Bombay High Court
Private Limited & Anr vs Oshiwara Land Development Company ... on 5 February, 2014
Author: S.C. Gupte
Bench: S.C. Gupte
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
NOTICE OF MOTION NO. 3806 OF 2011
IN
SUIT NO. 1975 OF 2011
Pankaj Unit No.1 Housing Development Company
Private Limited & Anr. ...Plaintiffs
vs.
Oshiwara Land Development Company Private
Limited & Anr. ...Defendants
Mr.Iqbal Chagla, Senior Advocate with Mr.Janak Dwarkadas, Senior Advocate
with Mr.Mustafa Doctor with Mr.Rohan Rajadhyaksha i/b. M/s.Warerkar &
Warerkar for the Plaintiffs.
Dr.Virendra Tulzapuarkar, Senior Advocate with Mr.Amit Jamsandekar, Ms.Neha
Bhatt i/b. M/s.Bilawala & Co. for Defendant No.1.
Mr.D.Madon, Senior Advocate with Mr.Aditya Shiralkar i/b. Mr.N.R. Gandhi for
Defendant No.2.
CORAM : S.C. GUPTE, J.
05 FEBRUARY 2014
JUDGMENT :
The Notice of Motion applies for a decree on admission. The facts of the case may be briefly set out as follows.
2 Plaintiff Nos. 1 and 2 are companies under Part IX of the Companies Act, 1956 incorporated as such upon conversion of two co-operative societies, which themselves came into existence on account of de-merger of Pankaj Co-operative Housing Development Society Ltd. ("Principal Society").
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3 Defendant No. 1 was the owner inter alia of land forming part of
Survey No. 41 at Oshiwara in Mumbai, which was reserved as No Development Zone ("suit property"). By a registered Deed of Lease of 17 September 1981, Defendant No. 1 demised the suit property unto the Principal Society for 98 years. Clause 6 of the Lease Deed provided that the Lessee shall have a right to purchase the reversionary rights in respect of the suit property from the Lessor at the rate of Rs. 9.95 per sq. ft. In 1981 and 1983 development agreements were entered into in respect of the suit property between the Principal Society and Defendant No. 2 (who was originally Plaintiff No. 3 in the present suit and later transposed as a defendant as mentioned below). The suit property was surveyed and measured in the year 1999 and its boundaries were fixed. The property admeasured about 9,01,983.9 sq. mtrs. or 224 acres. In 2001, the Principal Society was demerged and two societies (the predecessors of the present Plaintiffs) came into being. The leasehold rights of the Principal Society thus came to be jointly vested in the predecessors of the Plaintiffs. In 2011, the two societies were converted to Joint Stock Companies under Part IX of the Companies Act and thus became successors in interest of the leasehold rights in the suit property.
4 In December 2005, by an arrangement between the two societies and Defendant No. 2, the development agreements of 1981 and 1983 were confirmed and it was inter alia provided that a part of the consideration payable by Defendant No. 2 would be paid to Defendant No. 1 for purchase of reversionary rights of the latter in the suit property as well as its other dues. It is the case of the Plaintiffs that between December 2005 and August 2007, a sum ::: Downloaded on - 13/02/2014 23:13:12 ::: sat 3/17 nm 3806-2011.doc of Rs. 11,86,83,843/- was paid by Defendant No. 2 on behalf of the Plaintiffs to Defendant No. 1, which included the total consideration of Rs. 9,70,86,528/-
towards the purchase of reversionary rights in the suit property in accordance with Clause 6 of the Lease Deed as well as ground rent and interest payable to Defendant No. 1. It is the case of the Plaintiffs that with the payment of Rs.
11,86,83,843/-, the total consideration for reversionary rights was paid to Defendant No. 1 and the latter was bound to convey the suit property to the Plaintiffs. It appears that draft conveyance was exchanged between the parties, but no conveyance was eventually executed. The Plaintiffs, therefore, filed the present suit.
5 The Plaintiffs have taken out the present Notice of Motion for a decree on admission under Order XII Rule 6 of the Code of Civil Procedure. The Plaintiffs rely on admissions of Defendant No. 1 contained in various statements of the Defendants both in and outside the pleadings. These admissions are said to be contained in the following statements:
(i) In a statement made under Section 133 A of the Income Tax Act, the Director of Defendant No. 1 confirmed that an amount of about Rs. 9 crores was received towards sale of reversionary rights in the suit property and was retained as deposit in the account of Defendant No. 1 according to a consistent practice of accounting;
(ii) In a letter dated 23 December 2009 addressed to the Additional Commissioner of Income Tax, Defendant No. 1 stated that the sum ::: Downloaded on - 13/02/2014 23:13:12 ::: sat 4/17 nm 3806-2011.doc of Rs. 9,70,86,528/- received by Defendant No. 1 on behalf of the Plaintiffs was the total consideration for purchase of reversionary rights and the deal was through and treated as concluded during F. Y. 2006-07 and that accordingly the payment was treated as income of Defendant No. 1 in the return of income submitted for that year, and the tax liability due thereon was paid;
(iii) In the Directors' report for the year ended on 31 March 2007, Defendant No. 1 admitted that the Plaintiffs had exercised the right to purchase reversionary rights in the suit property and the full consideration for such purchase along with the rent and interest due thereon had been received by Defendant No. 1, and that accordingly the profit was worked out and tax paid by Defendant No. 1 pending execution of conveyance;
(iv) In the Notes on Account forming part of Balance Sheet for the year ended on 31 March 2007, Defendant No. 1 stated that as per a change in the accounting procedure, the profit was worked out on the sale of reversionary rights of the suit property in the accounting year during which the full consideration was received by Defendant No. 1 (that year being 2006-07);
(v) The Directors' Report for the year ended on 31 March 2008 also admits that full consideration of the reversionary rights had been received by Defendant No. 1 in the previous year, i.e. 2006-07; and ::: Downloaded on - 13/02/2014 23:13:12 ::: sat 5/17 nm 3806-2011.doc
(vi) The Balance Sheet of Defendant No. 1 as at 31 March 2008 showed the entry of 'Loans and Advances' from the Plaintiffs as nil as against the entry of Rs. 9,70,86,528/- of the previous year (showing thereby appropriation of the amount earlier held in deposit towards the full consideration of reversionary rights).
The Plaintiffs submit that even in the pleadings, Defendant No. 1 has admitted (i) the existence and validity of the agreement to purchase reversionary rights, (ii) exercise of the right to purchase the reversionary rights by the Plaintiffs, and (iii) receipt of the total consideration mentioned in the suit agreement for such purchase.
6 In its Written Statement as well as reply to the Notice of Motion, Defendant No. 1 submits that the agreement to transfer the reversionary rights contained in the Lease Deed was altered or modified by a writing executed by Defendant No. 2 on behalf of the Plaintiffs on 1 February 2008; that such alteration or modification required that for the TDR which would be availed of in respect of land admeasuring 44 acres from out of the suit property (reserved as Sewerage Lagoon), Defendant No. 1 would receive a consideration of Rs. 400/-
per sq. ft.; and that the Plaintiffs were never ready and willing to perform the agreement to buy reversionary rights as altered or modified by the writing of 1 February 2008.
7 Incidentally, it may be noted that upon Defendant No. 1 taking the
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stand as above, Defendant No. 2, who was till then Plaintiff No. 3 in the suit, was transposed as Defendant No.2 on the application of the Plaintiffs.
8 The learned Counsel for the Plaintiffs submit that Defendant No. 1 has admitted the Plaintiffs' right to transfer of reversionary rights to the suit property admeasuring 224 acres vesting in Defendant No. 1; that these admissions are contained in the pleadings and also correspondence and communications of Defendant No. 1; that these admissions cannot be explained away by Defendant No. 1; that the purported communication of 1 February 2008 does not amount to any modification of the suit agreement; that in any event, even if it does, such modification relates only to the property of 44 acres which is clearly identifiable and can be separated from 180 acres of the balance suit property, and thus does not show any defence to the Plaintiffs' right to reversionary interest in respect of 180 acres; and that accordingly, a decree on admission for transfer of 180 acres of suit land can be passed in the alternative.
9 The learned Counsel for Defendant No. 1, on the other hand, submits that the claim in the suit is for specific performance of the suit agreement and not for refund of money paid; that an admission that full payment due under the suit agreement, as it originally stood, was received, is no admission of the Plaintiffs' entitlement to specific performance of the suit agreement as claimed in the suit; that it is an express case of Defendant No.1 that the suit agreement stood modified by a writing dated 1 February 2008 and that the Plaintiffs were neither ready nor willing to perform the modified agreement; and that the case ought to go to trial before any decree can be claimed by the Plaintiffs.
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10 The object of the provisions of Order XII Rule 6 of the Code of Civil
Procedure and their effect is discussed by the Supreme Court in the case of Uttam Singh Duggal & Co. Ltd. Vs. United Bank of India 1 in the following words (paras 12 and 13):
"12. As to the object of the Order XII Rule 6, we need not say anything more than what the legislature itself has said when the said provision came to be amended. In the objects and reasons set out while amending the said rule, it is stated that "where a claim is admitted, the court has jurisdiction to enter a judgment for the plaintiff and to pass a decree on admitted claim. The object of the Rule is to enable the party to obtain a speedy judgment at least to the extent of the relief to which according to the admission of the defendant, the plaintiff is entitled". We should not unduly narrow down the meaning of this Rule as the object is to enable a party to obtain speedy judgment. Where other party has made a plain admission entitling the former to succeed, it should apply and also wherever there is a clear admission of facts in the face of which, it is impossible for the party making such admission to succeed.
13. The next contention canvassed is that the resolutions or minutes of meeting of the Board of Directors, resolution passed thereon and the letter sending the said resolution to the respondent bank cannot amount to a pleading or come within the scope of the Rule as such statements are not made in the course of the pleadings or otherwise. When a statement is made to a party and such statement is brought before the Court showing admission of liability by an application filed under Order XII Rule 6 and the other side has sufficient opportunity to explain the said admission and if such explanation is not accepted by the Court, we do not think the trial court is helpless in refusing to pass a decree. We have adverted to the basis of the claim and the manner in which the trial court has dealt with the same. When the trial judge states that the statement made in the proceedings of the Board of Directors' meeting and the letter sent as well as the pleadings when read together, 1 (2000) 7 SCC 120 ::: Downloaded on - 13/02/2014 23:13:12 ::: sat 8/17 nm 3806-2011.doc leads to unambiguous and clear admission with only the extent to which the admission is made is in dispute, and the court had a duty to decide the same and grant a decree, we think this approach is unexceptionable."
11 The Supreme Court in that case distinguished its decision in the case of Nagubai Ammal Vs. B. Sharma Rao2, which is termed as locus classicus on the subject. In the case of Nagubai Ammal the Supreme court observed that merely because a written admission is made in a different context, such admission may not become relevant if the party making it has a reasonable explanation for that. The court held that on facts in Duggal's Case (supra) that was not the position. The admission in Duggal's Case was unambiguous and clear. The Supreme Court also noted the decision of Madhya Pradesh High Court in Shikharchand Vs. Bari Bai3 to the effect that the rule is wide enough to afford relief not only in cases of admissions in pleadings but also in cases of admissions de hors pleadings.
12 Later, in the case of Karam Kapahi vs. Lal Chand Public Charitable Trust4, the Supreme Court reiterated this position as follows (para 45) :
"45. Order 12 Rule 6 of the Code has been very lucidly discussed and succinctly interpreted in a Division Bench judgment of the Madhya Pradesh High Court in the case of Shikharchand v. Bari Bai. G.P. Singh, J. (as His Lordship then was) in a concurring judgment explained the aforesaid Rule, if we may say so, very authoritatively at p. 79 of the Report. His Lordship held: (AIR para 19) "...I will only add a few words of my own. Rule 6 of Order 12 of the Code of Civil Procedure corresponds to 2 AIR 1956 SC 593 3 AIR 1974 Madhya Pradesh 75 (V 61 C 18) 4 (2010) 4 SCC 753 ::: Downloaded on - 13/02/2014 23:13:12 ::: sat 9/17 nm 3806-2011.doc Rule 5 of Order 32 of the Supreme Court Rules (English), now Rule 3 of Order 27, and is almost identically worded (see Annual Practice 1965 Edn., Part I. p. 569). The Supreme Court Rule came up for consideration in Ellis v. Allen (1914) 1 Ch 904 : (1911-
13) ALL ER Rep 906. In that case a suit was filed for ejectment, mesne profits and damages on the ground of breach of covenant against sub-letting. Lessee's solicitors wrote to the plaintiff's solicitors in which fact of breach of covenant was admitted and a case was sought to be made out for relief against forfeiture. This letter was used as an admission under Rule 5 and as there was no substance in the plea of relief against forfeiture, the suit was decreed for ejectment under that rule. Sargant, J. rejected the argument that the Rule is confined to admissions made in pleadings or under Rules 1 to 4 in the same order (same as ours) and said:
'The rule applies wherever there is a clear admission of facts in the face of which it is impossible for the party making it to succeed.' Rule 6 of Order 12, in my opinion, must bear the same construction as was put upon the corresponding English rule by Sargent, J. The words 'either on the pleadings or otherwise' in Rule 6 enable us not only to see the admissions made in pleadings or under Rules 1 to 4 of the same order but also admissions made elsewhere during the trial."
13 Having regard to the law so laid down, it cannot be doubted that for the purpose of an application for a decree on admission, admissions in pleadings as well as admissions in correspondence or communications outside the pleadings can be relied on. But the salutary principle is that such admissions must be unambiguous, and clear. If there is any ambiguity in the admission or any reasonable explanation for such admission, a decree may not be passed by the court on the basis of such admission.
14 A decree on admission is not a matter of right, but rather a matter of
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discretion of a court. This discretion must be exercised in accordance with known judicial canons. A division bench of the Delhi High Court in the case of Vijay Gupta Vs. Ashok Kumar Gupta5 stated the law thus:
"8. It is also a settled principle of civil jurisprudence that judgment on admission is not a matter of right and rather is a matter of discretion of a Court. Where the defendant has raised objection which will go to the very root of the case, it would not be appropriate to exercise this discretion. The use of the words 'May' and 'make such orders' or 'give such judgment' spells out that power under these rules are discretionary and use of discretion would have to be controlled in accordance with the known judicial canons. The cases which involves questions to be decided upon regular trial and the alleged admissions are not clear and specific, it may not be appropriate to take recourse to these provisions. In the case of Pariwar Sewa Sansthan v. Dr.(Mrs) Veena Kalra, AIR 2000 Delhi 349 the Court examined at length the provisions and the need for an admission to be unequivocal and positive. The admission would obviously have the consequences of arriving at that conclusion without determination of any question and evidence. The Court while relying upon the case of Balraj Taneja and Anr. v. Sunil Madan, AIR 1999 SC 3381 and Dudh Nath Pandey v. Suresh Chandra Bhattasali, AIR 1986 SC 1509 held as under:
In Razia Begum v. Sahebzadi Anwar Begum, (AIR 1958 SC 886) it was held that Order 12, Rule 6 has to be read along with the proviso to Rule 5 of Order 8. That is to say, notwithstanding the admission made by the defendant in his pleading, the Court may still require the plaintiff to prove the facts pleaded by him in the plaint.
Thus, in spite of admission of a fact having been made by a party to the suit, the Court may still require the plaintiff to prove the fact which has been admitted by the defendant."
15 That said, it may now be considered, where do the purported 5 AIR 2007 Delhi 166 ::: Downloaded on - 13/02/2014 23:13:12 ::: sat 11/17 nm 3806-2011.doc admissions in our case fall - whether they can be said to be unambiguous and clear and should the court exercise its discretion to pass a decree on their basis.
The Plaintiffs substantially rely upon admissions outside the pleadings in the present case and submit that these admissions have to be seen in the context of clause 6 of the suit agreement. Clause 6 is as follows:
"6. And it is hereby further agreed and declared by and between the parties that the lessees shall be entitled to purchase the reversion in respect of such portion or portions of the demised land as the lessees may in their absolute discretion from time to time decide and the lessees shall thereupon purchase the reversion in respect of the minimum area of 10,000 square feet F.S.I. Provided also and it is hereby agreed and declared that the purchase price for the reversion payable by the lessees shall be Rs.9.95 (Rupees Nine and Paise Ninety Five only) per square feet of F.S.I. and on payment of such amount the lessors shall execute the conveyance or conveyances in respect of the portion in respect of which the lessees shall have expressed their desire to purchase the reversion in favour of the lessees and/or their nominee or nominees provided also and it is hereby agreed and declared that the lessees shall be entitled to purchase the reversion as aforesaid only upto 15 th September 1981 and that on purchase of the reversion on oath occasion as aforesaid the ground rent payable hereunder shall reduce proportionately and the lessees shall pay such reduced ground rent."
16 The purported admissions are to be found, as noted above, in (i) the statements of the directors of Defendant No. 1 under Sections 131 and 133 A of the Income Tax Act, (ii) Letter dated 23 December 2009 of Defendant No. 1 addressed to the Additional Commissioner of Income Tax, (iii) the Directors' Report for the year ended 31 March 2007 forming part of the accounts of Defendant No. 1, (iv) notes on account of Defendant No. 1 for the year ended 31 March 2008. These documents do contain the following admissions:
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(a) Defendant No. 1 was the owner of 224 acres of the suit land which
fell under 'No Development Zone' / 'Coastal Regional Zone' / 'Forest Land';
(b) In 1981 Defendant No. 1 leased out the said land to the Plaintiffs (such lease having clause 6 quoted above);
(c) The Plaintiffs exercised their right to purchase the reversionary interest of Defendant No. 1 in the suit land under clause 6;
(d) Defendant No. 1 received full consideration for such reversionary right along with rent and interest due thereon; and
(e) The deal was through and treated as concluded during Financial Year 2006-07, though the suit land was still to be conveyed and the matter was pending at the level of the solicitors of the parties.
The pleadings of Defendant No.1 do not dispute the above admissions and on the contrary support these.
17 As against the aforesaid admissions, what Defendant No. 1 claims in its written statement (and amended Written Statement), as noted above, is as follows :
(i) The agreement for transfer of reversionary interest stood altered or modified by letter dated 1 February 2008 executed by Defendant No. 2 (who was originally Plaintiff No. 3 and was later transposed as mentioned above) representing himself and the Plaintiffs;
(ii) The modification required that TDR in respect of 44 acres of the suit ::: Downloaded on - 13/02/2014 23:13:12 ::: sat 13/17 nm 3806-2011.doc land reserved for sewerage lagoon would be obtained and Defendant No. 1 would receive a sum of Rs. 400 per sq. ft. for the area;
(iii) The Plaintiffs have still not paid the said consideration in respect of TDR benefit for 44 acres under the sewerage lagoon area; and
(iv) The Plaintiffs were never ready and willing to perform the agreement as modified.18
Now, the question is whether the abovementioned admissions, in the backdrop of averments in the Written Statement noted above, warrant a decree on admission. At the outset, it may be noted that the suit is for specific performance of the suit agreement and not for refund of money admittedly received by Defendant No. 1 in performance of that agreement. The main issues in such a suit are (a) existence of a contract, (b) the Defendant's refusal to perform the contract and (c) the Plaintiffs' readiness and willingness to perform the contract. The defence of Defendant No. 1 in the Written Statement is that the suit agreement was modified by a writing executed by Defendant No. 2 on behalf of the Plaintiffs; and that the Plaintiffs were not ready and willing to perform the agreement as modified. On the other hand, the Plaintiffs' case is that there was no modification of the suit agreement; that Defendant No. 2 had no authority to execute any writing on behalf of the Plaintiffs; that the Plaintiffs had fully performed the agreement as it originally and always stood. These pleadings do raise the issues:
(i) Whether the writing of 1 February 2008 was executed by Defendant ::: Downloaded on - 13/02/2014 23:13:12 ::: sat 14/17 nm 3806-2011.doc No. 2 on behalf of the Plaintiffs?
(ii) Whether the writing had the effect of modifying the suit agreement?
(iii) Whether the Plaintiffs are ready and willing to perform the agreement as modified?
19 These issues ought to be decided at the trial. The Plaintiffs are not entitled to a decree at this stage on the admission of Defendant No. 1 that the agreement as it originally stood was performed by the Plaintiffs in 2006-07, when the defence is that the agreement as it originally stood was later, i.e. on 1 February 2008, modified, and the Plaintiffs are not ready to perform the modified agreement. The claim as laid down in the plaint is of the Plaintiffs' entitlement to specific performance of the original agreement. This claim is by no means admitted by Defendant No. 1. What is admitted is the existence of the original agreement (till it was said to be modified) and receipt of full payment thereunder, and not the Defendant's liability to perform the agreement as it originally stood.
20 The learned Counsel, in this behalf, submitted that the admissions were made not only before the alleged writing of 1 February 2008, but even after the alleged writing. That, however, is a matter of trial. The admissions, if any, made after the execution of the writing, may at the most weaken the defence based on the writing, but these admissions certainly cannot be called 'unambiguous, unconditional and clear' admissions intended to be read and construed as admissions of the Plaintiffs' claim in the suit.
21 A learned Single Judge of this Court in the case of Vaijayanti w/o.
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8) :
"8. "Facts", which need to be admitted for passing a decree under Rule 6 of Order 12 of Civil Procedure Code, have to be "facts jurisdictional to the grant of decree" and not the facts on which the transaction commenced, and isolated reading of admission cannot be done."
22 The admissions in our case are not of "facts jurisdictional to the grant of decree". These admissions by themselves do not cover all material propositions of fact which the Plaintiffs are called upon to prove in the present suit. No decree can, therefore, be passed on these admissions.
23 The judgment of Delhi High Court in the case of Vijaya Myne vs. Satya Bhushan Kurya7 cited by Mr.Chagla, the learned Senior Counsel for the Plaintiffs, is clearly distinguishable. In that case, the facts established from admissions of the Appellant were sufficient to pass a decree in favour of the Respondent.
24 Alternatively, it was submitted on behalf of the Plaintiffs that the writing of 1 February 2008 relates to 44 acres of identifiable land and a decree on admission can still be granted for 180 acres of the suit land for which there is no defence. That depends on whether the writing of 1 February 2008 was a separate agreement with respect to 44 acres unconnected with the original agreement or a modification of the original agreement. If it is a modification, the question is of performance as a whole of the modified agreement. There is no scope in such a 6 2007 (4) ALL MR 593 7 142 (2007) Delhi Law Times 483 (DB) ::: Downloaded on - 13/02/2014 23:13:12 ::: sat 16/17 nm 3806-2011.doc case to grant performance of a part of the modified agreement. As discussed above, the effect of the writing of 1 February 2008 is a matter of trial and hence, the alternative submission cannot be accepted.
25 The learned Counsel for the Plaintiffs, in support of the claim for a part decree, relied upon the judgment of the Supreme Court in the case of Firm Sriniwas Ram Kumar vs. Mahabir Prasad 8 and the judgment of Calcutta High Court in the case of Premsuk Das Assaram vs. Udairam Gungabux 9. In the case of Firm Sriniwas Ram Kumar (supra), the subordinate court had dismissed the plaintiff's claim for specific performance, but granted a money decree on the basis of the defendant's admission of receipt of an advance payment. The Supreme Court upheld this decree on the ground inter alia that there was no question of adducing evidence on a fact expressly admitted by the defendant. The case of Firm Sriniwas Ram Kumar (supra) was a case where a decree was passed at the conclusion of the trial and not under Order XII Rule 6.
That case has no application to the facts of our case. In Premsuk Das Assaram (supra), the Judgment was delivered under Order XII Rule 6. That was a suit for a money claim based on accounts. There was an admission of a part of the amount. A judgment was entered for that part of the suit claim and the plaintiff was permitted to proceed to prove the rest of the claim at the trial. The Calcullta High Court refused to restrict the operation of Order XII Rule 6 only to cases where the defendant's admission pertains to the whole claim. The decree for the part which was admitted was upheld. But then, in the Calcutta case the claim was severable into distinct portions and the defendant admitted his liability in respect 8 AIR (38) 1951 Supreme Court 177 9 Indian Law Reports (Vol.XLV.) Calcutta Series Page 138 ::: Downloaded on - 13/02/2014 23:13:12 ::: sat 17/17 nm 3806-2011.doc of one portion of such claim. In our case, the two parts, namely, reversionary rights with respect to 44 acres and 180 acres, cannot be so separated.
26 For all these reasons, Notice of Motion No.3806 of 2011, which prays for a decree on admission, is rejected. There shall be no order as to costs.
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