Bombay High Court
Mana Builders And Developers Pvt. ... vs Firdous Park Co-Operative Hsg. ... on 6 November, 2012
Bench: S. J. Kathawalla
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
NOTICE OF MOTION NO. 1438 OF 2011
IN
SUIT NO. 1037 OF 2011
Mana Builders and Developers Pvt. Ltd. and others ... Plaintiffs
vs.
Firdous Park Co-operative Hsg. Soc. Ltd. and others ... Defendants
Mr. Deepak Chitnis, instructed by M/s. Deepak Chitnis-Chiparikar & Co., for the
Plaintiffs.
Mr. P.K. Samdani, Senior Advocate, along with Mr. Nikhil Karnawat and Ms.
Gogre, instructed by Mr. Nivit Srivastava, for Defendant No.1.
Ms. Rebecca Dias Dias, instructed by M/s. AKS Legal for Defendant No. 10.
CORAM: S.J. KATHAWALLA, J.
Judgment reserved on : October 04, 2012
Judgment pronounced on : November 06, 2012
JUDGMENT:
1. The above suit is filed by the Plaintiffs inter alia for an order and decree
against the Defendants to specifically perform the Memorandum of
Understanding ("MoU") dated 10th March 2008 (Exhibit-H to the Plaint),
Development Agreement dated 24th March 2008 (Exhibit-J to the Plaint) and
also to execute all necessary documents/writings so as to effectually sell,
transfer and convey the right, title and interest of the Defendants property
bearing Survey No. 20, Hissa No. 4, corresponding C.T.S. Nos. 112, 112/1 to
112/7 admeasuring 5335.35 sq. meters situate at Village Bandivali, Tal.
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Andheri, Mumbai Suburban District ("the suit property") to the name of the
Plaintiffs.
2. The Plaintiffs have taken out the above Notice of Motion in the suit
seeking interim reliefs i.e. appointment of a Court Receiver in respect of the suit
property and an injunction restraining the Defendants from in any manner
dealing with, and/or disposing off and/or creating any third party rights in
respect of the suit property and from permitting any person other than Plaintiffs
from carrying out the work of redevelopment of the suit property.
3. The Defendant No.1 Society is the owner of the suit property which was
originally developed by M/s. Jogani Enterprises - builder and developer. There
are in all 138 members in the Defendant No.1 Society who have purchased
flats and/or shops/offices.
4. According to the Plaintiffs, since the buildings of the Defendant No.1
were in a dilapidated condition, Defendant No.1 society floated a tender, and in
pursuance thereof the offer submitted by the Plaintiffs vide their letter dated 8 th
October 2007 for carrying out the redevelopment of Defendant No.1 Society's
property was held to be the most beneficial to Defendant No.1 Society. At that
time the suit property was not owned by Defendant No.1 Society, since the said
M/s. Jogani Enterprises had not conveyed the suit property in favour of
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Defendant No.1 Society. At the request of Defendant No.1 Society, the Plaintiffs
negotiated with the said Jogani Enterprises who agreed to accept a sum of Rs.
10,00,000/- in full and final settlement of its claim, and for sale, transfer and
conveyance of the suit property along with the building standing thereon in
favour of the Defendant No.1 Society.
5. The Plaintiffs thereafter vide their letter dated 6 th November 2007, gave
a detailed offer to the first Defendant Society. The Plaintiffs by their said letter
have inter alia set out the exact area that will be provided to the members of
the Society after carrying out the redevelopment of the suit property. The
Plaintiffs also agreed to provide various other commercial benefits such as
payment of advance rent to the members of Defendant No.1 Society for enabling
them to make their own transit accommodation arrangements, deposit of Rs. 2.5
crores as and by way of corpus fund with the Defendant No.1 Society and
compensation at the rate of Rs. 12,000/- to every shopkeeper to enable them to
acquire temporary alternate accommodation during the construction period.
6. In the Annual General Body meeting of the first Defendant Society held
on 11th November 2007, attended by 49 out of 138 members, it was decided to
get the plan and elevation features from the Plaintiffs and give the work to the
Plaintiffs "upon satisfaction of the members of the Society". A copy of the
minutes of the meeting held on 11 th November 2007 was forwarded to the
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Plaintiffs by the first Defendant Society vide its letter dated 26 th November 2007.
According to the Plaintiffs, a tentative plan along with the elevation drawings of
the new building were submitted by the Plaintiff to the Defendant No.1 Society.
The said tentative plan and the elevation drawings were considered and
accepted by the Managing Committee Members of the first Defendant Society
who approved and discussed the said plan by showing the same to the members
of Defendant No1. Society.
7.
In the Annual General Meeting of the first Defendant Society held on
20th February 2008, Defendant No.1 Society discussed the various proposals
received from different builders and developers. In the said meeting the plan
and invitation received from the Plaintiff was discussed in detail by the first
Defendant Society. In the meantime, the Plaintiffs paid an amount of Rs. 10
lakhs and also got a Deed of Conveyance executed by Jogani Enterprises in
favour of Defendant No.1 Society.
8. On 10th March 2008, the Plaintiff and Defendant No.1 executed a MoU
incorporating the terms and conditions agreed between the Plaintiffs and
Defendant No.1 Society pertaining to redevelopment of the property of the
Society. After execution of the MoU, a Development Agreement was entered
into by and between the Plaintiff and Defendant No.1 Society on 24 th March
2008. The Society vide its letter dated 23 rd April, 2008 also acceded to the
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request of the Plaintiffs dated 19th April 2008 to put up a sign Board of the
Plaintiffs in the Society building.
9. In the Annual General Meeting of the first Defendant Society held on 9 th
November 2000 which was attended to by 63 out of 138 members, the members
inter alia confirmed the Agreement as well as the MoU entered into by and
between the Plaintiff and the Society. On 19 th January 2009 the Society
executed an Irrevocable Power of Attorney in favour of the Plaintiffs to enable
the Plaintiffs to carry out the development of the said property as agreed
between the Plaintiffs and the Defendant No.1 Society under the Development
Agreement. By the said Power of Attorney, the Defendant No.1 Society
authorised the Plaintiffs to carry out the development of the suit property in
accordance with and as contemplated by the Development Agreement and also
in accordance with the lay out plan sanctioned by the Bombay Municipal
Corporation or any other Municipal/local Corporation/body of Mumbai, and as
per the requirements as laid down by the development control authorities or
other relevant authorities for successful development of the suit property. The
Plaintiffs were also empowered to demolish and construct buildings and other
structures on the suit property, consuming the entire potential Floor Space Index
("FSI"), including FSI by way of Transfer of Development Rights ("TDR").
10. In the year 2008, about 10 members of the Society filed a dispute before
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the IVth Co-operative Court, Mumbai being Dispute No. 309 of 2008 challenging
the said redevelopment of the suit property. In the said dispute, the Society filed
its affidavit dated 19th November 2008 ( Exhibit-Q to the Plaint) opposing the
said dispute and supporting redevelopment of the property of the Society by the
Plaintiffs. The Hon. Secretary of the Society by his letter dated 28 th January
2008 informed the Plaintiffs that the Managing Committee of the first Defendant
Society has approved, discussed and also shown to the members of the Society
the plans, and thus authorised the Plaintiffs to go-ahead with the development
and other formalities. By an undated letter, the Plaintiffs were also handed over
peaceful possession of the suit property.
11. The Plaintiff by its letter dated 1 st August 2009 addressed to the Secretary
of Defendant No.1 Society inter alia recorded that the Society has failed to get
the Agreements for providing alternate accommodation to the Members of the
Society executed from each and every member and that the Society should get
the agreement for permanent alternate accommodation executed from the
remaining members of the Society immediately on receipt of the said letter. By
the said letter, the Plaintiffs also informed the first Defendant Society that in
view of the prevailing market situation, the Plaintiffs will have to consider
reducing the corpus fund amount and the monthly rentals given to each member
and that they will provide extra area of not more than 25 per cent to the
residential owners and 10 to 15 per cent to the shop owners. The first Defendant
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Society was also informed by the Plaintiffs that the Plaintiffs will not be
providing a Bank Guarantee as initially offered to be provided by them.
12. The Defendant No.1 Society did not respond to the said letter dated 1 st
August 2009 received from the Plaintiffs. On 16 th September 2010, the Assistant
Engineer (B & F), K/W of the Municipal Corporation of Greater Mumbai issued
a notice under Section 354 of the Mumbai Municipal Corporation Act to the
Chairman of the Society, setting out therein that the buildings on the suit
property are in a ruinous condition, likely to fall and therefore dangerous to any
person occupying, or passing by the same. The Chairman of the Society was
therefore called upon to forthwith carry out the work set out in the said notice.
The buildings standing on the suit premises were inspected by the Municipal
Corporation of Greater Mumbai. The Corporation by its report dated 30 th
September 2010 recommended that if the said buildings are not taken for
reconstruction or structural repairs at the earliest, , it may deteriorate further
and may collapse endangering the lives of the occupants/inmates of the said
buildings. It is also recorded by the Corporation that despite several notices
having been issued by the Municipal Corporation of Greater Mumbai to the
Society and the occupants, no steps are taken either for structural repairs or
reconstruction. The A.E. (Bldg.) was requested to issue a notice to vacate the
said buildings to avoid any mishap and/or take necessary steps for the same.
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13. The Secretary of the Defendant No.1 Society under cover of his letter
dated 4th October 2010 forwarded the said notices received from the Municipal
Corporation to the Plaintiffs and requested them to expedite the redevelopment
process as per the MoU dated 10 th March 2008. According to the Plaintiffs, they
received a show cause notice from the Defendant No.1 Society dated 29 th
October, 2010 calling upon them to show cause within a period of thirty days
from the date of receipt of the said notice as to why the Development
Agreement dated 24th March 2008 should not be terminated on the ground that
the Plaintiffs are unable to carry out the development of the property of the first
Defendant.
14. The Advocate for the Plaintiff addressed a letter dated 24 th December
2010 to the Registrar of Co-operative Societies, "K" Ward, wherein it is inter alia
alleged that the Society had agreed to provide to the Plaintiffs Agreements duly
signed by each and every individual member of the Defendant No.1 Society
agreeing and confirming the execution of the MoU as well as the Development
Agreement executed by and between the first Defendant Society and the
Plaintiffs and that the Plaintiffs have repeatedly also requested the members of
the Society to individually sign and execute the Agreement for providing
permanent alternate accommodation to them. However, out of 139members,
only 53 members have signed and executed the Agreement for providing
permanent alternate accommodation in the redeveloped building. It is recorded
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in the said letter that the Plaintiffs hope that that the Defendant No.1 Society
will not compel the Plaintiffs to inform and bring to the notice of the Registrar of
Co-operative Society the conduct of the Managing Committee members of not
fulfilling their commitments and instead indulging in dishonest, illegal and
fraudulent conduct. Interestingly, though the letter is addressed to the Registrar
of Co-operative Societies, "K" Ward, the letter is entirely addressed to the
Society.
15.
The Plaintiff addressed a letter dated 15 th January 2011 to the
Chairman/Secretary/Treasurer of the Society inter alia requesting them to
pursue their members and request them to immediately sign and execute
individual Agreements with the Plaintiffs. In the said letter the Plaintiffs have
recorded that in their earlier letter dated 1 st August, 2009, they had informed
the Society that if the above project is delayed for a considerable period, the
Plaintiffs may have to reduce the corpus fund, rental and area agreed to be
provided by the Plaintiffs to the members of the Society. Under these
circumstances they had requested the Society to get the said Agreement for
providing alternate accommodation executed from the remaining members of
the Society immediately. It is further recorded that the Plaintiffs have kept the
aforesaid payment ready and are awaiting a prompt reply from the Society and
if the said Agreements for providing alternate accommodation are signed and
executed from the remaining members of the Society within a short duration,
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the Plaintiffs will not change any of the terms and conditions as mentioned in
the Development Agreement.
16. On 17th January, 2011, the Plaintiffs issued a public notice in the Times
of India setting out the Agreements entered into by and between the Plaintiffs
and the Defendant No.1 Society and thereby put the public to notice that in view
of the execution of the said documents, the Society has no right to enter into any
transaction with any other developer/builder. It was further cautioned that if
the Society is illegally and unlawfully dealing with some other developer for
developing the said property, the transaction will not be binding on the
Plaintiffs and they will challenge the said transaction in a Court of Law, thereby
preventing any such developer from entering and disturbing the Plaintiffs'
possession of the suit property.
17. The Plaintiffs thereafter filed the present suit on 26 th April 2011. Since
Defendant No.1 Society had invited tenders for re-development of the suit
property on 13th December, 2010 and pursuant thereto had entered into a
Development Agreement and Power of Attorney with Defendant No. 10 on 2 nd
July 2011, the Plaintiffs amended the plaint on 17 th June 2011 and joined the
new Developer as Defendant No. 10 to the present suit. The Plaintiffs also made
an application for urgent ad-interim reliefs which was rejected by a detailed
order of this Court (Coram: S.J. Vazifdar, J.) dated 23 rd June 2011.
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18. The Plaintiffs preferred an appeal rejecting the grant of ad-interim reliefs
before the Division Bench of this Court. The Division Bench, whilst requesting
the single Judge taking Notices of Motion to try and dispose of the Notice of
Motion at an early date, clarified that the third party rights created in favour of
Defendant No. 10 would be subject to the result of the final order of the learned
single Judge on the Notice of Motion.
19.
The Learned Advocate appearing for the Plaintiffs has submitted that the
Plaintiffs have complied with all the obligations required to be fulfilled by them
under the MoU dated 10th March 2008 and the Development Agreement dated
24th March 2008. It is submitted that however the Defendant No.1 Society has
not complied with clause 3 (b) of the Agreement under which the Defendant
No.1 is obliged to obtain Agreements for alternate accommodation from each
and every member of the Society. It is submitted that though the Plaintiff had in
its letter dated 1st August 2009, stated that the Plaintiffs will have to reconsider
its offer made to the members of the Society and will not be in a position to
furnish a Bank Guarantee, the Plaintiffs have subsequently by their letter dated
15th January, 2010, informed the office-bearers of the Society that if they are
ready to co-operate with the Plaintiffs and get the necessary Agreements
executed from each and every member of the Society pertaining to the alternate
accommodation to be provided by the Plaintiffs to the members of the Society,
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the Plaintiffs will not change any of the terms agreed upon by the Plaintiffs in
the MoU/Development Agreement. It is submitted on behalf of the Plaintiffs
that the first Defendant therefore cannot contend that the Plaintiffs by their
letter dated 9th January 2009 have backed out from the offer made by the
Plaintiff to the Society and its members. The Plaintiffs have also relied on the
decision of the Division Bench of this Court in Chheda Housing Development
Corporation vs. Bibijan Shaikh Farid and others1 wherein it is held that an
agreement for use of TDR can be specifically enforced unless it is established
that compensation in money would be an adequate relief. It is submitted on
behalf of the Plaintiffs that the Plaintiffs have paid an amount of Rs. 45 lakhs to
the Defendant No.1 Society and has also incurred other expenses. The amounts
spent by the Plaintiffs are approximately to the tune of Rs. 93 lakhs. It is
therefore submitted that the balance of convenience is also in favour of the
Plaintiff and against the Defendant No.1 Society and that the Plaintiffs be
granted reliefs as sought.
20. The Learned Senior Advocate appearing on behalf of the first Defendant
No.1 denied and disputed the submissions advanced on behalf of the Plaintiffs.
It is submitted that the Defendant No.1 has no privity of contract with the
Plaintiffs. The suit has been filed by Plaintiff No.1, which is a Private Limited
Company, incorporated on 10th August 2008 and not by Mana Constructions,
whereas the MoU, Development Agreement and the Deed of Confirmation have
1 2007 (2) Bom. C.R. 587
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been executed by Defendant No.1 in favour of M/s. Mana Constructions. The
certificate of registration of M/s. Mana Constructions shows that the name of
Mana Constructions has been changed to M/s. Mana Builders and Developers
Pvt. Ltd. with effect from 1st April, 2008. However, the suit has been filed on the
basis of a Power of Attorney dated 23rd October 2007 executed by the partners
of M/s. Mana Constructions in favour of Saleem Motorwala which Power of
Attorney is annexed at the end of the Plaint i.e. after page 280. Therefore there
is no valid authorisation by Plaintiff No. 1 for challenging the suit. It is
submitted that it is thus clear that the Plaintiff No.1 does not have any privity
of contract with Defendant No.1.
21. The Learned Senior Advocate appearing for Defendant No.1 has next
contended that Defendant No.1 has complied with all its obligations under the
Agreements and it is the Plaintiff No.1/Mana Constructions who have failed to
perform the terms and conditions incorporated in the Agreements. It is
submitted that as per recital (F) of the Development Agreement dated 24 th
March, 2008 it was the representation of M/s. Mana Constructions that they
have entered into Agreements with all the members of Defendant No.1. Clause
3 (b) of the Development Agreement contemplates that at the time of handing
over quiet, vacant and peaceful possession of the respective flats/units/shops
etc., Defendant No.1 shall make best endeavours to ensure that all the members
cooperate and execute/implement their respective Agreements. The said
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endeavour is distinct and different from obtaining Agreements or possession
from the members. It is submitted that thus there is no obligation upon
Defendant No.1 for obtaining Agreements/possession from its members. Despite
this, the Plaintiffs in paragraph 54 of the Plaint have wrongly pleaded such
obligation on part of Defendant No.1. It is submitted that paragraph 54 of the
Plaint records that 51 members of the Defendant No.1 Society out of 138
members had signed and executed Agreements with the Plaintiffs which is
contrary to the representation made by the Plaintiffs in the Development
Agreement at Recital (F). It is therefore submitted that it is the Plaintiffs who
have failed to perform their part of the Agreement and are wrongly alleging that
the failure is attributable to Defendant No. 1.
22. The learned Senior Advocate appearing for Defendant No.1 next
contended that the Plaintiffs even at the time of filing of the Plaint were not
ready and willing to perform its part of the contract. Clause 3 (d) of the
Development Agreement contemplates furnishing a Bank Guarantee of Rs. 2.5
crores by M/s. Mana Constructions to Defendant No.1. However, the Plaintiffs in
paragraph 62 at page 33 of the Plaint have stated that they have reduced the
corpus fund and monthly rental amount to be provided to the members of
Defendant No.1 and will not be able to provide Bank Guarantee as agreed by
them. It is submitted that in paragraph 48 of the Plaint, the Plaintiffs have
admitted that there was no relief granted against Defendant No. 1 in Co-
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operative Court No. IV. Thus, nothing prevented the Plaintiffs to proceed under
the Development Agreement dated 24th March 2008. It is also submitted that the
Plaintiffs have stated in paragraph 55 of the Plaint that the plans were approved
by Defendant No.1 on 28th January 2008. However, no steps were taken by
M/s. Mana Constructions till the termination of the Development Agreement for
obtaining sanction of the building plans. It is therefore submitted on behalf of
Defendant No.1 that the Plaintiffs were never ready and willing to perform their
part of the Contract and are therefore not entitled to specific performance of any
Agreements as sought or otherwise.
23. The Learned Advocate appearing for Defendant No.1 has submitted that
the reliefs claimed by the Plaintiffs are not contemplated by the Agreement. By
prayer clause (a), the Plaintiffs seek specific performance of MoU and
Development Agreement which cannot be granted. Further by prayer clause (b),
the Plaintiffs are seeking a decree for execution of all necessary
documents/writings so as to effectually sell, transfer, convey the right title and
interest of Defendant No.1 in the suit property. Under the Development
Agreement, the only right which the Developer i.e. M/s. Mana Constructions
could claim is to carry on re-development of the suit property as per the terms
and conditions of the Agreement. Therefore, the reliefs claimed are not
contemplated by the agreed terms and hence cannot be granted. In support of
this contention, the learned Senior Advocate appearing for the Defendant No.1
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has relied on the decision of the Division Bench of the Delhi High Court in Smt.
Raj Rani Bhasin and others vs. S. Kartar Singh Mehta 2 . The Learned Senior
Advocate appearing for Defendant No.1 has also submitted that the purported
show cause notice dated 29th October 2010 issued to the Plaintiff, is annexed as
Exhibit-1 to the affidavit filed on behalf of Defendant No.1 dated 21 st June 2011.
He has submitted that in the Plaint the Plaintiffs have suppressed, and later
admitted in the affidavit-in-rejoinder in paragraph 18 at page 53 that they had a
meeting with the members of the Managing Committee of Defendant No.1 and
Defendant No. 10 where they were offered return of Rs. 45 lakhs. It is therefore
submitted on behalf of the Defendant No.1 that the conduct of the Plaintiffs
smacks of mala fides and disentitles the Plaintiffs from grant of any discretionary
reliefs.
24. The Learned Senior Advocate appearing for Defendant No.1 has lastly
submitted that the Plaintiffs cannot claim any equities in their favour. It induced
Defendant No.1 to enter into the Development Agreement on representation
that it had already entered into Agreements with members of Defendant No.1.
The members of Defendant No.1 have passed resolutions to terminate the
Development Agreement dated 24th March 2008 in favour of the Plaintiffs and
have appointed Defendant No. 10 as the new developer. All the notices for the
Special General Meeting of the Defendant No.1 held on 17 th October 2010, 5th
February 2010 and 17th April, 2011 were duly served upon M/s. N.S.S.R.Group,
2 AIR 1975 DELHI 137
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a sister concern of M/s. Mana Constructions, being a member of the Defendant
No.1, who purchased shops in Defendant No.1 as admitted by the Plaintiffs in
paragraph 75 of the Plaint. It is submitted that the subject matter of the suit
concerns re-development of a Co-operative Society. The buildings need urgent
redevelopment. They are admittedly in a dilapidated condition. The Plaintiffs do
not have support of individual members, in whose benefit the redevelopment is
to take place. The balance of convenience is thus in favour of Defendants and
against the Plaintiffs. The Plaintiffs even otherwise do not have a prima facie
case. The Notice of Motion therefore deserves to be dismissed.
25. I have considered the submissions advanced on behalf of the parties. The
suit is filed by one Mana Builders and Developers Pvt. Ltd. However, in
paragraph 1 of the Plaint it is stated that "the Plaintiff Nos. 2 to 7 are the
Partners of the Plaintiff No.1 and they are represented by their Constituted
Attorney Mr. Saleem Motorwala. The Plaintiff Nos. 2 to 7 have authorised Mr.
Saleem Motorwala to represent them in the matter of redevelopment of the
property belonging to the Defendant No.1 Society". The Plaintiffs have along with
the plaint filed a General Power of Attorney executed by the Partners of M/s.
Mana Constructions on 23rd October, 2007 in favour of one of its Partners Mr.
Saleem Motorwala. In the verification clause Mr. Saleem Motorwala as a
Director/Constituted Attorney of the Plaintiffs declared that what is stated in
para 1 of the plaint was true to his own knowledge. This Court therefore
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pointed out on 3rd October 2012 to the learned Advocate appearing for the
Plaintiff that since Plaintiff No.1 is admittedly a Company, Plaintiff Nos. 2 to 7
cannot be partners of Plaintiff No.1 Company and cannot be represented by their
Constituted Attorney Mr. Saleem Motorwala on the basis of the Power of
Attorney executed on 23rd October 2007, when admittedly Plaintiff No.1
Company was not even incorporated. This Court also pointed out to the
Advocate for the Plaintiffs that the submission therefore made on behalf of the
first Defendant that there is no valid authorisation by Plaintiff No.1 in favour of
Saleem Motorwala to file the above suit appears to be correct. The learned
Advocate appearing for the Plaintiffs sought a day's time to seek a clarification
of this issue. On the next day, the Advocate for the Plaintiffs filed a chronology
of dates and events and also a compilation of documents running into 54 pages
explaining that the Partnership Firm was formed by Plaintiff Nos. 1 to 7 in the
name and style of M/s. Mana Constructions under a Deed of Partnership dated
1st June 2006. By a Supplemental Deed of Partnership dated 15 th March 2008,
the Partners of M/s. Mana Constructions had agreed to change its name to Mana
Builders and Developers with effect from 1 st April 2008. By a Resolution dated
8th April, 2008, the Partners of M/s. Mana Builders and Developers unanimously
resolved to convert the Partnership business of M/s. Mana Builders and
Developers to M/s. Mana Builders and Developers Pvt. Ltd. i.e. the first Plaintiff
which was incorporated on 18 th August 2008. Even today, the learned Advocate
appearing for the Plaintiffs is unable to explain as to how in paragraph 1 of the
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Plaint it can be stated that Plaintiff Nos. 2 to 7 are the Partners of Plaintiff No.1
and how the Plaint is signed by Shri Saleem Motorwala on the basis of a Power
of Attorney executed by the Partnership Firm of Mana Constructions on 23 rd
October 2007. Despite the Advocate for the Plaintiffs having taken time to
clarify this issue, he did not apply to this Court to carry out any amendments to
the Plaint. In view thereof I am satisfied that there is no valid authorisation by
Plaintiff No.1 for filing the suit and the Plaintiffs are not entitled to any reliefs
on this ground alone.
26. Recital (F) of the Development Agreement dated 24 th March 2008, reads
as under:
" F. The Developer has entered into separate Agreements
with each member of the said Society whereby, inter alia,
each such member has granted consent to the said Re-
Development Project and the Developer has allotted a
flat/increased area in the new building/s to be constructed
by the Developer on the said Land, on the terms and
conditions therein contained. Relevant details of the
agreement executed between the Society and each member
are provided in the Annexure 'A' hereto. "
From the aforesaid recital it is clear beyond any doubt that at the time of
entering into the Development Agreement dated 24th March 2008 the Plaintiffs
(Developer) have represented to the Defendant No.1 Society that the Plaintiff
No.1 has entered into separate Agreements with each member of the Society
whereby each such member has inter alia granted consent to the said
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redevelopment project and the Developer has allotted a flat having increased
area in the redeveloped buildings to be constructed by the Developer on the
suit land, on the terms and conditions contained in the said separate
Agreements "with each member of the Society". The relevant details of the
Agreements executed between the Society and each member which are
provided in Annexure-A to the Development Agreement pertains to the original
Agreements executed by and between the Society and the Member at the time
when the member originally purchased the flat/shop in his possession. The
same cannot be mistaken as the details of the Agreements allegedly entered into
by and between the Developer and each member of the Society as represented
by the Developer to the Society and recorded in Recital (F). Clause (1) of the
said Development Agreement clearly states that the recitals to the Development
Agreement shall form an integral part of the Agreement and are deemed to
form a part of the operative part of the understanding recorded in the
Agreement. Despite the aforesaid representation made by the Developer to the
Society in the Development Agreement which, as stated hereinabove, forms
part of the Agreement, the Plaintiff No.1 has repeatedly taken a stand that it is
the responsibility of Defendant No.1 Society to get the Agreements executed by
each and every member of the Society pertaining to providing alternate
accommodation by the Plaintiffs to the members of the Society. In support of
this contention, the Plaintiffs have relied on clause 3 (b) of the Development
Agreement which pertains to consideration. The said clause 3 (b) is reproduced
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hereunder:
"(b) On the execution of all the Agreements to be
executed between the Developer and the individual
members of the Society with respect to the Re-development
Project and the individual members handing over to the
Developer quiet, vacant and peaceful possession of all their
respective flats/units/shops etc. the Developer shall pay the
residue amount out of the total corpus fund of Rs.
2,50,00,000/- (Rupees Two crores fifty lakhs only). The
Society shall make best endeavours to ensure that all the
members co-operate and execute their respective
Agreements."
From the aforesaid clause, it is clear that clause 3 (b) of the Development
Agreement contemplates, that at the time of handing over quiet, vacant and
peaceful possession of the respective shops/units/flats etc. , the Defendant No.1
shall make best endeavours to ensure that all the members co-operate and
execute their respective Agreements. As correctly submitted by the learned
Senior Advocate appearing for the Defendant No.1, this endeavour is distinct
and different from getting Agreement executed by the individual members of the
Society, or possession from the Members of the Society. I am therefore of the
view that there is thus no obligation upon Defendant No.1 for obtaining
Agreements/possession from its members as the Developer has represented in
recital (F) of the Development Agreement that he has entered into separate
Agreements with each member of the said Society wherein each member has
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granted consent to the said redevelopment project and the Developer has
allotted flats/increased area on the terms and conditions mentioned in such
separate Agreements. In paragraph 54 of the Plaint, the Plaintiff records that
51 members of the Defendant No.1 Society out of 138 members have signed and
executed Agreements with the Plaintiffs which is contrary to the representation
made in the Development Agreement at recital (f). I am therefore of the view
that the Plaintiffs are incorrect in their submission that the Defendant No.1 has
failed to comply with its obligations under the Development Agreement to
obtain agreement/possession from its members and in fact it is the Plaintiffs
who have made an incorrect representation in the Development Agreement that
they have already entered into separate Agreements with each member of the
Society and have thereafter tried to shift the burden qua execution of the said
Agreements with the members of Defendant No.1 on the Society, which cannot
be allowed and disentitles the Plaintiffs from any discretionary/equitable reliefs.
27. Clause 3 of the Development Agreement contains an agreement between
the Plaintiffs and the Defendant No.1 Society as regards "consideration". Under
sub-clause (d) of the said clause 3, the Plaintiffs/Developers have agreed as
follows:
" (d) As and by way of security for the performance of the
terms of this Agreement, the Developer shall furnish a bank
guarantee for an amount of Rs. 2,50,00,000/- (Rupees Two
crore fifty lakhs only) refundable in favour of the Society or
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alternatively provide/grant transferable development rights to
the Society to the extent of Rs. 3,50,00,000/- (Rupees Three
Crore and Fifty lakhs only)".
The Plaintiffs initially by their letter dated 1 st August 2009 inter alia requested
Defendant No.1 society to get the Agreements for providing alternate
accommodation to the members of the first Defendant Society executed from
each and every member and in paragraph 12 of the said letter recorded as
under:
"12. In view of the present market situation we will have
to consider to reduce the corpus fund amount and the
monthly rentals to be given to each member. We will
provide extra area of not more than 25% to the residential
owner's and 10% to 15% to the shop owner's. As offered
initially. We will also not provide Bank Guarantee."
From the aforesaid it is clear that Plaintiff No.1 has not contended that the
contents of the said paragraph 12 would be applicable only if the Defendant
No.1 Society fails to get the Agreements for providing alternate accommodation
executed by its members. The said paragraph 12 is clearly independent of the
request made by the Plaintiffs to the Defendant No.1 Society to get the said
Agreements executed. In fact, as regards the Bank Guarantee required to be
provided by the Plaintiffs to Defendant No.1 Society, the Plaintiffs have
categorically stated "We will also not provide Bank Guarantee" and it is not
KPP -24-
stated that the Plaintiffs would be considering not providing of a Bank
Guarantee. The contents of the said paragraph of the said letter therefore
clearly establishes that on 1 st August 2009 the Plaintiffs were not ready and
willing to perform their part of the contract and wanted to reconsider reduction
in corpus fund and the monthly rentals to be given to each member and had
taken a decision not to provide the Bank Guarantee. The Plaintiffs having
realised later that in view of the said paragraph 12 of the letter dated 1 st August,
2009 they are not entitled to claim specific performance of the Agreements,
after receiving the purported show cause notice according to the Plaintiffs, and
the termination letter, according to Defendant No.1 on 15 th January, 2010, tried
to clarify/make up by recording in paragraphs 21 and 22 of the said letter as
follows:
" 21. We draw your attention to our letter dated 1 st August
2009 informing you the present market scenario whereby we
had informed you that if the above project is delayed for a
considerable period, we may have to reduce the corpus fund,
rental and area agreed to be provided by us to your members.
Under these circumstances, we have requested you to get the
said agreement for providing alternate accommodation
executed from the remaining members of your society
immediately.
22. We have kept the aforesaid payment ready and
we are awaiting your prompt reply. If you get the said
Agreement for providing alternate accommodation signed and
executed from the remaining members of your society within
KPP -25-
a short duration,we will not change any of the terms and
conditions as mentioned in our Development Agreement."
The interpretation sought to be given in paragraph 21 of the letter dated 15 th
January 2010 certainly cannot be given to paragraph 12 of the letter dated 1 st
August, 2009. Again even in the letter dated 15 th January, 2010, the Plaintiffs
have not agreed to provide a Bank Guarantee which it had categorically refused
to provide by the letter dated 1 st August 2009. In fact, even in paragraph 62 of
the Plaint, the Plaintiffs state " The Plaintiffs state that due to changes in market
situation the Plaintiffs will have to consider to reduce the corpus fund amount and
monthly rentals to be given to the members of the Defendant No.1 Society". Even
if I treat the contents of paragraph 62 of the plaint, as an attempt on the part of
the Plaintiff to set out the contents of the letter dated 1 st August 2009, in
incorrect English, in the facts and circumstances set out hereinabove I am
satisfied that there did exist a stage before filing of the present suit when the
Plaintiffs were not ready and willing to perform their obligations as agreed
under the Development Agreement dated 24 th March, 2008. The Plaintiffs are
therefore disentitled from seeking specific performance of the said Development
Agreement and any interim reliefs in their favour.
28. Though there is a dispute qua the letter dated 29 th October 2010
written by Defendant No.1 to the Plaintiffs and the Plaintiffs having stated in the
plaint that they have replied to the said show cause notice dated 29 th October,
KPP -26-
2010 addressed by Defendant No.1 to the Plaintiffs, again a doubt arises as to
the case of the Plaintiffs in that regard since Exhibit-AA annexed to the Plaint is
a reply dated 24th December, 2010 to the Registrar of Co-operative Societies,
"K" Ward and not to the Defendant No.1 Society. A copy of the said reply is also
not marked to the Society.
29. Again though the Society has always cooperated with the Plaintiffs
as regards displaying their Board on the property of the Society, approving plans
on 28th January 2008 itself, executing Power of Attorney as agreed under the
Agreement, handing over possession of the suit property to the Plaintiffs, the
Defendants have not taken any steps in getting plans sanctioned from the
Municipal Corporation and obtaining IOD in respect of redevelopment of the
buildings on the suit property despite more than two years having elapsed.
30. As can be seen from the narration of facts, the buildings are in a
dilapidated condition and the Municipal Corporation has already given notices
to the Society to have the buildings vacated on the ground that they are likely to
collapse causing harm to the life and property of its occupants. In view thereof,
the balance of convenience is also in favour of Defendant No.1 and not the
Plaintiffs in having the redevelopment of the project completed as early as
possible from a developer of the choice of the members of the Defendant No. 1
Society.
KPP -27-
31. In the circumstances, the Notice of Motion is dismissed. However,
the Defendant No.1 is directed to deposit an amount of Rs. 45 lakhs received by
them from the Plaintiffs on or before 19 th November, 2012 with the
Prothonotary and Senior Master of this Court. The Plaintiffs shall be at liberty to
withdraw the said amount without prejudice to their rights and contentions in
the suit. In the event of the Plaintiffs not being interested in withdrawing the
said amount, the Prothonotary and Senior Master shall invest the same in a fixed
deposit of a Nationalised Bank initially for a period of one year and thereafter
renew the same from time to time.
(S.J. KATHAWALLA, J.)
