1. The Plaintiffs Shapoorji Pallonji and Company Limited, have filed the above Suit against Defendant Nos. 1 to 4, who are Partners of Crescent Builders (Defendant No. 5), a Partnership Firm, Defendant No. 6 â Municipal Corporation of Greater Mumbai and Defendant No. 7 â Shreyas J. Shah, Sole Proprietor of Builtech Constructions. The subject matter of the Suit is the Plot of the Defendant No. 6 Corporation bearing CS Nos. 1/725 and 725 (Part), Malabar Hill Division, Mumbai, admeasuring 17,651.43 sq.mtrs. (hereinafter referred to as âthe suit propertyâ). By the present Suit, the Plaintiffs have inter alia, sought specific performance of the Agreements dated 8th January, 1997, 29th June, 2007, and 24th August, 2007, as well as a declaration that the termination notice dated 12th January, 2010, issued by Defendant No.1 is illegal, invalid, void ab initio and not binding upon the Plaintiffs and a declaration that the Agreement dated 2nd February, 2012, alleged to have been entered into by and between Defendant Nos. 5 and 7, is illegal, unenforceable and not binding on the Plaintiffs and the same is liable to be set aside.
2. In the said Suit, the following Notices of Motion have been taken out by the Parties viz:
2.1 Notice of Motion No. 443 of 2012 filed by the Plaintiffs, seeking to restrain Defendant Nos. 1 to 5 as well as the Court Receiver from selling/transferring the entitlement of the Plaintiffs in the sale building;
2.2 Notice of Motion No. 492 of 2012 taken out by the Plaintiffs, seeking to restrain Defendant Nos. 1 to 5 from giving effect to the termination notice dated 12th January, 2010, and declare the termination as illegal, void and unenforceable;
2.3 Notice of Motion No. 1604 of 2012 taken out by the Plaintiffs, seeking to restrain Defendant Nos. 1 to 5 from disposing of the passenger lift and tower crane;
2.4 Notice of Motion No. 1605 of 2012 taken out by Defendant Nos. 1 to 5 seeking permission to sell Flat No. 801 in the sale building;
2.5 Notice of Motion No. 2333 of 2012 taken out by the Plaintiffs, seeking to restrain Defendant Nos. 1 to 5 from carrying out further construction and removing any material from the suit premises;
2.6 Along with the above Notices of Motion, Notice of Motion No. 167 of 2012 seeking condonation of delay of 24 days in filing the Review Petition by the Plaintiffs against the order dated 27th January, 2012, passed in Writ Petition (L) No. 2943 of 2011, along with Review Petition (L) No. 32 of 2012, is taken up for hearing.
3. Briefly set out the facts in the matter are as under:
4. Under the provisions of the Maharashtra Regional and Town Planning Act 1966 (âMRTP Actâ), Development Control Regulations (âDCRâ) were formulated by the Municipal Corporation of Greater Mumbai, which were sanctioned by the State of Maharashtra and came into force with effect from 25th March, 1991. DCR 33 (7) inter alia, provided for redevelopment of old cessed buildings in the island city of Mumbai. The suit property was reserved for public housing in the Development Plan. The suit property comprised of 14 buildings which housed 278 residential tenements, 9 shops and other non-residential occupants. The occupants on the suit property had formed the âJanata Nagar Co-operative Housing Society Limited (hereinafter referred to as âthe Societyâ).
5. On 9th July, 1996, a proposal was submitted on behalf of the occupiers of the suit property to the Defendant No.6 Corporation for redevelopment of the same. On the basis of the said proposal, a Letter of Intent (âLOIâ) dated 5th August, 1996, was issued by the Defendant No. 6 Corporation in favour of the architect of the Society.
6. The proposal for redevelopment of the suit property, including rehabilitation of the occupiers, was approved by the Improvements Committee of the Defendant No. 6 Corporation on 11th October, 1996, and the proposal was approved by the Defendant No. 6 Corporation on 15th October, 1996.
7. A Memorandum of Understanding (âMoUâ) dated 17th October, 1996, was entered into between the Society and its Occupants (described as âthe Promotersâ) and Defendant No.5 (described as âthe Developerâ). By the said MoU, the Society/Occupants authorized Defendant No. 5 to carry out the work of development in terms of the LOI dated 5th August, 1996. Thereafter, Defendant No.5 approached the Plaintiffs for carrying out the work of redevelopment on the suit property with respect to the terms of both, the LOI dated 5th August, 1996, and the MoU executed by them with the Society. Accordingly, MoU dated 8th January, 1997, was executed between the Plaintiffs and Defendant No.5. The said MoU broadly provided as follows:
(i) That on the suit property admeasuring 1,90,000 sq.ft., redevelopment was to be carried out;
(ii) That the Developer i.e. Defendant No.5 proposed to enter into a Tripartite Agreement between itself, the Municipal Corporation and the Society;
(iii) That the Plaintiffs would carry out development of the said plot under the terms and conditions set out in the said MoU as well as in the Tripartite Agreement which was to be entered into;
(iv) That Defendant No. 5 would obtain all the requisite permissions, approvals and orders;
(v) That the Plaintiffs would, at their own cost and expense, carry out the construction as set out in clause 2 of the MoU, which would include construction for the existing tenements, as well as the separate building, to utilize the balance area of approximately 69,360 sq.ft.;
(vi) That Defendant No. 5 would make full payment to the Municipal Corporation for the capitalized value;
(vii) That Defendant No. 5 would be liable to negotiate with the tenants;
(viii) That the Plaintiffs would provide alternate transit accommodation to the tenants;
(ix) That the Plaintiffs would incur all expenses for Architects/Consultants;
(x) That the Plaintiffs would be entitled to sell 55 per cent of the built up area from the sale building, which the Plaintiffs were entitled to sell/lease/deal with in any manner;
(xi) That the built up area for free sale was computed at 69,360 sq.ft.
(xii) That the Plaintiffs would bear the stamp duty, registration charges, cost of formation of Society and other incidental expenses only for such portion of the built up area in the free sale building as allotted to the Plaintiffs.
8. On 16th July, 1998, a Tripartite Agreement was executed between the MCGM, the Society and Defendant No.5 under which the programme for construction and development of the suit property was broadly agreed as under:
(i) 8830 sq.mtrs. (95,046 sq.ft.) of the suit property would be developed as per the approval granted by the Improvements Committee and the MCGM on 11th October, 1996, and 15th October, 1996, respectively;
(ii) The area of 87,180 sq.ft. would be constructed to accommodate the existing tenants;
(iii) Defendant No.5 would be permitted to sell 35,392 sq.ft. in the open market;
(iv) Defendant No. 5 shall hand over 33,860 sq.ft. built up area to the MCGM, free of cost or pay its capitalized value computed at Rs. 18,62,30,000/-, on the payment of which the Developer would be entitled to retain the surplus area as well. The payment schedule for payment of the capitalized value was fixed as follows:-
(a) Rs. 86,23,000/- on or before execution of the Agreement;
(b) Rs. 1,00,00,000/- on or before 1998;
(c) Balance of 90 per cent amounting to Rs. 16,76,07,000/- on or before grant of the Occupation Certificate for the free sale building.
(v) Since there would be two buildings at the site, one for rehabilitating the existing tenants and the other of saleable component, the plot would be notionally subdivided, and the Society would be permitted to sub-lease the area required for the saleable building, to get it registered under the Co-operative Society's Act, 1912, on the same terms and conditions. Thus, the two Societies would be independent from a functional point of view.
9. On 25th January, 1999, the State Government sanctioned modification to DCR 33 (7) whereby the Floor Space Index (FSI) for redevelopment projects under DCR 33 (7) was increased from 2 to 2.5 on the gross plot area or FSI required for rehabilitation of existing tenants + incentive FSI as specified in Appendix-I, whichever is higher.
10. On 26th June, 2006, a letter was addressed by the Defendant No. 6 Corporation to the Architect of Defendant No. 5, granting the NOC to issue the Commencement Certificate for the sale building.
11. On 3rd November, 2006, the Architect on behalf of Defendant No. 5 addressed a letter to the Defendant No. 6 Corporation seeking issuance of IOD for the sale building as well as grant of enhanced FSI at 2.5. The letter recorded that for rehabilitation of the existing occupiers of Janata Nagar, 4 Wings i.e. A, B, C and D consisting of ground + 13 floors had been completed and Occupation Certificate had been obtained. The proposal for grant of additional FSI was therefore submitted.
12. On 29th June, 2007, a Supplemental Agreement was entered into between Defendant No.5 and the Plaintiffs, the terms of which broadly provided as follows:
(i) That under the Agreement dated 8th January, 1997, the Plaintiffs and Defendant No. 5 had agreed to develop the suit property;
(ii) That under the terms of the said Agreement, the Plaintiffs had paid Defendant No.5 certain amounts from time to time;
(iii) That in consideration of the obligations undertaken by the Plaintiffs, the Plaintiffs were to get 55 per cent of the built up area for free sale with a right to sell/lease/deal with in any manner, and that the Defendant Nos. 1 to 5 were correspondingly entitled to retain 45 per cent of the built up area;
(iv) That by reason of and on account of diverse events and circumstances, the construction was delayed and the Defendants and the Confirming Party, being the sister concern of Defendant No. 1, had requested the Plaintiffs to adjust payments under the two Agreements against variation in area sharing ratio and a further additional area of 8287 sq.ft. of saleable area, as consideration for the same;
(v) That in partial variation of the Agreement dated 8th January, 1997, the share of the Plaintiffs in the saleable area was increased to 57 per cent for free sale along with an additional area of 8287 sq.ft. out of the 43 per cent share of the Defendants;
(vi) That the Defendants agreed to make full payment to the Defendant No. 6 Corporation for the capitalized value of the area in terms of the Agreement dated 8th July, 1997. For that purpose, it was agreed to open an Escrow Account, operable jointly by Defendant No.5 and the Plaintiffs;
(vii) That the Defendants agreed that from the sale proceeds of the area from the share of Defendant No.5, a sum of Rs. 5500/- per sq.ft. of the saleable area would be first deposited and credited to the Escrow Account. The amount in the Escrow Account was to be used exclusively for the payment of capitalized value to the Municipal Corporation;
(viii) That if any surplus amount remained in the Escrow Account, Defendant Nos. 1 to 5 were entitled to the same;
(ix) That save as provided in the said MoU, the Agreement dated 8th January, 1997, stood confirmed.
13. On 24th August, 2007, a further Supplemental Agreement was entered into between Defendant Nos. 1 to 5 and the Plaintiffs. This Agreement provided as follows:
(i) Under clause (1) of the MoU, the parties agreed to purchase additional FSI of approximately 40,000 sq.ft. as may be permitted by the Defendant No. 6 Corporation. Defendant Nos. 1 to 5 would be liable to negotiate with the Municipal Corporation and other statutory authorities for the said purpose;
(ii) Recital (b) reiterated that the total built up area available for free sale, inclusive of area to be purchased from MCGM, was 69,360 sq.ft. The Plaintiffs were entitled to 57 per cent and Defendant No. 5 was entitled to 43 per cent (less the saleable area of 8387 sq.ft.);
(iii) Under Clause 3 of the MoU, Defendant No.5 agreed to pay to the Plaintiffs Rs. 2500/- per sq.ft. of built up area including amenities, towards the share of Defendant No.5 in respect of the costs and expenses incurred by the Plaintiffs for construction on the additional area.
14. On 17th April, 2008, the Defendant No. 6 Corporation issued a show cause notice to Defendant No.5 and directed it to pay 90 per cent of the capitalized value payable by it to the Defendant No. 6 Corporation. As Defendant No. 5 failed to pay the capitalized value of Rs. 16,76,07,000/-, the Defendant No.6 Corporation issued a stop work notice. The stop work notice was challenged by Defendant No.5 in Writ Petition Nos. 1157 and 1558 of 2008. As can be seen from the order passed by this court on 25th August, 2008, the Defendant No. 6 Corporation withdrew the stop work notice issued under Section 354A of the Mumbai Municipal Corporation Act, 1888, and the Writ Petitions were accordingly disposed of.
15. On 19th December, 2008, Defendant No. 5 filed Writ Petition No. 72 of 2009 in this Court for directions to the Defendant No.6 Corporation to grant additional FSI.
16. According to the Plaintiffs, by April 2009, the Plaintiffs, at their own cost, completed the construction of the rehab building with four wings comprising of ground floor + 13 upper floors, for 288 tenants and handed over the same to the Society for occupation. The Plaintiffs, at their own cost, also completed construction of the school building. The Plaintiffs completed structural construction upto 20 levels, comprising of 2 basements plus 4 podiums plus one service floor plus 15 residential floors. According to the Plaintiffs, at this point of time, they had incurred costs of approximately Rs. 41,23,60,000/- on construction of these buildings and therefore became entitled to the sale component admeasuring 35,392 sq.ft. + 33,860 sq.ft. for which the capitalized value of Rs. 18,62,30,000/- was to be paid as provided in the Agreement dated 16th July, 1998. However, Defendant No.1 failed in its obligation to pay the capitalized value to the Defendant No. 6 Corporation. Therefore, on 21st April, 2009, the Plaintiffs filed the present Suit seeking specific performance of the Agreement dated 8th January, 1997, and the Supplemental Agreements dated 29th June, 2007, and 24th August, 2007. It will not be out of place to mention here that since the Plaintiffs were not a party to the Writ Petitions filed by Defendant No.5 before this Court, challenging the stop work notice issued by the Defendant No. 6 Corporation under Section 354-A of the Mumbai Municipal Corporation Act and the orders passed therein, the Plaintiffs were not aware, on the date of filing of the Suit, that the stop work notices had been withdrawn and the Writ Petitions disposed of by an order dated 25th August, 2008. The Plaintiffs came to know about the withdrawal of the show cause notices only when this fact was mentioned in the affidavit-in-reply dated 18th June, 2009, filed by Defendant No. 5 in Notice of Motion No. 2173 of 2009.
17. On 4th/7th May, 2009, Plaintiffs filed Notice of Motion No. 2173 of 2009 for the reliefs summarised hereunder:
(i) Defendant No.5 be restrained from selling, alienating or creating third party rights in respect of its share of the unsold tenements from the sale building;
(ii) Defendant No.5 be restrained from alienating or creating third party rights in respect of its share of tenements in the sale building on the basis of additional FSI to be loaded on the sale building;
(iii) Defendant No.5 be directed to deposit Rs. 16,76,07,000/- towards the balance capitalised value and Rs. 34,54,10,924/- towards the cost for purchase and construction of additional FSI loaded on the sale building.
18. On 4th May, 2009, the Division Bench of this Court passed an order in Writ Petition No. 72 of 2009 directing the Defendant No. 6 Corporation to decide the application of Defendant No.5 for grant of additional FSI of 0.5. On 8th June 2009, the Deputy Municipal Commissioner, pursuant to the order passed by the Hon'ble Division Bench dated 4th May, 2009, passed an order holding that construction of the sale building was not completed within two years. That the Commencement Certificate for the sale component was issued on 24th January, 2006, and therefore the period of two years was computed from 24th January, 2006, and that 18 per cent interest on the unpaid capitalised value of Rs. 16,76,07,000/- would become payable from 25th January, 2008, onwards and directing the Petitioners/Developers to pay the remaining 90 per cent of the capitalised value amounting to Rs. 16,76,07,000/- along with 18 per cent interest thereon with effect from 25th January, 2008, to the AC (Estates). By a Judgment and Order dated 13th August, 2009, passed by the Division Bench of this Court in Writ Petition No. 72 of 2009, this Court inter alia held, that Defendant No.5 was liable to make payment of capitalized value with interest @ 15 per cent per annum from 24th April, 2008, until payment. Defendant No. 5 preferred a SLP therefrom, which was dismissed by the Hon'ble Supreme Court on 9th October, 2009.
19. In the meantime, an ad-interim order dated 7th May, 2009, was passed by this Court in Notice of Motion No. 2173 of 2009, recording the statement of Defendant No.5 that the flats mentioned in prayer clause (b) of the Notice of Motion had already been sold in January 2009. By the said order, a notice came to be issued in respect of prayer clause (c) of the Notice of Motion.
20. On 4th September, 2009, the Plaintiffs filed a Criminal Complaint being CC No. 2900089 of 2009 in the Court of the Metropolitan Magistrate, 29th Court, Dadar, Mumbai, for the offences under Sections 467, 468, 471, 420 and 34 of the Indian Penal Code, against all the Partners of Defendant No.5. In the said Complaint, an order under Section 156 (3) of the Criminal Procedure Code 1973 was passed directing police investigation and submission of a report. The grievance of Defendant No.5 was that the Complaint was also filed against an 80 year old widow who was put to grave inconvenience in view of the said Complaint. Defendant Nos. 1 to 5 filed Criminal Writ Petition No. 2883 of 2009 before this Court in which an order dated 11th November, 2009, issuing Rule was passed. By the said order, it was also directed that no coercive steps be taken against the Defendants.
21. Defendant No.5, by its letters addressed to the Plaintiffs dated 21st October, 2009, 16th November, 2009, and 27th November, 2009, requested the Plaintiffs to start finishing off interior and exterior works of the building constructed upto 19 Floors. The Plaintiffs did not respond to these letters. In view thereof, the Advocates for Defendant No.5 issued a notice to the Plaintiffs inter alia, recording that the Plaintiffs had stopped construction without any justification and that they must start construction within a month. It was pointed out that due to breaches on the part of the Plaintiffs, Defendant No.5 became liable to pay 90 per cent of the capitalized value i.e. Rs. 16.76 crores to the Corporation, even though the building was not ready and the CC was not received. Defendant No.5 also became liable to pay interest at the rate of 15 per cent per annum and was not able to have the application for additional FSI approved and was not able to hand over possession to the purchasers. According to Defendant No.5, since the Plaintiffs did not respond to its Advocates notice and did not commence the construction, Defendant No. 5 terminated the Agreement with the Plaintiffs on 12th January, 2010, by invoking clause 24 of the MoU dated 8th January, 1997.
22. On 19th January, 2010, Defendant No.5 issued a public notice contending that the said Agreement dated 8th January, 1997, and the Supplementary Agreements dated 29th June, 2007, and 24th August, 2007, had been terminated. On 29th January, 2010, the Advocates for the Plaintiffs replied to the letters dated 5th December, 2009, and 12th January, 2010, received from the Advocates for Defendant No.5, setting out that there was default on the part of Defendant No.5 including, but not restricted to, non-payment of capitalized value to the Defendant No.6 Corporation. The Advocates for the Defendant No.5, by their letter dated 1st February, 2010, addressed to the Plaintiffs Advocates, recorded that there was no justification for stopping the construction work.
23. On 11th February, 2010, a public notice was issued by the Plaintiffs stating that there was no equitable distribution of shares between the parties and that Defendant Nos. 1 to 5 could not sell any portion of the free sale building constructed on the suit property. On 29th March, 2010, the Plaintiffs filed Notice of Motion No. 945 of 2010 seeking particulars of the transactions of sale and a list containing the names and particulars of persons with whom the Defendants had entered into any transaction of sale. On 3rd April, 2010, the Plaintiffs filed Chamber Summons No. 534 of 2010 to bring on record the subsequent events and challenged the purported termination by Defendant No. 5 on 12th January, 2010.
24. On 20th October, 2010, Chamber Summons No. 534 of 2010 taken out by the Plaintiffs seeking amendment, was granted. By an order dated 13th December, 2010, Notice of Motion No. 173 of 2009 was disposed of with a direction to the Defendant No.5 to provide information to the Plaintiffs regarding third party rights, if created in the property, which is the subject matter of the Suit. On 13th December, 2010, Notice of Motion No. 945 of 2010 was also allowed in terms of prayer clause (b). As the Defendants failed to comply with the orders dated 13th December, 2010, passed in Notice of Motion No. 173 of 2009 and Notice of Motion No. 945 of 2010 by not furnishing particulars to the Plaintiffs with regard to third party rights created in the property, the Plaintiffs filed a Contempt Petition on 8th April, 2011, being No. 625 of 2011 which came up for admission on 26th August, 2011, where the Advocates for Defendant No.1 submitted that there was no time frame set out for compliance of the said order dated 13th December, 2010. Defendant No.5 filed an affidavit agreeing to comply with the order dated 13th December, 2010, within a period of three weeks. The Contempt Petition was accordingly disposed of. The Advocates for Defendant No.5, vide their letter dated 9th/10th September, 2011, forwarded the details of the flats to the Advocates for the Plaintiffs.
25. On 7th December, 2011, Defendant No.6 issued a notice directing Defendant No.5 to stop work and called upon Defendant No. 5 to pay the balance 90 per cent of the capitalised value of Rs. 16,76,07,000/- and penalty of Rs. 1,00,000/- per day. Defendant No.5 therefore filed Writ Petition (L) No. 943 of 2011 before this Court against the Defendant No.6 Corporation, challenging the said stop work notice and the call to make the said payments set out therein. The said Writ Petition was disposed of in terms of the minutes of the order dated 27th January, 2012, tendered by the parties. By the said minutes of order, the Court Receiver came to be appointed in respect of the sale building â Crescent Towers. The Court Receiver was empowered to sell the flats in the said building after a period of six months in the event of a default made by Defendant No.1. The Plaintiffs were not impleaded as parties in the said Writ Petition. According to the Plaintiffs, in their absence, Defendant No.5 tendered minutes and authorised the Court Receiver to also sell the share of the Plaintiffs, which is undisputedly 57 per cent and an additional area of 8287 sq.ft. of saleable area from Defendant No.5's share of 43 per cent.
26. On 2nd February, 2012, Defendant No.5 executed a building contract with Defendant No.7 Builtech Constructions, a new Contractor, for completing the exterior and interior work of the building. On 10th February, 2012, the Plaintiffs filed Notice of Motion No. 423 of 2012 for an injunction against the Defendants and the Court Receiver not to deal with the alleged 57 per cent share of the Plaintiffs. In response thereto, on 16th February 2012, Defendant Nos. 1 to 5 filed their affidavit in reply pointing out the appointment of Defendant No. 7 for completing the work on the said building. On 17th February, 2012, the Plaintiffs filed Chamber Summons (L) No. 340 of 2012 for impleading Shreyas J. Shah, Proprietor of Builtech Constructions Ltd., as a party Defendant, which was allowed. On 21st February, 2012, the Plaintiffs also took out Notice of Motion No. 492 of 2012 for stay on termination of the Agreements. On 14th March, 2012, this Court passed an order in Notice of Motion No. 443 of 2012 directing Defendant Nos. 1 to 5 to obtain permission from this Court before sale of any flats by them.
27. On 14th March, 2012, Chamber Summons Nos. 625 of 2011 and 331 of 2012, filed by the Plaintiffs, were allowed. On 28th March, 2012, the Plaintiffs filed Review Petition (L) No. 32 of 2012 seeking review of the order accepting the Minutes of Order and disposing of Writ Petition (L) No. 2943 of 2012 in terms of the Minutes of Order.
28. In May 2012, Defendant Nos. 1 to 5 took out Notice of Motion No. 1605 of 2012 for permission to sell one flat, which was pending and is now taken up for final hearing. In May 2012, Defendant Nos. 1 to 5 have also filed a suit against the Plaintiffs for damages to the tune of Rs. 114 crores.
29. On 6th July, 2012, the Plaintiffs took out Notice of Motion No. 1604 of 2012 for restraining the Defendants from removing the tower crane, passenger lift and other material from the suit site. On 30th August, 2012, the Defendants undertook not to dispose off the tower crane and passenger lift till the disposal of the Notice of Motion. The said Notice of Motion is now taken up for hearing and final disposal.
30. On 11th October, 2012, the Plaintiffs filed Notice of Motion No. 2333 of 2012 to restrain the Defendants from removing the alleged material from the suit site. On 12th October, 2012, this Court passed an order directing that the material should not be removed from the site without the permission of the Court.
31. In November 2012, Defendant Nos. 1 to 5 filed an Appeal (L) No. 833 of 2012 against the order passed by this Court on 14th March, 2012, directing Defendant Nos. 1 to 5 to not sell the flats without the permission of the Court. In November 2012, Defendant No. 7 i.e. the new contractor also filed an Appeal (L) No. 803 of 2012 against the order passed by this Court dated 12th October, 2012, directing that the Plaintiffs material should not be removed from the site without the permission of the Court. On 29th November, 2012, the Appeal Court passed an order directing that the material of the Plaintiffs be kept on site. On 29th November, 2012, the Appeal Court passed an order that the Notice of Motion No. 443 of 2012 and connected Motions be disposed of, preferably by 25th December, 2012, which was thereafter extended upto 18th January, 2013. Since the Review Petition was required to be heard by this Court and all the other Notices of Motion pertained to the assignment of another Court, the parties have, after obtaining the permission of the Hon'ble Chief Justice, got the above Notices of Motion assigned to this Court for hearing along with the Review Petition. Accordingly, the final hearing of the Review Petition as well as the other Notices of Motion commenced before this Court and they were reserved for orders on 31st January, 2013.
32. Mr. Janak Dwarkadas, the Learned Senior Advocate appearing for the Plaintiffs has, after taking me through the detailed chronology of dates and events set out hereinabove, submitted that the Plaintiffs have complied with all their obligations under the MoU dated 8th January, 1997, and the Agreements dated 29th June, 2007, and 24th August, 2007, which is apparent from the following:
(i) The Plaintiffs had constructed the entire rehab building comprising of four buildings with ground + 13 floors, rehabilitated 288 tenements and handed over the said rehab building to the Defendant No.6 Corporation on 26th March, 2003. The Plaintiffs had completed construction of the Welfare Centre as well as the School building.
(ii) The free sale building (exclusively meant for the Plaintiffs and Defendant No.5) had been constructed upto 20 levels with two basement levels by fully utilizing the 2 FSI available on the subject property. All along, the Plaintiffs had been waiting for receipt of appropriate permissions/clearances to be obtained by Defendant No.5, to go upto 37 floors for utilising and loading additional 0.5 FSI on the said building. Since inception, the Plaintiffs had carried out the entire construction including the foundation, plinth, columns, beams, etc. of the aforesaid saleable building in such a manner that the said building/tower would take the full and complete load of 37 floors.
(iii) It was admitted that there was no delay on the part of the Plaintiffs in carrying out construction and the same is apparent from: (a) Recital (f) of the Supplementary Agreement dated 29th June, 2007 (Page 53 of the Plaintiffs compilation), wherein it is expressly stated that construction was delayed due to reasons beyond the control of both the parties;
(b) the fact that Defendant No.5 had filed Writ Petition Nos. 1557 of 2008 and 1558 of 2008 setting out various reasons due to which the construction was delayed. However, Defendant No.5 has not attributed the delay to the Plaintiffs in any manner whatsoever;
(c) the fact that even after filing of the present suit on 21st April, 2009, Defendant No.5, for the first time vide its letter dated 21st October, 2009, called upon the Plaintiffs to complete the construction.
33. Mr. Dwarkadas has taken me through the reply letter dated 29th January, 2010 by the Plaintiffs Advocates (Page 82 of the Plaintiffs Compilation), wherein the performance of the Plaintiffs obligations and the alleged breaches committed by the Defendant No.5 have been summarised. Mr. Dwarkadas submitted that the Plaintiffs have an interest in respect of their share in the free sale building which gave them the âadded rightsâ to sell flats and create an interest in the land beneath the free sale building. Relying on clauses 9 and 10 of the MoU dated 8th January, 1997, Mr. Dwarkadas submitted that the same categorically set out the shares of the Plaintiffs and the Defendant No.5 in the free sale area and expressly empowered the Plaintiffs to deal with or dispose of or retain or sell their portion of the built up area allotted, in such manner, at such price and at any time they may determine. Relying on Clauses 18 and 39 of the Tripartite Agreement dated 16th July, 1998, Mr. Dwarkadas submitted that the Tripartite Agreement makes it abundantly clear that it was open for Defendant No.5 to enter into an arrangement for the purpose of complying with its obligations under the said said Agreement and the Defendant No.5 was also entitled to enter into an arrangement in respect of its shares from the free sale area. Mr. Dwarkadas submitted that it was in consonance with the said Tripartite Agreement that the Plaintiffs and Defendant No.5 entered into an arrangement whereby the Plaintiffs would incur the entire cost of construction of rehabilitation component, welfare centre, school building and the free sale building. The compensation to the Plaintiffs was by way of shares in the free sale area as recorded in the MoU dated 8th January, 1997, and the Supplementary Agreements dated 29th June, 2007, and 24th August, 2007. The Plaintiffs were entitled to sell the flats in the free sale building in their own name and on a principal to principal basis with the flat purchasers. It clearly shows that the Plaintiffs were not mere contractors, as is sought to be contended by Defendant No.5, but rather, had an interest in the aforesaid construction. Mr. Dwarkadas therefore submitted that the ratio of the Division Bench judgment in the case of ChhedaHousing Development Corporation vs. Bibi Jaan S.Farid (2007 (2) BCR 587)would clearly apply.
34. Mr. Dwarkadas further submitted that the provisions of the Maharashtra Ownership Flats Act (âMOFAâ) were mandatory and would apply in respect of the present construction. Under Section 2 (f) of the MOFA, the Plaintiffs, Defendant No.5 and the Defendant No. 6 Corporation would be the Promoters. He submitted that this Court has, in Association of Commerce House vs. Vishaldas Shamaldas (1983) BLR 356), categorically held that the provisions of the MOFA have to be mandatorily applied to all constructions. Hence, the Plaintiffs would have an obligation as a Promoter under the MOFA and a consequent entitlement in the construction. Section 3 of the MOFA sets out the liability/obligation of the promoter and the Plaintiffs would be liable to perform the obligations of the promoter under the statute, failing which several consequences, including penal consequences as set out in Sections 13 and 14 of the MOFA, would follow.
35. Mr. Dwarkadas submitted that the Plaintiffs are entitled to specific performance of the MoU dated 8th January, 1997 and the Supplementary Agreements dated 29th June, 2007 and 24th August, 2007. Section 14 (3) (c) of the Specific Relief Act empowers the Court to grant specific performance of agreements in the nature of the suit agreements. Moreover, clause 25 of the MoU dated 8th January, 1997, categorically provides for the agreements to be specifically enforceable at the instance of the Plaintiffs.
36. Mr. Dwarkadas submitted that the Defendants have obtained an order in terms of the Minutes of Order on 27th January, 2012, from this Court in Writ Petition No. 2943 of 2011 behind the back of the Plaintiffs without joining them as parties to the said Writ Petition or giving them any notice qua the said Writ Petition or the orders obtained therein. He submitted that in view thereof, the Plaintiffs are aggrieved parties as Defendant No.5 has sold not just the flats coming to its share under 2 FSI but also future construction in respect of additional 0.5 FSI of which no CC has been granted. The order in the Writ Petition empowers the Defendant No. 6 Corporation, through the Court Receiver, to sell the flats to enable the Defendant No. 6 Corporation to recover its dues in respect of balance capitalised value. The said order therefore, if executed, will affect the Plaintiffs. Hence, it cannot be said that the Plaintiffs are not âpersons aggrievedâ. Order 47 of the Code of Civil Procedure, 1908, clearly permits a âperson aggrievedâ to file a review petition. The aforesaid submission regarding maintainability of a review petition at the instance of the Plaintiffs is fortified in the judgments of ShapoorjiData Process Ltd. vs. Ameer Trading Corporation Ltd. (AIR 2003 Bom. 228)and M/s. Numaligarh Refinery ltd. vs.Assam Board of Revenue (AIR 2003 Guwahati 119).
37. Mr. Dwarkadas has submitted that in the event of this Court coming to the conclusion that the Plaintiffs have a strong prima facie case, but there being any impediment in the grant of relief on account of the dues of the Defendant No. 6 Corporation for the balance capitalised value, despite it being the sole obligation of Defendant No. 5 to pay the capitalised value, the Plaintiffs are without prejudice to their rights and contentions, willing to pay the balance capital value in accordance with the statements handed over by the Defendant No.6 Corporation to this Court. Mr. Dwarkadas submitted that, in the circumstances, not only do the Plaintiffs have a strong prima facie case but also, the balance of convenience requires that the Plaintiffs be allowed to complete the construction and that the Defendant Nos. 1 to 5 be restrained from, in any manner, creating any third party rights in respect of the flats coming to the share of the Plaintiffs.
38. Mr. Rohit Kapadia, the Learned Senior Advocate appearing for Defendant Nos. 1 to 4, submitted that the MoU dated 8th January, 1997, is a contract for construction and not an agreement with added rights in which the Plaintiffs have substantial interest, as contended by the Plaintiffs. It is submitted that in the said MoU, the Plaintiffs are described as âcontractorâ. Though the description is not decisive, it is a pointer as to how two hardened businessmen described the role of the Plaintiffs. Mr. Rohit Kapadia pointed out that the recital in the Agreement shows that the 5th Defendant is a Developer but that the âcontractor has agreed to carry out such developmentsâ. He submitted that the recital in the Agreement also shows that the land belongs to the Defendant No.6-Corporation and the Contractor has agreed to carry out the construction on the said property as per the MoU with the Society and as per the draft Tripartite Agreement. The recitals also record that the construction work will be as per the approved plans and in accordance with the by-laws and regulations of the Corporation. The Agreement shows that the Developer was to bring all permissions required and the Contractor was to construct the buildings in accordance with the specifications and the approved plans as also with the by-laws and regulations of the Defendant No.6 Corporation. The consideration payable to the Contractor for the work is provided in clauses 7 and 9 of the Agreement. Both the clauses provide that the Contractor is entitled to consideration for the work done and monies expended by him. This is merely a payment in kind for the work done and monies expended by the Contractor. It is submitted that clauses 7 and 9 suggest that the 55 per cent of built up area and facilities available for free sale etc. shall be âgiven by the Defendant No.5â.
39. In support of his contention that the said MoU is a contract for construction, Mr. Rohit Kapadia submitted that there was no question of agreeing to transfer property, because there is none. Shortly stated, all that was required of the Plaintiffs was to carry out construction for profit by selling the flats in the buildings so constructed. Mr. Rohit Kapadia submitted that the decision of the Hon'ble Division Bench in ChhedaHousing Development Corporation (supra) relied upon by the Plaintiffs is not applicable to the present case. Referring to the observations in para 16 âSpecific performance can be granted of the land or interest in the land belonging to a person who has agreed to sell the land with interest therein. If person is not the owner or has no interest in the land agreed to be sold or transferred there is no question of granting specific performance.â It is submitted that in the present case, Defendant No. 5 is not the owner and has no interest in the land agreed to be leased out. Further, according to the Plaintiffs, they have not sold or agreed to sell a single flat. Therefore the principle laid down in the said judgment is not applicable to the present case.
40. Mr. Rohit Kapadia next contended that the termination of Agreement dated 8th January, 1997, and the other Agreements with the Plaintiffs by the Defendant No.5, is legal and valid. In support of this contention, he submitted that clause 23 of the Agreement dated 8th January, 1997, provides for and empowers Defendant No. 5 to complete the balance work through any other contractor if the Plaintiffs fail to construct. Clause 24 of the said MoU provides that in the event of termination, the Plaintiffs/Contractor shall vacate the site and the balance work will be carried out through any other Contractor. The Plaintiffs would be disentitled to 55% of the saleable area mentioned, but would be entitled to reimbursement of the costs and expenses incurred by them in connection with the project. The construction was to be done within a period of 18 months, expandable for a reasonable period of time only if the construction is delayed on account of the reasons mentioned in clause 15. No such grant of extension is pleaded nor is it relevant. The 18 month period was subject to three things viz: (i) receipt of Commencement Certificate; (ii) approval of plans; and (iii) vacation of possession of the site. All three were fulfilled by 24th January, 2006. Again, Clause 22 of the MoU makes it clear that time is of the essence in the contract. Defendant No.5, by its letters dated 21st October, 2009, 16th November, 2009, and 27th November, 2009, and its Advocates letter dated 5th December, 2009, requested/called upon the Plaintiffs to complete the exterior and interior work of 19 floors of the said building. However, the Plaintiffs failed to respond to the said request. In the aforesaid circumstances, by a letter dated 12th January, 2010, the Defendant No.5 validly terminated the contract.
41. Mr. Kapadia next submitted that it is only after the Agreement was terminated by Defendant No.5, did the Plaintiffs, by their reply dated 29th January, 2010, object to the termination and also replied to the letter written by the Advocates for Defendant No.5, dated 5th December, 2009. Mr. Kapadia submitted that the project was to be completed within a period of two years from 24th January, 2006, and Defendant No. 5 was required to pay the capitalized value of 90 per cent. Further, the Plaintiffs had agreed to complete construction within 18 months from CC. Defendant No. 5 was therefore justified in calling upon the Plaintiffs to start and complete the building and on failure of the Plaintiffs to do so, was justified in terminating the contract by invoking clause 24. It is submitted that there is no explanation or justification given by the Plaintiffs for stoppage of construction work. The only explanation given by the Plaintiffs, was that they were waiting for additional FSI of 0.5, which cannot be accepted since there is no obligation on the part of Defendant No.5 to obtain 0.5 FSI from BMC. It is submitted that the entire agreement of August 2007 is on the assumption of the grant of 0.5 additional FSI. It does not entitle the Plaintiffs to sit and do nothing until the grant of such additional FSI. It is submitted that the position in which the 5th Defendant found itself was actuated only by the total inaction on the part of the Plaintiffs. Had the construction been completed upto 19 floors, then the flats could have been sold and upon receipt of Occupation Certificate of the last wing, Defendant No.5 would have been in a position to make payment of 90% of the capitalized value to MCGM, as agreed. It is therefore submitted on behalf of Defendant Nos. 1 to 4 that the issue raised by the Plaintiffs qua the legality and validity of the termination of the Agreement dated 8th January, 1997, holds no ground and the submissions in this regard by the Plaintiffs be rejected.
42. Mr. Kapadia next contended that the specific performance of the contract in question cannot be granted to the Plaintiffs. He submitted that the MoU being a contract for construction, the same is amenable to damages and specific performance is not available. Even on the assumption that the Contract creates an interest in land and would therefore be subject to the Chheda principles, it is submitted that Section 10 of the Specific Relief Act provides that âif the contrary is proved in a contract for transfer of immovable property is liable to be relegated a claim to damages.â It is submitted that in this case, the Plaintiffs are only Contractors. The entire money spent by the Plaintiffs is to be recovered from the flats coming to their share. This is not a case of purchase of immovable property. There is no transfer of immovable property involved here. In fact, the Plaintiffs being builders, their only interest is to acquire their share, viz. money expended by them for construction plus a profit, which they cannot derive on account of not being able to effect sale. It is submitted that there would be only a difference between the market price realized from sale and the cost. Both these amounts are ascertainable. Damages would therefore, offer complete relief to the Plaintiffs.
43. Mr. Kapadia next submitted that a contract, which is in its nature determinable or terminable, cannot be specifically enforced in view of the provisions of Section 14 (1) ( c) of the Specific Relief Act. In the instant case, as per clause 24 of the contract, the same can be determined or terminated by Defendant No.5 and in such a situation, the Plaintiffs are entitled only to reimbursement of construction cost. According to Section 41 (e) of the Specific Relief Act, an injunction cannot be granted to restrain a party from committing a breach of contract that cannot be specifically enforced. Mr. Kapadia submitted that clause 13 of the MoU provided that the Agreement was personal to the Contractor. The grant of a decree of specific performance would require the Court to grant a decree for construction. Such a decree would require supervision by the Court and would require going into the manifold details in order to ascertain whether the specification in Annexure-3 to the MoU was adhered to or not. The Court would never be in a position to supervise and enforce the obedience of its orders. This is not permissible and as such, specific performance cannot be granted. Mr. Kapadia also submitted that though the Plaintiffs have stated that they are ready and willing to perform obligations on their part, the Plaintiffs have nowhere pleaded or shown their readiness and willingness to complete the construction of the building. The Plaintiffs are therefore not entitled to the relief of specific performance.
44. Mr. Kapadia has further submitted that the suit for specific performance of a Development Agreement is not maintainable at the instance of the Developer and is hit by the provisions of Section 14 (3) (c) of the Specific Relief Act. However, a suit for specific performance of such an agreement at the instance of the owner of the building would be maintainable if the conditions mentioned in the said Section are complied with. In support of this contention, Mr. Kapadia has relied on the decision in VipinBhimani vs. Smt. Sundara Das (AIR 2006 Cal. 209)and the judgment of the learned Single Judge of this Court in M/s. Shah and Jhaveri Developers vs. M/s. Classic Developers Pvt. Ltd. and another (at item 8 of the Compilation).
45. Mr. Kapadia has next submitted that there is delay on part of the Plaintiffs which disentitles the Plaintiffs to any relief. In support of this contention, it is submitted that Defendant No.5 terminated the Agreement with the Plaintiffs on 12th January, 2010; the Plaintiffs filed Chamber summons No. 534 of 2010 to challenge the termination. The said Chamber Summons was allowed on 20th October, 2010. Even after amending the Plaint, the Plaintiffs did not take out any application or Notice of Motion for stay on termination and took out Notice of Motion No. 443 of 2012 only on 14th February, 2012 i.e. after a period of about 16 months, that too for the relief of protecting their alleged share of 57%. It is submitted that till February 2012, no stay on termination was sought. Further, in para 5 of the Affidavit in support of the Notice of Motion No. 492 of 2012 (Page 267 of List of dates of
Defendants) it is stated that Defendant No. 5 is raising a technical objection that no interim reliefs have been sought in respect of the termination and therefore the relief of stay on termination was sought. It is submitted that since the Plaintiffs did not apply for stay on termination and were not granted any stay at any point of time, now after a period of three years the Plaintiffs are not entitled to any relief whether it be stay on termination or otherwise. It is submitted that the Plaintiffs, in para 6 of the Affidavit in support of the Notice of Motion No. 945 of 2012 (Pages 198-207 of the List of dates of Defendants), had stated that the possibility of the Defendants coming out with a case of creation of more third party rights at a later point of time during the trial of the present suit/proceedings cannot be ruled out, yet the Plaintiffs did not take out any application seeking appropriate interim relief against the Defendants. It is submitted that on 2nd February, 2012, Defendant No. 5 has appointed another contractor who is carrying out construction in the building (Crescent Towers). The contractor has carried out substantial work and substantial amounts have been spent. It is further submitted that, as per Chart Exhibit-2 to the affidavit of 17th August, 2012, filed by Defendant No.3, Defendant No. 5 has sold flats till December 2011. In view of this, the relief sought by the Plaintiffs cannot be granted. It is submitted that since no ad-interim reliefs were granted to the Plaintiffs and the only order passed was that if any flats are sold by Defendant Nos. 1 to 5, they shall do so only after obtaining permission from this Court, the Plaintiffs are not entitled to any ad-interim relief at this stage.
46. Mr. Kapadia next contended that the conduct of the Plaintiffs disentitled them from seeking specific performance of the Agreements executed by and between the Plaintiffs and Defendant No.5. In support of this contention, Mr. Kapadia has submitted that the Plaintiffs have made false statements on oath that due to the stop work notice of the Defendant No. 6 Corporation, the Plaintiffs had stopped the construction work and at no point of time prior to the termination had the Defendant No.6 Corporation informed the Plaintiffs of withdrawal of stop work notice. (Affidavit in Notice of Motion No. 443 of 2012 of Rajesh Bakshi dated 7th March, 2012, at page 379 of list of dates and events of Defendants). It was also during the course of arguments that it was admitted on behalf of the Plaintiffs that in 2009 itself, Defendant No. 5 had brought the withdrawal of the stop work notice to the notice of the Plaintiffs. It is therefore submitted that the Plaintiffs are not entitled to seek specific performance of the Agreements and the relief sought by the Plaintiffs deserves to be rejected.
47. Mr. Kapadia also contended that the relief sought in Notice of Motion No. 433 of 2012 is not maintainable. He has submitted that the Plaintiffs seek relief of protecting their alleged share of 57%, which can be granted only after completion of the building in its entirety and grant of its occupation certificate by the Defendant No. 6 Corporation.
48. As regards the Review Petition, Mr. Kapadia has submitted that the Review Petition is not maintainable on the following grounds:
(i) A review application can be filed only by a party to the lis in which the order sought to be reviewed has been passed. It cannot be preferred by a third party. It cannot not be contended that the phrase âany person considering himself aggrievedâ would include anyone who is adversely affected by the impugned order, whether or not that person is party to the lis in which the impugned order has been passed. The person applying for review has to satisfy two conditions namely, that he is aggrieved by the order and that he, for the reasons mentioned, was not in a position to bring that fact to the notice of the Court earlier which resulted in a wrong order being passed. If these two conditions are necessary before a review can be moved, it follows that the review application has to be made by a person who was a party to the lis decided by the impugned order or decree. In support of this contention, Mr. Kapadia has relied on the decision of the Delhi High Court in the case of Bharat Singh vs. Firm Sheo Pershad Giani Ram and others (AIR 1978 Delhi 122).
(ii) The Review Petition would be maintainable if no proceedings were filed earlier. The Plaintiffs had earlier filed Notice of Motion No. 443 of 2012. In view thereof, the Plaintiffs had to choose and elect between the two proceedings which they want to go on with.
(iii) A perusal of the Tripartite Agreement dated 16th July, 1998, will show that it was only Defendant No.5 who had privity of contract with the Defendant No. 6 Corporation, the owners of the land. The show cause notice dated 7th December, 2011, was issued and addressed only to Defendant No.5. As such, the Plaintiffs were not necessary parties to Writ Petition (L) No. 2943 of 2011. Moreover, the Plaintiffs had failed to obtain any relief against termination. It is submitted that in view of the false statements made on oath and the contradictory stands taken by the Plaintiffs, the Plaintiffs are not entitled to any reliefs whatsoever.
49. Mr. Kapadia further submitted that the reliefs sought in the Notices of Motion No. 1604 of 2012 and 2333 of 2012 show that so far as removal of materials/equipments which were sought in Notice of Motion No. 1604 of 2012, the same reliefs were sought again in Notice of Motion No. 2333 of 2012. So far as the tower crane and passenger lifts are concerned, Defendant No. 5 had, pursuant to the request of the Plaintiffs, dismantled the same and the Plaintiffs expressed their willingness to remove the same. The only dispute was with regard to the charges for dismantling and warehousing by Defendant No.5. The Plaintiffs were ready to pay Rs. 6.75 lakhs. Without prejudice to their rights, to claim the balance amount, Defendant No. 5 is willing to allow the Plaintiffs to remove the tower crane and passenger lifts, subject to the Plaintiffs paying or depositing the said amount of Rs. 6.75 lakhs. It is therefore submitted on behalf of Defendant Nos. 1 to 4 that the Plaintiffs are not entitled to any relief whatsoever and the orders passed by this Court on 14th March, 2012, directing Defendant Nos. 1 to 4 to seek permission of this Court before sale of any flats, be vacated.
50. Mr. Thorat, the Learned Senior Advocate appearing for Defendant No.5, has submitted that the Agreement with the Plaintiffs is a result of sanction of scheme under DCR 33 (7). Free sale component is a by-product of the said scheme. The Corporation is the owner of the land and will continue to be the owner even after completion of the entire project. The Corporation will execute the lease in favour of the Society of tenants as well as purchasers of the free sale component. The tenants who were residing in the existing 14 buildings on the property, are beneficiaries of the scheme. The tenants had appointed an Architect, M/s. Mhatre, who submitted a proposal to the Corporation under DCR 33 (7). The proposal was sanctioned by the Corporation on certain terms and conditions. The Plaintiffs have no privity of contract with the owners of the land or beneficiaries of this Scheme. After sanction of the scheme, Defendant No.5 entered into a separate agreement with the Society and a tripartite agreement with the society and the Corporation. The Plaintiffs, though aware of these agreements, are not parties thereto. Under the Tripartite Agreement with the Corporation and the Society, the obligation to carry on development is solely of Defendant No.5. Under the Agreement, Defendant No.5 has not been authorised to assign or transfer his right of development in favour of any other person. Defendant No.5 is merely permitted to appoint a contractor for carrying out the work of development. Mr. Thorat has further submitted that the Plaintiffs have approached the court with a specific plea that since the additional 0.5 FSI was not being sanctioned, there was no question of completing the construction upto the 19th floor, since the same would be damaged as and when additional floors were raised. The stand of the Plaintiffs while arguing the Notices of Motion is that they are willing to complete construction upto the 19th floor if the notice of termination is stayed. This stand is inconsistent with the pleadings and indicates that, on the date of the Suit, the Plaintiffs were not ready and willing to complete construction upto the 19th floor. The unwillingness of the Plaintiffs to complete construction upto the 19th floor, thus enabling the parties to obtain the Occupation Certificate, is to be viewed in the context of the Corporation not granting additional FSI without the Occupation Certificate for the sanctioned construction. Mr. Thorat further submitted that the terms 'developer' and 'contractor' have distinct meanings and each of them is required to perform different obligations, and possesses different rights. The parties themselves after deliberation, have chosen to call the Plaintiffs âcontractor. The terms and conditions of the MoU between the Plaintiffs and Defendant No.5 make this abundantly clear. Some of the terms are as follows:
(i) Defendant No.5 alone is to deal with the tenants and the Corporation in all matters relating to development (Clause 4);
(ii) The consideration payable to the Plaintiffs is for carrying out construction work and there is no element of transfer in the said consideration (Clause 7);
(iii) Defendant No.5 is to provide the title certificate to the purchasers of the Plaintiffs' share (Clause 10);
(iv) Defendant No.5 has to take steps for making the Plaintiffs purchasers, members of the proposed society (Clause 14);
(v) The MoU cannot be terminated at the instance of the contractor. However, it is terminable at the instance of Defendant No. 5 (Clause 24);
(vi) The MoU itself provides the manner in which the Plaintiffs are to be compensated in the event of termination of the MoU (clause 24);
(vii) There is no Power of Attorney executed by Defendant No.5 in favour of the Plaintiffs, in order to enable the Plaintiffs to perform the acts of Defendant No.5, nor is there any conduct by Defendant No.5 that raises an inference that the Plaintiffs were entitled to perform the acts of Defendant No.5.
51. It is submitted that in the very nature of things, Defendant No. 5 being a developer, Plaintiffs can only be contractors. There cannot be two developers in respect of a building, something which will attract provisions of MOFA. The Plaintiffs cannot give any title to the purchasers without the concurrence of Defendant No.5 and the Defendant No. 6 Corporation.
52. Mr. Thorat further submitted that the scheme of Specific Relief Act and in particular, Sections 9, 10, 14, 16 and 20, require the Court to apply underlying principles of those provisions to the facts of each case. When the parties themselves, after due deliberation, arrive at an agreement, the Court need not look further than the terms of such agreement. If the parties have stipulated that the contract is determinable and that reimbursement of the costs incurred by the Plaintiffs is an adequate compensation, the Court need not make any further inquiry.
53. Mr. Thorat next contended that under Section 9 of the Specific Relief Act, 1963, the Defendants are entitled to raise defences based upon the Contract Act, 1872. He submitted that in the present case, the Plaintiffs have refused to perform their part of the contract despite the terms of the contract and the Defendants demands made by notices addressed to the Plaintiffs. Under the circumstances, apart from the term in the contract, Defendant No.5 was entitled to terminate the contract under Section 39 of the Contract Act. Mr. Thorat further submitted that the Plaintiffs voluntarily stopped construction, as a result of which the occupation certificate could not be applied for or granted. As a consequence, Defendant No.5 was constrained to challenge the claim of the Corporation for the balance 90% of the capitalized value, right upto the Supreme Court. The reason given by the Plaintiffs, of absence of additional 0.5 FSI, for stopping construction is not the reason they are entitled to invoke under the MoU. It is submitted that the Plaintiffs have invited the situation and cannot blame Defendant No.5 for what has happened. It is therefore submitted on behalf of Defendant No.5 that the Plaintiffs are not entitled to any relief as sought for.
54. Mr. Dani, the Learned Advocate appearing for Defendant No. 7, submitted that Defendant No. 7 was appointed on 2nd February, 2012, by Defendant No. 5, to carry out construction on the building 'Crescent Tower'. Since then, Defendant No.7 has carried out substantial work and made substantial investments. Defendant No.7 therefore, has a right to continue and complete the construction of the building. It is submitted that though Defendant No.7 is joined as party Defendant to the Suit, no reliefs are sought against Defendant No.7 in the Notice of Motion. The relief sought in the Notice of Motion, especially regarding stay on the construction, cannot be granted. It is submitted that in view of the order passed by the Appeal Court dated 12th October, 2012, in Appeal (L) No. 803 of 2012, the Plaintiffs are not entitled to any reliefs so far as the construction of the building 'Crescent Tower' is concerned. It is therefore submitted on behalf of Defendant No. 7 that no reliefs be granted to the Plaintiffs in the Notice of Motion.
55. I have considered the submissions advanced and the case law cited on behalf of the parties.
56. As set out hereinabove, it is argued on behalf of Defendant Nos. 1 to 5 that in the MoU dated 8th January, 1997, the Plaintiffs are described as âContractorâ. The recital in the MoU shows that Defendant No.5 is the Developer but that the âContractor has agreed to carry out such âdevelopmentâ. The recital in the Agreement also shows that the land belongs to the Defendant No.6 Corporation and that the Plaintiff Contractor has agreed to carry out the construction on the suit property as per the MoU with the Society and the Tripartite Agreement and that the construction work will be as per the approved plans and in accordance with the by-laws and Regulations of the Defendant No.6 Corporation. Clauses 2, 3, 4, 5, 12, 14 and 16 postulate various liabilities on the Developer-Defendant No.5. The Contractor is only entitled to consideration for the work done and monies expended by him. This is merely a payment in kind for the work done and monies expended by the Contractor. Clauses 7 and 9 of the Agreement suggest that the 55 per cent of the built up area and facilities available for free sale etc. shall be âgiven by Defendant No.5â. In view thereof, there was no question of agreeing to the transfer of the property. The Plaintiffs were to only carry out construction for profit. The Judgment of the Division Bench in ChhedaHousing Development Corporation (supra) relied upon by the Plaintiffs is therefore not applicable to the present case. In fact, in paragraph 16 of the above mentioned judgment, it is stated by the Hon'ble Division Bench of this Court that, âspecific performance can be granted of the land or interest in the land belonging to a person who had agreed to sell the land with interest therein. If the person is not the owner or has no interest in the land agreed to be sold or transferred, there was no question of granting specific performanceâ. Defendant No.5 is, admittedly, not the owner and has no interest in the land agreed to be leased out. Further, according to the Plaintiffs, they have not sold or agreed to sell a single flat and therefore the principle laid down in the decision of this Court in the case of Chheda Housing is not applicable to the present case.
57. The Defendants have, in support of their aforestated submissions, also relied on the following decisions:
(i) Unreported decision of the Hon'ble Division Bench of this Court (D.K. Deshmukh and D.G. Karnik, JJ.) dated 19th January, 2004, in First Appeal No. 1543 of 2003 (M/s. Runwal Constructions vs. P.K. Velu and Company Pvt. Ltd.);
(ii) Unreported decision of a Learned Single Judge of this Court (H. Suresh, J.) dated 10th January, 1988, in Notice of Motion No. 2716 of 1987 in Suit No. 2673 of 1987 (AsooNihalani vs. Mr. Wilfred D'Souza and others);
(iii) Unreported decision of a Learned Single Judge of this Court (H. Suresh, J.) dated 9th February, 1988, in Notice of Motion No. 76 of 1987 in Suit No. 3419 of 1986 (NarayanRamchandran vs. Mahabhodi Society and others);
(iv) Unreported decision of the Hon'ble Division Bench of this Court (Lentin and Mrs. Sujata Manohar, JJ.) ) dated 7th March, 1988, in Appeal No. 285 of 1983 in Notice of Motion No. 76 of 1987 in Suit No. 3419 of 1986 (Narayanan Ramchandra vs. Mahabhodi Society of India and others );
(v) Unreported decision of a Learned Single Judge of this Court (S.N. Variava, J.) dated 27th September, 1996, in Notice of Motion No. 5 of 1996 in Suit No. 4476 of 1995 (LokhandwalaEstates and Development Com. Ltd. and another vs. Goregaon Siddharth Nagar Sahakari Griha Nirman Sanstha Ltd.);
(vi) Decision of a Learned Single Judge of this Court (S.S. Nijjar, J.) in GurudevDevelopers vs. Kurla Konkan Niwas Co-op. Housing Society (1999 (Supp) Bom. C.R. 257;
(vii) Decision of a Learned Single Judge of this Court (F.I. Rebello, J.) in the Peerless General Finance and Investment Co. Ltd. vs. Swan Mills Limited and others (2000 (1) Bom. C.R. 48);
(viii) Unreported decision of a Learned Single Judge of this Court (D.K. Deshmukh, J.) dated 13th April, 2007, in Notice of Motion No. 3820 of 2006 in Suit No. 3151 of 2006 (M/s. Shah and Jhaveri Developers vs. M/s. Classic Developers Pvt. Ltd. and another);
(ix) Decision of the Division Bench of the Calcutta High Court in VipinBhimani and another vs. Smt. Sunanda Das and another (AIR 2006 Calcutta 209);
(x) Decision of the Division Bench of Delhi High Court in Smt. Rai Rani Bhasin and others vs. S. Kartar Singh Mehta (AIR 1975 Delhi 137); and
(xi) Decision of the Division Bench of Delhi High Court in Bharat Singh vs. Firm Sheo Pershad Giani Ram and others (AIR 1978 Delhi 122).
58. The Learned Senior Advocate appearing for the Plaintiffs has submitted that a reading of the clauses contained in the Agreements executed between the Plaintiffs and Defendant No.5; the Society and Defendant No.5 and between the Defendant No.6 Corporation; and the Society and Defendant No.5, clearly shows that the Plaintiffs are not mere Contractors, as sought to be contended by Defendant No.5, but have an interest in the said construction and therefore, the ratio of the Division Bench judgment in the case of ChhedaHousing Development Corporation (supra) would clearly apply. It is also submitted that almost all the decisions relied on by the Defendants are decisions prior to the Judgment of this Court in the case of Chheda Housing and have been considered by the Division Bench of this Court in its decision in Chheda Housing.
59. Admittedly, the Defendant No.6 Corporation is the owner of the suit property i.e. the land which was reserved for public housing in the Development Plan. There were 14 buildings on the suit property comprising of 287 tenements, of which 278 were residential and the balance were shops and other non-residential premises. The occupants on the suit property formed the Janata Nagar Co-operative Housing Soc. Ltd. and a proposal was submitted on behalf of the occupiers by the Promoters (i.e. the occupiers and the Society) on 9th July, 1996, to the Defendant No.6 Corporation for redevelopment of the suit property. The proposal for redevelopment of the suit property was approved by the Improvements Committee of the Defendant No.6 Corporation on 11th October, 1996, and the proposal was approved by the Defendant No.6 Corporation on 15th October, 1996. A MoU dated 17th October, 1996, was entered into between the Society and the occupants (described as the Promoters) and Defendant No.5 (described as the Developer). Under clause 6(b) of the MoU, the Defendant No. 5 Developer was authorised to carry out the redevelopment work on behalf of the proposed Society and under clause 6(c), the Developers were entitled to construct and hand over to the Corporation such tenements as had been stipulated while approving the scheme/proposal by the Defendant No. 6 Corporation. Clause 6(d) of the MoU is relevant since the Society has agreed therein that the Developer shall be entitled to sell the remaining tenements permitted by the Defendant No. 6 Corporation for free sale to any person that the Developers may think fit. Under clause 6(e), it was agreed that the Society shall accept lease of such area of land granted by the Defendant No. 6 Corporation in respect of any tenements constructed for the existing tenants, and the Society will not have any claim on the remaining area or structure meant to be given to the Corporation and for free sale. It is also provided in clause 6 (f) of the said MoU that âthe Promoters are aware of construction of 2 Buildings for tenants, one or more for sale in open market. Thus, the plot will be divided proportionately, enabling the tenants, Corporation and flat purchasers, to form the Societies respectivelyâ. Clauses 8 and 9 of the said MoU entered into by and between the Society and Defendant No. 5 provide as follows:
â8. In consideration of the Developers redeveloping the property at their expenses as per sanction of the Corporation and giving 298 + 10 PAP tenements including commercial premises to the existing tenants at the price as stated in para 6. Total built upto area of about 33,860 sq.ft. Inclusive of balcony free of charges to the Corporation, the Developers shall be entitled to sell the remaining area to any person they like and retain the sale proceeds and the society shall not have any claim therein. If the Corporation does not desire to take their flats, it will be entitled to sell them on their own a/c and the Tenants or the Society shall not be entitled to claim any share or interest therein.
9. The Society/promoters shall give a power of attorney to the Developers to carry out the Development work on behalf of the Society and for that purpose to approach various architects, submit plans, engage architects, advocates, contractors and staff and to attend to all litigation in connection with the said property.â
60. Thus since inception the Society has agreed to the following:
(i) That the Defendant No. 5 (Developer) shall retain the flats in the sale building to the extent of its entitlement and hand over the balance flats to the Defendant No. 6 Corporation as agreed. The Society shall not have any claim therein.
(ii) That if the Corporation does not desire to take its flats, it will be entitled to sell them on its own account and the Society shall not be entitled to claim any share or interest therein.
(iii) That the Society shall accept lease of such area of land granted by the Defendant No. 6 Corporation in respect of the tenements constructed for existing tenants and the Society will not have any claim on the remaining area of the plot or structure meant for free sale and the suit plot will be divided proportionately, enabling the tenants, Corporation and the flat purchasers to form their respective Societies.
(iv) That Defendant No. 5 Developer will hand over about 33,860 sq.ft. of built up area free of charge to the Defendant No. 6 Corporation, being the owner of the land, and Defendant No. 5 shall be entitled to sell the remaining built up area to any person of its choice and retain the sale proceeds. The Corporation, not being desirous of retaining the said built up area of 33,860 sq.ft., may also sell the same and the Society shall not claim any share or interest therein.
61. A MoU dated 8th January, 1997, is executed between the Plaintiffs and Defendant No.5. Clause 9 of the MoU refers to the proposed Tripartite Agreement (executed on 16th July, 1998, between the Society, the Defendant No.6 Corporation and the Defendant No.5 Developer). Under the said MoU, it was agreed between the Plaintiffs (Contractor) and Defendant No. 5 (Developer) that the Plaintiffs would incur the entire cost of construction for the rehab component, welfare centre, school building and free sale building. The compensation to the Plaintiffs was by way of a share in the free sale area as recorded in the MoU dated 8th January, 1997, and the Supplementary Agreements dated 29th June, 2007, and 24th August, 2007. The Plaintiffs were entitled to sell the flats in the free sale building in their own name and on principal-to-principal basis to the flat purchasers. The inter se ratio of the land/FSI to be shared by the Contractor and Developer was fixed at 55:45. The Plaintiffs (Contractor) were free to deal with, dispose of, retain or sell their portion of the built up area allotted in such manner, at such price and at such time as may be determined by it. The Plaintiffs (Contractor) were to bear stamp duty, registration charges, cost of formation of Society and other incidental expenses for such portion of the built up area in the free sale building as allotted to the Plaintiffs (Contractor).
62. The Tripartite Agreement dated 16th July, 1998, expressly provides for Defendant No. 5 to raise funds without jeopardising the interest of the Defendant No.6 Corporation. Clause 18 of the Tripartite Agreement contemplates dual ownership i.e. ownership of the land and ownership of the construction to be put up thereon. Defendant No.5 is entitled to raise funds (by dealing with the flats to be constructed) without creating any charge, debt, claim, lien or mortgage on the land. The Tripartite Agreement also gives rights to Defendant No.5 to carry out construction/development work either by itself or get the same executed through a contractor subject to clause 18 of the Tripartite Agreement. Clause 39 (A) of the Tripartite Agreement expressly provides for the suit plot to be notionally sub-divided in respect of the two buildings to be constructed at the site, one for rehabilitating the existing tenants and the other in respect of the sale component. Clause 39 (A) also provides for a âsub-leaseâ to be executed in favour of the Societies of occupants and of the saleable building and that the two separate societies be independent from a functional point of view. As correctly submitted by the Plaintiffs, the aforesaid clauses of the Tripartite Agreement make it abundantly clear that it was open for Defendant No.5 to enter into an arrangement for the purpose of complying with its obligations under the said Tripartite Agreement and Defendant No.5 was also entitled to enter into an arrangement in respect of its share from the free sale area.
63. Though the principle, that a development agreement in the nature of a construction contract is prima facie not capable of specific performance at the instance of the developer/contractor is well established, the question repeatedly raised before the Courts in suits seeking specific performance of development agreements invariably concerns the real nature of the particular agreement based on facts of the individual case, namely, whether the agreement termed as âdevelopment agreement is in reality an agreement for sale of immovable property or a mere construction contract.
64. In the case of NarayanRamchandran (supra), a learned Single Judge of this Court, on construction of the particular agreement, held that it was neither an agreement to sell nor an agreement to lease, but a simple agreement to develop the property belonging to the Defendant, on certain terms and conditions and that prima facie, such an agreement could not be specifically enforced. This order was, on appeal, upheld by Lentin and Sujata Manohar, JJ by their order dated 7th March, 1988, holding interalia, as follows :
âIn essence the suit agreement where the aim of the professional builder contract (appellant) is to make a profit by completing building and selling the flats at a profit. A breach of such an agreement can be compensated by way of damages.â
65. A Division Bench of this Court, in the unreported judgment of PallaviR. Karani vs. Dadhawala Builders Pvt. Ltd., in Appeal No. 784 of 1991 in Notice of Motion No. 2743 of 1990 in Suit No. 3067 of 1990, after considering the earlier judgments of this Court, observed that the aforesaid order of the Division Bench of this Court (Coram: Lentin and Mrs. Sujata Manohar, JJ.) dated 7th March, 1988, in Appeal No. 255 of 1988 in Notice of Motion No. 76 of 1987 cannot be read as âlaying down the law that specific performance for development can never be granted or interim relief in such a suit should always be refusedâ.
66. In the case of Ghoriand Khatri Builders vs. Iqbal Hussein Usman Fakir Mohammed Mansuri and Ors. in Appeal No. 217 of 1991 in Notice of Motion No. 763 of 1989 in Suit No. 844 of 1989, the Appeal Court in its order dated 9th March, 1983, inter alia, held that the agreement requiring the builders to construct a building at their own cost and allotting premises to the builders by way of absolute sale under MOFA as consideration, did create an interest in the immovable property and granted interim relief to the plaintiff builders who had applied for specific performance.
67. The case of ChhedaHousing Development Corporation (supra) distinguishes âan agreement only entrusting construction work to a party for considerationâ and âan agreement entrusting the work of development to a party with added rights to sell the constructed portion to flat purchasers who would be forming a Co-operative Housing Society to which Society the owner of the land is obliged to convey the constructed portion as also the land beneath the constructionâ. The Court held that on the facts of the case, the latter agreement may be held prima facie as âan agreement which can be specifically enforcedâ.
68. As set out hereinabove, the Defendants have relied on several judgments to contend that the MoU dated 8th January, 1997, and the Supplementary Agreements dated 29th June, 2007, and 24th August, 2007, could not be specifically enforced. However, the said decisions do not detract from the above position of law.
69. In the case of RunwalConstruction (supra), the suit property was owned by a third party, whose permission was necessary for development of the same and which the plaintiff developer failed to obtain. It was the case of the Defendant that the plaintiff developer was not ready and willing to perform its part of the contract. This finding, in favour of the defendant and recorded by the trial Court, was affirmed by the Appeal Court. After affirming the finding, the Appeal Court observed that this Court had held in a catena of decisions that âno specific performance can be granted in respect of an agreement of developmentâ.
70. In the case of AsooNihalani (supra), a Learned Single Judge of this Court found that the property belonged to a society which had imposed various restrictions on its development and that prima facie it was difficult for a member of the society to sell the property to a non-member by entering into an agreement. The Learned Judge, in the premises, proceeded on the necessary assumption that it was an agreement to develop and not an agreement to sell.
71. The case of Narayanan Ramchandra (supra), where a Division Bench of this Court held the suit agreement to be âin essenceâ an agreement âwhere the aim of the professional builder Contractor (Appellant) is to make a profit by completing building and selling the flats at a profitâ and that âa breach of such an agreement can be compensated by way of damagesâ, has been, as noted above, considered by the later Division Bench of this Court in ChhedaHousing Development Corporation's case as not laying down the law that specific performance for development can never be granted or interim relief in such a suit should always be refused.
72. The case of LokhandwalaEstates and Gurudev Developers (supra), decided by a Learned Single Judge of this Court, also proceeded on the footing that the ratio of NarayanRamchandra'scase (supra) applied fully to the facts of those cases. As held by the recent Division Bench Judgment in ChhedaHousing Development Corporation (supra), these cases cannot be said to lay down the absolute proposition that specific performance of a development agreement can never be granted.
73. In the case of Peerless General Finance and Investment (supra), on construction of particular clauses of the agreement in question, the Court held the agreement to be purely a development agreement without any provision for transfer of interest in immovable property.
74. In the case of Shah and Jhaveri Developers (supra), a learned Single Judge of this Court noted that the plaintiff builders in that case were entitled to get a portion of the constructed area only after completion of construction of a building consuming FSI of 56,000 sq.ft. The admitted position in that case was that the plaintiff builders had not constructed the building. Therefore, the Court noted that, as the first stage of the contract, the plaintiff would have to get a decree of specific performance of the contract for construction of the building, which the plaintiff was prima facie unlikely to get. The Court specifically observed that âin a given case, it is possible for the Court to pass a decree of specific performance even when the contract is for development of the propertyâ. But the Court further held, âthat depends on the nature of the agreement. In the present case, as I find that considering the nature of the contract entered into between the parties essentially is a contract for construction of the building by the builderâ. The contract was held prima facie incapable of being specifically performed.
75. The Division Bench Judgment of the Calcutta High Court in the case of VipinBhimani (supra), cannot bind this Court with its ratio running counter to the ratio as laid down by this court as noted above, and particularly, to the ratio in the Division Bench Judgment in ChhedaHousing Development Corporation (supra).
76. The Plaintiffs have, at their own expense, constructed not only the rehab building comprising of ground plus 13 floors, having 288 tenements and 4 wings and the welfare centre and school building, but also the free sale building. Even the design of the free sale building was to be mutually agreed between the Plaintiffs and Defendant No.5. The Society has agreed in the MoU executed with the Defendant No.5 Developer that the Developer shall retain the flats in the sale building and shall be entitled to sell the remaining built up area to any person of its choice and retain the sale proceeds. The Society agreed to accept the lease granted by the Defendant No.6 Corporation only of such area of land on which the tenements are constructed for existing tenants and the Society further agreed not to have any claim over the remaining area of plot or structure for free sale. The Society further agreed that the suit plot will be divided proportionately enabling the tenants, Corporation and flat purchasers to form their respective Societies. Again, under the Tripartite Agreement executed by and between the Society, Defendant No.6 Corporation and Defendant No.5 Developer, it was agreed that the Developer may carry out construction/development work either by itself or get the same executed through a Contractor. Clause 39(A) of the Tripartite Agreement expressly provided for the suit plot to be notionally sub-divided in respect of the two buildings to be constructed at the site, one for rehabilitating the existing tenants and the other in respect of the sale component. Clause 39(A) also provides for a âsub-leaseâ to be executed in favour of the Societies of occupants of the saleable building and that the two separate societies would be independent from a functional point of view. Pursuant to the rights granted in favour of Defendant No.5 under the Tripartite Agreement, Defendant No.5 entered into an arrangement with the Plaintiffs in respect of its share in the free sale area. As per the said arrangement, the Plaintiffs are entitled to 57 per cent, plus 8,287 sq.ft. from and the Defendant No.5's 43% share of the sale building and are also entitled to sell the flats coming to their share in such manner, at such price and at such time, as it may determine. The Plaintiffs (Contractor) are also required to bear stamp duty, registration charges, cost of formation of Society and other incidental expenses for such portion of built up area in the free sale building as allotted to the Plaintiffs (Contractor). These facts prima facie clearly establish that the Plaintiffs were specifically invested with 'added rights' adverted to in the Judgment of the Division Bench in the case of ChhedaHousing Development Corporation (supra) and therefore would be prima facie entitled to specific performance. It cannot be contended that the Plaintiffs are mere Contractors.
77. The Plaintiffs are also correct in their submission that the provisions of the MOFA are mandatory and would apply in respect of the present construction. Under Section 2(c) of the Maharashtra Ownership Flats Act, the Plaintiff, Defendant No. 5 as well as MCGM, would be the Promoters. This Court has, in Association of Commerce House vs. Vishaldas (1983 BLR 356)categorically held that the provisions of the MOFA have to be mandatorily applied to all constructions. The Defendants arguments that, for the purposes of MOFA there cannot be two developers in respect of a building or that in the very nature of things, the Plaintiffs can only be termed as a Contractor, also do not hold water. MOFA provides for liabilities of a âpromoterâ. Any person âwho constructs or causes to be constructed a block or building of flats, or apartments for the purpose of selling some or all of them to other personsâ is a âpromoter within the meaning of MOFA. In case where the person who builds and the person who sells are different persons, the term includes both. Here, the Plaintiffs are both, builders as well as sellers of the flats coming to their share from the free sale flats. The Plaintiffs are thus âpromoter within the meaning of MOFA and would have an obligation as such âpromoter under the MOFA and a corresponding entitlement to a portion of the construction. Section 3 of MOFA sets out the liabilities/obligations of a Promoter and the Plaintiffs would be liable to perform the obligations of a Promoter under the statute, failing which several consequences, including penal consequences as set out in Sections 13 and 14 of MOFA, would follow.
78. The Defendants have, in the alternative, contended that even on the assumption that the contract creates an interest in land and would therefore be subject to the principle enunciated in the case of ChhedaHousing Development Corporation (supra), in the instant case, the breach to transfer immovable property, assuming there is any, can be adequately relieved by compensation in money. Under Section 10 of the Specific Relief Act, 1963, the Court ought to presume that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money unless and until the contrary is proved. Leave aside the proof, which in any event can only come at the stage of trial, even prima facie, on the facts placed before the Court, it cannot be said that compensation in money would be adequate relief to the Plaintiffs. Under the suit agreement, what comes to the share of the Plaintiffs is FSI to be shared in the proportion of 55:45 with the Defendants. The Plaintiffs were, under the agreement, free to deal with, dispose of, retain or sell their portion of the built up area in such manner, at such time and at such price as they may determine. This, prima facie, amounts to an agreement for transfer of immovable property and its breach cannot be compensated in terms of money. Besides, Clause 25 of the MOU dated 8th January, 1997, categorically provides for specific performance of the agreement at the instance of the Plaintiffs. The Defendants have argued that, in this case, the parties have stipulated that the contract is determinable and that the reimbursements of the costs incurred by the Plaintiffs would be an adequate compensation and that therefore, the Court need not make any further inquiry. Clause 24 of the contract (MOU) provides for the right of the Developers (i.e. Defendant No.5) to terminate the agreement and get the remaining work done through any other contractor and the Contractors (i.e. the Plaintiffs) entitlement to reimbursement of costs and expenses, only in the event of breach by the Contractor, of the agreement. The Clause does not take away the right of specific performance of the contractor in the event of wrongful determination of the contract by the Developers. Therefore, it cannot be said that by reason of Clause 24, reimbursement of costs in the event of wrongful termination by the Developers, is an adequate compensation for the contractor.
79. The Defendants also contended that Defendant No.5 not being the owner or having any interest in the land agreed to be leased out, specific performance of the suit agreement cannot be granted against it. In this behalf, it is important to note that the suit agreement between the Plaintiffs and Defendant No.5 is in pursuance of the tripartite agreement between the MCGM, Society and Defendant No.5 and the Agreement between the Society and Defendant No.5. The Lease Agreements, in favour of both the societies for the rehabilitation building and the purchasers of flats for the free sale building, will come from the owner of the land, i.e. the MCGM, in pursuance of the Tripartite Agreement, which is valid and subsisting as of date. The MCGM has not refused to perform the same. Thus, there is prima facie no difficulty in ordering specific performance of the suit agreement against Defendant Nos. 1 to 5.
80. As the agreement between the parties is specific as to the shares in the free sale areas, the obligation for payment of capitalized value and construction, etc. in the facts of the case and the question of continuous supervision of the Court does not arise in the instant case. The suit agreement cannot thus be said to be hit by section 14 (1) (d) of the Specific Relief Act, 1963.
81. The Defendants have contended that under section 9 of the Specific Relief Act, 1963, the Defendants are entitled to raise defenses based on the Contract Act, 1872, and since the Plaintiffs having failed to perform their obligations fully or in entirety, the Defendants can put an end to the contract under Section 37 and 38 of the Contract Act. The Defendants have also contended that clause 24 of the MoU dated 8th January, 1997, empowers Defendant No. 5 to terminate the Agreement and get the work carried out by another Contractor, in the event of non-compliance by the Plaintiffs of the terms and conditions of the said MoU. It is in purported exercise of the aforesaid power that Defendant No. 5 appointed Defendant No. 7 as Contractor vide the Agreement dated 2nd February, 2012. It is submitted on behalf of the Plaintiffs that Defendant No. 5 has failed to demonstrate any breach committed by the Plaintiffs. It is submitted that clause 24, in any event, cannot be enforced by Defendant No. 5 as the same would amount to a forfeiture/penalty, inasmuch as it entitles Defendant No. 5 to forfeit the entire share of the Plaintiffs in the free sale building. Clause 24 prima facie could not be enforced in a Court of law, as the same is in the nature of a penalty and contrary to the provisions of the Contract Act as has been laid down by the Hon'ble Supreme Court in the case of MaulaBux vs. Union of India (AIR 1970 SC 1955)and FatehChand vs. Balkishan Dass (AIR 1963 SC 1405). Reliance on Sections 37 and 38 of the Contract Act and Clause 24 of the MoU dated 8th January, 1997, shall be of no assistance to the Plaintiffs since Sections 37 and 38 as also the said clause can be invoked only in the event of non-compliance by the Plaintiffs of the terms and conditions of the said MoU. As held hereinafter, the Defendants have failed to establish that the Plaintiffs have failed to comply with the terms and conditions of the MoU.
82. The Defendants have next contended that the Plaintiffs have failed to perform their part of the contract. It is submitted that Defendant No. 5 was required to complete the project within a period of two years, from 24th January, 2006, and pay 90 per cent of the capitalized value of the area which would otherwise be required to be handed over to the Corporation, free of cost; on or before grant of the Occupation Certificate of the last wing of the Building for sale. Therefore, the Plaintiffs had agreed to complete the construction within 18 months from the date of the Commencement Certificate. It is submitted that therefore, Defendant No. 5 was justified in calling upon the Plaintiffs to start and complete the Building, and upon the failure of the Plaintiffs to start the construction work, was justified in terminating the contract by invoking Clause 24 of the MoU dated 8th January, 1997. It is submitted that there is no explanation or justification given by the Plaintiffs for stoppage of the construction work. The only explanation given by the Plaintiffs is that they were awaiting sanction of additional 0.5 FSI, which cannot be accepted. It is submitted that there is no obligation on the part of Defendant No. 5 to obtain 0.5 FSI from the Defendant No.6 Corporation. It is submitted that as per the Tripartite Agreement, the Defendants were required to pay the capitalized value only on completion of the construction and grant of the Occupation Certificate for the last wing. It is submitted that the entire agreement of August 2007, is on the assumption of grant of additional 0.5 FSI. It does not entitle the Plaintiffs to sit and do nothing until the grant of such additional FSI. It is further submitted that in the teeth of letters from Defendant No. 5, inaction on the part of the Plaintiffs to complete the construction work amounts to exhibition of supreme indifference and arrogance on the part of the Plaintiffs. It is therefore submitted that, even assuming that the contract between the Plaintiffs and Defendant No. 5 is capable of specific performance, the Plaintiffs are not entitled to seek any reliefs against the Defendants and the termination of the Agreement dated 8th January, 1997, and the Supplementary Agreements dated 29th June, 2007, and 24th August, 2007, between the Plaintiffs and Defendant No. 5, is valid and justified.
83. It is true that under the Agreement dated 8th January, 1997, it was agreed that the construction of the sale Building would be completed by the Plaintiffs within a period of 18 months from the date of receipt of the Commencement Certificate for the saleable area, the approved plans of the saleable area and vacant possession of the site for construction of the saleable building from Defendant No.5, and that the Plaintiffs would be entitled to a reasonable extension of time if such completion was delayed on account of the conditions set out in clause 15 of the MoU dated 8th January, 1997. It is also true that Defendant No. 5 had, in its agreement with the Corporation, agreed to complete the construction of the saleable building within a period of two years from the date of receipt of the Commencement Certificate for the saleable building. It is also true that the Commencement Certificate of the saleable building was issued on 24th January, 2006, and that the Plaintiffs had not applied for any extension of time. The 18 month period expired in July 2007. However, the question of the Plaintiffs completing the construction of the saleable Building within 18 months i.e. by July 2007, never arose because Defendant No. 5 admittedly obtained the full Commencement Certificate only in April 2008. In fact, Defendant No. 5 has, in its Writ Petition No. 72 of 2009, submitted that construction upto the 19th floor was already completed by December 2008.
84. As stated hereinabove, Defendant Nos. 1 to 5 have contended that the Plaintiffs are responsible for not completing the construction of the saleable Building within a period of 18 months from 24th January, 2006 (i.e. on or before 23rd July 2007), as agreed under the MoU dated 8th January, 1997. In fact, the Advocate for Defendant No.5 has, in his letter dated 12th January, 2010 addressed to the Plaintiffs, recorded that the Plaintiffs had totally stopped the construction work for the last about 14 months (i.e. sometime in October 2008), thereby delaying the completion of the saleable building and consequently causing harm, loss and injury to Defendant No.5. These allegations made by Defendant No. 5, pertaining to delay on the part of the Plaintiffs, are belied inter-alia by the pleadings filed in Courts, representations made by Defendant No. 5 before the Deputy Municipal Commissioner of the Defendant No.6 Corporation and the correspondences exchanged as follows:
(a) Recital (f) of the Supplementary Agreement dated 29th June, 2007, between the Plaintiffs and Defendant No.5:
In the Supplementary Agreement dated 29th June, 2007, executed between the Plaintiffs and Defendant No.5, it is categorically stated in recital (f) thereto that:
âBy reason and on account of diverse events and circumstances and protracted delay in the construction of the proposed building which said events and circumstances were beyond the control of the parties hereto...â
(b) Writ Petition No. 1558 of 2008 filed before the Division Bench of this Court on 20th June, 2008:
(i) In Paragraph 24 (c) of the said Writ Petition, Defendant No.5 has stated that the delay was due to the demarcation not being done and NOC for sale building not being issued. After setting out the hurdles faced by Defendant No.5, Defendant No.5 has submitted that the delay was due to circumstances set out in the said paragraphs and was not attributable to Defendant No.5. In fact, being satisfied with the progress of the project by Defendant No.5, the Commencement Certificate and other documents were validated from time to time. It is further submitted that the full Commencement Certificate for the sale building was renewed and extended quite recently i.e. on 8th April, 2008. It is submitted on behalf of Defendant No.5 that therefore, it is not open to the Mumbai Municipal Corporation to hold that the work is not complete or that the project period is over.
(ii) In Paragraph 24 (e) of the Writ Petition, Defendant No.5 has submitted that judicial notice can be taken of the fact that in such projects, due to litigation, the projects are delayed and extensions are granted.
(iii) In paragraph 24 (f) of the Writ Petition, Defendant No. 5 has submitted that under clause 29 of the LOI, the construction work of the redevelopment project was to be completed within a period of two years from the demolition of the old structures. Defendant No.5 has completed the project of redevelopment within time.
(iv) Exhibit-5 to the Writ Petition is a letter dated 28th May, 2008, addressed by Defendant No.5 to the Defendant No.6 Corporation. In the said letter, the reasons for the project not being completed are set out in detail, including the reason that the full Commencement Certificate for the sale building was granted only on 8th April, 2008. Admittedly, in the above Writ Petition filed on 20th June, 2008, no allegation as regards delay qua the project or completion of construction of the saleable building, is attributed to the Plaintiffs.
(c) Representation dated 29th May, 2009, made by Defendant No.5 to the Deputy Municipal Commissioner of the Defendant No.6 Corporation:
In paragraph 17 of the said representation, Defendant No.5 has submitted that the Corporation was aware that delay in implementation of the project had taken place because of litigation which Defendant No.5 had to fight to get the vacant site for the rehabilitation building and the sale building. Again, no allegation is made against the Plaintiffs as regards the delay qua the project or completing the construction of the saleable building.
(d) Writ Petition No. 72 of 2009 filed on 19th December, 2008, and amended on 8th July, 2009, by Defendant No.5 against the Mumbai Municipal Corporation impugning the inaction on the part of the Corporation to grant an additional 0.5 FSI for the construction of the sale building:
(i) In paragraph 9 of the above Writ Petition, it is explained by Defendant No.5, that Defendant No.5 tried to start construction of the sale building upon IOD being received. However, the site conditions did not permit starting of the construction. There was certain litigation with regard to the structures standing on the plot of land admeasuring 2300 sq.yds. The demarcation for the sale building was also not done. Ultimately, the NOC for the sale building was processed and granted to Defendant No.5 only on 26th June, 2006.
(ii) In paragraph 17 (c)(i) of the said Writ Petition, Defendant No.5 has submitted that the Deputy Municipal Commissioner, who passed an order dated 8th June, 2009, directing Defendant No.5 to pay the capitalized value with interest, had erred in holding that Defendant No.5 had taken a period of three years to carry out the construction after the issuance of the Commencement Certificate and had inordinately delayed the construction of the sale component. Defendant No. 5 has submitted that the Deputy Municipal Commissioner failed to appreciate that there was a stop work notice issued by the Corporation under Section 354A of the Mumbai Municipal Corporation Act on 17th April, 2008, which was challenged by Defendant No.5 before this Court by filing Writ Petition No. 1558 of 2008 and the said stop work notice was ultimately withdrawn by the Defendant No.6 Corporation. The Deputy Municipal Commissioner has also not considered that Defendant No.5 had filed Writ Petition No. 72 of 2009 on 19th December, 2008, impugning the inaction on the part of the Corporation to grant an additional 0.5 FSI as regards the construction of the saleable building. It is submitted that if the time on the said count is excluded, Defendant No.5 completed the sale building within a period of about two years. It is submitted that the Deputy Municipal Commissioner has therefore erroneously come to the conclusion that Defendant No.5 has taken three years to complete the sale component.
(iii) In paragraph 17 (c)(ii), Defendant No.5 has submitted that there was no delay on its part in completion of the project but the delay was on account of the litigation involved in the matter, firstly, to get the vacant plots for construction of rehabilitation building and thereafter, to get the vacant plots for construction of the sale building.
(iv) In paragraph 17 (c)(iii), Defendant No.5 has submitted that there was no delay on the part of Defendant No.5 in implementing either the rehabilitation project or the sale building.
(v) In paragraph 17 (c)(iv), Defendant No. 5 has submitted that Defendant No.5 completed the sale building upto the 19th floor, within a period of two years.
(e) Special Leave Petition No. 24400 of 2009 dated 8th September, 2009, impugning the judgment and order dated 13th August, 2009, passed by the Division Bench of this Court directing Defendant No. 5 to pay the capitalized value with respect to 33,860 sq.ft. built up area, to the Corporation, with interest.
All the submissions made by Defendant No.5 in Writ Petition No. 72 of 2009 are reproduced verbatim in the Special Leave Petition. Defendant No.5 has not made any allegations against the Plaintiffs for the project being delayed.
85. It is clear from what is stated hereinabove, that though Defendant Nos. 1 to 5 have, in the present suit, attempted to blame the Plaintiffs for the delay caused in completion of the saleable building and in fact the Advocate for Defendant No.5 has, by his letter dated 12th January, 2010, addressed to the Plaintiffs, terminated the Agreements with the Plaintiffs on the ground that the Plaintiffs have totally stopped the construction work since October 2008, no allegations qua delay are found to be made by Defendant No.5 against the Plaintiffs even as late as on 8th September, 2009, when the SLP was filed before the Hon'ble Supreme Court. In fact, it is repeatedly submitted by Defendant No.5 in the aforestated pleadings that not only can Defendant No.5 not be blamed for any delay but also, there has been no delay in completion of the project and/or saleable building. Again, there is not a single letter written by Defendant No.5 prior to the letter dated 21st October, 2009, addressed to the Plaintiffs, requesting them to finish off the interior and exterior work of the building constructed upto the 19th floor. Being conscious of the fact that prior to the said letter dated 21st October, 2009, Defendant No.5 had never called upon the Plaintiffs to carry out interior and exterior work of the building constructed upto the 19th floor, Defendant No.5 has recorded in the letter that it has requested the Plaintiffs several times to start finishing off the interior and exterior of the building constructed upto the 19th floor, which is completely belied by the aforestated pleadings/submissions of the Defendants themselves. I am satisfied that the letters Defendant No.5 started writing to the Plaintiffs from 21st October, 2009, onwards are only with the ulterior motive of creating a record as more particularly set out hereinafter. I am therefore satisfied that the Plaintiffs are in no way responsible for the delay, if any, in completion of the construction work of the saleable building and have been wrongly blamed by Defendant Nos. 1 to 5 for the same.
86. Defendant Nos. 1 to 5 have, in the present Suit, also alleged that the Plaintiffs, after putting up construction of the saleable building upto the 19th floor, failed to carry out further work pertaining to the interior and exterior of the building constructed upto the 19th floor. The fact that Defendant Nos. 1 to 5 themselves, from the very outset, had decided to construct the saleable building comprising of 36 floors and stopped further construction work after raising the structure of the sale building upto the 19th floor, is clear as set out hereinafter, from the representation made by Defendant No. 5 to the Deputy Municipal Commissioner of the Defendant No. 6 Corporation and from the pleadings of Defendant No. 5 in Writ Petition No. 72 of 2009 filed by Defendant No.5 before this Court, seeking directions against the Corporation to grant it additional 0.5 FSI for construction of the saleable building upto 36 floors.
(A) Writ Petition No. 72 of 2009:
(i) Defendant No.5 has, in paragraphs 5 and 6 of the Writ Petition, stated that the redevelopment scheme, as sanctioned in respect of the suit property, was with 2 FSI as per the policy of the Government prevailing at that point of time. Though Defendant No. 5 was permitted to sell the area/tenements of 32,395 sq.ft. in the open market, Defendant No. 5 was to hand over 33,860 sq.ft. built up area to the Corporation free of cost and free of charges or pay its capitalised value at the rate of 5500/- per sq.ft. The total capitalised value was Rs. 18,62,30,000/-, of which 10 per cent was to be paid before grant of the Commencement Certificate and the balance 90 per cent before final occupation of the sale building.
(ii) It is stated in paragraph 10 of the Petition that by Government Notification dated 25th January, 1996, 33 (7) of the DC Regulations, 1991, was modified and the Floor Space Index was increased to 2.5 per cent (which was earlier 2) on the gross plot area and Clause 10 (a) of Appendix-III of the notification provided that in case of a redevelopment scheme already in progress, if full occupation permission has not been granted, then a Co-operative Society of the landlords and/or the occupiers of the Corporation building may convert the proposal in accordance with the Regulations, subject to submitting a structural stability certificate from the Structural Engineer.
(iii) In paragraph 11 of the Petition, it is submitted that Defendant No.5, being entitled to avail of 2.5 FSI being an ongoing project and full Occupancy Certificate not having been granted, submitted amended plans with a view to construct a high rise building to avail of 2.5 FSI. At the time of submission of the plans, the Mumbai Municipal Corporation promised and assured Defendant No.5 that Defendant No.5 would be granted the benefit of 2.5 FSI as per the modified DC Regulation 33 (7). In view of the said promise and assurance, Defendant No.5 submitted the amended plans for construction of the sale building, which was sanctioned on 27th July, 2006.
(iv) In paragraph 13 of the Petition, it is submitted that by a representation dated 3rd November, 2006, to the Mumbai Municipal Corporation (i.e. after the Commencement Certificate of the saleable building was issued in January 2006), permission was sought from the Corporation to allow Defendant No.5 to consume 2.5 FSI. The request was reiterated by further representations dated 9th May, 2008, and 16th September, 2008.
(v) In paragraph 16 of the Petition, it is submitted that Defendant No.5 made further representations dated 14th October, 2008, 23rd October, 2008, 3rd November, 2008, 7th November, 2008, and 17th November, 2008, to the Municipal Commissioner and Estate Commissioner, inter alia, pointing out that withholding of 0.5 FSI, despite representations from 2006 onwards was causing grave hardship to Defendant No.5. It is also mentioned in paragraph 16 of the Petition that âthe Petitioner (Defendant No.5 herein) had already constructed and completed the sale building upto 18th floor and 19th floor would also be completed very soon whereafter the construction of sale building would come to a standstillâ.
(vi) In paragraph 17 of the Petition, Defendant No.5 has inter alia, stated/submitted that âthe Petitioner has constructed sale building upto 19th floor i.e. as per 2 FSI. The Petitioner says that the construction of sale building which was planned and is being implemented on the basis of assurances and promises made by the Respondents that the Petitioner will be granted 2.5 FSI has come to a stand still and if further construction is not permitted or sanctioned as per further 0.5 FSI to which the Petitioner is legally entitled to, the Petitioner will suffer huge lossesâ. Defendant No.5 has further stated that despite representations made by Defendant No.5 since 2006, no response was received from the Corporation and therefore, Defendant No.5 moved Writ Petition No. 72 of 2009 before the Hon'ble Division Bench of this Court challenging the inaction on the part of the Corporation to grant the additional 0.5 FSI to Defendant No.5.
(vii) Defendant No.5 has, in grounds (d) and (e) of the said Writ Petition, further stated that Defendant No. 5 has constructed the sale building upto the 19th floor as per 2 FSI. The inaction on the part of the Defendant No. 6 Corporation, of not granting 0.5 FSI and withholding the same, is causing grave harm and loss to Defendant No.5. It is further submitted that, in view of the promise and assura