Bombay High Court
Prajita Developers Pvt.Ltd vs Yusuf Khan @ Dilip Kumar And Anr on 4 March, 2016
Bench: Anoop V. Mohta
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION APPEAL (L) No. 74 OF 2016
IN
ARBITRATION PETITION NO. 829 OF 2015
WITH
NOTICE OF MOTION (L) NO. 583 OF 2016
Prajita Developers Pvt.Ltd. .. Appellants
(Orig.Petitioners)
Vs.
1 Yusuf Khan alias Dilip Kumar
2 M/s. Gold Beam Construction Pvt. Limited .. Respondents
(Orig. Respondents)
Mr. Janak Dwarkadas, Senior Advocate with Mr. Zal Andhyarujina
with Arup Dasgupta, Ms. Shruti Sardesai Mr. Nirav Merchant and Ms.
Deepika Sekar i/b. Jhangiani Narula & Associates for the appellants.
Mr. Milind Sathe, Senior Advocate with Mr.Chirag Shah and Parag
Shah i/b. M/s. Mahesh Shah & Co. for respondent No.1
Mr.N.H.Seervai, Senior Advocate with Mr. Rahul Chitnis i/b. Akshay
Shah for respondent No.2
CORAM: ANOOP V. MOHTA AND
G. S. KULKARNI, JJ.
CLOSED FOR JUDGMENT ON: February 26, 2016
PRONOUNCED ON : March 04, 2016
JUDGMENT (Per Anoop V. Mohta, J.)
The Appellants (original Petitioners) have challenged
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impugned order dated 14.01.2016 passed by the learned Single
Judge, thereby the Petition under Section 9 of the Arbitration and
Conciliation Act, 1996 (for short, "Act of 1996") is dismissed.
2 The Appellants, through Section 9 Petition, sought
injunction against Respondent No.1, his servants and agents from
dispossessing from the property bearing land admeasuring 2,056
sq.mtrs. plot no.16 of Pali Hill Estate in the Village of Danda (Bandra),
Taluka-Andheri, Bandra (East), Mumbai 400 051, forming part of
Survey No.236, No.3, N.A. No.329 corresponding CTS. No. C/1395,
C/1396 and C/1397 (hereinafter referred to as the said Property).
3 Respondent No.1 is 92 years old, a senior citizen, had
entered into Development Agreement dated 23.06.2006. The learned
Judge referred those facts in paragraphs 4, 5 and 6 in the impugned
order, which read thus:
"4 The development agreement dated 23.6.2006 was
executed between Yusuf Khan alias Dilip Kumar
Respondent no.1, M/s.Sharyans Resources Limited
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(hereinafter referred to as M/s.Sharyans) and respondent
no.2 M/s.Gold Beam Construction Pvt.Ltd. whereby
respondent no.1 granted development rights to the said
M/s.Sharyans and to the respondent no.2 as stated therein
in respect of the said property upon terms and conditions
and for consideration of Rs.10 crores. The development
agreement was duly registered with the Sub-Registrar of
Assurance. Power of Attorney executed by respondent no.1
in favour of respondent no.2 and its director to enable the
developer to commence the development work. As per the
said Development Agreement developers paid sum of Rs.1
crores to the respondent no.1 on execution of development
agreement and thereafter paid sum of Rs.3 crores. In all
they paid Rs.4 crores to the respondent no.1. Some of the
relevant clauses of the said development agreement dated
23.6.2006 are as under:
"1. (A) For monetary consideration as hereinafter
provided to be paid by the Developers to the Owner and
other than the consideration of providing to the Owner free
of costs the built-up premises desired to be retained by the
Owner, in the buildings to be constructed on the said
property the Owner hereby grants to the Developers and
the Developers hereby acquired from the Owner the
development rights to the extent and in the manner
hereinafter provided in respect of the said property more
particularly described in the Schedule hereunder written
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(hereinafter as aforesaid referred to as "the said Property")
by consuming and utilizing the entire permissible F.S.I. in
respect of the said Property (including F.S.I. of staircase,
lifts, passage, balcony etc.) as well as by consuming and
utilizing entire permissible T.D.R. In accordance with the
Development Control Regulations of MCGM.
(B) It is estimated that for development of the said
Property the total permissible FSI available is about 2056
sq.mtrs. Equivalent to 22130 sq.ft. and further FSI by way
of TDR as permissible under D.C.Regulations of MCGM.
(i) The entitlement of the parties in the development
potential shall be as under:
Party
Residential User
(1) (2)
CPS
Owner 50% 50%
Developers 50% 50%
(ii) The Owner has retained and/or will be deemed to
have retained for his own use and benefit above stipulated
entitlement of the Owner out of the total FSI and TDR
available for the development of the said property
including proportionate entitlement of the total number of
car parking slots (CPS) (both stilted and/or open) that may
be provided in the complex and the said portion of the FSI
(hereinafter collectively referred to as "the Owner's Lot),
shall be developed by the Developers at the cost of the
Developers in the manner and in accordance with the plans
prepared as per the requirement of the Owner and under
the supervision of the Architect of the project and in the
time frame and in the manner as provided herein.
(iii) The benefit of the above stipulated entitlement of the
Developers out of the total FSI and TDR available for
development of the said property as also of the total CPS
(both stilted and open) that may be provided in the
complex (such Developer's entitlement available for
development on the said Property and the CPS-both stilted
and open) that may be provided in the complex
(hereinafter referred to as "the Developer's lot) shall be
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developed by the Developers at its own costs and shall
belong to the Developers and shall be at the disposal of the
Developers.
(iv) In case any additional area or potential over and
above the present development potential is allowed in
future to be constructed on payment of premium, the same
shall be divided between the Owner and Developers in the
proportion as provided in Clause 1(B) (I) above and then
ali pro-rata costs of such premium and the costs of
construction of such additional area coming to the share of
the Owner shall be borne and paid by the Owner and the
remaining pro-rate costs of such premium and the costs of
construction coming to the share of the Developers shall be
borne and paid by the Developers. Above stipulated
entitlement of the Owner of such additional built-up area
shall form part of the Owner's lot and above stipulated
entitlement of the Developer's lot. It is certified that the
purpose aforesaid the term "present development potential"
shall means F.S.I. available on the said property for
redevelopment and additional 50% thereof by way of
T.D.R.
3. The Developer's shall pay to the Owner the sum of
Rupees Ten Crore as and by way of lump sum monetary
consideration in the manner as provided herein:
(a) a sum ali of Rs.1,00,00,000/- (Rupees One Crore
Only) on execution of these presents.
(b) a sum of Rs.4,00,00,000/- (Rupees four crore Only)
before handing over vacant possession of the said property
including the Bungalow standing on the said property to
enable the Developers to enter upon the said property and
commence development.
(c) the balance sum of Rs.5,00,00,000/- (Rupees five
crores Only) within six months from the date of this
Agreement provided the Developers are not restrained
and/or not prevented from carrying on the development of
the property as provided thereunder.
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17. Upon payment of the balance monetary
consideration by the Developers to the Owner as provided
in Clause 3(b) the Owner shall permit and the Developers
shall have the license to enter upon the said Property to
develop the said Property,to carry on construction on the
said Property and for that purpose to do all acts, deeds,
matters and things as may be necessary exercising the
following rights and authorities:
(a) To put and/erect sign boards upon the said Property
as also to issue advertisement in the newspapers and other
medias as may be deemed fit by the Developers announcing
the construction of the buildings on the said Property and
the sale of the flats, shops, offices, garages, parking spaces,
tenements, etc. (coming to the share of Developers on
ownership basis.
(b) After revalidation of the building plans to commence,
carry on and complete construction of the buildings on the
said Property by the Developers or through its contractors,
sub-contractors or any other agent at its costs.
(c) To dispose of in its own name on ownership basis of
the flats, shops, offices, garages, parking spaces, tenements,
stilts or any other rights in the buildings to be constructed
on the said Property which comes to the share of the
Developers to the person or parties of its choice at the price
and upon the terms and conditions as the Developers may
deem proper.
(d) To receive the consideration from the purchasers of
the flats, shops, offices, garages, parking spaces, tenements,
stilts or any other rights in the buildings to be constructed
on the said Property which comes to the share of the
Developers and the Developers shall be entitled to
appropriate the same as it may deem fit and proper.
(e) To enter into agreements for sale of the premises
which comes to the share of the Developers comprising of
the flats, garages, parking spaces, tenements, stilts or any
other rights in the buildings to be constructed on the said
Property."
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5 Initially, the said M/s.Sharyans applied to the various
authorities for permission to develop the suit property.
M/s.Sharyans paid an amount of Rs.2,89,900/- on
28.4.2008 to the National Institute of Oceanography to
obtain requisite CRZ clearance to load TDR upon the said
property. In May 2008, the said M/s.Sharyans applied for
height clearance for the building to be constructed to the
Airport Authority. The Airport Authority of India granted
NOC for height clearance for the building to be constructed
on the said property on 22.8.2008. Thereafter the said
M/s.Sharyans appointed a Contractor to execute the
Development work under the Development Agreement and
the said contractor has done demolition of the old
bungalow, excavation work necessary to lay foundation of
the new building, pilling work, foundation work etc. On
22.9.2008 Municipal Corporation for Greater Mumbai
granted commencement certificate for development of the
said property.
6 On 20.4.2010, the deed of assignment came to be
executed between M/s.Sharyans and the petitioners by
which M/s.Sharyans have assigned their right, title and
interest of the development agreement dated 23.6.2006 to
the petitioners. As per the said deed of assignment dated
20.4.2010 the petitioners acquired M/s.Sharyans right in
development agreement dated 23.6.2006. Pursuant to the
said deed of assignment, partnership deed between
respondent nos.1 and 2 modified and the petitioners
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became a partner of the said partnership firm whose aim
was to develop the said property as per the development
agreement. Because of the dispute between the parties,
the petitioners invoked Arbitration Clause of development
agreement dated 23.6.2006 calling upon the respondents to
appoint the Arbitrator to dissolve their disputes. The
Arbitration Clause of the development agreement dated
23.6.2006 reads thus:
"40 All disputes differences and questions whatsoever
arising between the parties hereto and/or the persons
claiming by under or through them at any time touching
these presents or any matter arising out of this transaction
if not resolved mutually between the parties, the same shall
be resolved by arbitration of a single arbitrator if both
parties agree upon one such, or by two arbitrators one each
appointed by each party and third Arbitrator appointed by
them, and the decision of the Arbitrator/s shall be final and
binding upon the parties. The Venue of such Arbitration
shall be Mumbai and subject as above, the same shall be in
accordance with the Arbitration and Conciliation Act,
1996."
4 The learned Judge referring to the affidavit so filed on
record, including the documents read with judgments so cited, noted
even the rival submissions in paragraphs 13 to 17 of the Order.
5 The learned Judge ultimately concluded in paragraphs 21
to 23 and dismissed the Petition.
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6 The Appellants/Petitioners/Prajita have obtained the
leasehold rights in the property together with the bungalow standing
thereon by virtue of Lease dated 25 September 1953. Since they
wanted to develop the said property, applied to the Corporation of
Greater Mumbai (MCGM) and obtained IOD dated 6 October 2000.
Therefore, for the same, a Memorandum of Understanding of 1 July
2004 was executed with M/s. Sharyans Resources Limited
(Sharyans), who was appointed as the Project Manager for the
development of the property. Sharyans and M/s. Gold Beam
Construction Pvt Ltd (Gold Beam) entered into a Partnership on 16
June 2006 for development of the property. A fresh Partnership Deed
was executed on 10 December 2008 (the Partnership Deed) with
Respondent No.2/Gold Beam. Based upon the Partnership, the
monetary burden was upon them to develop the property. Gold Beam
was required to bring its contribution of 50% of the cost and 50% of
monetary consideration through Respondent No.1 (owner). The
profit of the firm was to be shared equally between the Sharyans and
Gold Beam. A development agreement was entered into with
Sharyans on 23 June 2006 and Gold Beam. The same was further
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rectified by the Deed of Rectification on 11 September 2006 (the
Development Agreement). The owner executed a Power of Attorney
(POA) in favour of Gold Beam to authorise various agreements.
Sharyans and Gold Beam were supposed to develop the said property
as per the said agreement (the Developer). A monetary consideration
of Rs. 10 crores as per clause 3 was required to be paid to the owner.
The said instalments are mentioned in the above paras as noted by the
learned Judge. Based upon the Development Agreement, the
Sharyans and the Gold Beam were permitted to enter upon the
property as developers. The remaining amount was required to be
paid from the date of Development Agreement (23 December 2006).
The remaining said amount was not paid to the owner in full. The
amount paid was approximately, 7,14,00,000/-. The part payment
apart, no progress of construction and development as agreed was
made.
7 As per the agreements, Sharyans and Gold Beam were to
get 50% of the development potential area to be constructed which
was subject to further division equally between the Sharyans and the
Gold Beam. There is no dispute that as per clause 19 (d) of the
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Development Agreement, the entire development work was to be
carried out by the developer/Appellant/Petitioner at their own costs,
including to procure the permissible TDR as per clause 2 of the
agreement. There is nothing to show that the developers have
procured any part of TDR in view clause 11-A(a). Admittedly, as per
the agreement, the development was supposed to commence within
30 days and should be completed within a time period of 12 months
from the date of IOD/Commencement Certificate. The plans were
approved on 2 January 2008 and CC was obtained on 22 September
2008. No steps to initiate even construction were taken. Admittedly
the development of the remaining was not completed before
September 2011 - even the foundation was not laid, except some
piling work with two coloums. The position remained same till the
year 2013-2014. The said position of 2013 and 2014 still remained
same till this date. In the background, such
construction/development contract so entered into by Respondent
No.1/owner to develop his property as a owner within his lifetime
considering his age. The agreement clause itself shows that time was
an essence of the contract to complete the development so that all the
parties including the Appellants/Petitioners would get his 25% share
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after completion of the construction at this costs. The
Appellants/Petitioners entitlement was only after completion of the
development. The remaining 25% was admittedly of Gold Beam. In
the remaining 50% area, the Appellants and/or Gold Beam and/or
Sharyans had no right whatsoever. Their rights/interest/entitlement
was also subject to to the development and construction for the
development potential area. The Developers could not even obtain
permission, NOC, though obtain re-validation of CC till the year 2013.
The Sharyans and his assignee/Petitioner/Prajita, therefore, failed to
develop the property further as per the agreement.
8 Sharyans executed a Deed of Assignment (the Deed of
Assignment) on 20 April 2010 and assigned its rights and liabilities
arising out of the Development Agreement in favour of the
Appellants/Petitioner/Prajita, by which the Appellants were entitled to
25% share in the development rights, but it was subject to all
liabilities and obligations of the Sharayans under the agreement. The
Deed of Assignment was confirmed by the Respondents also. On the
same day, a Deed of Admission-cum-Retirement was executed by and
between the Sharyans and the Appellants/Petitioners/Prajita and Gold
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Beam, whereby the Sharyans retired from the said firm and
Prajita/Appellants was treated as new partner on the same terms and
conditions in place of Sharyans under the Partnership Deed.
Admittedly, the Appellants, therefore, stepped into the shoes of
Sharyans with all rights and liabilities mentioned in the said
development agreement. The Appellants, therefore, knowing the
background and the obligation, including the time being the essence
of the contract in view of the nature of construction and the reason for
development of the property by the owner, the Appellants as well as
the Gold Beam/Respondent No.2, failed to comply with the essential
terms and conditions of the Development Agreement in time. They
have not complied with the various conditions mentioned in the IOD
and the NOC till this date. There was no dispute with regard to the
title/ownership of Respondent No.1. There was no restraintment
order of any kind passed against Prajita/the Sharyans and/or the
property in question. There was nothing to prevent the developer to
carry out the construction activities in time. The suit by Sameer
Bhojwani, even if any, about rent, pending in Small Causes Court,
Bandra, ad-interim injunction was only between 25 September 2013
which was vacated on 31 October 2013 i.e. only for 37 days.
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Therefore, there was no constraint of any kind for the development of
the property in question. There was no any such communication
and/or agreement to stop the construction work. The Developers
including the Appellants, therefore, failed to stick to the time so
agreed. The submission that for some time, Respondent No.1 asked to
stop the construction on account of third party claim against his title
in the Suit which was for short time is of no assistance to claim the
defence of stopping of work by Respondent No.1. The Appellants,
therefore, as noted, has not shown any progress of construction. This
shows that the developers were unwilling to develop the said
property for various reasons including the requisite funds to carry out
the development work. Admittedly, they did not commence and
complete the development of the property. In the meantime, there
was no question of touching the portion of the bungalow as it was
subject to other clause of the agreement and basically when developer
for eight years except two coloums and carry out piling work, made
no construction as per the agreements, as they agreed to complete the
building and made ready for occupation within 25 months from the
date of obtaining CC. The Appellants, as recorded, have not done any
activity of construction except by Sharyans so made before the
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assignment. This itself, as rightly expressed by the learned Judge and
we have also noted the inability and unwillingness to pursue the
development as per the agreement.
9 The nature of agreement itself shows that the
Appellants/Petitioners and the Sharyans and/or Developers were
permitted to enter into the property as developer only after part
payment of consideration. The said licence was for limited purpose
and for ancillary activities. The intention was made known to all.
This licence, in our view, also cannot be read to mean and as sought to
be contended by the counsel appearing for the Appellants, that the
interest was created in the property in perpetuity.
10 The reliance was placed on a judgement of a Division
Bench in Chheda Housing Development Corporation v. Bibijan Shaikh
Farid and ors1., in support of their contention. In that case, the
agreement was totally different. There was no such development
agreement whereby share of the Petitioner, at the most is 25% i.e.
after completion of the construction and developing the further
1 2007 (3) Mh. L. J. 402
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property. In the facts and peculiar circumstances and basically the
clauses so read and referred and the agreement so entered into and as
admittedly, the Petitioner was not in picture at the time of basic
development agreement and admittedly came into picture in the year
2010 and as no property was developed at any point of time, though
permitted to enter into the premises, the said judgment is of no
assistance to claim the interest in the property based upon the
agreement itself.
11 The submission that time was not the essence of the
contract based upon the decision in M/s.Hindu Construction
Contractors v. State of Maharashtra,2 is also unacceptable. The
findings given by the learned Judge, based upon the clauses so read
and referred and as we have also considered those rival contentions
and submissions and as there was no progress whatsoever shown and
it is a case where the Petitioners who subsequently entered into the
suit property based upon the agreement so referred and unable to
show willingness and desire to complete the construction as agreed on
the basis of 2006 Development Agreement and as we have also come
2 (1979) 2 SCC 70
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to a conclusion, looking to the facts and circumstances, the time was
the essence of the contract,, the Appellants therefore failed to perform
their obligations. The invocation of arbitration clause and the
termination of the contract by the Appellants/Petitioners in no way
can be stated to be wrong and/or impermissible. The breach
committed by the Appellants and Respondent No.2, therefore, goes to
the root of the agreement of such contract and as there is no case of
any waiver and/or extension of agreed time for further development,
in view of express provisions, the contention that the time was not the
essence of the contract, is unacceptable.
12 The submission is raised for the first time in Appeal that
the Appellants are entitled to claim specific performance and/or
related reliefs from Respondent No.2 being part of the Development
Agreement as well as Assignment Deed in question. Admittedly,
Respondent No.2 has not raised any such issue and/or not claimed
any specific performance and/or not made any demand from
Respondent No.1. Therefore, having accepted the position including
the termination by one of the partner/party to the Development
Agreement/Deeds, the intended claim of specific performance, even if
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any, in the present facts and circumstances, in our view, is an
additional ground and reason, to hold that the Appellants/Petitioners
are not entitled for interim protection and/or relief so sought by
restoring the terminated contract. Out of two partners, one partner
has already accepted the termination, the interest even, if any, as
noted, of 25% share, which was also subject to completion of
construction, the Appellants/Petitioners are at the most entitled for
the damages and/or similar compensation. However, after
considering the totality of the matter and as admittedly, the
Appellants/Petitioners have no right or interest till other remaining
75% of the property in question, no case for interim relief/or
protection and/or restoration of possession so stated, is made out.
13 The judgment referred to Order 1, Rule 1 of Code of Civil
Procedure (CPC) to join parties for specific performance and for
related claims, based upon Jahar Roy (Dead), through L.Rs v. Premji
Bhimji Mansata,3 Poonuswami Gounder v. Rama Boyan and ors.,4 are
of no assistance to interfere with the impugned order so also the
judgment revolving around Section 45 and Section 23 of Specific
3 (1977) 4 SCC 562
4 AIR 1979 Madras 130
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Relief Act in Kandaswami and ors v. Venkatachala Kandar and ors. 5,
specifically when it is settled that the remedy of specific performance
is an equitable one and is in the discretion of the Court. As noted, the
facts and circumstances, though we are not expressing final opinion,
as it will be subject to Suit and/or Arbitration, if initiated, but we are
inclined to observe that the Appellants and the Plaintiffs claim, even if
any, in no way, can be more than damages and/or compensation.
These observations are for deciding this Appeal against judgement on
Section 9 Application. The main relief of specific performance, in
view of above admitted position, as not possible and would not be
executable, the interim protection and/or relief in aid to the same, as
prayed in Section 9 Application, therefore, as not granted by the
learned Judge and we see no case is made out to interfere with the
same, considering the scope and power of Appellate Court under
Section 37 of the Act of 1996. The Apex Court in Wander Ltd and anr
v. Antox India P Ltd6., has dealt with the power of Appellate Court to
interfere with the reasoned order passed by the learned Judge in
exercising and taking note of basic principle of law of injunction.
Even otherwise, as noted, no case is made out to substitute the order
5 1972 The Madras Law Journal Reports 401
6 1990 (Supp) SCC 727
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so passed as the same is not illegal, contrary and/or perverse. The
order so passed is well within the frame work of law and the record.
14 The judgment so cited by the learned senior counsel
appearing for the Appellants in ICICI Bank Limited v. United Breweries
(Holdings) Limited and ors., in Appeal (L) No.409 of 2015 in Notice of
Motion (L) No. 905 of 2015 in Suit (L) No. 290 of 2015 with Notice of
Motion (L) No. 1285 of 2015 dated 3 December 2015 ( V. M. Kanade,
Acting Chief Justice & Dr. Shalini Phansalkar-Joshi, J.), in support of
his submission that if case is made out, the Appellate Court is required
to interfere even with the reasoned order so passed by the learned
Judge. In the facts and circumstances, the Division Bench of this
Court interfered with the reasoned order, apart from the reasons
which we have noted above, as it would be difficult for the Court,
even the Arbitrator to pass order of specific performance except,
subject to material and evidence, compensation/damages, if any. This
is subject to counter claim/damages by Respondent No.1 also.
15 In the result, the Appeal is dismissed. There shall be no
order as to costs.
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16 In view of dismissal of Appeal, Notice of Motion (L) No.
583 of 2016 does not survive and stands disposed of accordingly.
17 At this stage, learned senior counsel appearing for the
Appellants submits that the statement of Respondent No. 1 to
continue for a period of two weeks. Considering the issue so involved
and the reasons so recorded and in the interest of justice, we are
inclined to continue the statement of Respondent No.1 for two weeks.
Order accordingly.
(G. S. KULKARNI, J.) (ANOOP V. MOHTA, J.)
