A.F.R. M/S. Creative Builders And vs Prabir Kumar Dash on 27 September, 2024

[Cites 27, Cited by 0]

Orissa High Court

A.F.R. M/S. Creative Builders And vs Prabir Kumar Dash on 27 September, 2024

Sashikanta Mishra,J. This is a Defendant's appeal against a confirming judgment. The judgment dated 29.2.2024 followed by decree passed by the 4th Addl. District Judge, Bhubaneswar in RFA No.85/2023 is under challenge whereby the judgment dtd.23.8.2023 followed by decree passed by the Sr. Civil Judge (L.R & L.T.V), Bhubaneswar in Civil Suit No.1941/2021 was confirmed.

2. For convenience, the parties are referred to as per their respective status in the trial Court. Case of the Plaintiff

3. The Plaintiff-Respondent No.1, being a resident of U.S.A. instituted the suit in question through his authorized agent. He being the owner of the suit land R.S.A. No.174 of 2024 Page 2 of 53 executed a Development Agreement on 07.8.2020 with the Defendant firm represented by its Managing Partner-Bibhuti Bhusan Patra for development of the suit property. As per said agreement, the land owner's allocation was limited to 50% of the super built up/carpet area up to 4th floor while the builder-cum- developer's (Defendant's Firm) allocation was limited to the remaining portion. It was further provided that the land owner would have no claim in case the builder obtained sanction of the Bhubaneswar Municipal Corporation (BMC) beyond 4th floor and the actual allocation of flats would be declared only after approval of the building plan by the Odisha Real Estate Regulatory Authority (ORERA). The Plaintiff received an amount of Rs.2,80,00,000/- on different dates prior to execution of the agreement. The suit property being lease-hold land, the Plaintiff deposited a sum of Rs.3,09,91,736/- to make it free-hold on 24.7.2020 and Rs.3,44,355/- for obtaining convenience deed R.S.A. No.174 of 2024 Page 3 of 53 from his own source. Another agreement titled Supplementary Agreement was executed on the very next date i.e. on 8.8.2020 by the Plaintiff with the Defendant. As per the said agreement, the Plaintiff agreed to receive his 50% share by way of financial benefits to the extent of Rs.15,15,00,000/- in lieu of flat in the proposed housing project. Thus, after adjustment of the security amount of Rs.2,80,00,000/-, he is entitled to the balance amount of Rs.12,35,00,000/- within a period of 24 months with a grace period of 6 months from the date of approval/registration of the project under BMC and ORERA. Further, on 03.9.2020, the Plaintiff executed a registered General Power of Attorney (GPA) authorizing the Defendant firm to develop the construction work over the suit property and to obtain permission from the appropriate authority as and when required. He thereafter delivered possession of the suit land to the Defendant by demolishing the existing residential R.S.A. No.174 of 2024 Page 4 of 53 house thereon. The Managing Partner of the Defendant firm namely, Bibhuti Bhusan Patra died on 14.12.2021 and by letter dated 21.7.2021, his widow intimated that she had been appointed as Managing Partner and two ordinary partners had been incorporated under a Deed of Reconstitution of the firm. It was further given out that the new management had accepted in principle to honour all the official agreements executed by the deceased Managing Partner and committed to develop the suit land into a multi-storied apartment complex after obtaining required approval from the BMC and ORERA. Nothing was however, said regarding payment of the balance amount save and except that they would try and pay off the share given earlier depending on the financial situation of the firm. The Plaintiff was surprised that the permission of the authority had not been obtained despite lapse of one year and there was no clear-cut indication as to when the balance amount would be paid to him. On R.S.A. No.174 of 2024 Page 5 of 53 09.8.2021, the Plaintiff replied to the letter of the Defendant informing that despite direction of the BMC no action had been taken by the Defendant for obtaining permission and yet without obtaining ORERA Registration Certificate, the Firm was collecting amounts from the intending purchasers by advertising the project, which is in violation of the rules and regulations. The Defendant in its reply dtd.17.8.2021 intimated that delay was caused in obtaining legal heir certificate and reconstitution of the firm as also due to the impact of COVID-19 Pandemic. Defendant further claimed to have paid Rs.3,20,00,000/- as against Rs.2,80,00,000/-. The Plaintiff claims that an amount of Rs.40,00,000/- paid by the deceased-Bibhuti Bhusan Patra by way of a post dated cheque, on being presented was dishonoured due to insufficient funds. All these facts created reasonable doubt in the mind of the Plaintiff as regards honoring of the commitment by the Defendant firm and therefore, he filed the suit R.S.A. No.174 of 2024 Page 6 of 53 claiming the relief of declaration that the agreement dated 7.8.2020 and 8.8.2020 and the GPA dtd.3.9.2020 as null and void, with recovery of possession and permanent injunction. The Plaintiff also expressed his readiness and willingness to return the advance amount of Rs.2,80,00,000/- to the defendant.

Case of the Defendant

4. The Defendant questioned the maintainability of the suit on the ground that the same had been filed by a person without authority. The facts relating to the execution of the Development Agreement and the GPA by the Plaintiff in favour of the deceased Managing Partner was admitted. It was further stated that before execution of the agreement with the Defendant, the Plaintiff had executed a registered Agreement for Sale on 4.12.2017 in favour of another firm namely, M/s. Cottage Design Private Ltd. for a consideration of Rs.12,60,00,000/-and had received Rs.1,00,000/-. As R.S.A. No.174 of 2024 Page 7 of 53 the Agreement could not materialize, it was cancelled on 01.6.2020 through a registered document. As regards the Development Agreement executed with the Plaintiff, the terms were admitted as also the fact of payment of Rs.2,80,00,000/- to the Plaintiff till 30.7.2020. The Defendant further claimed that a sum of Rs.20,00,000/- was paid to the Plaintiff in the form of cheque on 07.11.2020 and Rs.20,00,000/- also in the form of cheque on 04.12.2020, which was encashed by the Plaintiff but suppressed in the plaint. It is the further case of the Defendant that there was no delay on the part of the firm but because of unavoidable reasons like the onset of Pandemic and death of the Managing Partner, some delay was caused. Nevertheless, the defendant on reconstitution of the firm submitted building plans before the BMC, which required compliance of several conditions which the defendant complied and deposited the requisite fees. The BMC thereafter approved the building plan. R.S.A. No.174 of 2024 Page 8 of 53 The Defendant also submitted application before the ORERA for approval of the project but because of order of status quo by the trial Court, such application was rejected. According to the Defendant, there is no fault or latches on its part to perform the part of the contract and no intention of not paying the agreed amount within the period fixed by the agreement. As regards dishonor of the cheque, it is the Defendant's case that the deceased Managing Partner had issued three security cheques and two post dated cheques to the Plaintiff of which the Plaintiff was to encash only two cheques of Rs.20 lakhs each and the remaining three cheques were to be returned to the Defendant firm, but the Plaintiff deliberately deposited one of the said cheques amounting to Rs.40,00,000/- on 17.8.2021, which came to be dishonoured. This, according to the Defendant, shows the malafide intention and oblique motive of the Plaintiff to harass the Defendant firm. The building plan of the project R.S.A. No.174 of 2024 Page 9 of 53 had been approved but approval of ORERA could not be obtained because of order of status quo. On such averments, the Defendant prayed for dismissal of the suit.

Issues and Findings of the trial Court

5. Basing on the rival pleadings, the trial Court framed the following issues for determination;

(i) Whether the suit is maintainable?

(ii) Whether there is cause of action for the plaintiff to file the suit?

(iii) Whether the suit is barred by limitation?

(iv) Whether the suit is grossly undervalued ?

(v) Whether the plaintiff is entitled to a decree declaring the development agreement dated 07.08.2020, the supplementary agreement dated 08.08.2020 and the GPA dated 03.09.2020 as null and void?

(vi) Whether the plaintiff is entitled to a decree directing the defendant to handover the vacant possession of the suit land to him?

(vii) Whether the plaintiff is entitled to a decree for permanent injunction restraining the defendant, its men, agents, followers and assigns from interfering in any way with his peaceful possession over the suit land or any part thereof and from changing the nature and character of the same after possession is recovered on his behalf?

(viii) To what other relief(s) the parties are entitled? R.S.A. No.174 of 2024 Page 10 of 53

6. Issue Nos.(v), (vi) and (vii) being the pivotal issues, were taken up for consideration by the trial Court at the outset. After analyzing the oral and documentary evidence on record, the trial Court observed that as there was nothing clear and specific as to when the remaining amount would be paid by the Defendant as per the Supplementary Agreement, the same became the prime concern for the Plaintiff to file the suit. It was further held that the grounds for explaining the delay are not sufficient, when the supposed performance of the obligations under the Agreements are taken into consideration in the face of the time stipulated in the supplementary agreement for payment of plaintiff's balance consideration. Observing thus, the trial Court held that mere admission of the executed agreement and power of attorney cannot prevent the Plaintiff to repudiate the agreements and revoke the power of attorney executed R.S.A. No.174 of 2024 Page 11 of 53 by him. Since the Defendant failed to give any concrete assurance as to the payment of the balance amount, but admittedly collected money from potential purchasers before registration of the housing complex under the ORERA rules, the Plaintiff is justified to get out of the agreements and the power of attorney. Though the approval of BMC had been obtained but till filing of the suit the Defendant had not got any project registered under the ORERA. It was therefore held that the Defendant willfully neglected to carry out the proposed building plan intending to make immense profit out of the project without giving any firm assurance for making payment of the remaining consideration amount to the Plaintiff for which the Plaintiff is entitled to terminate the agreements and revoke the power of attorney. It was also held that the contract was indefinite and had become impossible of performance. On such findings basically the issues were answered in favour of the Plaintiff. R.S.A. No.174 of 2024 Page 12 of 53

On Issue No.3 regarding limitation the trial Court held that the suit falls under the residuary Article 113 of the Limitation Act. Since the suit was filed before the time stipulated in the agreement, it was held to be in time.

As regards maintainability of the suit on the ground of its non-presentation by the authorized person, the trial Court held that the same is a curable defect and cannot be fatal to the suit more so as the defendants have themselves substantially admitted the contentions made in the plaint. Moreover, the Plaintiff had disclosed his intention to engage the authorized agent for the purpose of the suit.

On Issue No.4, the trial Court held that the suit being one for declaration along with consequential relief, the Plaintiff valued the same at Rs.1,00,000/- and there was no objection by the office at the initial stage. With such findings being rendered on the main issues, the remaining issues were answered R.S.A. No.174 of 2024 Page 13 of 53 accordingly in favour of the Plaintiff. The suit was thus decreed by granting the relief claimed by the Plaintiff with further direction to him to refund Rs.3.2 crores to the Defendant with simple interest @ 12% per annum to be calculated from 01.5.2020 till payment.

7. Being aggrieved, the Defendant carried the matter in appeal, which was heard and disposed of by learned 4th Addl. District Judge.

Findings of the 1st Appellate Court

8. An application for permission to adduce additional evidence was filed by the Defendant before the 1st Appellate Court under Order 41, Rule 27 of C.P.C. The 1st Appellate Court held in the impugned judgment that the Defendant could not prove that it had exhibited due diligence in obtaining and presenting the same during trial even though said documents were available at the relevant time. The prayer for adducing additional evidence was thus R.S.A. No.174 of 2024 Page 14 of 53 rejected. The 1st Appellate Court took note of the findings of the trial Court and also considered the oral and documentary evidence on record. It was held that till institution of the suit, the Defendant firm had not made any application for approval of the project before the ORERA nor there is any explanation for non- submission of the same prior to the institution of the suit. This therefore, amounts to non-performance of its contractual obligation by the Defendant within a considerable period of more than a year of the execution of the agreement. It was further held that as the Agreements and the GPA had been declared void due to the fault of the Defendant firm, it is not entitled to any compensation for the loss sustained by it due to its own fault. On the question of authority of the person filing the suit on behalf of the Plaintiff, the 1st Appellate Court also held that it was a mere procedural defect and irregularity which is curable in nature and that the same cannot be allowed to defeat substantive R.S.A. No.174 of 2024 Page 15 of 53 rights of the plaintiff. On such findings, the 1st Appellate Court did not find any reason to interfere with the judgment and decree of the trial Court and the appeal was thus dismissed.

9. Being further aggrieved, the Defendant has filed the present appeal, which was admitted on the following Substantial Questions of Law;

(i)Whether the Plaint which has been signed, verified, sworn on oath and presented by Plaintiff's Agent Akshaya Kumar Parija is maintainable when the said Agent. Akshaya Kuamr Parija has admitted in course of his evidence that he has no personal knowledge about the contents of the Plaint nor he has any personal knowledge about the tractions under the Development Agreement dated 07.08.2020 (Ext. A/Ext-8) and Supplementary Agreement dated 08.08.2020 (Ext.B/Ext.9) between the Plaintiff and the Defendant Firm ?

(ii)Whether there is any cause of action for the Plaintiff to file C.S. No 1941 of 2021 on 14.09.2021 before expiry of the stipulated timelines for completion of construction of the proposed building project specified under the Development Agreement dated 07.08.2020 (Ext.A/Ext.8) which expires on 15.03.2025 ? AND Whether there is any cause of action for the Plaintiff to file C.S. No 1941 of 2021 on 14.09.2021 alleging inter alia non-payment of total consideration amount of the suit property to him, before expiry of the stipulated timelines for completion of payment by the Defendant Firm to the Plaintiff as specified under the R.S.A. No.174 of 2024 Page 16 of 53 Supplementary Agreement dated 08.08.2020 (Ext.B/Ext.9) which expires on 15.03.2024, particularly when the Plaintiff has already received Rs.3.20 crores from the Defendant Firm?

(iii)Whether the Issue No.(iii) as framed by the learned Trial Court to the effect, "Whether the suit is barred by limitation? is to be re-casted as "Whether the suit is prematurely filed?"

(iv) Whether the finding of the learned First Appellate Court to the effect. "As per Section 55 of the Indian Contract Act, the Defendant Firm has not taken prompt steps for registration and project approval, even though considerable period of more than one year has elapsed not taken any steps for payment of balance consideration amount to the plaintiff", is legally sustainable particularly when the documents exhibited show that there is no delay on the part of the Defendant-Appellant Firm in this regard?

(v) Whether the findings of the learned Trial Court under Paragraph-13 of its judgment is liable to be set aside as the same are beyond pleadings and materials on record and based upon surmises and conjectures?

vi. Whether the findings of the learned First Appellate Court to the effect that "the application of the Defendant to admit documents under Order 41 Rule 27 and to mark the same as exhibits suffers from want of due diligence and for such the same is rejected", is legally sustainable or the same is liable to set aside?"

Submissions on substantial questions of law and findings.

10. Heard Mr. Bidyadhar Mishra learned Senior counsel appearing with Mr. T. R. Biswal for the Defendant-Appellant, Mr. Bansidhar Baug, learned R.S.A. No.174 of 2024 Page 17 of 53 counsel for the Plaintiff-Respondent No.1 and Mr. Bhaskar Panda, learned counsel appearing for the Respondent Nos.2 and 3.

Substantial Question No.(i).

11. Learned Senior counsel Mr. Bidyadhar Mishra submits that the suit was filed by Prabir Kumar Das but the plaint was presented by his purported agent namely Akshaya Kumar Parija. As per the different provisions of C.P.C. the plaint can only be presented by the Plaintiff or by a person duly authorized by him, who is acquainted with the facts of the case. In the instant case, the plaint was signed, verified and affirmed on oath by Akshaya Kumar Parija, who being examined as a witness (P.W.2) during trial admitted that he was only authorized to file the suit as the Plaintiff was residing in USA and was prevented from travelling to India due to COVID restrictions. He further admitted that he did not have any personal knowledge about the agreements. According to learned R.S.A. No.174 of 2024 Page 18 of 53 Senior counsel this is fatal to the suit. Moreover, the authorization letter dtd.12.9.2021 is not in proper form nor contains the approval of the Indian Embassy at USA nor certified by the Collector and District Magistrate, Khurdha. The required fees were also not paid nor the authorization letter was notarized by the Notary Public in USA. As such, the authorization letter appended to the plaint is no authorization in the eye of law. The original authorization letter dtd.12.9.2021 was notarized by the Notary Public of USA on

15.9.2021, which is a day after the filing of the suit and therefore, as on the date of filling of the suit, there was no valid authorization. Mr. Mishra has relied upon the following judgments in support of his contention as above;

(A)State Bank of Travancore v.

Kingston Computers India Private Limited; (2011) 11SCC 524.

(B)A. C. Narayanan v. State of Maharashtra and another, (2014) 11 SCC 790.

R.S.A. No.174 of 2024 Page 19 of 53

            (C)Manisha Mahendra          Gala and
           others    Vs.     Shalini     Bhagwan
           Avatramani and others;
           (2024) 4 SCR 357.

12. Per contra, Mr. Bansidhar Baug would argue that the authorized person of the Plaintiff not only signed the plaint but also verified the same and furnished an affidavit stating that he is authorized by the Plaintiff and subsequently he filed an authorization of the Plaintiff, which was later certified by the embassy. Said authorization not being a power of attorney is not required to be written on a Stamp Paper nor any fees are required to be paid. Even otherwise, mere defect in signing of the pleading, verification and furnishing of affidavits are curable defects, which cannot be used to defeat the substantive rights of the parties. In support of his contentions Mr. Baug has relied upon the following case laws;

R.S.A. No.174 of 2024 Page 20 of 53

(A)Uday Shankar Triyar v. Ram Kalewar Prasad Singh and another, (2006) 1 SCC 75.

(B)United Bank of India v. Naresh Kumar and others, (1996) 6 SCC 660.

(C)H.D. Revana v. G. Puttaswamy Gowda and others; (1999) 2 SCC 217.

13. In order to appreciate the contentions advanced by the parties, it would be apposite to first refer to the following relevant statutory provisions governing institution of suits and pleadings etc. "Section 26 of C.P.C.-Institution of suits-(1) Every suit shall be instituted by the presentation of a plaint or in such other manner as may be prescribed.

(2) In every plaint, facts shall be proved by affidavit. Order 3, Rule (2) of C.P.C.- Recognized agents - The recognized agents of parties by whom such appearances, applications and acts may be made or done are -

(a) persons holding power of attorney, authorizing them to make and do such appearances, applications and acts on behalf of such parties;

(b) persons carrying on trade or business for and in names of parties not resident within the local limits of the jurisdiction of the Court within which limits the appearance, application or act is made or done, in matters connected with such trade or business only, where no other agent is expressly authorised R.S.A. No.174 of 2024 Page 21 of 53 to make and do such appearances, applications and acts.

Order 4, Rule (1) of C.P.C.- Appointment of pleader-(1) No pleader shall act for any person in any Court, unless he has been appointed for the purpose by such person by a document in writing signed by such person or by his recognised agent or by some other person duly authorised by or under a power-of-attorney to make such appointment. Order 6, Rule (14) of C.P.C.- 14-A. Address for service of notice (1) Every pleading, when filed by a party, shall be accompanied by a statement in the prescribed form, signed as provided in Rule 14, regarding the address of the party.

(2)Such address may, from time to time, be changed by lodging in the Court a form duly filled up and stating the new address of the party and accompanied by a verified petition.

(3)The address furnished in the statement made under Sub-rule (1) shall be called the "registered address" of the party, and shall, until duly changed as aforesaid, be deemed to be the address of the party for the purpose of service of all processes in the suit or in any appeal from any decree or order therein made and for the purpose of execution, and shall hold good, subject as aforesaid, for a period of two years after the final determination of the cause or matter.

(4)Service of any process may be effected upon a party at his registered address in all respects as though such party resided thereat.

(5)Where the registered address of a party is discovered by the Court to be incomplete, false or fictious, the Court may, either on its own motion, or on the application of any party, order-

(a) in the case where such registered address was furnished by a plaintiff, stay of the suit, or R.S.A. No.174 of 2024 Page 22 of 53

(b) in the case where such registered address was furnished by a defendant, his defence be struck out and he be placed in the same position as if he had not put up any defence.

(6)Where a suit is stayed or a defence is struck out under Sub- rule (5), the plaintiff or, as the case may be, the defendant may, after furnishing his true address, apply to the Court for an order to set aside the order of stay or, as the case may be, the order striking out the defence.

(7)The Court, if satisfied that the party was prevented by any sufficient cause from filing the true address at the proper time, shall set aside the order of stay or order striking out the defence, on such terms as to costs or otherwise as it thinks fit and shall appoint a day for proceeding with the suit or defence, as the case may be.

(8) Nothing in this rule shall prevent the Court from directing the service of a process at any other address, if, for any reason, it thinks fit to do so. Order 6, Rule (15) of C.P.C.- Verification of pleadings - (1) Save as otherwise provided by any law for the time being in force, every pleading shall be verified at the foot by the party or by one of the parties pleading or by some other person proved to the satisfaction of the Court to be acquainted with the facts of the case.

(2) The person verifying shall specify, by reference to the numbered paragraphs of the pleading, what he verifies of his own knowledge and what he verifies upon information received and believed to be true.

(3)The verification shall be signed by the person making it and shall state the date on which and the place at which it was signed.

(4)The person verifying the pleading shall also furnish an affidavit in support of his pleadings." R.S.A. No.174 of 2024 Page 23 of 53

14. From a conjoint reading of the afore quoted provisions, it is clear that a plaint can be presented by a person authorized by the plaintiff to do so. Further, such person must be proved to the satisfaction of the Court to be acquainted with the facts of the case. In the instant case, objection has been raised by the defendants to the plaint on the ground that the authorized person namely, Akshaya Kumar Parija being examined as a witness (P.W.2) admitted that he had no personal knowledge about the Development Agreement dated 7.8.2020 and Supplementary Agreement dated 8.8.2020.

15. After going through the plaint averments and the evidence of P.W.2, this Court is of the considered view that the requirement of the statute as per Order 6, Rule 15 of C.P.C. is for the authorized person to be acquainted with the 'facts of the case'. In his examination-in-chief, P.W.2 stated that on 12.9.2021 R.S.A. No.174 of 2024 Page 24 of 53 the Plaintiff was in USA and by a letter of authorization, he authorized him (P.W.2) to institute the present case and as per his (Plaintiff) instruction, the plaint has been drafted. In cross-examination, he admitted that he does not have any personal knowledge about the Development Agreement (Ext.A) and Supplementary Agreement (Ext.B). Plainly understood, this cannot be understood to mean that P.W.2 was not aware of the facts of the case though he was not aware of the agreements in questions. The above statement cannot be stretched to definitely hold that he was not aware of the facts leading to filing of the suit. Therefore, merely because he lacked personal knowledge about the agreements in question, it cannot be definitely held that he had no knowledge about the facts of the case on the whole.

16. Coming to the case laws cited by both parties, it is seen that in the case of State Bank of Travancore R.S.A. No.174 of 2024 Page 25 of 53 (supra), the suit was filed by a person without requisite authority of the Board of Directors. Such is obviously not the case here. In the case of A.C. Narayanan (supra) referring to its earlier judgment passed by the Supreme Court in the case of Janki Vashdeo Bhojwani v. IndusInd Bank Ltd.;1 the Supreme Court was dealing with the case of a power of attorney holder and held that a complaint filed by a power of attorney holder on behalf of the original plaintiff is maintainable provided he has personal knowledge of the transaction in question. Since this Court, on facts narrated above, has held that the authorized person cannot be treated as a person not acquainted with the facts of the case, the judgment cited would not be applicable. In the case of Manisha Mahendra Gala (supra) reliance was again placed on Janki Vashdeo Bhojwani (supra) and the question under consideration was whether a power of attorney 1 (2005) 2 SCC 217 R.S.A. No.174 of 2024 Page 26 of 53 holder, who had no knowledge regarding transaction would be examined as a witness. Said case would have no application to the facts of the present case.

17. Coming to the case laws cited by Mr. Baug, in Uday Shankar Triyar (supra), the Supreme Court held that non-compliance with any procedural requirement relating to a pleading should not entail automatic dismissal or rejection unless the relevant statute or rule so mandates. Further, procedural defects and irregularities, which are curable, should not be allowed to defeat substantive rights or to cause injustice. Same view was taken in the case of United Bank of India (supra) as also in H.D. Revanna (supra).

18. From the foregoing narration, it is seen that firstly, from the materials and evidence on record, this Court is not inclined to accept the contention that the authorized person (P.W.2) was not acquainted with the R.S.A. No.174 of 2024 Page 27 of 53 facts of the case so as to hold that there was violation of the provision under Order 6 Rule 15 of C.P.C. Secondly, assuming that P.W.2's admission of ignorance regarding the agreements in question can be stretched to hold that he was not acquainted with the 'facts of the case' and there was procedural irregularities in the letter of authorization, the same being curable in nature cannot be a ground to non-suit the plaintiff. In other words even assuming there was some defect or irregularity, the same being curable cannot come in the way of deciding the substantive rights of the parties.

The Substantial Question No.(i) is therefore, answered accordingly against the defendant-appellant. Substantial Questions Nos. (ii) & (iii).

19. Mr. Mishra learned Senior counsel has referred to different clauses of the Development Agreement (Ext.A), Supplementary Agreement (Ext.B) as also the General Power of Attorney (Ext.2) in this context. He R.S.A. No.174 of 2024 Page 28 of 53 submits, as per Clause-14 of Ext.A, the Plaintiff agreed to receive Rs.2.80 crores from the Defendant's Firm and as per Clause-7 it was stipulated that the project shall be completed within 36 months with a grace period of 6 months from the date of final approval or the plan. The BMC gave its approval (Ext.B) on 06.9.2021 and therefore, the stipulated period is due to expire on 15.3.2025. Mr. Mishra further submits, as per the Supplementary Agreement (Ext.B), the Plaintiff agreed to receive Rs.15.15 crores in lieu of his 50% share after adjustment of the amount of Rs.2.80 crores already paid with the understanding that the balance amount of Rs.12.35 crores would be paid within 24 months with the grace period of 6 months from the date of approval/registration of the project by BMC and ORERA. BMC accorded approval on 16.9.2021 and therefore, the period of 30 months expired on 15.3.2024. The defendant further paid Rs.40 lakhs in between 8.8.2020 i.e. the date of execution of the R.S.A. No.174 of 2024 Page 29 of 53 Supplementary Agreement and 14.9.2021. Therefore, the stipulated period was due to expire on 15.3.2024. The Plaintiff however, filed the suit much prior to the period stipulated for completion of the project i.e. 15.3.2025 and for payment of consideration i.e. 15.3.2024. Therefore, there was no cause of action for the plaintiff to file the suit either before 15.3.2024 or 15.3.2025.

20. Per contra, Mr.Baug would contend that issues are framed on the basis of pleadings. In the instant case, there is no averment in the written statement of the Defendant that the suit was prematurely filed. Therefore, no issue was framed by the trial Court. Further, whether the suit was prematurely filed is a mixed question of fact and law, which would require evidence for being answered. Therefore, it cannot be treated as a substantial question of law. Mr. Baug further submits that admittedly, the Defendant had R.S.A. No.174 of 2024 Page 30 of 53 not obtained registration from the ORERA as per the rules. Section 3 of the Real Estate (Regulation and Development) Act, 2016 mandates that no promoter shall advertise, market, book, sell or offer for sale or invite person to purchase in manner, any plot, apartment or building as the case may be, before registration of the project with the ORERA. In the instant case, however, the Defendant firm, in complete violation of Section 3 of the Act raised funds from intending purchasers and advertised the same. This is also a clear breach of Clause-23 of the Agreement vide Ext.8. The Plaintiff was therefore, constrained to file the suit even though the period stipulated in the agreements had not expired. In the case of Rajesh Kumar v. Anand Kumar and others2, it was held as follows;

"The Courts will also frown upon suits which are not filed immediately after the breach/refusal. The fact that the limitation is three years does not mean 2 2024 (6) SCALE 450 R.S.A. No.174 of 2024 Page 31 of 53 that a purchaser can wait for one or two years to file a suit and obtain specific performance."

21. From the materials and evidence on record, it is evident that the Defendant firm had accepted money from prospective purchasers at a time when the registration of the project had not been obtained from the ORERA. Though it is stated that the application for registration was not considered because of an order of status quo subsisting at the relevant time yet, fact remains that in such a situation, the Defendant could not have advertised the project to attract potential customers or to accept deposits from them. Clause-23 of the Development Agreement is clear that the project can be advertised only after obtaining registration. This is therefore, a clear case of breach of contract. Such being the fact, the Plaintiff was well within his right to seek necessary declaration by filing the suit even before expiry of the period stipulated in the Agreement R.S.A. No.174 of 2024 Page 32 of 53 in view of the ratio decided in the case of Rajesh Kumar (supra).

Substantial Question Nos.(ii) and (iii) are therefore, answered accordingly against the Defendant- Appellant.

Substantial Question No.(iv).

22. According to Mr. Bidyadhar Mishra, learned Senior counsel for the appellant, the finding of the 1st Appellate Court that as per Section 55 of the Indian Contract Act, the Defendant firm has not taken prompt steps for registration and project approval, even though considerable period of more than one year has elapsed nor taken any steps for payment of balance consideration amount to the Plaintiff is not legally sustainable in view of the fact that the evidence on record clearly shows the steps taken by the Defendant firm to obtain ORERA Registration Certificate but because of factors beyond its control such as death of the Managing Partner and onset of R.S.A. No.174 of 2024 Page 33 of 53 COVID-19 Pandemic, some delay was caused. Therefore, the finding that the Defendant has not performed its contractual obligation within a considerable period of more than one year of the execution of the agreements is also not legally sustainable. In the instant case, the time period for completion of the project was due to expire on 15.3.2025 and that for payment of the balance amount was 15.3.2024. Both the dates not having expired, Section 55 of the Contract Act would not be applicable. That apart, it has not been proved that the terms of the agreements are uncertain so as to be declared void as per Section 29 of the Contract Act.

23. Per contra, Mr. Baug would argue that the original agreements were executed in favour of M/s.Creative Builders and Consultants, a registered Partnership firm through its Managing Partner Bibhuti Bhusan Patra. As per the definition clause of R.S.A. No.174 of 2024 Page 34 of 53 the agreement vide Ext.8/Ext.A, the Builder-cum- Developer shall include its legal heirs, successors in interest or assignees. At the relevant time, the Partnership firm was comprised of two Partners- Bibhuti Bhusan Patra and his wife Nirupama Patra. As per Section 7 of the Indian Partnership Act when there is no provision in the contract between the Partners for the duration of their Partnership firm or the determination of the firm, it must be treated as a Partnership-at-will. As such, on death of the one of the Partners the Partnership firm gets automatically dissolved. Mr. Baug further argues that the Partnership firm cannot run with one Partner only as in such event, it would became a proprietorship concern. Mr. Baug has referred to the provision of Section 201 of the Contract Act in this regard and Section 42 (c) of the Partnership Act. Though the Partnership was purportedly reconstituted, according to Mr. Baug, it must be treated as a new entity R.S.A. No.174 of 2024 Page 35 of 53 altogether having no relationship with the earlier Partnership firm nor it can be said to have stepped into the shoes of the earlier firm. Therefore, with the dissolution of the original firm w.e.f. 14.12.2020, the GPA vide Ext.2 stood automatically terminated so also the Development and Supplementary Agreements. Since those documents have the potential of creating problem in future with regard to the right, title and interest of the Plaintiff over the suit land, he was constrained to file the suit seeking necessary declaration in view of Section 31 of the Specific Relief Act.

24. There is no dispute that the original Partnership firm was comprised of two Partners one of whom namely, Bibhuti Bhusan Patra died on 14.12.2020. The contentions advanced by Mr. Baug, as noted above, contradict the stand of the Plaintiff as laid in the plaint. Firstly, the above plea was never raised in R.S.A. No.174 of 2024 Page 36 of 53 the plaint and secondly, the Defendant firm has been described in the following manner;

"M/s.Creative Builders and Consultants, a registered Partnership Firm represented through its Managing Partner Nirupama Patra, W/o.Late Bibhuti Bhusan Patra, hav ing its registered office at Plot No.209/A, Sagheed Nagar, P.O./P.S.-

Saheed Nagar, Bhubaneswar, Dist-

Khordha."

25. If the plaint averments are read plainly, it would be evident that the Defendant has admitted the subsequent developments and has accepted the newly constituted Partnership firm as well as the existence of the agreements with the Defendant firm. In other words, the Plaintiff himself accepts in a way that the newly constituted firm had stepped into the shoes of the original firm. The contentions raised before this Court were significantly never raised either before the trial Court or before the 1st Appellate Court and therefore, the same are not acceptable at this stage. R.S.A. No.174 of 2024 Page 37 of 53

26. Be that as it may, even assuming that the Agreements and GPA still subsist, the question is, can the Plaintiff be held entitled to the relief claimed on the face of non-expiry of the periods for completion of the project and payment of the balance amount in the agreements. As has already been held hereinbefore, apart from raising the plea of non-performance of the terms of the contract, the Plaintiff has also taken a specific plea that the terms of the contract were violated. It would be proper at this stage to refer to the relevant provisions of the contract i.e., Clause 23 of the Agreement dated 7.8.2000 (Ext.8/Ext.A), reads as follows;

"That both the parties hereto agreed that the SECOND PART the Builder-cum-Developer is free to advertise, market for the proposed apartment/residential/commercial units in the said project as per prescribed rules of Orissa Real Estate Regulatory Authority (ORERA), over the land and receive advance from intending purchasers, execute agreements for the same at the risk of SECOND PART the Builder-cum-Developer only and the land owner will not bear any civil or financial liability for the same."

R.S.A. No.174 of 2024 Page 38 of 53

27. Chapter-II of the Real Estate (Regulation and Development) Act, 2016 deals with registration of Real Estate Project and registration of Real Estate Agents. Sub-section (1) of Section 3 thereof reads as follows;

Section 3(1)- Prior registration of real estate project with Real Estate Regulatory Authority.(1) No promoter shall advertise, market, book, sell sale, or invite persons to purchase in any manner any plot, apartment or building, as the case may be, in any real estate project or part of it in any planning area, without registering the real estate project with the Real Estate Regulatory Authority established under this Act:

Provided that projects that are ongoing on the date of commencement of this Act and for which the completion certificate has not been issued, the promoter shall make an application to the Authority for registration of the said project within a period of three months from the date of commencement of this Act:

Provided further that if the Authority thinks necessary, in the interest of allottees, for projects which are developed beyond the planning area but with the requisite permission of the local authority, it may, by order, direct the promoter of such project to register with the Authority, and the provisions of this Act or the rules and regulations made thereunder, shall apply to such projects from that stage of registration."

28. Chapter-VIII relates to offences, penalties and adjudication under which Section 59 is the penal R.S.A. No.174 of 2024 Page 39 of 53 provision for non-registration under Section 3, which reads as follows;

"Section 59-Punishment for non-registration under section 3- (1) If any promoter contravenes the provisions of section 3, he shall be liable to a penalty which may extend up to ten per cent of the estimated cost of the real estate project as determined by the Authority.

(2) If any promoter does not comply with the orders, directions issued under sub-section (1) or continues to violate the provisions of section 3, he shall be punishable with imprisonment for a term extend up to three years or with fine which may extend up to a further ten per cent of the estimated cost of the real estate project, or with both.

This clause relates to the punishment for non- registration under clause 3.

Sub-clause (1) provides that if any promoter contravenes the provisions of clause 3, he shall be liable to a penalty which may extend up to ten per cent of the estimated cost of the real estate project as determined by the Authority.

Sub-clause (2) provides that if any promoter does not comply with the orders, decisions or directions issued under sub-section (1) or continues to violate the provisions of clause 3, he shall be punishable with imprisonment for a term which may extend up to three years or with fine which may extend up to a further ten per cent of the estimated cost of the real estate project, or with both. (Notes on Clauses)."

29. Coming to the facts of the case, it is the specific case of the Plaintiff that the Defendant firm without obtaining ORERA Registration Certificate collected money from the intending purchasers by advertising R.S.A. No.174 of 2024 Page 40 of 53 the project in violation of the rules and regulations prescribed by ORERA. It would be profitable to refer to the specific pleadings of the parties in this regard. Paragraph-8 of the plaint is relevant and is extracted herein below;

"That, after receiving the letter from the defendant the plaintiff became great shocked that even after lapse of almost one (1) year the defendant has not able to obtain permission from the authority and there is no clear specific as to when the defendant is going to pay the balance amount which he is entitled to get. Soon after receiving the letter the plaintiff on dtd.09.08.2021 through email tendered reply to the defendant stating therein that 'the BMC Vide its letter no 2217 dated 13.01.21 has directed you to comply all necessary requirements as per the decision taken in 2nd DP and BP Committee meeting but, till date no action has been taken from your side for obtaining permission. Besides that it is learnt that without obtaining ORERA registration certificate, the defendant Firm are collecting amount from the intending purchasers by advertising the project which is complete violation of the rule & regulation prescribed by ORERA. All the acts done by the defendant's amounts to implied refusal to perform the promise under the agreements and entitling the plaintiff to rescind the contract. Even such questionable, illegal and unconscious mechanism of the defendant act will not only put the project into litigation but the Plaintiff will be dragged without any fault to such litigation which will cause immense hardship for him. This action of the defendant is done in a calculated manner to siphon off the whopping amount putting the plaintiff to irreparable loss and to grab the suit land without giving anything to the plaintiff. It is hereby stated that the Defendant Firm is under a lawful obligation pay R.S.A. No.174 of 2024 Page 41 of 53 the rest amount of Rs.12,35,00,000/- within a period of 24 months with a grace period of six months from the date of approval/registration of the project by the competent authority i.e BMC and ORERA. It does not mean for an indefinite period that the defendant at its own will & wish will obtain the required permission and thereafter the Plaintiff will be counting the date for getting the money as per the agreement."

30. In the written statement filed by the Defendant, the above referred plaint averments have been answered in the following manner;

"That, the averment made in paragrpah-8 is absolutely false and baseless designed for the purpose of the case, hence denied. There is nothing to shock after receipt of the letter of the Defendant Firm rather he will happy that the Defendant Firm trying to pay off the share of the owner even before the contractual date.

That, be it stated that the Defendant Firm never delayed the matter rather during the pandemic period and demise of the managing partner on 14.12.2020 trying desperately to reconstituted the Firm and there after submitted the building plan before the BMC with immediate effect.

That, BMC vide letter No.2217, dt.13.01.2021 directed to comply about 6 conditions and this defendant firm with much difficulties due to Covid-19 restriction collected NOC and compliances as required by the BMC and deposited the same along with requisite fees of Rs.64,72,556/- on 25.08.2021 and thereafter the BMC approved the building plan.

That, after obtaining the building plan the defendant firm deposited the necessity application for project approval before the ORERA but unfortunately the plaintiff submitted an order of status quo passed by this Court before the R.S.A. No.174 of 2024 Page 42 of 53 ORERA authority and according the application for approval of project has been rejected."

31. Thus, the specific allegation that the Defendant firm had advertised the project and had collected money from the intending purchasers has not been specifically denied. Rather, it is admitted that there was no registration obtained from the ORERA. Further, Defendant No.1, being examined as D.W.1, apart from admitting in her evidence that the project was not registered with ORERA also clearly admitted of having received Rs.35 lakhs from her nephew (husband's brother) and also described him as 'prospective buyer'. Of course, she also said that said Rs.35 lakhs was paid as part of Rs.2.8 crores paid to the plaintiff but, as held by both the Courts below, there is no evidence in support of such stand. Further, both the Courts below have taken note of the above admission of D.W.1 to hold that there was violation of the contractual obligations by the defendant firm. This Court, after R.S.A. No.174 of 2024 Page 43 of 53 considering the evidence independently, finds no reason to differ.

32. That apart, the plea that non-registration of the project with ORERA was because of an order of status quo passed by the trial Court is hardly acceptable in the absence of any order or communication made by the ORERA with the defendant firm indicating non- grant of the registration and more so, for the reason cited above. Even otherwise, accepting for a moment that non-registration of the project by ORERA was because of reasons beyond control of the defendant, it is immaterial in the present context because the same cannot justify collection of amount from the prospective buyer as mentioned above. This is a clear violation of Section 3 read with Section 59 of the RERA Act. There was specific contract between the parties as reflected in Clause-23 that the Defendant Firm was free to advertise and market for the proposed project 'as per prescribed rules of ORERA' and receive advance R.S.A. No.174 of 2024 Page 44 of 53 from intending purchasers, execute agreements for the same at its own risk and the land owner would not bear any civil or financial liability for the same. Therefore, this amounts to a clear breach of the contract. As has already been held hereinbefore, despite non-expiry of the period stipulated in the contract for its performance, the Plaintiff was justified in filing the suit in view of the breach of the contract. Though the 1st Appellate Court has not approached the issue from the above perspective yet, this Court concurs with its findings for the reasons indicated above.

The substantial question No.(iv) is therefore, answered against the Defendant.

Substantial Question No.(v).

33. In this context, in assailing the findings of the trial Court in paragraph-13 of its judgment, Mr. Mishra, learned Senior counsel would argue that the Defendant firm has spent huge amount of money for R.S.A. No.174 of 2024 Page 45 of 53 obtaining necessary NOCs and permissions from different authorities as also paid Rs.3.20 crores to the Plaintiff. As such, a substantial and subsisting interest was created in its favour for which no action prejudicial to its interest can be taken under Sections 202 to 205 of the Contract Act. In this regard, Mr. Mishra has relied upon a judgment of Supreme Court rendered in the case of T. Seshareddy (D) Rep. by his LR.-cum-Irrevocable GPA holder and Assignee Kotamreddy Kodandarami v. State of Karnataka and others (S.L.P (C) Nos.6354 and 6356 of 2020 decided on 9.11.2022).

34. Per contra, Mr. Baug would argue that the judgment of the trial Court having merged with the judgment of confirmation passed by the 1st Appellate Court, the findings in question of the trial Court under Paragraph-13 have lost its importance. Since the Second Appeal has been filed challenging the R.S.A. No.174 of 2024 Page 46 of 53 confirming judgment, the finding of the trial Court rendered under Paragraph-13 of the judgment cannot be considered as a substantial question of law.

35. After considering the rival submissions as above, this Court finds that the findings rendered by the trial Court have in fact merged in the judgment passed by 1st Appellate Court and the decree has been drawn up accordingly. Nevertheless, this Court having already held that the Plaintiff was justified to step out of the contract because of its breach, the said question automatically pales into insignificance not warranting any further attention of this Court much less as a substantial question of law.

The question so formulated is therefore, answered accordingly against the Defendant. Substantial Question No.(vi).

36. It has been argued by Mr. Mishra, learned Senior counsel that the finding of the 1st Appellate Court that the Defendant-Appellant had not proved R.S.A. No.174 of 2024 Page 47 of 53 any material to show that it had made due diligence for obtaining and presenting the evidence before the trial Court even though the same are of prior to the institution of the suit cannot be sustained because the documents in question could not be marked as exhibits as their presence could not be known at the relevant time which is a plausible plea having regard to the fact that the Managing Partner late Bibhuti Bhusan Patra was dealing with the records and had kept the same in his custody.

37. Per contra, Mr. Baug contends that the Defendant has not been able to prove that the documents in question were not within its possession during pendency of the suit being kept under lock and key. When it is the case of the Defendant that the same firm was reconstituted with one of the earlier Partners becoming the Managing Partner of the new firm, it is hardly believable that she would not have had access R.S.A. No.174 of 2024 Page 48 of 53 to all documents particularly when she has made all correspondence relating to the agreement repeatedly with the Plaintiff. Even otherwise, according to Mr. Baug, these documents would not improve the case of the Defendant in any manner nor are of such nature as are essentially required by the Court to give judgment in the case.

38. After considering the rival submissions as noted above, this Court holds that even if the requirement of exhibiting due diligence as contemplated under Order 41, Rule 27 of C.P.C. can be dispensed with, it is still necessary for the Defendant to prove that the documents in question are germane to the case and are essentially required for a just decision of the case. Even before this Court, the Defendant-Appellant has not been able to demonstrate that but for the documents sought to be adduced as additional evidence, the judgment would have been otherwise. R.S.A. No.174 of 2024 Page 49 of 53 This Court therefore, finds nothing wrong in the impugned judgment in so far as it relates to rejection of the application for adducing additional evidence.

The substantial question of law is answered accordingly.

39. Apart from the aforementioned substantial questions of law, an additional question was raised by the Appellant, i.e. valuation of the suit. According to the Defendant, the suit was grossly undervalued being valued at Rs.1,00,000/- only. The suit was filed on the pleading that the Plaintiff had received Rs.3.20 crores out of total consideration of Rs.15.15 crores. The trial Court brushed aside the objection relating to under valuation on the ground that no objection had been raised by the office and the 1st Appellate Court also erroneously held that there was no irregularity in this regard.

R.S.A. No.174 of 2024 Page 50 of 53

40. Per contra, Mr. Baug would argue that the question of valuation of a suit is a matter between the State and the Plaintiff over which the Defendant has no say. Even otherwise, the Plaintiff has valued the suit at Rs.1,00,000/- as per Section 7(iv) (c) of the Court Fees Act and accordingly paid ad valorem court fee of Rs.4185/-. Mr. Baug further argues that if the arguments of the Defendant were to be accepted then in order to prove its bonafides, the Second Appeal should have been valued accordingly on the valuation of Rs.15.15 crores and appropriate court fee should have been paid.

41. Without entering into the merits of the rival contentions as noted above, this Court finds that the suit was one for declaration. As such, the Plaintiff was within his right to value the suit as provided under Section 7 (iv) (c) of the Court Fees Act. This Court therefore, rejects the plea of undervaluation of the suit. R.S.A. No.174 of 2024 Page 51 of 53

Conclusion.

42. Thus, from a conspectus of the analysis of facts, evidence and law as discussed before, this Court finds that none of the questions raised in the appeal can be treated as substantial questions of law requiring adjudication by this Court as the 2nd Appellate Court. Moreover, the appeal being against a confirming judgment, it is the settled position of law that the 2nd Appellate Court would be slow to interfere unless it can be demonstrated that there was any patent illegality or perversity or finding against the weight of evidence on record so as to be persuaded to interfere. Reference in this regard may be had to the judgment of the Supreme Court in the case of S. Appadurai Nadar & another v. A. Chokalinga Nadar and another3;

43. For the foregoing reasons therefore, this Court finds no justified reason to interfere with the 3 (2007) 12 SCC 774 R.S.A. No.174 of 2024 Page 52 of 53 concurrent findings of facts rendered by both the courts below.

44. Resultantly, the appeal is found to be devoid of merit and is therefore, dismissed, but in the circumstances, without any cost.

.................................. Sashikanta Mishra, Judge Ashok Kumar Behera Signature Not Verified Digitally Signed Signed by: ASHOK KUMAR BEHERA Reason: Authentication Location: High Court of Orissa, Cuttack Date: 30-Sep-2024 11:02:04 R.S.A. No.174 of 2024 Page 53 of 53

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