of the Civil Courts if the dispute falls squarely within the ambit of section 91(1) of the Act. The Court then went on to enumerate five kinds of disputes mentioned in section 91(1), first disputes touching the constitution of a society; secondly, disputes touching election of the office-bearers of a society; thirdly, dispute touching the conduct of general meetings of a society, fourthly, disputes touching the management of a society and fifthly, dispute touching the business of a society. In the context, it was said.” “It is clear that the word 'business' in this context does not mean affairs of a society because election of office-bearers, conduct of general meetings and management of a society would be treated as affairs of a society. In this sub-section the word 'business' has been used in a narrower sense and it means the actual trading or commercial or other similar business activity of the society which the society is authorised to enter into under the Act and the Rules and its bye-laws.” In regard to the question whether a dispute touching the assets of a society would be dispute touching the business of the society, it was observed: “Ordinarily, if a society owns buildings and lets out parts of buildings which it does not require for its own purpose it cannot be said that letting out of those parts is a part of the business of the society. But it may be that it is the business of a society to construct and buy houses and let them out to its members. In that case letting out property may be part of this business.” In my view, the observations made in the aforesaid judgments make it clear that the suit filed by the plaintiff would not be maintainable on the ground that the requisite notice as required under section 164 of the Maharashtra Co-operative Societies Act has not been served.
In that case letting out property may be part of this business.” In my view, the observations made in the aforesaid judgments make it clear that the suit filed by the plaintiff would not be maintainable on the ground that the requisite notice as required under section 164 of the Maharashtra Co-operative Societies Act has not been served. Counsel has further submitted that even if the suit is said to be maintainable yet no relief can be granted to the plaintiff in the suit as the agreement dated 18th January, 1985 is merely a development agreement and the same cannot be specifically performed. Learned Counsel has relied on a judgment given in Notice of Motion No. 2716 of 1987 in Suit No. 2673 of 1987, (A. Nihalani v. Mr. Wilfred D'Souza and others)7. In that Notice of Motion this Court had the occasion to consider the nature of the agreement as to whether the same was simply a development agreement or an agreement for sale. Therein the agreement contemplated a payment of Rs. 2,85,000/- to the owners i.e. defendant Nos. 1 and 2. It permitted the plaintiff to develop the property and construct the building in which flats were to be sold on ownership basis as per the requirements and guidelines of the lessors of the land viz. Salset Catholic Co-operative Housing Society Ltd. The agreement envisages that within a period of 18 months the developer should provide to the owners and tenants a temporary alternative accommodation and that the owners should also remove the person who is occupying the garage. When disputes had arisen the agreement was cancelled and the reserved rights in favour of the plaintiff to develop the property had been withdrawn. The defendants in fact after terminating the agreement entered into another agreement with another developer for the purpose of developing the property. It was argued on behalf of the society that having regard to the provisions of section 14 of the Specific Relief Act, 1963 such an agreement cannot be specifically enforced. This view was prima facie accepted. It was held: “The facts show that the plaintiff was not in a position to develop within the period contemplated under the agreement. It was not an agreement to sell. The plaintiff was to develop and sell flats, may be, to Christians, and earn his profit.
This view was prima facie accepted. It was held: “The facts show that the plaintiff was not in a position to develop within the period contemplated under the agreement. It was not an agreement to sell. The plaintiff was to develop and sell flats, may be, to Christians, and earn his profit. Therefore, in such a case, if the agreement was put an end to, at the highest, the remedy of the plaintiff could be by way of damages, and there is no question of specific performance of this contract.” It may be noticed that the agreement therein was very similar to the agreement in the present case. Therefore, I am prima facie of the view that no suit for specific performance would lie in such circumstances. 6. Counsel for the defendant has brought to my notice another judgment of this Court in which the same view has been reiterated (given in Notice of Motion No. 76 of 1987 in Suit No. 3419 of 1986). Therein again a similar view has been taken and held that such a development agreement cannot be said to be an agreement to sell nor an agreement to lease. It has been held that it is simply an agreement to develop the property belonging to the defendants on certain terms and conditions. Thus it has been held that such an agreement cannot be specifically enforced. This judgment of the learned Single Judge has been upheld in appeal being Appeal No. 285 of 1988 decided on 7th March, 1988. The Division Bench has observed as follows:— “In essence the suit agreement is a development agreement where the aim of the professional builder/contractor (appellant) is to make a profit by completing building and selling the flats at a profit. A breach of such an agreement can be compensated by way of damages. Merely because a temple and a guest house for devotees were also to be constructed within the plot, makes no difference to the essence of the development agreement. While we applaud the pious zest of the professional builder-contractor in seeking to ameliorate the spirits and material comforts of the devotees, the essence of the contract still remains a building contract entered into with the aim of making profits by the expedient of constructing the building and selling the flats at a profit.
While we applaud the pious zest of the professional builder-contractor in seeking to ameliorate the spirits and material comforts of the devotees, the essence of the contract still remains a building contract entered into with the aim of making profits by the expedient of constructing the building and selling the flats at a profit. We agree with the learned Single Judge that damages for breach of such a contract would be the adequate remedy. Appeal dismissed.” The Division Bench judgment has been followed by a Single Judge Bench in Notice of Motion No. 763 of 1989 in Suit No. 844 of 1989 on February 8, 1991. Therein also the parties were entered into an agreement which was very similar to the agreement in the present suit. The learned Judge after considering the characteristics of the agreement has held: “The plaintiffs are professional builders/contractors and their aim in entering into the suit agreement was to make profit by completing building and selling the flats therein. Breach of such an agreement can be compensated by way of damages. No interests in land has been created by the defendants in favour of the plaintiff's under the said agreement.” Argument of the Counsel that an interest in the land had been created by the defendants in favour of the plaintiffs, because the defendants had under the agreement agreed to sell to the plaintiffs the entire second floor of the building to be constructed and one shop also, was rejected. The learned Judge held: “I am afraid it is not possible to accept this contention. It is correct that under this clause the defendants have agreed to give and allot to the plaintiffs the premises mentioned in sub-clauses (a) and (b) thereof. However, this is nothing but mode of remunerating the plaintiffs for the services of construction of the building which the plaintiffs have agreed to render to the defendants under the said agreement.” Relying on the aforesaid Division Bench judgment the learned Judge has further held: “I am supported in my view to the effect that the suit for specific performance of development agreement is not maintainable by an unreported judgment of the Division Bench of this Court in Appeal No. 285 of 1988 in Notice of Motion No. 76 of 1987 in Suit No. 3419 of 1996 being the judgment of Lentin and Sujata Manohar, JJ. dated 7th March, 1988.” 7.
dated 7th March, 1988.” 7. In this view of the matter I have no manner of doubt in holding that prima facie an agreement such as the one which is the subject-matter of the present suit cannot be specifically enforced. However, Counsel for the plaintiffs has brought to my notice the decision given in Notice of Motion No. 2475 of 1993 in Suit No. 3872 of 1993 dated 24th October, 1996. In that case there was an agreement dated 30th November, 1990 wherein the defendants had agreed to assign to the plaintiffs the development rights for developing the suit property. The plaintiffs were to develop the suit property. The defendants wanted to back out of the agreement and, therefore, suit for specific performance was filed. A perusal of paragraph 11 of the judgment would show that the case put forward by the defendants therein was that there was no concluded agreement as such no specific performance could be granted. In paragraph 12 of the judgment the argument of the defendant to the effect that the agreement is merely a development agreement and, therefore, the same cannot be specifically performed was noticed. A perusal of paragraph 14 shows that the Court came to the conclusion that there is no termination of the agreement by the defendant. In paragraph 16 it is observed that a reading of the agreement clearly shows that the first defendant has in fact assigned the development rights of the said property in favour of the plaintiff. The agreement says that the authority and the arrangement as arrived at between the plaintiff and defendant is irrevocable. It was, therefore, observed that the defendant therein had entered into an agreement with the plaintiff who had taken various steps in accordance with and in pursuance of the said agreement. The plaintiffs were always ready and willing to perform their part of the contract. As a consequence of this, nothing was pointed out on behalf of the first defendant which would disentitle the plaintiffs from the relief on equitable considerations. Thus it was held that the plaintiff had a prima facie case. The defendant therein was held singularly responsible for not complying with his part of the contract.
As a consequence of this, nothing was pointed out on behalf of the first defendant which would disentitle the plaintiffs from the relief on equitable considerations. Thus it was held that the plaintiff had a prima facie case. The defendant therein was held singularly responsible for not complying with his part of the contract. A perusal of the said authority, however, shows that none of the authorities mentioned above which have been pointed out by the learned Counsel for the defendant in this case were pointed out to the learned Single Judge. This Court is bound by the decision given by the aforesaid Division Bench. 8. Counsel for the defendants has further argued that a perusal of the agreement would show that all permissions and sanctions were to be obtained by the plaintiffs. This is clear from a reading of Clause 18 of the agreement. Therefore, the plaintiffs have made wholly false averments. It is further submitted that defendant No. 1 was anxious that the development work should be completed. In fact, it was the plaintiffs who were not showing any concern. I have also gone through the various relevant clauses meticulously. I find that by virtue of Clause 18 of the agreement it was for the plaintiffs to get the necessary or requisite permissions. Not only were the plaintiffs to get all the necessary permissions but it was to be done entirely at the expense of the plaintiff also. All that the defendant had agreed to do was that they would append their signatures on the forms if necessary. It is further contended by the Counsel for the defendants that a perusal of Clause 22 would show that this agreement was terminable. The said agreement has been terminated validly under Clause 22 in view of the fact that the plaintiff has not complied with the stipulations as contained in paragraph 12 of the agreement. Therefore, it is submitted by the Counsel for the defendant that even on merits the plaintiff is not entitled to any relief. Not only is the plaintiff not entitled to any relief in this notice of motion, it is argued by the Counsel for the defendants, that the suit is liable to be dismissed in limine being not maintainable. In view of what has been stated above, I am of the considered opinion that there is absolutely no merit in this notice of motion.
In view of what has been stated above, I am of the considered opinion that there is absolutely no merit in this notice of motion. Consequently the notice of motion is dismissed with no order as to costs. 9. Counsel for the plaintiff at this stage had made a request that the operation of this order be stayed to enable him to carry the matter in appeal. The request is declined. Notice of motion dismissed. -----