Karnataka High Court
M/S Whitefield Shelters Pvt Ltd vs Sri.N.Nagaraja on 14 May, 2015
Equivalent citations: AIR 2015 KARNATAKA 106, (2015) 4 KANT LJ 138
Author: B.Manohar
Bench: B.Manohar
1
IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 14TH DAY OF MAY 2015
BEFORE
THE HON'BLE MR. JUSTICE B.MANOHAR
W.P.Nos.35516/2014 & 38416/2014(GM-CPC)
BETWEEN:
M/s.Whitefield Shelters Pvt. Ltd.,
Plot No.775/A1,
Road No.45, Jubilee Hills,
Hyderabad - 500 033,
Represented by Promoters/Directors.
1. Sri.K.Raja Reddy.
2. Sri.R.Srinivas Reddy. ... Petitioners
(By Sri.V.Viswanatha Setty, Advocate)
AND:
1. Sri.N.Nagaraja,
Aged about 56 years,
S/o.Nagappa,
2. Smt.M.Shanthakumar @ Shanthamma,
Aged about 49 years,
W/o.N.Nagaraja,
2
Both are R/at ' Manjunatha Nilaya '
No.9, Garudacharpalya,
Mahadevapura Post,
Bangalore - 560 048.
3. Sri.G.M.Shamanna,
Aged about 39 years,
S/o.Muniyappa,
R/at Kaggadasapura Village,
Krishnarajapura Hobli,
Bangalore East Taluk,
Represented by his Attorney
Sri.N.Nagaraja. .....Respondents
(By Sri.Srivatsa, Senior Counsel for Sri.N.S.Sanjay Gowda, Advocate for
C/R1, 2 & 3)
+++++
These Writ Petitions are filed under Articles 226 and 227 of
Constitution of India, praying to call for the entire records on the file of
the Fast Track Court IV, Bangalore Rural District, Bangalore and to
quash the order dated 13.6.2014 passed by the Hon'ble II Additional
Senior Civil Judge, Bangalore Rural District, Bangalore in
O.S.No.2121/2007 directing the petitioner to pay court fee of
Rs.40,57,125/- and direct the Trial Court to accept the Court fee already
paid by the petitioner under Section 47 of KCF & SV Act, vide
Annexure - K by allowing the above writ petition and to grant an
interim order to stay, staying the operation of the order dated 13.6.2014
passed in O.S.No.2121/2007 by the Hon'ble II Additional Senior Civil
Judge, Bangalore Rural District, Bangalore directing the petitioner to pay
the Court fee of Rs.40,57,125/- within two months from the date of
order.
3
These Writ Petitions are coming on for Orders and having
reserved for Orders on 03-02-2015, this day, the Court pronounced the
following:
ORDER
The petitioner-Company is the plaintiff in O.S.No.2121/2007 on the file of II Additional Civil Judge (Sr.Dn.), Bangalore Rural District, Bangalore. Being aggrieved by the order dated 13th June 2014, allowing I.A.Nos.2 and 5 and preliminary issue No.6 with regard to the court fees, the petitioner has filed these writ petitions.
2. The petitioner is a Company incorporated under the Companies Act, established to carry on the business of land development and construction activities. The respondents 1 to 3 are the owners of various items of land situated at Kannamangala Village, Bidarahalli Hobli, Bangalore East Taluk. They approached the petitioner-company for joint development of their properties contending that total extent of land available is 31 acres 11 guntas (hereinafter referred to as the 'suit schedule property') and agreed to do the joint venture of development and construction of Apartments. As per the Memorandum of 4 Understanding dated 27-09-2004 ('MOU' for short), the respondents had agreed to handover the suit schedule property for construction of Apartments and out of built up area, 22% of the area and appurtenant land has to be given to the respondents and 78% of built up area and appurtenant land has to be retained by the petitioner. As per the terms of the MOU, the petitioner has paid a sum of Rs.2,00,00,000/-(Rupees two crores only) towards the security deposit. Further, the respondents have to co-operate for completion of the project. As per the MOU, it is the responsibility of the petitioner to get converted the entire extent of land for residential purpose. However, the competent authority converted only 19½ acres of land and refused to convert 12½ acres of land on the ground that the said property falls under the Park Zone under the Comprehensive Development Plan (hereinafter referred to as 'the CDP' for short). Hence, 12½ acres of land cannot be converted for non-agricultural purpose and the said fact was brought to the notice of respondents. However, the respondents assured that the Government is preparing a new CDP for the year 2005, by that time, they will get the 5 land deleted from the Park Zone in the CDP. The first respondent was MLA at that time. Believing the words of the respondents, the petitioner has spent lot of money for development of land and put up the compound wall. He has entered into an agreement with the L & T for construction of the Apartments.
3. The specific case of the petitioner is that he had spent a sum of Rs.36,00,000/- for obtaining conversion order, Rs.60,00,000/- for obtaining draft plan and also spent Rs.30,00,000/- towards inaugural function apart from Rs.2.00 crores paid towards security deposit. For the inaugural function, the petitioner had invited the Hon'ble Minister for State, Ministry of Defense and National Development, Government of Singapore was invited as Chief Guests. The petitioner had spent more than Rs.5,00,00,000/- for development of the land and also for putting up the compound wall. However, the Department of Petroleum, Government of India had objected for putting up the compound wall and also formation of the road, since the pipeline comes under the property and the said property had already been acquired by the 6 Department of Petroleum for laying the pipes. The respondents without informing all these facts had entered into a MOU for development of the suit schedule property. In spite of repeated requests, they have not co-operated for the development of suit schedule property as per the MOU.
4. The plaintiff issued notice calling upon the respondents to co- operate with them to complete the venture as expeditiously as possible as per the MOU. As per the clauses of MOU, the entire project has to be completed within a period of four years. Hence, the petitioner filed a suit seeking for specific performance of MOU dated 27-09-2004 and direction to the defendants therein to co-operate with the plaintiff in completion of the proposed project as agreed upon by both the parties. Further, restraining the defendants from alienating the suit schedule property, creating any encumbrance, mortgage, lease, joint development agreement with the third parties and giving power of attorney to any persons. The plaintiff also sought for permanent injunction restraining 7 the defendants from altering the nature of the suit schedule property, pending disposal of the said suit.
5. In pursuance of the notice issued by the Trial Court, the defendants entered appearance and filed written statement denying the averments made in the plaint and contended that the suit filed by the plaintiff is not maintainable, the MOU is not enforceable in law and there is no concluded contract which is sought to be enforced as per the MOU. The plaintiff has to develop the entire extent of land, out of which, 22% of built up area has to be given to the defendants and 78% of built up area will have to be retained by the plaintiff. The plaintiff is supposed to bear the entire expenditure of construction of the Apartments. As per clause 8.1 of the MOU, the plaintiff has to commence the construction within one month from the date of MOU and he has to complete the construction and deliver to the respondents 22% of their share within 36 months and further 12 months grace period has been given. However, the plaintiff has not yet commenced the construction of building. Further, as per clause 5.5 it has been 8 specifically stated that some of the survey numbers fall under the Park Zone under the CDP. The second party i.e. the plaintiff shall get converted the same into non-agricultural purposes. Instead of doing so and developing the land by putting up construction, lame excuses have been taken by the petitioner. The suit in the present frame is not maintainable. Further the court fees paid is also insufficient. As per the plaint averments, the plaintiff has to invest more than Rs.350.00 crores and the market value of the property itself is Rs.70.00 crores. The valuation of the suit and the court fees of Rs.500/- paid for specific performance of the contract is insufficient and the suit is liable to be dismissed solely on that ground and sought for dismissal of the suit.
6. The defendants also filed I.A.No.2 under Order VII Rule 11(B) read with 151 of CPC seeking direction to the plaintiff to correct the valuation slip and to pay the correct court fee, failing which reject the plaint. They also filed I.A.No.5 under Section 11(2) of the Karnataka Court Fees and Suits Valuation Act to try the issue regarding court fee as a preliminary issue before the evidence is recorded. 9
7. On the basis of the pleadings of the parties and also applications filed by the respondents, the Trial Court framed necessary issues. Issue No.6 is with regard to Court fee paid on the plaint. The Trial Court after considering the arguments on the preliminary issue, by its order dated 6th August 2011 held that Court fee paid on the plaint is sufficient since sharing of the built up area as per Clause 7 of the MOU will come into effect in future and valuation of the suit under Section 47 (ii) of KCF and SV Act is in accordance with law. Being aggrieved by the said order, the defendants 1 to 3 filed W.P.Nos.39002-39004/2011 before this Court. This Court by its order dated 5th January 2012 allowed the writ petitions and remitted the matter to the Trial Court for reconsideration, in accordance with law and also taking into consideration clause 10.1 of the MOU.
8. After remand, the Trial Court by its order dated 06-11-2012 examined the matter and directed the plaintiff to pay the court fees of Rs.40,57,125/-. Being aggrieved by the said order, the plaintiff filed W.P.No.753/2013 before this Court, this Court by its order dated 10 30-01-2013 allowed the said writ petition and quashed the order dated 06-11-2012 passed by the Trial Court and directed the Trial Judge to re- determine the court fees payable by the plaintiff taking into consideration the relief sought in the suit and also maintainability of the suit in the present form and further taking into consideration the order made in W.P.Nos.39002-39004/2011 dated 5-1-2012 After remand, the Trial Court taking into consideration I.A.Nos.2 and 5 filed by the defendants and issue No.6 regarding court fees as preliminary issue and after examining the matter in detail, by its order impugned in this writ petition dated 13-06-2014 allowed I.A.Nos. 2 and 5 and directed the plaintiff to value the suit under Section 40 of the KCF & SV Act and to pay the Court fee on the consideration of 78% out of entire sale consideration of Rs.350.00 crores, which amounts to Rs.40,57,125/-, within a period of two weeks. Being aggrieved by the said order, the plaintiff filed these two writ petitions.
9. Sri.V.Vishwanath, learned counsel appearing for the petitioner contended that the order passed by the Trial Court is contrary to law. 11 The Trial Court completely erred in not considering the intent and purport of MOU dated 27-09-2004. It is only for the joint development in respect of suit schedule property and for construction of the Apartments. There is no question of sale and purchase of the properties and treating the MOU as agreement of sale is contrary to law. In the MOU there is no mentioning of investment of Rs.350.00 crores. Clause 6 speaks about the cost of construction. As per Clause 6.2 of MOU, the entire cost including fee, fine, charges, cess, for obtaining the license and sanctioned plan for construction of the building and conversion charges has to be borne by the second party. The first party shall not be required to contribute any amount towards cost of construction or betterment charges. The question of paying court fees on 78% of the entire sale consideration of Rs.350.00 crores does not arise. Even if the plaintiff has to pay the court fees, it is on the 78% of the value of the property and not on the sale consideration. In the present suit, the question of sale does not arise. The prayer of the plaintiff in the suit is only for specific performance of MOU dated 27-09-2004 and also for 12 injunctory relief. The court fee has to be paid under section 40 of the KCF & SV Act and fixed fees on injunctory relief. Hence, sought for setting aside the order dated 13-06-2014 made on I.A.Nos.2 and 5 and preliminary issue.
10. Sri.Sreevatsa, learned Senior Counsel appearing for N.S.Sanjay Gowda argued in support of the order passed by the Trial Court and contended that the entire project was assessed for Rs.350.00 crores. As per clause 7.2 of MOU, the first party i.e. the owners of the property had agreed to transfer an undivided 78% share in the suit schedule property to the second party or their nominees, the second party shall construct and deliver 22% of share of total super built area together with all common area i.e. car parking area, amenities, etc., for the absolute use and benefit and ownership of the first party. The cost of construction has to be borne by the second party. Hence, the plaintiff has to pay the court fee on 78% of their share. The Trial Court, taking into consideration all these aspects of the matter had called upon the plaintiff to pay court fees under Section 40E of the Karnataka Court Fess and 13 Suits Valuation Act and sought for dismissal of the writ petitions. He also relied upon the judgment reported in 1967 (1) KLJ 258 (F.THIMMAIAH v/s V.LAKKANNA); AIR 1975 KAR 203 (T.GANGADHARASWAMY v/s DOWLATRAM MOHANDAS AND OTHERS); (1997) IMLJ 649 (MADRAS) (NALLA GOUNDER AND ANOTHER v/s V.M.SOMASUNDARAM AND ANOTHER).
11. I have carefully considered the arguments addressed by the learned counsel for the parties and perused the order impugned and other relevant records.
12. The records clearly disclose that the plaintiff filed a suit for specific performance of MOU dated 27-09-2004 wherein the plaintiff and defendants had agreed that the suit schedule property has to be handed over to the plaintiff for construction purpose. Out of the total built up area, 22% of the area has to be given to the defendants and 78% of the built up area will have to be retained by the plaintiff. As per the MOU, entire expenditure towards construction has to be borne by the 14 plaintiff. The plaintiff has to incur expenditure for conversion of the property for residential purpose and other expenditures. The specific case of the plaintiff is that out of 31 acres 11 guntas of land, the plaintiff was able to get converted only 19½ acres of land and the remaining 12½ acres of land fall under the Park Zone under the CDP. The competent authority refused to convert the remaining extent of land. Though the defendants had given assurance that they will take steps to delete the said property from the New CDP, but no steps have been taken. In view of acquisition of some portions of the property by the Department of Petroleum for laying underground pipe, he could not construct the road over the underground pipes and the Department of Petroleum had objected for the same. The entire topography and structure of the plan has to be changed. Hence, he could not commence the construction of building as per the MOU entered into between the parties in view of non co-operation from the defendants. The defendants have taken steps to alienate the suit schedule property with some third party, in view of that, the plaintiff filed the suit. However, the defendants contended that, in 15 view of non fulfillment of the terms of MOU, the Power of Attorney given to the plaintiff has already been cancelled on 30-04-2007 itself. Further, all construction must be completed within a period of four years. However, the plaintiff failed to commence the construction. As per the MOU, 75% of the Security deposit has to be forfeited and MOU has to be cancelled, Hence, sought for dismissal of the suit.
13. The defendants further raised an issue with regard to the court fee paid which is insufficient and I.A.Nos.2 and 5 have been filed seeking to treat the issue regarding court fee as preliminary issue and to reject the plaint for non-payment of sufficient court fee. The reasoning of the Trial Court calling upon the plaintiff to pay the court fee under Section 40 of the KCF & SV Act on the consideration of 78%, out of the entire sale consideration of Rs.350.00 crores is contrary to law. In the MOU there is no mentioning of total investment of Rs.350.00 crores. Clause 6 of the MOU speaks about cost of construction of the Apartments, which reads as under:
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"6. COST OF CONSTRUCTION:
6.1 Whereas, the entire cost of providing the absolute marketable title to the Schedule Lands shall be the responsibility of the First Part, the entire cost of preparing the lands for development by way of obtaining the necessary change of land use, sanction of conversion, etc., shall be borne by the Second Party;
6.2 The entire cost, including the fee, fine, levy, penalties, charges, cess whatsoever, for obtaining license and sanctioned plan for construction of the building to be put up in the Schedule Lands including the area falling to the share of the First Party shall be borne by the Second Party. The First Party shall not be required to contribute any amount towards the cost of construction or betterment charges, conversion, fine, penalty, etc., for change of land use, and/or any professional fee or charges with regard to the proposed construction in the Schedule Lands."
However, in the plaint at paragraph 10, the plaintiff has stated that the project costing about more than Rs.350.00 crores, that amount cannot be treated as sale consideration for the purpose of valuation of the suit. As stated earlier, as per clause 10 of MOU, the first party shall convey, transfer and sell the second party 78% share in the land comprised in the schedule land to the second party or his nominees as and when second party request the first party to convey or transfer. The first party agreed and undertook to sign and execute the agreements/deeds/indenture for 17 the sale of undivided share in the suit lands falling to the share of the second party i.e. to an extent of 78% in favour of the second party or their nominees.
14 In the instant case, the project itself has not been started. The main prayer sought in the suit is for specific performance of MOU dated 27-09-2004 and to co-operate the plaintiff for completion of the proposed project. Hence, the order passed by the Trial Court calling upon the plaintiff to pay the court fee on the sale consideration of 78% out of the entire sale consideration of Rs.350.00 crores is contrary to law. Reading of clause 10.1 of the MOU makes it clear in this regard. At the most, the plaintiff can be called upon to pay the court fee on 78% of the value of the property and not the sale consideration of Rs.350.00 crores, since the project has not yet been commenced. The issue with regard to payment of Court fee was remanded by this Court on two occasions. In spite of the same, the Trial Court has not considered the case of the plaintiff in accordance with the provisions of Karnataka Court Fees and Suits Valuation Act. Hence, the order passed by the 18 Trial Court on I.A.Nos.2 and 5 cannot be sustainable. The Plaintiff has to pay the Court fee on 78% of the value of the property as on the date of the MOU. Accordingly, I pass the following:
ORDER The writ petitions are allowed. The order dated 13-06-2014 made on I.A.Nos. 2 and 5 and preliminary issue No.6 is quashed. The plaintiff is liable to pay the Court fee on 78% of the value of the property as on the date of MOU.
Two months time from today, is granted to the plaintiff to pay the difference of Court fee, failing which, the plaint filed by the plaintiff has to be rejected.
Sd/-
Judge mpk/-*