Calcutta High Court
Primarc Srijan Projects Llp & Ors vs Howrah Mills Company Ltd on 1 February, 2024
IN THE HIGH COURT AT CALCUTTA
(Ordinary Original Civil Jurisdiction)
COMMERCIAL DIVISION
Present:
The Hon'ble Justice Krishna Rao
CS 186 of 2018
With
IA No. GA 8 of 2024
Primarc Srijan Projects LLP & Ors.
Versus
Howrah Mills Company Ltd.
Mr. Ratnanko Banerjee, Sr. Adv.
Mr. Sabyasachi Choudhury
Mr. Saubhik Chowdhury
Mr. Paritosh Sinha
Mr. Shounak Mukhopadhyay
Mr. Tithankar Das
... For the plaintiffs.
Mr. Abhrajit Mitra, Sr. Adv.
Mr. Sarvapriya Mukherjee
Mr. Satadeep Bhattacharyya
Mr. Bikash Shaw
Mr. Sumanta Biswas
Mr. Yashvardhan Kochar
... For the defendant.
2
Hearing Concluded On : 24.01.2024
Judgment on : 01.02.2024
Krishna Rao, J.:
1. The defendant has filed the present application being G.A No. 8 of 2024
for rejection of the plaint or in the alternative to dismiss the suit.
2. The plaintiffs have filed the suit praying for following reliefs:
"a) A decree in the sum of Rs. 11,58,74,242/-
(Rupees Eleven Crores Fifty Eight Lakhs Seventy
Four Thousand Two Hundred and Forty Two) along
with interest at the rate of 15 % (Fifteen percent)
per annum from the date of institution of the suit
against the Defendant, as more fully pleaded in
paragraph 20 above;
b) Decree for interest upon judgment at the
rate of 15 % (Fifteen percent) per annum against
the Defendant, as morefully pleaded in paragraph
21 above from 1st June 2018 onwards;
c) Pendente lite interest and interest upon
judgment;
d) Perpetual injunction restraining the Defendant
and its men, servants or agents to construct or
undertake any development on the said land being
the demarcated and earmarked portion of 194
Cottahs of land out of the larger premises no.
493/C/A Grand Trunk Road (S), Howrah - 711102
without first making payments of the dues of the
plaintiffs."
3. The defendant is contesting the suit by filing written statement along
with counter claim praying for following reliefs:
"(a) A decree of specific performance directing the
plaintiff Nos. 2 & 3 to act in terms of the MOU
dated 27th August, 2015;
(b) In the event specific performance cannot be
granted then, a decree for damage to the tune of
Rs. 130 crore as more fully pleaded in paragraph
9(e) of the Written Statement;
(c) In the alternative enquiry into damage and
decree for such sum which may be found due and
payable upon enquiry;
(d) Decree for interest upon judgment @18% per
annum as pleaded in paragraph 9(g):"
4. By an order dated 22nd December, 2022 following issues are framed:
1. Whether the plaintiffs are entitled to a decree
for Rs.11,58,74,242/- along with interest @
15% per annum from the date of institution of
the suit?
2. Whether plaintiffs are entitled for interest
upon judgment @ 15% per annum against the
defendant from 1st June, 2018 onwards?
3. Whether the plaintiffs are entitled to pendente
lite as prayed for?
4. Whether the plaintiffs are entitled to an order
of perpetual injunction restraining the
defendant and its men, servants or agents to
construct or undertake any development on
the demarcated and earmarked portion of 194
Cottah of land out of the larger premises no.
493/C/A, Grand Trunk Road(s), Howrah
711102?
5. Whether the defendant failed to perform their
obligations under the agreement dated August
27, 2015?
6. Whether the Agreement recorded in form of
Minutes in a Meeting held on May 9, 2017 is
binding upon the parties to the suit?
7. Whether the defendants have committed
breach of their obligations under the
Agreement dated May 09, 2017?
8. Whether the defendant has suffered any loss
or damage on account of loss of profit,
business opportunity and goodwill due to
delay committed by the plaintiff?
9. Whether the defendant is entitled to a decree for
damages against the plaintiff to the tune of
Rs.130 crores along with interest upon decree @
18% per annum?
10. Whether the defendant is entitled to a decree of
specific performance against the plaintiff no.2
and 3 to act in terms of the Agreement dated
August 27, 2015?
5. This Court had fixed the matter for witness action of the plaintiff but
the Learned Counsel for the plaintiff informed this Court that the
plaintiff will not adduce any witness and will argue the matter on merit
on the basis of the documents relied upon by the parties. The Counsel
for the plaintiff has concluded his argument. The Counsel for the
defendant has also argued the matter on merit. During the argument,
the defendant has raised the point of admissibility of the document i.e.
the agreement dated 27th August, 2015, on the basis of which the
plaintiff has filed the suit as the said agreement is not properly
stamped.
6. By an oder dated 29th March, 2023, this Court has referred the
agreement dated 27th August, 2015 to the Collector for proper valuation
under the Indian Stamp Act, 1899 and accordingly, the agreement was
properly stamped. Subsequently, the defendant has filed two
applications being G.A. No. 6 of 2023 and G.A. No. 7 of 2023. The
defendant has not pressed the application being G.A. 6 of 2023 and the
Counsel for the defendant has argued the matter with regard to the
application being G.A. No. 7 of 2023 wherein the defendant has raised
objection of admissibility of the document i.e. Minutes of the meeting
dated 9th May, 2017 appearing at page No. 41 and 42 of the plaint as
the same is also not properly stamped.
7. The objection raised by the defendant with regard to the admissibility of
the document appearing at page nos. 41 and 42 of the plaint was
decided by this Court by an order dated 22nd September, 2023 holding
that the document is not required to be stamped. Being aggrieved with
the said order, the defendant has preferred an appeal being APOT No.
387 of 2023 and the said appeal was disposed of by an order dated 17th
November, 2023 by setting aside the order dated 22nd September, 2023
and directed this Court to decide the issue de novo on the basis of the
observation made by the Appellate Court.
8. After the order passed by the Appellate Court, the plaintiffs submits
before this Court that the plaintiffs do not want to go to any
controversy whether the document is required to be stamped or not, the
plaintiffs voluntarily prayed for sending the document to the Collector
for stamp. As per the submissions made by the Learned Counsel for the
plaintiffs, this Court has referred the Minutes of the Meeting dated 9th
May, 2017 to the Collector for valuation for the purpose of getting the
document properly stamped. On 21st December, 2023, the Collector of
Stamp Revenue, Kolkata has properly stamped the said document.
After the stamp of the documents, the plaintiffs prayed for passing
appropriate order on merit of the suit but in the meantime, the
defendant has filed the present application.
9. Now the defendant raised an objection that the Minutes of the Meeting
dated 9th May, 2017 which the plaintiffs have relied upon expressly
creates a "lien over the Premises No. 439/C/A, G.T. Road (South),
Howrah - 711 102" and thus the said document is required to be
registered and without the registration, the said document cannot be
admitted in evidence or relied upon.
10. Mr. Abhrajit Mitra, Learned Senior Advocate referred Section 59 and
Section 100 of the Transfer of Property Act, 1882 and submitted that by
acts of parties, the Minutes of the Meeting is a security for the payment
of money which has been created over the immovable property and the
same does not amount to mortgage, it is a charge within the meaning of
Section 100 of the Transfer of property Act, 1882 and the principal
money secured under the said document is more than one hundred
rupees, as per Section 59, the same requires registration.
11. Mr. Mitra submits that the Minutes of the Meeting is an unregistered
document and thus the same is in-admissible in evidence under
Section 49 of the Registration Act, 1908.
12. Mr. Mitra relied upon the judgment reported in 2019 SCC Online Mad
21145 (Narayana Naicker and Others -vs- Kannusamy Naicker
and Others) and submitted that proviso to Section 49 of the
Registration Act makes that document admissible in evidence only in
respect of collateral transaction, which is not required to be registered.
The collateral transaction is not a transaction affecting the immovable
property, but it is independent from the main transaction. Therefore,
merely the payment of deficit stamp duty, in respect of an unregistered
document, it cannot be stated that it can be used for any collateral
purpose. The above unregistered document sought to be used in
respect of immovable property is inadmissible, in view of the clear bar
under Section 49 of the Registration Act.
13. Mr. Mitra submitted that the suit is based on the Minutes of Meeting
dated 9th May, 2017 as appearing at paragraph 17 of the plaint and
the said Minutes of the Meeting cannot be looked into even for the
collateral purposes and thus the plaint is liable to be rejected. Mr.
Mitra relied upon the judgment reported in 2013 SCC OnLine Cal
7062 (Suresh Tulshan & Ors. -Vs- Development Consultants Pvt.
Ltd.) and submitted that where a plaint based on an unregistered
document the same even cannot be looked into for the collateral
purpose and the plaint is to be rejected.
14. Mr. Ratnanko Banerjee, Learned Senior Advocate representing the
plaintiff submits that initially on 27th August, 2015, a Basic
Understanding on Joint Venture Development for a portion of the
Premises No. 493/C/A, G.T. Road (South), Howrah was entered
between the plaintiff and the defendant for development. The property
is still mortgaged with the SBI and the land has not yet converted to
"Baastu" land. Without clearing the mortgage and without obtaining
No Objection Certificate from the SBI, no conversion can be made to
"Baastu" land.
15. The plaintiff has paid an aggregate sum of Rs. 7,00,00,000/- (Rupees
Seven Crores Only) to the defendant in terms of the memorandum of
understanding and the defendant has acknowledged the receipt of the
same.
16. Subsequent to the Memorandum of Understanding, a Minutes of the
Meeting was recorded on 9th May, 2017 wherein it is recorded that in
case the Memorandum of Understanding is cancelled, the defendant
shall return the amount of Rs. 7,00,00,000/- along with expenses upto
Rs. 1,00,00,000/- along with interest @ 15% within 90 working days
from the date of cancelation or termination of the Memorandum of
Understanding. In the said Minutes, it is also recorded that the
plaintiffs shall have lien over the said premises and no one will be
allowed to construct on the said premises without first making payment
to the plaintiffs.
17. The defendant in its written statement admitted with regard to the
acknowledgement of Rs. 7,00,00,000/- and it is also admitted that the
defendant has not obtained No Objection Certificate from the SBI nor
the land is converted to Baastu. The defendant had failed to obtain no
objection from SBI in terms of the Memorandum of Understanding and
Minutes of the Meeting, the plaintiff by a letter dated 18th May, 2018,
had cancelled the Memorandum of Understanding and called for the
defendant for return of the amount with interest but the defendant
failed to return the amount with interest and expenses, therefore, the
plaintiff has filed the suit.
18. Initially the defendant has raised objection that the Memorandum of
Understanding is not properly stamped and in terms of the order
passed by this Court, the plaintiffs have taken appropriate steps and
got the said document properly stamped. Thereafter, the defendant has
filed an application that the Minutes of the Meeting dated 9th May,
2017 also not properly stamped, this Court has rejected the contention
of the defendant and the defendant has carried the said order in appeal
and the Appellate Court has set aside the order of this Court and
remanded the matter to decide the issue de novo. Before deciding the
matter by this Court, the plaintiffs of their own have got the said
Minutes of the Meeting properly stamped.
19. Minutes of the Meeting dated 9th May, 2017 reads as follows:
"It has been agreed by both the Howrah Mills
Co. Ltd. (hereinafter referred to as HMCL) and
Primac Srijan LLP (hereinafter referred Srijan) on the
development of 194 cottachs of land at premises
493C/A, G.T. Road South, Howrah - 711 102 that
Primac Srijan LLP will only develop the aforesaid
premises and sign the formal development
agreement on the basis of the MOU dated 27th
August, 2015 if the State Bank of India and/or its
assignee permits to sanction housing loan for the flat
purchasers as well as allow to construct on the
aforesaid land.
Priman Srijan LLP will keep deposited two
cheques aggregated Rs. 9 crores that is Rs. 5.50
crores for sanction of plan by Howrah Municipal
Corporation; Rs.3.50 crores for permission of
housing loan for customers/SBI NOC with Mr. Utpal
Majumdar, Advocate for a period of 30 days as a
security. On obtaining permission for Housing
Loan/SBI NOC the sum of Rs.3.50 crores shall be
paid by Mr. Majumdar to HMCL and the balance
amount of Rs.5.50 Crores shall be released by Mr.
Majumdar only upon the successful completion of
both the events ie. Housing Loan NOC and Sanction
of Plan.
Primarc Srijan LLP has categorically stated in
case HMCL fail to bring the permission for housing
loan as well as sanction plan for the said premises
within 30 days from the date hereof then the
Memorandum of Understanding shall automatically
stand cancelled without any further negotiation.
In case of such happening of cancellation
and/or determination of MOU, HMCL will return
Srijan Rs.7 crores plus expenses upto the tune of
Rs.1 crore; incurred by Primarc Srijan LLP in this
project till date along with interest @15% p.a. within
90 working days from the cancellation and/or
termination as stated hereinabove and till such
payment is made by HMCL to Srijan. Srijan shall
have lien over the aforesaid permises and no one
will be allowed to construct on the said premises
without first making payment to Srijan. Srijan shall
have no other claim whatsoever and cheques of Rs.9
crores deposited with Sri Uptal Majumdar, Advocate
will be returned"
20. Similar question came before the Hon'ble Supreme Court in the case of
Haryana Financial Corporation -vs- Gurcharan Singh and
Another reported in (2014) 16 SCC 722 and the Hon'ble Supreme
Court held that:
"8. This Court in J.K. (Bombay) (P)
Ltd. v. New Kaiser-I-Hind Spg. & Wvg. Co.
Ltd. [J.K. (Bombay) (P) Ltd. v. New Kaiser-I-Hind
Spg. & Wvg. Co. Ltd., AIR 1970 SC 1041 : (1969) 2
SCR 866] explained the difference between the
charge and the mortgage as follows :
"33. ... While in the case of a charge
there is no transfer of property or any interest
therein, but only the creation of a right of
payment out of the specified property, a
mortgage effectuates transfer of property or an
interest therein. No particular form of words is
necessary to create a charge and all that is
necessary is that there must be a clear
intention to make a property security for
payment of money in praesenti."
9. Section 100 of the Transfer of Property Act,
1882 defines "charge" as follows:
"100. Charges.--Where immovable
property of one person is by act of parties or
operation of law made security for the
payment of money to another, and the
transaction does not amount to a mortgage,
the latter person is said to have a charge on
the property, and all the provisions
hereinbefore contained which apply to a
simple mortgage shall, so far as may be, apply
to such charge.
Nothing in this section applies to the
charge of a trustee on the trust property for
expenses properly incurred in the execution of
his trust, and, save as otherwise expressly
provided by any law for the time being in
force, no charge shall be enforced against any
property in the hands of a person to whom
such property has been transferred for
consideration and without notice of the
charge."
The abovementioned section clearly indicates
the following types of charges:
(1) Charges created by act of parties; and
(2) Charges arising by operation of law.
10. An ordinary charge created under the
Transfer of Property Act is compulsorily registrable.
The first portion of Section 100 of the TP Act lays
down that where immovable property of one person
is by act of parties or operation of law made
security for the payment of money to another, and
the transaction does not amount to a mortgage, the
latter person is said to have a charge on the
property, and all the provisions hereinbefore
contained which apply to a simple mortgage shall,
so far as may be, apply to such charge. The words
"which apply to a simple mortgage shall, so far as
may be, apply to such charge" in this section were
substituted by Section 53 of the Transfer of
Property (Amendment) Act, 1929, for the words "as
to a mortgagor shall, so far as may be, apply to the
owner of such property, and the provisions of
Sections 81 and 82 shall, so far as may be, apply
to the person having such charge". Evidently, the
effect of the amendment was that all the provisions
of the TP Act which apply to simple mortgages were
made applicable to charges.
11. Section 59 of the Transfer of Property Act
refers to the mode of transfer which reads as
follows:
"59.Mortgage when to be by
assurance.--Where the principal money
secured is one hundred rupees or upwards, a
mortgage, other than a mortgage by deposit of
title deeds, can be effected only by a
registered instrument signed by the mortgagor
and attested by at least two witnesses.
Where the principal money secured is
less than one hundred rupees, a mortgage
may be effected either by a registered
instrument signed and attested as aforesaid,
or (except in the case of a simple mortgage) by
delivery of the property."
12. A conjoint reading of Section 100 with
Section 59 of the TP Act makes it clear that if by act
of parties, any immovable property is made
security for the payment of money to another and it
does not amount to mortgage, then all the
provisions which apply to a simple mortgage, as far
as may be, apply to such charge. Consequently, in
view of Section 59 of the TP Act when there is a
mortgage other than a mortgage by deposit of the
title deeds, it can be effected only by a registered
instrument.
14. In K. Muthuswami Gounder [K.
Muthuswami Gounder v. N. Palaniappa Gounder,
(1998) 7 SCC 327] this Court was dealing with the
legal validity of a security bond by which parties
undertook that they would not alienate the
properties till the decree was discharged. Referring
the said document, this Court held as follows :
"17. The document, Ext. A-6, security
bond does not in substance offer suit property
by way of security. Even giving the most
liberal construction to the document, we
cannot say that a charge as such has been
created in respect of the suit property for
money to be decreed in the suit. All that it
states is that in the event of a decree being
passed not to alienate the property till the
decree is discharged, which is a mere
undertaking without creating a charge.
Therefore, we agree with the finding of the
High Court that the document at Ext. A-6 is not
a charge. If that is so, the suit filed by the
appellant has got to be dismissed."
The Court held that the decree obtained in that
suit was a simple money decree and not a decree
on a charge or mortgage with the result that the
appellant who purchased the property in execution
of that decree did not acquire the rights under the
security bond.
15. In Bank of India [Bank of
India v. Abhay D. Narottam, (2005) 11 SCC 520]
this Court was examining the scope of undertaking
made for creating an equitable charge over a flat in
favour of the Bank. This Court held that without a
transfer of interest, there is no question of there
being a mortgage and that mere undertaking is not
sufficient to create a charge. The ratio laid down by
the abovementioned judgment applies to the
present case. In our view, the mere undertaking
that the party will not dispose of the properties
mentioned in an undertaking, during the currency
of the loan, will not create any charge over those
properties, unless charge is created by deposit of
title deeds or through a registered document."
21. As far as the present case is concerned, initially on 27th August, 2015,
a Memorandum of Understanding was entered between the plaintiffs
and the defendant and in terms of the said Memorandum, the
plaintiffs have paid Rs. 7,00,00,000/- to the defendant. The defendant
failed to carryout out its obligation by not obtaining pollution/fire
clearance certificate, No Objection Certificate from the State Bank of
India and approval from the State Bank of India for project loan and
accordingly a meeting was held between the parties on 9th May, 2017
wherein the plaintiffs have agreed to keep two cheques amounting to
Rs. 9 crores that is Rs. 5.50 crores for sanction of plan by Howrah
Municipal Corporation and Rs. 3.50 Crore for permission of loan for
customers with No Objection from State Bank of India with Mr. Utpal
Mazumdar for a period of 30 days as security. On obtaining permission
of housing loan and No Objection from the State Bank of India, the sum
of Rs. 3.50 Crores will be paid by Mr. Mazumdar to the defendant and
balance amount of Rs. 5.50 Crores shall be released by Mr. Mazumdar
only upon the successful completion of both the events. It is also
mentioned that the defendant failed to bring permission for housing
loan as well as sanction plan within 30 days, the MOU shall stand
cancelled without any further negotiation and the defendant will return
the amount of Rs. 7,00,00,000/- plus expenses along with interest
within 90 working days from the date of cancellation and till such
payment is made by the defendant to the plaintiff, the plaintiff shall
have lien over the premises and no one will be allowed to construct on
the said premises without first making payment to the plaintiff.
22. In view of the case of Haryana Financial Corporation (Supra), mere
undertaking that no one will be allowed to construct on the said
premises without first making payment to the plaintiff, will not create
any charge over the property. The defendant has not created any
charge by depositing the title deed or any registered documents in
favour of the plaintiffs except the undertaking.
23. As regard to the merit of the suit, the defendant has admitted with
regard to the execution of the Memorandum of Understanding dated
27th August, 2015, receipt of an amount of Rs. 7,00,00,000/- and the
execution of the Minutes of the Meeting dated 9th May, 2017. Initially
the defendant has raised objection that the Memorandum of
Understanding and Minutes of the Meeting were not properly stamped
but in terms of the order passed by this Court, the Memorandum of
Understanding was duly stamped and subsequently the plaintiff of its
own after the order passed by the Hon'ble Division Bench, got the
Minutes of the Meeting properly stamped.
24. The defendant has filed written statement along with counter claim for
Specific Performance of Memorandum of Understanding. The defendant
has not produced any documents to prove that the defendant has
complied with its obligation in terms of the MOU but on the other hand
by signing in the Minutes of the Meeting dated 9th May, 2017 has
admitted that the defendant has not obtained all the required
documents in terms of the Memorandum of Understanding.
25. Considering the above facts and circumstances, this Court finds that
the plaintiff has proved the case and is entitled to get Decree in terms
of prayes (a), (b), (c) and (d) of the plaint.
26. The defendant failed to prove the case in terms of the prayers of the
counter claim as the defendant has not complied with the terms and
conditions of the Memorandum of Understanding and Minutes of the
Meeting. Accordingly, the counter claim filed by the defendant is
dismissed.
27. In view of the above, the application filed by the defendant being G.A.
No. 8 of 2024 is thus dismissed. C.S. No. 186 of 2018 is thus
disposed of. Decree be drawn accordingly.
(Krishna Rao, J)
Later:
Counsel for the defendant prays for stay of the operation of the
order. Counsel for the plaintiffs raised objection. Considered the
submissions made by the Counsel for the respective parties. Prayer is
refused.
(Krishna Rao, J)
