Anita Rajinder Rishi vs Deepak Pandurang Pawar And Mukesh ...
2021 Latest Caselaw 14671 Bom

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


                      CHAMBER SUMMONS NO.35 OF 2020
                                       IN
         COMMERCIAL EXECUTION APPLICATION NO.252 OF 2019
                                       IN
                  SUMMONS FOR JUDGMENT NO.39 OF 2017
                                       IN
                COMMERCIAL SUMMARY SUIT NO.140 OF 2017


Mukesh Nenshi Gala                           .. Applicant-Intervenor
In the matter between
Anita Rajinder Rishi                         .. Plaintiff-Judg.Creditor
         v/s.
Deepak Pandurang Pawar                       .. Defendant-Judg.Debtor
         And
The learned Sheriff                          .. Respondent


Mr. Shreepad Murthy a/w Vishal Jathar, Ms. Khushboo Chaurasia i/b.
MDP & Partners for the applicant.

Mr. Prathamesh Kamat a/w Nakul Jain & Ms. Bency Ramakrishnan
i/b. Akash Menon for the plaintiff.

None for the defendant/Judgment Debtor.


                                        CORAM : A. K. MENON, J.

DATED : 7TH OCTOBER, 2021.

P.C. :

1. The present Chamber Summons seeks raising an attachment levied

CHS-35-20 (COMEX-252-19).doc wadhwa on certain immovable property with buildings standing thereon at

the instance of the Applicant developer who has Joint Venture

Agreement with the defendant/owner of the property. The plaintiff

having obtained a decree has attached the property in execution. The

property belongs to defendant who now seeks to support the

applicant. The applicant is a JV partner as aforesaid in respect of a

redevelopment agreement of "Likhite House" situate at Mahim,

Mumbai. The applicant claims that he acquired right title and

interest for consideration. The Joint Venture Agreement is a

registered document. Possession has said to have been handed over

to the applicant. Mr. Murthy on behalf of the applicant submits that

his clients, the applicants, have acquired rights in the property prior

to the decree being passed and prior to the attachment being levied

and that being so the property cannot be sold in execution of the

decree.

2. According to Mr. Murthy, the Joint Venture Agreement provides for

profits and losses to be shared equally between the applicant and the

defendant. The Joint Venture contemplates the rehousing of tenants

who are part of the old structure and who are required to be given

permanent alternate accommodation. The applicant claims rights to

consume FSI and load TDR and has the power to sell the redeveloped

CHS-35-20 (COMEX-252-19).doc wadhwa property to the extent it concerns the free sale area. Mr. Murthy has

taken me through the salient provisions of the Joint Venture

Agreement and it is his contention that the defendant owner was

only entitled to sharing the profit and loss and nothing more. The

defendant had executed an irrevocable power of attorney in favour

of the applicant, that power of attorney is registered and the

applicant is required to provide permanent alternate accommodation

to the tenants. The applicant is empowered to and has obtained the

consent of the various tenants. Acting on the said powers granted to

him, the applicant has applied for and obtained several permissions

from the Fire Brigade from the authorities of Municipal Corporation

and the Traffic Department.

3. According to the applicant, he has spent about 1.38 crores on the

various expenses incurred by him towards preparing for

redevelopment of the property. In addition, the applicant claims to

have paid a sum of Rs.1.69 crores to the defendant as advance share

of profit. He claims he is entitled to interest on that amount. Mr.

Murthy further submits that in the JV Agreement the defendant had

declared that he had clear title. The defendant handed over

possession to the applicant for redevelopment and agreed not to

transfer the property without the consent of the applicant. He

CHS-35-20 (COMEX-252-19).doc wadhwa stressed upon the fact that the JV Agreement contained a very clear

provision declaring that there were no pending proceedings against

the defendant owner. Mr. Murthy submitted that the object of the JV

was to redevelop "Likhite House" and to house the existing tenants

and thereafter sell the free sale component and share the profit of the

defendant. Under clause 4, of the agreement, the defendant had

indemnified the applicant. Under clause 5, he declared that de-facto

possession of the property was with the applicant.

4. Mr. Murthy relied upon an additional affidavit filed on behalf of the

applicant in which the deponent has contended that prior to the JV

Agreement from 29th January, 2014, a Memorandum of

Understanding had been signed and that sought to record the

payments made till then. In the additional affidavit certain

corrections were made to the effect that as against the statement in

the application that Rs.1.69 crores had been paid over to the

defendant in fact only Rs.1.67 crores had been paid and this excludes

the interest on the advance. Mr. Murthy submitted that instead of

Rs.1.38 crores as set out in the application, the actual expenses about

Rs.54 lakhs and therefore the total of Rs.2.21 crores had been spent.

Mr. Murthy was at pains to submit that the plot area is small, it is

difficult to develop and a huge amount has already been invested.

CHS-35-20 (COMEX-252-19).doc wadhwa The plot area being only 212.19 sq. mtrs., a building of only 7 storeys

could be constructed. The project is yet to be registered under the

Maharashtra Real Estate Regulatory Authority and the plans will be

subject to amendment pursuant to DCR 2034. Mr. Murthy

submitted that the built-up area is approximately 859.369 sq. mtrs.

and that may enable the applicant developer to just about break even

and make every small profit if at all.

5. In respect of the profit, he has relied upon a project report which

shows that the total cost would be Rs.919,18,546/-, the total recovery

from sales was expected to be Rs.13,39,83,383/-. This would result

in a net profit of about Rs.4,20,64,837/-. The applicant had already

spent Rs.2,21,00,000/-. Thus, the tentative project report which is

dated 28th September, 2019 would clearly evidence the fact that the

project was not capable of generating large amounts of money and

accordingly, it would not be practical for the applicant to pay over

the decretal amount or any part thereof to the plaintiff-decree

holder.

6. The principal submission is that the applicant had acquired rights

much before the transaction between the plaintiff and the defendant

which was a money transaction and which led to the decree being

CHS-35-20 (COMEX-252-19).doc wadhwa passed. There is an irrevocable power of attorney in favour of the

applicant and in that view of the matter the property is now under

the absolute control of the applicant, the judgment debtor can only

seek to recover monies to the extent of the share of the owner and the

owner share is at best only 50% in the net profit and nothing beyond.

This he submitted is the factual aspect which cannot be disputed and

in the light of this there is no occasion to remit any monies to the

judgment debtor or permit sale of the property since that would have

the effect of the depriving the applicant of his rightful dues and his

rights which had crystallized prior to the decree.

7. Mr. Murthy relied upon the following decisions in support of his

case:-

1) Vannarakkal Kallalathil Sreedharan v/s. Chandramaath Balakrihnan and another1

2) Kancherla Laxminarayana v/s. Mattaparthi Shyamala & Ors. 2

8. The defendant is absent though he is said to be served. He has

however filed an affidavit-in-reply to oppose the attachment

proceedings and it appears that he is supporting the applicant. In his

affidavit, the defendant claims that he is the sole owner of the

(1990) 3 SCC 291

AIR 2008 SC 2069

CHS-35-20 (COMEX-252-19).doc wadhwa property and that he had suffered an exparte decree. He has already

sought setting aside of that exparte decree. He however, confirms the

execution of the Memorandum of Understanding, the Power of

Attorney and the Joint Venture Agreement. Incidentally, he admits

receipt of Rs.1.69 crores although the plaintiff seems to suggest that

the amount is only 1.67 crores.

9. Mr. Kamat on behalf of the respondent, opposing the application

submitted that the attachment was valid. The property was attached

in pursuance of a decree obtained against the defendant. The

defendant is admittedly owner of the property even in terms of the

JV Agreement and hence the submissions on behalf of the applicant

are of no avail. He submitted that the applicant has no locus to apply

to this Court to vacate the order of the attachment. The warrant was

admittedly pasted on the property on 6 th May, 2019. The Chamber

Summons was affirmed on 10th July, 2019 but was served only on

20th September, 2019. The application is therefore an afterthought.

Mr. Kamat submitted that the contents of the JV Agreement cannot

override the effect of the decree. The decree was passed by a

competent court, it is executable under law and is being so executed

inter alia by attachment of the property belonging to the Judgment

CHS-35-20 (COMEX-252-19).doc wadhwa Debtor. The amount of the decree was more than 7½ crores and the

present property claimed by the applicant is only one of the

properties that will have to be sold. He therefore submits that there

is no occasion to raise attachment.

Mr. Kamat relied upon the following decisions;

1) Barses J.A. D'Souza v/s. Municipal Corporation of Gr. Brihan Mumbai and others3

2) Sushil Kumar Agarwal v/s. Meenakshi Sadhu and others 4

3) Shantilal J. Shah and others v/s. Jitendra Sanghavi and others 5

10. Having heard the learned counsel for the parties and having

perused the pleadings and document, I find that in the Chamber

Summons the reliefs sought are (i) to permit intervention; (ii) to hold

an enquiry under Order 21 Rule 58 of the Code of Civil Procedure

to determine right, title and interest under the JV Agreement; (iii) to

lift the attachment levied on 11 th April, 2019; (iv) to declare the

applicant has a legal, valid and subsisting charge on the said

property for a sum of Rs.3.7 crores as of 2018 and (v) to direct the

Sheriff not to act pursuant to the attachment and to restrain the

defendant from alienating, transferring or encumbering the suit

2003(4) Mh.L.J.

(2019) 2 SCC 241

2014(1) Mh.L.J. 193

CHS-35-20 (COMEX-252-19).doc wadhwa property. Likewise, to restrain the Sheriff from proceeding with

auction and sale by the attached property and in the meantime,

permit the applicant to redevelop the plot.

11. Having permitted intervention, the application is being treated as

one under Order 21 Rule 58 as an objection to the attachment of the

property. Mr. Murthy has submitted that the property is not liable to

be attached since the applicant has already a prior right therein and

since the property has not been sold, such objection can be

considered by the Court and determined by the court. Order 21 Rule

58 provides that the court shall determine all questions including the

questions relating to right, title and interest in the property attached

in these proceeds. The question that arises in the present case is

whether, by virtue of the JA Agreement, part payments made

thereunder, the attachment is bad and as a consequence whether the

respondent-judgment creditor must be prevented from proceeding in

execution. In deciding this issue, it is appropriate that consider the

factual background that has caused, the applicant to approach this

court.

12. The decree came to be passed on 12 th March, 2018 and

attachment of various properties have been sought. The present

CHS-35-20 (COMEX-252-19).doc wadhwa property is one amongst many sought to be attached and sold. The

decree in favour of the plaintiff is for a principal sum of Rs.7.35

crores and interest of Rs.98,10,739.72 is payable @ 12% from the

date of suit. The applicant has contended that the JV Agreement was

executed on 20th March, 2014. The applicant is a builder has

developed a several properties in and around Mumbai and that the

project in question is based on a small plot of land which vary

limited scope. The defendant is the owner of the property has

acquired only 50% of the property and that he has already paid a

sum of Rs.1.67 crores as advance.

13. In the case of V.K. Sreedharan (supra), the Supreme Court was

considering Order XXXVIII Rule 10 and Section 64 pertaining to an

Agreement for Sale of land in favour of the appellant which had been

executed prior to the attachment levied on the land. Although the

agreement of sale was executed prior to attachment a sale deed came

to be executed after the attachment. The Supreme Court held that

the Agreement for Sale having been entered into prior to attachment,

the sale deed would prevail over the attachment. The Court

considered that a contractual obligation that leads to attachment in

respect of ownership of the land would create an obligation and that

the attachment could not be free of obligations incurred under the

CHS-35-20 (COMEX-252-19).doc wadhwa contract for sale. The Supreme Court thus overturned the decision of

the Kerala High Court which held that the sale deed having been

executed after the attachment, it was bad in law. The Supreme Court

relied upon decision of the Calcutta High Court and of the Bombay

High Court and held that where the attaching creditor attaches only

the right title and interest of the debtor, the attachment cannot

confer upon any right higher than that the judgment debtor had as

on date of attachment.

14. An agreement for sale creates an obligation attached to the

ownership of property and since the attaching creditor is only

entitled to attach right title and interest, the attachment cannot be

free from the obligations incurred under a contract for sale. In other

words, the ownership does not vest in the person attaching the

property. In this view of the matter and applying the principle

herein to the facts at hand, I find that no assistance can be drawn

from these decisions by the applicant since the present case is not one

where the applicant is the owner of the land. All that the applicant

holds is the right to develop the land and to sell the develop property

house the tenants and take away his share of profit. The land is not

owned by the applicant and in this context, the provisions of the JV

CHS-35-20 (COMEX-252-19).doc wadhwa Agreement are clear. Ownership will always vest in the defendant

and not in the applicant. This is obvious from clause 7 of the JV

Agreement. Clause 7 reads as follows;

"No transfer of interest in property :- There is no transfer or assignment in respect of the said property, as the developer shall bring required money for the development of the same, and the existing ownership rights shall always remain with the owner."

Thus, in the facts at hand, Sreedharans' decision (supra) is of no

assistance to the applicant.

15. In Kancherla Laxminarayana (supra), the Supreme Court while

following V. K. Sreedharan (supra), was considering a fact situation

where objections to attachment of property were raised and an

auction sale was held. The court found that the words "sold" in

clause (a) of proviso to Rule 58 of Order XXI has to be read meaning

thereby, a complete sale including the confirmation of the auction.

The attachment could not be free from the prior obligations. Mr.

Murthy seeks to canvass the point that the JV Agreement having been

in place and rights having been created, the Judgment Creditor could

not get a right of sale of the property even to the extent of the

CHS-35-20 (COMEX-252-19).doc wadhwa entitlement of the defendant- judgment debtor. Once again, this

decision will not come to the assistance of the applicant since we are

not concerned in the instant case with the sale of property to the

applicant which necessarily contemplates transfer of ownership. In

the case of Laxminarayana (supra), the sale was via auction. The

auction had not concluded by confirmation of the sale and the

Supreme Court held that till the sale is confirmed, the contract

pursuant to the auction was not concluded.

16. In the facts at hand, it is obvious that the applicant did not

become the owner and never could become the owner even under

the JV Agreement. Particular reference being had to the effect of

clause 7 which clearly reiterated the ownership of the property

vesting in the defendant.

17. In Barses J.A. D'Souza (supra) a Single Judge of this court has

ruled that mere mention in the title of the body of a power of

attorney that it is irrevocable does not make it irrevocable. Only if

the agent himself was an interest in the property which forms the

subject matter of the agency, the agency cannot in the absence of the

express contract be terminated. We are here concerned with the case

not of termination of the JV or of the Power of Attorney but the

CHS-35-20 (COMEX-252-19).doc wadhwa question that arises is whether interest if any is created in the land

which is subject matter of attachment. In this behalf, Barses (supra)

considers the judgment of the Andhra Pradesh High Court in M.

Johan Kotaiah v/s. A. Divakar & ors.6 in which the court held that if

an interest created in the agent is the result or the proceeds arising

after the exercise of the power then the agency is revocable and

cannot be said to be an irrevocable agency but if the interest in the

subject matter, say a debt payable to the principal, is assigned to the

agent as security simultaneously with the creation of the power and

thereafter the agency exercises the power to collect the debt owed by

the principal in favour of the agency, the agency becomes

irrevocable. This court has agreed with the observation of the

Andhra Pradesh High Court in paragraph 18 of the judgment in

Kotaiah (supra) where it found that the principal had not assigned

any interest simultaneously with the execution of the power of

attorney, but only created an interest in the resultant product or

produce arising out of the exercise of that power. In the instant case,

the product of exercising the power of attorney is to redevelop the

property and to sell the flats that are constructed pursuant to the JV

Agreement. There is no alienation of the land itself since the land is

what is now been attached.

AIR 1985 AP 30

CHS-35-20 (COMEX-252-19).doc wadhwa

18. In Sushil Kumar Agarwal (supra) the court was considering

provisions of Section 14 (3)(c) of the Specific Relief Act and the

specific performance of a Development Agreement. Although we are

not directly concerned with the factual aspects, in that case, one may

to take into consideration the interpretation placed by the court on

the concept of ownership of property which reiterates the decision

of the Supreme Court in B. Gangadhar v/s. B.G. Rajalingam7

observing that the ownership denotes the relationship between a

person and an object forming subject matter of the ownership. It

consists of complex of rights, all of which are rights in rem, being

good against the world and not merely against specific persons.

There are various rights or incidents of ownership all of which need

not necessarily be present in every case. They may include a right to

possess, use and enjoy the thing owned and a right to consume,

destroy or alienate it. Thus, the essential incident of ownership of

land is the right to exploit it. The question that it arises is whether the

attachment of the defendants interest in the land could prevail over

the rights of the JV partner? The irrevocable nature of the power of

attorney has to be tested considering the peculiar facts of the present

case. I am of the view that the attachment of the property is not

(1995) 5 SCC 238

CHS-35-20 (COMEX-252-19).doc wadhwa liable to be raised but will prevail over the rights of the JV partner

except to the extent of the share of the Applicant in the redeveloped

property. The sale of the land may proceed subject to the rights

created in favour of the applicant. In other words, if the property

was to be put to sale, at this given moment, the purchaser would be

bound by the terms of the JV Agreement in favour of the applicant

and the right title and interest of the defendant as curtailed by the JV

agreement would alone be available for purchase by interested

parties. It is not possible to accept a consequence that would result

in the applicant being deprived of all its rights under the JV

Agreement merely because of the attachment.

19. In Shantilal Shah (supra), the Division Bench of this court

considered the power of the developer and in the context of Section

202 of the Contract Act dealing with the situation where the agent

has himself interest in the property forming subject matter of the

agreement and following the judgment of the Supreme Court in Seth

Loon Karan Sethiya v/s. Ivan E. John, AIR 1969 SC 73 , the Supreme

Court observed that the agency is created for valuable consideration

and to secure the interest of the agent, the authority cannot be

revoked but before Section 202 can be invoked, the agent must have

an interest in the property. In the facts of that case it was found that

CHS-35-20 (COMEX-252-19).doc wadhwa the Development Agreement between the parties did not create any

interest of the agent in the property and the power conferred to

negotiate or settle with the tenants and to obtain a surrender of the

tenancy rights for facilitating on redevelopment would not by itself

create an interest in the property. In the present case it is evident that

the applicant is also entitled to sell flats to the exclusion of the owner.

20. On a fair reading of clause 7 of the JV agreement it is evident that

the Applicants obligation is to invest money in the project.

Ownership rights continue to vest with the defendant. It has been

contended by Mr. Murthy that any amount withdrawn by the

developer out of cash in hand and the JV shall be debited to the

personal account of the owner. To this effect he has relied upon

clause 9(b) but at the end of the day we are not concerned with the

relationship inter se between the applicant and the defendant. The

property has been attached along with the rights of the owner

therein. Even considering the various provisions of the JV agreement

to which Mr. Murthy has referred to. It may be that the owner has

made an incorrect declaration that there are no proceedings pending

and that his title is clear but the fact remains that the owners interest

in the property continue to subsist although it has been said about

the small size of the project and the impracticality generating much

CHS-35-20 (COMEX-252-19).doc wadhwa profits. These are the matters which are not within the scope of the

present controversy on the applicants in showing the project is yet to

be registered with Maharashtra Real Estate Regulatory Authority

(MahaRERA). The plans may be subject to further amendments and

in line with Development Control Regulation Act 2034 and there is

a possibility of their being larger area available for sale as part of the

free sale of the component. Thus, the attempt of the applicant to

project a picture that nothing whatsoever will be payable to the

owner nor a chapter to be taken into consideration.

21. In the present case, there is no doubt that an interest in

developing the land has been created in favour of the applicant but

that cannot translate to ownership unless there is an express grant in

favour of the applicant and as the facts reveal in the present case,

clause 7 of the JV Agreement clearly provides that ownership of the

land will continue to vest in the defendant. That being the case, it is

not possible to accept the applicant's contention that he is entitled to

resist the attachment and have the attachment vacated

unconditionally. No doubt, if the property is put to sale, the scope of

the alienation by sale may be restricted by the interest created in

favour of the applicant under the JV Agreement but that aspect does

not arise for consideration. What one has to considered here is

CHS-35-20 (COMEX-252-19).doc wadhwa whether the attachment is liable to be vacated. It may be of

academic interest and may lead to an awkward situation where the

prospective purchaser would be faced with acquiring right title and

interest of the judgment debtor in the land, in the face of a JV

agreement and the rights and obligations that are attached with it,

but the fact situation at hand certainly does not justify an order

vacating the attachment of the property.

22. In conclusion, I am of the view that the present application

cannot be succeed, the attachment to continue and in the result, I

pass the following order;

(i) Chamber Summons is dismissed.

(ii) No orders as to costs.

At this stage, after the order is pronounced, Mr. Murthy seeks stay

of operation of this order. Request is declined.

(A. K. MENON, J.)

Digitally signed by SANDHYA SANDHYA BHAGU BHAGU WADHWA WADHWA Date:

2021.10.07 17:15:04 +0530

CHS-35-20 (COMEX-252-19).doc wadhwa