Bombay High Court
Madhusudanlal Narayanlal Pittie vs Maheshchandra Agarwal & Ors on 26 September, 2014
Author: Roshan Dalvi
Bench: Roshan Dalvi
jsn 1 CHS No.738_2013
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
CHAMBER SUMMONS NO.738 OF 2013
IN
S.C. SUIT NO.224 OF 1961
Madhusudanlal Narayanlal Pittie ... Plaintiff
Vs.,
Maheshchandra Agarwal & Ors. ... Defendants
AND
M/s. Manas Shelters Pvt. Ltd. ... Applicant
3rd party.
AND
Chief Officer, MBR & R Board & Ors.
ig ... Respondents
(Third party)
Mr. R.V. Pai, Adv. a/w. Ms. Bina R Pai, Adv. for the applicant.
Mr. A V Anturkar, Adv. a/w. Mr. Niranjan P. Pandit, Adv. and Mrs.
Dhun A Chhapgar, Adv. i/b. M/s. D J Kamdin & co. for defendant
No.4.
Mr. Prakash Chavan, Adv. a/w. Ms. R J Nathani, Adv., a/w. N.N.
Matkar, Adv. for respondent No.3.
Mr. V A Sawant, Adv. i/b. P M Jadhav, Adv. for respondent No.4.
CORAM : MRS. ROSHAN DALVI, J.
DATE OF RESERVING THE ORDER : 11th September, 2014.
DATE OF PRONOUNCING THE ORDER : 26th September, 2014
O R D E R
1. The applicant, shown as third party, has taken out this Chamber Summons against the parties to the suit as also other respondents who are shown as third party respondents. The Chamber Summons is for declaration that the termination of the development agreement dated 16th December, 2003, Power of Attorney dated 22 nd ::: Downloaded on - 26/09/2014 23:49:22 ::: jsn 2 CHS No.738_2013 May, 2002 and certain other documents is unreasonable, unenforceable and illegal, for appointment of Court Receiver for various directions and for injunction against private receiver appointed in the suit property.
2. The suit filed in 1961 came to be decreed under consent terms signed by the parties on 28 th April, 2008. The defendant No.4 was appointed private receiver. He is one of the co-owners of the suit properties. He had to develop one of the suit properties. He had entered into an MOU with the Director of the applicant on 21 st May, 2002 and a development agreement on 16 th December, 2003 and executed a POA in his favour. The rights and obligations of the applicant would be under the aforesaid documents. The development agreement has been terminated under a notice dated 16th July, 2013.
3. The applicant is required to give certain flats, duly constructed, of specified areas to the owners of the suit property and their tenants in development. Under the agreement he is required to perform his obligations within certain specified periods. The periods have expired. The performance is incomplete. The agreement is terminated. The termination is challenged in the above Chamber Summons.
4. This is in a suit in which preliminary and final decrees have been passed upon settlement between the parties under certain terms. That decree would have to be executed. It is contended that the development agreement would essentially be in execution and hence the Chamber Summons is not maintainable as prayed. A separate Civil Suit would have to be filed upon payment of the ::: Downloaded on - 26/09/2014 23:49:22 ::: jsn 3 CHS No.738_2013 necessary court fee for obtaining the reliefs sought in the Chamber Summons. The nature of the reliefs and the prayer of the Chamber Summons makes this rather apparent. Rule 121 of the High Court Original Side Rules is relied upon by the defendants in support of their contention that the Chamber Summons is not maintainable. There are 38 specified matters which can be disposed off by Judge in chambers as chamber work under Chapter IX thereof. The applicant would contend that his application would fall under clause 15, 16 and 25 of Rule 121 of the High Court Original Side Rules.
Rule 15 relates to applications in execution. Rule 16 relates to questions under Section 47 of the CPC. Rule 25 relates to applications by receiver for management and disposal of properties.
(a) Questions under clause 47 of the CPC are questions to be determined by the Court executing the decree under an execution application. None can be filed by the applicant.
(b) The applications under clause 25 are by receivers. The applicant is not a receiver. Defendant No.4 is the private receiver in this case.
(c) An application by third party is not contemplated under clause
25.
The applicant would contend that the application is for management of the property. The application is instead for declaration that a notice of termination is illegal and for reliefs for appointing Court Receiver and grant of certain injunctions. Such "management" would be in any suit. The aforesaid clauses upon which the applicant relied shows a misconceived application.
5. Order 21 of the CPC sets out the procedure for applications in execution. In such applications Chamber Summons may be taken out for necessary directions. The applicant is a third party as shown ::: Downloaded on - 26/09/2014 23:49:22 ::: jsn 4 CHS No.738_2013 in the title of the Chamber Summons by the applicant. The applicant cannot execute the decree passed in the suit in favour of or against the parties to the suit.
6. It would stand to reason as has been contended on behalf of the respondents, who are parties to the suit, that the case of the applicant falls within the jurisdiction of the Civil Court and must be adjudicated upon payment of court fee and that this application has been taken out only to evade such payment. Mr. Pai on behalf of the applicant, upon taking instructions from the applicant, stated to Court that such was not the intention of the applicant. It is seen that the reliefs prayed for by the applicant are ones only grantable by a Civil Court in a suit. It would require oral evidence to be led. The Chamber Summons is not an application for grant of such reliefs. Mr.Pai stated that full court fee of Rs.3 lacs would be deposited by the applicant to show its bonafides. The applicant was, therefore, directed to deposit Rs.3 lacs to the credit of the Chamber Summons which could be availed by the applicant as court fee in an appropriate suit to be filed. Once that is done, interest of justice would require the Court to grant certain reliefs if a case on merits is made out by the applicant even pending such a suit.
7. The applicant has deposited Rs.3 lacs as directed. The Chamber Summons is, therefore, considered on merits (though it is seen that it is not maintainable) for grant of the necessary urgent interim reliefs only for a temporary period pending a civil suit being filed by the applicants.
8. The development agreement between the parties, which ::: Downloaded on - 26/09/2014 23:49:22 ::: jsn 5 CHS No.738_2013 superseded the earlier MOU executed between the parties, would have to be considered for the grant of reliefs claimed under the development agreement dated 16 th December, 2003. The parties agreed that the owners (who are parties to the suit) shall retain with themselves 20551 Sq.ft. of area including 6051 Sq.ft. of area for its tenants in the proposed new buildings for the use and occupation of the owners leaving the balance area of 14,500 Sq.ft. There was a subsequent modification by which the tenants were to get 700 Sq.ft. more so that from the total area of 20551 Sq.ft. to be retained by the owners the tenants would get 6751 Sq.ft. leaving the balance of 13,800 Sq.ft. for the owners.
9. This would mean and imply the net area to be given to the owners.
10. Under clause 6 of the agreement after excluding the area of 20551 Sq.ft. the remaining built up area would be available with the applicant for sale in open market to third party purchasers upon redevelopment of the suit property.
11. Under clause 9 of the agreement the applicant was to carry out the development at its own risk, costs and expenses. It had to obtain sanctions, construct flats of the aggregate area for the owners and the tenants and do various other acts and deeds as are usually required for development of the property which are set out by way of items (i) to (xii) under clause 9 of the agreement.
12. These applications include the time frame of the commencement and completion of the construction set out in item ::: Downloaded on - 26/09/2014 23:49:22 ::: jsn 6 CHS No.738_2013 nos.(x) and (xi) thereof. It would be material to set out item Nos.(x)
(xi) and (xii) to see whether there was any breach of the obligations as would merit the termination of the agreement. These clauses run thus :
(x) The party of the second part shall commence construction on the said property within one month from the date of the first commencement certificate issued by the Municipal Corporation of Greater Mumbai provided that the First Party gets the tenants / occupants vacated from the existing tenements in the said property by that time.
(xi) Carry out the construction of the new buildings in the said property and complete the redevelopment of the said property, and put the tenants / occupants (including M/s. Standard Metal Works Pvt. Ltd.) in possession of their respective premises / flats within a period of two years from the date of the execution of this agreement or from the date of the first commencement certificate or from the date on which the tenants / occupants are shifted to their respective transit accommodation on the said property, whichever is later provided that the owners / party of the first part shall be put in possession of their respective flats and car parking spaces within two years from the date of the execution of this agreement. Provided further that in case due to any order or direction of the Municipal Corporation of Greater Mumbai or of any Court, the construction work is stopped, then in that event the period till the time the said direction or the Order is withdrawn or set aside, to enable the second party to commence or resume construction, shall be excluded from the period stated above.
(xii) If without any fault on the part of the Second party, the Municipal Corporation of Greater Mumbai delays the issue of commencement certificate/s from time to time, as required for construction of the buildings, after issue of the first commencement certificate or by reason of Force Majeure or non availability of building materials, war, civil commotion or any other natural calamity beyond the control of the second party, the second party will be entitled for such further extension of time for completion of the buildings, as may be decided by any Architect named by the party of the first part.::: Downloaded on - 26/09/2014 23:49:22 :::
jsn 7 CHS No.738_2013
13. The above clauses would show that the construction must commence within one period of the first commencement certificate (CC) issued by the MMC. The first CC upto plinth level was issued on 27th November, 2009. The construction must, therefore, commence from 27th December, 2009. By that time the applicant should have vacated all the tenants and got possession. The last tenant was vacated on 15th July, 2009 after which the CC was issued.
14. Under item (x) the applicant was to complete construction and put the tenants in possession of their respective flats within two years from the date of the execution of that agreement (which was 16th December, 2003) or from the date of the first CC (which was issued on 27th November, 2009) or from the date on which the tenants were shifted to the transit accommodation which was on 15 th July, 2009 whichever was later. The latest of the dates is 27 th November, 2009 which is the date of the issue of the CC.
Consequently within two years from 27th November, 2009 the applicant must put the tenants in possession of the respective flats which were to be allotted to them. Hence applicant must complete this task on or before 26th November, 2011.
15. The item (x) provided that owners shall be put in possession of their respective flats within two years from the date of the execution of the agreement. It is argued on behalf of the owners, who are parties to the suit, that the clause, therefore, implies that even if the CC was not issued and the construction could not commence, the owners must be put in possession. It would have to be seen whether such absurd interpretation can be put upon any contract. It may be mentioned that if such interpretation is put, the ::: Downloaded on - 26/09/2014 23:49:22 ::: jsn 8 CHS No.738_2013 agreement would be impossible of performance and would be void on that ground under part II of the Section 56 of the Indian Contract Act, 1872.
16. Item (x) has a further proviso that if by any order or direction of the Municipal Corporation of Greater Mumbai (MMC) or any Court the construction was stopped, such period would be excluded from the above period of two years of completion.
17. It is stated that the plans which were submitted by the applicant on 16th August, 2004 were not passed and that IOD has been issued only as late as on 8th December, 2006. This was because there were amendments to the DC Rules with regard to the grant of FSI. The revised plans consequent upon the amendment of DC Rules were submitted in September, 2012.
18. NOC was for FSI 2.5. Thereafter in January, 2012 the DC Rules came to be amended granting FSI 3. The applicant informed the private receiver, defendant No.4, by its letter dated 18 th November, 2012 that it had already applied for the NOC to MMC for FSI. To that extent the plans were revised and modified as per regulation 33/7 of the DC regulation.
19. On 25th May, 2012 the private receiver, defendant no.4, forwarded the letter received by him from the MMC to furnish certain documents. The applicant has addressed letters dated 5 th June, 2012 and 3rd September, 2012 to the private receiver showing the possession of the developer. However, the issue of NOC of FSI 3 was pending before competent authority. Soon thereafter revised plans ::: Downloaded on - 26/09/2014 23:49:22 ::: jsn 9 CHS No.738_2013 were submitted by the applicant. On 11 th June, 2013 the applicant came to have applied for FSI 4 under DC Rule 33/24 instead DC Rule 33/7. The applicant would contend that consequently the development project was held up because the parties desired to have more and more FSI. It would have to be seen whether the delay in the aforesaid context would be the time which could be excluded under clause 9(xi) of the development agreement. This is not the period pursuant to any order of MMC or the Court. It is also not upon any direction of MMC or any Court. It is only without commencing construction in the hope of obtaining more and more FSI.
20. It is contended that the work was consequently delayed without the plans being sanctioned due to change in the DC rules.
21. Under clause 9 (xii) if the MMC delayed the issue of further CCs from time to time for construction of building for no fault of the applicant, the applicant would be entitled to further extension of time for completion of the buildings as may be decided by any architect named by the owners.
22. Further under clause 16 of the development agreement the time specified in clause (x) and (xi) was stated to be of the essence. The owners were to give the applicant 6 months further time if the construction was not completed, at his request. No request is stated to have been made. The respondent claims to be entitled to terminate the agreement by giving one month notice which he has done. It is argued on behalf of the applicant that the request to be made and the further six months extension to be granted by the owners to the applicant under clause 16 would come into effect only after the time ::: Downloaded on - 26/09/2014 23:49:22 ::: jsn 10 CHS No.738_2013 specified in clause 9 (x) & (xi) is exhausted. It is argued that such time is not yet exhausted because the delay has been occasioned not upon the fault of the applicant but because the DC Rules were to be amended and extra FSI was to be obtained.
23. Of course, the agreement does not make any mention of the owners availing of any extra FSI. Hence the delay would enure only for the benefit of the applicant and not the owners or the tenants.
24. After changed FSI was contemplated by the applicant, the private receiver asked for the statement of the expenses. These were shown as projected calculations on the assumption of FSI 4 as suggested by private receiver. The private receiver, defendant No.4, in the suit by his letter 13th July, 2013 asked for further particulars on the basis of FSI 4. The applicant by its letter dated 12 th July, 2013 stated that they were only on the basis of assumption and accordingly were meaningless as the MMC and MHADA would not consider grant of FSI 4 for development of the suit property. The applicant, therefore, stated that it was needless to furnish the owners information which was requisitioned.
25. The owners contend that several amounts have been collected by the applicant which are by third parties and intending flat purchasers which are concealed from the owners. The owners also contend that the applicants have deliberately and malafide made gross breaches of the MOU, POA and development agreement and that the applicants have not constructed the building for the last 10 years despite time being essence of the contract. The owners claim ::: Downloaded on - 26/09/2014 23:49:22 ::: jsn 11 CHS No.738_2013 that they should have been put in possession of their respective flats to the extent of the area which are agreed to be given to them within two years from the date of the execution of the development agreement, time being the essence of the agreement. That having not been done the agreement was validly terminated.
26. The MOU has been superseded by the development agreement. Consequently only terms of the development agreement would prevail to see the covenants and obligations of the parties thereto. The owners have not been able to show any specific clause related to disclosure of material facts by the applicant as an obligation under the development agreement. The breaches of the development agreement by the applicant is not seen save and except the delay in the construction. The allegations about keeping the owners in dark and concealing material facts are vague. Which are the material facts which ought to have been disclosed is not shown in the Notice of termination.
27. The period of two years under clause 9(xi) expired latest on 26th November, 2011 being two years from the date of the issue of first CC up to plinth level dated 27 th November, 2009. The owners have not taken any steps to terminate the agreement within a reasonable period thereafter or to apply for specific performance of the agreement. The owners themselves would be hit by latches in that behalf.
28. The specific provision of the period of two years from the date of the agreement for putting the owners in possession in impossible of performance and the agreement on that ground could ::: Downloaded on - 26/09/2014 23:49:22 ::: jsn 12 CHS No.738_2013 not be terminated.
29. The applicant has explained in reply to the notice of termination dated 10th August, 2013 that the amounts mentioned in the projected calculations on the basis of FSI 4 which showed the amount of Rs.39.98 Crores were only projected calculations and hence not the area sold by the applicant.
30. The respondent no.3 to the Chamber Summons who is a tenant and respondent no.4 to the Chamber Summons who is a flat purchaser contend that despite the delay of the applicant they would rather be allowed to complete the construction so as to be able to obtain the flats which have been alloted / purchased by them respectively.
31. It is seen that the refused plans are now re-submitted. The applicant would commence construction and complete it. The applicant would be required to handover possession of the suit flats to the owners as also the tenants within a reasonable time from now, the period of two years mentioned in the contract having expired long ago and the private receiver or the owners of the property being parties to the suit having not taken any action since at least 26 th November, 2011 when the latest of the periods under clause 9(xi) expired, they having not shown any specific breach by the applicant except delay. Further it would be in the interest of justice to allow the applicant to continue, so that the tenants and purchasers also get their due.
::: Downloaded on - 26/09/2014 23:49:22 :::jsn 13 CHS No.738_2013
32. Hence the following order:
1. The applicant is enjoined to give the owners 20551 Sq.ft. less 6751 Sq.ft. = 13800 Sq.ft. of area duly constructed. The applicants are also be enjoined to give 6751 Sq.ft. of area to the tenants.
2. The applicant would be entitled to built upon and sell remaining area subject to any further subtractions under any law as required by any government authority.
3. The applicant shall sufficiently and adequately comply with the development agreement dated 16th December, 2003.
4. The owners shall not act upon the termination notice dated 16 th July, 2013 for a period of four weeks.
5. The applicant may file a Civil Suit for continuation of these reliefs.
6. The applicant shall be allowed to withdraw Rs. 3 lacs deposited by the applicant towards payment of Court fees in such suit.
7. The application for appointment of Court Receiver by the applicant who is itself seen to be grossly delayed in discharge of its duties is misconceived and is, therefore, refused.
8. Chamber Summons is disposed off accordingly.
( ROSHAN DALVI, J. ) ::: Downloaded on - 26/09/2014 23:49:22 :::