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2011 DIGILAW 1454 (CAL)

RAHUL MAHESHWARI v. SHEILA GUHA

2011-11-29

SANJIB BANERJEE

body2011
JUDGMENT Sanjib Banerjee, J.: At the centre of these matters is a property off Park Street but with a Park Street address. One set of the parties owns the property; another is in possession of a part thereof; a third set claims to be entitled as tenants thereat; and, the fourth aspires to develop the property at the prime location. The property at 46, Park Street is owned by a trust connected with the Armenian Church. The property is vested in the Official Trustee. 2. The wardens of the Armenian entered into an agreement on or about August 19, 1999 with, inter alia, the petitioner in AP No. 373 of 2006 and AP No. 129 of 2010 for developing the property. The petitioner in AP No. 373 of 2006 and AP No. 129 of 2010 is one of a set of joint sub-tenants under the original tenant or the heirs of the original tenant at the property. The agreement between the wardens and the would-be developers envisaged the permission of the Official Trustee and the approval of the Court to be obtained. Such permission and approval were necessary since the property vests in the Official Trustee, who is governed by the provisions of the Official Trustees Act, 1913, and the matters pertaining to the properties of the trust are governed by a scheme settled by this Court. 3. Following the wardens' request to the Official Trustee to concur in the agreement, the Official Trustee wrote back on November 19, 1999 that he was unable to approve the development agreement. The Official Trustee referred, in particular, to certain clauses on which he has considerable reservation. The wardens and the would-be developers quickly set about re-working the relevant clauses to assuage the sentiments of the Official Trustee. A draft agreement was prepared by or about January, 2000 and again forwarded to the Official Trustee. The draft agreement envisaged that the Official Trustee would grant the would-be developers a tenancy in respect of the entirety of the premises for a period of seven years and six months at a monthly rent of Rs.7000/- subject to the existing occupants in a portion thereof. The draft agreement also recorded that the developers would, "on approval of this agreement by the Hon'ble High Court at Calcutta," deposit a sum of Rs. The draft agreement also recorded that the developers would, "on approval of this agreement by the Hon'ble High Court at Calcutta," deposit a sum of Rs. 2.5 lakh byway of security, which would be refunded after 50% of the demarcated allotted area as provided thereunder was made available. The developers were to become the immediate landlords of the existing joint tenants. The developers were to construct one or more new buildings at the premises at their own cost in accordance with the plan to be sanctioned by the corporation. The draft agreement did not specify the total area of the constructed space but indicated that 10,000 sq.ft thereof would be allotted to the developers and the rest would be divided between the parties in equal share with the developers enjoying a 99-year lease under the Official Trustee in respect of their allocation of 10,000 sq.ft built-up area at a monthly rent of Rs.5000/-. One of the clauses of the draft agreement envisaged sanction thereof being obtained from this Court. 4. Two of the wardens of the Armenian Church applied by way of GA No. 3565 of 2000 in Suit No. 413 of 1888 for the Court's permission under Section 25 of the 1913 Act. Such application has long been dismissed for default in the year 2003 and the wardens have taken no steps to revive the same. The draft agreement is of some vintage. The wardens now seem not to be overly interested in pursuing the proposed development agreement; as to whether out of embarrassment that they had altogether sold the Church short or for some even better reason, it is unclear. 5. The document executed on August 19, 1999 was by the wardens of the Church claiming as owners of the property and by three Maheshwari brothers describing themselves as developers. Such agreement did not meet the approval of the Official Trustee and an altogether different document was prepared and forwarded by the wardens to the Official Trustee under cover of a letter dated January 27, 2000. A copy of such draft agreement is available with the aspiring developers as it is appended to the petition relating to AP No.776 of 2011. A copy of such draft agreement is available with the aspiring developers as it is appended to the petition relating to AP No.776 of 2011. It cannot be missed that though the 1999 agreement referred to the wardens as the owners of the property, the draft agreement of January, 2000 contemplated the Official Trustee and the Maheshwaris being the primary parties thereto with the Church represented by its wardens as the confirming party. The Maheshwaris say in AP No. 776 of 2011 that there is an arbitration agreement between the Maheshwaris and the wardens of the Church that relates to the agreement of August 19, 1999. Yet, it is evident from the Maheshwaris' stand taken in AP No. 776 of 2011 that the agreement of 1999 was a non-starter and the draft agreement had been subsequently prepared by the wardens incorporating the essential features of the original agreement. There is a further anomaly that is apparent in the Maheshwaris' case. One of the wardens issued a letter on a plain sheet of paper on May 9, 2000 addressed to one of the Maheshwaris asserting that, "I agree that there should be a right to either party to refer the differences or disputes that may arise in course of time with regard to the Development Agreement for referring the same to Arbitrator." One of the would-be developers, the petitioner in AP No. 373 of 2006 and AP No. 129 of 2010, replied to the concerned warden on May 16, 2000, asserting "we herewith confirm and accept your proposal for including the arbitration clause in the aforesaid agreement." 6. It is such arbitration agreement on which AP No. 776 of 2011 is founded. Apart from the fact that there was no agreement between the parties to the original agreement of August 19, 1999 as to the dispute resolution mechanism since only one of the would-be developers and one of the wardens had exchanged the letters, it cannot be missed that both the would-be developers and the wardens were aware that the executed agreement of August 19, 1999 had been jettisoned and the new document to replace the original agreement was merely a draft and had neither been finalised nor executed. In any event, even the executed agreement of August 19, 1999, for whatever it was worth, recorded that the terms thereof were subject to approval of the Official Trustee and of this Court. Despite the would-be developers being aware of such position, they have said in the petition relating to AP No. 776 of 2011 that they are entitled to specific performance of the agreement dated August 19, 1999 and the modification thereto. 7. In September, 2006 one of the would-be developers carried AP No. 373 of 2006 to this Court under Section 9 of the Arbitration and Conciliation Act, 1996. At paragraph 9 of such petition, it has been averred that the Official Trustee holds the Park Street property in trust for the Armenian Church and in such circumstances, "it became necessary to obtain the permission of the said Official Trustee for the purpose of due grant of a lease of the said premises in favour of your petitioner and his brothers." The following paragraph refers to the application made by the wardens for permission being obtained from Court. The petitioner in AP No. 373 of 2006 has set out at paragraph 12 of the petition the prayers made by the wardens in GA No. 3565 of 2000. Such petitioner claims to have applied in the wardens' application for leave to intervene in the proceedings. On November 18, 2004 leave to intervene as sought was granted. However, as is now evident, prior to such order being made, the wardens' application, for permission stood dismissed for default. Both the would-be developers and the wardens had, at the relevant time, attempted to justify the plan for development on the ground that the property earned the church a meagre sum of Rs.2,750/- per month. 8. Though the petitioner in AP No. 373 of 2006 appears to have been aware of the Official Trustee having declined to accord permission to the document that the would-be developers and the wardens executed on August 19, 1999, paragraph 16 of the petition relating to AP No. 373 of 2006 narrates that the wardens authorised the petitioner, by a letter dated August 12, 2005, to initiate steps for obtaining vacant and peaceful possession of the premises from the present occupants thereat. The conduct of the would be stet developers is understandable since they were bent on making a killing by developing the property at a prime location on rather charitable commercial terms. The approach of the wardens, however, seems baffling. Even if the wardens had any authority to do anything in respect of any property of the church or the trust relating thereto, the wardens ought to have had the interest of the church or the relevant trust at heart in course of entering into any transaction relating to the property. The wardens appear at the relevant time to have completely disregarded the fact that the scheme that they had hatched to hand over the property on a platter to the Maheshwaris could not be carried forward without the Official Trustee playing ball and the Court's imprimatur. It was a minor matter that by the time the letter dated August 12, 2005 was issued on behalf of the wardens to the would-be developers, the application for permission to enter into any development agreement relating to the property stood dismissed for default. 9. The petition relating to AP No. 373 of 2006 says that Sheila Guha is the resident of flat No.1 on the ground floor of the premises and also in possession of vacant flat No.3 on the first floor thereof. The petitioner claims to have entered into negotiations with Sheila Guha pursuant to the wardens' authority granted in August, 2005 and suggests that an agreement was concluded between the petitioner and Sheila Guha on July 15, 2006. The relevant document runs into two pages and is in the form of a letter issued by the petitioner in AP No. 373 of 2006 addressed to Sheila Guha. At the foot of the second page there are two boxes, one to the right and another to the left. The petitioner says that the signature in the left box is that of Sheila Guha which appears below the words "Confirmed and accepted." The petitioner claims that the date of the acceptance has been written by Sheila Guha in the-box appearing to the right. In its opening paragraph, the letter refers to the so-called agreement with the wardens executed on August 19, 1999. In its opening paragraph, the letter refers to the so-called agreement with the wardens executed on August 19, 1999. The expression "you and the other tenants were represented by you" appears in the following paragraph and the petitioner insists that such expression implies that Sheila Guha entered into the agreement for and on behalf of all the joint tenants who were the surviving heirs of the original tenant. The perceived agreement is spread over nine clauses. 10. The petitioner in AP No. 373 of 2006 has referred to another letter of July 17, 2006 which speaks of the perceived agreement of July 15, 2006. The letter covering three paragraphs is also said to contain the signature of Sheila Guha and the date in two boxes and the petitioner says that it evidences the advance payment of Rs. 11,000/- made to Sheila Guha against the agreed consideration of Rs.2.51 lakh as recorded in the agreement of July 15, 2006. In her affidavit in AP No. 373 of 2006, Sheila Guha has altogether disowned the agreement of July 15, 2006 that envisaged that such joint tenant would vacate the premises and take up temporary lodgings elsewhere and would be allotted a portion of the constructed premises. Sheila Guha has said in her affidavit, and it is not disputed, that her father had been inducted as a tenant under the Official Trustee at the said premises. Upon her father's death, the widow and the four children came to be jointly entitled to the tenancy. The Official Trustee wrote a letter on February 14, 1994 to the heirs of the original tenant that such heirs were being accepted by the Official Trustee "as a monthly tenant exactly on the similar terms and conditions of the fore-going lease agreement which expired on 3.10.93 last." As to what weighed with the office of the Official Trustee at the relevant time to issue such a letter, which was clearly not in the interest of the trust, cannot be fathomed. But as far as the heirs of the original tenant are concerned, they enjoy a monthly tenancy on the terms contained in the deed of lease that expired by efflux of time in October, 1993. 11. But as far as the heirs of the original tenant are concerned, they enjoy a monthly tenancy on the terms contained in the deed of lease that expired by efflux of time in October, 1993. 11. At the ad interim stage in AP No. 373 of 2006, an ex-parte order was made on September 14, 2006 injuncting "the respondent from transferring and/or disposing of and/or selling and/or alienating and/or encumbering and/or letting out and/or creating any sub-tenancy and/or third party interest in respect of the entire premises and in particular flat no. 3 of the premises no.46 Park Street." A receiver was also appointed to make an inventory of the premises to ascertain the number of occupants thereat and identify the portions under their occupation. The order directed a copy of the petition to be served on the respondent and the matter was made returnable on September 25, 2006. Sheila Guha was not represented when the matter appeared on September 25, 2006. However, the receiver's report was noticed, particularly the statement attributed to Sheila Guha therein that flat No.3 had not been let out. 12. GA No. 3821 of 2007 is by Sheila Guha seeking the discharge of the receiver appointed in AP No. 373 of 2006. Such application was dismissed for default and the order subsisting in AP No. 373 of 2006 was confirmed and the petition disposed of, but the relevant order has been recalled and both AP No. 373 of 2006 and GA No. 3821 of 2007 are live matters. 13. One of the points canvassed by Sheila Guha at the initial stage, apart from disowning the agreement of July 15, 2006 and the arbitration clause contained therein, was that she was not the sole tenant of premises No. 46 Park Street. The petitioner in AP No. 373 of 2006 thereafter launched AP No. 129 of 2010 where the other siblings of Sheila Guha are also arrayed as respondents, their mother having died prior to the present dispute. 14. GA No. 758 of 2010 has been filed in the original proceedings by one of the heirs of the original tenant and a sister of the joint tenant in occupation seeking leave to intervene in the proceedings and requiring the subsisting orders to be modified. 15. 14. GA No. 758 of 2010 has been filed in the original proceedings by one of the heirs of the original tenant and a sister of the joint tenant in occupation seeking leave to intervene in the proceedings and requiring the subsisting orders to be modified. 15. CC No.3 of 2008 has been brought by the petitioner in AP No. 373 of 2006, complaining of the subsisting orders of September 14, 2006 and September 25, 2006 having been violated by the joint tenant in occupation. Such contempt petition has per force to be entertained by the present arbitration Judge. 16. Despite the involved submission made on behalf of the several parties, the matter appears to be quite simple. The wardens of the Armenian Church executed an agreement in favour of the aspiring developers, apparently creating an interest in respect of the property. The Official Trustee declined to approve the terms of the agreement. The wardens, to the notice and knowledge of the Maheshwaris, abandoned the so-called agreement of August 19, 1999 and put forward a draft agreement which also envisaged the development of the property by the Maheshwaris. But, more importantly, it is apparent that the parties to the so-called agreement of August 19, 1999 can do nothing about the matters covered thereby. If the arbitration clause that the petitioners in AP No. 776 of 2010 assert governs the so-called agreement of August 19, 1999, the parties thereto would be free to enjoy their tea and snacks in course of the reference thereunder without the property being affected in any way by the result of the reference. If the Maheshwaris do not have a present right in respect of the property, then notwithstanding their assertion of the purported agreement that Sheila Guha is alleged to have executed, the rights of the heirs of the original tenant at the premises can scarcely be affected. Again, since AP No. 776 of 2010 is for the avowed purpose of the Maheshwaris seeking specific performance of the so-called agreement of August 19, 1999 there is no merit in the petition once it is recognised that despite the wardens' flamboyant attempt to arrogate unto themselves the rights relating to the property, they had no authority to deal with it without the Official Trustee's sanction or the Court's approval. 17. 17. Substantial arguments have been made both on behalf of Sheila Guha and sister Ela Dutta as to the validity of the document of July 15, 2006 and the effect thereof on the other joint tenants. Judicial authorities have been carried on all sides either to demonstrate the distinction between joint tenants and tenants-in-common or the lack of it in Indian law. The doctrine of representation as recognised in tenancy law has also been expounded on with the applicable law of succession in tow. The parties have even ventured further a field in placing the law relating to contingent contracts. In the light of the view which is taken herein, it is not relevant to refer to the various judgments that have been cited by the parties. 18. The Armenian Church and its wardens do not appear to be interested in binding the church or the trust to the terms that had been reached with the Maheshwaris in 1999. They have taken no steps to revive the application for obtaining the Court's permission to develop the property. Even if the agreement of July 15, 2006 between one of the Maheshwaris and one of the joint tenants is accepted and all the Maheshwaris and all the joint tenants are taken to be parties thereto, the basis of such agreement has been undone in the Maheshwaris having no rights as of now under the so called agreement of August 19, 1999. The Maheshwaris' case against the joint tenants at the premises stands now no more than on thin air. The Maheshwaris have no present right in the premises that would warrant the continuation of any order that may be subsisting in favour of the petitioner in AP No. 373 of 2006 or AP No. 129 of 2010. 19. In the contempt proceedings brought by the petitioner in AP No. 373 of 2006 against Sheila Guha, the charge is that despite the order of injunction in the petitioner's favour, the alleged contemnor inducted persons at flat No.3 at the said premises. The explanation furnished by Sheila Guha is that two attendants or employees of the family have been permitted to use the flat without any rights* being created in their favour. The explanation is satisfactory and the matter does not call for any further investigation. 20. The explanation furnished by Sheila Guha is that two attendants or employees of the family have been permitted to use the flat without any rights* being created in their favour. The explanation is satisfactory and the matter does not call for any further investigation. 20. In the context of the wardens' conduct, it is tempting to expend a line or two on how trust properties ought to be dealt with. Trustees bare called as such to emphasise on the position of confidence that they enjoy and the faith reposed in them. Trust properties cannot be dealt with by trustees with even the remotest motive of personal gain. In particular, properties belonging to public or religious or charitable trusts should ordinarily not be dealt with without ensuring the best terms therefor. The best terms may generally come upon bids being invited and the bids being considered at arm's length with the interest of the trust being paramount. The wardens here showed extraordinary enthusiasm in entering into a private deal with private persons and expecting the Official Trustee to rubber-stamp it. Undeterred by the Official Trustee's reaction to the original game-plan, the wardens acted with alarming alacrity in conjuring up a draft agreement containing similar commercial terms to sugar-coat the pill for the Official Trustee. Thankfully, the concerned official did not take the bait, never mind whatever else may have been offered to him. It is at least redeeming that the wardens did not pursue the matter for much long thereafter. The wardens or the council of the Armenian Church or any other body responsible for the day to day management of the properties of the church or its trust may yet endeavour to make the Park Street property of greater use to the church or the community, since it does not yield anything meaningful from the joint tenants now; but a small investment by way of advertisements inviting offers from developers may result in the best terms coming in. 21. There is no merit in the petition relating to AP No. 776 of 2011, particularly since it is evident that the wardens could not have dealt with the property in question without the Official Trustee and the Court approving it. 21. There is no merit in the petition relating to AP No. 776 of 2011, particularly since it is evident that the wardens could not have dealt with the property in question without the Official Trustee and the Court approving it. There is also a serious doubt as to the efficacy of the arbitration agreement that has been cited by the petitioners therein as it is evident that the consensus in such regard was only as between one of the wardens and one of the would-be developers. If the wardens had no legal mandate to create any rights in respect of the property in favour of any person, the so-called agreement of August 19, 1999 conferred no rights on the would-be developers in respect of the property and no order as sought by the would-be developers in respect of future dealings concerning the property is warranted. AP No. 776 of 2011 is dismissed without any order as to costs. The wardens or the council of the Armenian Church may only remember to give notice to the Maheshwaris in the event they invite offers for the development for the property. 22. Since the Maheshwaris do not appear to have any right at the moment to develop the property, no order can be made in AP No. 373 of 2006 or AP No. 129 of 2010 even if it is accepted that there was an agreement between all the would-be developers and all the joint tenants at the premises. There is, however, considerable doubt as to the existence and the legality of the agreement of July 15, 2006. Only one of the Maheshwaris and one of the joint tenants appear to be the eo nomine parties to such agreement, even if the factum thereof is not questioned. Whether one of the joint tenants could bind the other joint tenants in the manner asserted, including the dispute resolution mechanism, is a question that need not be conclusively answered in the present proceedings, despite the temptation, and be left to the persons affected or sought to be affected thereby to work out elsewhere. Prima facie, both the basis for the Maheshwaris' endeavour to enter into the agreement and the factum thereof appear to be on infirm ground. Prima facie, both the basis for the Maheshwaris' endeavour to enter into the agreement and the factum thereof appear to be on infirm ground. Even if one of the joint tenants is accepted to have executed the agreement with the Maheshwaris, the authority of such joint tenant to bind the other joint tenants has not been demonstrated. AP No. 373 of 2006 and AP No. 129 of 2010 stand dismissed and all orders subsisting on either petition stand vacated. The petitioner in such matters will pay costs assessed at 1000 GM each to Sheila Guha and Ela Dutta. GA No. 3821 of 2007 and GA No. 758 of 2010 stand disposed of without any order as to costs. 23. CC No.3 of 2008 is dropped without any order as to costs. 24. One or more flats at premises No. 46 Park Street to which the joint tenants are entitled remain vacant. It is not inconceivable that the vacant flat or flats may be sublet by the joint tenants against a substantial initial payment. Judicial notice must be taken of the fact that possession is made over by tenants in prime commercial locations to sub-tenants against hefty initial payments, more often than not in cash. Since the property belongs to a trust which earns a measly amount of less than Rs.3000/- per month for an asset that should fetch it lakhs of rupees a month, it would be injudicious to allow the joint tenants to enjoy such bonanza with the church or its relevant trust being left in the lurch. Sheila Guha, who is one of the joint tenants and actually in occupation of the vacant flat or flats, has volunteered to take prior permission of the Official Trustee before creating any sub-tenancy in respect of any portion of the premises in occupation of the joint tenants. Accordingly, in keeping with the ethos of section 25 of the 1913 Act, the joint tenants are permitted to create any sub-tenancy in favour of any other in respect of any portion of premises No. 46 Park Street under their occupation, but only after obtaining the previous sanction of the Official Trustee. The Official Trustee should not unreasonably withhold the permission if the initial premium for creation of any sub-tenancy appears to be reasonable to the Official Trustee and the joint tenants offer three-fourths of such amount to the trust. The Official Trustee should not unreasonably withhold the permission if the initial premium for creation of any sub-tenancy appears to be reasonable to the Official Trustee and the joint tenants offer three-fourths of such amount to the trust. Such order may not be seen to have detracted from any rights of the trust qua the joint tenants in any manner whatsoever. 25. Urgent certified photocopies of this judgment, if applied for, be supplied to the parties subject to compliance with all requisite formalities. Later : 26. The petitioner in AP No. 373 of 2006 and AP No. 129 of 2010 seeks a stay of the operation of this order insofar as it vacates the subsisting interim orders. Such prayer is declined.