NIRCON DEVELOPERS PRIVATE LIMITED Vs. ZOHRABAI FAKHRUDDIN

JUDGEMENT

(1.) THIS suit has been filed by the plaintiffs making a number of prayers. A declaration is sought to the effect that there is a valid and subsisting agreement for sale and development between the plaintiffs and the defendant Nos. 1 to 19 and 21 in terms of the document at Exhibit-Q and that the same is binding on the said defendants. A declaration is also sought to the effect that the agreement to lease dated 31-1-96 alleged to have been executed by the MMRDA in favour of defendant No. 22 and the agreement dated 17-2-1997 alleged to have been executed by defendant No. 22 in favour of defendant No. 23 are null and void and have no legal effect. It is further prayed that this Court be pleased to cancel the aforesaid agreement to lease dated 31-1-97 and the agreement dated 17-2-1997. A further declaration is sought to the effect that the 140 documents as per particulars set out in Exhibit-88 executed by defendant Nos. 1 to 14 in favour of defendant No. 22 are null and void. A further declaration is sought that it is defendant Nos. 1 to 19 and 21 who are under an obligation to apply for permission and/or sanction to the Appropriate Authority under Chapter XX-C of the Income-tax Act by filing the necessary Form 37-I. It is also prayed that defendant Nos. 1 to 19 and 21 be ordered to specifically perform the obligation in prayer clause (b) and to execute the confirmation letter confirming the agreement contained in prayer clause (a) and to execute and submit Form 37-I under the provisions of Chapter XX-C of the Income -Tax Act within 15 days of the execution of such confirmation letter for obtaining sanction or permission under the provisions of Income-tax Act.

(2.) THIS Notice of Motion has been taken out with a prayer for appointment of Receiver and injunction restraining defendant Nos. 1 to 19 and 21 from dealing with, disposing of, alienating, encumbering, parting with possession or creating any third party rights in the suit property which is said to be described in Exhibit-A to the plaint. An injunction is also sought against defendant No. 20 restraining the said defendant from granting or executing any lease in favour of the defendants or any of them. It is further prayed that pending the hearing and final disposal of the suit defendant No. 22 be restrained from completing any transaction in favour of defendant No. 23 pursuant to the agreement dated 17-2-1997 and also that the defendant No. 23 be restrained from making any further payment to defendant No. 22 and from taking possession of the suit property. An affidavit in support of the Notice of Motion has been filed.

(3.) IT is the case of the plaintiffs that there was a valid and concluded contract for sale of the suit property by the defendant Nos. 1 to 14 to the plaintiffs. Plaintiffs No. 1 is a Company incorporated under the provisions of the Companies Act. Plaintiff No. 2 is a Director of plaintiff No. 1. Plaintiff Nos. 3 and 4 are the brother and uncle respectively of plaintiff No. 2, who are stated to be builders and developers. In paragraph 2 of the plaint it is stated that defendant Nos. 1 to 14 are the co-owners of the property described therein bearing Survey Nos. 110/2, 113/1 and 2, 115/2 (Pt.) and CTS No. 139 to 144, 153, 153/11011, 151/27, 153/28, 153/34, 153/35, 153/36,153/371038, 153/39, 153/40, 153/421043, 153/49, 153/45, 153/46, 153/477048, 153/49, 153/50 situate at Village Goregaon in Greater Bombay in the registration sub-district of Bandra Taluka South Salsette and Dist. Bombay containing by ad-measurement 56011. 68 sq. yds. equivalent to 46830 sq. mts. or thereabout being the property more particularly described in the Schedule at Exhibit-A to the plaint, thereinafter referred to as "the suit property". According to the plaintiffs the suit property falls within the area of 102 hectares of land at Goregaon/jogeshwari demarcated by the Government of Maharashtra as "oshiwara District Centre" to be developed as a business district as an alternative to the Bandra-Kurla Complex. The Government of Maharashtra in exercise of the powers under the Maharashtra Regional Town Planning Act, 1966 has, inter alia, vide its notification dated 16-1-1992 declared defendant No. 20, a statutory body as the Special Planning Authority for planning and developing the said Centre. Under the Scheme framed by the Government of Maharashtra, in order to ensure owners participation in development of the said centre the BMRDA is to issue notification for acquisition of the land at the notional rate of Rs. 1/- per hectare and the same land would then be leased back by the BMRDA to the land owner for development at a lease premium of Rs. 750/- per sq. ft. for commercial zones and Rs. 500/- for residential zones. Defendant No. 15 is a partnership firm carrying on business as builders and developers. Defendant No. 15 had entered into an agreement dated 17th March, 1982 with defendant Nos. 1 to 14 for development of the suit property. The defendant No. 15 firm has been dissolved and their interest has been taken over by defendant No. 21. According to the plaintiffs, defendant Nos. 1 to 14 had orally agreed to sell the suit property at or for the total consideration calculated at the rate of Rs. 395/- per sq. ft. of available FSI (less costs incurred by plaintiff by way of premium payable to BMRDA, providing alternative accommodation to the tenants, development charges etc.) and on the terms and conditions set out in the plaint. It is the case of the plaintiff that the defendants have accepted the cheques from the plaintiffs for Rs. 15 lakhs towards part payment of the aforesaid consideration. The plaintiffs state that in the first week of December, 1993, the plaintiff No. 2 was introduced to defendant Nos. 1 to 14 to conduct negotiations for the sale of the suit property. On 25th December, 1993 a meeting was held at the residence of defendant No. 16 between the plaintiff No. 2 and defendant Nos. 5, 7, 12, 14 and 16. At this meeting the consideration for the sale of the property was agreed upon. The second meeting was held on 8-1-1994 allegedly in the office of the Solicitor again between the same parties. In the first meeting itself the parties had also agreed on the schedule of payment. It was also agreed that the preparation of the agreement for sale as per the concluded contract be entrusted to Mr. Shrikant Shah, Solicitor. The plaintiffs thereafter approached Mr. Shrikant Shah for necessary documentation. Mr. Shah requested a joint meeting of the plaintiffs and the defendants and their Advocates. Thus the second meeting was held on 8-1-94 at the office of Mr. Shrikant Shah. At that meeting it was agreed that certain documents shall be furnished by the defendants to Mr. Shah to enable him to prepare the agreement for sale as per the decision and agreement between the parties. By their letter dated 12-1-94 the defendants furnished copies of certain documents to Mr. Shah. On 17-1-1994 the plaintiffs sent cheque of Rs. 10,000/- to their Solicitor Mr. Shrikant Shah towards his legal fees. On 18-1-94 another meeting was held between the parties at the office of defendant No. 15. On 18-1-1994 the terms of the oral agreement entered into between the parties on 25th December, 1993 were briefly and succinctly summarized and there and then typed out on a sheet of paper. It is specifically pleaded on page 13 of the plaint as follows. The said typed sheet was not signed by the parties with a view to avoid any legal complications that may have arisen with regard to the provisions of Chapter XX-C of the Income-tax Act. " on the basis of the aforesaid a draft agreement was forwarded to the defendants to make any amendments therein. It is the case of the plaintiffs that pursuant to and in part performance of the plaintiffs obligation the plaintiffs made payment of an amount of Rs. 15 lakhs by cheque to defendants as and by way of on account payment of the earnest money of Rs. 1 crore which was payable by the plaintiffs to the defendants on execution of the formal agreement on stamp paper. The plaintiffs issued (i) 2 cheques for Rs. 2. 5 lakhs each to defendant No. 15 (ii) cheque for Rs. 2. 5 lakhs in favour of defendant No. 5, (iii) cheque for Rs. 2. 5 lakhs in favour of defendant No. 7, (iv) cheque for Rs. 2. 5 lakhs in favour of defendant No. 9 and (v) cheque for Rs. 2. 5 lakhs in favour of defendant No. 12. The draft agreement signed by Mr. Shah was returned after making necessary corrections by defendant No. 16. These amendments were incorporated in the draft agreement. It is the case of the plaintiffs that Mr. Shah thereupon finalised the agreement for sale and the same was handed over by defendant No. 16 to the plaintiffs in March, 1994. This agreement is attached with the plaint as Exhibit-Q. It is the case of the plaintiffs that Exhibit-Q is a concluded contract between the parties containing all the terms and conditions agreed upon by the plaintiffs and the defendants. It is stated that the aforesaid agreement contained an implied agreement to obtain permission or sanction of the Appropriate Authority as required by the provisions of Chapter XX-C of the Income-tax Act. The defendants are bound to comply with the said obligations by executing the necessary Form 37-I prescribed by the Income-tax Act. After receiving the aforesaid draft agreement the defendants have started making various excuses for being unable to execute the agreement on stamp paper in terms of the approved agreement. According to the plaintiffs, the defendants are now trying to withdraw and renege from their commitments under the agreement with the ulterior motive of profiteering from the escalation in price of real estate property. Thus the prayers have been made for specific performance of the said agreement. By an amendment it has been pleaded that after the present suit was filed, defendant Nos. 1 to 14 have individually and separately purported to convey their respective undivided shares in varying parts or portions of the suit property to one Wonderland Estate Developers Pvt. Ltd. under 140 separate conveyances alleged to have been executed by defendant Nos. 1 to 14. Thus the aforesaid firm has been impleaded as defendant No. 22. It is stated that defendant No. 22 is only a front organisation of defendant Nos. 15 to 19 and 21. The shareholding of defendant No. 22 is held and controlled by defendant Nos. 15 to 19 and 21. The documents in question have been executed on behalf of defendant No. 22 by Dilawar Nensey s/o defendant No. 16. The 140 conveyances have been executed by defendant Nos. 1 to 14 in collusion with defendant Nos. 15 to 19 and 21 with the sole object of attempting to delay and/or defeat the plaintiffs right and claim to the suit property. It is stated that defendant No. 22 have allegedly paid almost Rs. 6 crores. This is, however, said to be much less than the market price of the suit property. Thus it is stated that the aforesaid conveyances are null and void. Defendant No. 23 has been impleaded in view of the affidavit filed when the Notice of Motion came up for hearing on 4th September, 1997. In the affidavit filed by defendant No. 22 it was claimed that by an agreement dated 31-1-1996 between defendant No. 22 and MMRDA, defendant No. 22 consented to the acquisition of the suit property by the Special Land Acquisition Officer appointed by the State Government and that pursuant to the said agreement MMRDA had acquired the suit property and had thereafter entered into an agreement dated 2nd April, 1996 to lease the suit property to defendant No. 22 for a period of 60 years on a payment of lease premium. Defendant No. 22 has also entered into an agreement dated 17-2-1997 with defendant No. 23 for sale and transfer of the benefits of the said agreement between defendant No. 22 and the MMRDA in respect of a portion of the suit property admeasuring about 21512 sq. mts with the right to use the FSI of 5,80,000 sq. ft. at the consideration and on the terms and conditions set out therein. This agreement has been submitted to the Appropriate Authority under Chapter XX-C of the Income-tax Act. This transfer in favour of defendant No. 23 is said to be another attempt to avoid any orders which may be passed by this Court in the suit. In view of all this continuous alienation of the property the plaintiffs have registered a notice of lis pendens on or about 1st September, 1994. It is stated that in view of the pending litigation the transfers in favour of defendant No. 22 and 23 are not bona fide.