Yusuf Vali Mohd. Bilakhiya v. Hitesh Enterprises and 7 Ors.

Bombay HC18 Jul 2014NMS/1988/2011

Case brief

AI extract

What is this about?

The applicant challenged the executability of consent terms upheld by the Supreme Court, seeking an injunction against a development agreement executed thereafter. The Single Judge rejected the interim application, noting that the consent terms were valid, acted upon by deposit of consideration, and parties changed positions detrimentally.

What the court decided

AI extract

Yusuf Vali Mohd. Bilakhiya Vs Hitesh Enterprises and 7 Ors. — Bombay HC (2014) — LawSathi Research

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION

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NOTICE OF MOTION NO. 1988 OF 2011 IN

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SUIT NO. 1526 OF 2011

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Mr.Yusuf Vali Mohd.Bilakhiya ...Applicant / Plaintiff vs. M/s.Hitesh Enterprises & Ors. ...Defendants

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Mr.Zal Andhyarujina with Mr.Ashwin Shete and Apurva gupte i/b. M.s.Jayakar & Parnters for Plaintiff.

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Mr.Ashish Kamath with Ms.sudeshna Guha Roy i/b. M/s.Vidhi Partners for Defendant Nos.1, 2 and 7.

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CORAM : S.C. GUPTE, J.

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18 JULY 2014

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P.C. :

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This is a suit challenging inter alia the executability of consent terms signed between the parties in connected proceedings as also for declaration of nullity in respect of a development agreement purportedly executed in pursuance of the consent terms. The Notice of Motion seeks an interim injunction in respect of development of and / or creation of third party rights in the suit property by Defendant No.2 in pursuance of the development agreement challenged in the suit.

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2 Short facts of the case may be stated as follows :

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(i) One Budhiya Vesta Patel claimed to be in exclusive and uninterrupted possession of the suit property. He had constructed a chawl on the suit property. By an agreement dated 12 February 1994, the said Budhiya purported to sell the suit property to the Plaintiff. There was an irrevocable Power of Attorney as well as a Deed of Confirmation executed by Budhiya

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in favour of the Plaintiff;

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(ii) In 1999, Budhiya filed a suit in the City Civil Court at Bombay, being Suit No.5163/1999, against Defendant No.7, who was the widow of the original owner of the suit property, claiming ownership of the suit property by way of adverse possession. Budhiya took out a Notice of Motion in the suit which was made absolute by the City Civil Court. An AO was filed before this Court by Defendant Nos.1 to 6 in that suit. This Court by an order dated 19 April 2002 appointed a Court Receiver and directed the Receiver to make a report on the party found to be in the possession of the suit property with a view to determine the question of appointment of an agent of the Court Receiver. The Court Receiver made a report and accordingly, the City Civil Court at Bombay appointed Budhiya as agent of the Court Receiver;

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(iii) In the meantime, in or about 2001, Defendant No.1 herein as well as Defendant No.7 (successor in title of the original owner) filed a counterclaim in Suit No.5163/1999 filed in the City Civil Court. The counter-claim was for a declaration of their ownership of the suit property. The case of Defendant Nos.1 and 7 was that Defendant No.7 was the owner of the suit property; and that the predecessor in title of Defendant No.7 had entered into a development agreement with Defendant No.1. The Plaintiff herein was impleaded as Defendant No.8 in the counter-claim. Written statements were filed both by the Plaintiff and Budhiya to this counterclaim;

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(iv) By an order and decree dated 10 February 2003, the City Civil Court dismissed Budhiya's suit and decreed the counter-claim filed by Defendant Nos.1 and 7 herein;

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(v) The City Civil Court’s order was challenged in First Appeals by Budhiya, being First Appeal No.1388/2003 (against dismissal of his suit) and First Appeal No.1389/2003 (against the decree in the counter-claim). The

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Plaintiff herein, who was Defendant No.8 in the counter-claim, filed his own First Appeal, being First Appeal No.1390/2003, challenging the decree of the City Civil Court;

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(vi) During the pendency of the appeal, on or about 5 December 2003, Budhiya died. Defendant Nos.3 to 6 herein claim as heirs of Budhiya;

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(vii) On 7 January 2005, an Irrevocable Power of Attorney was executed by Defendant Nos.3 to 6, as heirs of Budhiya, in favour of the Plaintiff. Civil Applications were thereupon taken out by the Plaintiff in the First Appeals, referred to above, for being brought on record as the legal representative of Budhiya in the First Appeals;

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(viii) On or about 22 May 2006, three sets of consent terms were signed between the Plaintiff, Defendant No.1 and Defendant Nos.3 to 6 and tendered in the First Appeals, referred to above. The Consent Terms were taken on record and the appeals were disposed of. The consent terms inter alia required Defendant No.1 to pay a sum of Rs.1.15 crores to the Plaintiff for and against all rights or claims made by the Plaintiff in respect of the suit property. The consent terms provided that prior to the signing of the said consent terms, this entire amount of Rs.1.15 crores was paid to the Plaintiff by pay orders drawn in favour of the Plaintiff's advocates. The consent terms further provided that in consideration of such payment, the Plaintiff would have no claim in respect of the suit property either for himself or as the attorney of Defendant Nos.3 to 6. Just before the filing of these consent terms, a letter was addressed by the Plaintiff's Advocates to Defendant No.1 informing the latter that out of the total amount payable to the Plaintiff under the consent terms, an amount of Rs.70 lakhs would be held in escrow by the Advocates of the Plaintiff to defray any amount that may be payable to Defendant Nos.3 to 6 towards discharge of their claim, if any. Immediately after the consent terms were filed, another letter was addressed by the Plaintiff's Advocates to Defendant No.1 stating inter alia that a sum of Rs.1 crore would remain

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with the Plaintiff's Advocates in escrow towards any claim which may be preferred by any legal heirs of Budhiya including Defendant Nos.3 to 6 herein within eight months. The letter inter alia stated that the amount would be disbursed for settling the claims of heirs of Budhiya and the balance, if any, would be handed over to the Plaintiff at the end of the said period of eight months or such further time as may be required for settling the said claims, if any;

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(ix) In pursuance of these consent terms, the Court Receiver handed over the possession of the suit property to Defendant No.1;

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(x) On or about 24 July 2006, Defendant No.1 executed a development agreement in favour of Defendant No.2 whereby exclusive development rights in respect of the suit property were transferred by Defendant No.1 in favour of Defendant No.2. Defendant No.2 paid a consideration of Rs.10 crores to Defendant No.1 in pursuance of this development agreement. The development agreement was thus entered into after the consent terms were duly tendered in the First Appeals filed before this Court and the matter was settled between the parties and possession of the suit property was handed over to Defendant No.1;

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(xi) Defendant No.3 to 6 thereafter, i.e. on 3 August 2006, filed Civil Application Nos.3628, 3629, 3630 of 2006 before this Court seeking to set aside the consent terms and the consent order dated 13 June 2006 passed in pursuance thereof. These civil applications were taken out on the footing that the Plaintiff had no authority to represent Defendant Nos.3 to 6 and that Defendant Nos.3 to 6 were defrauded by execution of the consent terms. The Plaintiff filed a reply in the civil applications inter alia taking a stand that the Plaintiff had the requisite authority and that Defendant Nos.3 to 6 at the relevant point of time were clearly aware of what was being done by the Plaintiff on their behalf;

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(xii) By an order dated 12 October 2007, this Court dismissed the civil applications filed by Defendant Nos.3 to 6 and upheld the consent terms on an express finding that the Plaintiff had the requisite authority to execute the consent terms and that no fraud was played upon Defendant Nos.3 to 6;

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(xiii) The order of this Court passed in the civil applications was challenged by Defendant Nos.3 to 6 before the Supreme Court in SLP Nos.21108-21110 of 2007. The Plaintiff herein, who was Respondent No.9 in the SLPs, filed a counter affidavit dated 5 August 2009 in the Supreme Court claiming inter alia that Defendant No.1 herein by their conduct had rendered the consent terms non-executable and the same were no longer binding on the Plaintiff. This, according to Defendant Nos.1 and 2, was a clear change of stand and an afterthought on the part of the Plaintiff;

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(xiv) By its order dated 21 April 2010, the Supreme Court dismissed the SLPs and upheld the order passed by this Court on 12 October 2007 dismissing the civil applications. The Supreme Court inter alia recorded that the Plaintiff had full authority to execute the Consent Terms on behalf of Defendant Nos.3 to 6. The Supreme Court inter alia noted the stand of the present Plaintiff (Respondent No.9 in the said SLPs) inter alia seeking a declaration that the Consent Terms stood cancelled and annulled on the ground that the consent terms had been rendered infructuous due to the failure of Defendant No.1 (Respondent No.8 in the SLPs) to perform his obligations as per the consent terms. The stand of the Plaintiff herein did not find any favour with the Supreme Court, which clearly expressed its disagreement with the stand;

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(xv) The Plaintiff has, in these premises, approached this Court by way of the present suit seeking a declaration that the consent terms have been rendered inexecutable by reason of Defendant No.1 having defaulted in performance of its obligations thereunder. The Plaintiff also challenges the

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development agreement executed by Defendant No.1 in favour of Defendant No.2 seeking a declaration of nullity of the same. The present Notice of Motion is taken out for an interim injunction restraining Defendant No.2 from in any manner carrying on any construction / development activity on the suit property or creating any third party rights in respect thereof. The Motion also seeks appointment of a Court Receiver and injunction against Defendant No.8, who is the Mumbai Metropolitan Region Development Authority, from executing any conveyance in respect of the suit property in favour of Defendant No.2 or permitting Defendant No.2 from carrying on any construction activity on the suit property.

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3 In their replies filed to the Notice of Motion, Defendant Nos.1, 2 and 7 have raised three preliminary objections. It is submitted by the Defendants that the present suit which inter alia seeks to set aside a compromise decree passed by this Court in First Appeal Nos.1388 to 1390 of 2003, is not maintainable in view of Section 47 and Rule 3A of Order 23 of the Code of Civil Procedure, 1908. It is submitted that no suit can lie to set aside a decree on the ground that the compromise on which the decree is based was not lawful. It is submitted that suit is barred by the Law of Limitation since it seeks to set aside the consent terms dated 22 May 2006. It is submitted that the dispute was raised by the Plaintiff in respect of the consent terms first in October 2007. It is submitted that the present suit filed in June 2011 is, thus, barred by the Law of Limitation. It is next submitted by the Defendants that the suit is barred by res judicata and / or constructive res judicata or principles analogous thereto. It is submitted by the Defendants that the issue of inexecutablity of the consent terms having been raised by the Plaintiff in the SLPs before the Supreme Court and having been rejected by the Supreme Court in its order of 21 April 2010, the suit is barred by res judicata and / or constructive res judicata or principles analogous thereto .

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4 Having regard to the objections to the jurisdiction of this Court raised as above, the following issues are framed as preliminary issues :

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(i) Whether Defendant Nos.1, 2 and 7 prove that the suit is barred by reason of provisions of Section 47 and Rule 3A of Order 23 of the CPC, 1908?;

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(ii) Whether the Plaintiff proves that the suit is within limitation?;

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(iii) Whether Defendant Nos.1, 2 and 7 prove that the suit is barred by res judicata and / or constructive res judicata or principles analogous thereto for the reasons alleged in para 3(b) of the affidavit in reply of Defendant Nos.1, 2 and 7 filed in Notice of Motion No.1988/2011?

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5 The Plaintiff prays for interim reliefs as claimed in the Notice of Motion pending determination of the preliminary issues under Clause (2) of Rule 9A of the CPC. The Plaintiff's application is dealt with in the order below.

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6 The record of the case indicates that late Anant Mahadev Tambe, who was the owner of the suit property, which was claimed by adverse possession by the late Budhiya Vesta Patel through whom the Plaintiff claims, had entered into a development agreement with one Govind Hari Rane. In pursuance of a development agreement executed by the said Rane, with the late Tambe as a confirming party thereto, development rights in respect of the suit property were given to Defendant No.1. Defendant No.1 had filed a suit in this Court, being Suit No.1230/92, against the late Tambe and the said Rane seeking the specific performance of the development agreement. By a decree passed by this Court on 28 January 2000, this Court decreed the suit filed by Defendant No.1. In the meantime, Budhiya filed his suit in the City Civil Court for declaration of his ownership on the basis of his purported adverse possession. In this suit, a counterclaim was filed by Defendant Nos.1 and 7 (Defendant No.7 being the widow of late Tambe) asserting the ownership of Defendant No.7 and development rights granted to Defendant No.1. Budhiya's suit was dismissed by the City Civil Court and the counterclaim of Defendant Nos.1 and 7 was allowed thereby declaring Defendant No.7 to be the lawful owner of the suit property. The

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consent terms, validity / executability whereof is the subject matter of the present suit, were filed in First Appeals filed by the late Budhiya and the Plaintiff herein. These consent terms inter alia required Defendant No.1 to pay a sum of Rs.1.15 crores to the Plaintiff in full and final settlement of his right / claim with respect to the suit property. These consent terms have been upheld right upto the Supreme Court. The challenge on account of the Plaintiff's authority to enter into the consent terms as well as legality of the consent terms has been upheld by the Supreme Court. Even the aspect of executability of the consent terms purportedly on the ground of Defendant No.1 not having performed its part of the contract has been considered by the Supreme Court when the SLPs (from out of the civil applications filed in this Court for setting aside the consent terms) were dismissed by the Supreme Court. The consent terms, thus, must be held to be valid and binding at least for the purposes of the present interim application. These consent terms have been duly acted upon by the parties. In pursuance of the consent terms and on the basis of the express communications addressed in that behalf by the Plaintiff's Advocates, Defendant No.1 has deposited the entire amount of Rs.1.15 crores due and payable to the Plaintiff under the consent terms with the Plaintiff's Advocates. The parties have clearly changed their position to their detriment in pursuance of these consent terms. Defendant No.2 has entered into a development agreement with Defendant No.1 and has paid a sum of Rs.10 crores under this development agreement. Prima facie, the challenge to these consent terms both on the grounds of the Plaintiff's authority to enter into these consent terms as well as inexecutability of the consent terms by reason of the purported failure of Defendant No.1 to perform them, stand prima facie dispelled and the consent terms stand acted upon. In these premises, there is no merit in the Plaintiff's application for any restraint upon the Defendants from acting in pursuance of the consent terms. The development agreement between Defendant Nos.1 and 2 having been entered into in pursuance of these consent terms and having been performed by Defendant No.2, there is no case for any interim restraint on Defendant No.2 from acting under or in pursuance of the development agreement.

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7 In these premises, the Plaintiff is not entitled to any interim relief in

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the Notice of Motion. Accordingly, the Plaintiff's application for interim injunctions, as claimed in the Notice of Motion, pending determination of the preliminary issues framed as above, is rejected.

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8 Place this suit for directions on 4 August 2014, when the parties may communicate as to whether evidence is required to be led on the preliminary issues framed. Directions pertaining to the conduct of the trial on the preliminary issues will be given on that date.

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(S.C. Gupte, J.)

Yusuf Vali Mohd. Bilakhiya v. Hitesh Enterprises and 7 Ors.

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Yusuf Vali Mohd. Bilakhiya v. Hitesh Enterprises and 7 Ors.

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