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2002 DIGILAW 609 (CAL)

Satguru Nirman Pvt. Ltd. v. Narayan Chandra Paul

2002-09-12

Altamas Kabir, C.C.De

body2002
JUDGMENT Altamas Kabir, J. The appellant/plaintiff herein filed a suit, being Title Suit No. 207 of 1999, in the 5th Court of Civil Judge (Senior Division) at Alipore, inter alia, for the following reliefs:- . "a) For a decree for permanent injunction restraining the defendant from executing any construction work or any agreement for construction of building in the suit properties through other Developer/ Promoter or outsider excepting the plaintiff. b) For a decree for permanent injunction restraining the defendant from selling of the flat/flats to the intending purchaser/ purchasers either himself or through any other Promoter/Developer. c) For a decree for specific performance of contract dated 22nd September, 1997. d) For a decree for damages likely to be cause not allowing the plaintiff to enter into the suit properties for construction of G+3 storeyed building. e) For a decree for realization of the amount already paid against receipts after executing through Accountants Commissioner to be appointed by the learned Court with interest thereon. f) Cost of the suit. g) Interest and further interest. h) Receiver. i) Attachment. j) Any other relief or reliefs the plaintiff is entitled in law and equity". 2. The case as made out by the plaintiff/appellant is that the plaintiff/appellant as the developer and the defendant/respondent as the owner of the suit property entered into an agreement on 22nd September, 1997, for construction of a four-storeyed building on the land measuring about 7 cottaha 4.16 chittaks lying and situated at premises No. 192-C/1, Kasba Road (now known as B.B. Chatterjee Road). In terms of the agreement the defendant/ respondent was entitled to 38% of the constructed area of the proposed building along with Rs. 8 lakhs to be paid in installments together with the proportionate share of the common facilities and amenities. It was alleged in the plaint that-despite having received various sums from the plaintiff/appellant, the defendant/ respondent failed to hand-over peaceful possession of the land with super-structure upto the ground floor, as a result whereof the plaintiff/appellant was unable to complete the construction work in terms of the agreement. It was also alleged that the action and/or inaction on the part of the defendant/respondent was with a view to frustrate the right acquired by the plaintiff/appellant under the agreement and to engage other developers to complete the construction work. 3. It was also alleged that the action and/or inaction on the part of the defendant/respondent was with a view to frustrate the right acquired by the plaintiff/appellant under the agreement and to engage other developers to complete the construction work. 3. The plaintiff/appellant in paragraph 10 of the plaint has indicated that it was ready and willing to perform its obligations under the joint-venture agreement dated 22nd September, 1997, although the defendant/ respondent was intentionally trying to avoid the said agreement. 4. On the basis of such pleadings, the plaintiff/appellant, inter alia, prayed for a decree for specific performance of the contract dated 22nd September, 1997, and also a decree for damages, as set out hereinbefore. 5. An application under Order 39 Rules 1 and 2, read with section 151 of the Code of Civil Procedure, was filed by the plaintiff on 8th October, 1999, for an order of temporary injunction to restrain the defendant from engaging any other developer or outsider other than the plaintiff to commence and complete the construction work after physical vacant and peaceful possession of the suit properties, free from encumbrances, was given by the defendant to the plaintiff, till the disposal of the suit or, at least, till a joint inspection and measurement was undertaken of the work done by the defendant or his men. 6. The said application was taken up for hearing by the learned Court below which by its order dated 31st January, 2000, dismissed the plaintiffs said application for temporary injunction on contest on the finding that it would be a great indiscretion to tilt the balance of discretion in favour of the plaintiff. 7. This appeal has been preferred by the plaintiff against the said order of the learned 5th Court of Civil Judge (Senior Division) at Alipore in Title Suit No. 207 of 1999. 8. Appearing in support of the appeal, Mr. Jayanta Mitra submitted that the learned Court below was wrong in holding that the agreement dated 22nd September, 1997, did not vest any right of possession of the suit property to the plaintiff/appellant but, merely created a licence in his favour to develop and to deal with the suit property. Mr. 8. Appearing in support of the appeal, Mr. Jayanta Mitra submitted that the learned Court below was wrong in holding that the agreement dated 22nd September, 1997, did not vest any right of possession of the suit property to the plaintiff/appellant but, merely created a licence in his favour to develop and to deal with the suit property. Mr. Mitra submitted that the terms and conditions of the agreement would indicate that specific portions of the building to be constructed had been allotted to the plaintiff/appellant as owner and to the defendant/ respondent as developer. Referring to paragraph 1.8 of the agreement Mr. Mitra pointed out that under the said provision the defendant/respondent was entitled to 38% of the constructed area of the proposed building, together with all common facilities and amenities to be allocated thereon as per the sanctioned plan, together with proportionate undivided share of land in the premises along with a sum of Rs. 8 lakhs to be paid by the plaintiff/appellant to the defendant/ respondent. Mr. Mitra pointed out that as per paragraph 1.9 of the agreement the plaintiff/appellant was entitled to 62% of the constructed area in the building proposed to be constructed after allocation to the owner, including the proportionate share of common facilities and amenities. 9. Mr. Mitra also referred to paragraphs 4.1, 4.2 and 4.3 of the agreement in support of his contention that the right to develop the property had been vested by the defendant/respondent in the plaintiff/appellant and merely because of the observation made in paragraph 4.4 of the agreement, it cannot be contended that only a mere licence had been created in favour of the plaintiff/appellant for the purpose of development of the property. 10. Mr. Mitra submitted that the agreement also enabled the plaintiff/appellant to negotiate for sale of the portion allocated to him excluding the space provided under the allocation made to the defendant! respondent and under paragraph 6.5 of the agreement the developer was also empowered to execute Deeds of Conveyance in favour of the intending purchaser/ purchasers of the appellant's allocation of the building on behalf of the defendant! respondent on the strength of a General Power of Attorney which had been executed by the defendant/respondent in favour of the plaintiff/appellant. 11. Mr. respondent on the strength of a General Power of Attorney which had been executed by the defendant/respondent in favour of the plaintiff/appellant. 11. Mr. Mitra submitted that the learned Court below had completely misconstrued the terms of the agreement incoming to a finding that a licence had been created in favour of the plaintiff/appellant only to develop and to deal with the suit property and observing that the plaintiff/appellant's remedy lay in damages for alleged breach of contract for which a prayer had also been made in the plaint. 12. Mr. Mitra urged that paragraphs 4.1, 4.2 and 4.3 of the agreement, read with paragraphs 1 to 8 thereof made out a prima facie case to go to trial for a decree for specific performance of contract and it is now well-settled that in a suit of such nature ad interim protection is called for despite section 52 of the Transfer of Property Act since third party rights without notice may intervene and unsettled the equity in favour of the plaintiff. 13. In support of his aforesaid submission Mr. Mitra firstly referred to and relied on a Bench decision of this Court in the case of Mukta Kesi Dawn vs. Hari Pada Mazumdar, reported in A.I.R. 1988 Calcutta page 25, where the said proposition fell for consideration and it was observed that while it is true that the doctrine of lis pendens takes care of all pendente lite transfers it may not always be good enough to take fullest care of the plaintiffs interest vis-avis such a transfer. It was observed further that where a suit is one for specific performance of sale in respect of the suit property, if the defendant is not restrained from selling the property to a third party who purchases the same bona fide for value without notice of the pending litigation and spends large sums for improvement thereof, the equity in his favour may intervene to persuade the Court to decline, in exercise of its discretion, the equitable relief of specific performance to the plaintiff at the trial and to award damages only in his favour. - 14. Mr. Mitra also referred to certain other decisions where the principle relating to grant of injunctions have been enunciated which need not detain us. 15. Mr. - 14. Mr. Mitra also referred to certain other decisions where the principle relating to grant of injunctions have been enunciated which need not detain us. 15. Mr. Mitra urged that in order to protect and preserve the interest of the parties under the agreement during the pendency of the suit, it was necessary in the interest of justice that an order of temporary injunction be passed to prevent the defendant /respondent from rendering the said agreement nugatory. 16. Appearing on behalf of the defendant/respondent, Mr. Bikash Ranjan Bhattacharya firstly submitted that paragraph 4.4 of the agreement clearly indicates that the plaintiff/appellant was a mere licensee for the purpose of the development of the premises and as such he was not entitled to claim specific performance of contract or injunction and his only remedy, if at all, is by way of damages. Mr. Bhattacharya submitted that since no right, title or interest had been created in favour of the plaintiff/appellant by paragraph 4.4 of the agreement the same was not enforceable in view of the provisions of section 14(3)(c) of the Specific Relief Act, 1963. 17. Mr. Bhattacharya then submitted that apart from the above, the agreement was required to be compulsorily registered under the West Bengal Building (Regulation of Promotion of Construction and Transfer by Promoters) Act, 1993, and in the absence of such registration, the same could not be acted upon for the purposes of the suit. Mr. Bhattacharya contended that since the construction was to be made for the purpose of transfer, the appellant, who was the promoter within the meaning of section 2(g) of the above Act, was required to obtain registration under section 3(1) thereof and for the said purpose he was required to make an application for registration of his name and for permission for construction of the building. Mr. Bhattacharya submitted that neither had the appellant got the agreement registered nor did he apply for registration and permission for construction as required under section 3(1) of the 1993 Act. 18. Mr. Bhattacharya urged that since the agreement had been executed as far back as on 22nd September, 1997, the same could no longer be registered having regard to the provisions of section 23 read with section 25 of the Indian Registration Act. Mr. 18. Mr. Bhattacharya urged that since the agreement had been executed as far back as on 22nd September, 1997, the same could no longer be registered having regard to the provisions of section 23 read with section 25 of the Indian Registration Act. Mr. Bhattacharya submitted that in the absence of registration, the agreement was hit by the provisions of section 3(2) of the 1993 Act and was no longer capable of being enforced. Moreover, the agreement had not been properly stamped as was required under the amended provisions of the Indian Stamp Act in its application in West Bengal which provides that in all the agreements involving development and transfer of immovable property Stamp Duty is required to be paid on the agreement for such development on a percentage of the market value of the property to be developed. 19. Mr. Bhattacharya submitted that even on such account the agreement in question was not capable of being enforced. 20. Referring to the provisions of section 14(3)(c) of the Specific Relief Act, Mr. Bhattacharya submitted that an agreement of the nature involved in this case is not capable of being enforced unless firstly, the building or other work are described in the contract in terms sufficiently precise to enable the Court to determine the exact nature of the building or work, and, secondly, the plaintiff has a substantial interest in the performance of the contract which is of such a nature that compensation in terms of money for non-performance of the contract is not an adequate relief. 21. Mr. Bhattacharya pointed out that since the plaintiff/appellant had not acquired any right, title or interest in the suit property, he could at best claim damages for non-performance of the contract. It was submitted that the agreement had been entered into with commercial intent and as such compensation in terms of money is an adequate relief for the plaintiff/appellant. 22. In support of his aforesaid submissions Mr. It was submitted that the agreement had been entered into with commercial intent and as such compensation in terms of money is an adequate relief for the plaintiff/appellant. 22. In support of his aforesaid submissions Mr. Bhattacharya referred to and relied on the decision of the Hon'ble Supreme Court in the case of I.C.I.C.I. vs. State of Maharashtra, reported in A.I.R. 1999 S.C.W. page 4742, where the provisions of the Bombay Stamp Act and the Transfer of Property Act fell for consideration and it was observed that by an agreement putting a licensee in possession only for the purpose of constructing a building does not create any interest in the land in the licensee's favour. The agreement neither created a lease nor did it demise any legal interest in the land proposed to be developed. 23. Mr. Bhattacharya submitted that the learned Court below had quite rightly dismissed the plaintiff/appellant's application for temporary injunction upon holding that since only a licence had been created in favour of the plaintiff/appellant to develop and to deal with the suit property his remedy, if any, lay in damages for alleged breach of contract and not by way of the discretionary relief of injunction. 24. Having considered the submissions made on behalf of the respective parties, we are not at this interim stage inclined to make any observation regarding the merits of the suit. Whether the suit is maintainable or not in view of the submissions made by Mr. Bhattacharya is to be adjudicated upon by the learned trial court at the appropriate stage upon framing of specific issues in that regard. However, we are inclined to agree with the observation made by the learned trial court that the agreement between the parties did not vest any right or possession of the suit property with the plaintiff/appellant but merely created a licence in his favour to develop and to deal with the suit property, as would be apparent from paragraph 4.4 of the said agreement, and that such creation of licence becomes further evident from the Power of Attorney executed by the defendant/respondent in favour of the plaintiff/appellant on the very date of the execution of the agreement. 25. As will appear from the judgment of the learned Court below the said Power of Attorney was also cancelled by a registered deed dated 25th August, 1999, whereupon the plaintiff/appellant automatically lost his foot-hold. 26. 25. As will appear from the judgment of the learned Court below the said Power of Attorney was also cancelled by a registered deed dated 25th August, 1999, whereupon the plaintiff/appellant automatically lost his foot-hold. 26. We are also of the view that even if the agreement is to be taken at its face value, it is hit by the provisions of section 14(3)(c) of the Specific Relief Act, 1963. Section 14 of the aforesaid Act provides as follows:- "14. Contracts not specifically enforceable. - (1) The following contracts cannot be specifically enforced namely:- (a) a contract for the non-performance of which compensation in money is an adequate relief; (b) a contract which runs into such minute or numerous details or which is so dependent on the personal' qualifications or volition of the parties, or otherwise from its nature is such, that the Court cannot enforce specific performance of its material terms; (c) a contract which is in its nature determinable; (d) a contract the performance of which involves, the performance of a continuous duty which the court cannot supervise. (2) Save as provided by the Arbitration Act, 1940(10 of 1940) no contract to refer present or future differences to arbitration shall be specifically enforced; but if any person who has made such a contract (other than an arbitration agreement to which the provisions of the said Act apply) and has refused to perform it, sues in respect of any subject which he has contracted to refer, the existence of such contract shall bar the suit. (3) Notwithstanding anything contained in clause(a) or clause(c) or clause(d) of sub-section(l) the Court may enforce specific performance in the following cases:- (a) where the suit is for the enforcement of a contract- (i) to execute a mortgage or furnish any other security for securing the repayment of any loan which the borrower is not willing repay at once: Provided that where only a part of the loan has been advanced the lender is willing to advance the remaining part of the loan in terms of the contract, or (ii) to take up and pay for any debentures of a company; (b) where the suit is for- (i) the execution of a formal deed of partnership the parties having commenced to carryon the business of the partnership; or (ii) the purchase of a share of a partner in a firm; (c) where the suit is for the enforcement of a contract for the construction of any building or the execution of any other work on land: Provided that the following conditions are fulfilled namely:- (i) the building or other work is described in the contract in terms sufficiently precise to enable the Court to determine the exact nature of the building or work; (ii) the plaintiff has a substantial interest in the performance of the contract and the interest is of such a nature that compensation in money for non-performance of the contract is not an adequate relief; and (iii) the defendant has, in pursuance of the contract obtained possession of the whole or any part of the land on which the building is to be constructed or other work is to be executed". 27. As it will appear from clause(c) of sub-section(3) of section 14 of the above Act, where the suit is for enforcement of contract for the construction of any building the party seeking specific performance of such contract has to satisfy the three conditions indicated in the proviso. Provision has been made in the agreement it self for damages and the plaintiff/appellant, along with his prayer for specific performance, has also prayed for a decree for damages in the suit. Provision has been made in the agreement it self for damages and the plaintiff/appellant, along with his prayer for specific performance, has also prayed for a decree for damages in the suit. Apart from the above, the plaintiff/appellant has not also obtained possession of the whole or any part of the land on which the building has to be constructed and in the application for temporary injunciton the plaintiff/appellant has prayed for a direction upon the defendant/ respondent to give physical vacant possession of the suit properties free from encumbrances to enable the plaintiff/appellant to commence and complete the construction work. From such prayer it is obvious that the plaintiff/appellant has not been put in possession of any portion of the suit property for development of the same, thus attracting the provisions of clause (iii) of the proviso to clause(c) of sub-section (3) of section 14 of the above Act. 28. As observed hereinbefore, at this stage of the suit, it would not be proper for us to go into a detailed discussion regarding the merits of the case and our above discussion will suffice for disposing of the present appeal. 29. The decision of the Hon'ble Supreme Court cited by Mr. Bhattacharya in the case of I.C.I.C.I. us. State of Maharashtra (supra) appears to be in pari materia with the facts of this case. The various decisions cited by Mr. Mitra would have application in a situation where the contract was capable of being performed and there was no bar under section 14 of the Specific Relief Act, 1963. 30. In such circumstances, we are not inclined to interfere with the order passed by the learned trial Court and impugned in the instant appeal. The appeal is, accordingly, dismissed and the interim order of status quo passed on 30th March, 2000 and extended from time to time is vacated and the application for stay (CAN No. 2094 of 2000) is dismissed. We hope that the suit itself will be disposed of as expeditiously as possible, but positively within one year from the date of communication of this order to the Court below. The department is directed to communicate this order to the learned Court below expeditiously. 31. There will be no order as to costs. 32. We hope that the suit itself will be disposed of as expeditiously as possible, but positively within one year from the date of communication of this order to the Court below. The department is directed to communicate this order to the learned Court below expeditiously. 31. There will be no order as to costs. 32. If an urgent xerox certified copy of this order is applied for, the same is to be supplied to the applicant expeditiously, subject to compliance with all the required formalities. Appeal dismissed.