Bombay High Court
Sanjiv Builders Pvt.Ltd.& Ors vs Life Insurance Co.Ltd on 10 April, 2019
Author: G.S. Patel
Bench: G.S. Patel
15-S894-86.DOC
Arun
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
SUIT NO. 894 OF 1986
Sanjeev Builders Pvt Ltd & Ors ...Plaintiffs
Versus
Life Insurance Co Ltd ...Defendant
Ms Deepti Panda, with Akanksha Patil & Parvathy K Iyers, i/b
Narayanan & Narayanan, for the Plaintiffs.
Ms Snehal Paranjape, with JP Kapadia & O Mohandas, i/b Little &
Co., for the Defendant.
CORAM: G.S. PATEL, J
DATED: 10th April 2019
PC:-
1.By consent, Issue No.(viii)(c) framed on 29th October 2018 is to be recast to read as follows:
"(c) pay to the Plaintiffs losses and damages, and, if so, in what amount; and if any amount is awarded, whether that amount should carry interest, and, if so, at what rate and from what date?"
2. The numbering of the issue below Issue No. (iii) will be corrected to read Issue No. (iv). For convenience the recast and renumbered issues are once again are appended to this order.
Page 1 of 1610th April 2019 ::: Uploaded on - 11/04/2019 ::: Downloaded on - 12/04/2019 02:02:10 ::: 15-S894-86.DOC
3. The suit is for specific performance of an agreement for purchase of an immovable property in Mumbai. The agreement is dated 8th June 1979. The property in question is known as Dena Building at CS No. 170/1 and 170 of the Malabar Hill Division at 56, Ridge Road, Mumbai 400 006. It is a substantial tract of land of approximately 3,800 sq yards.
4. The 1st Plaintiff is one Sanjeev Builders Pvt Ltd. The 2nd Plaintiff is another private limited company, called Vineet Builders Pvt Ltd. The sole Defendant is the Life Insurance Company of India. After the suit was filed in 1986, the Plaintiff amended the plaint in April 2014. This amendment sought the addition of a 3rd Plaintiff, Kedia Construction Co Ltd, and consequential amendments. That amendment was permitted by a learned Single Judge and a challenge to that order was upheld by the Division Bench. The Supreme Court in Life Insurance Co Ltd v Sanjeev Builders Pvt Ltd & Anr1 disallowed the amendment entirely. It held that the amendment came to be made 27 years after the filing of the suit. It materially and vitally affected valuable rights accrued to LIC. It affected a defence available to LIC. The Supreme Court, therefore, disallowed the amendment entirely.
5. Kedia Construction is said to be an assignee of Sanjeev Builders with the consent of Vineet Builders. The original purchaser in the suit agreement was Sanjeev Builders alone. The plaint proceeded on the footing that it had some stage thereafter, i.e. after the execution of the suit agreement dated 8th June 1979 and before 1 2018 (11) SCC 722.
Page 2 of 1610th April 2019 ::: Uploaded on - 11/04/2019 ::: Downloaded on - 12/04/2019 02:02:10 ::: 15-S894-86.DOC the suit was filed in 1986, requested LIC to conclude the transaction in favour of Vineet Builders as its nominee, i.e., that Vineet Builders would take up the title in the property that Sanjeev Builders had agreed to purchase.2
6. The present controversy, however, is about the contents of the Evidence Affidavit now filed on behalf of the Plaintiff by one Jagdish Prasad Kedia, a former director of Sanjeev Builders. He says he has been associated with Sanjeev Builders from the time of its incorporation in 1974. He continued as a director until his resignation in 2009. He is 86 years old. He says he is personally aware of facts and proceeds to give evidence.
7. Ms Paranjape for LIC submits that almost the whole of paragraphs 6 to 14 of this evidence falls outside the realm of admissible evidence because it is testimony without a supporting pleading. She accepts that, correctly stated, the proposition is that no amount of evidence can be led in support of a plea not properly taken.
8. What is the evidence that is being introduced and what is the plea that it is supposed to substantiate? This is, after all, a suit for specific performance. Therefore, essential to any such suit is a 2 There is a subsequent amendment of 2018 where the Plaintiff has since increased the amount of its alternative claim for damages. That was allowed. An appeal failed. LIC is in the process of approaching the Supreme Court against the second amendment too. As to that amendment, all that I have done separately today is to slightly re-word one issue (viii)(c), so that it is not specific to any particular rupee amount claimed in damages, but as to the Plaintiffs' entitlement to damages generally. Both sides have agreed to this. I am not concerned today with that aspect of the matter.
Page 3 of 1610th April 2019 ::: Uploaded on - 11/04/2019 ::: Downloaded on - 12/04/2019 02:02:10 ::: 15-S894-86.DOC pleading accompanied by later proof that the plaintiff seeking specific performance was at all times ready and willing to complete his obligations under the agreement of which specific performance is sought.
9. The testimony from paragraphs 6 to 14 is probably best set out in full:
"6. Plaintiffs are Companies which are jointly held by the Kedia family and the Parsrampuria family. The Kedia family and the Parsrampuria family have been engaged in various businesses including purchase and sale and development of real estate. Both families through their members and/or business concerns have at all times pooled monies and infused funds into their Companies for the purpose of purchasing and developing land. The Kedia Family and the Parsrampuria Family were joint in business and had purchased and developed several properties jointly.
7. The Kedia family and Parsrampuria family jointly held several properties at Versova, Malad and Surat, and have also carried out huge development works. At the relevant time, the Kedia family held substantial stakes in what is now known as Gokuldham at Goergaon, and was seized and possessed of large parcels of land in Mir Road, which was valued at over Rs. 5,00,00,000/-.
8. The Plaintiff No. 1 was formed for the purpose of doing business in real estate. It is the practice in the real estate industry that a Company or a firm develops one or a group of properties, and separate Companies/ firms are floated for various projects. The Promoters - who are the common link - move funds amongst the various companies/firms as and when the need arises. The Plaintiff Page 4 of 16 10th April 2019 ::: Uploaded on - 11/04/2019 ::: Downloaded on - 12/04/2019 02:02:10 ::: 15-S894-86.DOC No. 1 was one of the several Companies and firms promoted by the Kedia family. The funds of the Plaintiff No. 1 for the purpose of its business were sourced from the Companies belonging to the Kedia family and Parsrampuria family as and when the need arose. The funds of the Promoters and their respective business concern act as a common pool.
9. The Kedia family has promoted and/or holds stakes in various companies, some of which are Strong Steel Ltd., Aditya Leasing Ltd. (now known as Nitin Castings Ltd.,) Kedia Agglomerated Marbles Ltd., Kedia Construction Co Ltd., Kirti Investment Ltd., Anand Guest House, Protective Mercantile & Trading Co Ltd., Prestige Stocks & Bonds Ltd., Kedia Shah Estate Development Corporation, Nirmal Builders Ltd., P.R. Kedia & Ors., Malad Shopping Centre Private Ltd., Sanjay Construction & Finance Co Pvt Ltd (herein after collectively referred to as "the said concerns"). Of these, Strong Steel Ltd., Nitin Castings Ltd., Kedia Agglomerated Marbles Ltd., Kedia Construction Co Ltd., and Kirti Investment Ltd. Are listed public limited companies. I have been at various times actively associated with the above Companies and have had a stake in the Companies and the properties. I have presided as a patriarch of the Kedia Family for several years which comprised at the relevant time the joint interests of the members of the families of six Kedia brothers.
10. At the relevant time it was agreed between the members of the Kedia family and the Parsrampuria family, that the money and/or the investment required by the Plaintiff No. 1 for the purchase and development of property would be brought in by the family members and/or the said concerns. Plaintiff No. 1 was to utilise the funds received from the members of the Kedia family and/or the said concerns. Thereafter, in view of and for the Page 5 of 16 10th April 2019 ::: Uploaded on - 11/04/2019 ::: Downloaded on - 12/04/2019 02:02:10 ::: 15-S894-86.DOC sake of convenience, the transaction was agreed to be completed in the name of Plaintiff No. 2, which was at the relevant time also a Company where the Kedia Family and the Parsrampuria Family jointly held stakes. I had personally agreed to infuse funds into Plaintiff No. 1 and/or 2 as the need would have arisen.
11. The business concerns and me personally had at all relevant time sufficient funds which could be brought into the Plaintiffs' account, with a view to pay for the suit transaction. One of the business concerns which had the ability to, and continues to be able to pool in the funds for the suit transaction was M/s. Nitin Castings Ltd.
12. The Kedia family has been the Promoter and the owner of M/s. Nitin Castings Ltd., ("Nitin Castings"), a Company engaged in the business of manufacture of Alloy Steel Castings. Nitin Castings was promoted by me and my brothers in 1961, and we have had technical collaboration with Schmidt & Clemens, a German Company. I was the Director and Chairman of Nitin Castings for several years. The Company was the first in India to manufacture centrifugal castings. The Company has since carved out its Casting Division and merged the same with one Nitin Alloys Global Ltd. (which is thereafter named Nitin Castings Ltd.). Nitin Castings Ltd. Is a listed public company with approximately 260 employees, and has a present annual turnover of about Rs. 65 crores. Nearly 71% of the issued, subscribed and paid-up Capital of the Company is held within the Kedia family.
13. Nitin Castings at all times had adequate monies to fund the suit transaction. The reserves were increasing every year. I hereby tender in evidence the photocopies of Annual Returns for the years 1980-81, 1981-82, 1983-84 to 1986-87, 1988-89 to 1991-92, 1994-95 to 2000-2001 and the Page 6 of 16 10th April 2019 ::: Uploaded on - 11/04/2019 ::: Downloaded on - 12/04/2019 02:02:10 ::: 15-S894-86.DOC Balance Sheet for the period ending 31st March 1993 of Nitin Castings. At the relevant time I had retained photocopies of the Annual Returns for each year. Even after due and diligent search I am unable to trace the original publications. Each of the photocopy has been made under my instructions and had been compared with the original at the relevant time and retained for my record as per usual practice. I say as a Director I am able to affirm that the contents of the Annual Returns are true and correct. The photocopies are produced as Compilation of Documents - II and I pray that the same be marked in evidence.
14. I say that even after the assignment of the benefits of the suit Agreement by Plaintiff No. 1 to Kedia Construction Co Ltd and by and under an Agreement for Sale dated 24th August 1987 the project continued to remain with the Kedia family. However, Plaintiff No. 1 even thereafter was and continues to be ready, willing and able to perform its obligations under the Agreement dated 8th June 1979 independently."
10. This narrative is materially different from the plaint. What Sanjeev Builders and Vineet Builders now say is that their readiness to perform the agreement, i.e. their ability to pay, must be gauged -- and was at all times to be gauged -- on the basis that there was a hitherto undisclosed agreement or arrangement between the Kedia and the Parsrampuria families to make outside funds available to Sanjeev Builders -- that is to say, that neither Sanjeev Builders nor Vineet Builders themselves had sufficient funds but for this outside funding agreement. The second suggestion is that even leaving aside the Parsrampurias, the Kedia family had within itself an understanding that a separate company, and a distinct legal entity, Page 7 of 16 10th April 2019 ::: Uploaded on - 11/04/2019 ::: Downloaded on - 12/04/2019 02:02:10 ::: 15-S894-86.DOC Nitin Castings Limited, promoted in 1961 3 would make funds available because it had sufficient money at its disposal. In other words, this is an attempt to say that the necessary willingness of Sanjeev Builders and Vineet Builders must be gauged on the basis of an understanding between the Kedia and Parsrampuria families, or an understanding within the Kedia family, or both; and that the sufficiency of funds in other entities under the Kedia family's control, particularly Nitin Castings, evidences the Plaintiffs' willingness.
11. In my view, there are several problems with accepting this as evidence. First, as Ms Paranjape points out, in my view quite correctly, this now tries to bring in as evidence precisely that which the Supreme Court did not permit in the attempted 2014 amendment. Had the Supreme Court permitted that amendment, then conceivably some portion of this evidence, and perhaps even all of it, might have been admissible. Ms Paranjape points out that even at the time of 2014 amendment there was no attempt to introduce any pleading of any such arrangement, understanding or availability of funds with Nitin Castings. Second, the evidence seems to me to clearly require a foundational pleading essential to any such specific performance suit, i.e. at least an averment that the funds with which Sanjeev Builders and Vineet Builders would complete the sale transaction were at all times available from other sources within the Kedia group. There is no such averment, and there never was. Had the plaint said that the funds necessary to complete the sale been at the Plaintiffs' disposal from sources within 3 Then a private limited company, though that is inconsequential.
Page 8 of 1610th April 2019 ::: Uploaded on - 11/04/2019 ::: Downloaded on - 12/04/2019 02:02:10 ::: 15-S894-86.DOC the Kedia group or Kedia-Parsampuria groups, and that even the earnest or down payment had come from those very sources that assured the balance, then perhaps this could have been considered. Notably, the suit agreement is with a company, a distinct legal entity. If it had a funding arrangement with another company, that had to be pleaded. If this funding arrangement was with an individual, then that too had to be pleaded. Was this funding to be a loan? Was it to be towards an equity subscription? Was it something else entirely? We are not told, and left only to speculate. It is also entirely unclear how Nitin Castings, now a public limited company, could be said to be required to act on the dictates of this deponent, no matter what his position. Further, the entire pre-litigation history is nowhere near as simple as this evidence seeks to make out. LIC has terminated the agreement, and it has forfeited the earnest money. That termination speaks directly to a failure to perform on the part of the Plaintiffs.
12. I am unwilling to allow the Plaintiff to constantly experiment with a litigation by repeatedly seeking to improve its case. I propose to mark out and redact as inadmissible all of paragraphs 6 to 14 in the original evidence Affidavit; except the third sentence in paragraph 10, which will be retained. I have appropriately marked the retained portion in blue pencil underlining in the original document. The rest, that which is not permitted, is marked in red square brackets in the original, i.e. from paragraphs 6 to the words 'and/or the said concerns' in paragraph 10 and from the words 'I had personally agreed' in paragraph 10 to the end of paragraph 14. The redacted portion will be disregarded during cross-examination. For clarity, these paragraphs of the evidence with my markings for Page 9 of 16 10th April 2019 ::: Uploaded on - 11/04/2019 ::: Downloaded on - 12/04/2019 02:02:10 ::: 15-S894-86.DOC redaction/retention, are appended to this order. In that reproduction, the redacted portions are in red and struck through, besides being in red square brackets; and the retained portion is in blue underlining.
13. There are also an Affidavit of Documents and a list of witnesses. Copies are given to Ms Paranjape. A compilation of documents has been separately served. The Plaintiffs are not to tender the originals in the Registry. For the present they will retain the originals in their safe custody and will produce them at the time of marking. I am making this direction in all cases presently because there are structural and civil works going on in this building requiring entire departments to be shifted at short notice. Original documents should not be risked being lost or misplaced in this process. That actually happened in another litigation, and it took several weeks for the original documents to be found.
14. List the matter for marking the Plaintiffs' documents on 20th June 2019.
(G. S. PATEL, J) Page 10 of 16 10th April 2019 ::: Uploaded on - 11/04/2019 ::: Downloaded on - 12/04/2019 02:02:10 ::: 15-S894-86.DOC ISSUES FRAMED ON 29TH OCTOBER 2018 AND ISSUE NO. VIII (C) RECAST ON 10TH APRIL 2019 SUIT NO. 894 OF 1986
(i) Whether Plaintiffs prove that the entire claim in suit is within limitation?
(ii) Whether the claims made in para 12A of the plaint and amended para (b)(v) of the plaint are barred under Order 2 Rule 2 of the Code of Civil Procedure, 1908?
(iii) Whether Defendant proves that the suit is not maintainable at the instance of Plaintiff No. 2?
(iv) Whether Defendant proves that by joining Plaintiff No. 2 as a party to the suit, the suit has been rendered bad on account of mis-
joinder of parties and is liable to be
dismissed?
(v) Whether Plaintiffs prove that the termination
of the suit agreement by Defendant is not
valid in law?
(vi) Whether Plaintiffs prove that they are
entitled to specific performance of the suit agreement?
(vii) Whether Plaintiffs prove that Plaintiff No.2 is entitled to conveyance of suit property as nominee of Plaintiff No. 1?
(viii) In the event Plaintiffs are not granted relief for specific performance of the suit agreement, are Defendants liable to-
(a) Refund to Plaintiffs the sum of Rs.
4,52,778/- paid by it to Defendant together with interest thereon at the rate of 18% pa from the date of payment till refund as Page 11 of 16 10th April 2019 ::: Uploaded on - 11/04/2019 ::: Downloaded on - 12/04/2019 02:02:10 ::: 15-S894-86.DOC claimed.
(b) pay to Plaintiff No. 1 the sum of Rs.
10,75,021.25 with further interest on Rs.
4,42,778/- at the rate of 18% pa from the
date of the suit till payment as prayed for in prayer (b) of the plaint and
(c) pay to the Plaintiffs losses and damages, and, if so, in what amount; and if any amount is awarded, whether that amount should carry interest, and, if so, at what rate and from what date?
(ix) Are the Plaintiffs entitled to statutory charge for payment of the sums mentioned at para (viii) above, and for enforcement of the charge for payment of any sums as may be directed to be paid by this Court to Plaintiff?
(x) What order and decree? Page 12 of 16 10th April 2019 ::: Uploaded on - 11/04/2019 ::: Downloaded on - 12/04/2019 02:02:10 ::: 15-S894-86.DOC APPENDIX: PW1 EVIDENCE AFFIDAVIT REDACTED/RETAINED PORTIONS
[6. Plaintiffs are Companies which are jointly held by the Kedia family and the Parsrampuria family. The Kedia family and the Parsrampuria family have been engaged in various businesses including purchase and sale and development of real estate. Both families through their members and/or business concerns have at all times pooled monies and infused funds into their Companies for the purpose of purchasing and developing land. The Kedia Family and the Parsrampuria Family were joint in business and had purchased and developed several properties jointly.
7. The Kedia family and Parsrampuria family jointly held several properties at Versova, Malad and Surat, and have also carried out huge development works. At the relevant time, the Kedia family held substantial stakes in what is now known as Gokuldham at Goergaon, and was seized and possessed of large parcels of land in Mir Road, which was valued at over Rs. 5,00,00,000/-.
8. The Plaintiff No. 1 was formed for the purpose of doing business in real estate. It is the practice in the real estate industry that a Company or a firm develops one or a group of properties, and separate Companies/ firms are floated for various projects. The Promoters - who are the common link - move funds amongst the various companies/firms as and when the need arises. The Plaintiff No. 1 was one of the several Companies and firms promoted by the Kedia family. The funds of the Plaintiff No. 1 for the purpose of its business were sourced from the Page 13 of 16 10th April 2019 ::: Uploaded on - 11/04/2019 ::: Downloaded on - 12/04/2019 02:02:10 ::: 15-S894-86.DOC Companies belonging to the Kedia family and Parsrampuria family as and when the need arose. The funds of the Promoters and their respective business concern act as a common pool.
9. The Kedia family has promoted and/or holds stakes in various companies, some of which are Strong Steel Ltd., Aditya Leasing Ltd. (now known as Nitin Castings Ltd.,) Kedia Agglomerated Marbles Ltd., Kedia Construction Co Ltd., Kirti Investment Ltd., Anand Guest House, Protective Mercantile & Trading Co Ltd., Prestige Stocks & Bonds Ltd., Kedia Shah Estate Development Corporation, Nirmal Builders Ltd., P.R. Kedia & Ors., Malad Shopping Centre Private Ltd., Sanjay Construction & Finance Co Pvt Ltd (herein after collectively referred to as "the said concerns"). Of these, Strong Steel Ltd., Nitin Castings Ltd., Kedia Agglomerated Marbles Ltd., Kedia Construction Co Ltd., and Kirti Investment Ltd. Are listed public limited companies. I have been at various times actively associated with the above Companies and have had a stake in the Companies and the properties. I have presided as a patriarch of the Kedia Family for several years which comprised at the relevant time the joint interests of the members of the families of six Kedia brothers.
10. At the relevant time it was agreed between the members of the Kedia family and the Parsrampuria family, that the money and/or the investment required by the Plaintiff No. 1 for the purchase and development of property would be brought in by the family members and/or the said concerns. Plaintiff No. 1 was to utilise the funds received from the members of the Kedia family and/or the said concerns.] Thereafter, in view of and for the sake of convenience, the transaction was agreed to be completed in the name of Plaintiff No. 2, which was at the relevant time also a Company where the Kedia Family and Page 14 of 16 10th April 2019 ::: Uploaded on - 11/04/2019 ::: Downloaded on - 12/04/2019 02:02:10 ::: 15-S894-86.DOC the Parsrampuria Family jointly held stakes. [I had personally agreed to infuse funds into Plaintiff No. 1 and/or 2 as the need would have arisen.
11. The business concerns and me personally had at all relevant time sufficient funds which could be brought into the Plaintiffs' account, with a view to pay for the suit transaction. One of the business concerns which had the ability to, and continues to be able to pool in the funds for the suit transaction was M/s. Nitin Castings Ltd.
12. The Kedia family has been the Promoter and the owner of M/s. Nitin Castings Ltd., ("Nitin Castings"), a Company engaged in the business of manufacture of Alloy Steel Castings. Nitin Castings was promoted by me and my brothers in 1961, and we have had technical collaboration with Schmidt & Clemens, a German Company. I was the Director and Chairman of Nitin Castings for several years. The Company was the first in India to manufacture centrifugal castings. The Company has since carved out its Casting Division and merged the same with one Nitin Alloys Global Ltd. (which is thereafter named Nitin Castings Ltd.). Nitin Castings Ltd. Is a listed public company with approximately 260 employees, and has a present annual turnover of about Rs. 65 crores. Nearly 71% of the issued, subscribed and paid-up Capital of the Company is held within the Kedia family.
13. Nitin Castings at all times had adequate monies to fund the suit transaction. The reserves were increasing every year. I hereby tender in evidence the photocopies of Annual Returns for the years 1980-81, 1981-82, 1983-84 to 1986-87, 1988-89 to 1991-92, 1994-95 to 2000-2001 and the Balance Sheet for the period ending 31st March 1993 of Nitin Castings. At the relevant time I had retained photocopies of the Annual Returns for each year. Even after Page 15 of 16 10th April 2019 ::: Uploaded on - 11/04/2019 ::: Downloaded on - 12/04/2019 02:02:10 ::: 15-S894-86.DOC due and diligent search I am unable to trace the original publications. Each of the photocopy has been made under my instructions and had been compared with the original at the relevant time and retained for my record as per usual practice. I say as a Director I am able to affirm that the contents of the Annual Returns are true and correct. The photocopies are produced as Compilation of Documents - II and I pray that the same be marked in evidence.
14. I say that even after the assignment of the benefits of the suit Agreement by Plaintiff No. 1 to Kedia Construction Co Ltd and by and under an Agreement for Sale dated 24th August 1987 the project continued to remain with the Kedia family. However, Plaintiff No. 1 even thereafter was and continues to be ready, willing and able to perform its obligations under the Agreement dated 8th June 1979 independently.] Page 16 of 16 10th April 2019 ::: Uploaded on - 11/04/2019 ::: Downloaded on - 12/04/2019 02:02:10 :::