Bombay High Court
Shapoorji Pallonji And Company Ltd vs Jignesh Shah And 7 Ors. And Shrikant ... on 25 September, 2018
Author: G.S. Patel
Bench: G.S. Patel
3-6-NMS89-18.DOC
Atul
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
NOTICE OF MOTION NO. 89 OF 2018
IN
SUIT NO. 1512 OF 2009
WITH
CHAMBER SUMMONS NO. 984 OF 2018
IN
EXECUTION APPLICATION NO. 1150 OF 2014
Shapoorji Pallonji & Company Ltd ...Plaintif
Versus
Jignesh Shah & Ors ...Defendants
AND
CHAMBER SUMMONS NO. 580 OF 2018
IN
EXECUTION APPLICATION NO. 1150 OF 2014
IN
SUIT NO. 1512 OF 2009
AND
CHAMBER SUMMONS NO. 646 OF 2018
IN
EXECUTION APPLICATION NO. 1150 OF 2014
IN
SUIT NO. 1512 OF 2009
Page 1 of 12
25th September 2018
::: Uploaded on - 26/09/2018 ::: Downloaded on - 27/09/2018 01:48:38 :::
3-6-NMS89-18.DOC
AND
CHAMBER SUMMONS NO. 647 OF 2018
IN
EXECUTION APPLICATION NO. 1150 OF 2014
IN
SUIT NO. 1512 OF 2009
Mr Janak Dwarkadas, Senior Advocate, with Tejas Gokhale, I/b
Dhaval Vussonji & Associates, for the Applicant/Plaintiff.
Mr Pradeep Sancheti, Senior Advocate, with Minal Chandnani,
i/b JS Chandnani, for the contesting Defendants Nos. 1 to 5.
Mrs Kavita Ambekar, Ist Assistant to the Court Receiver, present.
CORAM: G.S. PATEL, J
DATED: 25th September 2018
PC:-
1.There are a number of issues at various stage in this Execution Application. In the present order, I propose to segregate and identify each of these to the extent possible, and to issue directions where necessary. In doing this, I have followed the note submitted by Mr Dwarkadas for SPCo ("SPCo"). Mr Sancheti for the contesting Defendants Nos. 1 to 5 (collectively, "Crescent Builders") does not necessarily accept the correctness of SPCo's contentions, and this is noted.
Page 2 of 12 25th September 2018 ::: Uploaded on - 26/09/2018 ::: Downloaded on - 27/09/2018 01:48:38 ::: 3-6-NMS89-18.DOC I) AGREEMENTS OF SALE FOR 18 FLATS
2. By an order dated 22nd January 2015 on Court Receiver's Report No. 381 of 2014 (SC Gupte J), the Court Receiver was permitted to sell 18 flats in Crescent Tower. The draft of the Agreement of Sale for these 18 flats was also confirmed. The Court Receiver then called for bids. The successful bidders deposited 70% of the sale consideration with the Court Receiver. On 20th April 2018, the sale of these 18 flats was confirmed by an order made that day.
3. By an order dated 27th April 2018 made on Court Receiver's Report No. 115 of 2018, I noted that the parties were bound by a format approved in an earlier order dated 22nd January 2015 (in Court Receiver's Report No. 381 of 2014). With respect to the issue of being described as a 'Promoter' I directed the parties to mention in the agreement(s) that the issue is pending before the Court and would be subject to the orders of the Court.1
4. The necessary changes having been made in the agreement(s), SPCo submitted a revised draft to the office of the Court Receiver. On 7th September 2018, the Court Receiver has approved that draft. Ms Ambekar from the Court Receiver's office 1 This requires some explanation. On 1st May 2017, the Real Estate (Regulation and Development) Act, 2016 ("RERA") came into force. Following this, by an order dated 21st July 2017 in Court Receiver's Report No. 123 of 2017, Defendant No. 1, Jignesh Shah, was directed to be registered as the 'Promoter' and SPCo was directed to be registered as the 'Co-Promoter'. SPCo carried the order dated 21st July 2017 in Commercial Appeal No. 161 of 2017. Jignesh Shah filed Cross Appeal (L) No. 326 of 2017. Both appeals are pending.
Page 3 of 1225th September 2018 ::: Uploaded on - 26/09/2018 ::: Downloaded on - 27/09/2018 01:48:38 ::: 3-6-NMS89-18.DOC confirms that the finalized draft is being forwarded to the parties. The Court Receiver will place the matter for directions when required.
II) RECOVERY OF BALANCE CONSIDERATION FROM PURCHASERS OF THE 18 FLATS
5. Pursuant to Gupte J's order dated 22nd January 2015, mentioned above,, the Court Receiver sold 18 flats in Crescent Tower for an aggregate consideration of Rs. 1,33,32,41,609/-. The Court Receiver has received 70% of the consideration, an aggregate amount of Rs. 93,32,69,126/-. The Court Receiver is yet to recover the remaining 30%, aggregating to Rs. 39,99,72,483/-.
6. The Chartered Accountancy firm of M/s Bhupendra Fafadia & Co appointed by the Court Receiver has by its letter dated 4th May 2018 forwarded its computation of the amounts recoverable from the flat purchasers of these 18 flats towards Service Tax, Maharashtra Value Added Tax, and Goods & Service Tax. The Court Receiver is yet to collect the amounts towards these taxes, itemized below:
1. Service Tax 4,20,21,781/-
2. VAT 93,38,173/-
3. CGST 2,39,65,458/-
4. SGST 2,39,65,458/-
Total 49,87,15,132/- Page 4 of 12 25th September 2018 ::: Uploaded on - 26/09/2018 ::: Downloaded on - 27/09/2018 01:48:38 ::: 3-6-NMS89-18.DOC III) SATISFACTION OF DECRETAL CLAIM
7. Gupte J's order dated 22nd January 2015 directed the Court Receiver to pay, from the sale proceeds of these 18 flats:
(a) dues of MCGM towards capitalized value;
(b) the decretal amount of Rs. 107 crores due to SPCo; and
(c) to SPCo the costs of construction as may be certified by an Architect on the Receiver's panel from time to time, in that order.
8. From the 70% consideration the Court Receiver received as part payment of the purchase prices of these 18 flats, the Court Receiver has so far--
(a) Paid Rs. 37,63,03,349/- to MCGM towards capitalized value; and
(b) Partly paid a sum of Rs. 53,25,37,464/- to SPCo in partial satisfaction of the decree;
9. The decree is to be got marked partly satisfied to this extent, i.e., Rs. 53,25,37,464/-, if not already done, within four weeks from today.
10. Thus, a sum of Rs. 53,74,62,536/- is yet to be disbursed by the Court Receiver's Report to SPCo towards satisfaction of the decree. Of this, an amount of about Rs. 39.99 crores stands to be recouped from the balance 30% consideration due against sale of the 18 flats.
Page 5 of 1225th September 2018 ::: Uploaded on - 26/09/2018 ::: Downloaded on - 27/09/2018 01:48:38 ::: 3-6-NMS89-18.DOC The Court Receiver will issue the necessary notices calling on the flat purchasers to make payment (as previously directed).
IV) RECOVERY OF CONSTRUCTION COSTS
11. SPCo claims to have incurred an expenditure for a sum of Rs. 42,32,41,743/- on the construction of the free-sale building and the Municipal School building.
12. The Architects, M/s Parelkar and Dallas, have so far certified costs for a sum of Rs. 28,11,73,162/- and issued certificate(s) for the period ending 31st December 2017 towards direct expenses. For indirect expense the Architects have certified costs for the period ending 30th June 2017.
13. By my order dated 26th/27th June 2018, I directed the Court Receiver to place these certifications in a proper compilation and adjourned the matter to 25th July 2018. On that day, the certification process was yet incomplete. I requested the architects to complete their assignment on or before 28th August 2018. That exercise is not yet over. By their letter of 28th August 2018 to the Court Receiver, M/s Parelkar and Dallas sought an extension of four weeks. I granted it.
14. For completeness, I will note that there is an application from M/s Parelkar & Dallas to the MCGM of 4th August 2017 confirming the completion of the free-sale building, and requesting Page 6 of 12 25th September 2018 ::: Uploaded on - 26/09/2018 ::: Downloaded on - 27/09/2018 01:48:38 ::: 3-6-NMS89-18.DOC an Occupation Certificate ("OC"). The MCGM issued the OC on 23rd January 2018. The free-sale building has had a water connection since 16th April 2018.
15. SPCo claims that it continues to incur what it describe as "indirect expenditure"--maintenance and upkeep charges, property tax, water and electricity charges, and expenditure on housekeeping, security, equipment maintenance/operating charges, monsoon protection charges, etc. At this stage, there will be no orders in regard to this claim. All contentions are kept open. SPCo will maintain a separate account statement of these costs for ready verification, with all supporting documents.
V) RECOVERY OF ADDITIONAL EXPENDITURE SAID TO HAVE BEEN INCURRED BY SPCO
16. Pursuant to the order dated 15th March 2017 passed in Court Receiver's Report No. 41 of 2017 SPCo has paid Rs. 20,74,830/- into the suit account towards development charges payable to MCGM. As there was no money in the suit account, SPCo was directed by an order of 21st July 2017 to fund the Court Receiver in the amount of Rs. 5,98,22,857/- to meet various disbursals towards property tax due on the free-sale building, the costs of repairs of the Municipal School building, etc. SPCo has deposited an amount of Rs. 5,44,93,748/- with the Court Receiver. It says it has separately made payment to the MCGM in various departments of an aggregate sum of Rs. 96,53,974/-, and it thus claims to have incurred an additional expenditure of Rs. 6,41,47,662/-. SPCo contends that Page 7 of 12 25th September 2018 ::: Uploaded on - 26/09/2018 ::: Downloaded on - 27/09/2018 01:48:38 ::: 3-6-NMS89-18.DOC under the orders of 15th March 2017 and 21st July 2017, it is entitled to recover this entire amount of additional expenditure.
17. The submission is noted and rival contentions are kept open for decision at a later date.
VI) SALE OF FIVE ADDITIONAL FLATS
18. By an order dated 2nd May 2017 in Court Receiver's Report No. 57 of 2017, the Court Receiver was permitted to sell five more flats in Crescent Tower. On 27th April 2018, I made an order in Court Receiver's Report No. 115 of 2018 directing the Court Receiver to apply to have the reserve price fixed for these five flats.
19. The Court Receiver has not yet applied to Court to (i) fix the reserve price for these five flats; or (ii) issue a public notice for sale of those five flats. Evidently, (ii) will follow only after an order is made on (i), fixing the reserve price. Ms Ambekar states that the matter is in hand and the work is under way to prepare a report with a suggested valuation as the basis for fixing the reserve price.
VII) PERJURY APPLICATION FILED BY SPCO AGAINST CRESCENT BUILDERS
20. SPCo has filed Notice of Motion No. 1579 of 2014 alleging perjury by Crescent Builders (Defendants Nos. 1 to 5) and seeking Page 8 of 12 25th September 2018 ::: Uploaded on - 26/09/2018 ::: Downloaded on - 27/09/2018 01:48:38 ::: 3-6-NMS89-18.DOC reliefs in that regard. Notice was issued on 11th January 2016; the answering Defendants were directed to file their replies, and the notice was made returnable. No reply is yet filed.
21. The perjury application is pending. The next CMIS date is 25th September 2018. That date will be deferred and a fresh date assigned. Time to Defendants Nos. 1 to 5 to file their replies to the Notice of Motion is extended as a last and final indulgence to 19th October 2018.
VIII) AVAILING CENVAT CREDIT
22. SPCo has filed Notice of Motion No. 89 of 2018 for direction regarding availing CENVAT credit accrued as on 30th June 2017.
23. By an order of 23rd March 2018, Crescent Builders were inter alia directed to take the necessary steps to avail the deduction / set- of against the CENVAT credit as well as credit under the provisions of CGST Act; and to avail and adjust these against the service tax/GST liability arising from flat sales made by Court Receiver and the GST to be collected from the flat purchasers. There is no communication from the Defendants in this regard.
24. After obtaining PAN and other registrations, Crescent Builders are to collect the taxes due and to pay these to the authorities concerned after adjusting all the credits accrued and also to file the monthly returns, and to comply with TDS provisions.
Page 9 of 1225th September 2018 ::: Uploaded on - 26/09/2018 ::: Downloaded on - 27/09/2018 01:48:38 ::: 3-6-NMS89-18.DOC
25. Crescent Builders will file an affidavit by 19th October 2018 setting out the present status in this regard. The answering Defendants may request the Court Receiver to furnish details of all amounts and taxes collected so far, and the Court Receiver will supply the necessary statements.
IX) EXTENSION OF TIME FOR COMPLETION OF CONSTRUCTION
26. The Court Receiver has filed a report bearing No. 181 of 2017 inter alia seeking directions against SPCo alleging that it has not completed construction in accordance with the agency agreement dated 19th August 2014 and the order dated 7th February 2017. SPCo and the Crescent Builders have filed their respective Affidavits in Reply to this Report.
27. List Court Receiver's Report No. 181 of 2017 on 15th October 2018.
X) DECLARATION OF PLAINTIFF IN FORM
FOR RERA FILING.
28. Crescent Builders (i.e. Defendants Nos. 1 to 5) have filed Notice of Motion (L) No. 1687 of 2017 in Court Receiver's Report No. 123 of 2017 seeking that SPCo be directed to submit an Affidavit-cum-Declaration in Form "B" for RERA filing.
Page 10 of 1225th September 2018 ::: Uploaded on - 26/09/2018 ::: Downloaded on - 27/09/2018 01:48:38 ::: 3-6-NMS89-18.DOC
29. SPCo says it has provided its Form "B" Declaration-cum- Affidavit to Crescent Builders5 on 27th July 2017, and that this is already uploaded by Crescent Builders to the MahaRERA website.
30. Although Notice of Motion (L) No. 1687 of 2017 is still pending, it may well be infructuous. List the Notice of Motion on 15th October 2018 for orders.
XI) COURT RECEIVER'S REPORT ON
DISCLOSURES MADE BY CRESCENT
BUILDERS
31. On 25th July 2018, I directed Crescent Builders to disclose particulars of the flats they claim to have sold to third parties, this being necessary for precision in drawing up an inventory of unsold flats. I directed the Court Receiver to file a separate report after tallying the Court Receiver's records with the disclosures called for from Crescent Builders. There is an affidavit of 30th August 2018 filed by Crescent Builders.
32. The Court Receiver will file a report in compliance with the previous order and list it on 15th October 2018.
Page 11 of 1225th September 2018 ::: Uploaded on - 26/09/2018 ::: Downloaded on - 27/09/2018 01:48:38 ::: 3-6-NMS89-18.DOC XII) CHAMBER SUMMONS (L) NO. 1361 OF 2018 FILED BY SPCO
33. SPCo has very recently (on 10th September 2018) lodged this Chamber Summons for directions to the Court Receiver to sell further flats in Crescent Tower and to pay the sale proceeds to SPCo towards the amounts claimed by SPCo under the Consent Terms dated 4th September 2013.
34. The Chamber Summons is to be finally numbered and served by Friday, 28th September 2018. Affidavits in Reply by Crescent Builders to be filed and served by 19th October 2018. No rejoinder without leave of the Court. The Chamber Summons is to be listed for final disposal on 29th October 2018.
(G. S. PATEL, J) Page 12 of 12 25th September 2018 ::: Uploaded on - 26/09/2018 ::: Downloaded on - 27/09/2018 01:48:38 :::