Allowed

Primeland Contructions v. Mohammad Afzal Shikh Farid and 8 Ors.

Bombay HC18 Jul 2014NMS/427/2014

Case brief

AI extract

What is this about?

High Court granted temporary injunction against Defendants to prevent creation of third-party rights and to restrain disturbance of Plaintiffs occupation of suit property in a specific performance suit concerning a development agreement.

What did the court decide?

Temporary injunction against Defendants from creating third party rights in suit property and from disturbing Plaintiffs occupation and possession.

Primeland Contructions Vs Mohammad Afzal… — Contract and Commercial Disputes | Bombay HC (2014)

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

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NOTICE OF MOTION NO. 427 OF 2014 IN SUIT NO. 187 OF 2014

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Primeland Constructions …Applicants / Plaintiffs vs. Mohammad Afzal Shaikh Farid & Ors. ...Defendants

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Mr.Rajiv Narula with Ms.Shweta Doshi i/b.M/s.Jhangiani Narula for Plaintiffs. Mr.Rizwan Merchant i/b. Mr.U.M. Zaveri for Defendant Nos.1 to 9. Mr.Jai Chinoi, Senior Advocate with Mr.S.A. Bhagwat and Miss Astha Thamankar, Miss Madhu Hiraskar i/b. M/s.Chitnis Vaithy & Co. for Defendant Nos.10 and 11.

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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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The Notice of Motion is taken out by the Plaintiffs seeking various reliefs. However, the only prayers pressed at the hearing of the Notice of Motion are in prayer clauses (a) and (b). Prayer clause (a) seeks a temporary injunction against the Defendants from creating any third party rights in respect of the suit property, whilst prayer clause (b) seeks a temporary injunction restraining the Defendants from disturbing or obstructing the Plaintiffs' occupation and possession of the suit property. The Notice of Motion is taken out in a suit for specific performance of a development agreement entered into between Defendant Nos.1 and 2 on the one hand, and the Plaintiffs on the other.

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2 The facts of the case, as narrated by the Plaintiffs, may be briefly stated as follows :

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(i) The Plaintiffs are a registered partnership firm engaged in the business of construction of buildings. Defendant Nos.1 to 9 are the owners of the suit

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property having undivided share in a larger property admeasuring about 30 acres. Defendant Nos.1 to 8, who are co-owners holding of 84.61% share in the larger property are co-owners in respect of the suit property which consists 26 acres and 4 and ½ gunthas out of the larger property;

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(ii) In or about 2007, a Joint Venture Agreement was executed between Defendant Nos.1 to 4 as owners of the suit property with a sister concern of the Plaintiffs by the name of M/s.Ravi Foundation along with one Mr.S.M. Javed and Mr.Bharat Vijan for development of the suit property by formation of a private limited company. The shares of the respective parties in the private limited company were stipulated in the MOU. The development was agreed to be carried out on “as is where is” basis. It appears that the suit property was recorded as a forest property in the revenue records, and the onus of obtaining necessary clearance in respect of the forest reservation was on Defendant Nos.1 to 8 under the MOU;

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(iii) Subsequently, in or about 2008, the terms of the MOU were sought to be modified and revised and the development of the suit property was agreed to be taken up by a partnership firm of the Plaintiffs, then comprised of the present partners of the Plaintiffs firm, Defendant No.1 and Mr.Vijan as well as Mr.Javed. On 3 May 2008, a partnership deed was executed between the parties stipulating their respective shares in the profits and losses of the firm. On the same date, a development agreement was executed between the parties, namely, Defendant Nos.1 to 8, on the one hand, and the Plaintiffs’ firm, on the other. By this development agreement, the terms of development agreement recorded earlier in the MOU were modified. Development right in respect of the undivided share of the larger property of Defendant No.1 equivalent to 26 acres and 4 and ½ gunthas (the suit property) on “as is where is basis” was granted to the Plaintiffs for a lump sum consideration of Rs.66 crores. The agreement inter alia provided for a payment of Rs.11 crores on or before the execution of the said agreement. The balance consideration was payable within stipulated periods, respectively, after the date of

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receipt of IOD. It is the case of the Plaintiffs that whilst the initial payment of Rs.11 crores was made under the development agreement, further payments could not be made since the IOD could not be obtained due to the continued reservation of forest in respect of the suit property. Defendant Nos.1 to 8 also executed a Declaration-cum-Indemnity on the same date, i.e. 3 May 2008. The Defendants also executed a Special Power of Attorney as well as a General Power of Attorney in favour of the Plaintiffs inter alia nominating the Plaintiffs' partner Shri Jayesh T. Shah to do all acts, deeds and things necessary for obtaining permissions of the competent authority for development of the suit property as also for admitting execution of the development agreement before the SubRegistrar of Assurances. Defendant Nos.1 to 8 also executed a letter in favour of the Plaintiffs granting them a licence to enter upon the suit property for development of the same in accordance with the development agreement;

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(iv) The Plaintiffs claim to have taken possession of the suit property in pursuance of the documents executed on 3 May 2008. The Plaintiffs claim to have erected their name board and deployed their security guards on the suit property. The Plaintiffs also claim to have put tin sheets and iron poles around the suit property fencing the same. The Plaintiffs rely upon the payment receipts issued by the security agency for engagement of security from time to time after May 2008 and photographs of the suit property showing the Plaintiffs' possession of the suit property including fencing erected by the Plaintiffs around it;

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(v) In or about 2009, in course of time, Mr.Javed as well as Defendant No.1 retired from the Plaintiffs’ firm transferring their respective shares in the profits and losses of the partnership firm to Mr.Jayesh Shah, one of the continuing partners of the Plaintiffs and Mr.Bharat Vijan, the other continuing partner of the Plaintiffs;

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(vi) In pursuance of the development agreement, the Plaintiffs proceeded to get the mutation entry of forest land in the revenue records in respect of the suit property cancelled and filed appeals before the Sub-Divisional Officer. The revenue appeals were allowed and the Sub-Divisional Officer directed deletion of the mutation entry of forest. The order was subsequently stayed by the Sub-Divisional Officer. The Plaintiffs, as Constituted Attorneys of Defendant Nos.1 to 8, challenged the said order by filing a writ petition. This Court by its order dated 18 June 2014 has since stayed the order passed by the SDO staying the entry;

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(vii) At this stage, on or about 4 December 2013, a termination letter was purportedly addressed by the Advocates of Defendant Nos.1 to 8 to the Plaintiffs seeking termination and cancellation of the MOU of February 2007 as well as development agreement of 3 May 2008 and various documents executed in pursuance thereof. It is the case of the Plaintiffs that immediately after this termination letter, Defendant No.1 together with his hirelings attempted to commit criminal trespass on the suit property and barged into the same and removed the tin sheets constructed by the Plaintiffs on the suit property as also threatened the Plaintiffs' security guards posted at site;

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(viii) On 13 December 2003, a development agreement is purported to have been executed by Defendant Nos.1 to 8 in favour of Defendant No.10 inter alia granting development rights in respect of the suit property to Defendant No.10. Defendant Nos.1 to 8 also claim to have executed a Power of Attorney and possession letter in favour of Defendant No.10 in pursuance of the said development agreement;

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(ix) On 14 December 2013 and 16 December 2013, the Plaintiffs addressed complaints to the police in respect of the acts of criminal trespass committed by Defendant No.1 and his hirelings. An FIR is registered by the police on 27 December 2013. In pursuance of the FIR,

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the police authorities have arrested 39 persons found to be trespassing the suit property;

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(x) In these premises, the present suit is filed on 22 January 2014 seeking specific performance of the development agreement. After the alleged rights of Defendant Nos.10 and 11 were brought to the notice of the Plaintiffs, the plaint has since been amended by impleading Defendant Nos.10 and 11, as party Defendants to the present suit and seeking appropriate reliefs including a declaration of the purported development agreement dated 13 December 2013 being null and void.

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3 Defendant Nos.1 to 8 oppose the Notice of Motion by contending inter alia that the Plaintiffs were never in possession of the suit property. It is submitted by the Defendants that the licence granted to the Plaintiffs to enter upon the suit property was subject to plans being sanctioned for development of the suit property. It is submitted that since no such plans were sanctioned, there was no question of putting the Plaintiffs in possession of the suit property. It is submitted that there is a panchnama prepared by the police in respect of the NC filed by Defendant Nos.1 to 8 before the police on 6 December 2013. It is submitted that the panchnama prepared on 7 December 2013 shows Defendant Nos.1 to 8 in possession of the suit property. Defendant Nos.1 to 8 also rely upon various property tax bills as also electricity and telephone bills in respect of a structure standing within the suit property. The Defendants also rely upon the statements of police in pending proceedings under Section 145 of the Code of Criminal Procedure. Apart from disputing the Plaintiffs' possession of the suit property, Defendant Nos.1 to 8 also submit that the development agreement, of which specific performance is sought in the present suit, is neither stamped nor registered and that the Plaintiffs are not entitled to rely on the same in the present suit. Defendant Nos.1 to 8 also submit that the purported retirement deed of Defendant No.1 in respect of his 40% share in the Plaintiffs' partnership is without any consideration.

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4 In the first place, relevant clauses of the development agreement,

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which have a material bearing on the present controversy, need to be seen. The development agreement records that whilst the costs, charges and expenses for obtaining NOC / clearance from the forest department and for removal of the forest entry shall be borne by the developer, i.e. the Plaintiffs alone, the owners, i.e. Defendant Nos.1 to 8, shall assist and extend co-operation to the developers in this behalf. The development agreement further records that on the execution of the agreement, the owners have given a licence to the developers to enter upon the suit property with right, permission and authority to the developers to protect, fence the said property, submit the layout scheme in respect of the said property and get layout of the said property approved and develop the same by constructing building / buildings thereon. The development agreement entitles the developers to sell, allot and / or transfer flats / premises in the new buildings to be constructed on the suit property to third parties. The development agreement also contains the owners' consent to the developers to amalgamate the suit property with any other land and develop the amalgamated property in the manner they deem fit and proper. The development agreement read with the possession letter (referred to as “licence letter”) makes it clear that the Plaintiffs were granted licence to enter upon the said property for development of the same for all intents and purposes in connection therewith. The argument of Defendant Nos.1 to 8 that this licence was to come into existence after the plans were sanctioned holds no water. In fact, the licence letter grants licence to enter upon the suit property in terms of the development agreement, which, as noted above, allows the developers to protect, fence the said property and develop the same. The other documents executed in connection with the development agreement, namely, the General Power of Attorney of the same date, i.e. 3 May 2008, also confers upon the Plaintiffs, as developers, a power to handover and surrender possession of portions of the suit property reserved for any purpose to the authorities concerned, whilst having the layout sanctioned as also to execute all documents and writings including conveyance in favour of such authorities in respect of such portions. The General Power of Attorney also authorises the Plaintiffs to execute agreements, declarations, right of way and / or access documents with adjoining land owners for construction of road and or / right of way to the property from the nearest available road. The .General Power of Attorney also authorises the

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Plaintiffs to receive compensation in case of acquisition of the property or any part thereof. All these circumstances prima facie support the Plaintiffs' case that the Plaintiffs were put in possession of the suit property, in pursuance of the development agreement. The Plaintiffs' possession of the suit property in pursuance of the documents executed on 3 May 2008, is further supported by documentary evidence of payments made by the Plaintiffs to the security agency appointed to guard the suit property from time to time from May 2008. The photographs relied upon by the Plaintiffs also show the Plaintiffs' possession of the suit property.

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5 Defendant Nos.1 to 8, on the other hand, rely upon mainly the police record since the date of the NC registered by Defendant Nos.1 to 8 with the police on 6 December 2013. Defendant Nos.1 to 8 claim to be in settled possession of the suit property between 6 December 2013 and 27 December 2013 when the police arrested the men posted on the suit property by Defendant Nos.1 to 8. It is the Plaintiffs' own case that on 6 December 2013, Defendant No.1 with his hirelings trespassed upon the suit property and forcibly sought to take possession thereof planting his board on the suit property and purporting to depute security personnel on his behalf to guard the suit property after ousting the Plaintiffs' men posted there. The police record in respect of the possession of Defendant Nos.1 to 8 at site during 7 December 2013 to 27 December 2013 is hardly of any assistance to the Defendants in these facts. When the Court asked the learned Counsel for Defendant Nos.1 to 8 about the documentary evidence relied upon by the Defendants to claim their possession prior to 6 December 2013, all that the learned Counsel placed before the Court was the property taxes bills in respect of one particular structure within the suit property as also some electricity bills and telephone bills in respect of this structure. As noted in the suit development agreement signed by the parties, Defendant No.1 had been carrying on quarry operations and had erected a structure within the larger property installing a crusher therein. This was a small structure within a property of over 26 acres. The structure was used in connection with the quarry operations carried on by Defendant No.1 within the property. These quarry operations had been admittedly discontinued by Defendant No.1 as noted in the development

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agreement. Having regard to the work carried on earlier by Defendant No.1 in a particular structure within the suit property, it is possible that property taxes as well as electricity bills in respect of this particular structure continue to be issued to Defendant No.1 by statutory authorities. In fact, most of the property taxes bills, electricity bills and telephone bills have been prior to the date of delivery of possession by Defendant Nos.1 to 8 to the Plaintiffs. Many of the bills during the period 2012 to 2014 show nil consumption of electricity. On the other hand, it is submitted by the learned Counsel for the Plaintiffs that during the relevant period, it is possible that the suit structure was used by the security personnel employed by the Plaintiffs and as a result, there is some minimum consumption of electricity shown in respect of the particular structure during certain periods. The electricity bills issued in respect of a particular small structure within a large property of nearly 26 acres surely does not establish the Plaintiffs' possession of the suit property, particularly having regard to the various documents on record which clearly support the Plaintiffs' case of delivery of possession of suit property by Defendant Nos.1 to 8 to the Plaintiffs, as noted above.

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6 The development agreement in the present case is stamped with a stamp duty of Rs.100/-. The development agreement contemplates execution of a conveyance in favour of the developers or their nominees including a cooperative society or company of purchasers of flats / premises in the building/s to be constructed on the suit property. The inadequacy, if any, of the stamp duty paid on the development agreement or non-registration thereof is not fatal to the interim reliefs claimed in the present suit. The Plaintiffs can always pay the deficit stamp duty and penalty, if any, and rely on the document in evidence. Nonregistration of the Agreement is not a defence available in a suit for specific performance. There is no substance in the Defendants' objection to the reliefs claimed in the Motion on that ground.

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7 As far as the plea of Defendant Nos.1 to 8 concerning the authenticity or validity of the retirement deed executed by Defendant No.1 in respect of his 40% share in the profits and losses of the Plaintiffs' firm, this can hardly be a ground to oppose the Plaintiffs' application. In any event, if Defendant

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No.1 has any claim as a partner of the Plaintiff firm, the same is through the Plaintiffs and cannot be urged as a ground to oppose the Plaintiffs' application for interim reliefs.

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8 It is submitted by the learned Counsel for Defendant Nos.1 to 8 that there are pending proceedings under Section 145 of the Code of Criminal Procedure between the parties where the police have filed an application and placed documents before the Court. It is submitted that whatever order that may be passed in the present application may be made subject to the result of these proceedings. As far as breach of peace proceedings are concerned, any order passed by a Magistrate under Section 145 of the Cr.P.C. is itself subject to a determination of the question of title and possession by a civil court. A plea that an order passed by this Court whilst dealing with the suit filed for the determination of title or possession should be made subject to the result of the proceedings under Section 145 of the Cr.P.C. is unheard of and does not merit any further discussion.

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8 Learned Counsel for Defendant Nos.10 and 11 submits that no order could be passed against Defendant Nos.10 and 11, since rights, if any, can only be claimed by the Plaintiffs against Defendant Nos.1 to 8. Learned Counsel, however, clearly admits that his clients, i.e. Defendant Nos.10 and 11, are not in physical possession of the suit property. Defendant Nos.10 and 11 claim through Defendant Nos.1 to 8. If any rights are purported to be created in favour of Defendant Nos.10 and 11 subsequent to the suit development agreement, as subsequent agreement purchasers / transferees Defendant Nos.10 and 11 can certainly be arraigned as party Defendants in a suit for specific performance of the suit agreement and appropriate reliefs can always be sought against them.

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10 For the reasons discussed above, the Plaintiffs have made out a prima facie case. Having regard to the Plaintiffs' occupation of, and control over, the suit property since May 2008, there is a clear case for protection of the Plaintiffs' occupation of the suit property as well as for restraining Defendant Nos.1 to 8 from creating any third party rights over the suit property.

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11 Accordingly, the Notice of Motion is made absolute in terms of prayer clauses (a) and (b). There, however, shall be no order as to costs.

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12 The application of the learned Counsel for Defendant Nos.1 to 8 for stay of this order is refused.

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(S.C. Gupte, J.)

Primeland Contructions v. Mohammad Afzal Shikh Farid and 8 Ors.

Case brief

What is this about?

What did the court decide?

Primeland Contructions v. Mohammad Afzal Shikh Farid and 8 Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

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