Bombay High Court
Ranjit Vardichand Jain vs Nirmal Gagubhai Chhadwa And 11 Ors on 5 June, 2023
Bench: R. I. Chagla
2023:BHC-OS:4308 3-ia-2457-2021.doc
This Order is modified/corrected by Speaking to Minutes Order dated 07/06/2023
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
INTERIM APPLICATION NO.2457 OF 2021
IN
COMS SUIT NO.194 OF 2021
Ranjit Vardichand Jain ...Applicant /
Plaintiff
V/s.
Nirmal Gagubhai Chhadwa & Ors. ... Defendants
Mr. Sharan Jagtiani, Senior Advocate with Mr. Asif Lampwala, Mr.
Mutahar Khan, Rohit Bandekar, Ms. Sheetal Shah, Ms.
Dimple D. Bitra i/b. Mehta and Girdharlal for the
Applicant / Plaintiff.
Mr. Gautam Ankhad with Chaitra Rao for Defendant Nos.1 and 2.
Mr. Sanjay Jain, with Mr. Naresh Chheda and Ms. Sakina
Electricwala i/b. Taurus Legal for Defendant Nos.3 to 5.
Ms. Sadhana Datar, i/b. J. Law Associates for Defendant No.10.
Mr. Vinay Nair, i/b. Arun Panickar for Defendant No.11(a).
CORAM: R.I. CHAGLA, J.
JUDGMENT RESERVED ON 31st January, 2023
JUDGMENT PRONOUNCED ON 5th June, 2023
JUDGMENT (Per R.I. Chagla, J.).
1. By this Interim Application, the Applicant / Plaintiff
has sought appointment of a Court Receiver in respect of the land
situated at CTS 619/21B and CTS 667A/2A of village Borla, Taluka
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Kurla and District Mumbai Suburban as well as the project 'Shabari
Park' being constructed on the land and the unsold units in the
commercial building known as "Shabari Park" and residential
building known as "Sabari Garden" (mentioned as "Shiv Garden"
in the prayer) - Tower I and II including power to sell the said
units by public auction or private treaty as this Court deems fit.
Further, relief of injunction has been sought restraining the
Defendants from disposing off, alienating, encumbering, parting
with possession or creating any third party rights over and in
respect of the unsold units more particularly described in Exhibit
KK to the Plaint and which is hereinafter referred to as the "Suit
property". Further, relief of injunction is also sought restraining
Defendants from jointly or severally taking steps in furtherance of
development of the Suit land as well as injunction restraining them
from in any manner prejudicing the rights of the Plaintiff under
Memorandum of Understanding dated 17th April, 2018 ("MoU").
2. The Applicant / Plaintiff has filed the present Suit
seeking Specific Performance of the MoU dated 17th April, 2018
entered into between the Plaintiff and Defendant No.1 and under
which the Plaintiff claims to have purchased half of Defendant
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No.1's development rights in the joint development which was
being carried out by Defendant Nos.1 to 3 on their contiguous but
separately owned plots of land. The Plaintiff has sought a
declaration that a subsequent Deed of Exchange dated 30th
August, 2019, under which the Defendant Nos.1 and 2 exchanged
their plot of land for 7 commercial units constructed as part of the
present development with Defendant No.3 is fraudulent, void ab
initio and for cancellation of Deed of Exchange. In the alternative
damages have been sought. A further declaration has been sought
that payment of the amounts claimed stand charged against the
unsold units in the development and on failure to make such
payment to the Plaintiff, the charge be enforced by sale of the
unsold units and moneys be paid over to the Plaintiff.
3. The Suit property comprises of a smaller property and
larger property. The Applicant / Plaintiff is concerned with the
smaller property and has claimed 50% development rights in the
smaller property which has been purchased by the Applicant /
Plaintiff from Defendant No.1 under the said MoU dated 17th
April, 2018. The smaller property prior to the said MoU was owned
by Defendant Nos.1 and 2 who are husband and wife and which
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admeasures 1161.2 sq. mtrs. and forms part of CTS No.619/21B
(appears to have subsequently been numbered a 667A/2A) of
village Borla situated at Motibaug, Sion, Trombay Road, Chembur,
Mumbai - 71. The larger property comprises of parcels of land
owned by Defendant No.3 admeasuring 19916.02 Sq. mtrs.
bearing CTS No.667A/2C (other than the smaller property), 667A/
2B, 667A/2C and 667A/2D situated at the aforementioned
address.
4. Although it is mentioned in the said MoU that the
Defendant No.3 is the owner of the smaller property which is
defined in the MoU as "the said property", all documents on record
have Defendant No.1 as the owner of the smaller property.
Further, the rest of the MoU records that certain land is owned by
Defendant No.1 while rest of the land is owned by Defendant No.3.
5. It is the case of the Applicant/Plaintiff that Defendant
No.1 had implied / ostensible authority to act on behalf of the
Defendant No.2. In the said MoU a reference has been made to a
prior MoU dated 21st August, 2010 entered into between
Defendant No.1 and Defendant No.3 to develop "the properties
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jointly". It records that the lands of Defendant No.3 are adjacent to
land of Defendant No.1 and Defendant No.1 has rights over 6.2%
of the development based on ownership of 1161.2 Sq. mtrs. out of
18486.34 sq. mtrs. This is mentioned in Clauses 3 and 4 of the
MoU. Clause 5 of the MoU mentions that in order for the
Defendant No.1 to construct his "share of land" finance was
required. Further, it is mentioned that the Defendant No.1 had
entire right, interest and title to his share of land. In clause 6 of the
said MoU, it is mentioned that, Defendant No.1 had approached
the Plaintiff to arrange for finance for the purpose of developing
the "said land" and agreed to "reimburse the amounts with interest
and to give a 50% share in the profit of the said project on the said
land which is 6.2%".
6. Under Clauses 7 and 8 of the said MoU, the Plaintiff
had agreed to pay total consideration of Rs.1.55 Crores out of
which Rs.1.05 Crores was paid prior to execution of the said MoU.
The remaining amount of Rs.55 lacs was to be paid within 30 days
of execution. It is necessary to note that the receipt has been
signed by Defendant No.1 evidencing payment of Rs.1.05 Crores
and which receipt is annexed to the said MoU. Thereafter, the
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payment of Rs.55 lacs was made and the receipt signed by
Defendant No.1 evidencing payment is at Exhibit F to the Plaint.
The Plaintiff has accordingly paid the entire consideration amount
under the MoU. It is further necessary to note that though
Defendant No.2 was not a party to the said MoU, the receipts
evidencing payment of consideration record her name.
7. Under Clause 11 of the said MoU, the Defendant No.1
undertook sole responsibility to put the Plaintiff into peaceful and
vacant possession of 3.1% share in the said land. Further, until the
entire project was completed and the flats in the new building
constructed were sold and the entire consideration received,
Defendant No.1 had undertaken in Clause 16 of the MoU that "he
shall not create any third party rights or part with possession or
induct third party into possession of their said property or any part
thereof", except for the Plaintiff.
8. The prior MoU dated 21st August, 2010 had
envisaged a joint development by the Defendants of the Suit
property by construction of a commercial building ("Sabari Park")
and two residential buildings ("Sabari Garden"). Thereafter, the
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Defendant No.1 and 2 entered into a Joint Venture Agreement
dated 4th June, 2018 with Defendant No.3 ("J V Agreement"),
which was subsequent to the said MoU dated 17th April, 2018
between the Plaintiff and Defendant No.1 and by which J V
Agreement, the Defendant Nos.1 and 2 on the one hand and
Defendant No.3 on the other agreed to a prorata share in the
development i.e. in proportion of their land holding. The JV
Agreement identifies the units (15 commercial and 16 residential)
falling to the share of Defendant Nos.1 & 2. The total coming to
Defendant Nos.1 and 2 is 35,880 carpet area. Under the JV
Agreement, Defendant No.3 was entitled to encumber the joint
development property and units to be constructed save and except
the Defendant Nos.1 and 2's share of the units and no consent was
required for this purpose.
9. The entire construction cost of the Suit property was
to be under the JV Agreement borne by Defendant No.3. The
Defendant Nos.1 and 2 had to proportionally reimburse their
pro-rata share in the cost of construction to the Defendant No.3
from the sale of units coming to their share.
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10. The Applicant / Plaintiff had filed Suit No.331 of 2019
in the City Civil Court against Defendant Nos.1 and 2 on 23rd July,
2018. The Suit had sought a declaration that the said MoU is valid
and binding and for permanent injunction restraining Defendant
Nos.1 and 2 from creating third party rights over the Plaintiff's
3.1% share in profit of the development of the Suit property. The
Defendant No.3 was not joined as a party to the Suit. The City Civil
Court granted leave under Order II Rule 2 of the Code of Civil
Procedure, 1908 on 10th August, 2018.
11. The City Civil Court had thereafter proceeded to hear
the parties on the issue of maintainability of the Suit and Court
fees in view of the value of the MoU forming the subject matter of
the Suit exceeding Rs.1 Crore. During one of the dates of hearing
i.e. 22nd October, 2018, neither the Plaintiff nor his Advocates
were present and accordingly, the Suit was dismissed for want of
prosecution. The Plaintiff had thereafter filed Notice of Motion
No.2766 of 2019 before the City Civil Court on 24th July, 2019
seeking vacation / setting aside of the order dated 22nd October,
2018 dismissing the Suit for want of prosecution and for
restoration of the said Suit. The Notice of Motion was allowed vide
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order dated 30th September, 2021 and the Suit was restored to
file. After restoration of the Suit plaint, the City Civil Court
directed return of the Suit Plaint to the Plaintiff as per Order VII
Rule 10 of the CPC for proper presentation. This was due to lack of
pecuniary jurisdiction.
12. It is necessary to note that prior to the said order, the
Plaintiff had filed the present Suit and Interim Application in this
Court on 20th September, 2021.
13. Further, by order dated 23rd November, 2021, this
Court directed the Plaintiff to present the City Civil Court Suit
No.331 of 2019 before the Registry of this Court on 24th
September, 2021 and directed the Registry to accept the same. By
subsequent order dated 1st December, 2021, this Court permitted
to Plaintiff to withdraw the City Civil Court Suit which was
numbered Suit (L) No.27259 of 2021 with liberty to continue the
present Suit which had been filed.
14. Apart from the above Suits filed, there were Criminal
Proceedings filed between the parties. Defendant No.1 had filed a
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criminal complaint against the Plaintiff for forgery and cheating on
20th November, 2018 and which the Plaintiff learnt of vide RTI
Response dated 24th January, 2019. The Defendant No.1's
allegations in this complaint proceeded on the premise that the
Plaintiff and his son had, sometime in the first week of July, 2018,
obtained signature of the Defendant No.1 on blank stamp papers
and few other blank papers on the pretext that this would be used
to draw up a friendly loan agreement under which the Plaintiff had
agreed to extend loan of Rs.2 Crores to Defendant No.1 against
security of certain tenements occupied by the Defendant Nos.1 and
2 as tenants. The Defendant No.1 alleges in the complaint that the
Plaintiff used these papers to draw up the said MoU.
15. The investigation office filed report on 24th December,
2018 in the criminal complaint filed by Defendant No.1 stating
that since Suit had been filed in the Court, the file is closed.
16. The Plaintiff had also filed complaint against
Defendant Nos.1 and 2 on 15th February, 2019 for criminal breach
of trust and cheating on grounds that they failed to disclose that
the smaller property had already been mortgaged prior to the
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execution of the said MoU and subsequent to the said MoU and the
City Civil Civil Suit, another mortgage had been created in favour
of the Punjab National Bank. In these proceedings, an FIR was
registered against Defendant No.1 on 6th April, 2019 and on 10th
April, 2019. The notary who notarized the said MoU gave a
statement dated 10th April, 2019 confirming execution of the said
MoU. Further, on 11th April, 2019, the Defendant No.7 made a
statement that he is unaware of the said MoU and produced the JV
Agreement and confirmed that Defendant Nos.1 and 2 have 6.2%
development rights in the construction. Further, that Defendant
Nos.1 and 2 sold three units out of their share. Another statement
recorded on 30th April, 2019 is on the same lines. It is the case of
the Plaintiff that at least from this date the Defendant No.3
(Defendant No.7 being a partner of Defendant No.3) had
knowledge of the said MoU. The Defendant No.1 was thereafter
arrested on 27th May, 2019. The bail applied for was rejected by
the Metropolitan Magistrate Court and by the Sessions Court. This
Court granted bail on 3rd July, 2019 in view of Defendant No.1
offering to deposit Rs.1.55 Crores in this Court.
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17. It is the case of the Plaintiff that the Defendant No.1
had created encumbrances with respect to the smaller property
prior to the said MoU and the City Civil Court Suit. The JV
Agreement records that the title deeds of 6 smaller plots which
constitutes the smaller property were mortgaged to Kurla Nagrik
Bank and Religare Finvest Ltd. This is apart from the mortgage
created in favour of Punjab National Bank subsequent to the said
MoU and City Civil Court Suit. There were Agreements for Sale
executed by the Defendant Nos.1 and 2 after the sad MoU dated
17th April, 2018 and City Civil Court Suit which included
Agreement for sale dated 31st December, 2018 in respect of Office
No. 207 and registered Agreement for Sale dated 31st December,
2018 in respect of office No.206. The Defendant No.3 signed as
confirming party and Punjab National Bank issued NOC. Further,
Defendant Nos. 1 & 2 executed registered Agreement for Sale
dated 15th January, 2019 in respect of office 401 and where
Defendant No.3 signed as confirming party and Punjab National
Bank issued NOC. However, this unit appears to be not part of the
Defendant Nos.1 and 2's share as per the J V Agreement.
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18. The registered Deed of Exchange was entered into on
30th August, 2019 between Defendant Nos.1 and 2 on the one
hand and Defendant No.3 on the other. By the said Deed of
Exchange, Defendant Nos.1 and 2 transferred to Defendant No.3
the smaller property and in exchange thereof Defendant No.3
allotted 7 commercial units in Sabari Park which included Unit No.
203 admeasuring 1,153 Sq. ft. (Carpet area) along with two car
parking spaces; Unit No.204, having carpet area of 1,445 Sq. ft.
with two covered car parking spaces; Unit No.404, having carpet
area of 1,445 Sq. ft together with two covered car parking spaces;
Unit No.606 having carpet area of 507 sq. ft together with one
covered car parking space; Unit No.904, having carpet area of
1,445 Sq.ft with two covered car parking space; Unit No.907,
having carpet area of 651 Sq.ft with one covered car parking space
and Unit No.1003 having carpet area of 1,153 Sq. ft with two
covered car parking spaces. It is necessary to note that in the Deed
of Exchange, it is mentioned that the Defendant Nos.1 and 2 have
clear and marketable title to the smaller property free from any
debts, charges / encumbrances and that Defendant Nos.1 and 2
have not created any lien, grant or charge or any other
encumbrances of whatsoever nature over the smaller property.
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19. In the Affidavit in Reply to the present Interim
Application, the Defendant Nos.1 and 2 have denied the said MoU
with the Plaintiff in its entirety as being a complete fabrication.
Further, that Defendant No.2 was not a party to the said MoU
despite some parcels of the smaller property being in her name.
The consideration purportedly under the said MoU was paid as
early as 1st April, 2016 whereas the MoU is dated 17th April,
2018. It is the case of the Defendant No.1 that the said MoU is
completely one sided and no prudent person would enter into such
an MoU. The cost of construction as per the JV Agreement is
Rs.57.39 Crore with regard to the area coming to the share of
Defendant Nos.1 and 2. Therefore, it is inconceivable that these
Defendants would assign half their rights for a paltry amount of
Rs.1.55 Crore.
20. The Defendant Nos.3 to 5 have in their Reply to the
Interim Application raised various defences. The primary defence
being that under the Deed of Exchange Defendant Nos.1 and 2
transferred the smaller property to Defendant Nos.3. The
Defendant No.3 is not party to the said MoU with the Plaintiff.
Therefore, the Plaintiff cannot seek relief against Defendant No.3
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or in respect of the smaller property since it is no longer owned by
the Defendant Nos.1 and 2. The defences raised by Defendant No.3
are similar to that raised by Defendant Nos.1 and 2 and which
include lack of stamping and registration of said MoU; delay in
filing the Suit as well as the Interim Application; limitation; fraud;
the said MoU being an agreement to agree; the Plaintiffs claim of
Rs.1.55 Crores being fully secured by the deposit of the said sum
by Defendant No.1 as condition for bail; not a commercial dispute;
the 7 units coming to the share of Defendant Nos.1 and 2 under
the Deed of Exchange having been sold to third parties. The stand
of Defendant No.10 is that he had retired from Defendant No.3 on
30th June, 2018 and therefore cannot be made liable.
21. By an order dated 1st December, 2021 passed by this
Court Defendant Nos.1 and 2 were directed to file Affidavit in
Reply making disclosures of (i) all particulars of the sale of the 7
units that came to the share of Defendant Nos.1 & 2 under the
Deed of Exchange dated 30th August, 2019 executed between
Defendant Nos.1 & 2 and Defendant No.3; (ii) Whether Defendant
Nos.1 and 2 have only received 7 units under the Deed of
Exchange.
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22. Thereafter, the disclosure Affidavit has been filed by
the Defendant Nos.1 and 2 and which provides details of the 7
units which came to the share of the Defendant Nos.1 and 2 under
the Deed of Exchange and particulars of the sale of these units and
consideration received. A statement has been made by Defendant
Nos.1 and 2 that the 7 units are the only units received by them
under the Deed of Exchange. Further, particulars are given of the
three units viz. 206, 207 and 401 allotted to Defendant Nos.1 and
2 by Defendant No.3 under the J V Agreement i.e. prior to the
execution of the Deed of Exchange. These have also been sold by
Defendant Nos.1 and 2 and for which particulars of sale have been
given as well as the consideration received.
23. The Plaintiff in his Affidavit in Rejoinder has raised
issues with regard to incomplete disclosure made by Defendant
Nos.1 and 2 and that it is not stated that the consideration value
set out in the Disclosure Affidavits in respect of the 7 units is the
entire or complete consideration received by these Defendants.
Further, there are certain discrepancies in consideration received in
relation of the certain units as well as Defendant Nos.1 and 2 not
disclosing cash component in the transactions relating to the sale
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of the 7 units. Further, it is contended that though the units were
allotted to the share of Defendant Nos.1 and 2 under the J V
Agreement, the consideration in respect of these units has been
received by Defendant No.3.
24. In a further Affidavit of the Plaintiff, certified copy of
the opinion of the Additional Chief State Examiner of Documents,
Handwriting and Photography Bureau CID, Mumbai requisitioned
by the Joint Commissioner of Police, EoW, Mumbai has been relied
upon and which states that signatures on the said MoU is shown to
be that of Defendant No.1 and the signatures on certain specified
documents of Defendant No.1 collected by police are of the some
person. Therefore, it is evident that Defendant No.1 had signed on
the said MoU. Further, it is contended that the sale transactions in
respect of the 7 units received by Defendant Nos. 1 & 2 are not
arms length transaction since they are sold for amounts lesser than
the Ready Reckoner Rates. This has been disputed in an additional
Reply filed by Defendant Nos.1 and 2 dated 24th August, 2022. It
is stated that the consideration mentioned in respect of unit 907
was inadvertently shown and giving the actual consideration /
agreement value of the said unit.
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25. Mr. Sharan Jagtiani, learned Senior Counsel appearing
for the Applicant / Plaintiff has submitted that the Plaintiff is
entitled to claim specific performance of the said MoU and that
specific performance can also be claimed against Defendant No.3
being a purchaser with notice of the said MoU when the Deed of
Exchange had been executed. He has submitted that the Plaintiff
had performed his part of the agreement by paying the entire
consideration of Rs.1.55 Crores and was entitled to 3.1% share of
constructed area i.e. 50% of Defendant No.1 / Defendant No.2's
6.2% share in the Suit property. He has submitted that clause 11
of the MoU contemplated that the Suit property (reflected to
therein as the "Suit land") would be constructed upon and it would
be the sole responsibility of Defendant No.1 to apply and obtain all
necessary permissions for construction of new buildings at his own
cost and commence, carry on and complete construction in
accordance with the sanctioned plan and obtain completion
certificate and put the joint developers (defined to mean the
Plaintiff) into peaceful and vacant possession of 3.1% share in the
said land.
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26. Mr. Jagtiani has submitted that the Defendant No.1 by
entering into the said MoU with the Plaintiff represented that he
had implied / ostensible authority to act on behalf of Defendant
No.2 as owner of the smaller property in the sale of 50% of the
development rights of Defendant Nos. 1 & 2 to the Plaintiff. This
authority has been ratified by Defendant No.2 receiving her share
of Rs.1.55 Crores being the entire consideration paid under the
said MoU. In the context of agency he has relied upon the decision
of the Supreme Court in Chairman, LIC Vs. Rajiv Kumar Bhaskar1
Paragraphs 22, 23, 28, 36, 37 to 40 and for act of ratification relied
upon the decision of the Supreme Court in Jugraj Singh Vs. Jawant
Singh2 paragraph 8. In Chairman, LIC (supra), the Supreme Court
has held that an agency can be created expressly or by necessary
implication. In the context of ratification, it has been held that a
person ratifying the act of another would be deemed to be, though
in fact he was not, a party to the contract. Mr. Jagtiani has them
referred to the relevant provisions viz. Section 185 - 187 of the
Contract Act with regard to implied authority as well as Sections
196 to 197 of the Contract Act with regard to ratification. It is
1 (2005) 6 SCC 188.
2 (1970) 2 SCC 386.
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provided under Section 185 of the Contract Act that even passing
of consideration is not necessary.
27. Mr. Jagtiani has thereafter made submissions with
regard to the Plaintiff's entitlement to enforce performance against
Defendant No.3. He has submitted that in a case where title to
which the Plaintiff claims is, subsequent to the Plaintiff's contract,
transferred to a third party, the law allows for performance to be
enforced against such third party. This is provided for under
Section 19(b) of the Specific Relief Act. In doing so, the Court is
not transferring the obligations owed by the Plaintiff's counter
party under the contract to the third party. It is merely divesting
the third party of so much of the title that the Plaintiff is entitled
to. This subjected to only one exception namely that if the third
party has acquired such title in good faith and without notice of
the Plaintiffs contract, then specific performance cannot be
imposed against such third party. He has relied upon the decision
of the Supreme Court in Ram Niwas V. Bano & Ors.3 and R.K.
Mohd Ubaidullah V. Hajee Abdul Wahab.4.
3 (2000) 6 SCC 685.
4 (2000) 6 SCC 402.
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28. Mr. Jagtiani has submitted that the Defendant No.3
had notice of the said MoU by reason of the statement of
Defendant No.7, partner of Defendant No.3, made to the Police
prior to execution of the Deed of Exchange. Thus, Defendant No.3
cannot be said to be a transferee without notice and this is not a
defence available to resist the enforcement of the said MoU.
Defendant No.3 by executing the Deed of Exchange with the
Defendant Nos.1 and 2, the Defendant Nos.1 and 2's rights to the
smaller property of which 50% was otherwise contractual
committed to the Plaintiff, has been parted with or given up in
favour of Defendant No.3 for an alleged consideration in exchange.
Thus, for the purpose of application of Section 19(b), Defendant
No.3 is such other person claiming under the party to the original
contract / the said MoU i.e. Defendant No.1/Defendant No.2 by a
title subsequent i.e. Deed of Exchange to the said MoU. This
therefore makes Defendant No.3 'a person against whom specific
performance of a contract / the said MoU may be enforced'.
Further, the Defendant No.3 cannot be considered to be transferee
for value as 6.2% share in the Suit property had been estimated by
Defendant Nos.1 or 2 at Rs.35 Crores and that the value of 13
units transferred to them as consideration / exchange for their
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6.2% share in land is only Rs.12 Crores. In other words, if
Defendant No.3 had paid an upfront consideration of Rs.12 Crores
for Defendant No.1 /Defendant No.2's 6.2% share in the land, it
would be much below Defendant No.1/Defendant No.2's estimated
fair value of the land. He has accordingly submitted that in view of
Section 19(b) of Specific Relief Act being applicable in the present
case, specific performance of the said MoU can be sought by the
Plaintiff against Defendant No.3.
29. Mr. Jagtiani has further submitted that delay is not a
ground to refuse interim relief and in that context he has relied
upon the decision of this Court in Rajiv Sanghvi V. Pradip Kamdar5.
In the said decision this Court has held that delay by itself is no
ground to deny interim relief. It would be necessary for the
Defendants to show prejudice caused to them on account of the
delay in filing the present Suit and seeking interim relief. The
question of delay, if at all, requires to be balanced against the
likelihood of the Plaintiff ultimately succeeding in the action and
where the Suit is prima facie strong, the Plaintiff's delay (assuming
there is delay) in filing the action would not dis-entitle the Plaintiff
5 Interim Application No.571 of 2022 decided on 30th June,
2022.
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to the relief. He has further relied upon the decision of the
Supreme Court in Madamsetty Satyanarayana Vs. G. Yellogi Rao
and Ors.6, wherein the Supreme Court has held that in India mere
delay without such conduct on the part of the Plaintiff as would
cause prejudice to the Defendant does not empower a Court to
refuse such a relief.
30. Mr. Jagtiani has submitted that the issue raised by the
Defendants on whether the said MoU was sufficiently stamped and
registered and whether the same is admissible in evidence can be
gone into at the time of trial. He has relied upon the decisions of
this Court in Suhail Abdul Kadar Ishkay - Applicant and Nadeem
Majid Oomerbhoy Vs. Riyad Rashid Oomerbhoy Thru LRs and Ors. 7
in support of his submission that the defence of insufficient
stamping does not preclude interim relief. He has also placed
reliance upon the decision of the Full Bench of this Court in
Gautam Landscapes Vs. Shailesh Shah8 which has held that the
Court can grant interim or ad-interim relief in an application under
6 MANU/SC0310/1964 : AIR 1965SC 1405: (1965) 2 SCR
7 2021 SCC OnLine Bom 6711.
8 (2019) SCC Online Bom 563.
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Section 9 of the Arbitration Act when a document is unstamped or
insufficiently stamped. Further, on the issue of forgery i.e. whether
the signature of the party to the agreement is forged or not is a
matter of trial. In that context he has relied upon the decision of
the Andhra Pradesh High Court in Nalluri Sai Vasavi V. Kolluri
Nagaswara Rao9 at Paragraph 19.
31. Mr. Jagtiani has made submissions with regard to the
Courts not inquiring into the adequacy of consideration in the
context of the issue raised by the Defendants that there was
inadequate consideration under the said MoU for the Plaintiff
acquiring 50% of the development rights of the Defendant Nos.1
and 2. He has in this context relied upon decision of Kolkata High
Court Harendra Nath Ghose & Anr. Vs. Union of India & Ors. 10 He
has also relied upon the decision of this Court in Chintaman
Sitaram Bajad Thru L.Rs. Vs. Shankar Sonaji Shingne 11 where it
has been held that inadequate consideration is not a ground for
refusing specific performance.
9 CMA No.120 of 2022 decided on 13th September, 2022.
10 2006 SCC OnLine Cal 567: (2007) 3 CHN 34.
11 2014 (3) Mh.L.J.
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32. Mr. Jagtiani has also submitted that said MoU is not
an agreement to agree as the rights and obligations are clearly
spelt-out from a reading of the said MoU and it constitutes a
concluded contract between the parties. The Plaintiff has also paid
full consideration under the said MoU which militates against the
said MoU being a mere agreement to agree. Mr. Jagtiani has also
referred to clauses 12 to 19 of the MoU, which primary contains
various powers and rights given to the Plaintiff and corresponding
restraints on Defendant Nos.1 and 2. These include the power of
the Plaintiff to supervise construction, operate bank accounts,
sharing profits, negotiate with purchasers for sale. There is a
restraint on Defendant No.1 from creating third party rights etc.
These clauses are from a plain reading clear and not capable or in
need of further refinement or agreement between the parties.
Merely, because an agreement contemplates further documents to
be executed does not mean that it does not constitute a binding
contract when the terms are clear and concluded. In this context
he has relied upon the decision of this Court in Rajiv Sanghvi
(Supra) and Kollipara Sriramulu Vs. T. Aswatha Naryana (dead)
Thru LRs.12, (paragraphs 3 and 5).
12 1968 3 SCR 387.
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33. Mr. Jagtiani has submitted that the Plaintiff has
at all times been ready and willing to perform the said MoU and
has infact performed the essential obligation of the Plaintiff which
was to bring in consideration of Rs.1.55 Crore, which admittedly
has been performed and the receipt of this money has not been
denied by Defendant Nos.1 and 2. The remaining clauses viz. 12 to
18 do not cast obligations on the Plaintiff but on the contrary
confer various powers and rights to the Plaintiff and this has no
bearing on the question of readiness and willingness of the
Plaintiff. He has submitted that mere delay in a case where the
Plaintiff has already performed his obligation cannot defeat the
Plaintiffs' case for specific performance. In that context he has
relied upon the decision of this Court in Bastion Constructions Vs.
Nusli Wadi, (S.C. Gupte, J) dated 4th March, 2016.
34. Mr. Gautam Ankhad, learned Counsel appearing
for Defendant Nos.1 and 2 has submitted that the Plaintiff has
propounded a false case and has relied upon a fabricated
document. The foundation of the alleged MoU is in serious dispute.
There are contradictory statements as to who had drafted the
alleged MoU. The notary in a statement dated 10th April, 2019
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before the police claims that the alleged MoU was drafted by him.
Whereas the Plaintiff in an Affidavit in Rejoinder dated 19th
November, 2021 had in paragraph 15 filed before this Court after
two years of the notary's statement pleads that it was Defendant
No.1 who had prepared the alleged MoU. Both these statements
have been denied by Defendant Nos.1 and 2. There is no proper
explanation given by the Plaintiff in the Rejoinder arguments other
than stating that there is inconsistency in these statements and that
the Plaintiff is a lay person and the alleged MoU was prepared
under the Defendant No.1's instructions.
35. Mr. Ankhad has referred to the prior Suit filed in the
City Civil Court which came to be dismissed on 22nd October,
2018. He has submitted that the prayers sought by the Plaintiff in
the City Civil Court Suit and the present Suit are similar and this is
nothing but an attempt to re-agitate the same reliefs. He has
submitted that the prayers sought in the present Suit are premised
on the footing that alleged MoU was valid, subsisting and binding.
As the main relief is dismissed by the City Civil Court, there is no
question of granting any consequential or interim relief in the
matter. He has further submitted that the issues of forgery /
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fabrication / validity of the MoU will have to be adjudged at the
trial and no relief can be granted till the trial is concluded. Mr.
Ankhad has submitted that the Plaintiff has propounded a false
case and has repeatedly prevaricated on oath in the Plaint on the
issue of the dismissal of the City Civil Court and knowledge of the
2010 MoU. This conduct dis-entitles the Plaintiff from claiming
Specific Performance.
36. Mr. Ankhad has submitted that Defendant Nos.1 and /
or 2 have no surviving right, title or interest in the Suit property as
they have sold and conveyed all their rights to Defendant No.3
under the registered Deed of Exchange executed on 30th August,
2019. The present Suit has been filed only on 28th September,
2021. Assuming without admitting that the Plaintiff has made out
a prima facie case, the Plaintiff has only a claim of damages which
will be decided after trial. The Defendant Nos.1 and 2 have sold all
7 units that had come to their share. Thus, third party rights have
already been created qua all their interest in the development. The
7 units have been sold by the registered sale deeds and third
parties have been put in possession and Occupation Certificate has
also been received. The Plaintiff had knowledge of the same and
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the details have been disclosed in the Plaint, but despite which no
steps were taken to prevent the sale or sue the third party
purchasers. Thus, the Plaintiff has given up all his rights in the Suit
property.
37. Mr. Ankhad has submitted that Defendant No.2 has
not signed the alleged MoU. There is no privity of contract
between Defendant No.2 and the Plaintiff. The Plaintiff being
aware of this has not claimed relief of specific performance against
Defendant No.2. Defendant No.2 being the wife of Defendant No.1
has been unnecessarily dragged into litigation on the fanciful oral
argument of implied authority. The Plaintiff though being aware
that Defendant No.2 was owner of certain parcels of the Suit land
did not seek to obtain the consent of Defendant No.2. There is no
explanation for this. The Plaintiff being a real estate developer
cannot come with a case that no due diligence was conducted by
him to verify as to who is the actual owner of the land. There are
no pleadings for alleged agency in the Plaint, though submissions
are made across the bar. Defendant No.2 has never ratified the
alleged MoU. The monies received in the joint account of
Defendant No.2 were not towards the sale of Defendant No.2's
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land. There is no prayer for specific performance against
Defendant No.2. Accordingly, the issue of implied authority when
the final relief is not sought against Defendant No.2 does not arise.
38. Mr. Ankhad has submitted that the argument on
implied authority and ratification under Section 185, 186, 187,196
and 197 of the Contract Act has no application to the facts of the
present case apart from there being no pleading that Defendant
No.1 had implied authority to execute the alleged MoU on behalf
of Defendant No.2 or Defendant No.2 had consented or ratified the
agency of Defendant No1.
39. Mr. Ankhad has submitted that there is no
correspondence addressed by the Plaintiff calling upon Defendant
No.1 and / or Defendant No.2 to perform the alleged MoU. There
is no readiness and willingness shown by the Plaintiff at any point
of time by calling upon Defendant No.1 or Defendant No.2 to
perform the alleged MoU.
40. Mr. Ankhad has submitted that the alleged MoU is a
fabricated document and its genuineness will be decided at trial. It
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cannot form the basis of interim relief. He has submitted that
Defendant No.1 has not signed the alleged MoU in its present
form. He has relied upon Affidavit in Reply dated 10th November,
2021 which has provided the circumstances leading to the signing
of papers on which the Plaintiff has typed out the alleged MoU. He
has submitted that a reading of the alleged MoU demonstrates that
it is a strange document whereby it seeks to assert rights in
Defendant No.3's property. Further, Defendant No.3 had never
been called upon by the Plaintiff to perform. There is no
explanation as to how the alleged MoU came into existence on
17th April, 2018 whilst part of purported consideration was paid
from 1st April, 2016 till 20th February, 2018 to one Karan
Enterprises. It is impossible to believe that a real estate developer
will advance monies in anticipation of an agreement to be signed
two years later.
41. Mr. Ankhad has further submitted that it is impossible
to believe that the alleged MoU, it requires Defendant No.1 to
refund the entire amount with interest and in addition thereto
provide 3.1% rights in the Suit property for free to the Plaintiff.
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These are some of the factors which shows that the alleged MoU is
the fabricated document.
42. Mr. Ankhad has submitted that the Plaintiff being a
childhood friend of Defendant No.1 had misused the blank pages
provided by Defendant No.1 in context of the separate transaction.
Defendant No.1 had learnt about the alleged MoU when the
Plaintiff served the City Civil Court papers on 16th October, 2018.
The Defendant No.1 took immediate steps to object to the bogus
Suit and maintainability of the same on 20th October, 2018, when
he appeared before the City Civil Court and filed criminal
complaint dated 20th November, 2018 against the Plaintiff and his
son Sachin Jain for forgery and cheating.
43. Mr. Ankhad has submitted that there are no ground
made out in the Plaint for cancellation of the registered Deed of
Exchange. The document is validly executed, stamped, registered
and acted upon by the parties. Mr. Ankhad has submitted that
there is a presumption in law that a registered agreement is validly
executed. The Defendants have acted upon the Deed of Exchange
and sold units to third party purchasers, which came to the share
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of Defendant Nos.1 and 2 as their consideration. He has submitted
that Defendant Nos.1 and 2 have encashed out of the project
instead of the arrangement envisaged under the 2010 MoU and
2018 J V Agreement. This is a matter of commercial bargain
between the Defendants and cannot be questioned in Court. It is
impossible to believe that Defendant Nos.1 and 2 will borrow
Rs.1.55 Crore where the construction cost is Rs.57.39 Crore and
thereafter refund the entire amount with interest and in addition
provide 3.1% of the entire land free of cost to the Plaintiff.
44. Mr. Ankhad has submitted that there is gross delay in
filing the present Suit and taking out the present Interim
Application as the Deed of Exchange is dated 30th August, 2019
and the Suit has been filed only on 20th September, 2021. He has
submitted that even after knowledge of the execution of the Deed
of Exchange, no steps were taken by the Plaintiff to prevent the
Defendants from acting upon the said document. The Plaintiff has
slept over alleged rights well over three years and has permitted
the third party rights to accrue. This is also because the Plaintiff
was interested in recovering Rs.1.55 Crores, which is fully secured.
The Defendant No.1 has deposited Rs.1.55 Crores on 3rd July,
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2019 and the same is lying in this Court. The Plaintiff cannot be
permitted to agitate the right after an inordinate delay. The
Plaintiff thus is not entitled to discretionary relief. The gross delay
in filing of the Suit dis-entitles the Plaintiff.
45. Mr. Ankhad has submitted that the Plaintiff has never
shown readiness and willingness to perform the 2018 MoU.
Several clauses of the alleged MoU, such as Clauses 10 to 18
required performance from the Plaintiff. Mr. Ankhad has submitted
that readiness and willingness must be continuous and at all times
i.e. from the date of contract until the decree in a Suit. He has
referred to Section 16(c) of the Specific Relief Act which mandates
continuous readiness and willingness as a condition precedent for
obtaining relief of specific performance. This must be all
throughout i.e. from the date of the contract till the decree in a
Suit.
46. Mr. Ankhad has referred to certain facts including that
IOD / CC having been obtained in 2014 and 2015 and the
construction activities had already started and by 2018, the
construction was up to the 10th floor. Neither inquiries were made
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by the Plaintiff nor did the Plaintiff take any steps to stop the
construction. After the alleged MoU, third party rights were
created by Defendant Nos.1 and 2. Yet again, the Plaintiff took no
steps. This shows that the Plaintiff was never ready or willing.
47. Mr. Ankhad has submitted that Section 19(b) of the
Specific Relief Act has no application whatsoever. The word
"contract" in Section 19(b) means a genuine and undisputed
document. The alleged MoU is a fabricated document. It cannot be
the basis of making a claim against a third party.
48. Mr. Ankhad has submitted that the Plaintiff is not
entitled to any relief also in view of Section 17 of the Specific
Relief Act. The Defendant No.1 has no title to either Defendant
No.2's land or Defendant No.3's land and thus specific performance
cannot be granted in respect of the alleged MoU, particularly after
the Deed of Exchange has been executed between Defendant Nos.1
and 2 with Defendant No.3. Even on a demurer and assuming this
Court holds at the interim stage that the document is a valid and
genuine document, the alleged MoU is only a broad arrangement
and at best an agreement to agree. This is because the document
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has never been acted upon by the Plaintiff and nor any formal
agreement as envisaged under Clause 21 of the alleged MoU been
drawn up. Since, it is only an agreement to agree, the alleged MoU
cannot be specifically performed.
49. On the aspect of readiness and willingness, Mr.
Ankhad has relied upon the decision of the Supreme Court in
Shenbagam Vs. K.K. Rathinavel13 (Paragraphs 13 to 21, 29 to 36
and 41) and Heritage Developers Vs. Cool Bridge CHSL14
(Paragraphs 35 to 38, 49 and 51). He has submitted that in view of
the above submissions, the present Interim Application be
dismissed with costs.
50. Thereafter, Mr. Ankhad has distinguished the
judgments relied upon by the Plaintiffs on implied / ostensible
authority and ratification as having no application as Defendant
No.2 is neither a party to the MoU nor has ratified the MoU.
Further, there is no specific pleading on implied authority and
ratification in the Plaint. There is no prayer for specific
performance against Defendant No.2. Thus there is no case made
13 (2022) SCC OnLine SC 71.
14 (2014) 3 Mh.L.J.
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out that there was a contract of sale of lands between Defendant
No.2 and the Plaintiff. Mr. Ankhad has also distinguished the
judgments relied upon by the Plaintiff on delay not being a ground
for granting interim relief nor specific performance viz. the case of
Rajiv Sanghavi (Supra) and Madamsetty (Supra). He has
submitted that unlike in the present case where the alleged MoU is
a fabricated document and in any case, its validity can be tested at
trial, in Rajiv Sanghavi(Supra) case, the Minutes was a full and
final settlement between the parties and the only a formal
agreement was to be executed. Further, Defendant No.3 in the
present case has been creating third party rights since 2018-19.
The present Suit came to be filed only 20th September, 2021. The
Plaintiff has not shown what steps he has taken under the alleged
MoU to assert his rights. Further, in Rajiv Sanghavi (Supra), the
decision was in the context of family arrangement which is
governed by special equity principles.
51. Mr. Ankhad has submitted that the decision of of the
Supreme Court in Madamsetty (Supra) relied upon by the Plaintiff
has no application to the present case as in that case the seven
months delay in filing the Suit for specific performance was
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explained. This is not so in the present case. The alleged MoU is of
April, 2018 and the present Suit was filed only on 20th September,
2021. There is no explanation for the delay and infact the
Plaintiff's City Civil Court Suit was also dismissed on the same
principle issue.
52. Mr. Ankhad has also distinguished the decision cited
by Plaintiffs on defence of forgery to be considered at the time of
trial viz. Nalluri Vasavi (Supra). He has submitted that this
judgment is not applicable. In the present case forgery is
established on the Plaintiff's own contradictions as to who drafted
the alleged MoU. The Plaintiff has not established a prima facie
case and there is no question of grant of interim relief.
53. Mr. Ankhad has further distinguished the decision
relied upon by the Plaintiff on inadequacy of consideration viz.
Harendranath (Supra). He has submitted that this decision is not
applicable to the present case as Defendant Nos.1 and 2 have not
asserted inadequacy of consideration but rather the absurdity or
unconscionableness of the transaction contemplated in the alleged
MoU.
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54. Mr. Sanjay Jain, learned Senior Counsel appearing for
Defendant Nos.3 to 5 has submitted that there is no privity of
contract between the Plaintiff and Defendant Nos.2 to 12. The
purported MoU under which the Plaintiff is seeking relief is
allegedly entered into between the Plaintiff and Defendant No.1
alone. There can be no question of any relief against the remaining
Defendants. The Plaintiff has no locus to challenge the Deed of
Exchange to which the Plaintiff is not a party as the only parties to
Deed of Exchange are the Defendants. The Deed of Exchange was
executed and registered for valuable consideration and without
any legal impediment. Even otherwise, the Plaintiff cannot seek
relief of cancellation of a third party document in a Suit for
Specific Performance. Further, on the basis of the Deed of
Exchange, third party rights have been created and the same
cannot be set aside retrospectively. Therefore, the reliefs sought for
in the Interim Application are rendered infructious.
55. Mr. Jain has submitted that the Suit is bad for mis-
joinder of parties. The purported MoU upon which the Plaintiff has
based his entire claim has only been executed between the Plaintiff
and Defendant No.1, though as a matter of fact, Defendant No.2
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was also owner of two portions of the land. However, Defendant
No.2 has not signed the purported MoU. There can be no specific
performance against persons who are not signatories to the
purported MoU. Further, Defendant Nos.6 to 12 are no longer
partners of Defendant No.3 firm and no longer concerned with the
day to day business of the firm.
56. Mr. Jain has submitted that the claim under the
purported MoU can only be for 50% share in the profit from the
development. This is borne out from the police complaint of the
Plaintiff, the City Civil Court Suit and the terms of the purported
MoU. The Plaintiff has no right to the flats constructed on the Suit
property. The claim in the Suit can only be for money. Hence, the
Suit for specific performance is not maintainable.
57. Mr. Jain has further submitted that the claim of the
Plaintiff is subservient to the rights of Defendant No.3. The
Plaintiff has not sought part performance. The Plaintiff seeks to
assert rights contrary to the 2010 MoU and J V Agreement. The
Plaintiff cannot do so. If such part of the purported MoU cannot be
enforced, then the entire purported MoU cannot be enforced. The
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Plaintiff has not sought part performance as required under
Section 12 of the Specific Relief Act, 1963. Without such assertion
and prayer for part performance, no such part performance can be
granted. If part performance as a final relief cannot be granted, no
interim relief in aid of non-existant final relief can be granted.
58. Mr. Jain has further submitted that the purported
MoU is neither registered nor stamped as per the provisions of
Indian Registration Act and Maharashtra Stamp Act respectively.
The contract does not come into existence till such time as the
purported MoU is duly stamped. It is the duty of the Court to
impound the purported MoU.
59. Mr. Jain has submitted that the purported MoU is void
for want of adequate consideration or in any event unconscionable.
The Plaintiff claims entitlement to flats worth Rs.46 Crores. As
against this, as per the Plaintiffs case, the Defendant Nos.1 and 2
have to pay cost of construction of Rs.57 Crore as well as provide
their land of about 1100 Sq. mtrs. Therefore, if the Plaintiff's case
is to be believed, the Defendant Nos.1 and 2 will pay additional
amount of Rs.11 Crore (Rs.57 Crore - 46 Crore) also loose their
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property of 1100 Sq. mtrs., pay to the Plaintiff Rs.1.55 Crore and
interest on the amount of Rs.1.55 Crore.
60. Mr. Jain has submitted that the purported MoU is at
the highest a pure finance transaction. This can be seen from the
alleged amounts paid by M/s. Mangal Jewellers to Karan
Enterprises / Nirmal Chhadwa between 1st April, 2016 to 20th
February, 2018. Thus substantial amount of money was allegedly
paid by M/s Mangal Jewellers to M/s Karan Enterprises / Nirmal
Chhadwa before 20th February, 2018. Therefore, if it was the
intention of the parties to enter into the purported MoU and if
there was any intention to create rights in favour of the Plaintiff in
respect of the Chhadwa Land, they would have entered into the
purported MoU at the outset.
61. Mr. Jain has further submitted that the Defendant
No.1 did not need any financial assistance as entire construction
costs and payment of duties, premiums etc were to be borne by
Defendant No.3 and reimbursed by Defendant Nos.1 and 2 from
the sale proceeds of the units coming to their share on
development of the Suit property. In fact, the construction of the
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commercial building was completed in the year 2018 and
Defendant No.3 had also obtained part OC in respect thereof on
12th March, 2020 and 17th June, 2021. The Plaintiff has
purported to file the present Suit after delay of three years from
execution of the purported MoU without any explanation and
justification for the delay. The entire modus operandi of the
Plaintiff is to usurp the property rights of Defendant Nos.1 and 2.
62. Mr. Jain has further submitted that the Plaintiff has
not explained the delay and laches. The Plaintiff was as per Clause
17 of the purported MoU to give 15 days written notice to
Defendant No.1 to discharge his alleged obligations. However, no
such notice was ever issued. The Plaintiff filed Suit No.331 of 2019
in the City Civil Court in July, 2018 asserting that there had been a
breach of the alleged MoU. No interim relief was sought for in the
Suit. No explanation was provided by the Plaintiff for not pursing
interim relief in the Suit and no explanation for the delay from
2018 till September, 2021 when the present Suit has been filed.
The Plaintiff though being aware of the 2010 MoU, J V Agreement
and Deed of Exchange had not taken steps to seek appropriate
order in the City Civil Court Suit since the last three years.
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63. Mr. Jain has further submitted that under Clause 11 of
the purported MoU, there was a fixed date of performance of
Defendant No.1's obligations i.e. within one month of execution of
the MoU. The cause of action if any arose in favour of the Plaintiff
on 16th May, 2018 and thus period of limitation would have ended
on 15th May, 2021 and accordingly, the Suit is barred by
limitation.
64. Mr. Jain has supported the submissions of Mr. Ankhad
on behalf of Defendant Nos.1 and 2 that the Plaintiff and his son
are guilty of committing forgery, fraud, cheating against Defendant
No.1. He submitted that no specific relief can be granted when
fraud has been alleged by the contesting party and false statement
made by the Plaintiff. He has supported the submissions of Mr.
Ankhad with regard to the manner in which the purported MoU
was executed as well as the one sided nature of the purported
MoU. He has further supported the submissions of Mr. Ankhad
with regard to the purported MoU not being endorsed by
Defendant No.2 despite Defendant Nos.1 and 2 being joint owners
of the smaller property admeasuring 1161.21 Sq. mtrs. forming
part of the Suit property. He has also reiterated the submissions
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made by Mr. Ankhad with regard to the Plaintiff having made
several contradictory and false statements in the present Suit as
well as not approaching this Court with clean hands and also
submissions the purported MoU being an agreement to enter into
an agreement.
65. Mr. Jain has also submitted that the Plaintiff's alleged
claim of Rs.1.55 Crores is fully secured as it has been deposited in
this Court by Defendant No.1 in July, 2019 as per the directions in
the order dated 3rd July, 2019 passed in Bail Application No.1679
of 2019. The deposit of the said amount of Rs.1.55 Crores in the
Court dis-entitles the Plaintiff from grant of any interim relief.
66. Mr. Jain has submitted that if the Plaintiff had a right
in the flats / premises that came to the share of Defendant Nos.1
and 2, then the Plaintiff ought to have impugned the transactions
relating to the 7 premises as the 7 premises have already been sold
and monies received under the registered agreements. The Plaintiff
has deliberately not done so. The Plaintiff has no locus to
challenge the Deed of Exchange for the project developed by
Defendant No.3. Any relief granted against Defendant No.3 would
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result in multiplicity of proceedings. The Plaintiff's claim can only
be in the nature of damages qua Defendant No.1. In view of
Rs.1.55 Crore deposited by Defendant No.1 in this Court, the
alleged claim of the Plaintiff is fully secured. Thus, nothing
survives in the present Suit.
67. Mr. Jain has submitted that no notice was issued by
the Plaintiff to Defendant No.3 with regard to the purported MoU
at any point or at all. The statement made by one of the former
partners of Defendant No.3 viz. Defendant No.7 recorded before
the Chembur Police makes this position clear. It was only put to the
Defendant No.3 as to whether the partner was aware of the MoU
between the Plaintiff and Defendant Nos.1 and 2 and nothing
more. The purported MoU was not shown to Defendant No.3.
68. Mr. Jain has taken this Court through the various
averments in the Plaint. He has submitted that the entire pleading
and reliefs sought by the Plaintiff are on the basis of profit sharing.
There are no pleadings or reliefs with respect to any rights in the
land / Suit property. There are contradictions in the allegations /
contentions made by the Plaintiff in the present Suit and in the
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2019 City Civil Court Suit which shows that there is no credibility
in the allegations made by the Plaintiff.
69. Mr. Jain has submitted that under the Deed of
Exchange Defendant No.3 gave 7 units to Defendant Nos.1 and 2
which were sold by Defendant Nos.1 and 2 for Rs.12.79 Crores.
Defendant No.3 had taken all the obligations of incurring all costs
for construction, premium etc. i.e. the cost of Rs.57.30 Crore and
waived Rs.3 Crores. Thus, Defendant No.3 has given to Defendant
Nos.1 and 2, the total amount of Rs.73.90 Crore which includes
taking the burden of all construction, premium costs and expenses;
no refund of security deposit and 7 units being fully ready for sale
with O.C. Thus, this amount is greater than the ready reckoner rate
for 6.2% of the Suit property, even if the Plaintiffs case is to be
accepted.
70. Mr. Jain has referred to the decision of the Supreme
Court in Katta Sujatha Reddy & Anr. Vs. Siddamsetty Infra Projects
Pvt. Ltd. & Ors.15, in the context of the amendment of Section 10 of
the Specific Relief Act carried out in 2018 being prospective. By the
15 2022 SCC OnLine SC 1079.
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amendment, the specific performance of a contract shall be
enforced by the Court subject to provisions contained in Sub-
Section (2) of Section 11, Section 14 and Section 16 of the Specific
Relief Act. Thus, this provision which remained in the realm of the
Court's discretion pre-amendment was converted into a
mandatory provision, prescribing a power the Court had to
exercise when the ingredients were fulfilled. Under the pre-
amended Specific Relief Act, one of the major considerations for
grant of Specific Performance was the adequacy of damages under
Section 14(i) (a). However, this consideration subsequent to the
amended has been completely done away with in order to provide
better compensation to the agreed party in the form of specific
performance. Mr. Jain has submitted that the amendment of 2018
being declared as prospective would not apply in the present case
as the purported MoU is dated 17 th April, 2018 and thus executed
prior to the coming into force of the 2018 amendment i.e. on 1st
October, 2018 (the appointed date on which the amended
provision has come into effect.) Accordingly, this Court would have
to consider the pre-amended position and discretion vests in this
Court in granting specific performance by considering the
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adequacy of damages under Section 14(1) (a) of the Specific Relief
Act.
71. Mr. Jain has thereafter relied upon the decision of the
Supreme Court in Garware Wall Ropes Ltd. Vs. Coastal Marine
Constructions and Engineering Ltd16 to contend that inadequate
stamping of the purported MoU renders the contract unenforceable
and no injunction can be granted on the strength of an
unenforceable contract. Mr. Jain has also referred to N.N. Global
Mercantile Private Ltd. Vs. Indo Unique Flame Limited & Ors 17,
which had referred this issue to a Constitutional Bench of Five
Judges of the Supreme Court in view of the Supreme Court having
taken a considered view that the finding in Garware Wall (Supra)
is not the correct position in law.
72. Mr. Jain has also relied upon the decision of the
Supreme Court in Lala Durga Prasad & Anr. Vs. Lala Deep Chand &
Ors.18 in support of his submission that the Deed of Exchange
entered into between the Plaintiff Nos.1 and 2 and Defendant No.3
16 (2019) 9 Supreme Court Cases 209.
17 (2021) 4 Supreme Court Cases 379.
18 1954 SCR 360 : AIR 1954 SC 75.
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cannot be cancelled as there are covenants in the Deed between
the Defendants which would make it inequitable to disturb by
cancellation of their Deed in the event this Court is of the view
that the Deed of Exchange could not have entered into given
purported MoU. Further, such view can only be arrived at on the
premise that the Defendant No.3 had knowledge of the prior
purported MoU and was not a bonafide purchaser for value
without notice.
73. Mr. Jain has relied upon decision of the Supreme
Court in Speech and Software Technologies (India) Private Limited
Vs. Neos Interactive Limited19 in support of his submission that, the
purported MoU is nothing but an agreement to enter into another
agreement. The Supreme Court in that decision held that it is a
well settled legal position that an agreement to enter into an
agreement is neither enforceable nor does it confer any right upon
the parties.
74. Mr. Jain has relied upon the decision of the Supreme
Court in Ambalal Sarabhai Enterprises Limited Vs. K.S. Infraspace
19 (2009) 1 Supreme Court Cases 475.
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LLP Limited & Anr.20 in support of his submission that the issue of
whether there is an existing or concluded contract between the
parties is itself a matter of trial to be decided on the basis of
evidence that may be led.
75. Mr. Jain has further relied upon Best Sellers Retail
(India) Private Limited Vs. Aditya Birla Nuvo Limited & Ors. 21 and
Ambalal Sarabhai (Supra) for the well settled proposition that for
an interim injunction the requirements are (i) prima face case, (ii)
balance of convenience; and (iii) irreparable injury. He has
submitted that in the present case none of these requirements have
been met and accordingly, no relief be granted.
76. Having considered the submissions, there have been
contrary interpretations given to the various clauses of the said
MoU executed between the Plaintiff and Defendant No.1 on 17th
April, 2018 and in respect of which specific performance has been
sought in the above Suit. There have been submissions on behalf of
the Defendants that the said MoU is an absurd commercial
arrangement under which Defendant No.1 and / or Defendant
20 (2020) 5 Supreme Court Cases 410.
21 (2012) 6 Supreme Court Cases 792.
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No.2, though land owners to the extent of 6.2%, would get no
benefit from the development, having ceded all their benefits to
the Plaintiff under Clause 6 of the said MoU.
77. In the context of the interpretation placed by the
Defendants on the clauses of the said MoU, it is necessary to refer
to the initial clauses of the said MoU, viz. Clause Nos.1 to 7 which
in my prima facie view merely sets out the recitals to the said MoU
and gives a historical background of the agreement between the
parties. In clause 6 of the said MoU, it is mentioned that the
Defendant No.1 - owner was in need of finance and approached
the Plaintiff as joint developer and requested the joint developer to
arrange finance for the purpose of jointly developing the Suit
property and further agreed to reimburse the amounts with
interest and to give 50% share in the profit on the development of
the Suit property i.e. 50% of the 6.2% share of the owners in the
Suit property.
78. By placing reliance on Clause 6 in order to contend
that the said MoU is an absurd commercial arrangement, the
Defendant have done a piecemeal and selective reading of the said
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MoU which is impermissible, particularly when the said MoU is to
be read as a whole and the commercial bargain between the
Plaintiff and Defendant No.1 / Defendant No. 2 is contained in the
later Clauses i.e. Clauses 8 to 15 of the said MoU. It is well settled
that in interpretation of clauses of an agreement, it is necessary to
harmonize the various clauses in order to give effect to the
agreement between the parties.
79. The consideration payable by the Plaintiff to the
Defendant No.1 / Defendant No.2 is mentioned in Clause 7 of the
said MoU i.e. an aggregate sum of Rs.1.55 Crores. Defendant No.1
confirms having received prior to the execution of the said MoU
the sum of 1.05 Crores as per the particulars of payment
mentioned in the statement annexed to the said MoU. The balance
amount of Rs.50 lakh was payable by the Plaintiff as aggregate
consideration and which admittedly has been paid by the Plaintiff
to Defendant No.1 / Defendant No.2. Further, in return for the
consideration paid by the Plaintiff, the Plaintiff is entitled to 3.1%
share in the Suit property. This is made clear from Clause 8
onwards. These clauses contemplate joint development to be
carried out by the Plaintiff and Defendant No.1 of their 6.2%
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ownership in the Suit property of which the share of the Plaintiff is
3.1% thereof. Clause 11 of the said MoU is necessary to reproduce
as under:
"11. It is agreed that it is the sole responsibility of
the Owner to apply and obtain all necessary
permissions for construction of new buildings at
their own cost and commence, carry on and
complete construction in accordance with the
sanction plan and to apply and obtain completion
certificate and to put the joint developers into
peaceful and vacant possession at 3.1% share in
the said land thereof. It is agreed that the owner
shall within a period of one month from the date
hereof, shall take all necessary steps to implement
the purpose and intention of this MoU and the
obligations of the owner thereof."
80. Although, in the said Clause 11 reference is made to
"put the joint developers into peaceful and vacant possession at
3.1% share in the said land thereof", this in my prima facie view
can only apply to the Plaintiff who is described as joint developer
being entitled to and put in possession of 3.1% share of the
constructed area of the Suit property. The opening part of Clause
11 makes this clear as it has been agreed between the Plaintiff and
Defendant Nos.1 and 2 that it is the sole responsibility of the
owner i.e. Defendant No.1 / Defendant No.2 to apply and obtain
all necessary permissions for construction of new buildings at their
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own costs and commence, carry on and complete construction in
accordance with the sanctioned plan and to apply and obtain
completion certificate. This is then followed by the aforementioned
words in quotation. Thus, in my prima facie view the commercial
bargain of the parties is not in the least ambiguous or can be said
to be an absurdity.
81. The contention of Defendant No.3 that the Plaintiff
has only right to profit and at the highest only has a monetary
claim cannot be accepted. Clause 3 of the said MoU describes the
word "profit" in terms of area and which reads as under:-
3. The Owner has entered a Memorandum of
Understanding (MoU) dated 21st August, 2019
with M/s. Shiv Sabari Developers to develop the
properties jointly. The lands of Shiv Sabari are
adjacent to the land of the owner. The total land
jointly admeasuring is 18486.34 sq. mtrs and on
development the right in profit of the owner is
1161.2 Sq. mtr. i.e. 6.2% of the total land.
If the Plaintiff had only a right to the profit and / or
monetary claim, there would no necessity in clause 3 of the said
MoU to mention that the Suit property would be developed and
upon development the right in the profit of the owner is 1161.21
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sq.mtrs. i.e. 6.2% of the total land. Out of this area the Plaintiff has
by the said MoU purchased 50%. Thus, it would be necessary to
read clause 3 with clause 11 and these clauses make it clear that
there will be joint development of the Suit property and that the
Plaintiff as a joint developer would be put in possession of his
share viz.3.1% share in the subject property. Thus, the narrow
interpretation placed by the Defendants on the clauses of the said
MoU cannot be accepted. It is well settled that Courts must
interpret contracts to uphold the bargain of the parties as opposed
to nullifying it.
82. It has been contended on behalf of the Defendant
No.3 that the Plaintiff has no entitlement to enforce specific
performance against Defendant No.3 as the Defendant No.3 is not
a party to the said MoU of which specific performance is sought.
This contention cannot be accepted in view of Section 19(b) of the
Specific Relief Act. Section 19 reads thus:-
"19. Relief against parties and persons claiming under
them by subsequent title. - Except as otherwise provided
by this Chapter, specific performance of a contract may
be enforced against - (a) either party thereto; (b) any
other person claiming under him by a title arising
subsequently to the contract, except a transferee for
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value who has paid his money in good faith and without
notice of the original contract."
83. In the present case, the Plaintiff claims that its 3.2%
share in the Suit property has been transferred by Defendant Nos.
1 & 2 to a third party i.e. Defendant No.3. Section 19(b) of the
Specific Relief Act provides for specific performance to be enforced
against any other person / third party claiming under such person
against whom specific performance of the contact may be
enforced, by a title subsequent to the contract. The only exception
being that if the third party had acquired title in good faith for
value and without notice of the Plaintiff's contract, then specific
performance cannot be enforced against such third party.
84. In the present case, Defendant No.3 who is the other
party / third party contemplated under Section 19(B) of the said
Act has claimed title to the Plaintiff's 50% of the 6.2% share of the
Defendant No.1 / Defendant No.2 in the Suit property by
exchanging 7 units with Defendant No.1 and Defendant No.2
under the Deed of Exchange. Prior to the Deed of Exchange, the
Plaintiff would have sought specific performance of said MoU only
against Defendant No.1 and Defendant No.2. The Plaintiff would
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have in other words sought enforcement of 50% of the units
coming to the share of Defendant No.1 and Defendant No.2. By
the Deed of Exchange, Defendant No.1 and Defendant No.2's share
of 6.2% of the Suit property, 50% of which was contractually
committed to the Plaintiff has been parted with or given up in
favour of Defendant No.3 in exchange of the 7 units. Thus,
Defendant No.3 is such other person against whom specific
performance of the said MoU may be enforced. Further, the
exception in Section 19(b) of the Specific Relief Act will not in my
prima facie view apply in present case as Defendant No.3 had
notice of the said MoU. This is borne out from the statement made
by the then partner Defendant No.7 of the Defendant No.3-Firm to
the police i.e. prior to the Deed of Exchange viz. that he was aware
of the said MoU. Hence, Defendant No.3 cannot be a transferee
without notice to resist the enforcement of the contract. Further,
the Defendant No.3 in my prima facie view is not a transferee for
value who has paid his money in good faith. This is apparent from
the value of the 6.2% share of Defendant No.1 and Defendant No.2
in the Suit property which is estimated at Rs.35 Crores. However,
the value of the 7 units which were exchanged by Defendant No.3
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with Defendant Nos.1 and 2 as consideration for their 6.2% share
in the Suit property is valued only at Rs.12 Crores.
85. In Lala Durga Prasad (Supra), the Supreme Court has
held that specific performance of a contract may be decreed
between the vendor and the Plaintiff by directing the subsequent
transferee to join in the conveyance, so as to pass on the title
which resides in him to the Plaintiff. He does not join in any special
covenants made between Plaintiff and his vendor; all he does is to
pass on his title to the Plaintiff.
86. The contention on behalf of the Defendants that the
purchasers of 7 units should have been joined or relief claimed
against them has no merit. The Plaintiff's relief is for specific
performance against Defendant No.3 who claims subsequent title
to the Defendant No.1 and Defendant No.2's share of 6.2% despite
50% of the Suit property having been acquired by the Plaintiff
under the said MoU. Thus, it would not be necessary for the
Plaintiff to pursue remedies against subsequent purchasers of the 7
units. Further, as aforementioned the Plaintiff is only seeking
specific performance of the said MoU and hence there is no
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requirement to seek specific performance of the 2018 J V
Agreement and / or pay construction costs of Rs.57 Crores under
the JV Agreement. As the Plaintiff is not a party to the J V
Agreement of 2018, the Plaintiff cannot be made liable for any of
the obligations under the J V Agreement and / or payment of
construction costs contemplated thereunder.
87. The said MoU by itself does not entitle the Plaintiff to
claim any property in the hands of Defendant No.3. It is only after
the Deed of Exchange that the Plaintiff is entitled to proceed
against 3.1% of the Defendant No.1 / Defendant No.2's share
which now vests in Defendant No.3. Thus, Section 17 of the
Specific Relief Act which provides that contracts to sell or let any
immovable property by one who has no title is not specifically
enforceable does not apply in the present case. In my prima facie
view the Plaintiff has prior title to 3.1% of the Suit property and
that they can claim enforcement against Defendant No.3 of their
share under Section 19 (b) of the Specific Relief Act.
88. Further, the contention on behalf of Defendant No.3
that the said MoU is in contravention of the 2010 MoU and JV
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Agreement and hence cannot be specifically enforced does not
deserve acceptance. Clauses 1-11 of the said MoU which give
rights to the Plaintiff over 50% of the Defendant No.1 / Defendant
No.2's entitlement in the project is not contrary to the Defendant
No.3's rights under the 2010 MoU or JV Agreement. This is
because under these Agreements Defendant No.1 / Defendant
No.2's rights over 6.2% of the constructed area remain with
Defendant Nos.1 & 2. It can be seen from a reading of Clause 12
onwards of the said MoU that, entitlements are given to the
Plaintiff by the said MoU. However, the only obligation of the
Plaintiff under the said MoU is to make payment of the
consideration of Rs.1.55 Crores for acquiring 3.1% of the
Defendant No.1 / Defendant No.2's share in the Suit property.
Thus, the Plaintiff's claim for which consideration has been paid is
for 50% of the Defendant No.1 and Defendant No.2's share in the
Suit property. Although the Plaintiff is entitled under the said MoU
to take over construction, such entitlement has not been exercised
by the Plaintiff.
89. Under Section 12(4) of the Specific Relief Act, it is
provided that when part of a contract which, taken by itself can
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and ought to be specifically performed, stands on a separate and
independent footing from another part of the same contract, which
cannot or ought not to be specifically performed, the Court may
direct specific performance of the former part. In my prima facie
view, the Plaintiff is seeking performance of that part of the said
MoU, which gives the Plaintiff 50% of Defendant No.1 and
Defendant No.2's share in the constructed area of the suit property
and which stands on an independent footing as against the
entitlement of the Plaintiff under the said MoU, which includes
taking over the construction. Thus, in my prima facie view, Section
12(4) expressly permits the final relief sought.
90. Although there have been submissions on behalf of
the Defendant No.3 that there can be no cancellation of a Sale
Deed / Deed of Exchange in favour of a subsequent purchaser in a
Suit for specific performance by the third party, in my view, the law
laid down by the Supreme Court in Lala Durga Prasad (Supra) has
been misread. The Supreme Court only lays down that, it is not
obligatory for the Plaintiff to seek cancellation of the subsequent
Deed by the third party. This is also laid down by this Court in
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Sharada Nanasaheb Patil & Ors. Vs. Appaso Jivappa Chougule &
Ors.22
91. Prima facie I do not find any merit in the contention
on behalf of Defendants that the said MoU is an agreement to
agree and for which the specific performance cannot be granted. In
my prima facie view, the rights and obligations have been clearly
provided for in the said MoU and constitutes a concluded contract
between the parties.
92. In the present case, the Plaintiff has paid full
consideration under the said MoU and hence, the said MoU cannot
be considered to be a mere agreement to agree. As held above, the
subsequent clauses i.e. 12 to 19 of the said MoU contains
entitlements / powers or rights given to the Plaintiff and
corresponding restraints on Defendant No.1 or Defendant No.2.
The powers of the Plaintiff includes the power to supervise
construction, operate bank account, sharing profits, negotiate with
purchasers for sale. There is a restraint on Defendant No.1 from
creating third party rights etc. In my prima facie view, these clauses
22 Second Appeal No.114 of 1991 decided on 20th September,
2019.
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are clear and not capable or in need of further agreement between
the parties. Merely because the said MoU incorporates Clause 20
which requires execution of subsequent documents this does not
detract from the fact that the said MoU, in my prima facie view,
constitutes a clear and concluded contract. This has been held by
this Court in Rajiv Sanghvi (supra) which has been relied upon by
the Plaintiff.
93. In so far as the Defendant No.2 not being a signatory
to the said MoU is concerned, in my prima facie view, Defendant
No.1 by his conduct in executing the said MoU and thereafter
Defendant No.1 & 2 receiving the purchase consideration paid by
the Plaintiff would make Defendant No.2 bound by the said MoU
on the principle of implied authority and ratification. The
Defendant No.1 who is the husband of Defendant No.2 has
represented to the Plaintiff that he is entitled to deal with the
entire property. Further, Defendant No.2 has in receiving her share
of the consideration under the said MoU consented to or ratified
the agency. It has been laid down in Chairman LIC (Supra) that
existence of implied authority is an objective analysis based on the
conduct of parties and they will be held to have consented to a
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relationship of principal and agent if they have agreed to what
amounts in law to such a relationship, even if they do not
recognize it themselves and even if they have professed to disclaim
it. In other words, the existence of state of facts on which the law
imposes the consequences of agency are sufficient to hold the
parties bound by the relationship of the agency.
94. Defendant No.3 has placed reliance upon the police
complaint filed by the Plaintiff to contend that allegations of
misrepresentation by Defendant No.1 of his title is contrary to the
case of implied authority / agency. This in my view is a misplaced
reliance as a perusal of the police complaint would reveal that the
allegation of misrepresentation of title was on account of
undisclosed prior mortgages on Defendant No.1 / Defendant
No.2's land and not that Defendant No.1 dealt with Defendant
No.2's land without being authorized to do so. A Police Complaint
has also been filed against Defendant Nos.1 and 2 and which is
consistent with the Plaintiff's case that Defendant No.2 was
represented by Defendant No.1.
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95. Regarding readiness and willingness of the Plaintiff,
one has to consider the obligation of the Plaintiff under the said
MoU which was to bring in consideration of Rs.1.55 Crore, which
has been admittedly done. The receipt of money is not denied by
Defendant No.1 and 2. Thus, in my prima facie view, the Plaintiff
has performed his part of the said MoU. The remaining clauses i.e
Clauses 12 to 18 are only entitlement of the Plaintiff and / or
powers or rights given to the Plaintiff which may or may not be
exercised and have no bearing on the issue of readiness and
willingness of the Plaintiff. The reliance placed by the Defendants
on the decision of the Supreme Court in Shenbagam (Supra) is
misplaced. The case is clearly distinguishable on facts. In that case,
the Plaintiff had not paid the balance consideration and there was
complete inaction on its part calling upon the Defendant to
complete the transaction and offer the balance consideration.
Merely sitting idle with the balance consideration was not
considered sufficient to demonstrates readiness and willingness. In
the present case, the Plaintiff has paid full consideration under the
said MoU, a few months after the said MoU. Though there has
been delay in applying for restoration of the City Civil Court's Suit,
such delay in my prima facie view does not amount to waiver or
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abandonment of the Plaintiff's rights or for the Defendant No.1 /
Defendant No.2 to claim the benefit of the delay. In view of the
Plaintiff having performed his obligations, delay cannot defeat the
Plaintiff's case of specific performance. Reliance upon Bastion
Constructions (Supra) is apposite.
96. I do not find any merit in the contention on behalf of
Defendant No.3 that the delay in restoring the City Civil Court Suit
amounts to laches because prior to the restoration i.e. during the
period when there was no suit, the Defendant No.3 had entered
into Deed of Exchange with Defendant No.1 and Defendant No.2.
It is necessary to note that prior to entering into the Deed of
Exchange, Defendant No.3 had notice of the said MoU and despite
which it entered into said Deed of Exchange within a month of the
Plaintiff filing its Notice of Motion for restoration. The Deed of
Exchange was entered into by Defendant No.3 with Defendant
No.1 / Defendant No.2 prior to even filing its reply to the
restoration application. It is further necessary to note that the City
Civil Suit was not dismissed on merits but was on account of
default. Accordingly, Defendant No.3 cannot be stated to have
suffered prejudice on account of the delay in the Plaintiff seeking
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restoration of the City Civil Suit. Accordingly, Defendant No.3 who
had notice of the said MoU whilst entering into the Deed of
Exchange, did so with eyes open and thus suffered no prejudice
and hence cannot claim any equities.
97. I also do not find any merit in the Defendants
contention that in view of the contract being inadequately
stamped, no injunction can be granted. The Defendant has placed
reliance upon Garware Wall Ropes (Supra). It is necessary to note
that the Supreme Court in Garware Wall Ropes (Supra), at
paragraph 30, upon making reference to the decision of the Full
Bench of this Court in Gautam Landscapes (P.) Ltd. (Supra), has
not interfered with the conclusion therein viz. that the Court can
entertain and grant interim or ad-interim relief in an Application
under Section 9, despite the document containing an arbitration
clause which is un-stamped or insufficiently stamped. The decision
of the Supreme Court in Garware Wall Ropes (Supra) has been
recently upheld by the Constitution Bench of the Supreme Court in
M/s N.N. Global Mercantile Private Limited Vs. M/s Indo Unique
Flame Ltd. - Civil Appeal No.(S) 3802-3803 of 2020 - dated 25 th
April, 2023. It is noted that in the majority decision of the Supreme
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Court, there was no pronouncement on the matter with reference
to Section 9 of the Arbitration Act. Thus, the non-inference with
the conclusion of the Full Bench of this Court in Gautam
Landscapes (Supra) by the Supreme Court in Garware Wall Ropes
(supra) remains. Accordingly, the principle of inadequacy of
stamping, assuming there is improper stamping as contended, will
not preclude this Court from granting interim relief.
98. Prima facie, I do not find any merit in the stand taken
on behalf of the Defendant No.1 / Defendant No.2 that the said
MoU is a fabrication. This undisputed position in view of the fact
that the Defendant No.1 has signed the said MoU. Further, the said
MoU is notarized and there is a detailed statement given by the
Notary Officer of execution with a copy of the Notarial Register. It
is necessary to note that the Plaintiff had offered to produce the
Notary Officer and the Register before this Court. Defendant No.1
in their Affidavit has in my prima facie view given a far fetched
explanation of Defendant No.1's signature on the said MoU. The
explanation given in the said Affidavit of Defendant No.1 is that
the said MoU was meant to be a loan agreement which Defendant
No.1 asked the Plaintiff to unilaterally draw up blank papers
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signed by Defendant No.1 because Defendant No.1 was travelling
to Turkey. There is no reason given by Defendant No.1 as to why
the drawing up of the document was so urgent that could not wait
his return. Further, Defendant No.1 has not given any justification
as to why he did not see the document drawn up by the Plaintiff
and only saw it when served with the City Civil Court Suit. If the
said MoU was unilaterally drawn up by Plaintiff, there is no
explanation as to how the 2010 MoU has been quoted in the said
MoU of 2018. This fact would have only be known to the
Defendant No.1. There is no mention that the Plaintiff had been
told of the 2010 MoU for a purported loan agreement which was
unconnected to the development. Further, an important fact is that
Defendant No.1 / Defendant No.2 never offered to pay back the
money which is alleged to be a loan. The consideration was
admittedly received by Defendant No.1 and Defendant No.2.
99. The Defendants have relied upon Best Seller and
Ambalal Sarabhai (Supra) for the well settled proposition that for
an interim injunction these are three requirements to be satisfied
viz. (i) prima facie case (ii) balance of convenience and (iii)
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irreparable injury. In my prima facie view these requirements have
been satisfied in the present case.
100. Accordingly, in my view, a strong prima facie case has
been made out for grant of injunctive relief at the interlocutory
stage with respect to the Plaintiff's entitlement of 1655.07 Sq mtrs
built up area of residential units and 1122.73 sq. mtrs. built up
area of commercial units.
101. In view thereof, the Interim Application is made
absolute in terms of prayer Clause a(i) to a(iv) as under:
a) The Court Receiver, High Court, Bombay is appointed
as Receiver of the land situated at CTS 619/21B and CTS 667A/2A
of the village Borla, Taluka Kurla and District Mumbai Suburban,
as well as the project "Sabhari Park" being constructed on the land
and the unsold units in the commercial building known as "Sabhari
Park" and in the residential buildings known as "Shiv Garden -
Tower I and II" more particularly described in Exhibit "KK" to the
Plaint with all powers under Order XL Rule 1 of the Code of Civil
Procedure, 1908 including the power to sell the said units by
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public auction or private treaty and / or as this Hon'ble Court may
think fit.
b) The Defendants, by themselves / themselves, their
servants and agents are restrained by an order and injunction of
this Hon'ble Court from disposing off, alienating, encumbering,
parting with possession or creating any third party right over or in
respect of the unsold units more particularly described in Exhibit
"KK" to the Plaint.
c) The Defendants jointly or severally as directed to
disclose on oath all steps taken by them jointly or severally in
furtherance of development of the Suit land including however not
limited to all plans submitted, sanctions granted up to date, all
construction and proposed construction up to date, premises
residential or commercial sold and those that are yet to be old
along with amounts recovered and amounts yet to be recovered;
d) The Defendants, by themselves / themselves, their
servant and agent are restrained by an order and injunction of this
Hon'ble Court from disposing off, alienating, encumbering, parting
3-ia-2457-2021.doc
This Order is modified/corrected by Speaking to Minutes Order dated 07/06/2023
with possession or creating any third party rights or carrying out
any further construction in furtherance of development and / or
doing any act causing prejudice to the rights of the Plaintiff under
MoU dated 17th April, 2018."
e) The Interim Application is accordingly disposed of.
( R. I. CHAGLA J. )
