Shyam Sunder Kabra And Anr vs Wondervalue Realty Developers ...
2021 Latest Caselaw 7205 Bom

            This Order is modified/corrected by Speaking to Minutes Order dated 25/06/2021



              IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                     ORDINARY ORIGINAL CIVIL JURISDICTION
                              [ COMMERCIAL DIVISION ]

              INTERIM APPLICATION (LODGING) NO.10985 OF 2021
                                              IN
                COMMERCIAL SUIT (LODGING) NO.10983 OF 2021

Shyam Sunder Kabra & Anr.                               .. Applicants-Plaintiffs
               Vs.
Wondervalue Realty Developers
Pvt. Ltd. & Ors.                                        .. Respondents-Defendants


Dr. Virendra Tulzapurkar, Sr. Advocate, with Mr. Ravi Gandhi, Mr. M.A.
Kamdar and Mr. Rashmin Jain, i/by Kanga & Co., for the Applicants-Plaintiffs.
Mr. Nikhil Wable, with Mr. Priyank Daga and Ms. Juhi Valia, i/by Jayakar &
Partners, for Defendant Nos.1 to 4.
Mr. Rohaan Cama, with Mr. Krishna Moorthy, Mr. Abinash Pradhan and Ms.
Garima Agrawal, i/by Wadia Ghandy & Co., for Defendant No.5.


                                                CORAM : A. K. MENON, J.

                                                DATE      : 5TH MAY, 2021.
                                                [THROUGH VIDEO CONFERENCE]

P.C. :

1. Heard learned counsel for the parties. For the reasons recorded below, the ad-interim relief is refused.

2. The plaintiffs claim to be purchasers of a flat in proposed "HBS Towers- Building No.2", admeasuring 1,693 sq.ft. (carpet area) and 3 car-parking spaces in the Apartment No.2201 on the 22 nd floor. The flat is to be constructed on a property located at Worli, Mumbai. Two plots have been amalgamated to facilitate this construction. According to the plaintiffs, the defendant no.1 had offered an option to acquire Flat No.1801 on the 18 th

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This Order is modified/corrected by Speaking to Minutes Order dated 25/06/2021

Floor of HBST2, admeasuring 1547.67 sq.ft. for a consideration of Rs.8,67,48,400/-. It was then contemplated that the defendant no.1 would construct HBST2, amongst other buildings, on the aforesaid amalgamated plot. Under an Options Agreement dated 6 th February 2013, which was executed between the plaintiffs and defendant no.1, the defendant no.1 agreed pursuant to the option to execute agreement for sale, as contemplated under the Maharashtra Ownership of Flats (Regulation of the Promotion, Construciton, Sale, Management and Transfer) Act, 1963. The defendant no.1 intended to develop the amalgamated plot under the Development Control Regulations 33(5), 33(9) or 33(10) or a combination of those. After constructing rehabilitation units for members of the two co-operative societies, namely, Shiv Prerana Society and Worli Shivshali Society, for accommodation for the members of the societies, the free-sale component is said to house the suit flat, which is subject matter of the options agreement.

3. As time passed, the plaintiffs agreed to accept an alternate flat being Flat No.2201, in lieu of the 18th floor apartment and claim to have paid a sum of Rs.13,49,680/- as an advance on 10 th January 2013. Further payment of Rs.11,08,455/- was made on 14th October 2013 and the second payment of an identical amount of Rs.11,08,455/- was also paid inclusive of service tax. The plaint sets out the manner in which the parties agreed to purchase apartment 2201 in lieu of 1801.

4. The contention of the plaintiffs and as canvassed by Dr. Tulzapurkar is that during the validity of the agreement, the defendant no.1 failed to perform its obligations under the options agreement. It is now believed that defendant no.5 is intending to take over the project from defendant no.1. Dr. Tulzapurkar therefore seeks protection against defendant no.5 disposing, alienating or creating third party rights in Apartment No.2201.

5. According to Dr. Tulzapurkar, a draft agreement for sale has been

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This Order is modified/corrected by Speaking to Minutes Order dated 25/06/2021

forwarded in October, 2017 and parties held various meetings to finalize the draft but since the project had not commenced, the agreement was not executed, since execution of the agreement was to await commencement of work. Although building plans were approved in 2013 and some work upto plinth level was said to have been completed in October, 2015, no further progress was made. According to Dr. Tulzapurkar, the two societies were also liable to honour the terms of the suit Options Agreement. On a query from the court as to why the societies have not brought before the court, he submitted that notice under Section 164 of the Maharashtra Co-operative Societies Act, 1960 has only just been issued and notice period is yet to expire. In my view, that was not reason enough for not impleading the societies in this IA, if according to the plaintiffs, the societies are said to be bound by the options agreement. In paragraph 3.49 of the plaint, the plaintiffs have averred that defendant no.1 along with the Worli Shivshahi and Shiv Prerana societies, are bound to honour the options agreement, but the options agreement is signed only as between defendant no.1 and the plaintiffs.

6. Mr. Cama appearing on behalf of the 5 th defendant submitted that he has no privity of contract with the plaintiffs. He has been instructed to appear for defendant no.5, who is believed to be negotiating to carry out the project with the societies. He submits that no injunction can be granted in respect of the flat. He relies upon a judgment of the learned Single Judge of this court in Vaidehi Akash Housing Pvt. Ltd. Vs. New D.N. Nagar Co-op. Housing Society Union Ltd. & Ors., along with connected matters, in Notice of Motion No.961 of 2013 in Suit No.262 of 2012 , wherein this court has taken a view that the transactions as between the developer and third parties cannot bind the society after the development agreement is terminated. He therefore submitted that no relief be granted to the plaintiffs. This is sought to be countered by Dr. Tulzapurkar, who states that in the present case, defendant no.1 is bound by the options agreement because the agreement between the

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This Order is modified/corrected by Speaking to Minutes Order dated 25/06/2021

defendant no.1 and the societies has not yet been terminated.

7. Be that as it may, the societies are not before the court. The plaintiffs' contention is that the societies are bound by the options agreement. I find that difficult to accept at this prima facie stage. Moreover, as against the total purchase price of Rs.8,67,00,000/-, the plaintiffs only paid a fraction of this and despite eight years having passed by. In my view, on balance of convenience, the plaintiffs are not entitled to any injunction in view of the termination of the options agreement by the societies.

8. Upon perusal of paragraph 3.5 of the plaint, it is seen that the plaintiffs are yet to finalize the draft agreement for sale on the basis that the agreement is to be executed only upon construction commencing. Surely, even today construction has not commenced. The plaintiffs were not willing to execute the agreement at the material time. Plaintiffs are also seeking a charge under the property. In the absence of any agreement and the fact that the societies are not parties to the options agreement, prima facie, the societies are under no obligation to honour the 1st defendant's obligations, if any, to the plaintiffs under the options agreement.

9. The options agreement contains a dispute resolution provision at clause 26, which provides for reference to arbitration. Parties as contemplated under the arbitration agreement are plaintiffs and the defendant no.1. The suit appears to side step this arbitration agreement by impleading defendant no.5 and the directors of defendant no.1. Moreover, as rightly pointed out by Mr. Cama, vide clause 12 of the options agreement, the parties agreed that if the defendant no.1 is unable to develop the property within 12 months or an extended period of 12 months, on certain vis major events taking place, the 1 st defendant is empowered to terminate the agreement, against which the 1 st defendant was liable to refund the amount along with simple interest @ 10% p.a. This refund is what the plaintiffs have sought as an alternative prayer

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This Order is modified/corrected by Speaking to Minutes Order dated 25/06/2021

along with the damages in the suit. The Options Agreement appears determinable in its nature.

10. In the above set of facts, I am of the view that the plaintiffs have failed to make out a case for ad-interim relief and therefore I pass the following order :-

              (i)       Ad-interim relief is refused.
              (ii)      Reply, if any, to be filed within four weeks from
                        today.

(iii) Rejoinder, if any, to be filed within two weeks thereafter.

(iv) List the IA per CIS.

(A. K. MENON, J.)

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