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2022 DIGILAW 2164 (BOM)

Suyog Happy Homes v. Sujeet Ramesh Patil

2022-09-28

N.J.JAMADAR

body2022
JUDGMENT 1. This commercial division summary suit is instituted for recovery of a sum of Rs.7,24,94,348/- along with further interest at the rate of 15% p.a. from the month of November, 2020 till payment and/or realization. 2. Shorn of unnecessary details, the background facts can be stated as under: (a) The plaintiff is a registered partnership firm. The plaintiff developed a project 'Jade Gardens' at Gandhi Nagar, Bandra East, Mumbai. The defendant evinced interest to purchase a flat in 'M' Wing of the said project. An agreement for sale came to be executed between the plaintiff and defendant and Middle Income Group III Co-operative Housing Society, as a confirming party, whereunder the defendant agreed to purchase Flat No.403 'M' Wing, Jade Gardens ('the suit flat') for a consideration of Rs.8,01,00,000/-. An earnest amount of Rs.60,00,000/- was already paid by the defendant. Under the said agreement, the defendant agreed to pay the balance consideration in three installments. First two of Rs.2,50,00,000/- and Rs.8,01,000/- payable on or before 31st December, 2017, and last of Rs.4,82,99,000/- on or before 31st January, 2018. It was further provided that in the event of delay or default in making the payment of installments, the plaintiff would be entitled to charge interest at the rate of 15% p.a. (b) The plaintiff asserts the defendant did not pay the amount in accordance with the schedule stipulated in the Agreement for Sale. By 31st March, 2018, the defendant paid a sum of Rs.2,58,01,000/-, only towards the balance consideration. As the partners of the plaintiff had cordial relations with Mr. Amit Patil, the brother of the defendant, pursuant to repeated request of the defendant, the plaintiff delivered possession of the suit flat to the defendant around the month of February/Mach, 2018. (c) The defendant sought time to pay the balance consideration on one or the other pretext. Eventually on 5th October, 2018, the plaintiff addressed a letter to the defendant calling upon the defendant to pay the balance consideration along with interest. In response thereto, Mr. Amit Patil addressed an e-mail and assured the plaintiff that there was no need to resort to legal proceedings. However, the defendant failed to pay the balance consideration and instead started paying maintenance directly to the society. In response thereto, Mr. Amit Patil addressed an e-mail and assured the plaintiff that there was no need to resort to legal proceedings. However, the defendant failed to pay the balance consideration and instead started paying maintenance directly to the society. Having realized the design of the defendant, the plaintiff claimed to have addressed a legal notice on 17th February, 2020 calling upon the defendant to pay the balance consideration along with accrued interest thereon. Despite service of notice, the defendant neither complied with the demand nor gave reply thereto. Hence, this suit. 3. The writ of summons was served on the defendant. Upon the defendant entering appearance, the plaintiff took out the Summons for Judgment. 4. An affidavit-in-reply is filed on behalf of the defendant seeking an unconditional leave to defend the suit. The defendant contends that the suit is mala fide and suffers from the vice of suggestio falsi and suppressio veri. It has been instituted with a view to wreck vengeance on account of the disputes, which arose between Mr. Jayant Shah, one of the partners of the plaintiff, and Mr. Amit Patil, the brother of the defendant, who had multiple financial dealings. The defendant assailed the tenability of the summary suit on the ground that the suit is essentially for specific performance and does not fall within the ambit of Order XXXVII of the Code. 5. The substance of the resistance put forth by the defendant is that the transaction between the parties is not the one which is apparently evidenced by the Agreement for Sale dated 5th October, 2017. The defendant contends that the real consideration for the suit flat was of Rs.5 Crore only. The said flat was conveyed to the defendant as a part of a financial dealing between Mr. Jayant Shah and Mr. Amit Patil. Apart from the consideration of Rs.3,18,01,000/-, which the plaintiff admits to have received, a sum of Rs.1,70,00,000/- was paid to Mr. Jayant Shah, during May and June, 2017, followed by another sum of Rs.20,00,000/- to Mr. Naresh Chheda, another partner of the plaintiff. The plaintiff has thus received the entire consideration, as agreed, between the parties, and only thereupon the possession of the suit flat was handed over to the defendant. 6. Jayant Shah, during May and June, 2017, followed by another sum of Rs.20,00,000/- to Mr. Naresh Chheda, another partner of the plaintiff. The plaintiff has thus received the entire consideration, as agreed, between the parties, and only thereupon the possession of the suit flat was handed over to the defendant. 6. Adverting to the terms of the Agreement for Sale, wherein the parties expressly agreed that not only the title to the subject flat would pass to the defendant but also possession thereof would be delivered to the defendant only upon the payment of the entire consideration as agreed, the defendant contends, the averments in the plaint that on account of 'relation of trust' the possession of the suit flat was handed over to the defendant despite non-receipt of the balance consideration of Rs.4,82,99,000/- is unworthy of credence. On these, amongst other, grounds, the defendant has prayed for an unconditional leave to defend the suit as number of triable issues allegedly arise. 7. An affidavit-in-rejoinder is filed on behalf of the plaintiff. The defences sought to be raised on behalf of the defendant are stated to be dishonest and moonshine defences warranting no leave to defend the suit. 8. In the wake of the aforesaid pleadings, I have heard Mr. Godbole, the learned Counsel for the plaintiff and Dr. Saraf, the learned Senior Counsel for the defendant, at some length. With the assistance of the learned Counsels for the parties, I have perused the averments in the plaint, documents annexed thereto, affidavit-in-reply seeking leave to defend the suit and rejoinder thereto. 9. Mr. Godbole strenuously submitted that the case at hand does not warrant grant of leave to defend the suit as it is a open and shut case. Since the execution of the Agreement for Sale, dated 5th October, 2017, and delivery of possession of the suit flat under terms of the said agreement are incontrovertible, the liability to pay the consideration agreed thereunder can hardly be contested. Mr. Godbole would urge that a half baked attempt to demonstrate that the consideration agreed to be paid was less than the one shown in the Agreement for Sale can under no circumstances be said to be a fair and bona fide defence, especially in the face of a registered Agreement for Sale. Mr. Godbole would urge that a half baked attempt to demonstrate that the consideration agreed to be paid was less than the one shown in the Agreement for Sale can under no circumstances be said to be a fair and bona fide defence, especially in the face of a registered Agreement for Sale. It was further urged that the payment of a sum of Rs.8,01,000/- towards TDS, by the defendant, belied the contention that consideration was less than Rs.8,01,00,000/-. Nor the defence that further amount of Rs.1,90,00,000/- was paid to Mr. Jayant Shah and Mr. Naresh Chheda, the partners of plaintiff no.1, in the absence of any documentary evidence to substantiate the same, can be stated to be a fair and bona fide defence. Therefore, a decree must follow. 10. Dr. Saraf joined the issue by canvassing a submission that the real nature of the transaction is required to be gathered from attendant circumstances and not merely on the basis of the covenants in the Agreement for Sale. Dr. Saraf would urge that it would be naive to accept the case of the plaintiff that, in a city like Mumbai, where possession is more than nine points in law, a developer would have delivered possession of the flat when almost 2/3 of the consideration was yet to be paid. Taking the Court through the covenants in the Agreement for Sale, especially as regards the passing of title and delivery of possession of the suit flat only upon the payment of entire consideration, Dr. Saraf submitted that the very fact that the defendant was put in possession of the suit flat indicates that the real transaction between the parties is different than the one the apparent tenor of the Agreement for Sale shows. 11. Dr. Saraf also assailed the tenability of the suit under Order XXXVII of the Code by putting forth a submission that the suit is essentially one for specific performance of the contract. In any event, since the plaintiff put hindrances in the defendant becoming a member of the housing society and paying the maintenance charges to the society and service providers directly, it implies that the plaintiff reckons that title in the suit flat has yet not passed to the defendant. And the claim for balance consideration thus surely falls within the ambit of equitable relief of specific performance. 12. And the claim for balance consideration thus surely falls within the ambit of equitable relief of specific performance. 12. Lastly, it was submitted that it defies common sense that the plaintiff would have put the defendant in possession of the suit flat, when a sum in the range of Rs.5 Crore was still outstanding. In this backdrop, the circumstances in which the defendant was put in possession of the suit flat, about which the defendant has furnished a competing version, according to Dr. Saraf, raises triable issues. Therefore, the defendant deserves an unconditional leave to defend the suit. 13. To begin with, the challenge to the suit on the ground of its tenability under Order XXXVII of the Code. The submission that the suit does not fall within the ambit of Sub-rule (2) of Rule 1 of Order XXXVII was principally rested on the premise that the suit is essentially in the nature of a claim for specific performance. Though there is a contract in writing between the parties yet, according to the defendant, the said Agreement for Sale is amenable to the relief of specific performance alone and cannot sustain an action under Order XXXVII. 14. Sub-rule (2) of Rule 1 of Order XXXVII reads as under: ''(2) Subject to the provisions of sub-rule (1), the Order applies to the following classes of suits, namely:- (a) suits upon bills of exchange, hundies and Promissory notes: (b) suits in which the plaintiff seeks only to recover a debt or liquidated demand in money payable by the defendant, with or without interest, arising,- (i) on a written contract, or (ii) on an enactment, where the sum sought to be recovered is a fixed sum of money or in the nature of a debt other than a penalty; or (iii) on a guarantee, Where the claim against the principal is in respect of a debt or liquidated demand only. [(iv) Suit for recovery of receivables instituted by any assignee of a receivable.]'' 15. The case at hand would be governed by Clause (b). The primary requirement under Clause (b) is an action to recover a debt or liquidated demand in money. Secondly, such an action should arise out of or based on; (i) a written contract; (ii) an enactment; (iii) a guarantee or (iv) assignment. 16. The case at hand would be governed by Clause (b). The primary requirement under Clause (b) is an action to recover a debt or liquidated demand in money. Secondly, such an action should arise out of or based on; (i) a written contract; (ii) an enactment; (iii) a guarantee or (iv) assignment. 16. Again, in the facts of the case, it has to be seen whether the claim at hand is one for recovery of a debt or liquidated demand on a written contract. Dr. Saraf endeavoured to impress upon the Court that existence of a written contract itself is not sufficient but the nature of the relief which such contract affords is also required to be seen. I am afraid, the plain construction of clause (b)(i) of Sub-rule (2) of Rule 1 of Order XXXVII does not envisage such an inquiry. 17. A Full Bench of this Court in the case of Jyotsna K. Valia vs. T. S. Parekh & Co, (2007) 4 Mh.L.J. 517 postulated the following requirements in the context of a suit based on a written contract; (i) there must be a concluded contract; (ii) the contract must be in writing; (iii) the contract must contain an express or implied promise to pay. 18. If the aforesaid postulates are found to exist in an action based, on a written contract, in my view, the aspect of the relief which such contract affords is of no consequence. This is for the reason that the primary emphasis under clause (b) of Sub- rule (2) of Rule 1 of Order XXXVII is on the nature of the action i.e. recovery of a debt or liquidated demand of money. Once this requirement is fulfilled, the fact that the written contract which gives rise to such an action for recovery of debt or liquidated demand of money is capable of enforcement by instituting a suit for any other relief including that of specific performance, does not constitute an impediment for an action under Order XXXVII. 19. This propels me to the nature and quality of the defence sought to be pressed into service on behalf of the defendant to seek an unconditional leave. Execution of the Agreement for ?Sale is incontestible. Nor the fact that the defendant has been put in possession of the subject flat is in dispute. 19. This propels me to the nature and quality of the defence sought to be pressed into service on behalf of the defendant to seek an unconditional leave. Execution of the Agreement for ?Sale is incontestible. Nor the fact that the defendant has been put in possession of the subject flat is in dispute. Precise time of delivery of possession and the circumstances in which the defendant was inducted into the suit flat are, however, put in contest. Nonetheless, it is imperative to note that the defendant has not endeavoured to establish a transaction of a different character than the one the Agreement for Sale represents. 20. What is sought to be essentially contested is the quantum of consideration. For the defendant, the consideration was Rs.5 Crore only and the Agreement for Sale recording a consideration of Rs.8,10,00,000/- was executed having regard to the business relations between Mr. Jayant Shaha and Mr. Amit Patil, the brother of the defendant. Secondly, the defendant claims that a further amount of Rs.1,90,00,000/- was paid to the plaintiff towards the said consideration, in addition to the sum of Rs.3,18,01,000/-. 21. Evidently, the aforesaid defence is in teeth of the contract in writing, which is of dispositive nature. To add to this, at this stage, at least, the defendant has not endeavoured to demonstrate that the alleged payment of Rs.1,90,00,000/- is evidenced by any document. 22. Dr. Saraf impressed upon the Court to draw upon experience of common course of transactions in a metropolis like Mumbai to readily not believe the claim of the plaintiff that the defendant was put in possession of the suit flat despite non payment of a sum of Rs.5 Crore. Undoubtedly, in the Agreement for Sale there are covenants to the effect that no interest in the subject flat shall pass to the purchaser until the full payment of the purchase price and the possession of the subject flat would be delivered to the purchaser only against payment of the balance consideration and all other amounts mentioned therein. Yet, the delivery of the possession of the property without receiving balance consideration does not vitiate the transaction of sale. Under Section 54 of the Transfer of Property Act, sale is a transfer of ownership in exchange for a price paid or promised or part paid or part promised. 23. Yet, the delivery of the possession of the property without receiving balance consideration does not vitiate the transaction of sale. Under Section 54 of the Transfer of Property Act, sale is a transfer of ownership in exchange for a price paid or promised or part paid or part promised. 23. In the case at hand, the defendant wants the Court to draw an inference that the fact that possession is delivered to the defendant implies that the price has already been paid and only thereafter the defendant has been put in possession thereof. Interestingly, the defendant relies upon the very covenants of the Agreement for Sale which are conditioned upon the payment of consideration as stipulated therein. 24. The Court, however, finds an element of commonality between the plaintiffs case and defendants defence, namely, the relations which the partner(s) of the plaintiff shared with Mr. Amit Patil, the brother of the defendant. It is on account of the said relationship, the plaintiff claimed to have inducted the defendant into the suit flat without payment of balance consideration and the defendant alleges to have executed the agreement showing a consideration far in excess of the agreed consideration. To what extent this relationship influenced the delivery of possession of the suit flat to the defendant and the attendant circumstances connected with the delivery of possession raise a triable issue. However, this by itself, would not warrant grant of an unconditional leave to defend the suit. 25. Mr. Godbole invited the attention of the Court to a recent pronouncement of the Supreme Court in the case of B. L. Kashyap and Sons Limited vs. JMS Steels and Power Corporation and another, (2022) 3 Supreme Court Cases 294 wherein the Supreme Court after adverting to the previous pronouncements in the case of Mechalec Engineers & Manufacturers vs. Basic Equipment Corporation, (1976) 4 SCC 687 and IDBI Trusteeship Services Ltd vs. Hubtown Ltd., (2017) 1 SCC 568 expounded the law as under: ''33. It is at once clear that even though in the case of IDBI Trusteeship, this Court has observed that the principles stated in paragraph 8 of Mechelec Engineers' case shall stand superseded in the wake of amendment of Rule 3 of Order XXXVII but, on the core theme, the principles remain the same that grant of leave to defend (with or without conditions) is the ordinary rule; and denial of leave to defend is an exception. Putting it in other words, generally, the prayer for leave to defend is to be denied in such cases where the defendant has practically no defence and is unable to give out even a semblance of triable issues before the Court. 33.1 As noticed, if the defendant satisfies the Court that he has substantial defence, i.e., a defence which is likely to succeed, he is entitled to unconditional leave to defend. In the second eventuality, where the defendant raises triable issues indicating a fair or bonafide or reasonable defence, albeit not a positively good defence, he would be ordinarily entitled to unconditional leave to defend. In the third eventuality, where the defendant raises triable issues, but it remains doubtful if the defendant is raising the same in good faith or about genuineness of the issues, the Trial Court is expected to balance the requirements of expeditious disposal of commercial causes on one hand and of not shutting out triable issues by unduly severe orders on the other. Therefore, the Trial Court may impose conditions both as to time or mode of trial as well as payment into the Court or furnishing security. In the fourth eventuality, where the proposed defence appear to be plausible but improbable, heightened conditions may be imposed as to the time or mode of trial as also of payment into the Court or furnishing security or both, which may extend to the entire principal sum together with just and requisite interest. 33.2 Thus, it could be seen that in the case of substantial defence, the defendant is entitled to unconditional leave; and even in the case of a triable issue on a fair and reasonable defence, the defendant is ordinarily entitled to unconditional leave to defend. 33.2 Thus, it could be seen that in the case of substantial defence, the defendant is entitled to unconditional leave; and even in the case of a triable issue on a fair and reasonable defence, the defendant is ordinarily entitled to unconditional leave to defend. In case of doubts about the intent of the defendant or genuineness of the triable issues as also the probability of defence, the leave could yet be granted but while imposing conditions as to the time or mode of trial or payment or furnishing security. Thus, even in such cases of doubts or reservations, denial of leave to defend is not the rule; but appropriate conditions may be imposed while granting the leave. It is only in the case where the defendant is found to be having no substantial defence and/or raising no genuine triable issues coupled with the Court's view that the defence is frivolous or vexatious that the leave to defend is to be refused and the plaintiff is entitled to judgment forthwith. Of course, in the case where any part of the amount claimed by the plaintiff is admitted by the defendant, leave to defend is not to be granted unless the amount so admitted is deposited by the defendant in the Court. 33.3 Therefore, while dealing with an application seeking leave to defend, it would not be a correct approach to proceed as if denying the leave is the rule or that the leave to defend is to be granted only in exceptional cases or only in cases where the defence would appear to be a meritorious one. Even in the case of raising of triable issues, with the defendant indicating his having a fair or reasonable defence, he is ordinarily entitled to unconditional leave to defend unless there be any strong reason to deny the leave. It gets perforce reiterated that even if there remains a reasonable doubt about the probability of defence, sterner or higher conditions as stated above could be imposed while granting leave but, denying the leave would be ordinarily countenanced only in such cases where the defendant fails to show any genuine triable issue and the Court finds the defence to be frivolous or vexatious.'' 26. The Supreme Court has enunciated in clear terms that the prayer for leave to defend is to be denied in such cases where the defendant has practically no defence and is unable to come up with a semblance of triable issue before the Court. Even if there remains a reasonable doubt about the probability of defence, sterner conditions could be imposed while granting leave but refusal to grant leave to defend would be justified only in such cases where the defendant fails to show any genuine triable issue and conversely, the defence appears frivolous or vexatious. 27. On the aforesaid touchstone, reverting to the facts of the case, in my view, in the totality of the circumstances, the defence raised by the defendant, especially in the backdrop of common thread which permeates the plaintiff's claim and defendant's defence cannot be stated to be frivolous or vexatious. However, in the face of the registered Agreement for Sale, which records the liability to pay the balance consideration, the defendant does not deserve an unconditional leave. Hence, I am persuaded to grant conditional leave to defend the suit. 28. Hence, the following order; Order (i) Leave is granted to the defendant to defend the suit subject to the defendant depositing in this Court a sum of Rs.4,82,99,000/- within a period of six weeks from today. (ii) If the aforesaid deposit is made within the stipulated period, this suit shall be transferred to the list of Commercial Causes and the defendant shall file its written statement within a period of four weeks from the date of deposit; (iii) If this conditional order of deposit is not complied with within the stipulated period as mentioned earlier, the plaintiff shall be entitled to apply for an ex-parte decree against the defendant after obtaining a non-deposit certificate from the Prothonotary and Senior Master of this Court. The summonses for judgment stands accordingly disposed of.