Disposed

One Bangalore West (Towers 1 to 5) Apartment Owners Association v. M/S Palladium Constructions Pvt. Ltd.

Karnataka HC3 Sept 2024MFA/2111/2024

Case brief

AI extract

What is this about?

Apartment owners' association appealed dismissal of its application seeking deposit of corpus fund by developer under Order 39 Rule 10 CPC. High Court upheld maintainability finding but directed defendants to file revised fixed deposit details before the trial court until suit disposal, and disposed of the appeal.

What did the court decide?

Defendants directed to file and renew fixed deposit details before the trial court till suit disposal; affidavit taken on record.

One Bangalore West (Towers 1 to 5) Apartment Owners… — Property and Title | Karnataka HC (2024)

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1 - NC: 2024:KHC:36365 MFA No. 2111 of 2024

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 3^RD DAY OF SEPTEMBER, 2024

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BEFORE

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THE HON'BLE SMT. JUSTICE LALITHA KANNEGANTI MISCELLANEOUS FIRST APPEAL NO.2111 OF 2024 (CPC)

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BETWEEN:

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ONE BANGALORE WEST (TOWERS 1 TO 5) APARTMENT OWNERS’ ASSOCIATION AN ASSOCIATION FORMED UNDER THE PROVISONS OF THE KARNATAKA APARMENT OWNERSHIP ACT, 1972, HAVING ITS REGISTERED OFFICE AT SOCIETY OFFICE, GROUND FLOOR, TOWER 1, NO.1, DR. RAJKUMR ROAD, OPP. VIVEKANANDA COLLEGE, RAJAJINAGAR, BANGALORE – 560 010.

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REPRESENTED BY ITS CURRENT PRESIDENT, NARAYANAN RAMAKRISHNAN.

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Digitally signed by SUVARNA T Location: HIGH COURT OF KARNATAKA

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MRS. ARCHANA KUMAR, AGED ABOUT 50 YEARS, W/O MR. NATARAJAN SHYAM KUMAR, RESIDING AT FLAT NO.2072, ONE BANGALORE WEST, BLOCK 3A/TOWER 2, NO.1, DR. RAJKUMAR ROAD, OPP. VIVEKANANDA COLLEGE, RAJAJINAGAR, BANGALORE – 560 010.

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MR. ARUN KALYANPUR, AGED ABOUT 78 YEARS, S/O. MR. RAMANAND SANJIV KALYANPUR, RESIDING AT FLAT NO.2092,

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2 - NC: 2024:KHC:36365 MFA No. 2111 of 2024

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ONE BANGALORE WEST, BLOCK 3A/TOWER 2, NO.1, DR. RAJKUMAR ROAD, OPP. VIVEKANANDA COLLEGE, RAJAJINAGAR, BANGALORE – 560 010.

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MR. VIVEK RAMACHANDRA KULKARNI, AGED ABOUT 67 YEARS, S/O. MR. RAMACHANDRA, VENKOB RAO KULKARNI, RESIDING AT FLAT NO.2031, ONE BANGALORE WEST, BLOCK 3A/TOWER 2, NO.1, DR. RAJKUMAR ROAD, OPP. VIVEKANANDA COLLEGE, RAJAJINAGAR, BANGALORE – 560 010.

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MR. UPPIN SHIVANNA, AGED ABOUT 71 YEARS, S/O. BASAWANNAPPA UPPIN, RESIDING AT FLAT NO.2201, ONE BANGALORE WEST, BLOCK 3A/TOWER 2, NO.1, DR. RAJKUMAR ROAD, OPP. VIVEKANANDA COLLEGE, RAJAJINAGAR, BANGALORE – 560 010.

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MRS. M. SARASWATHI, AGED ABOUT 70 YEARS, W/O. PACHAYAPPAN MASILAMANI, RESIDING AT FLAT NO.2221, ONE BANGALORE WEST, BLOCK 3A/TOWER 2, NO.1, DR. RAJKUMAR ROAD, OPP. VIVEKANANDA COLLEGE, RAJAJINAGAR, BANGALORE – 560 010.

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MR. KRISHNA KUMAR, AGED ABOUT 60 YEARS, S/O. MR. SURAJ BHAN, RESIDING AT FLAT NO.3071, ONE BANGALORE WEST, BLOCK 3B/TOWER 2, NO.1, DR. RAJKUMAR ROAD, OPP. VIVEKANANDA COLLEGE, RAJAJINAGAR, BANGALORE – 560 010.

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MR. GIRISH N. MAGNOOR, AGED ABOUT 47 YEARS, S/O DR. M.S. NAGARAJ, RESIDING AT FLAT NO.3101, ONE BANGALORE WEST, BLOCK 3B/TOWER 3, NO.1, DR. RAJKUMAR ROAD, OPP. VIVEKANANDA COLLEGE, RAJAJINAGAR, BANGALORE – 560 010.

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MRS. V. KAMESWARI DEVI, AGED ABOUT 54 YEARS, W/O. MRS. SRINIVAS V., RESIDING AT FLAT NO.408, ONE BANGALORE WEST, BLOCK 3C/TOWER 4, NO.1, DR. RAJKUMAR ROAD, OPP. VIVEKANANDA COLLEGE, RAJAJINAGAR, BANGALORE – 560 010.

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MR. PARTHA SARATHI, AGED ABOUT 62 YEARS, S/O. MR. K. SESHANNA, RESIDING AT FLAT NO.5122, ONE BANAGALORE WEST BLOCK 3D/TOWER 5, NO.1, DR. RAJKUMAR ROAD, OPP. VIVEKANANDA COLLEGE,

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4 - NC: 2024:KHC:36365 MFA No. 2111 of 2024

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RAJAJINAGAR, BANGALORE – 560 010.

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AMARNATH CHOWDHARY P., AGED ABOUT 43 YEARS, S/O MR. NAGARAJA NAIDU P., RESIDING AT FLAT NO.5202, ONE BANGALORE WEST, BLOCK 3D/TOWER 5, NO.1, DR. RAJKUMAR ROAD, OPP. VIVEKANANDA COLLEGE, RAJAJINAGAR, BANGALORE - 560 010.

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…APPELLANTS

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(BY SRI. HARIKRISHNA PRAMOD, ADVOCATE)

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AND:

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M/S. PALLADIUM CONSTRUCTIONS PVT. LTD. A COMPANY INCORPORATED UNDER THE COMPANIES ACT 1956, HAVING ITS REGISTERED OFFICE AT M/S MARKET CITY RESOURCES PVT. LTD. GROUND FLOOR, R. R. HOSIERY BUILDING, SHREE LAKSHMI WOOLLEN MILLS ESTATE, MAHALAKSHMI, MUMBAI – 400 011.

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ALSO AT: NO.1, DR. RAJKUMAR ROAD, OPP. SHERATON HOTEL, RAJAJINAGAR, BANGALORE – 560 010. REPRSENTED BY ITS AUTHORIZED SIGNATORY.

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MR. MADHUSOODHAN HEGDE, AGED ABOUT 63 YEARS, S/O MR. GANGADHAR HEGDE, RESIDING AT FLAT NO.2241, ONE BANGALORE WEST,

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5 - NC: 2024:KHC:36365 MFA No. 2111 of 2024

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BLOCK 3A/TOWER 2, NO.1, DR. RAJKUMAR ROAD, OPP. VIVEKANANDA COLLEGE, RAJAJINAGAR, BANGALORE – 560 010.

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…RESPONDENTS

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(BY SRI. DHYAN CHINNAPPA, ADVOCATE A/W SRI. M.V. SUNDARARAMAN FOR CAVEAT RESPONDENT)

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THIS MFA IS FILED U/O.43 RULE 1(r) OF THE CPC, AGAINST THE ORDER DT.28.02.2024 PASSED ON I.A.NO.1 IN O.S.NO.685/2024 ON THE FILE OF THE XXVII ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, BENGALURU CITY, (CCH-9), DISMISSING IA.NO.1 FILED U/O.39 RULE 10 R/W SEC.151 OF CPC AND ETC.

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THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

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CORAM: HON'BLE SMT. JUSTICE LALITHA KANNEGANTI

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ORAL JUDGMENT

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Aggrieved by the order passed in I.A.No.1 in O.S.No.685/2024 dated 28.02.2024 by the XXVII Addl. City Civil and Sessions Judge, Bengaluru, whereby the Trial Court had dismissed the application filed by the plaintiff under Order 39 Rule 10 Read with Section 151 of CPC., the plaintiff is before this Court.

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The facts of the case are the plaintiffs have instituted the suit seeking cancellation of portion of Clause 13 of the sale deed executed by the defendant in favour of plaintiff Nos.2 to 12 and for the consequential relief of declaration to declare that plaintiff No.1 is entitled for corpus funds collected from out of the sale of 472 apartments comprised in Towers 1 to 5 of suit B schedule property and to direct the defendant to transfer the entire corpus fund to plaintiff No.1-association and also for consequential relief of injunction. In the said suit, the present application that is I.A.No.1 is filed directing the defendant to deposit the entire corpus fund amounting to Rs.5,91,68,400/-. It is their case that the defendant, in the capacity as trustee, presently holds said funds and by way of this application they want the defendant to deposit the amount before the Court pending disposal of the suit. It is the grievance of the plaintiff that plaintiff No.1-Association established and commenced its functioning from 01.04.2021. Defendant also executed an Handover Deed on 12.03.2021. Plaintiff No.1-Association confirming handing over of assets and facilities and amenities situated within the precinct of 1A and 1B areas of plaintiff No.1Association under the said deed, but the corpus fund was not

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NC: 2024:KHC:36365 MFA No. 2111 of 2024

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handed over to the association formed by the purchasers. There is a clause in the sale deed that at the time of execution of the sale deeds in favour of purchasers, defendant unilaterally changes the agreed terms of sale agreements after having received significant portions of the amounts under the said sale agreements and insisted that the amounts would be handed over to an ‘Apex Association’. Now, by virtue of this suit, they want that particular clause i.e., clause No.13 of the sale deed to be cancelled and sought for a declaration. According to the plaintiff, the clause is against the interest of purchasers of flats in Towers 1 to 5, liable to be cancelled and thus sought for a direction to the defendant to deposit the amount collected from the flat owners.

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The defendants have filed detailed objections to the application contending that the application is not maintainable and the provision is also not applicable to the plaintiff. The expression employed in Order 39 Rule 10 of CPC is ‘Party’, which means a party to the suit. To apply said provision one party must admit that it is a trustee for another party to the suit and therefore between the parties to the suit, the Court may direct either party who is holding the money in trust to

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8 - NC: 2024:KHC:36365 MFA No. 2111 of 2024

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transfer money to the other party to deposit the money in the Court. It is the case of the defendant that such a provision has no application to the facts of the case. As per Clause No.13, the money will be held by the defendant until the Apex Association is formed and as of now the said Apex Association is not formed. The Trial Court had dismissed the application filed by the plaintiff.

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While dismissing the application, the Trial Court had observed that the words employed in Order 39 Rule 10 of CPC is that if the money or some other thing capable of delivery and any party thereto admits that he holds such money or other things as a trustee for another party, or that it belongs or is due to another party, in such circumstances, the Court can direct such party to deposit or provide security to the amount, before the Court. Admittedly, as per the terms of the sale deed, defendant holds the amount on behalf of the Apex Association, which is not a ‘party’ in the present proceeding. Even after completion of development work in the suit A schedule property, plaintiff No.1 is not entitled to seek refund of corpus fund from the defendant. Instead, it should be handed over to the Apex Association. The Trial Court had referred to Section 5

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NC: 2024:KHC:36365 MFA No. 2111 of 2024

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of the Karnataka Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1972. The Trial Court also observed that the defendant in the objections has not admitted that they are holding the amount as trustee on behalf of plaintiff No.1. In order to make an applicable use of Order 39 Rule 10 of CPC, there should be admission on the part of defendant and the nature which would constitute sufficient admission under Order 12 Rule 6 of CPC. Hence, the Trial Court has come to the conclusion that the application filed by the plaintiff is not maintainable and accordingly, dismissed the same. Aggrieved thereby the plaintiff before this court.

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Learned counsel appearing for the appellants/plaintiffs submits that as far as the appellant’s association is concerned, they have occupied the premises and they have handed over the premises to the purchasers and they have been managing the same. The corpus fund which is lying with the defendant is not so far handed over to the flat owners, in spite of their repeated requests. It is submitted that the clause that is incorporated, that is clause No.13 in the sale agreement is contrary to the interest of the purchasers and they are very

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much worried about the corpus funds that is lying with defendant. The Trial court, without considering the scope of Order 39 Rule 10 of CPC had dismissed the petition.

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Learned Senior Counsel Sri. Dhyan Chinnappa appearing for the respondents/defendants submits that as per clause No.13 of the agreement, once the construction is completed an apex body will be formed and the corpus fund has to be transferred to the said apex body. It is submitted that the apex body is not a party to the suit and as the construction is not completed, it is not open for the plaintiff to say that in the sale deed, a particular clause where it is signed by both the parties is not binding and the same has to be cancelled. He submits that in this case Order 39 Rule 10 of CPC has no application and the Trial Court had rightly dismissed the application filed by the plaintiff. When this matter came up on 13.08.2024, considering the submissions made on behalf of both the parties, this Court had passed an order directing the respondent/defendants to file an affidavit with regard to the plaintiff’s association, how much is the corpus fund that is lying with them and the details of the bank account before this

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Court. Pursuant to the order passed by this Court an affidavit is

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filed before this Court wherein it is stated as follows,

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Bank	Standard Chartered
Branch	23-25 M G Road, Opp. VSNL, Mumbai 400 001
Type of Deposit	Res/NRO Simple Fixed depPremat
In the name of	PALLADIUM CONSTRUCTIONS PRIVATE LIMITED
Funds Account No.	INR 22105109459
Total Amount deposited	Rs.5,89,13,000 (Rupees Five Crore Eighty-Nine Lakh Thirteen Thousand)

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According to them, the said amount is lying in a fixed deposit.

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In response to that learned counsel appearing for the plaintiffs submits that the deposit is for a period of 6 months and that is expired long back and now they have to file a fresh receipt before the Trial Court after the fixed deposit is renewed.

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Having heard the learned counsels on either side, perused the material placed on record. Considering the case of both the plaintiffs and the defendants, as far as the application that is filed by the plaintiff under Order 39 Rule 10 is concerned, the Trial Court had rightly held that as the apex body is not formed and as it is not before the Court, the

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application is not maintainable. However, the fact remains is the corpus fund is lying with the defendants and taking into consideration the concern of the plaintiff with regard to the said amount, this Court is passing the following:

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ORDER

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i. The respondents/defendants are directed to file a revised fixed deposit details before the Trial court.

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ii. The affidavit filed by the defendant is taken on record.

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iii. Till the disposal of the suit, whenever the fixed deposit is renewed from time to time, they shall file the revised details before the Trial Court.

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iv. Accordingly, the appeal is disposed off.

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v. All I.As., in the appeal, shall stand closed.

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SD/(LALITHA KANNEGANTI) JUDGE

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List No.: 1 Sl No.: 9

One Bangalore West (Towers 1 to 5) Apartment Owners Association v. M/S Palladium Constructions Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

One Bangalore West (Towers 1 to 5) Apartment Owners Association v. M/S Palladium Constructions Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

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Statutes considered

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