Extravagant Heights Realtors ... vs Allied Construction Company And 3 ...
2021 Latest Caselaw 3576 Bom

                                                                [email protected]




          IN THE HIGH COURT OF JUDICATURE AT BOMBAY
              ORDINARY ORIGINAL CIVIL JURISDICTION

               SUMMONS FOR JUDGMENT NO.10 OF 2020
                              IN
             COMMERCIAL SUMMARY SUIT NO.1388 OF 2019

Extravagant Heights Realtors Private Limited
and Others                                                ...Applicants
     In the matter between
Extravagant Heights Realtors Private Limited
and Others                                                ...Plaintiffs
           vs.
M/s. Allied Construction Company and Others               ...Defendants

Mr. Ruchir Tolat i/b. Vishal Acharya, for the Applicants-Plaintiffs.
Mr. R.P. Ojha, for the Defendants.

                               CORAM : N. J. JAMADAR, J.
                          RESERVED ON : 12th FEBRUARY, 2021
                        PRONOUNCED ON : 25th FEBRUARY, 2021
                                 -------------

JUDGMENT:

. This Commercial Division Summary Suit is instituted for

recovery of a sum of Rs. 2,45,38,176/- along with further interest.

2. The material averments in the Plaint can be summarized as

under:

a] The Plaintiff is a company incorporated under the

Companies Act, 1956. The Defendant No. 1 is a partnership frm.

Defendant Nos. 2 to 4 are its partners. The Defendants

Vishal Parekar, P.A. ...1 [email protected]

represented to the Plaintiff that the Defendants were developing a

project, then named "Allied Business Centre", which came to be

rechristened as "Jaswanti Allied Business Centre" situated at

Kanchpada, near Paras Industrial Estate, Ramchandra Lane

Extension, Malad (w), Mumbai-64. Based on the representation of

the Defendants, the Plaintiff booked a commercial unit, being Unit

No.B/704 admeasuring 2000 sq.ft. carpet in the said building for

the consideration at the rate of Rs. 7,500/- per sq.ft.

3. The Plaintiff did pay the entire consideration of Rs.

1,50,00,000/- to the Defendants. An allotment letter was issued to

the Plaintiff on 1st August, 2010 which acknowledged the aforesaid

payment of Rs.1,50,00,000/-. However, the Defendants failed to

develop the project and handover the possession of the said offce

premises, as promised. Upon persuasion, the Defendants

refunded a sum of Rs. 60 lakhs through R.T.G.S. during the

period 16th November, 2012 to 2nd February, 2013. The balance

amount remained outstanding. The Defendants allotted two

separate units being Unit No. B/718 admeasuring 183.31 sq.fts.

and Unit No. A/719 admeasuring 450.15 sq.fts carpet area in the

said building i.e. Jaswanti Allied Business Centre for the

Vishal Parekar, P.A. ...2 [email protected]

consideration of Rs. 41,18,000/- only, which came to be adjusted

against the outstanding amount of Rs. 90 lakhs under the

conveyance dated 16th August, 2016. The Plaintiff repeatedly

requested the Defendants to refund the amount which still

remained outstanding. The Defendants paid a sum of Rs. 3 lakhs

only on 9th March, 2018 through R.T.G.S. Ultimately, the Plaintiff

addressed a legal notice on 16 th October, 2018 calling upon the

Defendants to pay the outstanding amount along with interest

accrued thereon. The Defendants unjustly denied the claim of the

Plaintiff. Hence, the Plaintiff was constrained to institute the suit

for recovery of the balance amount of Rs. 45,80,000/- along with

interest @ 24% p.a. aggregating to Rs. 1,99,56,176/-

4. The Defendants appeared in the response to the service of

writ of summons. Thereupon, the Plaintiff has taken out the

instant Summons for Judgment. The Defendants have fled

affdavit in reply and sought an unconditional leave to defend the

suit.

5. The Defendants have affrmed that the suit claim is wholly

false, frivolous and vexatious. The Plaintiff is guilty of suppression

Vishal Parekar, P.A. ...3 [email protected]

of facts. Unconditional leave to defend the suit is sought on two

principal grounds.

6. First, the entire outstanding amount of Rs. 90 lakhs came to

be adjusted against the purchase of the above two offce units i.e.

Unit Nos. B/718 and A/719, under the conveyance executed on

16th August, 2016. In fact, it was the Plaintiff who had sought to

cancel the original allotment of Unit No. B/718 and instead

desired to purchase the above numbered offce unit. Though, in

the conveyances, the actual consideration was shown at Rs.

11,92,000/- and Rs. 29,26,000/-, the market value of the Unit No.

B/718 was Rs. 28,16,500/- and that of Unit No. A/719 was

Rs.69,16,000/-. The total value of the units was Rs. 97,32,500/-.

However, the Defendants did not insist for the payment of balance

consideration of Rs. 7,32,500/- over and above the amount of Rs.

90 lakhs which was due to the Plaintiff. The fact that the Plaintiff

had sold out the above numbered units for a consideration of Rs.

98,50,000/- within a span of less than four months from the date

of the aforesaid transaction, was pressed into service to bolster up

the defence that the agreed consideration was much more than

the consideration shown in instruments dated 16 th August, 2016.

Vishal Parekar, P.A.                                                    ...4
                                                           [email protected]

7. The second count on which an unconditional leave is sought

is the bar of limitation. The Defendants contended that from the

own showing of the Plaintiff, the suit is barred by law of

limitation. The endeavour of the Plaintiff to bring life into the suit

by placing reliance upon the alleged payment of Rs. 3 lakhs on 9 th

March, 2018 is stated to be legally unsustainable. The said

amount of Rs. 3 lakhs, according to the Defendants, was not paid

towards the alleged outstanding amount but it was by way of the

refund of the amount of Rs. 2,05,800/- which the Plaintiff had

paid to M/s. Ashray Investment, a joint venture partner of the

Defendants while acquiring the Unit No. B/718 and A/719. The

institution of the suit on 14th August, 2019 is thus stated to be

beyond the period of limitation.

8. In the backdrop of the aforesaid pleadings, I have heard Mr.

Tolat, the learned counsel for the Plaintiff and Mr. Ojha, the

learned counsel for the Defendants at some length.

9. It was urged on behalf of the Plaintiff that the fact that the

Plaintiff had parted with consideration of Rs.1,50,00,000/-, as

evidenced by the letter of allotment dated 1 st August, 2010, is

Vishal Parekar, P.A. ...5 [email protected]

incontestible. Nor there is dispute over the fact that the

Defendants had repaid only a sum of Rs. 60 lakhs. Thirdly, the

sale of two offce units, numbered B/718 and A/719, under the

conveyances dated 16th August, 2016 for the consideration of Rs.

11,92,000/- and Rs. 29,26,000/-, respectively is also

incontestible. In backdrop of these indubitable facts the defence

now sought to be taken of adjustment of the entire outstanding

amount of Rs. 90 lakhs is nothing but a moonshine defence. In

fact, the liability to pay the balance outstanding amount is

admitted liability. It was further urged by Mr. Tolat that the suit

is instituted within three years of the execution of the agreement

for sale dated 16th August, 2016. In any event, the payment of Rs.

3 lakhs on 9th March, 2018 constitutes the payment within the

meaning of Section 19 of the Limitation Act, 1963 and, thus, the

ground of limitation is totally misconceived. Thus, the Defendants

are not entitled to leave to defend the suit.

10. In opposition to this, Mr. Ojha, the learned counsel for the

Defendant Nos. 1 to 4 stoutly submitted that the Plaintiff's case

suffers from the vice suppressio veri and suggestio falsi . Though

the Plaintiff has placed on record the copies of the agreement of

Vishal Parekar, P.A. ...6 [email protected]

sale dated 16th August, 2016, yet the Plaintiff deliberately withheld

the Index II thereof. Inviting, the attention of the Court to the

Index II, wherein the market value of the Unit No. A/719 is shown

at Rs. 69,16,000/- and that of Unit No. B/718 is Rs. 28,16,500/-,

it was urged, with a degree of vehemence, that the actual agreed

consideration was far in excess of the consideration shown in the

instruments and the entire liability of the Defendants stood

discharged. Mr. Ojha further submitted that the fact that within a

couple of months of the execution of the said conveyances the

Plaintiff sold those two units at a consideration of Rs. 98,50,000/-

squarely establishes that the market value of those units was

more than Rs. 90 lakhs, which the Defendants owed to the

Plaintiff. On this ground alone, according to Mr.Ojha, Defendants

are entitled to an unconditional leave to defend the suit.

11. To being with, un-controverted facts. First and foremost, the

initial allotment of Unit No. B/704 admeasuring 2000 sq.fts. for

the consideration of @ Rs.7,500/- sq.fts. under the allotment

letter dated 1st August, 2010 is not in dispute. Nor there any

controversy over the fact that the Plaintiff had paid a sum of Rs.

1,50,00,000/- towards the consideration for the said unit.

Vishal Parekar, P.A.                                                     ...7
                                                           [email protected]

Though, the circumstances, which led to the cancallation of the

said allotment, and the question as to whose conduct was

blameworthy, are sought to be disputed, yet, the fact remains that

the allotment stood cancelled and the Defendants refunded the

sum of Rs. 60 lakhs to the Plaintiff. The subsequent contract

between the parties to sale Unit Nos. B/718 and A/719 is

evidenced by the agreements of sale dated 16 th August, 2016.

12. It would be contextually relevant to note that in the affdavit

in reply the Defendants did not dispute that the Defendants were

liable to repay the balance amount of Rs. 90 lakhs. In contrast,

what the Defendants contended was that it was specifcally agreed

by and between the Plaintiff and Defendants that the Defendants

should allot the aforesaid two units to the Plaintiff for the balance

amount of Rs. 90 lakhs, which the Defendants owed to the

Plaintiff and, thus, those conveyances were executed.

13. Whether the aforesaid defence, that the consideration which

fnds mention in the aforesaid conveyances dated 16 th August,

2016 was not the real consideration and the agreed consideration

was Rs. 90 lakhs, is legally sustainable. It is pertinent to note that

Vishal Parekar, P.A. ...8 [email protected]

under the said agreement to sale, the Defendants have

acknowledged to have received the consideration of Rs.11,92,000/-

and Rs. 29,26,000/- on 30th July, 2010 and 30th June, 2012

through R.T.G.S. Indisputably, the stated consideration for

agreements to sale is Rs. 11,92,000/- and Rs.29,26,000/-. The

instruments are duly registered.

14. In the aforesaid backdrop, the bar contained in Section 92 of

the Evidence Act, 1872 comes into play. Section 92(1) declares

that, when the terms of any contract, grant or other disposition of

property, or any matter required by law to be reduced to the form

of a document, have been proved according to the last section, no

evidence of any oral agreement or statement shall be admitted, as

between the parties to such instrument or their representatives in

interest, for the purpose of contradicting, varying, adding to, or

subtracting from, its terms.

15. The aforesaid section is based on a fundamental principle of

best rule evidence, namely, when the contract is reduced into

writing or required to be embodied by law in written instrument,

the instrument itself would be the repository of the terms of the

Vishal Parekar, P.A. ...9 [email protected]

contract and parole evidence shall not be allowed to substitute,

contradict or alter the terms of the contract.

16. A proftable reference, in this backdrop, can be made to a

judgment of the Supreme Court in the case of Roop Kumar vs.

Mohan Thedani1 wherein the Supreme Court expounded the

grounds of exclusion of oral evidence to contradict the terms of

"dispositive document", in the following words"

"21. The grounds of exclusion of extrinsic evidence are (i) to admit inferior evidence when law requires superior would amount to nullifying the law, (ii) when parties have deliberately put their agreement into writing, it is conclusively presumed, between themselves and their privies, that they intended the writing to form a full and fnal statement of their intentions, and one which should be placed beyond the reach of future controversy, bad faith and treacherous memory."

17. It is trite that the parties are entitled to plead that the

instrument was not intended to be acted upon as it was only a

sham or camoufage instrument. It is not the case that the

Defendants contend that the instruments in question were never

intended to operate as the conveyances and the real transaction

between the parties was distinct. In the case at hand, on the

contrary, however, the Defendants without disputing the nature or

1AIR 2003 Supreme Court 2418.

Vishal Parekar, P.A.                                                          ...10
                                                                   [email protected]

character of the instruments are only seeking to demonstrate that

the real consideration was in excess of the consideration shown in

the said instruments.

18. The evidence which the Defendants would be required to

lead in support of the aforesaid defence may be vulnerable as

inadmissible as, in essence, the Defendants would be seeking to

prove that the terms of the transaction covered by the instrument

(the consideration) are different from what is embodied in the

instrument. In this view of the matter, I fnd it rather diffcult to

accede to the submission on behalf of the Defendants that the

liability stood discharged with the execution of the said

instruments.

19. On the ground of limitation, the Plaintiff sought to rely upon

the payment of Rs. 3 lakhs, indisputably made by the Defendants

on 9th March, 2018. The Defendants made endevour to draw home

the point that the said payment was towards some other

transaction. However, from the own showing of the Defendants, it

becomes evident that the Plaintiff had paid a sum of Rs.

2,05,800/- only. The claim of the Defendants that the amount of

Vishal Parekar, P.A. ...11 [email protected]

Rs. 3 lakhs was towards the repayment of the said amount does

not appear prima facie, sustainable.

20. Nonetheless, the Plaintiff cannot draw much mileage from

the fact that the Defendants had made payment of Rs. 3 lakhs on

9th March, 2018. Evidently, the said payment was made through

R.T.G.S. In order to bring the case within the ambit of Section 19

of the Limitation Act, 1963 and have the beneft of a fresh period

of limitation, for institution of the suit, only the payment is not, by

itself, suffcient. In view of the text, and the proviso to, Section 19,

two conditions must be satisfed before the period of limitation

gets extended. First, the payment must be made within the

prescribed period of limitation. Second, it must be acknowledged

by some form of writing either in Defendant's own hand writing or

signed by him. In the case at hand, the Plaintiff has not

approached the Court with a case that the payment of the said

amount of Rs. 3 lakhs was also acknowledged within the meaning

of the proviso to Section 19 of the Limitation Act. Nor there are

specifc pleading to that effect, as mandated by Order VII Rule 6 of

the Civil Procedure Code, 1908.

Vishal Parekar, P.A.                                                      ...12
                                                                    [email protected]

21. A useful reference, in this context, can be made to a recent

judgment of the Supreme Court in the case of Shanti Conductors

Private Limited vs. Assam State Electricity Board and Others 2

wherein the legal position was enunciated thus:

15. "Order VII Rule 6 uses the words "the plaint shall show the ground upon which exemption from such law is claimed". The exemption provided under Sections 4 to 20 of the Limitation Act, 1963 are based on certain facts and events. Section 19, with which we are concerned, provide for a fresh period of limitation, which is founded on certain facts, i.e.,

(i) whether payment on account of debt or of interest on legacy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy, (ii) an acknowledgement of the payment appears in the handwriting of, or in a writing signed by, the person making the payment."

(emphasis supplied)

22. In the aforesaid view of the matter, in the absence of

pleading regarding acknowledgement of payment, so as to bring it

within the ambit of Section 19 of the Limitation Act, the reliance

on the payment of Rs. 3 lakhs dated 9 th March, 2018 does not

advance the cause of the Plaintiff.

23. However, despite the non-availability of the beneft of Section

19 of the Limitation Act, 1963, the issue of limitation, cannot be

ex facie, construed against the Plaintiff, at this stage.

Indisputably, the agreements for sale, in respect of Unit A/719

2(2020) 2 Supreme Court Cases 677.

Vishal Parekar, P.A.                                                              ...13
                                                                           [email protected]

and B/718 were executed on 16th August, 2016. The suit came to

be instituted on 14th August, 2019 i.e. within three years of the

execution of the said instruments. It is the case of the

Defendants that the Defendants did owe the sum of Rs. 90 lakhs

to the Plaintiff on the date of the execution of the said

instruments and the said liability stood discharged upon

execution of the said conveyances. Invariably, limitation is mixed

question of law and facts. In this view of the matter, the question

of limitation, would be a triable issue.

24. Evidently, the Defendants seek to contest the liability on the

premise that the consideration for the said conveyances was the

entire outstanding amount of Rs. 90 lakhs. While leading evidence

in respect of aforesaid defence the Defendants will be required to

surmount the impediment of admissibility in view of the

provisions contained in Section 92 of the Evidence Act. Thus, a

doubt arises about the Defendants' good faith and the

genuineness of the defence sought to be urged. The case would,

therefore, be covered by Clause 17.3 of the judgment of the

Supreme Court in the case of IDBI Trusteeship Services Limited

vs. Hubtown Limited3 which reads thus:

3(2017) 1 Supreme Court Cases 568.

Vishal Parekar, P.A.                                                                     ...14
                                                                    [email protected]




              17.3     Even if the defendant raises triable issues, if a

doubt is left with the trial judge about the defendant's good faith, or the genuineness of the triable issues, the trial judge may impose conditions both as to time or mode of trial, as well as payment into court or furnishing security. Care must be taken to see that the object of the provisions to assist expeditious disposal of commercial causes is not defeated. Care must also be taken to see that such triable issues are not shut out by unduly severe orders as to deposit or security.

(emphasis supplied)

Resultantly, the Defendant is not entitled to an

unconditional leave to defend the suit.

\

25. As there was no stipulation regarding the payment of

interest on the balance amount, I am of the considered view that

the claim of interest at the rate of 24% p.a warrants adjudication.

It would, therefore, be expedient in the interest of justice to grant

conditional leave to the Defendants to defend the suit subject to

deposit of the sum of Rs. 45,82,000/-, which constitutes the

balance of the initial outstanding amount of Rs. 90 lakhs. Hence,

the following order:

ORDER

1] Leave to defend the suit is granted to the Defendants

subject to deposit of the sum of Rs. 45,82,000/- within a

period of eight weeks from today.

Vishal Parekar, P.A.                                                              ...15
                                                          [email protected]




2]      If the aforesaid deposit is made within the stipulated

period, this suit shall be transferred to the list of

Commercial Causes and the Defendants shall fle written

statement within a period of four weeks from the date of

deposit;

3] If this conditional order of deposit is not complied

with, within the aforesaid stipulated period, the Plaintiff

shall be entitled to apply for an ex-parte decree against the

Defendants after obtaining a non-deposit certifcate from

the Prothonotary and Senior Master of this Court.

4] Summons for Judgment stands disposed of in the

aforesaid terms.

                                         (N. J. JAMADAR, J.)




Vishal Parekar, P.A.                                                    ...16