Calcutta High Court
Primarc Srijan Projects Llp & Ors vs Howrah Mills Company Ltd on 22 September, 2023
IN THE HIGH COURT AT CALCUTTA
(Ordinary Original Civil Jurisdiction)
COMMERCIAL DIVISION
Present:
The Hon'ble Justice Krishna Rao
IA No: GA 7 of 2023
In CS 186 of 2018
Primarc Srijan Projects LLP & Ors.
Versus
Howrah Mills Company Ltd.
Mr. Sabyasachi Choudhury
Mr. Shaunak Mukhopadhyay
Mr. Paritosh Sinha
Mr. Saubhik Chowdhury
... For the plaintiffs.
Mr. Abhrajit Mitra, Sr. Adv.
Mr. Sarvapriya Mukherjee
Mr. Satadeep Bhattacharyya
Mr. Sumanta Biswas
Mr. Yashvardhan Kochar
Mr. Bikash Shaw
... For the defendant.
Hearing Concluded On : 24.08.2023
Judgment on : 22.09.2023
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Krishna Rao, J.:
1. The defendant has filed the instant application being GA 7 of 2023 praying for direction upon the plaintiff to produce the original Minutes of Meeting dated 9th May, 2017 and be impounded and dealt with in accordance with law.
2. Mr. Abhrajit Mitra, Learned Senior Advocate representing the defendant submitted that as per the averments made in paragraphs 14 (iv), 22 and 24 of the plaint, the plaintiff has admitted that in the Minutes of Meeting dated 9th May, 2017, it was held that till the payment is made by the defendants to the plaintiff, the plaintiffs shall have lien over the said land.
3. Mr. Mitra had referred Schedule IA, Article 32(b)(ii) of the Indian Stamp Act, 1899 on Instruments in West Bengal and submitted that the instruments imposing a further charge on mortgage property, is required to be stamped. Mr. Mitra has further relied upon Article 40 (b) of Schedule IA of the said Act.
4. Mr. Mitra has further relied upon Section 35 of the Indian Stamp Act, 1899 and submitted that the instruments not duly stamped are inadmissible in evidence. He further referred Section 33 of the said Act and submitted that as per the said provision, it is mandatory that the instrument which is not duly stamped is required to be impounded. 3
5. Mr. Mitra submitted that the plaintiff has relied upon the Minutes of the Meeting dated 9th May, 2017 wherein it is mentioned that the plaintiff is having lien over the said premises and no one will be allowed to construct on the said premises without first making payment to the plaintiff and thus the minutes of the meeting which the plaintiff has relied upon is required to be impounded and unless and until the said document is not impounded, the document cannot be taken into consideration while passing judgment.
6. Mr. Mitra has further relied upon Section 17(1)(b) of the Registration Act, 1908 and submitted that the Minutes of the Meeting dated 9th May, 2017 is required to be registered as from the said documents charge have been created.
7. Mr. Mitra in support of his submissions has relied upon the following judgments :
"i. (2009) 2 SCC 532 (Avinash Kumar Chauhan -vs- Vijay Krishna Mishra).
ii. (2020) 4 SCC 612 (Dharmaratnakara Rai Bahadur Arcot Narainswamy Mudaliar Chattram and Other Charities & Ors. -vs- Bhaskar Raju and Brothers & Ors.).
iii. (2001) 3 SCC 1 (Bipin Shantilal Panchal -vs- State of Gujarat & Anr.).
iv. AIR 1968 SC 1028 (Kollipara Sriramulu (dead) by His Legal Representative -vs- T. Aswatha Narayana (dead) by His Legal Representatives & Others Respondents).4
v. (2023) 7 SCC 1 : 2023 SCC OnLine SC 495 (N.N. Global Mercantile Private Limited -vs- Indo Unique Flame Limited & Ors.).
vi. (2021) 4 SCC 379 (N.N. Global Mercantile Private Limited -vs- Indo Unique Flame Limited & Ors.). vii. (2020) 4 SCC 358 (Z. Engineers Construction Private Limited & Anr. -vs- Bipin Bihari Behera & Ors.)."
8. Mr. Sabyasachi Choudhury, learned Advocate representing the plaintiff submits that as per Section 14 of the Indian Stamp Act, the instrument is not required to be stamped and the said document is not an independent document and the document is in continuation of the agreement dated 27th August, 2015 and the said agreement has already been impounded by the plaintiff in compliance of the order passed by this Court dated 29th March, 2023.
9. Mr. Choudhury submitted that once the primary document has already been impounded and thus the second instruments are not required to be stamped. He submitted that on the objection raised by the defendant, the agreement dated 27th August, 2015 was impounded and at the relevant point of time the defendant has not raised the present issue though at that point of time also the plaintiff was relying upon the instrument dated 9th May, 2017.
10. Mr. Choudhury submitted that in the agreement dated 27th August, 2015, the charge was created and it is not the case of the plaintiff that in the document dated 9th May, 2017, any new charge was created. 5
11. Mr. Choudhury referred to paragraph 19 of the written statement filed by the defendant in the present suit and submitted that it is the case of the defendant that the Minutes dated 9th May, 2017, only record views, discussion and statements of the respective parties and the said Minutes of the Meeting cannot be construed as an agreement.
12. Mr. Choudhury submitted that it is the specific case of the plaintiff that in the Minutes of the Meeting, the defendant has undertaken that the defendant will not construct on the said land without making payment to the plaintiff and the said undertaking is the negative covenant and is enforceable by the plaintiff against the defendant.
13. Heard the learned Counsel for the respective parties, perused the materials on record and the judgments relied by the defendant. On completion of all formalities, the suit was fixed for witness action on behalf of the plaintiff on 20th February, 2023 but the learned Counsel for the plaintiff had submitted that the plaintiff will not adduce any evidence and will argue the matter on merit on the basis of pleadings and the documents relied by the parties. At the relevant point of time, the learned Counsel for the defendant has raised objection with regard to the admissibility of the agreement dated 27th August, 2015 on the ground that the said document is not properly stamped.
14. The objection raised by the defendant was taken into consideration by this Court and after hearing the parties by a judgment dated 29th March, 2023 read with order dated 19th May, 2023, this Court had 6 referred the agreement dated 27th August, 2015 to the Collector for valuation as provided under the Indian Stamp Act, 1899. In compliance of the judgment, the plaintiff has paid the deficit stamp duty and penalty and said agreement was impounded.
15. Now the defendant has raised objection that the Minutes of the Meeting dated 9th May, 2017 is not properly stamped.
16. On 27th August, 2015, an agreement in the nature of a joint venture for real estate development with respect of 171 Cottahs which was earmarked and demarcated being the portion of the larger premises No. 493/C/A, Grand Trunk Road (S), Howrah. For the purpose of decision of the present application of the defendant, the following clauses of the agreement is necessary which reads as follows :
"7(i). In case the plans are not sanctioned within the said period of twelve months as aforesaid and in case Home/Retail loans for customers are not sanctioned, then one month grace period will be given and even then if the plan is not sanctioned, and the Home/Retail loan not sanctioned, then the Developer will have the option to terminate the development agreement and be entitled to get back all costs incurred at actuals and deposits paid by the Developer along with interest @ 15%per annum and provided further that so long as the dues of the Developer is not paid, such dues will remain a charge on the property.
(x) The formal definitive agreement in terms of this Basic Understanding (with the specifications of construction and the facilities clearly mentioned therein) will be signed later but latest within fifteen days from the date (and/or the extended date, if any) of the Owner Obtaining the NOC/permissions of SBI 7 for signing of such definitive agreement within one month from the date hereof otherwise this Basic Understanding shall lapse and/or will have no value or consequence and shall be deemed to have come to an end and the Owner shall refund the money paid by the Developer within seven days thereof and till the payment is made by the Owner it will remain a charge on the property."
17. In terms of the agreement entered between the parties, the plaintiffs have paid the total amount of Rs. 7,00,00,000/- by way of two cheques to the defendant. The plaintiffs have also incurred an amount of Rs. 92,95,019/- in connection with the development of the said land. The defendant had failed to perform his obligations under the agreement dated 27th August, 2015 and accordingly, a meeting was held between the representative of the plaintiffs and the defendant on 9th May, 2017 to discuss further steps to be taken for development of the said land and it was agreed between the parties that:
"MINUTES OF THE MEETING ON 9TH MAY, 2017 AT THE CHAMBER OF SRI UTPAL MAJUMDER, ADVOCATE HELD IN BETWEEN 12.10 P.M. TO 1 P.M. IN PRESENCE OF FOLLOWING PERSONS.
1. Sri Utpal Majumdar, Advocate
2. Shree R.N. Agarwal
3. Shree Mahesh Pansari
4. Smt. Sunita Kar, Advocate
5. Shree Arun Sighania, All representing Primac Srijan LLP
6. Sri Shree Mohan Mall
7. Sri Sanjay Mall Both representing Howrah Mills Co. Ltd.8
It has been agreed by both the Howrah Mills Co. Ltd. (hereinafter referred to as HMCL) and Primarc Srijan LLP (hereinafter referred as Srijan) on the development of 194 cottachs of land at premises 493C/A, G.T. Road South, Howarah - 711 102 that Primarc Srijan LLP will only develop the aforesaid premises and sign the formal development agreement on the basis of the MOU dated 27th August, 2015, if the State Bank of India and/or its assignee permits to sanction housing loan for the flat purchasers as well as allow to construct on the aforesaid land.
Primarc Srijan LLP will keep deposited two cheques aggregated Rs.9 Crores that is Rs.5.50 Crores for sanction of plan by Howrah Municipal Corporation; Rs.3.50 crores for permission of housing loan for customers/SBI NOC with Mr. Utpal Majumdar, Advocate for a period of 30 days as a security. On obtaining permission for Housing Loan/SBI NOC the sum of Rs.3.50 Crores shall be paid by Mr. Majumder to HCML and the balance amount of Rs.5.50 crores shall be released by Mr. Majumdar only upon the successful completion of both the events i.e. Housing Loan NOC and Sanction of Plan.
Primarc Srijan LLP has categorically stated in case HMCL fail to bring the permission for housing loan as well as sanction plan for the said premises within 30 days from the date hereof then the Memorandum of Understanding shall automatically stand cancelled without any further negotiation.
In case of such happening of cancellation and/or determination of MOU, HCML will return Srijan Rs.7 Crores plus expenses upto the tune of Rs.1 Crore; incurred by Primarc Srijan LLP in this project till date along with interest @ 15% p.a. within 90 working days from the cancellation and/or termination as stated hereinabove and till such payment is made by HCML to Srijan. Srijan shall have lien over the aforesaid premises and no one will be allowed to construct on the said premises without first making 9 payment to Srijan. Srijan shall have no other claim whatsoever and cheques of Rs. 9 Crores deposited with Sri Utpal Majumdar, Advocate, will be returned"
18. The Judgment relied by the defendant in the case of Dharmaratnakara Rai Bahadur Arcot Narainswamy Mudaliar Chattram and Others Charities and Others (Supra), the Hon'ble Supreme Court held that:
"18. It can thus clearly be seen, that this Court has in unequivocal terms held, that when a lease deed or any other instrument is relied upon as containing the arbitration agreement, the court is required to consider at the outset, whether the document is properly stamped or not. It has been held, that even when an objection in that behalf is not raised, it is the duty of the court to consider the issue. It has further been held, that if the court comes to the conclusion, that the instrument is not properly stamped, it should be impounded and dealt with, in the manner specified in Section 38 of the Stamp Act, 1899. It has also been held, that the court cannot act upon such a document or the arbitration clause therein. However, if the deficit duty and penalty is paid in the manner set out in Section 35 or Section 40 of the Stamp Act, 1899, the document can be acted upon or admitted in evidence. It is needless to state, that the provisions that fell for consideration before this Court are analogous with the provisions of Sections 33 and 34 of the Karnataka Stamp Act, 1957. In this view of the matter, we are of the considered view, that in view of the law laid down in SMS Tea Estates (P) Ltd. [SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (P) Ltd., (2011) 14 SCC 66 : (2012) 4 SCC (Civ) 777] , that the lease deed containing the arbitration clause which is required to be duly stamped, was not sufficiently stamped and though the Registrar (Judicial) had directed Respondents 1 and 2 to pay deficit stamp duty and penalty of Rs 1,01,56,388 (Rupees one crore one lakh fifty-six thousand three hundred and eighty-eight only), the respondents failed to do so, the High Court has erred in relying on the said lease dated 12-3-
1997."
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19. In the case of N.N. Global Mercantile Private Limited (Supra), the Hon'ble Supreme Court held that:
"161. The view taken in SMS Tea Estates as followed in Garware and by the Bench in Dharmaratnakara Rai Bahadur Arcot Narainswamy Mudaliar Chattram v. Bhaskar Raju as to the effect of an unstamped contract containing an arbitration agreement and the steps to be taken by the Court, represent the correct position in law as explained by us hereinbefore. N.N. Global was wrongly decided, when it held to the contrary and overruled SMS Tea Estates and Garware."
20. In the present case, an earlier agreement was entered between the parties but the defendant has not complied with the terms of the contract and thereafter a meeting was held between the parties to discuss the issue and the same was recorded in writing. In the said writing, the defendant had agreed for repayment of the amount to the plaintiff. The said Minutes of the Meeting between the parties is not with respect of any new charge. By an agreement dated 27th August, 2015, the land in question was put on charge. On the previous occasion, the defendant has raised objection that the said agreement was not properly stamped but as per the order passed by this Court, the said agreement was impounded.
21. The defendant has also relied upon the judgement in the case of Kollipara Sriramulu (dead) By His Legal Representative (Supra), wherein the Hon'ble Supreme Court held that :
3. We proceed to consider the next question raised in these appeals, namely, whether the oral 11 agreement was ineffective because the parties contemplated the execution of a formal document or because the mode of payment of the purchase money was not actually agreed upon. It was submitted on behalf of the appellant that there was no contract because the sale was conditional upon a regular agreement being executed and no such agreement was executed. We do not accept this argument as correct. It is well established that a mere reference to a future formal contract will not prevent a binding bargain between the parties. The fact that the parties refer to the preparation of an agreement by which the terms agreed upon are to be put in a more formal shape does not prevent the existence of a binding contract. There are, however, cases where the reference to a future contract is made in such terms as to show that the parties did not intend to be bound until a formal contract is signed. The question depends upon the intention of the parties and the special circumstances of each particular case. As observed by the Lord Chancellor (Lord Cranworth) in Ridgway v. Wharton [6 HLC 238, 63] , the fact of a subsequent agreement being prepared may be evidence that the previous negotiations did not amount to a concluded agreement, but the mere fact that persons wish to have a formal agreement drawn up does not establish the proposition that they cannot be bound by a previous agreement."
22. In the present case, in the Minutes of the Meeting dated 9th May, 2017, the parties have referred the agreement dated 27th August, 2015 and it was agreed between the parties that the plaintiff shall have the lien over the aforesaid premises and no one will be allowed to construct on the said premises without first making payment to the plaintiff. The said lien/charge is also available in the agreement in clause 7(i) and (x) and the said agreement is already impounded by the plaintiff. 12
23. In view of the above, this Court finds that the judgments relied by the defendant is distinguishable from the facts and circumstances of the present case.
24. Instrument is defined under Section 2(14) of the Indian Stamp Act, 1899 which reads as follows :
"2(14) "instrument" includes-
(a) every document, by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded;
(b) a document, electronic or otherwise, created for a transaction in a stock exchange or depository by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded; and
(c) any other document mentioned in Schedule I, but does not include such instruments as may be specified by the Government, by notification in the Official Gazette;]."
Section 14 of the Indian Stamp Act, 1899 reads as follows:
"14. Only one instrument to be on same stamp.-- No second instrument chargeable with duty shall be written upon a piece of stamped paper upon which an instrument chargeable with duty has already been written:
Provided that nothing in this section shall prevent any endorsement which is duly stamped or is not chargeable with duty being made upon any instrument for the purpose of transferring any right created or evidenced thereby, or of acknowledging the receipt of any money or goods the payment or delivery of which is secured thereby."13
25. In the present case, the first instrument that is the agreement dated 27th August, 2015 is impounded. In the said agreement charge was created. Due to failure on the part of the defendant, a meeting was held and the second instrument dated 9th May, 2017 was executed. The defendant in its written statement has specifically stated that"The defendant further denies and dispute that any agreement was duly recorded in the meeting dated 9th May, 2017. The defendant says that the said Meeting dated 9th May, 2017 only records views, discussion and statements of respective parties. No agreement was executed between the parties. The defendant further says that the Minutes of the Meeting dated 9th May, 2017 cannot be constituted as an agreement."
26. In the facts and circumstances mentioned above, this Court finds that the application filed by the defendant has no merit and accordingly the same is dismissed.
27. G.A. No. 7 of 2023 is thus dismissed.
(Krishna Rao, J.)