Kantilal K. Haria And Ors vs Sanyam Realtors Pvt. Ltd. And Anr
2023 Latest Caselaw 3615 Bom

2023:BHC-OS:2913

                                                                 NMS-1361-13+IA-293-22.DOC


                                                                             Sayali Upasani


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


                                NOTICE OF MOTION NO.1361 OF 2013
                                              WITH
                               INTERIM APPLICATION NO-293 OF 2022


             Mr. Kantilal Khimji Haria and Ors                           ...Applicants

             Mr. Kantilal Khimji Haria and Ors                              ...Plaintiffs
                                  Vs.
             Sanyam Realtors Private Limited and Ors                    ...Defendants


             Mr. Rajiv Narula with Adv. Shwetaa H Doshile i/b Jhangiani
             and Ms. Mehak Chaudhary, Narula and Associates, for
             Applicants/Plaintiffs.
             Mr. Dinyar D. Madon, Senior Counsel, with Mr. Aditya
             Shiralkar, Mr. Vivek Shiralkar, Yashoda Desai and Vijay
             Poojari i/b Shiralkar and Co., for Defendant No. 1.

                                            CORAM:- N. J. JAMADAR, J.

RESERVED ON:- 24th NOVEMBER, 2022 PRONOUNCED ON:- 12th APRIL, 2023 JUDGMENT:-

1) The plaintiffs-applicants have preferred these Notice of

Motion and Interim Application, seeking injunctive reliefs

against the defendants.

2) The background facts can be summarized as under:-

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(a) Plaintiff Nos. 1 to 8 are the members of an Association

of Persons carrying on business, inter alia, of acquiring and

developing properties under the name and style of, "Sheetal

Realtors". M/s. Sanyam Realtors Private Limited (M/s. Sanyam),

defendant No. 1 is a Private Limited Company. M/s. EDMD

Infracon Private Limited (M/s. EDMD Infracon), the defendant

No. 2, who came to be impleaded by way of amendment, is also

a Private Limited Company.

(b) The defendant No. 1 purchased a property bearing CTS

No. 128, 128/1 to 8 admeasuring 2477 sq. meters situated at

Ghatkopar (suit property), under a Deed of Conveyance dated

31st December, 2002. There were sitting tenants on the suit

property, who had cattle stables thereon, and engaged in milk

business. Defendant No. 1 could neither develop the suit

property nor sale it as there were sitting tenants.

(c) Under an agreement described as "Terms Agreed",

between the plaintiffs and defendant No. 1, the defendant No. 1

agreed to sale the suit property to the plaintiffs. The defendant

No. 1 had, however, undertaken to evict the tenants/occupants

of the suit property. To this end under the terms of the

agreement (MOU), a part of consideration i.e. Rs.3 Crores was to

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be paid to the defendant No. 1 to utilize the said corpus to get

all the tenants, (a list of which was enclosed), evicted from the

suit property within two months thereof. In the event the

defendant No. 1 was required to expend more amount to evict

the tenants, the defendant No. 1 would incur the same. In the

event the tenants did not vacate the respective portions of the

suit property, the defendant No. 1 was to ensure that the work

did not suffer.

3) The MOU further provided for obtaining Commencement

Certificate of original plot area of 2477 sq. meters and incurring

costs for the same by the defendant No. 1. The plaintiffs were to

incur the expenses for purchase and sanction of T.D.R. within

three months of obtaining the Commencement Certificate.

4) Apart from the lump sum consideration of Rs.3 Crores,

the defendant No. 1 was to get 10,000 sq. feet constructed area

with 35% to 40% loading on the carpet area; 5,000 sq. feet in

the construction with One F.S.I. and 5,000 sq. feet in

construction post purchase of T.D.R. The plaintiffs claim, they

paid the entire amount of lump sum consideration, during the

period 20th December, 2005 to 7th August, 2007. According to

the plaintiffs, further Supplemental Agreement was executed

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between the plaintiffs and defendant No. 1 under which a

further sum of Rs.39 Lakhs was paid to the defendant No. 1. It

is further averred in accordance with the terms of Clause 20 of

the MOU, 50% equity share capital of defendant No. 1 came to

be transferred to the plaintiffs and their nominees by defendant

No. 1.

5) The plaintiffs further averred that the defendant No. 1 did

obtain IOD, as agreed. However, the defendant No. 1 could

obtain approval for plan of 2088 sq. meters only out of the total

area of 2477 sq. meters. C.C up to stilt for phase -1 was

obtained by defendant No. 1. However, the defendant No. 1

obtained Commencement Certificate for only part plinth of

phase- 1 programme as per modified approved plan dated 28 th

February, 2007, for 326 meters only out of 2477 sq. meters.

6) The plaintiffs commenced construction of part plinth as

per the sanctioned modified approved plan dated 28 th February,

2007. Construction of part plinth was completed in the month of

November, 2007. The defendant No. 1 obtained further

Commencement Certificate of phase-2 up to the extent of 900

sq. meters only and up to 3rd floor, on 27th December, 2007. The

plaintiffs could not carry out construction beyond plinth due to

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multifarious reasons including various Suits filed against the

defendant No. 1 and injunctions obtained by the plaintiffs in

those Suits.

7) While the things thus stood, on 14th January, 2011, the

defendant No. 1 obtained amended plans for the suit property.

However, as the defendant No. 1 could not get all the

tenants/occupants evicted from the suit property

Commencement Certificate for amended plans could not be

obtained. The project Architect opined that the eviction of the

tenants/occupants was indispensable for consumption of F.S.I.

of plus One and the construction work could not proceed on

account of restraint orders passed by the Court and the then

pending Revision of Development Plan. All these factors were,

according to the plaintiffs, beyond the control of the plaintiffs

and attributable to omissions and inactions on the part of

defendant No. 1 in performance of its obligations under the

Memorandum of Understanding.

8) The plaintiffs averred, instead of evicting the

tenants/occupants in discharge of its obligations under the

MOU and obtaining full sanction and Commencement

Certificate, the defendant No. 1, vide letter dated 17th January,

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2012, professed to terminate the MOU between the plaintiffs and

defendant No. 1. The said termination was premised on false

and frivolous grounds. In response to the reply addressed on

behalf of the plaintiffs to the illegal termination notice, the

defendant No. 1 for the first time sought to contest the MOU on

a patently contradictory ground that there was no contract

between the parties, and the amounts parted with by the

plaintiffs were in the nature of unsecured loans.

9) In the month of June, 2012, the defendant No. 1 destroyed

the plinth constructed by the plaintiffs. Thus, the plaintiffs were

constrained to institute the Suit for Specific Performance of the

agreement contained in MOU along with the Supplemental

Agreement and for a declaration that the contract contained

therein was valid, subsisting and binding on the defendant No.

1 and that the termination thereof by letter dated 17 th January,

2012, was illegal. The instant Notice of Motion was taken out for

ad-interim and interim reliefs.

10) When the Notice of Motion was listed before the Court on

31st October, 2012, the Court did not entertain the prayer for ad-

interim reliefs, as a statement was made on behalf of the

defendant No. 1 that it had entered into another Development

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Agreement dated 27th September, 2012, with defendant No. 2.

Availing the liberty, the plaintiffs amended the plaint and

defendant No. 2 came to be impleaded as a party defendant.

11) After the Notice of Motion was heard, by an order dated

20th May, 2013, the Court thought it appropriate to frame a

preliminary issue as to whether the suit was barred by law of

limitation. When the Notice of Motion came up for hearing

before the Court on 28th August, 2015, in view of the contention

of defendant No. 1 that AOP was in fact a partnership and the

suit by unregistered firm was barred, the Court was persuaded

to frame an issue whether the suit is maintainable in view of the

bar contained in the Section 69 (2) of the partnership Act,

1932 .

12) In the said order, the Court also recorded that the ad-

interim reliefs have been refused on merits. It is the plaintiffs

claim that the said observation was against the weight of the

material on record and the Court never refused ad-interim

reliefs on merits.

13) Eventually, by an order dated 30th October, 2015, the

Court held that the Suit was not barred under Section 69(2) of

the Indian Partnership Act, 1932. The defendant No. 1

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challenged the said order in Commercial Appeal No. 8 of 2016.

By an order dated 7th June, 2016, in Notice of Motion No. 1192 of

2016, the Appeal Bench ordered stay of the further proceedings

in the Suit keeping open the liberty to seek modification of the

order dated 21st August, 2015 to the extent it recorded that ad-

interim reliefs have been refused on merits.

14) In Commercial Appeal No. 8 of 2016 passed on 14 th

November, 2019, the Appeal Court with the consent of the

parties disposed of the Appeal recording that the order dated

30th October, 2015, passed by the learned Single Judge be

treated as a prima facie view taken by the Court requiring

substantive issue to be settled warranting a trial.

15) Narrating all these facts and developments, the plaintiffs

have taken out Interim Application No. 293 of 2022, seeking

appointment of Court Receiver and injunctive reliefs. The

plaintiffs assert that the defendant No. 1 has registered the

development project of the suit property, with RERA under the

name of "Ashok Odyssey" and has proposed 3 wings namely, "A"

wing comprising of 11 floors, "B" Wing of 12 floors and "C" Wing

of 11 floors. The construction in "B" and "C" Wing has reached

upto the stage of 6th floor. For "A" wing only plinth has been

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constructed. The defendant No. 1 and 2 taking undue advantage

of the developments in the proceedings and absence of restraint

orders have carried out the construction post haste and started

selling the flats therein, to the prejudice of the rights of the

plaintiffs.

16) Hence, the instant application to appoint a Court Receiver

in respect of the suit property, restrain the defendant No. 1 from

carrying out further construction of wings "A", "B" and "C",

restrain the defendant No. 1 from selling unsold flats in wings

"A", "B" and "C" and, in the alternative, direct the defendant No.

1 to deposit in this Court the entire sale proceeds, which have

already been received by respondent No. 1 consequent to sale of

the various flats in the wings "A", "B" and "C" and the future

sale proceeds.

17) The prayers in Notice of Motion were resisted by defendant

No.1. At the outset, the defendant No.1 contented that there was

no privity of contract between the plaintiff Nos. 2 to 8 and

defendant No.1 as no agreement was executed inter partes.

18) Consequently, the tenability of the Suit was also assailed

on the ground that an Association of Persons which the

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plaintiffs claim to have formed not a being a juristic entity, was

incompetent to institute the Suit.

19) Thirdly, on merits, the defendant No. 1 contended that the

MOU dated 15th December, 2005, was neither an agreement nor

a joint venture agreement. It was void for vagueness. At best,

the purported MOU was an inchoate instrument and the rights

and obligations of the parties thereto were not crystallised. It

merely reflected intent on the part of the parties to further

negotiate and arrive at a definite and binding agreement.

20) The defendant No. 1 further contended that the eviction of

the tenants from the suit property was dependent upon the

volition of the tenants. On account of refusal of the tenants to

vacate the portions of the suit property and the injunction

orders passed against the defendant No. 1 restraining it from

evicting the tenants, it became impossible for the defendant No.

1 to perform its part of the contract.

21) It was further alleged that the plaintiffs did not make any

earnest endeavor to negotiate and deal with the tenants.

22) According to the defendant No. 1, the plaintiffs had in fact

abandoned the project. The plaintiff No. 1 had not taken any

steps to purchase and acquire T.D.R.. There was default on the

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part of the plaintiff No. 1 to pay premium for the purchase of

acquiring cattle F.S.I., which was then available under

Regulation 33 (17) of the Development Control Regulations. In

any event, the defendant No. 1 terminated the purported MOU

by letter dated 17th January, 2012, and offered to refund the

money which was paid by the plaintiffs. The said amounts in

the absence of any concluded contract between the parties were

only in the nature of unsecured loans, which the defendant No.

1 offered to pay. Lastly, as the suit came to be instituted after

more than 10 months of the said termination, the plaintiffs were

not entitled to any interim reliefs.

23) In affidavit-in-reply to the Interim Application, the

defendant No. 1 contended that the Interim Application not only

suffered from gross delay and laches, but also constituted an

abuse of the process of law as an application for interim reliefs

in the form of Notice of Notion No. 1361 of 2013, was awaiting

adjudication. According to the defendant No. 1, there was no

change in circumstances which warranted filing of a fresh

application for interim reliefs. The defendant No. 1 has narrated

the sequence of events leading to the passing of the order by

Appeal Bench dated 14th November, 2019 in Commercial Appeal

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No. 8 of 2016, and asserted that from the conduct of the

plaintiffs, it becomes abundantly clear that the plaintiffs had

given up the prayers for interim relief. The plaintiffs, therefore,

can not be permitted to re-agitate the prayers for interim reliefs.

24) With reference to the Development Agreement executed

with defendant No. 2, the defendant No. 1 contends that the

defendant No. 1 and 2 mutually decided to cancel the

development agreements dated 27th September, 2012 and 10th

February, 2016 by executing a registered Deed of Cancellation

dated 9th June, 2017. The defendant No. 1 post the cancellation

of development agreement, took over the entire responsibility to

discharge the obligations undertaken by defendant No. 2 and

develop the suit property on its own. The defendant No.1 has

registered the project with RERA. Substantial construction of

"B" and "C" wings was also completed and plinth of "A" wing

was completed and further work was in progress. The defendant

No. 1 has also created third party rights as it has executed a

registered Deed of Mortgage dated 30th May, 2019, whereby and

whereunder the entire suit property and unsold inventory have

been mortgaged in favour of SBI for securing loan of 8 Crores. In

view of the aforesaid developments, at this juncture, the

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plaintiffs are not entitled to any injunctive reliefs. Any restraint

order, as sought by the plaintiffs, would cause irreparable loss

not only to defendant No. 1 but also to the persons who have

already purchased the flats and the prospective purchasers.

25) In the backdrop of the aforesaid pleadings, I have heard

Mr. Narula, the learned Counsel for the plaintiffs and Mr.

Madon, the learned Counsel for the defendant No. 1 at some

length. The learned Counsel took me through the material on

record especially the MOU, the correspondence exchanged

between the parties and the orders passed by the Courts.

26) To start with the MOU, which according to the plaintiffs

incorporates the contract between the parties. Evidently, there

is no controversy about the execution of the said MOU dated

12th December, 2005, though the parties are at issue as to

whether the said MOU was executed by plaintiff No. 1- Mr.

Kantilal Haria for and on behalf of the Association of Persons

and whether rests of the plaintiffs are entitled to claim any

rights thereunder.

27) The material terms of the said MOU titled, "Terms Agreed

Between" read as under:-

"1. Area of the plot is 2477 sq. mtrs. Bearing C.T.S. Nos. 128, 128/1 to 8 of Village Ghatkopar, situated at off

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L.B.S. Marg, Ghatkopar (West) Taluka and Registration Sub-District: Kurla, District and Registration District: Mumbai Suburban.

2. Rs.3,00,00,000/- (Rupees Three Cores Only) lump sum consideration to be used to vacate all the tenants; list enclosed, within two months. If extra amount is required to vacate, the owners will bear and pay. If it is less the benefits will be of the owners. If any tenant does not vacate then in that case it is the responsibility of the owners and the owners will see that due to the tenants the work does not suffer. The Developers can carry the work on the balance vacant plot, however if work suffers the Developers may at their option vacate the remaining tenants at the costs and risk of the owners, such amount to be reimbursed by the owners forthwith failing which shall be a charge on owner's share of built-up area, to be recovered with interest @ 18% p.a.

3. T.D.R. will be purchased by the Developers.

4. Total construction cost with good amenities by the Developers.

5. Sanction up to C.C. of original plot area i.e. 2477 square meters the cost of that like Architect, deposits, out of pocket expenses will be of Owners.

6. The sanction of the T.D.R. the total cost of that like premium, deposits, Architect fees out of pocket expenses will be of the Developers.

7. The Developers will purchase the T.D.R. within three months of obtaining C.C.

.............

10. 10,000 square feet duly constructed will be of Owners with 35% to 40% loading on the carpet area, 5000 square feet in the construction of one F.S.I. and 5000 square feet in the T.D.R. construction. ................

12. The Developers will complete the total project in all the respect between 18 to 24 months after obtaining full C.C.

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12(a). In the event completion is delayed beyond 24 months and proposed construction has not reached 50% due to finance in that case, the owners shall complete the balance work at the cost of developers, such amount to be reimbursed by the developers forthwith, failing which shall be a charge on Developer's share of built-up area, to be recovered with interest @ 18% p.a. ..............

15. C.C. will be obtained by the owner within 2 months with an extension of 1 month from the date of M.O.U.

16. Since there are no other dealings in the company the Developers may opt for proportionate share holding with full and sole right to operate Bank accounts of the company or the Developers may opt for outright purchase of property then the stamp duty if any will be borne by the Developers. Shri. Rakesh Jain shall continue as director entitled to operate bank account with other directors till consideration mentioned in Clause 2 above is fully paid. Shri. Rakesh Jain shall continue being the director only till the compliance of the Clause 10 above referred.

..............

19. On execution the subject property is and shall be in proportionate possession of the Develpers and owners.

20. Since Developer will take over existing company, there shall be proportionate issue of shares with joint management. Sole and exclusive right of management to Developers shall be on payment of amount mentioned at clause 2 above. Even the Developers/nominees shall be appointed as directors and existing directors will resign forthwith. All past liabilities of the Company shall be borne and paid by past management."

28) In the light of the aforesaid nature of the MOU and the

terms thereof, the submissions on behalf of the parties as

regards the legal character of the MOU deserve consideration.

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29) Mr. Narula would urge that the MOU incorporated all the

essential terms and conditions of the contract between the

parties. Mr. Narula further submitted that not only the parties

understood the MOU as a binding contract but acted upon the

material terms of the contract in as much as the plaintiffs

constructed plinth at the suit property. Thus, the submission

on behalf of the defendant No. 1 that the contract contained in

the MOU is not capable of specific performance or for that

matter, MOU was in the nature of an expression of intent to be

formalized by executing further documents is unsustainable.

30) Mr. Madon would urge that the MOU can not be said to

incorporate concluded contract between the parties. It was

urged that the intent of the parties to have a three tranche

consideration. Payment of a sum of Rs.3 Crores and allotment

of 10,000 sq. ft. of built up area represented two tranches. The

parties did not name and agreed upon the third tranche of

consideration. Therefore, the MOU can not be said to be a

concluded contract. Inviting attention of the Court to Clause

'16', Mr. Madon would urge that the consideration at which the

plaintiffs were to purchase the suit property was not agreed

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upon. Secondly, Mr. Madon would urge that there was no clarity

as to the identity of the purchasers.

31) A conjoint reading of the afore extracted Clauses of the

MOU would indicate that there was a contract between the

defendant No. 1 and plaintiff No. 1, in the least, in so far as the

development of the suit property. The material terms of the

contract including the consideration, the mutual obligations,

the period within which the contract was to be executed and the

consequences of default were all provided in the aforeextracted

Clauses.

32) Undoubtedly, in Clauses '16' and '20', the parties had

agreed that eventually the plaintiffs may take over the defendant

No. 1 company or opt for outright purchase of the suit property

as the defendant No. 1 was a single property/project company.

This option to acquire the defendant No. 1-company, however,

does not detract materially from the agreement arrived at

between the parties for development of the suit property.

33) The submission on behalf of the defendant No. 1 that

MOU was an inchoate and non binding instrument runs

counter to the professed stand of the defendant No. 1

manifested in the letter dated 17th January, 2012, which was the

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trigger for the disputes. This purported letter of termination

acknowledges the execution of the MOU and the agreement

incorporated therein. It attributes acts, defaults and omissions

to the plaintiffs qua the obligations under the MOU, which the

defendant No. 1 professed to terminate.

34) Paragraph Nos. 8 and 9 of the said termination letter

dated 17th January, 2022, read as under:-

"8. In view of the aforesaid facts and circumstances and looking to out clients past relationship out clients had humbly requested you as stated herein below.

a) Either you choose to become the owner of the said property by paying us the market value of the said complete property

or

b) You may take in return the money advanced by you in the said property. This offer was made to you without prejudice to the rights and contentions of our clients.

9. In view thereof our clients hereby terminate the agreement of the terms mentioned in the documents executed on 15th December, 2005 executed between you and our clients. "

35) It is imperative to note that one of the offer made by the

defendant No. 1 to the plaintiffs was to become the owner of the

suit property by payment of the market value thereof. This offer

clearly emanated from Clause 16 of the MOU (extracted above).

Moreover, the defendant No. 1 professed to terminate the "Terms

Agreed" between the parties on 15 th December, 2005. In the face

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of the said stand of the defendant No. 1, whereby defendant No.

1 professed to terminate the agreement, it would be

impermissible to urge that there was no contract as such

between the parties.

36) Mr. Narula was justified in placing reliance on a judgment

of the Supreme Court in the case of Julien Educational Trust

Vs. Sourendra Kumar Roy and Others 1, wherein it was observed

that where the prima facie case of existence of the agreement for

sale was made out, the issue has to go to trial and whether

there was a concluded contract or not between the parties was

a matter of evidence and can only be gone into during the trial

of the suit.

37) Though the learned Counsel for the parties advanced

considerable submissions on the point as to whether ad-interim

reliefs were refused on merits, I do not deem it necessary to

delve into that aspect. Since the pleadings are complete in both

Notice of Motion and Interim Application and the parties were

heard at length. I deem it appropriate decide the Notice of

Motion and Interim Application on the touchstone of well

recognized principles.

1 (2010) 1 SCC 379

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38) The parameters for grant of temporary injunction are well

settled. In the case of Seema Arshad Zaheer and Others Vs.

Municipal Corporation of Greater Mumbai and Others 2, the

essential requirements to be satisfied by the plaintiff for grant of

temporary injunction were postulated by the Supreme Court as

under:-

"(i) Existence of a prima facie case as pleaded, necessitating protection of plaintiff's rights by issue of a temporary injunction;

(ii) When the need for protection of plaintiff's rights is compared with or weighed against the need for protection of defendant's right or likely infringement of defendant's right, the balance of convenience tilting in favour of plaintiff; and

(iii) Clear possibility of irreparable injury being caused to plaintiff if the temporary injunction is not granted. In addition, temporary injunction being an equitable relief, the discretion to grant such relief will be exercised only when the plaintiff's conduct is free from blame and he approached the court with clean hands."

39) Once a prima facie finding is reached that there is a

contract, the next question that comes to the fore is whether the

contract is enforceable. Essential nature of the contract

contained in the MOU assumes significance. If the contract is

construed as a contract to build simplicitor, such a contract is

not enforceable. On the contrary, if the contract envisages

2 (2006) 5 SCC 282

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creation of interest in the property to be developed, the Court

would be justified in passing a decree for Specific Performance,

if certain conditions are fulfilled.

40) A profitable reference, in this context, can be made to a

judgment of the Supreme Court in the case of Sushil Kumar

Agarwal Vs. Meenakshi Sadhu and Others 3 , wherein the

Supreme Court considered the question as to whether the

Section 14(3) (c) of the Specific Relief Act, 1963, constitutes a

bar to a suit by a developer for specific performance of a

development agreement between the developer and the owner of

the property. After adverting to the provisions contained in

Section 14 of the Act, 1963 and the judgments which bear upon

the enforceability of a development agreement, the Supreme

Court expounded the various facets of development agreement,

the conditions in which the development agreement may become

enforceable and the principles which govern the exercise of

discretion in granting the specific performance of development

agreement as under:

18. When a pure construction contact is entered into, the contractor has no interest in either the land or the construction which is carried out. But in various other categories of development agreements, the developer may have

3 (2019) 2 SCC 241

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acquired a valuable right either in the property or in the constructed area. The terms of the agreement are crucial in determining whether any interest has been created in the land or in respect of rights in the land in favour of the developer and if so, the nature and extent of the rights.

.............

24. Various High Courts have interpreted the requirements under Section 14(3)(c) of the Act and opined on the maintainability of a suit by the developer for specific performance against the owner of the property for a breach in the conditions of the development agreement. A common thread that runs through the analysis in decided cases is the following:

24.1. The courts do not normally order specific performance of a contract to build or repair. But this rule is subject to important exceptions, and a decree for specific performance of a contract to build will be made only upon meeting the requirements under law;

24.2. The discretion to grant specific performance is not arbitrary or capricious but judicious; it is to be exercised on settled principles; the conduct of the plaintiff, such as delay, acquiescence, breach or some other circumstances outside the contract, may render it inequitable to enforce it;

24.3. In order to determine the exact nature of the agreement signed between the parties, the intent of the parties has to be construed by reading the agreement as a whole in order to determine whether it is an agreement simpliciter for construction or an agreement that also creates an interest for the builder in the property. Where under a development agreement, the developer has an interest in land, it would be difficult to hold that such an agreement is not capable of being specifically enforced; and

24.4. A decree for specific performance of a contract to build will be made if the following conditions are fulfilled:

24.4.1. the work of construction should be described in the contract in a sufficiently precise manner in order for the court to determine the exact nature of the building or work;

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24.4.2. the plaintiff must have a substantial interest in the performance of the contract and the interest should be of such a nature that compensation in money for non- performance of the contract is not an adequate relief; and

24.4.3. the defendant should have, by virtue of the agreement, obtained possession of the whole or any part of the land on which the building is to be constructed or other work is to be executed.......... "

(emphasis supplied)

41) In light of the aforesaid enunciation of law, the primary

question that crops up for consideration is whether, in the facts

of the case, the developer has acquired valuable rights either in

the property or in the constructed area. Upon a conjoint reading

of the aforextracted clauses of the MOU, at this stage, prima

facie an inference becomes sustainable that the MOU in

question is not merely an agreement for constructing a building

for monetary consideration. The MOU inter alia provided for

capital investment by the plaintiffs not only for erecting the

building but also for getting the land vacated of the tenants and

for acquiring developments right by purchase of TDR. The MOU

provided for consideration to the owner in the nature of 10,000

sq.fts constructed area out of the developed property, implying

thereby that rest of the developed property was to fall to the

share of the developer.

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42) Clause '19' expressly provided that on execution of the

MOU the suit property would be in proportionate possession of

the plaintiffs and defendant No. 1. In addition, the MOU made a

provision for acquisition of the entire suit property by the

plaintiffs. All these clauses, if cumulatively construed, lead to

an inference that plaintiffs were given additional rights than

mere building work. MOU thus prima facie appears to be

capable of specific performance.

43) This leads me to the pivotal question of existence of a

prima facie case to seek the specific performance of contract

and assail the termination of the contract by defendant No. 1

as bad and illegal. The MOU was executed on 15 th December,

2005. It came to be terminated vide letter dated 17 th January,

2012. The learned Counsel for the plaintiffs and the defendant

No. 1 made an endeavor to draw home the point that it was the

other party to the contract who committed defaults in the

performance of its obligations under the MOU.

44) Mr. Narula would urge that contrary to the terms of the

MOU, the defendant No. 1 could not get the entire suit property

vacated of the tenants. Secondly, the defendant No. 1 did not

obtain C.C. for total area of 2477 sq.mtrs. Commencement

NMS-1361-13+IA-293-22.DOC

Certificate could be obtained only for part plinth of phase-1.

Thirdly, restraint orders were passed by the Courts in the suit

instituted by the tenants. In view of these principal defaults on

the part of the defendant No. 1, Mr. Narula would urge, the

plaintiffs were not required to perform their reciprocal

obligations and thus the termination of the agreement by

attributing defaults to the plaintiffs was legally untenable.

45) Per contra, Mr. Madon would urge that the plaintiffs were

guilty of the breach of the contract in as much as the plaintiffs

made no efforts to purchase the T.D.R. despite grant of the

Commencement Certificate. Secondly, the plaintiffs were under

an obligation to pay cattle premium to get additional F.S.I.

Plaintiffs did not pay the cattle premium, though the additional

F.S.I. was approved by the Municipal Corporation. Mr. Madon

would urge that, in fact, inaction on the part of the plaintiffs

bordered on abandonment of the project. The defendant No. 1

was thus justified in terminating the contract.

46) Mr. Narula countered by submitting that obligation to

purchase T.D.R. would have arisen only upon the defendant No.

1 obtaining full C.C. Mr. Narula would urge Clause 5 and 15 of

the MOU (extracted above) are required to be read in

NMS-1361-13+IA-293-22.DOC

juxtaposition and thus read would indicate that plaintiffs

obligation to purchase the T.D.R. never arose.

47) To bolster up the submissions that sequence in which the

obligations are to be performed deserves to be taken into

account, Mr. Narula placed reliance on the judgment of the

Supreme Court in the case of Nathulal Vs. Phoolchand4. In the

said case, the Supreme Court enunciated that in considering

whether a person is willing to perform his part of the contract,

the sequence in which the obligations under a contract are to be

performed must be taken into account. By virtue of Section 4 of

the Transfer of Property Act, 1882, the Chapters and Sections of

the Transfer of Property Act, 1882 which relate to contracts are

to be taken as part of the Indian contract Act, 1872. If,

therefore, under the terms of the contract the obligations of the

parties are to be performed in a certain sequence, one of the

parties to the contract can not require compliance with the

obligations by the other party without in the first instance

performing his own part of the contract which in the sequence

of obligations is performable by him earlier.

48) It is trite the instrument is required to be read as whole.

Whilst there was an obligation on the defendant No. 1 to obtain 4 (1969) 3 SCC 120.

NMS-1361-13+IA-293-22.DOC

the Commencement Certificate within the stipulated period, the

plaintiffs were under an obligation to purchase T.D.R.

Indisputably part C.C. was obtained and the plaintiffs did erect

plinth in a portion of the suit property.

49) This situation is required to be appreciated in the light of

the fact that performance of the mutual obligations was further

contingent upon the suit property being vacated of all the

tenants. Indisputably, few of the tenants approached the Court

and obtained restraint orders. The extent of the property

covered by the restraint orders was sought to be debated.

However, the fact remained that few of the tenants could not be

evicted and continued to stay over the suit property.

50) When the performance of the reciprocal promises depends

upon an event, over which the parties had no control, especially

in a situation where the contingency is of eviction of the

tenants, who have statutory protection, the very enforceability of

the contract enters the arena of uncertainty. In such a situation

failure to perform such contingent obligation can not be readily

inferred. Thus, the failure of the defendant No. 1 to get all the

tenants evicted, in the face of the restraint orders passed by the

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Courts, saves it of the element of deliberate non performance.

51) From this standpoint, the stand of the plaintiffs that the

plaintiffs were not obligated to purchase the TDR or pay cattle

premium to acquire additional F.S.I prima facie does not seem to

be in furtherence of the intent of the parties under the MOU.

The parties had not agreed that development was to commence

only after entire plot was got vacated of the tenants. Clause 2

clearly provided that the Developer can carry the work on

balance vacant land. The Developer had the option to vacate the

tenants who stayed over at the costs and risk of the owners.

Prima facie, there is no material to show that the plaintiffs

initiated measures to either evict the remaining tenants or erect

further construction beyond part plinth.

52) Non payment of the cattle premium can not be explained

away by contending that liability to pay did not arise. Additional

FSI came to be sanctioned by MCGM on 16th August, 2007,

much before the controversy arose. The grant of additional FSI

in lieu of shifting/removal of existing cattle sheds was subject to

payment of requisite premium. Non payment of premium

entailed the consequence of lapse of benefit. Likewise, the

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purchase of TDR, as such, was not contingent upon grant of full

C.C. Purchase of TDR would have been a factor underscoring

the willingness of plaintiffs. Moreover, the things did not move

for almost Six years.

53) The situation which thus emerges is that the termination

of the agreement by the defendant No. 1 can not be said to be

prima facie, wholly unsustainable. That impinges upon the case

sought to be put-forth by the plaintiffs for grant of temporary

injunction.

54) The aforesaid aspects are required to be appreciated in the

light of the time lag and subsequent developments. They bear

upon the prima facie case, which the plaintiffs had at the

commencement of the dispute, to dilute its strength. They also

influence the determination of balance of convenience and

irreparable loss.

55) In the intervening period, there have been significant

developments. Indisputably, the plinth which the plaintiffs had

constructed was demolished. The defendant No.1 entered into

the development agreement with defendant No. 2. The defendant

No. 1 contends the said agreement with defendant No. 2 also

came to be terminated under a Deed of Cancellation dated 7 th

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July, 2017. The defendant No. 1, post cancellation of

development agreement, took over the entire responsibility to

develop the project. Out of three Wings, construction of "B" and

"C" Wings was almost complete and the plinth of "A" wing was

also erected. Defendant No. 1 claims to have created security

interest in the suit property by executing a registered Deed of

Mortgage dated 13th May, 2019, in favour of SBI for securing a

loan of Rs.8 Crores. Third party rights in the nature of allotment

of the flats to the purchasers have been created.

56) Banking heavily upon the aforesaid developments, Mr.

Madon would urge that at this stage the balance of convenience

heavily tilts in favour of defendant No. 1. In the event any order,

either of appointing a receiver or restraint of whatsoever nature,

is passed, the defendant No. 1 and the third parties would

suffer irreparable loss. On the contrary the interest of the

plaintiffs has been adequately protected by order dated 27 th

April, 2022 by which the defendant No. 1 had been directed to

deposit a sum of Rs.3.39,00,000/-, which was parted with by

the plaintiffs.

57) Mr. Madon placed strong reliance on a judgment of this

Court in the case of Ambalal Maganlal Patel and Another Vs.

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Indumati Narayan Mohile and Others 5, wherein a learned Single

Judge of this Court in the facts of the said case observed as

under:-

".... Interim reliefs such as those claimed in the present motion by the plaintiffs are basically in the discretion of the Court. Though discretion is expected to be exercised fairly and reasonably, this, in my judgment, is not a case for exercising the same in favour of the plaintiffs. Even assuming that the plaintiffs had initially, when the suit was filed, made out a case for interim relief, the same stood virtually destroyed by their utter silence all these long years. Third party rights have intervened. The old building has been demolished. A new construction has come up to third floor level....."

58) Mr. Narula, stoutly submitted that the mere fact that

during the pendency of the suit, the defendant No. 1 has erected

the structures would not dis-entitle the plaintiffs from enforcing

their rights. Mr. Narula would urge that it is not the case that

the plaintiffs had not been diligently prosecuting their remedies.

On the contrary, the material on record would show that the

defendant No. 1 resorted to litigative stratagem to delay and

defeat the legitimate rights of the plaintiffs. The defendant No. 1

took all sorts of technical objections and carried the matter in

Appeal to obviate an effective hearing on Notice of Motion and in

the intervening period carried out the development. Defendant

5 AIR 1990 Bombay 187

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No. 1, therefore, can not be permitted to take advantage of its

own unscrupulous conduct, urged Mr. Narula.

59) To buttress the aforesaid submissions, Mr. Narula placed

strong reliance on the judgments of the Supreme Court in the

cases of Gangubai Bablya Chaudhary and Others Vs. Sitaram

Bhalchandra Sukhtankar and Others6, Bina Murlidhar Hemdev

and Others Vs. Kanhaiyalal Lokram Hemdev and Others 7, a

judgment of Karnataka High Court in the case of Anthony

Reddy and Others Vs. The State of Karnataka and Others 8 and

a judgment of Calcutta High Court in the case of Rayees Alam

Vs. Ganges Garden Realtors Pvt. Ltd. and Others9.

60) In the case of Gangubai Bablya Chaudhary (supra), the

Supreme Court, in the facts of the said case, held that if the

defendants were allowed to put up construction by the use of

the F.S.I. for whole of the land including the land involved in

dispute, the situation may become irreversible by the time the

dispute is decided and would preclude fair and just decision of

the matter.

6 (1983) 4 SCC 31 7 (1999) (5) SCC 222 8 MANU/KA/7740/2019 9 2021 (3) ICC 105

NMS-1361-13+IA-293-22.DOC

61) In the case of Bina Murlidhar Hemdev (Supra), the

Supreme Court enunciated that it is true that normally a

plaintiff who stands by when another is making construction on

his property could not seek injunction to stop construction.

However, in the facts of the said case, the Supreme Court held

that it was not inclined to deny temporary injunction to the

plaintiffs notwithstanding the investments made by the builder.

The builder had never shown any anxiety before the Court to

come to terms and avoid an injunction by offering certain terms

to plaintiffs.

62) In Anthony Reddy (supra) a learned Single Judge of the

Karnataka High Court held that if the parties were exercising

their legal rights, the passage of time can not be arrayed against

them to deny the relief.

63) In Rayees Alam (supra) the Calcutta High Court held that

delay in filing the suit is not material where an injunction is

sought in aid of a legal right, and mere lapse of time will not be

a bar to the grant of an injunction before the trial.

64) Evidently, the aforesaid propositions have been enunciated

in the facts of the given cases. One can not loose sight of the

fact that grant of injunction or appointment of a receiver is a

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discretionary relief. It has to be exercised keeping in view the

fact situation of the matter. In the case at hand, the passage of

time has brought in its strain many factors which are of critical

salience. The suit property has been developed in a proportion

which far exceeds the terms of the MOU. Security interest of

significant bearing has been created. A multitude of third party

rights have been created. In fact, the physical character of the

suit property has been substantially altered. The contention

that the defendant No. 1 carried the development by resorting to

letigative stratagem is required to be appreciated in the light of

the fact that there has been no restraint order against the

defendant No. 1. In the circumstances, at this stage, the balance

of convenience clearly tilts in favour of defendant No. 1.

65) Irreparable loss, in the circumstances of the case, in the

event of grant of injunction would be suffered not only by the

defendant No. 1 but the parties in whose favour rights have

been created.

66) At this juncture, it would be contextually relevant to note

that Mr. Madon, the learned Counsel for the defendant No. 1, on

instructions, made a statement that the defendant No. 1 has no

objection to the plaintiffs withdrawing the amount of

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Rs.3,39,00,000/- deposited in this Court by the defendant No. 1

pursuant to order dated 27th April, 2022.

67) Granting such permission to withdraw the amount subject

to final adjudication would be a measure in mitigation.

68) For the forgoing reasons, I am impelled to hold that Notice

of Motion as well as the Interim Application deserve to be

dismissed. At the same time, I am inclined to allow the plaintiffs

to withdraw the sum of Rs.3,39,00,000/-, along with interest

accrued thereon without prejudice to the rights and contentions

of the parties and subject to the determination of the suit.

69)         Hence, the following order.

                                     :ORDER:

      (i)        Notice of Motion No. 1361 of 2013 and Interim

Application No. 293 of 2022, stand dismissed.

(ii) The plaintiffs are permitted to withdraw a sum of

Rs.3,39,00,000/-, along with interest accrued thereon

without prejudice to the rights and contentions of the

parties and subject to the final decision of the suit.

Costs in cause.

[N. J. JAMADAR, J.]