1. By this notice of motion, the plaintiffs seek an order and injunction against the defendant nos. 1 and 3 to 17 from in any manner dealing with or disposing of, alienating or encumbering or creating any third party rights in respect of the suit property or any part thereof described in prayer (a) of the notice of motion and/or parting with possession or inducting any third party in possession in any manner whatsoever and also seeks appointment of court receiver in respect of the said property.
2. The plaintiffs were formerly known as Vinit Estate Private Limited and had filed a suit inter alia praying for a declaration that the Memorandum of Understanding for sale of the suit property described in Ex.A to the plaint dated 23rd March, 2006 executed by and between the plaintiffs and defendant no1. Is valid, subsisting and binding upon defendant nos.1 and 3 to 17 and also seeks specific performance thereof. Some of the relevant facts for the purpose of deciding this notice of motion are as under :-
3. It is the case of the plaintiffs that the defendant no.1 is the owner of the suit property. Defendant no.2 is a partnership firm duly registered. Defendant no.1 is a partner of defendant no.2. Defendant no.3 is a society registered under the provisions of Maharashtra Co-operative Societies Act. Defendants nos. 1, 4 to 17 are the members of the defendant no.3 society. On 23rd March, 2006 the plaintiffs and the defendant no.1 entered into a memorandum of understanding. It is case of the plaintiffs that under the said MOU, the defendant no.1 as owner agreed to sale and the plaintiffs agreed to purchase the suit property for the consideration of Rs.23 crores on the terms and conditions contained therein.
4. It is the case of the plaintiffs that the defendant no.1 had represented to the plaintiffs that he had purchased the suit property under a deed of conveyance dated 28th March, 1968. The defendant no.1 as a partner of defendant no.2 had approached the Indian Overseas Bank for certain facilities. The said Indian Overseas Bank had issued a performance based guarantee for Rs.35 lacs. The original title deed of the suit property was kept as a security with the said bank against the bank guarantee. The defendant nos. 1 and 2 were liable to pay the sum of Rs.35 lacs with interest to the said Indian Overseas Bank for the release of title documents of the suit property. The Indian overseas bank filed a proceeding against the defendant no.2 before the Debt Recovery Tribunal (R.P.No.294 of 2002). The defendant no.1 therefore had requested the plaintiffs to pay a sum of Rs.80 lacs to the said Indian Overseas bank in 'no lien' account for the benefit of defendant no.2 on behalf of defendant no.1.
5. Under the said agreement, the plaintiffs paid a sum of Rs.80 lacs as part of the consideration against the total consideration of Rs.23 crores to the Indian Overseas Bank on behalf of defendant no.2. The plaintiffs were liable to pay the sum of Rs.1 crore to the defendant no.1 on or before 29th March 2006 against the defendant no.1 handing over the vacant possession of the flat no.302 admeasuring approximately 1100 sq.ft. on the third floor of the suit property. The plaintiffs agreed to pay a sum of Rs.1,20,00,000/- to the defendant no.1 on or before 10th April 2006 against the defendant no.1 handing over the vacant possession of flat no.001 admeasuring approximately 900 sq.ft. on the ground floor of the suit property. The plaintiffs agreed to pay Rs.2.5 crores against the defendant no.1 handing over the possession of the ground floor of the bungalow admeasuring about 2300 sq.ft.
6. The plaintiffs agreed to pay Rs.5 crores to the defendant no.1 upon receipt of the title certificate certifying clear and marketable title of the defendant no.1 and the balance amount of Rs.12.5 crores within 90 days from the date of the said MOU and upon the vendor executing conveyance deed in favour of the developers with power of attorney. It was agreed that the vendor shall handover to the plaintiffs quiet, vacant and peaceful possession of the suit property within 90 days from the date of the said MOU. The vendor in the said MOU had represented that they had not entered into any agreement or agreements nor contracted to create any right, title or interest in favour of any other person or persons nor have done any acts by reason of which their right, title or interest in respect of the suit property is or can be adversely affected and/or prejudiced. The vendor had full right and authority to grant the conveyance deed of the suit property in favour of the plaintiffs.
7. It was provided that the plaintiffs shall be entitled to investigate the title of the vendors to the suit property by issuing public notice in the newspapers inviting claims. If the vendor fail to satisfy and clear all the claims received in response to the public notice, the developers will clear the same at the cost to be recovered from the vendor or had an option to terminate the said MOU by sending seven days notice and in that event the vendor had agreed to forthwith return the amount paid by the developers. It is the case of the plaintiffs that under the said MOU the plaintiffs also paid to the defendant no.1 further amount of Rs.1 crore. In paragraph 4.6 of the plaint,it is averred that against the payment of the sum of Rs.1 crore, the defendant no.1 handed over the possession of flat no.302 admeasuring 1100 sq.ft. on the third floor and the car parking space in the suit building. The parties recorded the handing over possession of the said flat by the defendant no.1 to the plaintiffs by the letter dated 28th March, 2006.
8. By a letter dated 17th May, 2006 the plaintiffs alleged that the defendant no.1 had not complied with various promises in the MOU including handing over peaceful and vacant possession of the entire property within 90 days. Defendant no.1 by his letter dated 26th May 2006 informed that at the time of signing of the said MOU, the defendant no.1 had made it clear that the MOU for sale was subject to removal of the tenant and other terms and unfortunately the tenant was not ready for any settlement as earlier agreed by the tenant. It is also stated in the said letter that the plaintiffs were aware of the circumstances and the difficulty under which the defendant no.1 was compelled to sign the said MOU by the family members. Though defendant no.1 wished to complete the deal, he did not wish to get into further complication whereby the interest of the family was at risk. The defendant no.1 had a large family of merely 40 members. The defendant no.1 stated that he was ready to return the security and the question of possession of the flat did not arise.
9. It is the case of the plaintiffs that the defendant no.1 thereafter on 27th June, 2006 forwarded a form to the Corporation for commencement certificate and a notice for heritage required to be issued for the purpose of ULC and getting the plan sanctioned to the architect appointed by the plaintiffs. Defendant no.1 also executed a power of attorney on 25th September 2006 in favour of two persons nominated by the plaintiffs.
10. By a letter dated 7th October, 2006 addressed to the plaintiffs, the defendant no.1 demanded photocopy of the MOU and stated that only thereafter he would deal with the letter dated 17th May, 2006 of the plaintiffs. The plaintiffs by letter dated 20th October, 2006 to the defendant no.1 denied the allegations and contended that the defendant no.1 was fully aware of the terms of the MOU. It was contended that the defendant no.1, his family members alongwith his advocate had read all the clauses of the MOU and had discussed the same and thereafter had finalized the said MOU.
11. The defendant no.1 by his letter dated 27th October, 2006 once again requested the plaintiffs to furnish a copy of the MOU and stated that unless he would read the said MOU, it would not be possible for him to deal with the said letter of the plaintiffs dated 20th October 2006 under reference. The plaintiffs by their letter dated 2nd November, 2006 called upon the defendant no.1 to take inspection of the original MOU by visiting their office. The defendant no.1 thereafter alongwith their advocate attended the office of the plaintiffs on 15th November, 2006 and took inspection of the MOU. A photocopy of the said MOU was furnished by the plaintiffs to the defendant no.1.
12. The defendant no.1 by his advocates letter dated 15th November, 2006 alleged that the plaintiffs had tendered photocopy of the MOU at the time of inspection and the original was not shown. The defendant no.1 by his letter dated 18th November, 2006 alleged that the envelope which was sealed under the signature of Ms.Pinky Karve and the signature of Mr. Vijay Tawde advocate in which MOU was kept, was opened by the plaintiffs in their absence and further alleged that page no.7 of the said MOU was interpolated by the plaintiffs and also disputed the initials of defendant no.1 on page 7.
13. It is the case of the plaintiffs that the defendant no.1 thereafter met Mr.Sanjay Chabria of the plaintiffs and requested him to ignore the correspondence and that he was satisfied with the photocopy of the MOU fully and confirmed having taken inspection of the original of the MOU. The defendant no.1 by his letter dated 2nd December, 2006 placed the same on record and requested the plaintiffs to bear with him as he wanted to procure alternative accommodation for his family and promise to complete the transaction in accordance with the MOU. It is the case of the plaintiffs that the defendant no.1 thereafter attended the office of the Sub-Registrar of Assurances on 4th December, 2006 to register the power of attorney dated 25th September, 2006. On 21st December, 2006, the plaintiffs made payment of Rs.5 lacs as further part payment of consideration to the defendant no.1.
14. By letter dated 4th September, 2007 the defendant no.1 informed the plaintiffs that he was trying to handover the property to the plaintiffs on 7th October, 2007 and requested the plaintiffs to release a sum of Rs.2,50,000/- immediately as the defendant no.1 was at advance stage of negotiation with the tenant. It is the case of the plaintiffs that plaintiffs released the said amount of Rs.2,50,000/- to the defendant no.1 in cash.
15. The defendant no.1 by his letter dated 4th December, 2007 alleged that he was forced to sign the letter dated 2nd December, 2007 wherein it was alleged that he had withdrawn the facts recorded in his advocate's letter of 15th and 18th November, 2006 and further alleged that the representatives of the plaintiffs had coerced him to attend the office and made him to sign and register the power of attorney which he did under the threat. The defendant no.1 informed the plaintiffs that the defendant no.3 society was in exclusive, continuous and settled possession of the suit property since last several years and the rights, title and interest of the suit property was vested with the said society. The said MOU was subject to the rights, title and interest of the defendant no.3 society. It is stated in the said letter that the members of the society did not consent for the development and/or sale of the property within three months of the execution of the MOU and thus the said MOU would be cancelled. It is contended that the plaintiffs had agreed to accept the amount paid by them to the defendant no.1. The MOU is deemed to have been cancelled by efflux of time.
16. The defendant no.1 terminated the said MOU and agreed to refund the amount paid by the plaintiffs under the said MOU. The defendant no.1 enclosed a photocopy of the pay order for Rs.2,10,25,000/- in favour of the plaintiffs as refund of the amount paid by the plaintiffs to the defendant no.1 and requested to return the original documents as well as other writings and agreed to hand over the pay order to the plaintiffs. The defendant no.1 addressed a letter dated 5th January, 2008 stating that he had terminated the said MOU and had sent a copy of the demand draft but the plaintiffs had failed and neglected to collect the said demand draft and called upon the plaintiffs to collect the same within 10 days from the date of receipt of the letter and stated that in case of failure, the defendant no.1 would deposit the said amount in the bank.
17. By letter dated 12th January, 2008, defendant no. 1 revoked and cancelled the power of attorney dated 25th September, 2006 with immediate effect and called upon his constituted attorneys not to act upon the said power of attorney and to return the original thereof within one week.
18. The Plaintiffs by their advocates letter dated 12th February, 2008 denied the allegations made by defendant no. 1 in the letter dated 4th December, 2007, 5th January, 2008 and did not accept the offer of defendant no. 1 for refund of the amount and called upon the defendant no. 1 not to deal with the suit property. The plaintiffs thereafter invoked arbitration clause on 15th February, 2008. Parties did not agree to the name of the arbitrator suggested by each other. Plaintiffs filed a Petition (122 of 2008) in this court under section 9 of the Arbitration and Conciliation Act, 1996 against defendant no.1. Defendant no. 1 made a statement in those proceedings before this court that defendant no. 1 had already executed the registered deed of conveyance dated 12th September, 2007 in respect of the suit property in favour of defendant no. 3 and has no subsisting right, title or interest in the suit property. Defendant no.1 was in occupation of flat no. 102. Flat No. 003 was in occupation of a tenant. Defendant no. 1 made a statement that he will not create any third party rights in respect of the said flat no. 103 or 003. It was stated that flat no. 302 was in occupation of a a member of the society i.e. Firoza Banu Fazlur to whom a share certificate had been issued by the society. Defendant no.1 also furnished a copy of the deed of conveyance dated 12th September, 2007 made between defendant no.1 and defendant no.3 duly registered.
19. Mr. Madon, learned senior counsel for the plaintiffs states that the proceedings filed under section 9 and section 11 by the plaintiffs were pending. On 12th June, 2009, the plaintiffs issued a notice under section 164 of the Maharashtra Cooperative Societies Act, 1960 upon the Registrar of Cooperative Society. Plaintiffs filed a complaint on 7th July, 2009 against the defendant no. 1 with Senior Inspector of Police, Bandra Police Station (West), Mumbai. It is submitted by the learned senior counsel that the defendant no.1 had made a representation that he was the sole owner of the suit property. No consent of any family member before entering into the MOU or for acting upon the said document was required. The defendant no. 1 alleged coercion in the month of December, 2006 but no such allegations were placed on record at the material time though it was the practice of defendant no.1 to place all the allegations on record in writing in past. It is submitted that if there was any coercion on the defendant no. 1 by the plaintiffs, in December, 2006, defendant no.1 would not have asked for money from the plaintiffs in the month of September, 2007. Learned Senior Counsel invited my attention to paragraph 26 of the written statement filed by defendant no.1 before the Debt Recovery Tribunal in the application filed by the bank. Defendant no. 1 had made a statement that he would not deal with the suit property. The title deeds in respect of the suit property were at that time with the bank. Defendant no. 3 was not party to the proceedings before the Debt Recovery Tribunal. The defendant no.1 induced the plaintiffs to pay 80 lacs to the bank on his behalf and to obtain the title deeds from the bank.
20. It is submitted by the learned senior counsel that most of the occupants except one tenant, all the occupants are family members of the defendant no. 1 of the suit property. Learned senior counsel relied over a copy of the chart to demonstrate the allegation that all the occupants except one occupant occupying various flats in the society are family members of the defendant no. 1. Defendant nos. 7 and 8 are chairman and secretary of the society respectively. The defendant no. 3 society was fully aware of the transaction between plaintiffs and defendant no. 1 and was not a bona fide purchaser. Learned senior counsel submits that the alleged deed of conveyance dated 12th September, 2007 is sham and bogus document and is not binding on the plaintiffs. The alleged agreement for sale dated 9th January, 1976 between defendant no. 1 and 2 and the agreement between defendant no. 2 and 4 to 17 are also void ab initio and illegal and not binding on the plaintiffs. The defendant no. 1 all throughout continued to represent the plaintiffs that he was exclusive owner of the suit property and had absolute authority to deal with the said property to the plaintiffs. Similar representation was also made to the Municipal Corporation by defendant no.1. It is submitted by the learned senior counsel that in these circumstances this court shall appoint the Court Receiver in respect of the suit property and shall grant interim reliefs as prayed for.
21. Mr. Setalvad, learned senior counsel appearing for defendant no.3 society submits that the MOU relied upon by the plaintiffs and of which plaintiffs seeks specific performance is unstamped and unregistered and thus no reliance thereon can be placed by the plaintiffs. It is submitted that defendant no. 3 is a registered society. The deed of conveyance executed between defendant no. 1 and defendant no. 3 society on 12th September, 2007 is duly registered. By a writing dated 28 May, 2008 defendant no.3 has granted development rights in favour of M/s. Lookwell Life Space Pvt. Ltd. The said developer has not been impleaded as a party defendant to this proceedings. The plaintiffs have not challenged the said development agreement though suit was filed on 26th august, 2009. There is no prayer in the plaint for cancellation/recession of the registered deed of conveyance and/or development agreement. Learned senior counsel placed reliance on section 27 and 31 of the Specific Relief Act. It is submitted that since the plaintiffs have not impleaded the necessary party and the pleadings filed by the plaintiffs are not in accordance with provisions of Code of Civil Procedure, no relief can be granted in favour of the plaintiffs on that ground also. It is submitted by the learned senior counsel that the documents between the defendant no. 1and defendant no. 3 and the said M/s. Lookwell Life Space Pvt. Ltd. are registered documents whereas MOU entered into between the plaintiffs and the defendant no. 1 is an unregistered and unstamped document and thus plaintiffs cannot get any precedence based on an unregistered MOU over two registered documents.
22. Learned senior counsel placed reliance on section 3 of the Transfer of Property and submits that since the deed of conveyance executed between defendant no. 1 and defendant no. 3 is duly registered much prior to date of MOU and the development agreement between defendant no. 3 and M/s. Lookwell Life Space Pvt. Ltd are duly registered, there was deemed notice to the plaintiffs. No rights could be thus claimed by the plaintiffs as a bona fide purchaser. Learned senior counsel submits that defendant no.1 has entered into several documents with the flat purchasers during the period between 1980 and 1986 under Maharashtra Ownership Flat Act which are duly registered. Defendant no. 3 society itself was registered on 29th November, 1980 which is a body corporate within the meaning of section 36 of the Maharashtra Cooperative Societies Act, 1960. The powers in respect of the property of the society and its affairs can be exercised by the Managing Committee and the general body under section 72 and 73 of the said Act. The said society being a body corporate and registered in the year 1980, the plaintiffs had deemed knowledge of the existence of such entity. In the year 1984, defendant no. 3 had called upon defendant no. 1 to execute a deed of conveyance. Society was not party to the proceedings filed by the Indian Overseas Bank before the Debt Recovery Tribunal.
23. It is submitted that in so far as the obligations of the plaintiffs to make payment under clause 2(iii) to (vi) is concerned, the same had admittedly not been paid by the plaintiffs. Such payments have not been even offered by the plaintiffs to defendant no. 1. It is submitted by the learned senior counsel that no possession of any flat which was to be handed over under clause 2(ii) and(iii) was handed over to the plaintiffs on receipt of payment of Rs. 1 Crores and 1.2 Crore respectively. The possession of the entire property was supposed to be given to the plaintiffs under the said MOU within 90 days. The entire payment was due on or before 30 July, 2006. Learned senior counsel invited my attention to para 4.3 and 4.6 of the plaint and submits that there is no averment in the plaint that the plaintiffs had offered the balance amount to defendant no. 1. Though the flats mentioned in clause 2 (iii) and (iv) were not handed over by defendant no. 1, plaintiffs never made any grievance about the same. Learned senior counsel submits that in a suit for specific performance plaintiffs have not only to plead but has to prove that the plaintiffs were all through ready and willing to perform their part of the obligations. It is submitted that defendant no. 1 has rightly taken a stand in the letter dated 26th May, 2006 that the said MOU was conditional and he was compelled to sign the said MOU.
24. Learned senior counsel submits that there are also serious allegations of interpolations of MOU relied upon by the plaintiffs. It is submitted that the plaintiffs have abandoned the contract. My attention is invited to paragraph 48 of the written statement filed by defendant no. 3 society in which there is reference to an agreement between defendant no. 3 with M/s. Lookwell Life Space Ltd entered into on 23rd May, 2008. Learned senior counsel submits that though the plaintiffs has carried out amendment to the plaint, in the month of July and August, 2014, plaintiffs has not chosen to implead the said developers and to impugn the said document dated 23rd May, 2008. It is submitted that even otherwise in view of the gross delay on the part of the plaintiffs, which is more than two years, plaintiffs are not entitled to seek any discretionary relief of specific performance. Learned senior counsel placed reliance on the judgment of Supreme Court in the case of Janardanan Vs. Ramdas (2007) 15 SCC 174 and in particular paragraph 15 in support of the aforesaid submissions.
25. Learned senior counsel also placed reliance on the judgment of this court in case of Bharat Infrastructure and Engineering Pvt. Ltd. Vs. Park Darshan CHS Ltd. and Ors. delivered on 14th March, 2013 in Arbitration Petition No. 199 of 2013 and in particular paragraph 16 and 20 in support of the submission that the members of the society have to speak through the society and the resolutions of the society are binding on the members. It is submitted that admittedly the defendant no. 3 society was not party to the MOU. Learned senior counsel invited my attention to order passed by the Division Bench of this court on 14th March, 2008 in Arbitration Petition No. 122 of 2008 filed by the plaintiffs in which the deed of conveyance was referred in the order. The plaintiffs did not press for appointment of court receiver. It is submitted that since plaintiffs did not press for receiver as far back as 14th March, 2008, plaintiffs cannot press for the said relief at this stage. My attention is also invited to the order dated 9th September, 2009 by which this court passed an order for maintaining status quo. Even at that stage, the plaintiffs had not pressed for appointment of Court Receiver.
26. Mr.Setalvad, learned counsel for the defendant no.3 society submits that in a suit for specific performance the plaintiffs have to show his continuous readiness and willingness to perform his part of the obligation i.e. even after the execution of the agreement which the plaintiffs in this case have failed. It is submitted that the plaintiffs except making initial payment to defendant no.1, neither offered any payment nor made any payment after execution of the agreement. It is submitted by the learned counsel that the rights had already been created in favour of the society by the defendant no.1, 15 months prior to the date of MOU between the plaintiffs and defendant no.1. The plaintiffs were aware of the fact that the building was occupied by various persons and various agreements had already been entered into between defendant no.1 and various claim purchasers. This Court cannot accept the submission of the plaintiffs that the agreements entered into as far as in the year 1996 onwards under the provisions of Maharashtra Ownership flats Act which were duly registered and the deed of conveyance which was duly registered are void and shall hold that the unregistered MOU executed subsequently is valid and enforceable.
27. Learned senior counsel placed reliance on Section 9 of the Maharashtra Ownership Flats Act and would submit that since the agreements under the provisions of the said Act were already entered into, even mortgage in respect of the said property could not have been granted by defendant no.1 in favour of Indian Overseas Bank. Rights had already been vested in favour of members of defendant no.3-Society. The plaintiffs had voluntarily taken conscious decision to clear the liability of defendant no.1 to the Indian Overseas Bank which was subsisting with the rights of existing members under the provisions of Maharashtra Ownership Flats Act.
28. Learned senior counsel placed reliance on the judgment of Supreme Court in the case of Azhar Sultana Vs. B. Rajamani and Ors., reported in (2009) 17 SCC 27 and in particular paragraphs 6, 24, 27, 31 and 34 in support of the submission that in a suit for specific performance, the plaintiffs have to show their continuous readiness and willingness to perform their part of the obligations. Paragraphs 6, 24, 27, 31 and 34 of the said judgment read thus :-
â6. The suit for specific performance was filed on or about 7.12.1981. As indicated hereinbefore, in the original suit the defendant Nos.5 and 6 were not impleaded as parties. A written statement was filed by Shri Khanna on or about 30.8.1983 wherein he disclosed the factum of execution of the deed of sale dated 31.10.1981. The said defendants were impleaded as parties. One of the contentions raised by the said impleaded defendants was that they were subsequent purchasers for value and without notice to the original agreement for sale entered into by and between the appellants and the said Shri Khanna.
24.Defendant Nos.5 and 6 were in possession of the properties. The deed of sale was a registered one. Plaintiff, therefore, must be deemed to have notice thereof in terms of Section 3 of the Transfer of Property Act. She, however, neither in her notice nor in her plaint raised any question with regard to the bona fide or otherwise of the transaction of sale entered into by and between Shri Khanna and the respondent Nos.5 and 6.
27.It may be true that the name of the purchaser was not disclosed but then it was open to the plaintiff to ask for other and better particulars of the said statements. Why she had to wait for a period of more than three years for impeading the subsequent purchasers as parties has not been explained. Even an application for injunction was filed only in September1985. According to her husband, she came to learn about the sale of property in 14 the name of defendant No.5 only on 29.9.1986. Why an inquiry was not made in the Registration Office although the deed of sale was a registered one again defies anybody's comprehension. Readiness and willingness on the part of the plaintiff, therefore, is required to be considered from the aforementioned backdrop of events.
31. We are, however, in agreement with Mr. Lalit that for the aforementioned purpose it was not necessary that the entire amount of consideration should be kept ready and the plaintiff must file proof in respect thereof. It may also be correct to contend that only because the plaintiff who is a Muslim lady, did not examine herself and got examined on her behalf, her husband, the same by itself would lead to a conclusion that she was not ready and willing to perform her part of contract. If the plaintiff has failed to establish that she had all along been ready and willing to perform her part of contract, in our opinion, it would not be necessary to enter into the question as to whether the defendant Nos.5 and 6 were bona fide subsequent purchasers for value without notice or not.
34. We, however, agree with Mr. Lalit that the conduct of the respondent was not good but, similarly, we cannot lose sight of the conduct of the appellants as well. She had also not brought any evidence to show that she did not have the notice of the said deed of sale.â
29. Mr.Setalvad, learned senior counsel placed reliance on the judgment of Supreme Court in the case of Prem Singh and Ors. Vs. Birbal and Ors., reported in (2006) 5 SCC 353 and in particular paragraph 27 thereof in support of the submission that a registered document would be prima facie valid in law and will have weightage over an unregistered document. Paragraph 27 of the said judgment reads thus :-
â27. There is a presumption that a registered document is validly executed. A registered document, therefore, prima facie would be valid in law. The onus of proof, thus, would be on a person who leads evidence to rebut the presumption. In the instant case, Respondent No.1 has not been able to rebut the said presumption.â
30. Learned senior counsel placed reliance on the judgment of the Supreme Court in the case J.P. Builders and anr. Vs. A. Ramdas Rao and anr., reported in (2011) 1 SCC 429 on the issue of the requirement of continuous readiness and willingness on the part of the plaintiffs to perform their obligations and in particular paragraphs 22 to 27 thereof, Mr.Setalvad Learned senior counsel submits that since the plaintiffs have not challenged the registered documents in the plaint which are true to their knowledge, it would indicate that there is absence of readiness and willingness on the part of the plaintiffs.
â22. The words "ready" and "willing" imply that the person was prepared to carry out the terms of the contact. The distinction between "readiness" and "willingness" is that the former refers to financial capacity and the latter to the conduct of the plaintiff wanting performance. Generally, readiness is backed by willingness.
23. In N.P. Thirugnanam vs. Dr. R. Jagan Mohan Rao and Ors., (1995) 5 SCC 115 at para 5, this Court held:
"5......Section 16(c) of the Act envisages that plaintiff must plead and prove that he had performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than those terms the performance of which has been prevented or waived by the defendant. The continuous readiness and willingness on the part of the plaintiff is a condition precedent to grant the relief of specific performance. This circumstance is material and relevant and is required to be considered by the court while granting or refusing to grant the relief. If the plaintiff fails to either aver or prove the same, he must fail. To adjudge whether the plaintiff is ready and willing to perform his part of the contract, the court must take into consideration the conduct of the plaintiff prior and subsequent to the filing of the suit alongwith other attending circumstances. The amount of consideration which he has to pay to the defendant must of necessity be proved to be available. Right from the date of the execution till date of the decree he must prove that he is ready and has always been willing to perform his part of the contract. As stated, the factum of his readiness and willingness to perform his part of the contract is to be adjudged with reference to the conduct of the party and the attending circumstances. The court may infer from the facts and circumstances whether the plaintiff was always ready and willing to perform his part of the contract."
24. In P.D'Souza vs. Shondrilo Naidu, (2004) 6 SCC 649 paras 19 and 21, this Court observed:
"19. It is indisputable that in a suit for specific performance of contract the plaintiff must establish his readiness and willingness to perform his part of contract. The question as to whether the onus was discharged by the plaintiff or not will depend upon the facts and circumstance of each case. No strait-jacket formula can be laid down in this behalf....
* * *
21. The readiness and willingness on the part of the plaintiff to perform his part of contract would also depend upon the question as to whether the defendant did everything which was required of him to be done in terms of the agreement for sale."
25. Section 16(c) of the Specific Relief Act, 1963 mandates "readiness and willingness" on the part of the plaintiff and it is a condition precedent for obtaining relief of grant of specific performance. It is also clear that in a suit for specific performance, the plaintiff must allege and prove a continuous "readiness and willingness" to perform the contract on his part from the date of the contract. The onus is on the plaintiff.
26. It has been rightly considered by this Court in R.C. Chandiok and Anr. vs. Chuni Lal Sabharwal and Ors., (1970) 3 SCC 140 that "readiness and willingness" cannot be treated as a straight jacket formula. This has to be determined from the entirety of the facts and circumstances relevant to the intention and conduct of the party concerned.
27. It is settled law that even in the absence of specific plea by the opposite party, it is the mandate of the statute that plaintiff has to comply with Section 16(c) of the Specific Relief Act and when there is noncompliance with this statutory mandate, the Court is not bound to grant specific performance and is left with no other alternative but to dismiss the suit. It is also clear that readiness to perform must be established throughout the relevant points of time. "Readiness and willingness" to perform the part of the contract has to be determined/ascertained from the conduct of the parties.â
31. It is submitted by the learned senior counsel that unless the plaintiffs seek a declaration that the subsequent documents entered into between the defendant no.1, various members of the society with defendant no.2 and between defendant no.3 and other third party are void or voidable and seek cancellation thereof, the plaintiffs cannot seek specific performance of the agreements entered into between the plaintiffs and defendant no.3. Reliance is placed on paragraph 22 of the judgment of the Supreme Court in the case of Dhurandhar Prasad Singh Vs. Jai Prakash University and Ors., reported in (2001) 6 SCC 534 which reads thus:
â22. Thus the expressions âvoid and voidableâ have been subject matter of consideration on innumerable occasions by courts. The expression âvoidâ has several facets. One type of void acts, transactions, decrees are those which are wholly without jurisdiction, ab initio void and for avoiding the same no declaration is necessary, law does not take any notice of the same and it can be disregarded in collateral proceeding or otherwise. The other type of void act, e.g., may be transaction against a minor without being represented by a next friend. Such a transaction is good transaction against the whole world. So far the minor is concerned, if he decides to avoid the same and succeeds in avoiding it by taking recourse to appropriate proceeding the transaction becomes void from the very beginning. Another type of void act may be which is not a nullity but for avoiding the same a declaration has to be made. Voidable act is that which is a good act unless avoided, e.g., if a suit is filed for a declaration that a document is fraudulent and/or forged and fabricated, it is voidable as apparent state of affairs is real state of affairs and a party who alleges otherwise is obliged to prove it. If it is proved that the document is forged and fabricated and a declaration to that effect is given a transaction becomes void from the very beginning. There may be a voidable transaction which is required to be set aside and the same is avoided from the day it is so set aside and not any day prior to it. In cases, where legal effect of a document cannot be taken away without setting aside the same, it cannot be treated to be void but would be obviously voidable.â
32. It is submitted that the plaintiffs have pleaded in paragraph 7 of the plaint that the writings entered into between defendants are void, however, have not prayed for such declaration in the prayer clause. Mr.Setalvad, learned senior counsel distinguishes the judgments cited by Mr. Madon, learned senior counsel for the plaintiffs.
33. Mr.Kapadia, learned counsel for defendant no.1 invited my attention to various correspondence, averments in the plaint and also the terms of the MOU wherein the plaintiffs have pleaded about the antecedent rights of the society in the plaint. Even defendant no.1 has filed a detailed affidavit placing reliance on these facts on record showing that a person on the suit property is a tenant. It is submitted that when the MOU was executed, the same was not read by defendant no.1. The contents of the said MOU had been disputed by the defendant no.1. Even in the MOU, there is a reference to the fact that various family members of defendant no.1 are in occupation of the suit property. The plaintiffs were fully aware of the fact that the concurrence of the tenants and family members would be necessary.
34. It is submitted that in the paragraph 4.6 of the plaint, it is averred by the plaintiffs that the flat no.302 was handed over by the defendant no.1 to the plaintiffs. Admittedly the same was not handed over to the plaintiffs. When the defendant pointed out to the plaintiffs that the said flat was not handed over by the defendant no.1, the plaintiffs have in their rejoinder falsely alleged that the said flat was though initially handed over to the plaintiffs by defendant no.1, they were dispossessed of the said flat. Learned counsel invited my attention to one of the clauses in MOU which provides that the title in respect of the suit property has to be verified by the plaintiffs. It is submitted that since March 2006 till the date of filing of the suit, the plaintiffs did not take any steps to verify and/or investigate the title of the defendant no.1 in respect of the suit property. Learned counsel adopted the submissions made by Mr. Setalvad, learned senior counsel appearing for defendant no.3 on the other issues raised by Mr. Madon, learned senior counsel for the plaintiffs.
35. Learned counsel appearing for defendant no.17 submits that he is a bonafide purchaser without notice. It is submitted that the registered document would prevail over an unregistered MOU. The society has been registered in the year 1980 whereas the MOU has been entered into in the year 2000. Learned counsel adopted the submissions made by Mr.Kapadia, learned counsel for defendant no.1 and Mr.Setalvad, learned senior counsel for defendant no.3.
36. Mr. Madon, learned senior counsel, in rejoinder submits that the defendant no.3 has not referred to any development agreement dated 23rd May 2008 executed between the defendant no.3 and M/s.Lookwell Life Space Pvt. Ltd. In the reply. The defendant no.3 in its affidavit-in-reply, did not adopt the submissions/averments made in the written statement filed by them. A copy of the said agreement with M/s. Lookwell Life Space Pvt. Ltd. has been furnished to the plaintiffs only on 5th November 2014. It is submitted that the said M/s.Lookwell Life Space Pvt. Ltd. had not been even incorporated on the date of the execution of the alleged development agreement. It is submitted that the said company was incorporated on 29th May 2008. Learned senior counsel tendered an additional affidavit containing some of the documents which were relied upon by the plaintiffs at the stage of rejoinder.
37. Mr.Madon, learned senior counsel submits that the defendant no.1 has not terminated the agreement on the ground of non payment or that the plaintiffs were not ready and willing to perform their part of the obligation. The defendant no.1 has not even made any such submissions. It is submitted that though the said MOU is not registered, under section 49 of the Registration Act, in a suit for specific performance, plaintiffs can rely upon such unregistered document. It is submitted that in the plaint, the plaintiffs have prayed for specific performance against the defendant nos.1 and 3 to 17 which includes all the agreements. Reliance is placed in support of this submission on Section 19(b) of the Specific Relief Act which includes the term 'any other person'.
38. Mr.Madon, learned senior counsel placed reliance on the judgment of Supreme Court in case of Dwarka Prasad Singh and Ors. vs. Harikant Prasad Singh and Ors. (1973) 1 SCC 179 and submits that even though subsequent purchaser can be joined as a party and can be called upon to jointly execute the deed of conveyance with the owner, prayer for cancellation of the document is not necessary.
39. It is submitted by the learned senior counsel that the defendant no.1 in the said MOU representated himself as the owner and not the society. The defendant no.1 had entered into the document with the society which was the only document executed after execution of MOU. It is submitted that M/s.Look Well Life Space Limited is neither a necessary party nor a proper party to the suit. The said party did not come before this court for vacating the status quo order. 50% shareholders of the said M/s.Look Well Life Space Limited are parties to this suit. There is no mention of such development agreement between defendant no.3 and the said M/s.Look Well Life Space Limited in the written statement filed by defendant no.17. The other 50% shares of the said M/s.Look Well Life Space Limited are held by the son of the defendant no.17.
40. It is submitted that even the address of the said company the said M/s.Look Well Life Space Limited is that of the suit property which indicates that the said company has been incorporated by the defendant no.17 in collusion with defendant no.1 by creating anti-dated document. It is submitted by the learned senior counsel that the plaintiffs have good chances of succeeding in the suit and to secure the suit claim, receiver of the suit property shall be appointed by this court.
41. A perusal of the memorandum of understanding dated 23rd March, 2006 indicates that the plaintiffs were aware that one Mr. Mausamali M.Hirji had been a tenant in the suit property and was occupying about 2,300 sq.ft., on the ground floor of the bungalow. The plaintiffs had agreed to pay the consideration amount of Rs.23 crores in installments. The defendant no.1 had agreed to handover quiet, vacant and peaceful possession of the suit property within 90 days from the date of said MOU. The plaintiffs were entitled to investigate the title of the defendant no.1 by issuing public notice in the newspapers by inviting claims in respect of the suit property. It is the case of the defendant no.1 that he had not read the said MOU when it was executed. Defendant no.1 has also alleged tempering of the said MOU and has alleged that original of the said MOU was not shown to the defendant no.1 at the time of inspection.
42. It is the case of the defendant no.1 that he had made it clear to the plaintiffs that he had a large family of about 40 members and the said MOU was subject to the removal of tenant and subject to other terms. He was compelled to sign the MOU by the family members. A perusal of the affidavits in reply filed by the 1st defendant prima facie indicates that the defendant no.1 had executed articles of agreement dated 9th January 1976 with defendant no.2 in its capacity as a promoter of a co-operative housing society for a consideration of Rs.4,25,000/- . On 2nd July 1980 the defendant no.1 had entered into an agreement for purchasing flat no. 003 and garage no.6. The said agreement is registered. Defendant no.2 entered into several agreement with other flat purchasers during the period between 9th July 1980 and 11th July 1980. All those 14 agreements are duly registered and have been issued shares certificates. On 15th January 1981 the defendant no.3 society was registered.
43. A perusal of record indicates that though the defendants no.1 had disputed his obligation to transfer the property to the plaintiffs as far back as on 26th May 2006 and had asked for copy of the MOU and inspection, the plaintiffs invoked the arbitration agreement on 15th February 2008 after more than 18 months. In the arbitration proceedings in this court, the defendant no.1 made a statement that the registered conveyance in respect of the suit property had been already executed in favour of defendant no.3 society. The defendant no.1 had also made a statement that flat no. 302 was in occupation of a member of the society. The defendant no. 1 made a statement that he would not create any third party rights in respect of flat no. 103 or 003. The plaintiffs however, filed the suit on 26th August, 2009. The plaintiffs neither pressed any prayer for appointment of court receiver in the arbitration proceedings before this court nor the same has been granted by this court at the stage of the plaintiffs making an application for ad interim relief.
44. Though the defendant no.3 in their written statement have alleged that they have already entered into a development agreement with M/s. Lookwell Life Space Pvt. Ltd as far back as on 28th May, 2008 and the plaintiffs carried out amendment to the plaint twice i.e. in the month of July and August, 2014, plaintiffs have neither challenged the said development agreement between defendant no. 3 and the said M/s. Lookwell Life Space Pvt. Ltd nor have prayed for recession and/or cancellation of the said agreement nor have impleaded the said party. I am not inclined to accept the submission of Mr. Madon, learned senior counsel for the plaintiffs that defendant cannot place reliance on the said alleged document since the same was not referred to and relied upon in the affidavit in reply to the notice of motion. Even if the copy of the said document was not annexed to the written statement and was furnished few days prior to the date of arguments of this notice of motion, plaintiffs could have always asked for inspection and copies of the document referred to and relied upon by the defendant no. 3 in the written statement. In my view there is thus gross delay on the part of the plaintiffs to file the suit for specific performance and for seeking interim reliefs which factor has to be considered by the court while considering the application for interim reliefs.
45. In my prima facie view, since defendant no. 1 has already created various third party rights in favour of the defendants and some of the defendants having created further third party rights in favour of third parties who are not parties to this proceedings and their transactions not having been challenged in this proceedings, the plaintiffs may not succeed in the suit for specific performance.
46. A perusal of record indicates that though under clause 2 (iii) to (vi) the plaintiffs were liable to make various payments to the defendant no. 1 and the possession of the entire property was liable to be handed over within ninety days by the defendant no 1 to the plaintiffs, plaintiffs have neither offered the balance amount mentioned therein before the date of termination of the said agreement nor even thereafter till the arguments in this proceedings commenced. In a suit for specific performance, the court has to consider that the plaintiffs were ready and willing to perform their part of performance after execution of the agreement, during the pendency of the suit and till decree is passed by the court. Such readiness and willingness has to be continuous and all through out. A perusal of the averments made in the plaint and the other pleadings makes it clear that the plaintiffs have neither offered the balance amount any point of time nor paid the same. In my prima facie view, the plaintiffs were thus not ready and willing to comply with their part of obligation under the said MOU.
47. A perusal of record indicates that defendant no. 1 has entered into agreement with defendant no. 2 who in turn has entered into various agreements with various flat purchasers. The third defendant society has been already registered much prior to the date of execution of the MOU. Various agreements entered into with the flat purchasers are also registered documents. In my view, since all those documents were duly registered and were executed prior to the date of execution of the MOU, there was constructive notice of those transactions to the plaintiffs under section 3 of the Transfer of Property Act. In my view, there is presumption that the registered document is validly executed. Supreme Court in case of Prem Singh (supra) has held that a registered document prima facie would be valid in law and the onus of proof would be on the person who leads evidence to rebut the presumption. In my view this court cannot give precedence to an unregistered MOU over the registered documents. plaintiffs however, can rely upon the unregistered document in a suit for specific performance.
48. Supreme Court in case of Azhar Sultan (supra) has held that since the deed of sale was registered one, the plaintiffs must be deemed to have notice thereof in terms of section 3 of Transfer of Property Act. The plaintiff in that case however, neither in her notice nor in her plaint had raised any question about the bona fide or otherwise of the transaction of sale entered by and between some of the defendants. Supreme Court also considered the fact that the plaintiff was not disclosed about the name of the purchaser and held that it was open to the plaintiff to ask for other and better particulars of the statements. I am respectfully bound by the judgment of that Supreme Court in the case of Azhar Sultan (supra) which is squarely applicable to the facts of this case.
49. A perusal of the record indicates that though defendant no.1 had not handed over flat no. 302 to the plaintiffs and payment of Rs.1 Crore was made by the plaintiffs to the defendant no.1, the plaintiffs have alleged in the plaint that in furtherance of the said payment, the defendant no. 1 had handed over possession of the said flat to the plaintiffs. I am not inclined to accept the allegations of the plaintiffs that the defendant no. 1 had handed over possession of the said flat and subsequently had dispossessed the plaintiffs. It is thus clear that the plaintiffs have not come to this court with clean hands. In my prima facie view the defendant no.1 and some of the defendants already having created third party rights, plaintiffs may not succeed in the suit for specific performance. Interim relief is in aid of final relief. The plaintiffs have thus not made out any case for interim reliefs in the suit for specific performance.
50. Since, M/s.Lookwell Life Space Ltd. is not party to this proceedings, this court need not make any comment whether the said company was incorporated after execution of the development agreement with defendant no.3. 51. I, therefore, pass the following order :
(a) Notice of motion is dismissed.
(b) There shall be no order as to costs.
At the request of learned counsel for the plaintiffs, ad-interim order passed by this court to continue for six weeks from today.