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2013 DIGILAW 139 (BOM)

Girdhar Creations v. Baban Baburao Rathare

2013-01-17

S.C.DHARMADHIKARI

body2013
JUDGMENT:- 1. This Appeal from Order (AO 292/2007) was heard on earlier occasion. It was placed yesterday for passing judgment/final orders. However, it was noted that Mr. S. M. Gorwadkar has filed his Vakalatnama on behalf of the original defendant-respondent No.10 who is the contesting defendant and who has claimed that who has taken over the rights in the immovable property of the original defendant nos. 1 to 3. Thus, the contesting parties who were represented by Mr. Gorwadkar could not be heard as he was not present. Equally the respondent nos. 12 and 13 have been represented by Mr. Jaydeep Deo. He was also present on earlier occasion. Therefore, I have heard the advocates yesterday at some length and at the request of Mr. Gorwadkar, final orders were deferred today because, he sought time to take instructions from his client with regards to the prayers that are made in Civil Application No. 96 of 2010 in Appeal from Order No. 292 of 2007. 2. The submissions of the parties would be noted a little later after referring to the order challenged in the present appeal. 3. The Appeal from Order has been filed by the original plaintiffs in Special Suit No. 1311/2006, challenging the order passed below Exhibits 5, 34 and 68. By these applications, temporary injunction has been sought by the original plaintiffs seeking to restrain all the 13 respondents-defendants from disturbing their possession over the suit property and or from obstructing them from carrying out development and construction activities thereon, equally the defendants were sought to be restrained from creating any third party rights, interest in the suit property. 4. That the Trial Court has noted that the suit was filed by appellants alleging that there is an agreement in their favour dated 15th September, 2004. The agreement is duly registered i.e. the agreement between them and the original defendants nos. 1 to 11. Though it is styled as a development agreement, it is an agreement creating right in the immovable property and in fact, amounts to an agreement of development-cum-sale. The defendant nos. 1 to 9 had agreed to convey and sell the suit property in favour of any legal entity which may be established and created by the appellants-plaintiffs in respect of the flats/tenants on the buildings to be constructed on the suit property. The defendant nos. 1 to 9 had agreed to convey and sell the suit property in favour of any legal entity which may be established and created by the appellants-plaintiffs in respect of the flats/tenants on the buildings to be constructed on the suit property. There is also an irrevocable general power of attorney executed in their favour on the very day. Equally, there is a deed of declaration-cum-indemnity wherein, the original defendant Nos. 10 and 11 are consenting parties. It was averred that consideration under the said agreement was paid by way of cheques and what has then been noted by the Trial Court is the case that the building plans were submitted for construction and development of the property and they have been duly sanctioned by the Pune Municipal Corporation. The construction activity was going on and the same was in accordance with the sanctioned plan. The construction activities then noted was completed up to plinth in respect of two buildings and third slabs in respect of another building. The plinth checking certificate was issued by the Pune Municipal Corporation. There were third party rights created and prospective purchasers of the flats/units have agreements in their favour. As on the date when the Trial Court passed the impugned order, the agreements in respect of more than 90 flats/units were stated to have been entered into by the appellants-plaintiffs, apart there from there was readiness and willingness to perform their part under agreement has been noted. 5. It is in such circumstances and by alleging that a notice dated 1st April, 2006, from the defendant nos. 1 to 9, purporting to terminate the agreement was impugned and challenged by arguing that this agreement is for sale of immovable property and time was no essence under the said agreement. There has been no time limit prescribed and stipulated for getting the suit property measured and demarcated. Yet the demarcation and measurement has got done in the presence of the defendants. Therefore, by relying upon the contentions in the reply to termination notice and the averments in the plaint, the Trial Court noted that the appellants-original plaintiffs are claiming interim relief. 6. Thereafter, the Trial Court has noted the replies submitted by the contesting parties. Yet the demarcation and measurement has got done in the presence of the defendants. Therefore, by relying upon the contentions in the reply to termination notice and the averments in the plaint, the Trial Court noted that the appellants-original plaintiffs are claiming interim relief. 6. Thereafter, the Trial Court has noted the replies submitted by the contesting parties. It may not be relevant at this stage to note their contents because of the subsequent developments and during the pendency of the appeal, the suit having been compromised with some of the defendants and a compromise/ consent decree being passed in the appellants-plaintiffs favour as claimed in the memo of Civil Application No. 96 of 2010. 7. Be that as it may, the Trial Court noted the objections raised as to the measurement and demarcation and that the property covered by the agreement does not include some other lands, which are sought to be now usurped. This was the case of these parties who were contesting the suit. On all three counts namely, the prima facie case, balance of convenience and irreparable loss and injury, the Trial Court held against the appellants and proceeded to dismiss their temporary injunction application by a somewhat detailed discussion in order its dated 26th March, 2007. 8. Essentially the Trial Court noted that clauses in the agreement would denote that it is not an agreement for sale of the immovable property prima facie. That the agreement is for development of the property and such development agreement is not enforceable by itself. The Trial Court has placed reliance on several decisions of this Court and in consonance with these findings, held against the appellants on all three points. This Appeal from Order was preferred in this Court and has been admitted. What has been then done is to move a application for interim relief therein. In one of the applications made for interim injunction, what has happened will now have to be noted. 9. After hearing both the parties, a learned Single Judge of this Court, made an order dated 30th April, 2007. The learned Single Judge directed that till the application is heard finally, the respondents are restrained from obstructing the work of completion of Buildings A to D which are described in the affidavit dated 18th April, 2007. 9. After hearing both the parties, a learned Single Judge of this Court, made an order dated 30th April, 2007. The learned Single Judge directed that till the application is heard finally, the respondents are restrained from obstructing the work of completion of Buildings A to D which are described in the affidavit dated 18th April, 2007. The Court clarified that the applicants-appellants cannot carry on the construction of any other buildings save and except the buildings A' to 'D'. The Court then directed that this relief is granted subject to the condition that the applicants will not create any further third party interest in respect of the flats and the premises in the said buildings. The Court also clarified that further construction of buildings A to D will be subject to the final outcome of the appeal and no equity will be created in favour of the appellants. 10. The appellants have stated that application for interim relief being Civil Application No. 435 of 2007 in Appeal from Order No. 292 of 2007 could not be heard but in the meanwhile, they have paid the entire consideration of Rs. 1.75 crores, they have got the plans sanctioned and incurred heavy expenditure with regard to the development and construction. The construction has proceeded in terms of the interim order and buildings A to D consisting of 112 flats have been completed. Out of them, 95 flats are already sold. 17 flats comprising approximately total 12000 square feet area are lying vacant. The appellants-original plaintiffs have stated that in terms of the present market value of these flats and by holding on to these flats, which are now vacant, they are incurring losses. What has then been stated is that the partition deed entered into between the defendant Nos. 1 to 9 and 10 and 11 shows that property belongs to defendant Nos. 1 to 9. The present appellants- applicants purchased the property from defendant Nos. 4 to 9. The defendant Nos. 10 and 11. have entered into a development agreement with defendant Nos. 12 and 13 in respect of their share in the property. In the map annexed to the development agreement, some portion of the appellant-applicants' property admeasuring 65 R is erroneously shown as property belonging to defendant Nos. 10 and 11. Except the alleged overlapping portion, the defendant Nos. 10 and 11. have entered into a development agreement with defendant Nos. 12 and 13 in respect of their share in the property. In the map annexed to the development agreement, some portion of the appellant-applicants' property admeasuring 65 R is erroneously shown as property belonging to defendant Nos. 10 and 11. Except the alleged overlapping portion, the defendant Nos. 12 and 13 claiming under the said defendants 10 and 11 have no dispute as regards the entitlement of defendants Nos. 1 to 9 or demarcation of the share of the defendants 1 to 9. 11. What has then been stated is that there is a compromise arrived at between the original plaintiffs appellants before me and the original defendant Nos. 1 to 9. The compromise terms have been taken on record by the Trial Court by its order dated 31st October, 2007, a copy of which is annexed as Annexure A to the Memo of Civil Application No. 96 of 2010. 12. It is then stated that the defendant No.11 in the subject Special Civil Suit has also settled the dispute and has arrived at a compromise with the appellants. Even that compromise has been referred to in Para 7 of the Civil Application and a copy thereof together with order of the Trial Court has been annexed at Annexure C. It is stated that the project has suffered a lot. The original defendant no.10 has got a share of the defendant nos.1 to 3, about 30 % land transferred in his name. However, 70% of the share of defendant nos. 1 to 9 is now undisputed. The project consists of 7 buildings. Four buildings have been constructed. Out of remaining three buildings, only one building comes in the disputed area which is about 65 Ares. Remaining two buildings are not situate on the disputed area. Once huge amounts have been invested and prima facie this Court having come to a conclusion that the Trial Court was in error in holding that the agreement is merely of development and not of development-cum-sale, then, it is just, fair and proper that the Trial Court order is set aside or is substituted by permitting the appellants to complete the construction in terms of the agreement, and in any event, to dispose of the 17 flats which are lying vacant in buildings A to D. 13. It is on the material that I have heard Mrs. Bagalia on behalf of the Appellants. She has taken me through the record and has submitted that if this Court has, in the light of the prima facie findings recorded in the order passed on 30th April, 2007, allowed the construction and development over the suit property, then, the Trial Court's order is as good as set aside. This Court having permitted the construction to be carried out and the position at site undergoing a drastic change, on account of substantial compromise arrived at between the parties, then, this Court should while setting aside the order passed by the Trial Court and allowing the appeal should also permit further construction and development and even to sell these 17 flats. She submits that these are constructions as per and in accordance with the sanctioned plans. The Club house also has to be constructed in terms of the agreement with the flat purchasers, and therefore, was a part of the construction activity and development envisaged over the suit property. None of the construction carried out or the development made can be termed either as unauthorized or illegal, once it is in accordance with the sanctioned plan. She submits that in such circumstances, this Court should grant complete relief by taking note of the subsequent developments and not force the appellants original plaintiffs to make further applications in the Trial Court. She submits that the Trial Court may also be directed to dispose of the suit expeditiously. For all these reasons she submits that the appeal be allowed. 14. Mr. Gorwadkar, appearing on behalf of original defendant no.10 submits that the grant of such a relief would mean that this Court has granted further interim relief in the suit pending before the Trial Court. Even if the subsequent developments have to be noted by his Court, it does not mean that the Trial Courts function and its duties can be taken over and performed by it. It is not a Court where the lis is pending. The suit is still pending between same parties and it is not wholly compromised, there is serious dispute with regard to the measurement and demarcation of the property. The constructions on their own showing and prima facie overlaps portion of the lands which have come to the share of the contesting defendants. The suit is still pending between same parties and it is not wholly compromised, there is serious dispute with regard to the measurement and demarcation of the property. The constructions on their own showing and prima facie overlaps portion of the lands which have come to the share of the contesting defendants. In these circumstances, it would be hazardous and risky to allow this appeal by taking note of subsequent developments. That would mean that the suit is finally or partially decreed by this Court; thereafter it will be difficult for the contesting parties to resist the claim in the Trial Court. Some observations made in the course of arguments and while dealing with them will influence the Court below while deciding the suit. For all these reasons, he submits that it will not be just and fair to pass any further order. 15. In the alternative Mr. Gorwadkar submits that while it is true that order dated 30th April, 2007 passed by this Court in the Civil Application has not been challenged by the contesting defendants in the higher Court and the construction activity has proceeded in accordance therewith, yet, if the property is allowed to be dealt with by the appellants, that should be subject to such terms and conditions including undertakings from the appellants and equally the third parties that their activities and dealings would abide by the final outcome of the suit and will be subject to final orders therein and they should not be permitted to claim any equities. The suit is for specific performance of the agreement, styled as an agreement for sale but there is dispute as to whether it is as such. In any event specific performance is a discretionary relief. Section 20 of the Specific Relief Act 1963 mandates that the Court is not obliged to award and grant specific performance of a contract. That relief is discretionary and equitable. This provision is in an enactment which also stipulates that the discretion should be exercised judiciously and not arbitrarily. For all these reasons, Mr. Gorwadkar submits that in the event this Court is inclined to grant Prayer (b) of the Civil Application No.96 of 2010, it may impose such conditions which are just and proper. 16. Mr. Deo appearing for the original defendant-respondent nos. For all these reasons, Mr. Gorwadkar submits that in the event this Court is inclined to grant Prayer (b) of the Civil Application No.96 of 2010, it may impose such conditions which are just and proper. 16. Mr. Deo appearing for the original defendant-respondent nos. 12 and 13, while disputing the position as narrated in the Civil Application, submits that insofar as these defendants are concerned their rights may not be disturbed; they have distinct agreement in their favour. Any observations made by this Court with regard to the share of the contesting defendants are bound to prejudice the claim of these defendants. For these reasons, he submits that this Court should not grant any relief based on the subsequent developments. 17. With the assistance of the counsel appearing for the parties, I have perused the record of this appeal and equally the civil applications 18. From the record, it appears that the Trial Court has been influenced to a great extent by the clauses of the agreement. The Trial Court has referred to that agreement and relying on clause 14 thereof, held that the agreement prima facie cannot be said to be agreement for sale but a mere development agreement. 19. The compilation of documents which has handed over contains the document-agreement dated 15th September, 2004. There are parties who are referred to in this agreement as 'Developers' (The party of the First Part) equally the 'Owners' as Second Part, and the 'Consenting Parties'. It has been stated that in the recitals, with regard to their ownership and then what has been stated is that the Owners have legal necessity to sell the property and were not in position to cultivate the said land and apprehended that there was every likelihood of encroachment upon the said property as the area is rapidly coming under urbanization and hutment dwellers are likely to enter and encroach upon the said property. The developers had acquired expertise and they have represented them that they will promote an ownership scheme on a part of the land. The developers had shown their willingness to develop the property and construct buildings for the prospective purchases by entering into agreements with them. It is thereafter, clauses in the agreement have been set out. Clauses 1 and 2 talk of entrustment of property for development but by promoting ownership scheme or otherwise. The developers had shown their willingness to develop the property and construct buildings for the prospective purchases by entering into agreements with them. It is thereafter, clauses in the agreement have been set out. Clauses 1 and 2 talk of entrustment of property for development but by promoting ownership scheme or otherwise. The consideration for entrustment of rights is then referred to and Clauses 3, Clause 4 and 5 set out as to how the same is to be paid. Thereafter, there is a stipulation with regard to the owners handing over the property on the basis of their title and any stoppage of work is permitted before registration by the developers. The stipulations in clauses 8, 9, 10, 11, 12 and 13 and all clauses preceding thereto with the recitals will have to be read together. If they are so read clause 14 cannot be prima facie seen in isolation. The Trial Court has noted only this clause and has considered and read it in isolation and de hors the other clauses. If they are read together and with reference to the other clauses particularly which permit exploiting the potential of the land /plots by utilization of the FSI, TDR. Surely such stipulations and together with the permissions to execute agreements with the prospective purchasers and register a incorporated entity of such purchasers cant be seen as merely a licence to enter upon the property and make construction. After making construction and development there are definite and certain rights prima facie created in the land. In such circumstances, the Trial Court made no reference to them and in ignorance thereof, by only referring to the judgments of this Court held that the agreement cannot be held to be an agreement for sale but for development. 20. That the judgments of this Court have been rendered in peculiar facts and should be seen in that backdrop, the Trial Court should have noted not just their ratio or some paragraphs thereof. It 14/20 should read them in the context of the facts brought to the notice of this Court. That having not been done, this Court, prima facie being satisfied, permitted the construction of buildings A to D. Ms. It 14/20 should read them in the context of the facts brought to the notice of this Court. That having not been done, this Court, prima facie being satisfied, permitted the construction of buildings A to D. Ms. Bagalia is therefore right in arguing that the subsequent events cannot be brushed aside or ignored by this very Court as they arise on account of certain orders and directions of this Court. Further, that the suit is partially compromised is a factor in favour of the appellants original plaintiffs. 21. All that has been stated on affidavit by the contesting defendant no.10 in his earlier say is that the demarcation of the land will have to be done. There is a contest between the parties. The Court therefore should not permit any further steps being taken. Now when the respondent nos. 1 to 3 original defendants 1 to 3 have transferred, to respondent no.10- the original defendant no.10 on 30th August, 2006, their share of land admeasuring 65 R, then, all the more his defence will be gravely prejudiced. However, the fact remains that when this Court was satisfied that the interim order passed by the Trial Court cannot be sustained, it permitted construction and development activities. Pursuant thereto and after five years having gone by, buildings have come up at site, buildings A to D are stated to be complete and 95 flats therein are sold. There are total 112 flats in the said buildings. 17 of them are stated to be vacant and for nobody’s benefit, that is a completely idle investment and the unutilized portion will prolong everybody's agony is the submission canvassed before me. 22. Equally what has been argued is that interim relief itself is discretionary and final relief is not a matter of right, then, all such development will not confer or create any vested right in favour of the appellants. Tomorrow a situation may arise, if the suit is dismissed in that event, all such development would be futile. The evidence in the suit is yet to be led. 23. To my mind, the flats having been constructed and 95 of them have having been sold, it is not as if the dealings and transactions which have been undertaken till date will not and cannot abide by the result of the suit. The evidence in the suit is yet to be led. 23. To my mind, the flats having been constructed and 95 of them have having been sold, it is not as if the dealings and transactions which have been undertaken till date will not and cannot abide by the result of the suit. They are subject to the outcome of the suit and the parties are aware of the pendency of the main litigation. Sale of 17 flats subject to that will not prejudice any parties any further. This Court having permitted the construction activities and it having been completed within 5/6 years period and when the suit has been partially compromised, it will not be fair, just and proper to keep the 17 flats in vacant condition. That would only mean that costs of maintaining the same are to be incurred and as long as they are vacant, the purchasers who have already acquired rights in the other flats in the building would not be in position to enjoy the fruits of the development, construction and equally the property as a whole. In such circumstances, by imposing appropriate conditions and obtaining appropriate undertakings, the flats can be permitted to be dealt with subject to the outcome of the suit and without prejudice to the rights and contentions of all the parties. 24. To my mind the following order will sub-serve the ends of justice:- i. Appeal from Order No. 292 of 2007 is allowed. ii. The impugned order passed by the Trial Court is quashed and set aside in the light of the subsequent developments referred above and holding that the prima facie conclusion of the Trial Court that the agreement is merely of development and not a development-cum-sale is not sustainable. However, it is clarified that while setting aside this finding and conclusion by equally another prima facie and tentative conclusion, all developments subsequent to the institution of this appeal and the orders passed today shall not influence the Trial Court in deciding the suit finally. All contentions of the parties on merits are kept open. iii. The Civil Application 96 of 2010 is made absolute in terms of prayer clauses (b). All contentions of the parties on merits are kept open. iii. The Civil Application 96 of 2010 is made absolute in terms of prayer clauses (b). However the flats shall be sold by the appellants original applicants at their own risk subject to the undertaking to be filed in the Trial Court placing on record copies of each of the agreement in relation to these flats and containing the stipulation that they have been sold and parties have been put in possession subject to the final result in the suit and that no equities can be claimed either by the appellants or the flat purchasers. iv. The flat purchasers have been informed about the pendency of the suit as well. v. If such undertakings are filed in the Trial Court and compliance is made with the above stipulation, the Trial Court to permit appellants-plaintiffs to put the flat purchasers of these 17 flats in physical possession. However, all this is without prejudice to the right and contentions of the defendants. vi. Insofar as the reliefs claimed in prayer clauses (d) and (e) in Civil Application No.96 of 2010 are concerned, the applicants are at liberty to file appropriate application in the Trial Court for further interim relief and if such application is made, the Trial Court to decide the same uninfluenced by its rejection of the earlier temporary injunction application and by taking into account all subsequent developments. vii. In the light of the order passed in Civil Application No. 96 of 2010 and in view of the liberty given to the original plaintiffs to move the trial Court on the basis of subsequent developments, Civil Application No. 1227 of 2008 moved by the original defendant Nos. 12 and 13 in Appeal from order No. 292 of 2007, will not survive as the Appeal from Order itself is disposed of. Therefore, keeping open all the contentions and reserving liberty to the applicants-original defendant Nos. 12 and 13 to initiate appropriate proceedings, this Civil Application is disposed of. viii. In the light of the subsequent developments as noted above and in view of the liberty given, Appeal from Order No. 333 of 2007 will not survive and stands disposed of accordingly. ix. 12 and 13 to initiate appropriate proceedings, this Civil Application is disposed of. viii. In the light of the subsequent developments as noted above and in view of the liberty given, Appeal from Order No. 333 of 2007 will not survive and stands disposed of accordingly. ix. The Civil Application No. 477 of 2007 which is taken out by the appellant-respondent no.4 in Appeal from Order No. 333 of 2003 does not survive in the light of the orders passed this Court and is disposed of accordingly. x. The Appeal from Orders and the Civil Applications therein are disposed of in the above terms but without any order as to costs. xi. Since the suit is pending in the Trial Court since the year 2000 and possibly has not proceeded because of the subsequent developments during the pendency of the appeal from order and since the appeal from order also was not decided till date, the Trial Court shall endeavour to dispose of the suit itself as early as possible and by the end of 31st August, 2013.