Oral Order:
The above suit is filed by the Plaintiffs for, a declaration that the Development Agreement dated 25th September 2007 (Exhibit-A to the Plaint) ("the said Agreement") entered into between the Plaintiffs and Defendant Nos.1 to 3 and the Irrevocable Power of Attorney dated 25th October 2007 (Exhibit-B to the Plaint) ("the said POA") are valid, subsisting and binding on the Plaintiffs and Defendant Nos.1 to 3 and also a declaration that the purported letter of termination dated 4th October 2011 (Exhibit-E to the Plaint), terminating the said Agreement and the said POA, is illegal, wrongful, null and void, for possession from Defendant Nos.1 to 4 of the immovable property situated at Plot No.270, Deodhar Road, Matunga, bearing New Survey No.885 and Cadastral Survey No.205/10 of Dadar-Matunga Division, Mumbai- 400019 along with the building known as "Padmavati Sadan" thereon consisting of ground plus 3 floors comprising of 19 tenements ("the suit property") and ordering and directing the Defendant Nos.1 to 4 to do all such acts, deeds and things and execute and sign all documents and papers as are necessary for effectively acting upon, performing and implementing the said Agreement. The Plaintiffs have also taken out the above Notice of Motion seeking interim reliefs, that is, appointment of Court Receiver of the suit property and to restrain the Defendants by an order and injunction from in any manner alienating, encumbering, selling, transferring and/or creating any third party right, title and/or interest in respect of the suit property or any part thereof.
2. The facts are briefly are set out hereunder:
3. The Defendant Nos.1 to 3 are the owners of the suit property. The building on the suit property by the name "Padmavati Sadan" is a MHADA cessed property which is an old and dilapidated structure constructed prior to 1940. Out of 19 tenements, 6 tenements being Nos.4, 5, 7, 8, 9 and 11 are occupied by the family members of Defendant Nos.1 to 3 and 13 tenements are occupied by tenants.
4. Pursuant to the negotiations between the Defendant Nos.1 to 3 and the Plaintiffs, the said Agreement came to be entered into between the Defendant Nos.1 to 3 and the Plaintiffs, whereunder Defendant Nos.1 to 3 granted development rights in favour of the Plaintiffs on the terms and conditions more particularly set out therein. The said Agreement has been duly registered with the Sub-Registrar of Assurances under the provisions of the Indian Registration Act, 1908. Some of the relevant recitals and the terms and conditions of the said Agreement are reproduced hereunder for ready reference:
"B. The said Plot along with the said Old Building shall hereinafter collectively be referred to as "the said Property".
G. The said property is a cessed building and is fully occupied by the tenants/occupants. The said building is in a dilapidated condition and requires heavy repairs and/or reconstruction/redevelopment;
H. The Owners are at present using, occupying and residing in Flat Nos.7, 8 and 9 on the First Floor of the said building "Padmavati Sadan" admeasuring approximately 572 sq.ft., 461 sq.ft. and 419 sq.ft. (carpet area)respectively and Flat No.11 on the Second Floor of the said Building "Padmavati Sadan" admeasuring approximately 572 sq.ft. (carpet area) (hereinafter referred to as "the existing residential premises");
I. The Owners are at present using and in occupation of the office/commercial premises bearing Nos.4 and 5 on the Ground Floor of the said building "Padmavati Sadan" admeasuring approximately 419 sq.ft. and 389 sq.ft. (carpet area) respectively (hereinafter referred to as "the existing office/commercial premises");
J. The Owners have decided to demolish the said building and to erect new building/s thereon by consuming FSI as well as floating FSI of the outside properties in the form of TDR, if any, under the redevelopment scheme as permitted by MHADA;
K. Due to lack of experience and shortage of funds, the Owners have decided to get the said proposed development done through some experienced Developers having sound financial position and who would be able to settle amicably with the tenants/occupants occupying various premises in the said building;
1) The Owners hereby jointly and severally entrust, give and grant all and full development rights to the Developers and hereby allow the Developers to enter upon and develop full and in all respect and in all manner their property on "as is where is basis" being all these pieces or parcels of land or ground situate, lying and being at Deodhar Road, Matunga, Mumbai- 400 019 within the limits of Greater Mumbai in the district and registration sub-district of Mumbai City and Mumbai Suburban bearing Plot No.270 of Dadar-Matunga Estate and formerly bearing new S.No.885 and C.S. No.205/10 of Dadar-Matunga Division admeasuring about 833 sq.yds. (i.e. 696.49 sq.mtrs.) with a building standing thereon of ground and three upper floors then known as "Sanghavi Sadan" and now known as "Padmavati Sadan" and assessed to municipal taxes under 'F North' Ward No.7365 (I), 7365 (ii) and Street No.11, Deodhar Road ("Old Building") and more particularly described in the First Schedule hereunder written and delineated on the plan thereof hereto annexed and thereon shown surrounded by red colour boundary line, hereinafter known as "the said property" by demolishing the existing building/s and constructing thereon new building/s by utilising the FSI as contemplated in this Agreement.
2(a) In consideration of the owners entrusting the development rights in respect of the said property to the Developers, the Developers hereby agree to pay to the Owners as under:
(i) the Developers have paid the sum of Rs.99,00,000/- (Rupees Ninety Nine Lakhs only) to the Owners on or before the execution of this Agreement, the payment and receipt whereof, the Owners jointly and severally do hereby admit and acknowledge and discharge the Developers for the same forever;
(ii)the balance amount of consideration of Rs.12,00,000/- (Rupees Twelve Lakhs only) shall be paid by the Developers to the Owners on or before 13th October, 2007, time being the essence of the contract;
(iii)
(b) shall provide to the Owners Permanent Alternate Residential Accommodation on ownership basis but free of costs of 2,000 sq.ft. (carpet area) on the same floor, on the North East side of the Plot/Road facing, the Developers' Architect to give Certificate as to the area to be allotted as Permanent Alternate Residential Accommodation to the Owners herein in the proposed new building along with two stilt parking area and one open car parking space in the compound of the said building lieu of the Owners vacating the existing residential premises presently occupied by them in the said building "Padmavati Sadan"and handing over vacant possession thereof to the Developers;
(c) shall provide to the Owners as Permanent Alternate Office Accommodation on ownership basis but free of costs to the extent of 800 sq.ft. (carpet area) on the same floor, on the North East side of the Plot/ Road facing, the Developers' Architect to give Certificate as to the area to be allotted as Permanent Alternate Office Accommodation to the Owners herein in the said proposed new Building in lieu of the Owners vacating the existing office/commercial premises presently occupied by them in the said building Padmavati Sadan and handing over vacant and peaceful possession thereof to the Developers;
(d) In addition to the amount as set out in sub-clause 2 (a) above, the sum of Rs.27,00,000/- (Rupees Twenty Seven Lakhs only) is paid to the Owners as non-refundable amount towards corpus and rent/license fee payable or to be incurred by them for the temporary alternate accommodation which they would be taking of their own during the period of construction and development of the said property.
(e) It is further agreed that the aforesaid consideration amount is non-refundable by the Owners to the Developers even if the Developers does not complete the development of the said property for whatever reason.
(f) It is further agreed that if the F.S.I. is available in excess of 2.5 in respect of the said property now or hereafter, the same shall be divided between the Owners and the Developers equally;
(g) It is further agreed that the Developers shall not be entitled for a refund of proportionate consideration in the event of reduction in the F.S.I. of 2.5;
3) In addition to the consideration paid/payable to the Owners as set out in Clause 2 (a) above, the Developers shall allot to all the existing tenants/occupants as set out in Annexure "A" hereto who have been in possession and occupation of various tenements in the said building and who shall handover their respective tenements to the Developers and execute necessary/requisite agreements with the Developers, residential premises free of costs and on ownership basis;
4) Upon execution of this Agreement, the Developers shall proceed with the development work on the said property, however, at their own costs and risk, so also in accordance with the Development Control Regulations.
5(a) The Owners have made out free, clear and marketable title to the said property free from all encumbrances subject to the lease in respect of the Plot and subject to the existing tenants/occupants and shall at their own costs get in all outstanding estates and clear all defects in title, if any. The Owners shall also clear the claims, if any, raised by any concerned parties at their own costs and expenses;
(b) The Developers agree, declare and confirm that they have already verified the Owners title to the said property as clear and marketable. The Developers shall not raise any objection and make any further requisition in respect to the Owners' title to the said property.
6(a) It is specifically agreed that the developers shall negotiate with the tenants/occupants occupying various tenements in the said building and join them in the proposed redevelopment scheme either by offering Permanent Alternate Accommodation on ownership basis or obtaining surrender from them of their respective tenancy rights in respect of the premises in their possession and occupation on such terms and conditions as will be found fit and proper by the Developers.
(b) The Developers shall be entitled to effect transfer of tenancy rights in respect of any of the premises occupied by the tenants/occupants and shall intimate about such transfer/surrender of tenancy to the Owners.
7) The Owners shave already paid and shall continue to pay from time to time all the dues such as property taxes, N.A. Assessment, cesses, water charges, electricity charges, etc. till the date they hand over vacant and peaceful possession of the said property including building/structure standing thereon. If any taxes, charges, dues are found due or in arrears, the same will be to the account of the Owners and paid by the Owners exclusively and the rent from the tenants shall be recovered by the Owners till they hand over possession of the said property to the Developers.
10) The parties hereto specially agree and confirm that the existing building known as 'Padmavati Sadan' standing on the said property will be demolished by the Developers herein. The old materials such as M.S/Beam Joys, Cuddapah, AC Sheets, Doors and Windows, Mangalore Tiles and/or otherwise whatsoever material from old building/structure/s on the said property will be the property of the Developers and the Developers shall be entitled to dispose it of as he may deem fit and appropriate sale proceeds thereof without in any manner accountable or liable to the Owners or any of the tenants/occupants.
11) The Developers shall immediately commence the development work at their own costs and risk on the said property and make best endeavour to obtain Commencement Certificate within 6 months from the date of obtaining vacant and peaceful possession of the entire property, which may be extendable mutually and complete the same within a period of 30 months from the date of obtaining Commencement Certificate from the MCGM time being the essence of the contract. The Developers shall endeavour to obtain Occupation Certificate from the MCGM within a period of 30 months from the date of obtaining Commencement Certificate. The Developers shall indemnify and keep indemnified the Owners in respect of breach of any of the terms and conditions of the sanctioned plans while commencing, continuing and completing the construction work on the said property and/or any terms of this Agreement.
12(a) It is agreed and understood that the Owners shall not any way obstruct the construction and/or development work to be carried out by the Developers and shall not do or omit to any act, matter or things whereby the Developers will be prevented from carrying out the development work under this Agreement;
(b) It is further agreed that if the development of the said property is not completed due to willful default on the part of the Owners or any of them, then, the Developers shall be entitled to specific performance of these presents by the Owners and in such event, the owners shall also remain liable and responsible for all losses and damages which may be sustained and/or suffered by the Developers due to the willful default by the Owners.
13) The Owners hereby state, represent and declare that:
(d) in the event, the Owners desire to deal with or dispose off their existing and/or Permanent Alternate residential and/or office/commercial premises in their possession/occupation, then they shall first offer the same to the Developers at the price/rate as mutually agreed by and between them. In the event, the Developers decline to acquire the same, the Owners will be entitled to dispose off the same to any third party and the Developers shall issue a No Objection Certificate for such sale/transfer without claiming any consideration;
(e) The Owner shall not transfer, agree to transfer, accept surrender of any tenancy rights from any of the tenants/occupants of the said building/property from the date of this Agreement and the same shall be done by the Developers with the written intimation in that behalf to the Owners or any of them;
(f) ... ... ... ..
(g) they shall execute Conveyance/Deed of Transfer in respect of the said property to and in favour of the proposed Society/Condominium of holders of various units/premises.
15) It is agreed between the Parties that (i) the possession of the entire property will be handed over to the Developers within 30 days upon receipt of IOD from MCGM to enable the Developers to take charge of the same and to commence the development work; (ii) the possession of the tenanted premises occupied by the tenants shall be taken by the Developers directly from the tenants.
16) The Owners confirm that they have issued following permissions and rights to the Developers herein:
(a) To commence and complete the development of the said property as agreed herein by demolishing existing building/structures as well as cutting of trees, if any, thereon with their own sources and cost as per the plans approved and permission that may be given by the Municipal Corporation of Greater Mumbai and/or such other Local Authorities with amendments thereof, if any,
(b) To enter into and execute agreements with the tenants/occupants in the said building/property and to give permanent alternate accommodation in the new buildings to the existing owners/tenants/occupants as per Annexure "A" hereto or accept surrender/transfer of tenancies/rights from them;
(c) To store building material and storage of other goods and equipments required for development of the property as well as for temporary sheds required to accommodate construction labourers; (d) To deal with and/or dispose of on ownership basis or otherwise the Units/Premises in the new Buildings to be constructed on the said property at such price as the Developers may deem fit and proper from time to time and at their risk and costs;
(e) To enter into Agreements for Sale in respect of the flats/units/office/premises in the Buildings to be erected or any such further or additional area constructed on the said property on an ownership basis or otherwise with prospective buyer/s in their own name.
17(a) The Owners and each of them shall render all assistance, co-operation and sign and execute or caused to be signed and executed all applications, plans, authorities and other writings, as may be necessary or required to enable the Developers to develop and complete the development of the said property. The Developers shall incur the necessary expenditure for the same.
(b) The Owners shall not interfere with the construction work, elevation of the proposed new wing/building, colour scheme amenities etc. proposed to be provided by the Developers.
20) It is specifically agreed between the Parties hereto that, if for any reason the building plan could not be sanctioned and/or approved by the MCGM, then, in that event, this Agreement shall not come to an end or terminated. The Owners shall be entitled to retain the entire amount paid under this Agreement to them by the Developers as also the possession of the premises in their possession/occupation if not handed over to the Developers and the Development rights granted under these presents shall vest with the Developers herein forever.
21) The Owners do hereby state that from the date hereof the Owners shall not create any tenancy in respect of the said property or any part thereof and shall deliver the possession of the requisite tenements in their possession to the Developers upon sanction of the plan on receipt of full and total Commencement Certificate from the MCGM, whichever is earlier and also not to enter into any Agreement or documents for sale and transfer of the said property and/or accept any advance against the same nor create any third party right of whatsoever nature in respect thereof.
22) Simultaneously with the execution of these presents, the Owners herein shall also execute an Irrevocable General Power of Attorney in favour of the Developers or their nominee/s as may be desired by the Developers for the purpose of signing and/or executing all the applications, proceedings, plans, etc., to obtain necessary approval from various authorities, in connection with the further development of the said property to be submitted by the Developers on behalf of the Owners to the Competent Authority under the Urban Land (Ceiling and Regulation) Act, 1976, Mumbai Municipal Corporation, Town Planning Authority or any other Government or Semi-government authorities and also for the purpose of execution any other appropriate documents in respect of the said property in favour of the MCGM, BES and T Undertakings or Reliance Energy Limited/Government. The said Power of Attorney shall, inter alia, include power to execute/enter into agreements with tenants/occupants, seek surrender of their tenancies and/or other rights, sign and execute the - Transfer Deed/Conveyance/Assignment to and in favour of the Society/Condominium as well as Registration thereof. The Owners hereby agree that the said Power of Attorney shall not under any circumstances be revoked by them or any of them. However, upon completion of the entire project and sale and allotment of last flat/unit/tenement/office and execution of Conveyance in favour of the proposed Society/Condominium namely 'Padmalaya Cooperative Housing Society Limited, the said Power of Attorney shall automatically come to an end."
28) It is agreed that all the disputes either by the Owners or of the Developers shall be referred to the Arbitral Tribunal comprising of three persons one each to the nominated by the Owners and the Developers and the two Arbitrators shall appoint a third Presiding Arbitrator and the decision taken by the Arbitral Tribunal so nominated shall be final and binding upon the parties to the dispute. The arbitration will be conducted as per the provisions of the Arbitration and Conciliation Act, 1996. All the costs and expenses incidental to the Arbitration proceedings and other charges to be paid in pursuance thereof shall be borne and paid by both the parties equally. Each party will pay the fees of their respective Solicitors/Advocates."
5. According to the Plaintiffs, though the Defendant Nos.1 to 3 agreed to fully co-operate and assist the Plaintiffs to commence the redevelopment of the suit property and also compensate the Plaintiffs for any willful obstructions and omissions on the part of Defendant Nos.1 to 3 to commence and complete the development work of the suit property, Defendant Nos.1 to 3 have since signing of the said Agreement only been disrupting and obstructing all the efforts of the Plaintiffs to begin the redevelopment work and have not co-operated with the Plaintiffs to get the necessary plans and documents approved from the Municipal Corporation of Greater Mumbai ("MCGM"). According to the Plaintiffs, due to instigations and wrongful representations by the Defendant Nos.1 to 3 to the tenants, various tenants of the building on the suit property have refrained from entering into necessary agreements and/or are apprehensive in handing over the vacant and peaceful possession of their respective tenements to the Plaintiffs and therefore it has become exceedingly difficult for the Plaintiffs to obtain the necessary permissions/IOD from the MCGM and carry out other activities pertaining to the redevelopment of the suit property.
6. According to the Plaintiffs, despite the above conduct of the Defendant Nos.1 to 3, the Plaintiffs took steps towards carrying out development activities and have taken various steps towards commencement of the project with respect to the suit property, by appointing various professional agencies, carrying out geological survey and testing of soil of the suit property. The Plaintiffs appointed Zed Geotechnios and Const. to conduct Geo-technical investigation work at the suit property and also appointed M/s. P.N. Bhobe and Associates as Architects and Ascent Structural Engineers Pvt. Ltd. to act as Consulting Structural Engineers for the purpose of the said redevelopment. According to the Plaintiffs, whenever the representatives of the said agencies visited the suit property for the purpose of carrying out inspection or survey or testing, Defendant Nos.1 to 3 misbehaved and restrained the said agencies and/or their representatives from carrying out the desired work. It is submitted that the Plaintiffs were always ready and willing to perform their obligations under the said Agreement, and are still ready and willing to undertake the redevelopment of the said building.
7. According to the Plaintiffs, despite the hindrances created by Defendant Nos.1 to 3, the Plaintiffs with a view to resolve the pending issues, made various efforts including holding meetings with relevant authorities and also the tenants of the said building. The relevant correspondence exchanged by the Plaintiffs in this regard is annexed as Exhibits D-1 to D-4 to the Plaint. According to the Plaintiffs, since Defendant Nos.1 to 3 continued with their arbitrary and non-cooperative attitude leading to inordinate delays in the Plaintiffs commencing and completing the redevelopment works, the whole project came to a standstill. In the meanwhile, the Plaintiffs incurred huge losses on account of several commissions and omissions on the part of Defendant Nos.1 to 3 for which Defendant Nos.1 to 3 are liable to compensate the Plaintiffs in terms of the said Agreement.
8. According to the Plaintiffs, they were shocked and surprised to receive a letter dated 4th October 2011, addressed by Defendant Nos.1 to 3, inter alia contending that the said Agreement executed between the Plaintiffs and Defendant Nos.1 to 3 stands terminated on account of willful default of the terms and conditions of the said Agreement by the Plaintiffs. Defendant Nos.1 to 3 also issued public notice dated 7th October 2011 in local newspapers i.e. Janmabhoomi dated 11th October 2011 and Times of India dated 12th October 2011. In view thereof, the Plaintiffs through their Advocates also issued public notice dated 12th October 2011 in Janmabhoomi and notice dated 14th October 2011 in Times of India. The Plaintiffs through their Advocate's letters dated 10th October 2011 and 25th October 2011 denied the allegations made by Defendant Nos.1 to 3. The Plaintiffs also denied and disputed the purported termination of the said Agreement and revocation of the said irrevocable POA.
9. According to the Plaintiffs, in the circumstances the Plaintiffs issued notice to the Defendant Nos.1 to 3 and invoked the Arbitration clause (i.e. Clause 28 of the said Agreement) and called upon Defendant Nos.1 to 3 to nominate an Arbitrator of their choice. Since the Defendant Nos.1 to 3 failed and neglected to comply with the said communication, the Plaintiffs filed Arbitration Application No.149 of 2012 in this Court under Section 11 of the Arbitration and Conciliation Act, 1996 ("the Act"), for appointment of an Arbitrator by this Court. The Plaintiffs also filed an application under Section 9 of the Act for interim protective reliefs against Defendant Nos.1 to 3. However, by an order dated 1st December, 2011, the learned Single Judge of this Court (Coram: S.J. Vazifdar, J.) as an ad-interim measure directed Defendant Nos.1 to 3 to deposit in this Court a sum of Rs.1.38 crores paid by the Plaintiffs to the Defendant Nos.1 to 3, prior to entering into any development agreement with any third party. The Plaintiffs preferred an Appeal being Appeal No.25 of 2012 from the order passed by the learned Single Judge dated 1st December 2011. The said Appeal was disposed of by the Hon'ble Division Bench of this Court dated 16th April 2012. In the said order it was inter alia recorded that the learned Single Judge had not granted ad-interim relief by giving cogent reasons in his order dated 1st December 2011. However, it was clarified that the observations made by the learned Single Judge while rejecting the ad-interim relief, are to be treated as only tentative in nature and the Arbitration Petition be decided on its own merit and in accordance with law.
10. By their affidavit dated 30th January, 2012, Defendant Nos.1 to 3 averred that they had entered into a Development Agreement with Defendant No.4, pursuant to their depositing the said sum of Rs.1.38 crores in this Court on 22nd December 2011. Since Defendant Nos.1 to 3 had failed to forward a copy of the agreement entered into by and between them and the Defendant no.4 to the Plaintiffs, the Plaintiffs took out Chamber Summons No.295 of 2012 in Arbitration Petition No.968 of 2011, seeking directions against Defendant Nos.1 to 3 to furnish and grant inspection of the said Development Agreement-cum-Deed of Assignment of Lease dated 22nd December 2011, which Chamber Summons was allowed by an order dated 19th April, 2012 passed by this Court. Though Defendant Nos.1 to 3 had preferred an appeal impugning the order dated 19th April 2012, the said Appeal before the Division Bench was withdrawn, and a copy of the said Agreement dated 22nd December 2011 was made available to the Plaintiffs.
11. In view of the Defendant Nos.1 to 3 having created third party rights in respect of the suit property, on the application of the Plaintiffs this Court by its order dated 30th July 2012, allowed the Plaintiffs to withdraw the Arbitration Petition with liberty to file a suit, to seek appropriate reliefs. By the said order, the amounts deposited by Defendant Nos.1 to 3 amounting to Rs.1.38 crores along with interest accrued thereon was also directed to be transferred to the suit account to be retained therein until further orders. By the said order, this Court also clarified that the suit as well as the interim applications made therein shall be heard by this Court on merits without being influenced by any observations made in the orders passed in the Arbitration proceedings.
12. The Plaintiffs thereafter filed the present suit against Defendant Nos.1 to 3 and Defendant No.4 in whose favour Defendant Nos.1 to 3 have executed a Development Agreement-cum-Deed of Assignment of Lease dated 22nd December, 2011 in respect of the suit property.
13. Mr. N.H. Seervai, the learned Senior Advocate appearing for the Plaintiffs has, after taking me through the various clauses of the said Agreement and the said POA, submitted that pursuant to the said Agreement, the Plaintiffs have paid to the Defendant Nos.1 to 3 an aggregate amount of Rs.1.38 crores. The Plaintiffs also appointed Architects, Structural Engineers and Geo-technical Consultants in compliance with their obligations under the said Agreement and started negotiations with the tenants. However, from the very outset, the Defendant Nos.1 to 3 repeatedly caused disturbance and obstruction thereby not allowing the Plaintiffs to carry out their work. Defendant Nos.1 to 3 have also instigated the other tenants not to enter into any agreement with the Plaintiffs towards vacating their respective tenaments in the said building, and within a span of around 22 days after the passing of the Order dated 1st December 2011, by the learned Single Judge of this Court in the Arbitration proceedings, completed the negotiations and entered into a development agreement with Defendant No.4, which agreement cannot be said to have been entered into in a bona fide manner or without prior notice of the claims of the Plaintiffs in respect of the suit property. It is submitted that the development agreement with Defendant No.4 is ex-facie collusive as is evident from a perusal thereof, inter alia, on counts of consideration and obligations of the Assignee/Defendant No.4. It is submitted that no steps have been taken since 8 months by the Assignee/Defendant No.4 despite rights having been allegedly created in favour of Defendant No.4, which clearly goes to show that the same is to prejudice the rights of the Plaintiffs.
Mr. Seervai has also submitted that the share capital of Defendant No.4 is admittedly in the sum of Rs.One lakh and therefore it is impossible for Defendant No.4 to carry out the re-development of the suit property involving crores of rupees. Mr. Seervai has also relied on the letter dated 9th September 2009 written by the Defendant Nos.1 to 3 to the Plaintiffs, wherein the Defendant Nos.1 to 3 have referred to the G.R. issued by the Govt. of Maharashtra through its Urban Development Department, and alleged that the FSI for the development of old cessed buildings under Regulation 33(7) of D.C. Regulation 1991 was increased from 2.5 to 3, and in view thereof as provided in clause 2 (f) of the said Agreement, the increase in FSI has to be divided equally between the Plaintiffs and the Defendant Nos.1 to 3, and that the Defendant Nos.1 to 3 would be interested in having the said proportionate excess FSI added to their constructed area in addition to the area already agreed to be given to them. Mr. Seervai has submitted that the said demand made by the Defendant Nos.1 to 3 was incorrect and illegal because the G.R. referred to by the Defendant Nos.1 to 3 in the letter dated 9th September, 2009 was only a proposal to increase FSI and the same came into effect and the FSI was actually increased only in May 2011.
In the circumstances, Mr. Seervai submitted that there is a concluded contract for redevelopment of the suit property between the Plaintiffs and Defendant Nos.1 to 3. The said Agreement vested development rights in favour of the Plaintiffs in the suit property and the Plaintiffs are ready and willing to perform their obligations under the said Agreement at the earliest. The Plaintiffs have also taken various and active steps in furtherance of the said Agreement and have paid the entire monetary consideration thereunder to Defendant Nos.1 to 3. The Defendant Nos.1 to 3 with ulterior motives and without any valid cause have sought to terminate the said Agreement on grounds which are incorrect to their knowledge. The right of termination is absent in the said Agreement. The termination is therefore invalid and bad in law. Even under clause 20 of the said Agreement, it is clearly stated that the Development Agreement entered into between the parties shall not come to an end or terminated if for any reason the building plan could not be sanctioned and/or approved by the MCGM. It is submitted that Defendant Nos.1 to 3 have terminated the said Agreement for ulterior motives to deprive the Plaintiffs of their legitimate rights and to derive certain benefits by creating third party rights. It is therefore submitted that the Plaintiffs are entitled to the reliefs sought in the Plaint and is also entitled to the interim reliefs as prayed for in the above Notice of Motion.
14. Mr. Anturkar, the learned Advocate appearing for Defendant Nos.1 to 3 has submitted that the said Agreement being an agreement which gives only the development rights in respect of the suit property to the Plaintiffs and nothing more cannot be specifically enforced. Without prejudice to this contention, he has submitted that the Plaintiffs having taken out proceedings under Section 9 of the Act against Defendant Nos.1 to 3 seeking reliefs therein and having withdrawn the said proceedings, are not entitled to seek any reliefs against Defendant Nos.1 to 3 in the present suit. Mr. Anturkar has submitted that even otherwise the Plaintiffs are not entitled to any reliefs against Defendant Nos.1 to 3 since Defendant Nos.1 to 3 have already sold and transferred all their rights in the suit property in favour of Defendant No.4 and therefore the reliefs as prayed against Defendant Nos.1 to 3 have become infructuous. Mr. Anturkar has submitted that the suit as framed is bad in law since the Plaintiffs despite having knowledge of the fact that pursuant to the order passed by this Court dated 1st December 2011, Defendant Nos.1 to 3 have deposited the amount of Rs.1.38 crores in this Court and have thereafter entered into an agreement with Defendant No.4 selling/transferring all their rights in respect of the suit property in favour of Defendant No.4, have not impugned the said transaction in the present suit. In the absence of impugning the said transaction in the present suit, no reliefs can be granted in favour of the Plaintiffs at the interim stage and/or at the final stage.
Without prejudice to the aforesaid contention, Mr. Anturkar has also submitted that after execution of the said Agreement and the said POA by Defendant Nos.1 to 3, the Plaintiffs have not taken any steps whatsoever, in pursuance of the same. The responsibility of dealing with the tenants was solely that of the Plaintiffs under the said Agreement. At no stage have the Plaintiffs complained or made any grievance against Defendant Nos.1 to 3 that they have not co-operated with the Plaintiffs or have instigated the tenants, and for the first time in their letter dated 25th October 2011 false and incorrect allegations are made against Defendant Nos.1 to 3. Mr. Anturkar has also drawn my attention to the letters written by the Plaintiffs to the Income-tax Authorities from time to time explaining the delay in commencing/carrying out the reconstruction work, where again no allegations are made against Defendant Nos.1 to 3 as alleged for the first time on 25th October 2011. Mr. Anturkar has therefore submitted that the Plaintiffs themselves have failed to perform their obligations under the said Agreement which compelled Defendant Nos.1 to 3 to terminate the said Agreement. The Plaintiffs now cannot be heard to say that they were always ready and willing to perform their part of the contract and that the termination is bad. Mr. Anturkar has submitted that the agreement entered into by Defendant Nos.1 to 3 with Defendant No.4 is a bona fide agreement and all allegations made by the Plaintiffs against Defendant Nos.1 to 3 qua the same are denied and disputed by Defendant Nos.1 to 3.
15. Mr. Chagla, Learned Senior Advocate appearing for Defendant No.4, has supported the submissions advanced on behalf of Defendant Nos.1 to 3 by Mr. Anturkar. He has laid stress on the fact that this Court by its order dated 1st December 2011, on an application made by the Plaintiffs under Section 9 of the Act, allowed Defendant Nos.1 to 3 to enter into a development agreement after depositing an amount of Rs.1.38 crores in Court. Pursuant thereto, the amount of Rs.1.38 crores has been deposited in Court and an Agreement dated 22nd December 2011 transferring the development rights and assignment of leasehold rights is executed by Defendant Nos.1 to 3 in favour of Defendant No.4. Mr. Chagla submitted that in view thereof, the Plaintiffs cannot question the bonafides of the agreement dated 22nd December 2011 and further cannot be heard to say that the agreement dated 22nd December 2011 entered into by and between the Defendant Nos.1 to 3 and Defendant No.4, is only a tool attempted to prejudice the rights of the Plaintiffs. As regards the submission of Mr. Seervai on the share capital of Defendant No.4 Company, Mr. Chagla has submitted that Defendant No.4 is controlled and managed by Goshar Ventures Pvt. Ltd. which owns 81 per cent of the total paid up and subscribed capital of Defendant No.4. The Promoters of the said Goshar Ventures Pvt. Ltd. are experienced in real estate development and have completed various projects in the vicinity of Matunga, Mumbai. The Directors of Defendant No.4 are also running a successful business in the name of K.T. Exports, an Associate concern of Defendant No.4, having annual turnover of Rs.30 crores approx. and are capable of inducting further capital in the Defendant No.4 Company. Mr. Chagla has also taken me through the affidavit filed by Mr. Nimesh Sanghrajka dated 18th October 2012, wherein the deponent has set out the various steps taken by Defendant No.4 qua the suit property after entering into the agreement dated 22nd December 2011 with Defendant Nos.1 to 3. Mr. Chagla has therefore submitted that the Plaintiffs are not entitled to any reliefs as prayed for or otherwise.
16. I have considered the submissions advanced on behalf of the Plaintiffs and the Defendants. Before dealing with the main issues/defences raised by the Defendants as aforestated, I would first deal with the submission of Mr. Anturkar that the Plaintiffs are not entitled to seek any reliefs against Defendant Nos.1 to 3 in the present suit since the Plaintiffs had earlier taken out proceedings under Section 9 of the Act and have withdrawn the said petition and further that the Plaintiffs despite being aware of the fact that Defendant Nos.1 to 3 have sold the suit property to Defendant No.4 have not impugned the said transaction in the present suit because of which no reliefs can be granted in favour of the Plaintiffs at the interim stage and/or at the final stage.
17. It is true that the Plaintiffs had earlier issued notice to the Defendant Nos.1 to 3 and invoked the arbitration clause (i.e. clause 28 of the said Agreement) and called upon Defendant Nos.1 to 3 to nominate an Arbitrator of their choice. Since Defendant Nos.1 to 3 failed and neglected to comply with the said communication, the Plaintiffs filed Arbitration Application No.149 of 2012 in this Court and also filed an application under Section 9 of the Act for interim protective reliefs against Defendant Nos.1 to 3. However, by an order dated 1st December 2011, the Learned Single Judge of this Court (Coram: S.J. Vazifdar, J.) as an ad-interim measure directed Defendant Nos.1 to 3 to deposit a sum of Rs.1.38 crores in this Court, prior to Defendant Nos.1 to 3 entering into any Development Agreement with any third party. The Defendant Nos.1 to 3 thereafter deposited the said sum with the Prothonotary and Senior Master of this Court and executed a Development Agreement-cum-Deed of Assignment of Lease dated 22nd December 2011 in respect of the suit property in favour of Defendant No.4. Since Defendant No.4 was not a party to the Arbitration Agreement, the Plaintiffs withdrew the Arbitration Petition with liberty to file a suit against Defendant Nos.1 to 4. This Court by its order dated 30th July, 2012 allowed the Plaintiffs to withdraw the Arbitration Petition with liberty to file a suit against Defendant Nos.1 to 4. Pursuant to the said liberty granted by this Court to the Plaintiffs, the Plaintiffs filed the present suit against Defendant Nos.1 to 4 seeking aforestated reliefs. I am therefore not inclined to accept the submission advanced by Mr. Anturkar that since the Arbitration Petition was withdrawn by the Plaintiffs, the present suit cannot be filed by the Plaintiffs and interim/final reliefs cannot be granted in favour of the Plaintiffs. Hence the said submission is rejected.
18. The next submission of Mr. Anturkar is that the Plaintiffs are not entitled to any interim and/or final relief on the ground that the Plaintiffs despite being aware of the fact that a Development Agreement-cum-Deed of Assignment of Lease is already executed by and between Defendant Nos.1 to 3 and Defendant No.4, have not impugned the said transaction in the present suit. This submission is sought to be countered by Mr. Seervai by citing the decision of the Hon'ble Supreme Court in Guruswamy Nadar vs. P. Lakshmi Ammal (D) by L.Rs and others AIR 2008 SC 2560. Mr. Seervai, relying on paragraph 3 of the said decision, seems to suggest that the principle of Section 52 of the Transfer of Property Act applies in the instant case inasmuch as the subsequent transaction with Defendant No.4 was entered into during the pendency of a legal proceeding, namely, arbitration between the Plaintiffs and Defendant Nos.1 to 3 and therefore, the property cannot be transferred or otherwise dealt with so as to affect the Plaintiffs rights under a decree or order that may be made in the present suit. It is doubtful whether Section 52 of the Transfer of Property Act can be invoked in this case as suggested by Mr. Seervai. Firstly, Section 52 has been amended by Bombay Act 4 of 1939 so as to require a notice of pendency of any suit or proceeding to be registered under Section 18 of the Indian Registration Act, 1908 before the consequences provided for under Section 52 can apply in respect of immovable properties situated in Greater Mumbai. Therefore, pendency of a suit or legal proceedings simplicitor does not entail consequences under Section 52 in respect of immovable properties in Greater Mumbai, but there must further be a registered Lis pendens. Plaintiff has not made out any case of registration of such Lis Pendens.
Secondly, the principle of Section 52 applies qua a decree or order that may be passed in a suit or proceeding during the pendency of which the subsequent transfer takes place. The Plaintiff in this case seeks the benefit of Section 52 qua a decree or order that may be passed not in the pending arbitration but in a suit subsequently filed by him after giving up the arbitration proceedings. Prima facie, therefore, the submission of Mr. Seervai on the principle of Section 52 does not appear to be correct. I am, however, not convinced with the argument of Mr. Anturkar that the Plaintiffs had to impugn the Development Agreement-cum-Deed of Assignment of Lease between Defendant Nos.1 to 3 and Defendant No.4 before he could claim any relief in this suit against Defendant No.4. Under Section 19 of the Specific Relief Act, a Plaintiff promisee entitled to specific performance of his agreement can claim the same against a transferee of the promisor and for that purpose need not challenge the transfer between the promisor and his transferee. Prima facie therefore the Plaintiffs are entitled to the relief of specific performance against the Defendant No.4 transferee if they otherwise make out the case on merits. In the present suit, presumably on that footing the relief for specific performance including possession is claimed against all the Defendants including Defendant No.4.
19. I shall now deal with the main issues/defences raised by Mr. Anturkar recorded hereinabove. The first main issue which needs to be determined is whether the said Agreement entered into by and between Defendant Nos.1 to 3 and the Plaintiffs can be specifically enforced. The relevant clauses setting out the terms and conditions of the said Agreement are already set out hereinabove. It is clear from the same that the Vendors (i.e. Defendant Nos.1 to 3 herein) and the Developers (the Plaintiffs herein) under the said Agreement agreed as follows:
20.1 Under Clause 1, the Vendors have jointly and severely entrusted, given and granted full development rights to the Developers and have given them the right to enter upon the suit property and develop the same in all respects and in all manner by demolishing the existing building and constructing thereon new buildings by utilizing the FSI as contemplated in the said Agreement;
20.2 Under Clause 2 (a), the Vendors and the Developers have agreed that in consideration of the Vendors entrusting development rights in respect of the suit property to the Developers, the Developers shall provide to the Vendors the following:
(a) The Vendors have already been paid an amount of Rs.99 lakhs by the Developer on or before the execution of the said Agreement and the balance consideration of Rs.12 lakhs shall be paid by the Developers to the Vendors on or before 13th October 2007.
(b) The Developers shall in lieu of the residential premises presently in occupation of the Vendors provide free of costs to the Vendors, permanent alternate residential accommodation on ownership basis free of cost admeasuring 2000 sq.ft. (carpet area) in the proposed new building, along with two stilt parking areas and one open area parking space in the compound of the said new building.
(c) In lieu of the Vendors vacating the existing office/commercial premises presently occupied by them in the said building and handing over vacant and peaceful possession of the same to the Developers, the Developers shall further provide free of costs to the Vendors 800 sq.feet (carpet area) in the proposed new building as permanent alternative office accommodation on ownership basis.
(d) The Developers shall also pay an amount of Rs.27 lakhs to the Vendors as nonrefundable amount towards rent/license fee payable or to be incurred by the Vendors for the temporary alternate accommodation which the Vendors would procure during the period of construction and development of the suit property.
(e) In the event of additional FSI being made available i.e. in excess of 2.5 in respect of the suit property, the same would be divided between the Vendors and the Developers equally.
20.3 Under Clause 3, the Developers agreed with the Vendors that the Developers shall allot residential premises free of cost and on ownership basis to all the existing tenants/occupants who have been in possession and occupation of various tenements in the said building and who shall hand over their respective tenements to the Developers and execute necessary/requisite agreements with the Developers,.
20.4 Under Clause 4 it was agreed that the Developers shall proceed with the development work on the suit property upon execution of the said Agreement.
20.5 Under Clause 5 it was provided that the Vendors have made out a free, clear and marketable title to the suit property, free from all encumbrances, subject to the lease in respect of the plot and subject to the existing tenants/occupants and shall at their own costs clear all defects in title, if any. The said clause further provides that the Developers agree and confirm that they have already verified the Vendors title to the suit property as clear and marketable.
20.6 Under Clause 6 (a) it was provided that the Developers shall negotiate with the tenants/occupants occupying various tenements in the said building and join them in the proposed re-development scheme either by offering permanent alternate accommodation on ownership basis or obtaining surrender from them of their respective tenancy rights in respect of the premises in their possession and occupation, on such terms and conditions as found fit and proper by the Developers. The Developers shall also be entitled to effect transfer of tenancy in respect of any of the premises occupied by the tenants/occupants and only give intimation about such transfers/surrender of tenancy to the Vendors.
20.7 Under Clause 7 of the said Agreement, it is agreed that the Vendors shall continue to pay all the dues such as property taxes, N.A. assessment, cesses, water charges, electricity charges, etc. till the date they hand over vacant and peaceful possession of the suit property including buildings/structures standing thereon to the Developers.
20.8 Under Clause 10 it is agreed that the present building on the suit property shall be demolished by the Developers and the old materials such as M.S. Beam, Joys, Cuddapah,A.C. Sheets, Doors and Windows, Mangalore tiles and whatsoever material from old building/structures on the suit property, will be the property of the Developers and the Developers shall be entitled to dispose of the same as they may deem fit and proper without in any manner being accountable or liable to the Vendors or to the tenants/occupants.
20.9 Under Clause 12 (a) it is agreed that the Vendors shall not in any way obstruct construction and/or development work to be carried out by the Developers and shall not do or omit to do any act, matter or thing whereby the Developers will be prevented from carrying out the development work under the Agreement.
20.10 Under Clause 13(e), the Vendors have agreed that they shall not transfer, agree to transfer accept surrender of any tenancy rights from any of the tenants/occupants of the said building/property from the date of the said Agreement and the same shall be done only by the Developers with written intimation in that behalf to the Vendors or any of them.
20.11 Under Clause 13(g), it is agreed that the Vendors shall execute conveyance /Deed of Transfer in respect of the said property (i.e. the plot of land with buildings thereon) to and in favour of the proposed Society/Condominium of holders of various units/premises.
20.12 In Clause 15 it was agreed between the parties that the possession of the suit property will be handed over to the Developers within 30 days upon receipt of IOD from MCGM to enable the Developers to take charge of the same and to commence the development work and the possession of the tenanted premises occupied by the tenants shall be taken by the Developers directly from the tenants.
20.13 Under Clause 16 (d) of the said Agreement, the Vendors have given the right to the Developers to deal with and/or dispose of units/premises in the new buildings to be constructed on the suit property on ownership basis or otherwise at such price as the Developers may deem fit and proper from time to time at their risk and costs.
20.14 Under Clause 17, the Vendors had agreed that they shall render all assistance, co-operation and sign and execute or caused to be signed and executed all applications, plans, authorities and other writings as may be necessary or required to enable the Developers to develop and complete the development of the suit property and that the Developer shall incur the necessary expenditure for the same. The Vendors further agreed not to interfere with the construction work, elevation of the proposed new wing/building, colour scheme, amenities etc. proposed to be provided by the Developers in the new wing/building.
20.15 Under Clause 20 it is agreed between the parties that if for any reason the building plan could not be sanctioned and/or approved by the MCGM, then in that event the said Agreement shall not come to an end or terminated. The Vendors shall be entitled to retain the entire amount paid under the said Agreement to them by the Developers as also the possession of the premises in their possession/occupation, if not handed over to the Developers and the development rights granted under the said Agreement shall vest with the Developers for ever.
20.16 Under Clause 21 it was provided that the Vendors shall not create any tenancy in respect of the suit property or any part thereof, after execution of the said Agreement.
20.17 Under Clause 22, it is agreed that simultaneously with the execution of the said Agreement, the Vendors shall also execute an Irrevocable Power of Attorney in favour of the Developers or their nominees as may be desired by the Developers for the purpose of signing and/or executing all the applications, proceedings, plans, etc. to obtain necessary approval from various authorities in connection with the further development of the suit property, to be submitted by the Developers on behalf of the Vendors to the Competent Authority under the Urban Land (Ceiling and Regulations) Act, 1976, Mumbai Municipal Corporation, Town Planning Authority or any other Government or semi-government authorities and that the POA shall inter alia include power to execute/enter into agreements with tenants/occupants, seek surrender of their tenancies and/or other rights, sign and execute the transfer deed/conveyance/assignment to and in favour of the Society/Condominium as well as registration thereof. It was agreed that the Vendors shall not under any circumstances revoke the said POA. However, upon completion of the entire project and sale and allotment of the last flat/unit/office and execution of conveyance in favour of the proposed Society/Condominium viz. Padmalaya Co-operative Housing Society Ltd. the said POA shall automatically come to an end.
20.18 From the date of execution of the said Agreement, the Vendors have simultaneously executed in favour of the Plaintiffs the said POA whereunder the Plaintiffs-Developers are given all the rights as agreed under the said Agreement, including the right to execute/enter into agreements with tenants/occupants, seek surrender of the tenancies and/or other rights, the right to sell all the flats/units/tenements/offices on ownership basis and keep the sale proceeds without giving any accounts to the Vendors and to also sign and execute transfer deed, conveyance or assignment to and in favour of the Society/Condominium as well as its registration thereof.
21. From the aforesaid terms of the said Agreement and power given by the Vendors to the Developers, I am prima facie of the view that though the said Agreement is termed as a Development Agreement, it is an agreement whereunder interest is created in favour of the Developers in respect of the suit property which includes the structures thereon. As can be seen from the above, all the rights to develop the property have been given by the Vendors to the Developers. The Vendors have already received the monetary consideration as set out in the said Agreement from the Developers. Except for the premises agreed to be given to the Vendors by the Developers in lieu of the premises used and occupied by them in the said building, the Vendors have given all the rights to the Developers to deal with the tenants in the manner they desire and after providing them with alternate accommodation in the newly constructed building or elsewhere or giving them monetary consideration in lieu of their tenements, the Developer is given full and complete right to sell the flats/units/shops etc. on ownership basis without any interference from the Vendors. The right to decide the elevation of the building, the colour scheme, etc. is also given to the Developers by the Vendors. The Vendors have also agreed that they shall execute the Conveyance Deed/Deed of Transfer in respect of the said property (i.e. the plot of land with buildings thereon) to and in favour of the proposed Society/Condominium of holders of various units/premises. The Vendors have in the said Agreement itself provided that they will be simultaneously executing a POA, inter alia, giving the right to the Developer to construct a new building, accommodate the Vendors and the tenants as agreed and most important to sign and execute the transfer deed/conveyance/assignment to and in favour of the Society/Condominium as well as effect its registration. In the circumstances I am prima facie satisfied that the said Development Agreement is capable of being specifically enforced. I am fortified in my view by the decision of the Hon'ble Division Bench of this Court in Chheda Housing Development Corporation vs. Bibijan Shaikh Farid and others 2007 (3) Mh.L.J. 402.
22. Despite being of the prima facie view that the said Agreement is capable of being specifically enforced, the next question that arises before this Court at the interim stage is whether the conduct of the Plaintiffs entitles them to seek specific performance of the said Agreement and interim reliefs in this regard. Under clause 6 (a) of the said Agreement, the Developers were required to negotiate with the tenants/occupants occupying various tenements in the said building and to join them in the proposed redevelopment, either by offering permanent alternate accommodation on ownership basis or obtaining surrender from them of the respective tenancy rights in respect of the premises in their possession and occupation on such terms and conditions as may be found fit and proper by the Developers. For this purpose, the Developers were to execute necessary writings/agreements with the existing tenant/occupants at their own cost and expense as provided in clause 9 of the said Agreement. Under clause 11 of the said Agreement, the Developers had agreed to immediately commence the development work at their own costs and risk on the said property and make best endeavour to obtain commencement certificate within six months from the date of obtaining vacant and peaceful possession of the entire property which could be mutually extended and complete the same within a period of 30 months from the date of obtaining commencement certificate from the MCGM, time being the essence of the contract. The Developers also agreed to endeavour to obtain occupation certificate from the MCGM within a period of 30 months from the date of obtaining the commencement certificate.
However, from the documents annexed to the Plaint by the Plaintiffs-Developers, it is clear that though the Plaintiffs obtained a quotation from Zed Geotechnics and Const., for geological investigation work on the suit property and also appointed an Architect on 10th August, 2007, they have not made any progress thereafter. After approximately two years from the date of the execution of the said Agreement, the Plaintiffs appointed a Consulting Structural Engineer for the proposed redevelopment of the suit property. The first letter addressed by the Plaintiffs to the tenants and annexed to the Plaint is dated 2nd November 2008 i.e. after more than a year from the date of execution of the said Agreement. The second letter addressed by the Plaintiffs to the tenants is dated 24th November 2008 wherein the Plaintiffs have recorded that the points raised by the tenants need further discussion across the table. However, it was also recorded that the Plaintiffs were not available upto 15th December 2008 and will keep the tenants informed about the future date for the said discussion to be held at a convenient time and place. The Plaintiffs have suggested to the tenants that in the meantime they should consider giving a NOC for MHADA formalities which is revocable at any point of time till a final registered agreement is arrived at between the parties. A copy of the draft consent letter to be issued by the tenants to the Chief Officer, Mumbai Building, Repairs and Reconstruction Board (MBRRB) is annexed at page 75 of the plaint. The same is titled "Occupants irrevocable consent".
In paragraph 2 of the said consent letter it is provided that the Developer shall construct self-contained tenements in the new building proposed to be constructed by demolishing the existing building and shall allot "the tenant carpet area of _ _ _ _ sq.ft." in the new building. Without any agreement entered into between the tenants/occupants with the Plaintiffs-Developers, it would be impossible for the tenants to give their irrevocable consent to the MBRRB as suggested by the Plaintiffs. Though a plan is annexed at page 76 and at page 77 of the Plaint, certain general conditions have been set out and the signatures of the occupants/tenants are obtained, there is no further correspondence entered into by and between the Plaintiff and the occupants/tenants. The Plaintiffs have not produced a single letter addressed to the occupants/tenants inter alia recording that the tenants are allegedly not cooperating with the Plaintiffs. In one of the letters dated 17th December 2010 addressed to the Income-tax Officer, the Plaintiffs have recorded that no progress is made in the matter in the last three years i.e. 3 years after executing the development agreement with Defendant Nos.1 to 3 because of noncooperation from the "remaining tenants". In the subsequent letters dated 17th December 2010 addressed to the Income Tax Officer 17(2)(3) and 17(2)(4), the Plaintiffs have recorded the cause for the delay in taking any steps in the matter. The Plaintiffs have not mentioned anything regarding non-cooperation by the Defendant Nos.1 to 3 but have stated that as the agreement is towards the sale of development rights and as the said property is tenanted, it shall be possible to redevelop once the following conditions are complied with:
Written consent from all the existing tenants towards re-development is obtained;
No Objection Certificate (NOC) from Maharashtra Housing and Area Development Authority (MHADA) to be obtained subject to their conditions being complied with.
Approvals and NOC's from various government offices to be obtained subject to their conditions being fulfilled for the purpose of redevelopment.
In fact, the main reason attributed by the Plaintiffs for the non-commencement of the development work is as under:
"Since this Development Agreement was entered into three years ago, after which there has been an extremely slow or no progress mainly due to the global melt down in 2008 and also non-clarity from the government on the redevelopment of the Cess Category Building followed by the negotiation with the tenants and ambiguity on the grounds of extra area being offered by way of increase in the Floor Space Index (FSI)."
23. From the aforesaid facts it is clear that the Plaintiffs except for exchanging some correspondence in the year 2009 with the occupants/tenants, have not taken up the matter with the tenants/occupants any further. The Plaintiffs have not taken any steps whatsoever under the said Agreement. In view thereof, the Defendant Nos.1 to 3 by their letter dated 4th October 2011, after recording the failure on the part of the Plaintiffs to take any steps whatsoever upon execution of the said Agreement, terminated the said Agreement. In response, the Plaintiffs by their letter dated 25th October 2011 i.e. 4 years after the execution of the said Agreement for the first time alleged as follows:
"However, since the signing of the Agreement till date, you have only been disrupting and obstructing all efforts of our clients to proceed with the redevelopment work and have not cooperated with our clients to get the necessary plans and documents approved from the MCGM to commence the said re-development work. Thus, there is failure on your part to perform a promise which is required to be performed prior to seeking performance of any reciprocal promises by you from our clients. Therefore, you are liable to our clients to compensate them for all the financial losses and damages incurred by them due to the delay and obstructions so caused by you and failure/breach to perform your prior obligations. Moreover, due to your direct and indirect instigations and wrongful representations, various tenants of the building have been caused by you not to enter into necessary agreements and/or are apprehensive in handing over the vacant and peaceful possession of their respective tenements to our clients. This has further hampered the efforts in our clients to obtain the necessary permissions/IOD from the MCGM for the said redevelopment of the said property."
The above allegations against Defendant Nos.1 to 3 by the Plaintiffs are clearly an afterthought. The Plaintiffs have not written a single letter to Defendant Nos.1 to 3 making any such allegations during the period of 4 years i.e. between the date of the said Agreement dated 25th September 2007 and 25th October 2011. Even in the letters addressed to the Income tax Authorities the Plaintiffs have never alleged that they are unable to proceed with the development work since Defendant Nos.1 to 3 are disrupting or obstructing their efforts to proceed with the redevelopment work. In view thereof, I am prima facie satisfied that the allegations made by the Plaintiffs against Defendant Nos.1 to 3 in the letter dated 25th October 2011 and in the plaint to the effect that Defendant Nos.1 to 3 are instigating the tenants and a