G.Ram Construction Co vs Chowgule & Co.(Hind) Pvt.Ltd on 8 April, 2019

[Cites 20, Cited by 0]

Bombay High Court

G.Ram Construction Co vs Chowgule & Co.(Hind) Pvt.Ltd on 8 April, 2019

1. This began as a regular suit by a purchaser for specific performance of an agreement of sale of immovable property in Mumbai. What followed was most unusual. As I will have occasion to observe, almost everything of consequence in this litigation happened after the suit was filed. Even now, it raises a narrow question: in the peculiar facts of this case, can the plaintiff purchaser be said to have demonstrated its willingness to complete the transaction? There is no argument at all about its readiness; and none have urged that the plaintiff was not at all times ready. The only question was whether it was willing.

2. The original agreement had a price fixation mechanism or formula, but no stated aggregate consideration. For reasons unrelated at the time to the agreement, the plaintiff loaned some amounts to the defendant. Later, the parties agreed that the government would fix the price -- there was a reason for this, because the defendant held the land on terms that required it to pay part of the sale price to the government. There was also a bank loan then due. In court proceedings, the plaintiff said it would accept a market value fixed by the government provided it received an adjustment of the amounts it had loaned the defendant, with Page 2 of 50 3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 stipulated interest. The government fixed the price and demanded payment of its share from the plaintiff. The plaintiff in turn demanded that the agreed adjustment be effected. It says it was entitled to this, and it had no other recourse. The defendant disputes this, and says the plaintiff should have called on the defendant to pay the adjustment amount and interest and paid over the rest. Since it did not, it was unwilling and is therefore not entitled to specific performance. The plaintiff maintains that the defendant did not offer to make payment of the adjustment amount. To the contrary, it demanded a higher price be fixed. The question of the plaintiff purchaser's 'willingness' arises in these circumstances. There is not very much to address in terms of law. The entire case turns on a reading of documents and an analysis of the conduct of the parties -- that is to say, an appreciation of the evidence as it was led before the Court.

3. I propose to depart from the usual structure of final orders in suits. Rather than reciting the contentions in the plaint and the written statements, I propose instead to go through a chronological narrative of the events. These are largely undisputed. I will then turn to the issues. The oral evidence led was limited or at least brief and I will refer to the documents as necessary. The reason I do this is that the plaint itself tells us very little, and the written statements even less. It is the other attendant circumstances that form the central narrative.

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4. The property in question is a substantial tract of land in Thane District at Village Majiwada. It is described in paragraph 2 of the plaint and in Exhibit "A". By all accounts, it is a little over 41,000 sq mtrs. This is part of what was known as the larger property, some 16 acres or more. The Defendant, a private limited company ("Chowgule"), acquired the larger property in March 1960 under a contract with the Governor of Mumbai. Clause (8) of this 1960 agreement with the Government restricted the Chowgule's right to alienate the property.1 Clause 8 of this document says that Chowgule is not to alienate the property except with the previous written permission of the Government. The clause then says that Chowgule would be entitled to mortgage the land (for certain specified purposes) but again subject to a condition that in the event of a sale to pay off the mortgage debt, half the 'unearned income' from the sale of this land would be paid to the Government. Where the sale was of land and structures, the unearned income would be computed on the land alone, not the structures. The clause then goes on to say that the mortgagee would be entitled to use the remaining sale proceeds, after satisfying the Government's claim, for the payment of the mortgage debt. The mortgagee's right to sell the land to realize its undischarged debt is absolute but also made subject to this 'unearned income'. A formula for computing this unearned income is set out in this agreement itself: it is to be half the difference between the sale price and the 1 Exhibit D3, p. 695.

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3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 cost of acquisition incurred by the acquiring body. The land was acquired by the Government for Chowgule and there was therefore an acquisition cost already known in. There was never any controversy between the parties that even in a private sale between any purchaser and Chowgule, the Government was required to be paid this 'unearned income'.

5. In 1960, the Collector granted permission to Chowgule to use the land for non-agricultural purposes. A few years later, in May 1969 the Governor of Bombay issued a formal sanad vesting this larger property in Chowgule subject to certain terms and conditions. Clause 7 of the Sanad also required the prior written permission of the Government for any alienation. The Sanad does not seem to contain the same provisions regarding unearned income. But that matters little.

6. At this time, Chowgule was apparently manufacturing chemicals on at least a portion of this quite considerable tract of land. By the mid-80's, it was already in financial difficulty. In early 1985, the Government declared Chowgule a sick unit. Chowgule went to the Collector seeking permission to mortgage the land to the Bank of Baroda and the Bank of Maharashtra. It obtained this permission. In that month, the State Government exempted the larger land from the purview of the Urban Land (Ceiling and Regulation) Act 1976, then still in force, and Chowgule went on to mortgage the larger property to the two banks.

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7. On 19th February 1986, Chowgule made an application to the Collector requesting prior permission to sell about 41,645 sq mtrs of this land to GRC. The Collector asked Chowgule to produce consent letters from the banks. Both banks did so by April 1986.

8. This is the background to the suit agreement that followed on 21st July 1986 between Chowgule as the Vendor and the Plaintiff, G Ram Construction Co. ("GRC") as the purchaser. A copy of that agreement is of course marked in evidence.2 A few clauses of this agreement are immediately relevant. The agreement has no predetermined overall or aggregate sale price for the entire 41,000 sq mtrs. What it does provide is a rate per square foot and a method or an agreed formula for computing what GRC would have to pay Chowgule. This is clear from clause 1 where the parties agreed that GRC would have to pay Rs. 40/- per sq ft "of the FSI to be calculated as hereinafter provided". Obviously, and this is clear from clauses 1 and 3, the parties contemplated that the amount to be paid would certainly exceed Rs. 10 lakhs. I say this because an amount of Rs. 5 lakhs was to be paid immediately and was to be treated as earnest money although it was to be kept with M/s. Shah and Sanghavi, GRC's attorneys. Another Rs. 5 lakhs was to be paid under clause 3(b) on the fulfilment of four distinct anticipated conditions: (1) Collector's permission and NOC for the sale; (2) If necessary, NOC from the Competent Authority under the ULC Act for development; (3) IOD and CC from the Thane Municipal Corporation; and (4) the necessary permission changing user from residential to industrial. These seem to have been the orders and 2 Exhibit "P1", pp. 590-614.

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3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 permissions subject to which M/s. Shah and Sanghavi would continue to hold the initial amount of Rs. 5 lakhs. Finally, the remaining consideration, whatever it was finally computed to be, was to be paid in three equalized eight-monthly instalments, i.e. over a 24-month spread. The first of these was to be paid within eight months of obtaining the orders and permissions mentioned above and the other two instalments would follow at eight-monthly intervals thereafter. Clearly this meant that Rs. 10 lakhs was the only amount of consideration of which the parties were then certain; but they were equally certain that the final sale price was going to be something much higher, though nobody then knew exactly what it would be. Clause 5 of the agreement required Collector's permission. There are other provisions in the usual form such as the requirement that Chowgule make out a marketable title free from all encumbrances (clause 9), that it would obtain the necessary income tax clearances (clause 19A) and so on. Chowgule executed a Power of Attorney in favour of two of GRC's partners, one Parag Gopaldas Thakkar and one Champaklal Kishorchandra Vardhan. The latter went on to give evidence in this suit as PW2.

9. On 10th October 1986 the Collector sought Government approval for the sale by Chowgule of approximately 41,000 sq mtrs of this land to GRC. Passing over inconsequential later events (applications for income-tax clearance, advances paid to architects etc), I come directly to the events of early 1987. In March of that year, PV Chowgule, one of Chowgule's directors wrote to Jashubhai Shah, the senior partner of M/s Shah and Sanghavi. This was apparently in response to a letter from M/s Shah and Sanghavi of 14th March 1987. That letter is not on record. PD Chowgule said Page 7 of 50 3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 that the company was in a financial crisis, suggesting that this crisis was the rationale for the sale agreement with GRC. Chowgule then expressed his 'sense' that GRC had been 'flexible' when negotiations opened, but were now 'sticking to their terms of the contract'. He said that the contract had been drawn in good faith on Jashubhai Shah's 'promise' to prevail on GRC 'to part with some payment to give relief'. Nobody has made much of this letter but it seems to me to set the stage for what followed. Clearly, Chowgule, now in serious financial difficulties, was looking for assistance wherever it could. It knew -- it could not have believed otherwise

-- that GRC was not yet liable to make any payment under the sale agreement. Chowgule invoked the contract to seek financial rescue from GRC. Its request met with an almost predictable response from Jashubhai Shah a few days later. He said that nothing was due. Chowgule had not complied with its obligations. Therefore, nothing could be paid. After the earnest amount of Rs. 5 lakhs was paid, no further permissions had yet been obtained.3

10. I am now taking the liberty of compressing time frames rather than going into each date. GRC began providing periodic financial assistance to Chowgule. In July 1988, GRC sent on an amount of Rs. 7 lakhs. Further amounts followed in September 1988 and in June 1989. By October 1989, GRC had given -- I will not say 'paid' -- Rs.45 lakhs to Chowgule in this fashion, all of it 'bail out' money. There is no dispute about this figure, its provenance or the circumstances in which GRC gave it to Chowgule.

Exhibit "P9", pp. 627-628.

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11. While this was going on, on July 1988 Chowgule formally wrote to the Chief Minister of Maharashtra asking for permission to sell the suit property to GRC.4 This met with a rejection on 21st May 1990.5 The rejection references an application made in February 1986, four years earlier, one that pre-dates the suit agreement. The Government's response was a rejection of everything sought since 1986. About this, too, there is no dispute. Chowgule filed a writ petition in 1990.

12. By this time, Chowgule was in very serious financial trouble. By mid-1990 it had made a reference to the then Board of Industrial and Financial Reconstruction ("BIFR") under the Sick Industrial Companies (Special Provisions) Act 1985.

13. By November 1990, therefore, this was the position: GRC and Chowgule had their agreement of 21st July 1986 for sale of the suit land. The Government had rejected the application for permission for sale, a condition precedent to the completion of the agreement. At Chowgule's request, GRC had put Chowgule in significant funds of Rs. 45 lakhs but without in any way at that time referencing any clause of the agreement. None of Chowgule's remittances could be traced to any specific clause of the agreement.

14. This was the background in which in 1990 GRC filed the present suit for specific performance. That it had put Chowgule in funds of Rs. 45 lakhs is clear from the alternative prayer C1: for a 4 Exhibit "P15", pp. 636-639.

Exhibit "D6", p. 719.

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3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 refund of that amount with interest. It also seeks (as part of the alternative relief ), damages of Rs. 50 crores. The immediate cause of action in the plaint as it stood when instituted is set out in paragraph 12 (pages 9 and 10). Here GRC says that having paid Rs. 45 lakhs it apprehended that Chowgule was 'negotiating with some builders for the sale of the property and that these negotiations' were 'at an advanced stage'. This seems to be the first time the amount of Rs.45 lakhs is linked to the agreement.

15. GRC also filed a Motion seeking a receiver of the suit property, and an injunction against Chowgule creating further rights. This Court made an ad-interim order on 15th November 1990 restraining Chowgule from creating any third party rights. Less than two months later, the BIFR passed an order recommending Chowgule be wound up. This was potentially catastrophic to both GRC and Chowgule. Up to this point, GRC was no more than an unsecured creditor with an outlay of Rs. 45 lakhs, a quite considerable sum in 1990. Had Chowgule been put into liquidation, the asset would have vested with the liquidator. Given the source from which title had come to Chowgule in the first place, there was potentially an additional threat of the land reverting to the Government. Evidently, it was in the interest of both parties to this agreement to do something about this looming liquidation, and to do it quickly. Chowgule challenged the order of the BIFR before the appellate authority.

16. In the meantime, on 8th April 1992 this Court made an order on Chowgule's 1990 Writ Petition in which it impugned the Government's rejection of its sale permission proposal. The Court Page 10 of 50 3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 directed the Government to take a decision. On 31st July 1992, the Government allowed Chowgule's application for sale. This permission referenced a later application of 1st October 1990 and it imposed two conditions. The first was that the suit property would be sold by public auction. The second was that 50% of the income would be paid over to the Government (it uses the word 'escheated'

-- somewhat erroneously I believe). This second condition was not in itself problematic because it already existed in the original grant, i.e. the requirement to pay to the Government the so-called 'unearned income'. But the first stipulation for public auction was possibly as damaging to both sides as an order of winding up. There was no assurance that in any public auction GRC would be the successful bidder. The requirement effectively set at naught the sale agreement, and left GRC in the same position as an unsecured creditor.

17. About a year later, this Court confirmed the ad interim order in GRC's Motion as an interim order. Nobody has challenged that.

18. In mid-1993, AAIFR approved a draft revival scheme and directed its publication. While I do not find is necessary to go into the details of the scheme, like the Government directive of 31st July 1993, it contemplated the sale of a significant portion of this land at Thane, possibly the entire larger property, and therefore almost certainly affected any rights that GRC could claim under the suit agreement. This is why it was GRC which a writ petition in on 28th August 1993 challenging the AAIFR order. AAIFR formally sanctioned the scheme on 14th September 1993. GRC amended its Page 11 of 50 3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 writ petition. It then filed a Motion to restrain Chowgule and the Bank of Baroda from alienating the property.

19. This takes us to an order of 26th October 1993. This order is crucial to the case. It is the first major inflection point in this narrative. This was an order in GRC's writ petition, viz., an action by the purchaser, not the vendor. The writ petition assailed the AAIFR order sanctioning a rehabilitation scheme for the vendor, Chowgule. A copy of this order is marked in evidence.6 This is what it says:

"Rule. Returnable on 6th of December 1993.

Leave to amend in terms of the draft amendments.

Amendments to be carried out within one week from today.

Petition to be heard along with Writ Petition No. 3665 of 1990.

The Petitioners are willing to purchase the property in question in terms of their Agreement of Sale dated 21st of July 1986, but are willing to pay the present market value of the land, after adjusting the amounts already paid by them to respondent No. 5 and other authorities at the instance of respondent No. 5 with interest thereon. They have paid more than Rs. 45 lakhs so far under the said agreement. The rights of the petitioners as well as the effect of the order of injunction granted against respondent No. 5 in Writ Petition No. 3665 of 1990 does not appear to have been considered by B.I.F.R. There also 6 Exhibit "P21", pp. 646. There is an error in the reproduced or retyped copy of order at page 646. I have, therefore, extracted the whole of that order from a photocopy that is made available.

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3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 appears to be non-application of mind to various relevant facts, including the fact of consent to the said agreement having been given by the mortgagee Bank.

In the premises, there will be an interim order in terms of prayers (c) and (d) as amended.

Respondent No. 5 is directed to make a fresh application to respondent No. 6 for permission to sell the said land to the petitioners disclosing all the relevant facts, including the Court orders in that connection.

Respondent No. 6 shall decide the said application as expeditiously as possible and preferably within eight weeks from today.

The above order is passed in invitum.

Certified copy expedited."

(Emphasis added)

20. Stopping here for a moment, there was an early discussion whether this was or was not an order in invitum. I do not think that makes any material difference. What is important is that it notes that GRC volunteered to the Division Bench that it was willing to purchase the property in question in terms of the agreement of sale of 21st July 1986 but -- and this is important -- was willing to pay "the present market value of the land after adjusting the amounts already paid by them to Respondent No. 5 [Chowgule] and other authorities at the instance of Chowgule with interest". The next sentence is also important because it quantifies this amount at Rs. 45 lakhs, the same figure that is mentioned in the present suit, one that Page 13 of 50 3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 pre-dated the writ petition. The remaining contents of paragraph 1 are clearly observations of the Court, and then the court went on to grant an ad-interim order and directed the Government to decide a fresh application that Chowgule would have to make for permission to sell the land -- and this is also important -- to GRC.

21. Taking the second point first, this order eliminated the problem of a sale by public auction. The private treaty represented by the 21st July 1986 agreement was thus enthroned once again, restored to solitary primacy, as it were. There remained only the question of the terms on which the Government would permit that sale to take place and, though I will turn to this a little later, a question of fixing the price because there was the so-called escheat component to consider. What is not in dispute is that Rs. 45 lakhs had been paid. At this stage, GRC's offer or statement was that it was willing to substitute the possible uncertainty inherent in an FSI computation as contemplated by the agreement (albeit at a fixed rate of Rs. 40/- per sq ft) with a far more ascertainable lump-sum price, i.e. the present market value. Neither in the statement made by GRC nor in the writ petition and, therefore, not in the order was there any mention of the actual sale price, i.e. the present market value. Clearly, this was yet to be determined. All that GRC said was that it would accept the present market value, whatever it was finally determined to be, but after an adjustment of the amount of Rs. 45 lakhs and interest. This order was, therefore, pivotal to the entire transaction. Again I must note that there is a defence taken that this perhaps constituted a novatio. Whether or not it did and even if it did whether it had an impact is something to which I will return when I consider the rival arguments a little later in this order.

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22. Immediately thereafter, Chowgule did make an application to the State Government on 7th December 1993.7 From the perspective both of the case placed by the Plaintiff as also one of the issues to be determined, this document is equally crucial. I will consider it in some detail at this stage itself to avoid having to revisit it later. It is a letter signed by Chowgule's Managing Director addressed to the Secretary, Revenue and Forest Department of the Government of Maharashtra. It is marked to GRC, Chowgule's attorneys at that time and to the Advocates for the two Banks, M/s. Little & Co. The subject of the letter is a request for permission from the Government to sell this land at Majiwada Village. The land area is described in the letter and there is a reference to the Division Bench order of 26th October 1993, a portion of which is extracted at the forefront. Prayers (c) and (d) of the Petition are also reproduced. Prayer (c) operated as an injunction from selling this land by "public auction or otherwise". In other words, GRC and Chowgule had by means of this writ petition sought and obtained an order preventing the Government from selling the land to any third party. In paragraph 3 Chowgule set out some of the background facts. It agreed that it was solely responsible for procuring the necessary permissions. Importantly, paragraph 3(c) of this letter made it clear that there was no fixed amount set out in the agreement as the total consideration payable for the sale of this land. What was agreed, at the cost of repetition, was a formula for computing the consideration, one that was expected to be in excess of at least Rs. 10 7 Exhibit "P22", pp. 647-654.

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3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 lakhs at that time. In paragraph 3(e), Chowgule clearly accepted that it had 'survived' only because of GRC's infusion or injection of Rs. 45 lakhs in its time of need. Any previous statements that Chowgule may have made to the contrary or anything it may have said in the written statement contrary to this are clearly inconsequential. In paragraph 4 of this letter Chowgule set out what it considered to be the consequences of all these various proceedings. Paragraphs 4(c) and 4(d) are important:

"(c) In the event of M/s. G Ram Construction Co succeeding in their suit No. 3506 of 1990 the company would be either compelled to sale the property to M/s. G Ram Construction Company at the price fixed and arrived at 21st July 1986 or in the alternate decree for damages which are claimed at Rs. 5,00,00,000/- may be passed against the company. This again would weal the fate of the company.

(d) As it can be seen from the order dated 26th October 1993 M/s. G Ram construction Co., have expressed their readiness and willingness to purchase the property in terms of agreement for sale dated 21st July 1986 and is also willing to pay the present market value of and after adjusting the sum of Rs. 45,00,000/- paid by M/s. G Ram Construction Co. to us or third party and interest at the rate of 18% p.a. thereon."

23. In the next paragraph, Chowgule says it has now estimated the market value of the land to be Rs. 4.70 crores. It arrived at this figure in the BIFR proceedings. Interestingly, Chowgule states that no third party would be interested in purchasing this land at this value because of fear of being dragged into litigation by GRC. So far, Page 16 of 50 3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 therefore, this was an extremely symbiotic relationship between GRC and Chowgule, both sides trying to ensure that the land was sold by Chowgule to GRC and no one else. Paragraph 5 of the letter says this:

"5. Under the circumstances stated hereinabove it would be in our interest as well as Bank of Baroda/Bank of Maharashtra to agree to sell the land in question to M/s. G Ram Construction Co as market valuation of Rs. 4,70,00,000/- subject to our giving credit to M/s. G Ram Construction for payment of Rs. 45,00,000/- along with interest at the rate of 21% p.a. This would mean that the company would be realizing the market value of the land in question and would be in a position to revive the unit."

24. If there was any doubt about what the two parties intended, this should, I expect, put it entirely beyond all controversy. It was on this basis that Chowgule sought a deletion of the public auction condition, and permission to sell the land to GRC at Rs. 4.70 crores "after deducting a sum of Rs. 45 lakhs along with interest thereon at 18% per annum." This was, therefore, an unequivocal commitment by Chowgule.

25. There was no immediate compliance or response to this application. Several months later, on 11th March 1994, the Government rejected this application. It did so on the ground that it was the two banks as mortgagees that had the right to sell the land.8 This was clearly a reference to the original vesting or acquiring agreement which, as we have seen, said that the mortgagee's right of 8 Exhibit "D10", pp. 750-751.

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3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 sale was absolute subject only to the payment of the unearned income component. GRC amended its writ petition and challenged the 11th March 1994 order. It filed a Motion in that writ petition asking that the order be set aside and that the Government be directed to decide Chowgule's application in terms of the previous Division Bench order of 26th October 1993. It seems to have filed a separate Motion asking the Court to direct the Government to leave out of consideration any right the banks had to sell the property. This resulted in an order dated 3rd March 1995,9 by which the Court set aside the 11th March 1994 order and directed the Government to consider Chowgule's application of 7th December 1993 within eight weeks. Chowgule was also set at liberty to approach BIFR for a fresh scheme but one that did not involve a sale of these lands.

26. Finally on 10th November 1995 the Government granted permission to Chowgule to sell the property to GRC.10 This is the third in this series of post-suit critical documents. The original is in Marathi and a translation is placed on file from pages 655 to 667. There is no dispute about the correctness of the translation. The order notes the rival contentions, including a contention by the two banks that Rs. 45 lakhs paid by GRC to Chowgule should not in fact be adjusted. Since that came from the banks, I will set that aside as being wholly irrelevant. For its part, Chowgule submitted that the Government should consider a waiver entirely on payment of the unearned income component. Having considered these submissions, the Revenue Minister who passed the order held that 9 Exhibit "D29", pp. 885-887.

Exhibit "P23", pp. 655-667.

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3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 the livelihood of 300 workers employed by Chowgule was also a concern. In addition, there were orders of the Court that had been obtained and all these factors taken together required the authority to take cognizance of the suit agreement between the parties. The order notes that GRC was willing to pay the price as of 26th October 1993 (the date of the first Division Bench order) keeping intact the other terms and conditions of the agreement of 21st July 1986. Yet, taking into account the fact that Chowgule applied on 7th December 1993, the Hon'ble Minister held that it would be correct to permit Chowgule to sell the land to GRC at the market rate prevalent on 7th December 1993, the date of Chowgule's application. Clause 3 of the operative portion of the order said that this market rate and, therefore, the price (as on 7th December 1993) was to be determined by the Collector, Thane through the Town Planning and Assessment Department on the basis of the ready reckoner. This price or market value was to be finalized with the concurrence of the Finance Department. The order records that both sides agreed that the minimum price would be Rs. 4.7 crores. This order itself directed that 50% of the unearned income would be deposited with the Government in payment of the unearned income clause, and the two banks would be paid off from the remaining half, and the balance, if any, would be used to revive the company and repay all the liabilities to the workers. This order was communicated to the parties very shortly thereafter. On 8th May 1996 Chowgule seems to have quite literally taken a chance by filing a Motion in GRC's Writ Petition for a direction that GRC be ordered to pay the current market price. That Motion met its inevitable result with an order of dismissal not long after on 27th June 1996.

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27. It is at this point that the conduct of the parties towards each other took a slightly different turn. Until now both were more or less in tandem. There was of course the first agreement of July 1986. Chowgule found itself in financial difficulties. It looked to GRC for financial assistance and a bailout but without in any way tying that financial succour to the agreement. For its part, and although it initially denied that it was bound to provide any assistance, GRC finally did so and paid Rs. 45 lakhs over some time. Things spiralled out of the control of both parties when the BIFR recommending Chowgule's winding up. Just when the parties had somehow managed to put that genie back in its bottle, there came the Government order directing a sale by public auction, a second body blow to the parties' agreement. That the parties were in lock-step is evident from the fact while Chowgule challenged the BIFR orders, it was GRC that filed a writ petition against the Government order. Both parties were equally interested in a favourable outcome in both the petitions.

28. By 10th November 1995, therefore, the landscape had changed. First, the sale was now outside any winding up. Second, the public auction requirement of the Government had been replaced with a permission for sale by private treaty to GRC -- that private treaty being the suit agreement of 26th July 1986. Third, the agreement consideration computation provision in the 1986 agreement was substituted with an agreement by GRC to pay the market value as in 1993 after adjusting Rs. 45 lakhs and interest at 18%, thus for the first time making Rs. 45 lakhs a component of the purchase consideration.

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29. By this time, GRC had already filed this suit for specific performance in November 1990, but as we have seen, the significant developments thereafter were the ones that turned the trajectory of this litigation.

30. This was the factual context and background in which Chowgule filed its written statement in 1996.

31. I have not summarized the plaint; there is little to be achieved by that. A delineation of an amendment to it is necessary. Before that, a quick look at Chowgule's written statement of 18th September 1996 is useful. It predates the amendment. For the most part, this written statement is a set of denials and nothing more. Most of these are framed following that useless practice manner so beloved of some draughtsmen on the Original Side of this court: that which you cannot deny you must say you do not admit, even to the point of absurdity. Therefore, the strange averments in this written statement such as the one in paragraph 5 where Chowgule says it 'does not admit' that by the agreement of 21st July 1986 it agreed to sell the property to GRC and puts GRC 'to the strict proof' of this. Luckily, nobody today insists on this. There is a similar denial in paragraph 7 that Chowgule 'ever made' a request for an ad-hoc payment of Rs. 3 lakhs; in paragraph 8, a statement that Chowgule 'does not admit' that it requested payment of Rs. 5 lakhs under the agreement, and so on to the end of the chapter, all to no useful purpose that I can tell. Indeed paragraph 18 contains one of the few positive statements, and I use the term generously, in this written statement. Here Chowgule says that GRC agreed to release payments to tide over Chowgule's financial crisis but that these Page 21 of 50 3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 were not against the agreement of 21st July 1986. Of course, this assertion blithely ignores that this is the very agreement that Chowgule said it 'did not admit' in paragraph 5 just two pages earlier. This summary must suffice, for there is nothing in this written statement remotely relevant to the litigation now.

32. More than anything else, this also tells us that up to this time it was not what the parties were doing in this specific performance suit that mattered very greatly to either of them, but rather what the Government was doing and what each of them was doing vis-à-vis the Government.

33. On 25th July 1997, GRC wrote to the Government asking it to determine the market value pursuant to the Minister's order dated 10th November 1995.11 This is important because a little under two years had passed since the Minister had said that the Collector of Thane would have to determine the market price keeping Rs. 4.70 crores as the agreed minimum. On 14th August 1997, the Government wrote to the Collector in this regard.12 There is some misunderstanding reflected in this letter, for it assumes that the market price had been fixed at Rs. 4.70 crores rather than treating as a minimum. By this letter, the Additional Secretary in the Revenue and Forest Department instructed the Collector to inform both parties, i.e. Chowgule and GRC that 50% should be deposited with the Government as an unearned income and the remainder deposited with the Bank of Baroda for itself and on behalf of the 11 Exhibit "P26", pp. 671-672.

Exhibit "P27", p. 673.

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34. On 20th August 1997, the Government wrote to Chowgule saying that it was obliged to fix the market value as on 1993.13 This letter refers to a previous letter of 17th September 1996. I do not find that on record.

35. More time went by. On 16th March 1998, GRC's lawyers wrote to the Government again asking for a determination of the market value of the suit property.14 There was a later order dated 30th June 2000 under the ULC Act exempting the lands from the purview of that Act. It was not until 29th July 2000 -- this is now almost five years from the date of the Revenue Minister's order of 10th November 1995 and seven years after the High Court Division Bench order of 26th October 1993 -- that the Collector wrote to the Government for directions.15 There is another letter of 19th August 2000, by which the Collector told GRC that he had fixed Rs. 4.70 crores, i.e. the previously agreed minimum as the sale price of the suit property.16 The photocopy on record is not very clear but the last sentence of paragraph 1 seems to say that 50% of the amount is to be deposited with the Government and the remainder 50% with the lead bank, Bank of Baroda, within three months of the date of 13 Exhibit "D41", p.921.

Exhibit "P28", p. 674.

Exhibit "D42", p. 786.

Exhibit "P29", p. 678.

Page 23 of 50

3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 receipt of this letter. While the letter is addressed to GRC, it is clearly copied to Chowgule too.

36. Thus, we now have a situation where Government had fixed, though after a considerable delay, the aggregate consideration of Rs. 4.70 crores as the purchase price of the suit land. This is really where the real dispute in this suit begins because what GRC says now is that when fixing this price the Government did not give credit for the Rs. 45 lakhs that GRC had paid earlier, nor for the accumulated interest at the agreed rate of 18% pa. It seems to me this is the only issue at hand.

37. On 11th October 2000, Chowgule wrote to the Collector saying that no extension of time should be granted to GRC to make the payment as directed.17 A little later that month, on 27th October 2000, Chowgule asked GRC whether it had deposited Rs. 2.35 crores with the Government.18 On 6th November 2000 Chowgule sent another letter to the Collector asking for a status of GRC's payments.19 On 15th November 2000, GRC wrote to the Collector saying was a mistake in the Government's letter dated 19th August 2000 and the demand for Rs. 4.70 crores.20 In paragraph 2 of this letter GRC said that no adjustment had been made for Rs. 45 lakhs and interest. It asked for an appointment so that a detailed statement of account could be tendered in order to enable the Collector to 17 Exhibit "D15", p. 788.

Exhibit "D16", p. 699.

Exhibit "D18", p. 794.

Exhibit "P30", p. 677 Page 24 of 50 3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 'arrive at an amount which is to be paid as per the order of the Revenue Minister'. In the penultimate paragraph, GRC said to the Collector that this land was to be made over to it free from all encumbrances but that Chowgule had allowed some encroachments on the land. GRC, therefore, requested the Collector to hand over vacant and peaceful possession of the land.

38. On 23rd November 2000, Chowgule again wrote to the Collector for an update on the status of payments.21 Reminders followed on 3rd January 2001,22 12th February 200123 and 26th February 2001.24 On 28th February 2001, the Collector wrote directly to Chowgule saying that a report had been submitted to the Government.25 This does not seem to have been sent to GRC. This was evidently in response to Chowgule's repeated enquiries. The letter only said that since no amount had been paid Chowgule should take up the matter with the State Government. Between 2003 and 2004 there was some exchange with the Thane Municipal Corporation regarding development permissions, but these are immaterial to this suit.

39. As we have seen, almost everything of consequence happened after GRC instituted the suit in 1990. These subsequent events, including the High Court Division Bench order of 26th October 21 Exhibit "D19", p. 795.

Exhibit "D20", p. 796.

Exhibit "D21", p. 797.

Exhibit "D22", p. 798.

Exhibit "D24", p. 801.

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3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 1993, Chowgule's application of 7th December 1993, the Government permission of 10th November 1995, and the Collector's price fixation of Rs. 4.70 crores of 19th August 2000 were obviously not part of the plaint filed in 1990. GRC, therefore, amended the plaint on 3rd August 2005 and it inserted paragraphs 12A to 12I in relation to these events. It also modified its prayer for specific performance. That amended prayer is reproduced below, with the added matter in italics:

"(b) that the Defendants be ordered and decreed specifically to perform the said agreement Exhibit "B"

hereto in the Plaintiffs favour and for that purpose to do all acts deeds and things execute all writings necessary effectually to perform the same specifically, subject to the Plaintiffs making payment in accordance with their statements contained in the order dated 26th October 1993, (Exhibit P-2 to the Plaint) passed by this Hon'ble Court in Writ Petition No. 1636 of 1993 and the permission granted by the Government of Maharashtra by the letter dated 10th November 1995 (Exhibit P-3 to the Plaint) read with the letter dated 14th August 1997 (Exhibit P-5 to the Plaint);"

40. Of the amendments to the plaint's body, the crucial ones are paragraphs 12G, 12H and 12I:

"12G. By a letter dated 15th November 2000 the Plaintiffs informed the Collector Thane that the amount of Rs. 45 lakhs plus interest thereon from the date of payment and the expenses were to be deducted and then the balance amount was to be paid as per the order dated 26th October 1993. By the said letter Plaintiff stated that the Plaintiffs were entitled to credit for the sum of Rs. 45 lacs Page 26 of 50 3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 and interest thereon and the expenses as per the said Order dated 26th October 1993. By the said letter the Plaintiff also stated that Defendant had allowed some encroachment upon the said property and hence requested the office of Collector of Thane to hand over vacant possession of the said property. A copy of the said letter is hereto annexed and marked EXHIBIT "P-7".

12H. Defendant with ulterior dishonest and malafide intent and with a view to frustrate various orders passed by this Hon'ble Court addressed a letter dated 9th June 2003 to Thane Municipal Corporation to shift the proposed reservation on property bearing Survey No. 107 (part) and 109 (part) on to the part of the said property. However the said proposal has not been accepted. Plaintiffs crave leave to refer to and rely upon the said letter dated 9th June 2003 when produced.

12I. The Plaintiffs were always and even now are ready and willing to purchase the said property in terms of the agreement dated 21st July 1986 and in the event of specific performance being decreed in favour of the Plaintiffs, the Plaintiffs are and have always been ready and willing to make payment in accordance of their statement recorded in the said order dated 26th October 1993 passed by this Hon'ble Court in Writ Petition No. 1636 of 1993 and the permission granted by the Government of Maharashtra in the said letter dated 10th November 1995 read with the said letter dated 14th August 1997. In any event the Plaintiffs submit that the Plaintiffs are ready and willing to fulfil their aforesaid obligations as per the interpretation placed by this Hon'ble Court on the said order and permission."

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41. Paragraph 12G actually does not carry the matter further because it reproduces what GRC said in correspondence. Paragraph 12I contains the material averments about readiness and willingness but, in the form in which it is stated, it is generalized and non- specific: the paragraph itself does not mention a rupee figure anywhere.

42. To this amendment, Chowgule entered a supplementary written statement, one somewhat more nuanced than the first. There is a delineation of the facts, and in paragraph 16 Chowgule now accepts that it received Rs. 45 lakhs "as per the terms of the suit agreement". There is a narrative of the many intervening events. Then comes an averment that was repeatedly sought to be bolstered at the actual trial but was not, and in my view quite advisably, seriously canvassed by Mr Chinoy at all: Chowgule now said that there was a 'novatio' of the agreement and that the terms of the agreement were varied. In paragraph 35, page 109 it stated this variation as being GRC's agreement to pay the present market value for the purchase of the property. This is somewhat amplified at page 114 where again there is some pleading of novatio, but there is now a clearer statement that by agreeing to pay the market value as on 7th December 1993 subject to a minimum of Rs. 4.70 crores, a new agreement came into being. This is of some consequence because as we shall very shortly see, there is a specific issue framed on this defence.26 26 Incidentally, in paragraph 62 there is a reference to a letter dated 28th February 2002, Exhibit "D24", p. 801, alleging that this letter cancelled the permission for sale. The letter says no such thing. It only directs Chowgule to Page 28 of 50 3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 ISSUES

43. On 11th August 2005, issues were framed on the rival pleadings. These are set out below with my answers against each. Obviously some of these will have to be clubbed and heard together.

Sr. No. Issues Findings

1. Whether the Plaintiffs prove that the agreement dated 21st July 1986 is valid, YES subsisting and binding on both the parties?

2. Whether the Plaintiffs prove that the Plaintiff was and is ready and willing to perform its obligations under the agreement dated 21st YES July 1986 and/or under the order dated 26th October 1993?

3. Whether the Plaintiffs prove that the Plaintiff is entitled to specific performance of the YES agreement dated 21st July 1986?

4. Whether the Plaintiffs prove that the Defendant failed and neglected to carry out YES their obligations under the agreement dated 21st July 1986?

5. Whether the Plaintiffs have any charge on the suit property for the amounts, if any, decreed DOES NOT in favour of the Plaintiff in terms of the SURVIVE preceding two issues. If yes, what order?

6. Whether the Plaintiff was entitled to credit for interest on the amount of Rs. 45,00,000/- as YES alleged in paragraph 12(a) of the plaint?

make enquiries about payment with the Government. Further, paragraph 69 speaks of enforcement of an agreement of 25th October 1993. There is no agreement of that date. There is only the High Court order of 26th October 1993. The suit is not, and could not have been, for enforcement of a High Court order.

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7. Whether the Defendant proves that the agreement dated 21st July 1986 has become infructuous and/or void or subject to sanction NO as alleged in paragraph No. 2 of the written statement?

8. Whether the Defendant proves that the State of Maharashtra or Collector of Thane are NO necessary parties? If yes, what is the consequence of non-joinder?

9. Whether the Defendant proves that there is a novatio of the agreement dated 21st July NO 1986?

10. Whether the Defendant proves that the cause NO of action for the above suit does not survive?

11. Whether the Defendant proves that the new arrangement stood terminated upon default by the Plaintiff in making payment as alleged NO in paragraph No. 52 of the supplemental written statement?

12. Whether the suit or any part thereof is barred NO by the law of limitation?

13. What order and decree? SUIT DECREED WITH COSTS EVIDENCE

44. The Plaintiffs led the evidence of two persons, one Sanjay Patel and one Champaklal Vardhan as PW2. The Defendant led the evidence of one Nandita Ashok Rajani, the married daughter of Mr PV Chowgule, the original Managing Director of the Defendant- company. There were several documents marked. Some I have Page 30 of 50 3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 referred to earlier. Others I will reference as I discuss the rival arguments.

RE: ISSUES NOS. 9, 10 AND 11

45. I will take first the question of novatio. It must be answered against Chowgule and in favour of GRC. There was no novatio and none has been correctly pleaded. Indeed Mr Chinoy in fairness has not canvassed this at all. The substitution by a Court order of a price fixation mechanism for the method originally contemplated in the agreement is no 'novatio'. There was no substitution of one obligation with another. There was no additional obligation. There was no substitution of a party. The subject matter of the agreement remained the same. The parties remained the same. The transaction remained unaltered. What the parties only agreed that the amounts paid (or given) after the date of the suit agreement by GRC to Chowgule would be appropriated towards the purchase price with interest at 18% pa, and that instead of computing the consideration as a factor of permissible FSI with the rate of Rs. 40/- per sq ft, the current market value would be substituted. Only the formula change. That was the only change. That cannot constitute a novatio.

46. As to the submission in the written statement that the agreement stood terminated 'upon default' by GRC, the less said the better. There is no letter from Chowgule to GRC terminating the agreement or forfeiting the amounts paid.

47. The three issues are answered in the negative.

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48. The issue of limitation simply does not arise. There has been no evidence led on limitation, always a mixed question of fact and law. This plea is taken more or less automatically in the first written statement.

49. On the question of joinder of the State of Maharashtra and Collector of Thane, the answer suggests itself. The law is settled. Outsiders or third parties who are not signatories to the agreement cannot be permitted in a suit for specific performance.27 In any case, there was nothing in the suit that required the joinder of the State of Maharashtra or the Collector for a proper adjudication of GRC's claim for specific performance.

50. Issue No. 7 is not pressed. It is no one's case that any part of the agreement is void or that it requires any other sanction and I do not see how this agreement could ever be said to have become 'infructuous'. I do not understand what the plea is supposed to mean. An order might become infructuous, but not an agreement. An agreement pending performance or completion of obligations can only be rendered incapable or impossible of performance, or may be void or voidable, but never infructuous.

51. All three issues are answered in the negative.

Kasturi v Iyyamperumal, (2005) 6 SCC 733; Mumbai International Airport Pvt Ltd v Regency Convention Centre & Hotels Pvt Ltd & Ors, (2007) 7 SCC 417.

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52. I will take these four issues together. They seem to me to be entirely determinative of the dispute. Issue No. 5 regarding a charge on the property relates to the claim made in the alternative and I will deal with that separately later. Of these four issues, the central issue is the second, whether GRC was -- and is -- ready and willing to perform its obligations under the agreement. Indeed, as regards readiness as distinct from willingness, there should be no difficulty in answering the question in GRC's favour at all. The fact that it had paid the initial amount of Rs. 45 lakhs without even waiting to make this a precondition or securing it, or requiring it when given to be adjusted against the agreement consideration more than amply demonstrates readiness. There is no evidence whatsoever in the form of examination-in-chief or cross-examination that GRC at any time did not have the necessary financial means to pay the remaining amount and to complete the transaction.

53. The only question, therefore, is of willingness. Even that question is narrowed: by demanding that the Government pass an order giving it credit for Rs. 45 lakhs and an adjustment of the interest agreed, can GRC be said to have failed to demonstrate its willingness? The evidentiary context is the four or five salient documents to which I have previously referred. There is a considerable amount of narrative and factual clutter. But these documents tell us precisely who had to do what and when to complete the agreement.

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54. Before I go further, I should dispose of Mr Subramaniam's argument to the effect 'that the time for payment had not yet come'. I was surprised that he ventured this argument at all. This is a purchaser's suit for specific performance. An argument of this kind is a common defence by a purchaser to a vendor's suit to compel specific performance, i.e. to force the purchaser to pay and take up the property. But I am unable to see how a purchaser can seek specific performance and yet say that time for payment has not yet come. Mr Chinoy may be correct, therefore, in saying that this argument is possibly fatal to the case of the willingness, for the moment a purchaser says in prosecution of his own suit for specific performance that 'time has not yet come to make payment', then his suit must necessarily fail. I am sure this was to Mr Subramaniam's mind, and perhaps the reason why he juxtaposed the argument as he did was entirely different. He points out to clauses 3A, 3B and 3C of the agreement read with clause 5 to argue that payment was, in any case, conditional upon the completion of various factors including the removal of encroachments. Payment was to be made in a staggered fashion. Unless those conditions were met, he says, no payment could be required of GRC. This distracts attention from what it was the parties agreed to do and the way they agreed to re-compute the price (without actually effecting a novation). The argument about encroachments was never central to the plaint at all. There is one line in the amendment but that is all that is to it. There are three passages in the evidence of PW1 and PW2 where they make this statement. There are also some photographs on record to show the existence of encroachments. But the allegation that Chowgule deliberately encouraged, fostered or placed those encroachments to frustrate the agreement is not even a case put to DW1. In any case, Page 34 of 50 3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 the entire scheme worked out after the statement GRC made to the High Court in its own writ petition, viz. that it was willing to pay the market price subject to an adjustment of Rs. 45 lakhs and interest puts this argument of other requirements having to be first met completely out of the frame. At no point until the demand by the Collector and even thereafter did GRC ever say this. It is true that GRC asked the Collector to remove the encroachments but that again seems to me to have been a little more than a smoke screen because these encroachments were on private land, though originally on a grant from the Government, and it is entirely unclear how the Collector could have been involved in the clearance of these encroachments. Notably, I do see GRC saying anywhere to Chowgule (or to the Collector or the Minister) that it is not liable to make payment of the price fixed by the Collector until encroachments are removed or other conditions are met. Mr Chinoy may be, therefore, correct in saying that this argument is a bit of a latter day forensic ingenuity. But it is nothing more than that, and it serves no purpose. Nobody came to Court with this case. Nobody went to trial with this case. This has never been anyone's case. I will have to set this argument aside and I do so precisely because it formed no part of the trial, but comes only in (possibly ill-advised) oral arguments. I do not think this takes GRC in the direction or to the destination it intends.28 28 There are several such subsidiary factors, as for example that GRC had its own security guards on site. But that is not evidence per se of a willingness to complete the transaction so much as it is evidence of a continued interest to keep one foot in the door.

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55. The question really is only this. Is GRC's demand for a clear- cut adjustment, as agreed and as accepted by both sides before this Court, an insufficient demonstration of willingness to complete the transaction? Must GRC show more?

56. Let me summarize what it is that GRC claims that it did up to this stage. It paid Rs. 45 lakhs at Chowgule's instance and it did so initially without tying this payment to the agreement or to any consideration. It fought litigations, though of course it had an interest in those litigations. It then pursued the matter and once it received the order of the Collector, it promptly wrote to the Government and asked for an adjustment. Mr Subramaniam says there is nothing more GRC needed to do, or was required to do. If the amount was not adjusted as promised, GRC would be left entirely without a remedy. That adjustment had to be made, and it had to be made from the amount demanded by the Government from GRC.

57. He is at some pains to point out that this was not a demand for payment by Chowgule at all. Chowgule by this time had been rendered a bystander. It was actually to receive nothing at all because Rs. 4.70 crores was to be split equally between the Government taking 50% as unearned income and the balance going to the banks. In actual fact, he says, Chowgule had to put money in, i.e. it had to make provision for Rs. 45 lakhs and interest and thus reduce the amount that GRC would now have to pay to the Government and to the banks.

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58. One of the questions that this necessarily postulates is whether the Government was under any obligation at all to get into any mutual or inter se accounting between the two contracting parties. For this, we will necessarily have to return to the first order of the High Court and see what it was that the Government was mandated to do.

Resumed on 5th April 2019:

59. The starting point for this discussion must be the Division Bench order of 26th October 1993. It records GRC's submission in the first portion of the order, and the Bench noted and accepted GRC's willingness to purchase the property at the present market value after adjusting the amount already given to Chowgule (plus interest). The order that the State Government finally made on this on 10th November 1995 had distinct components. The most important of these was that it dislodged the requirement of a public auction. But it did not itself fix the price. It directed the Collector Thane to do so and only said the minimum was Rs. 4.70 crores. The ultimate price fixation by the Collector on 19th August 2000, possibly the result of what appears now to have been a trawl through the records, did not actually do anything towards assessing the fair market value as on any given date. There is certainly no material to show the Collector called for any comparable instances or looked at anything at all. He simply accepted Rs. 4.70 crores as the market value. We will never know whether this was indeed the open market value of the land. But it matters little. The sequencing tells us first what it is that the Government was to do. It was required to consider Chowgule's applications to permit a sale by private treaty and it was Page 37 of 50 3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 to take some steps towards determining the market price. The main contract of 1960 between the Government and Chowgule itself required prior permission of the Government for any sale. A condition attached to any such permission was the payment of unearned income. If there were mortgagees, they had an absolute right to sell the property. Provision had to be made for that as well. The 10th November 1995 order of the Government is to be seen for what it actually does. As we have seen, it effectively ring fenced the transaction and protected it from any possibility of an auction purchase, i.e. an approach by a third party. It also explicitly rejected the two submissions by the bank: first that there should be no credit given to GRC for the Rs. 45 lakhs that it had paid, and, second, that there should be a sale by public auction. Both these requirements were actually set aside.

Resumed on 8th April 2019:

60. There is, as we have seen, evidence of a considerable delay from the time that the Division Bench passed its order on 26th October 1993 and the order of the Collector which came only seven years later on 19th August 2000 finally fixing the price as Rs. 4.70 crores. I will accept straightaway, since the law is so well settled on this subject that it requires no further discussion, that actual tender is not required. I will also accept Mr Subramaniam's argument that the initial payment of Rs. 45 lakhs is in itself some level of evidence of both readiness and willingness. Indeed, as I have noted, on the question of readiness there has been no dispute at all. On the question of willingness, this must constitute sufficient evidence for the simple reason that GRC made this payment on a simple request Page 38 of 50 3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 from Chowgule and at the time when it first assisted Chowgule it did not tie this payment to the sale agreement at all.

61. It is in this context that we must appreciate what it is that GRC did on 26th October 1993 before the Division Bench, and why it was impelled to do this. Up to this time, as I have repeatedly noted, there was no aggregate consideration stated for the transaction. There was a rate per sq ft for the FSI, but that FSI was yet to be computed. In short, there was uncertainty as to the aggregate price and, at the same time there were threats from every direction. The matter was in imminent danger from being pulled away from both GRC and Chowgule as a consequence of Chowgule's financial ruin, including its indebtedness to the two mortgagees. This is the factual context in which Chowgule told the Division Bench that instead of waiting for some price to be computed as payable towards consideration for the sale, it would accept the market value of the property. Importantly, it clarified at this time that this offer was subject to it being allowed to adjust Rs. 45 lakhs and interest at 18%. To my mind, this statement itself is a second level of evidence of willingness.

62. Mr Subramaniam is also correct that there is sufficient material in this narrative to indicate continued willingness. Apart from the payment of Rs. 45 lakhs, there is GRC's statement before the Division Bench. There is the litigation that it initiated to safeguard the transaction and the property. It was GRC that filed a Motion in the Writ Petition against the State Government's rejection for permission for a private sale. It is in this context that I must consider the authorities on which Mr Subramaniam places Page 39 of 50 3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 reliance. It is generally true that a sequence set out in a contract demands adherence, and no purchaser can be expected to leapfrog that sequence or to fulfil obligations out of sequence.29 But this in itself is of peripheral importance to GRC's case. The correct test is whether GRC's conduct after the Collector fixed the price is, as Mr Subramaniam says, sufficient demonstration of GRC's willingness, or whether, as Mr Chinoy would have it, shows the reverse, a lack of willingness. If Mr Subramaniam is correct, then nothing remains and a decree must follow. If on the other hand Mr Chinoy's submission is to be accepted, then the suit will fail and the only question that will survive is what order is to be made in regard to the payment of Rs. 45 lakhs paid.30

63. Similarly the submissions by Mr Subramaniam that Chowgule has kept back the best evidence by not producing the Managing Director who was at all times involved with the transaction but instead leading only the evidence of his daughter, DW1, is really of no real assistance.31 The reason is self-evident. Chowgule's actions will be tested by the evidence that it has adduced in the form of correspondence. These documents will speak for themselves. There is not much GRC or Chowgule's witnesses can add to, or take away 29 Nathulal v Phoolchand, (1969) 3 SCC 120.

For this reason, I do not think it is necessary to look at further decisions on the question of marking of documents in evidence. I only note that Mr Subramaniam relied on the decision of a learned Single Judge of this Court in Geeta Marine Services Pvt Ltd & Anr v State & Anr, 2009 (2) Mh.LJ 410, and the decisions in Narbada Devi Gupta v Birendra Kumar Jaiswal & Anr, (2003) 8 SCC 745 and Om Prakash Berlia & Anr v Unit Trust of India & Ors, AIR 1983 Bombay 1 (reversed on other point in appeal).

Vidhyadhar v Manikrao & Anr, (1999) 3 SCC 573; Martand Pandharinath Chaudhari v Radhabai Krishnarao Deshmukh, AIR 1931 Bombay 97.

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3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 from, those documents. The counter arguments by GRC, therefore, on novatio, though pleaded by Chowgule but not seriously canvassed by Mr Chinoy, are unnecessary.32

64. Far more pertinent, in my view, are the authorities that Mr Subramaniam cites as to the correct test of willingness. In this regard, as we have seen, actual payment is not required.33 The law is well settled that the readiness and willingness of a person seeking specific performance must mean a demonstration of that person's preparedness to fulfil his obligation and accept performance when the time for it arrives.34 But crucial to Mr Subramaniam's case is the proposition that in assessing willingness a Court must have regard to the conduct of both parties to the contract -- including the conduct of the defendant.35 Indeed the Supreme Court has said that once the plaintiff seeking specific performance has discharged the onus of showing willingness, which is fact-dependent in each case, and there are sufficient averments in the plaint, the Court must also consider whether the defendant did everything required of him in terms of the agreement for sale. This proposition is most correctly applied to the conduct of the parties after the Collector fixed the price on 19th August 2000. What is it that GRC did after this? It wrote to the 32 Juggilal Kampalat v NV Internationale Crediet-En-Handels Vereeninging Rotterdam, AIR 1955 Calcutta 65; Chrisomar Corporation v MJR Steels Pvt Ltd, 2017 SCC OnLine SC 1104; Lata Construction & Ors v Dr Rameshchandra Ramniklal Shah & Anr, (2000) 1 SCC 586.

Bank of India Limited & Ors v Jamsetji AH Chinoy, 1950 ILR PC 606, at page 621; Avdel Tools & Services v Trufit Fasteners Pvt Ltd, 2008 (6) All MR 611; Ganesh Prasad v Saraswati Devi & Ors, AIR 1982 All 475.

Biswanath Ghosh & Ors v Gobinda Ghosh & Ors, (2014) 11 SCC 605.

P D'Souza v Shondrilo Naidu, (2004) 6 SCC 649.

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3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 Collector on 15th November 2000 saying that no credit had been given to Rs. 45 lakhs that it paid and interest. This is crucial. The entire exercise of the Collector fixing a price and permitting a private sale turned on an acceptance of GRC's submission and offer to accept whatever price was fixed less the adjustment with interest for the amount paid. But for that statement and its acceptance, the entire exercise by the State Government of permitting the sale and of the Collector fixing the price would never have taken place at all. What would have happened instead is that the banks would have proceeded as they were entitled to do under the terms of 1960 contract to put the property to sale by public auction. The matter would have ended there.

65. Mr Chinoy submits that what GRC ought to have done was to make the payment less the adjustment, or at least offer to make that payment less the adjustment, or to call upon Chowgule to pay Rs. 45 lakhs and computed interest at 18% pa. Having failed to do so, it must be held not to have demonstrated willingness. But this argument, to my mind, overlooks completely Chowgule's own conduct following the 19th August 2000 price fixation by the Collector. I do not find any material here, in a single letter that Chowgule wrote to the Collector, and it wrote several -- none of which it cared to copy for reasons I cannot understand to GRC -- saying at various times that there should be no extension of time, that the full amount should be deposited, asking whether GRC had made that deposit and sending reminders. The same argument that Mr Chinoy makes against GRC is an argument against Chowgule. It is not as if Chowgule did not know of the condition of adjustment of Rs. 45 lakhs and interest. It accepted this fully when it first applied Page 42 of 50 3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 for permission following the Division Bench order. It categorically stated in more than place that the Rs. 45 lakhs and interest would have to be adjusted.

66. The sole argument here is one of delay. Mr Chinoy seems to suggest that having obtained the High Court order, GRC did nothing for seven years until the Collector fixed the price on 19th August 2000, and even thereafter it did nothing until the amendment in 2005 when it for the first time sought to bring subsequent facts on record. In the meantime, he says, the property has appreciated beyond anybody's wildest expectations. GRC is simply speculating in land and today trying to obtain for a very depressed figure of Rs. 4.70 crores reduced by Rs. 45 lakhs and accumulated interest, a tract of land that is worth five or ten times as much. But is this delay to be laid at GRC's door? There is first of all the considerable delay in the Government doing what the High Court order directed it to do. Surely GRC cannot be held responsible for that. The second level of delay is of the Court itself because, as I have noted, the suit was of 1990 and it has come to final hearing only now in 2019. As I have also noted everything in this suit happened after it was filed including the orders that triggered the setting of a valuation by the Collector. This again is not something for which GRC is responsible. By the same token, Chowgule cannot have been unaware that property prices in Mumbai were headed -- and have always headed -- only in one direction. What is that Chowgule did other than making that first application for Government permission and thereafter protesting to the Collector (with no copy to GRC) asking for a raised valuation (that is to say more money), asking that no extensions of time be Page 43 of 50 3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 given to GRC, and yet refusing to do the one thing that it was required to do, which was to repay the Rs. 45 lakhs and accumulated interest? It did nothing at all. There can be no doubt that GRC was entitled to an adjustment of Rs.45 lakhs and interest. But 'adjustment' is not an expression without context. It means Chowgule owed this amount and interest to GRC. Whether, therefore, Chowgule paid this to GRC, and GRC then paid the entire sale price, or whether GRC paid the sale price less this amount was irrelevant. Had the matter remained between the two parties, that is to say with consideration being required to flow from GRC to Chowgule, then GRC would simply have had to pay that much less. The difference here is that the consideration needed for land title to pass from Chowgule to GRC was to be paid to a third party, viz., half to the Government and the remainder to the banks. Ever since the date of the High Court order of 26th October 1993 this was and remained unchanged. Consequently, GRC's liability was to pay the amount fixed by the Government, less the agreed adjustment. Accepting Mr Chinoy's submission therefore means accepting a conduct that is in essence inequitable. This submission from Chowgule has to be seen with its next submission that even if repayment is ordered of Rs. 45 lakhs, that should be without interest for the full period, as that would be onerous, and it should not in any case be a charge on the land. That is only multiplying inequity. Notably Chowgule has done absolutely nothing towards even attempt a repayment of Rs. 45 Lakhs. There are many things that one could speculate about what Chowgule should have done before it could even insist that the price fixed by the Collector should be increased. Mr Subramaniam is, I think, correct in saying that if he did not ask the Collector for an adjustment, then there was simply Page 44 of 50 3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 nowhere else for him to turn. The order of the Collector is not to be seen in isolation. It is a consequence of the Government order allowing the sale of the land by Chowgule to GRC at a price to be fixed by the Collector, i.e. an acknowledgement that GRC would be the paying party. This is the reason why the Collector made the demand on GRC in the first place, and this is the reason that the Collector required the payment of half the amount fixed as the unearned income due to the Government and the rest to the two banks. Again, I note that none have bothered to explain what the accumulated debt of the two banks was on 19th August 2000 when the Collector finally fixed the market price. The Collector certainly does not seem to have called for this information from the banks and it is unknown whether this amount of Rs. 2.35 crores represented the whole of the debt to the banks. If it did not, then the consequence was necessarily that despite the payment of Rs. 2.35 crores under the mortgage, the bank would nonetheless have a continuing claim which it could exercise as the mortgagee in view of the provisions of the 1960 contract between the Government and Chowgule vesting the land in Chowgule in the first place.

67. In these circumstances, it is not possible to accept Mr Chinoy's argument that no case of willingness was put to Chowgule, and therefore GRC must fail. It is true that willingness is GRC's affirmative case. But I do not see how in a situation like this it was necessary for GRC to put that 'as a case' to Chowgule's witnesses. The reliance on the two authorities is, I think, misplaced. In Harish Page 45 of 50 3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 Loyalka & Anr v Dilip Nevatia & Ors,36 I considered the Calcutta Division Bench order in AEG Carapiet v AY Derderian.37 That arose in significantly different circumstances. Where a party leads the evidence of a witness, but does not put what that witness says as an affirmative case to another witness and does not give that later witness an opportunity to controvert it, that statement cannot be held against the later witness as an admission. That is the substance of Carapiet, rendered in the context of a contested testamentary action. I held in Loyalka that a party must put its essential and material case to its rival, but I fail to see how, in this case, GRC could be held to have 'admitted' its 'unwillingness' if it did not 'put this case' to the Chowgule's witnesses. In practical terms, how would this have gone? Supposedly, GRC's lawyer should have said to Chowgule's witness: I put it to you that GRC was willing to complete the transaction. What have you to say to this? The inevitable answer would have been a denial and anything beyond that would have been in the realm of argument; leaving us no better off with the question asked than we are without it. A case has to be put not for form, but for the substance of it so that a witness is not foisted with a deemed admission of something he was not given an opportunity to rebut. Mr Subramaniam bases no part of his case on any 'admission' by non-denial by GRC or its witnesses. He constructs his case on, and only on, evidence of the conduct of parties as reflected in the documents admitted in evidence. There is no controversy about these documents at all. GRC's willingness is to be gleaned from these documents, not from what its witness might or might not have said.

(2015) 1 Bom CR 361; Muddasani Venkata Narsaiah v Muddasani Sarojana, (2016) 12 SCC 288.

AIR 1961 Cal 359.

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3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 ::: G Ram Construction Co v Chowgule & Co (Hind) Pvt Ltd COMS2-90-J.doc This Order is modified/corrected by Speaking to Minutes Order dated 06/06/2019 It would have been entirely without purpose, in these circumstances, for Chowgule's witnesses to blandly deny the suggestion when that denial was not borne out by the documents in evidence.

68. There remains Mr Chinoy's argument that the submission by Mr Subramaniam on the requirement for credit is misconceived because the credit was to be given by Chowgule and not by the State Government. Indeed that is so. But unless the State Government separately called on Chowgule to make payment of Rs. 45 lakhs with interest, it was looking to GRC to pay the entirety of the demand. Once again, what the State Government permitted and what the Collector did and demanded must be viewed in the contest of (i) Chowgule's application of 7th December 1993 to the State Government; and (ii) the preceding Division Bench order of 26th October 1993. Chowgule's application of 7th December 1993 was that it would pay Rs. 45 lakhs and interest and would be liable to do so. I see no evidence of it ever having written to the State Government to say this. Indeed, once the Collector had written on 19th August 2000 to GRC demanding payment, the correct thing for Chowgule to have done in immediate response would be to clarify to the Collector with a copy to GRC that from the demand of Rs. 4.70 crores, Rs. 45 lakhs and accumulated interest would be the responsibility of Chowgule and not GRC. There is no evidence of Chowgule ever having done this. If, therefore, GRC demanded an adjustment from the State Government, it was entirely within its rights to do so.

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69. The delay on the part of the State Government cannot come to the aid of Chowgule. Nor indeed can the delay in litigation. Were it otherwise, ever specific performance suit would have to be dismissed for that reason.

70. The oral evidence in this matter, such as it is, does not take parties further. The examination-in-chief is relevant only to the extent that it proves certain documents. I have not found anything in cross-examination of any significance on the issue of willingness. There is also no argument from the Defendant about the validity or subsistence of the 21st July 1986 agreement at all.

71. Issue No. 1 is thus answered in the affirmative. In view of the foregoing discussion, issue Nos. 2 and 3 are also answered in the affirmative.

72. Issue No. 4, whether the Plaintiff proves that the Defendant failed and neglected to carry out its obligation is strictly speaking unnecessary. If it has to be answered, it must be answered in the affirmative at least to the extent that it is Chowgule that never offered to repay Rs. 45 lakhs and interest and that was its primary obligation, one that it itself undertook.

73. Issue No. 6 answers itself in the affirmative. There is no factual dispute that GRC was entitled to a credit or adjustment of Rs.45 lakhs and interest at 18% per annum.

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74. Issue No. 5 will arise only in the alternative, though not specifically so worded, i.e. if specific performance is not ordered and decreed. It will not survive.

CONCLUSION & ORDER

75. In light of this discussion, the Suit is decreed in terms of prayer clauses (a) and (b).

76. GRC will make necessary payment in accordance with the Collector's letter dated 19th August 2000. It will do so within eight weeks from today. It is only necessary to clarify that it is now for GRC to settle the dues, if any, of the two banks but that is outside the frame of the suit and it will do so independently, all contentions being left open. At this stage, I note a statement made on behalf of Chowgule, though without any supporting basis on record, that the banks have been paid off in 2002 and there is nothing due to the banks except the amount of Rs. 2.35 crores to be paid by GRC. The statement is noted. Why this material was not brought on record is unclear.

77. Within four weeks of payment being made, Chowgule will execute the necessary documents to effect the transfer of the land under the suit agreement. Should it fail to do so, the Prothonotary & Senior Master is empowered to authorise an officer of this Court to execute the necessary documents and to have the same registered.

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78. As a matter of course, the suit will have to be registered in the Commercial Division since the Commercial Courts Act 2015 has come into force. The Registry will take the necessary steps.

79. Having regard to these circumstances, and the amendment by that Act to Section 35 of the Code of Civil Procedure 1908, there will need to be an order of costs in favour of the Plaintiff against the Defendant. The amendment sets out the various factors that the Court must bear in mind including where the costs have previously been awarded and reasonable legal expenses. Having regard to the length of the trial and the number of times it has actually been before the Court and the final hearing itself, I believe an amount of Rs. 30 lakhs is a reasonable amount of costs to be fixed. There will, therefore, be a decree of costs in this amount of Rs. 30 lakhs but without interest in favour of the Plaintiff and against the Defendant.

80. The original documents will be returned to the respective parties upon these being substituted with authenticated photocopies.

81. Decree to be drawn up expeditiously.

82. The existing stay will continue pending the execution of the decree.

(G. S. PATEL, J.) Page 50 of 50 3rd-8th April 2019 ::: Uploaded on - 02/05/2019 ::: Downloaded on - 05/04/2020 22:44:36 :::

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