Bombay High Court
Nitin Gandhi And Anr vs Dinyar Pheroz Dubash And 4 Ors on 9 October, 2014
Author: M.S.Sonak
Bench: Mohit S. Shah, M.S.Sonak
dssherla 1 app42-14@ nms2308.07
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO.42 OF 2014
IN
CHAMBER SUMMONS NO.2087 OF 2011
IN
SUIT NO.1241 OF 2007
Nitin Gandhi & anr. ..Appellants
vs.
Dinyar Pheroz Dubash & ors. .. Defendants.
WITH
NOTICE OF MOTION NO.2308 OF 2007
ig IN
SUIT NO.1241 OF 2007
Nitin Gandhi & anr. .. Plaintiffs
vs.
Dinyar Pheroz Dubash & ors. .. Defendants.
WITH
NOTICE OF MOTION NO.537 OF 2014
IN
APPEAL NO.42 OF 2014
IN
CHAMBER SUMMONS NO.2087 OF 2011
IN
SUIT NO.1241 OF 2007
Nitin Gandhi & anr. ..Applicants
In the matter between
Nitin Gandhi & anr. ..Appellants
vs.
Dinyar Pheroz Dubash & ors. .. Respondents.
Mr. Shailesh Shah, Sr.Advocate a/w. Mr. Gargi Bhagwat i/b M/s.
Divekar & Co. for Appellants/Applicants in Appeal 42/2014 &
Notice of Motion No.537 of 2014 and for Plaintiffs in Notice of
Motion No.2308 of 2007.
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Mr. Ramchandran N. i/b Narayanan & Narayanan for Respondent
Nos.1 to 3 in Appeal No.42 of 2014 & Notice of Motion No.537 of
2014 and for Defendants Nos.1 to 3 in Notice of Motion No.2308
of 2007.
Ms Usha R. Tiwari for Respondent No.4 in Appeal No.42 of 2014
& Notice of Motion No.537 of 2014 and for Defendants No.4 in
Notice of Motion No.2308 of 2007.
Mr. Pradeep Sancheti, Sr. Advocate a/w. Mr. Rakesh Agarwal i/b
N. Raja for Respondent No.5 in Appeal No.42 of 2014 & Notice of
Motion No.537 of 2014.
CORAM: MOHIT S. SHAH, C.J. &
ig M.S.SONAK, J.
JUDGMENT RESERVED ON : 25 June 2014
JUDGMENT PRONOUNCED ON : 09 Oct. 2014
JUDGMENT ( PER M.S.SONAK, J.):
1] This appeal is directed against the order dated 28 October 2013 in Chamber Summons No.2087 of 2011 in Suit No.1241 of 2007 declining the appellants (original plaintiffs) leave to implead subsequent purchaser of the suit property and for consequential amendments to the plaint.
2] We have heard Mr. Shailesh Shah, learned senior counsel for the appellants, Mr. Pradeep Sancheti, learned senior counsel for respondent No.5 (subsequent purchaser), Mr. Ramchandran N. for respondent Nos.1 to 3 (original defendant Nos.1 to 3) and Ms. Usha R. Tiwari for respondent No.4 (original defendant No.4). With the consent of learned counsel for the 2 of 35 ::: Downloaded on - 13/10/2014 23:48:37 ::: dssherla 3 app42-14@ nms2308.07 parties, we have taken up not merely this appeal, but also Notice of Motion No.2308 of 2007 in Suit No.1241 of 2007 (Motion seeking interim reliefs in the Suit), for final hearing and disposal.
3] For the purposes of present appeal, the parties shall be referred to by their descriptions in the trial court, i.e., the appellants shall be referred to as the plaintiffs, respondent Nos.1 to 4 as the defendants and respondent No.5 as the 'subsequent purchaser', for the sake of convenience.
4] By four separate agreements dated 2 January 2014, defendant Nos.1 to 4 agreed to assign their undivided rights in respect of the two properties being CTS No.725 and 515-C at Matunga in favour of the plaintiffs for total consideration of Rs.3.20 Crores (approximately) payable by the plaintiffs in the following manner:
(i) 10% upon execution of the agreement dated 2 January 2014;
(ii) 40% on obtaining commencement certificate to erect new buildings in place of old buildings;
(iii) The balance 50% on obtaining building completion certificate for the newly constructed buildings.
5] In addition to the aforesaid, since defendant Nos.1 to 4 were occupants in the building situated upon the property bearing CTS No.515-C, the plaintiffs have agreed to construct and allot to 3 of 35 ::: Downloaded on - 13/10/2014 23:48:37 ::: dssherla 4 app42-14@ nms2308.07 the said defendants six apartments in the new building to be constructed in or upon the said property.
6] In pursuance of the aforesaid, there is no dispute that defendant Nos.1 to 4 have received from the plaintiffs a sum of Rs.31,50,000/-, which corresponds to the 10% of consideration due and payable at the stage of execution of the agreement dated 2 January 2004. Defendant Nos.1 to 4 have also executed a Power of Attorney in favour of the plaintiffs, in order to enable the plaintiffs to undertake development in or upon the said property.
In pursuance of the agreement and/or Power of Attorney, the plaintiffs obtained clearance under the Urban Land (Ceiling and Regulation ) Act, 1976 on 29 July 2004.
7] It is the case of the plaintiffs that in pursuance of the agreements dated 2 January 2004, the plaintiffs obtained extract of property assessment in respect of the said properties; engaged services of competent architects to prepare plans for development and reconstruction of the said property; approached the tenants of the buildings in the suit properties with a view to obtain their consents for redevelopment; entered into agreement with one out of the two tenants in the building in property bearing CTS No.515-C. 8] It is the case of the plaintiffs that in the building in or upon property bearing No.CTS No. 515-C, apart from defendant Nos.1 to 4, there were two other occupants, i.e., Mr. K.R. N. 4 of 35 ::: Downloaded on - 13/10/2014 23:48:38 ::: dssherla 5 app42-14@ nms2308.07 Shenoy and Mr. Mody. In so far as Mr. K.R.N. Shenoy is concerned, the plaintiffs have entered into an agreement with him, which signifies his consent for the redevelopment. In so far as Mr. Mody is concerned, on account of non-cooperative attitude of defendant Nos.1 to 4, the plaintiffs were unable to enter into any agreement with him. Further, it is the case of the plaintiffs that the Public Interest Litigation No.3189 of 2004, which concerns interpretation of D.C. Regulation 37(7) came to be instituted and this Court vide interim order dated 26 October 2004 restrained the Municipal Corporation of Greater Mumbai from sanctioning proposals for redevelopment of cess buildings and appointed Committees to monitor reconstruction of cess buildings. In view of such interim order, it is the case of the plaintiffs, they could not submit plans for development of buildings in and upon the said properties or obtain commencement certificates.
9] Defendant Nos.1 to 4, by their lawyer's notice dated 30 June 2005 terminated the agreements dated 2 January 2004 on the ground that it was understood between the parties that the construction would be commenced within six months from the date of the agreement and since no construction had commenced within the said period, the agreements were being terminated.
10] The plaintiffs replied to the aforesaid legal notice, refuting the allegations made therein. In particular, it was pointed out that there was no understanding that the construction/development work would commence within a period 5 of 35 ::: Downloaded on - 13/10/2014 23:48:38 ::: dssherla 6 app42-14@ nms2308.07 of six months from the date of agreements. In any case, it was submitted that in the wake of written contracts in the form of agreements dated 2 January 2004, there was no question of raising any plea of 'oral understanding' to vary the terms of such written contract. The plaintiffs also adverted to the interim order in the Public Interest Litigation, which according to the plaintiffs was the cause for the inability to obtain clearance and approvals from the Municipal Corporation to proceed with the construction works.
11] It is the case of the plaintiffs that after about a period of two months from the aforesaid response, i.e., on or about 5 August 2005, the plaintiffs received a letter dated 3 August 2005 from the advocate of defendant nos.1 to 3 substantially reiterating the contents of the legal notice dated 30 June 2005 and purporting to return by way of cheques the amount of Rs.31,50,000/-, which was styled as 'earnest money deposit'.
12] The plaintiffs, thereupon, by letter dated 23 August 2005, joined issue with the allegations in the letter dated 3 August 2005 and declined to accept or encash the cheques. Thereafter the plaintiffs claim to have received from unnamed person a packet containing advertisement published in Bombay Samachar dated 31 August 2005 under the signature of Ms Kanchan Pamnani, advocate, which indicated that her client intended to purchase the properties, which formed the subject matter of the agreements dated 2 January 2004 (suit properties). The plaintiffs, therefore, 6 of 35 ::: Downloaded on - 13/10/2014 23:48:38 ::: dssherla 7 app42-14@ nms2308.07 by letter dated 22 November 2005 brought to the notice of Ms Kanchan Pamnani, the factum of agreements dated 2 January 2004. The plaintiffs also issued an advertisement on 28 November 2005 in the Free press Journal, informing the public at large about the agreements dated 2 January 2004 and warning them against dealing with defendant Nos.1 to 4, and suit properties, to the prejudice of the plaintiffs right in respect thereof.
13] The plaintiffs claim that there were no overt-acts on the part of the defendants in pursuance of the purported termination though defendant Nos.1 to 4 were not cooperative with the plaintiffs in the matter of proceeding with construction and development activity in or upon the said property. Ultimately, on or about 10 April 2007, the plaintiffs instituted a Suit No.1241 of 2007, seeking inter alia decree of specific performance as against defendant Nos.1 to 4 by reference to the agreements dated 2 January 2004. The plaintiffs, in such suit have averred that they have always been ready and willing and continue to be ready and willing to perform their part of the bargain.
14] The plaintiffs applied for ad-interim injunction, which was rejected by the learned Single Judge of this Court on 17 December 2007, primarily on the ground of delay.
15] On 6 August 2010, the Solicitors for respondent No.5, i.e., subsequent purchaser issued a public notices/advertisements in Free Press Journal and Navshakti inviting objection from the 7 of 35 ::: Downloaded on - 13/10/2014 23:48:38 ::: dssherla 8 app42-14@ nms2308.07 members of the general public, to the proposed sale/purchase of the property bearing CTS No.515-C. In response thereto, no claims were received by the Solicitors of subsequent purchaser from any person or entity, including in particular, the plaintiffs.
16] On 31 May 2011, defendant No.4 entered into an agreement with the subsequent purchaser, agreeing to assign his undivided rights in respect of two suit properties for a consideration of Rs.80 Lacs.
17] On 8 September 2011, when the plaintiffs Notice of Motion No.2308 of 2007 came up for hearing before the trial court, counsel for defendant Nos.1 to 3 informed the Court that they had learnt about defendant No.4 having transferred his undivided rights in respect of the suit property in favour of some third party. In view of such statement, the hearing in notice of motion was adjourned.
18] The plaintiffs' Solicitor on 8 September 2011 itself by letter bearing same date, made enquiries with regard to the subsequent purchasers and requested defendant No.4 to furnish a copy of agreement, if any, to them for the purposes of taking further necessary steps in the matter.
19] In the meantime, on 21 September 2011 defendant Nos.1 to 3 executed a Deed of Assignment in favour of the subsequent purchaser transferring their undivided rights in the 8 of 35 ::: Downloaded on - 13/10/2014 23:48:38 ::: dssherla 9 app42-14@ nms2308.07 property bearing CTS No.515-C. 20] On 5 December 2011, when Notice of Motion No.2308 of 2007 came up for hearing, on behalf of defendant Nos.1 to 3, a letter was handed over to the plaintiffs' advocate, informing them about the Deed of Assignment dated 21 September 2011.
21] Within a period of eight days from the aforesaid, i.e., on 13 December 2011, the plaintiffs took out the Chamber Summons No.2087 of 2011, seeking inter alia to implead the subsequent purchaser as a party defendant in Suit No.1241 of 2007 and for consequential amendments. A copy of the Chamber Summons was duly served upon the defendants, as also the subsequent purchaser.
22] On 3 January 2012, the subsequent purchaser filed an affidavit-in-reply opposing the Chamber Summons, inter alia, setting out a case that they are 'bona fide purchasers of value without notice' in respect of the entire 100% stake in the property bearing CTS No.515-C and in respect of 16.67% stake in the property bearing CTS No.725.
23] On 12 January 2012, i.e., after the receipt of Chamber Summons No.2087 of 2011 and filing of response thereto on 3 January 2012, the subsequent purchaser obtained a conveyance from defendant No.4, in respect of his undivided rights in the property bearing CTS No.515-C and CTS No.725.
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24] In the course of arguments upon Chamber Summons
No.2087 of 2011, the plaintiffs deleted certain portions of the proposed amendment as also prayer clause (C-1), which had sought for a declaration to declare the three Deeds of Assignment dated 21 September 2011 executed by defendant Nos.1to 3 with the subsequent purchaser as illegal and void. Therefore, the Chamber Summons was restricted to seeking the following amendments:
SCHEDULE I. Add the following as Defendant No.5 in the cause title of the Plaint.
M/s. Aastha Associates ]
A partnership firm, having their office ]
At Office No.7, Ashirwad Building ]
48, Dr. Ambedkar Road, above ]
Jankalayan Bank, Sion (East) ]
Mumbai 400 022 ]
II. Add the following paragraphs after paragraph 39
of the Plaint.
39A. The Plaintiff states that after filing
of the present suit, the Defendant Nos.1,2 and 3 have by separate Deeds of Assignments, all executed on 21st September 2011, assigned their right, title or interest in one of the suit
10 of 35 ::: Downloaded on - 13/10/2014 23:48:38 ::: dssherla 11 app42-14@ nms2308.07 properties described in Exhibit 'B' hereto to the Defendant No.5. The Plaintiffs state that the said transactions have been entered into by the Defendant Nos.1 to 3 behind the back and without the knowledge of the Plaintiffs. The said transactions have been entered into only with a view to prejudice the rights of the Plaintiffs. The Plaintiffs state that the present Suit is still pending. The Defendant No.5 cannot therefore be termed as "bona fide purchasers". In any event even assuming that Defendant No.5 are bona fide purchasers still the Defendant No.5 would also be bound by any order and decree that may be passed in the present suit.
39B. The Plaintiffs state that in the event, this Hon'ble Court holds that the Plaintiffs are entitled to specific performance of their agreements with Defendant Nos.1 to 4, then such a decree would also be binding upon Defendant No.5.
25] By the impugned order dated 28 October 2013, learned Single Judge has rejected the Chamber Summons, primarily on the ground that the plaintiffs had failed to plead and establish that the subsequent purchaser was not a bona fide 11 of 35 ::: Downloaded on - 13/10/2014 23:48:38 ::: dssherla 12 app42-14@ nms2308.07 purchaser without notice of the earlier agreement and therefore, in terms of section 19(b) of the Specific Relief Act, 1963 (said Act), there was no question the plaintiffs claiming any specific performance against such subsequent purchaser. Learned Single Judge noted that there were no allegations in the affidavit supporting the chamber summons to the effect that the subsequent purchaser was not a bona fide purchaser. Learned Single Judge went on to note that in the statement in the proposed text of amendment that the subsequent purchaser cannot be termed as a 'bona fide purchaser' was woefully insufficient in the context of positive evidence led by the subsequent purchaser to establish prima-facie that it was a purchaser for value and without notice of the original contract. Learned Single Judge has reasoned that if a subsequent purchaser against whom there are no allegations or materials indicating want of bonafides, is made a party to a suit seeking specific performance, the same would be contrary to the exception carved out by section 19(b) of the said Act, apart from leading to inconvenience and harassment to bona fide purchaser for value. Learned Single Judge placed reliance upon the decision of this Court in the case of M/s. Shree Kamal Constructions & Ors. vs. Shri. Kamlakar Jiwan Patil & ors (Appeal No.330 of 2012 in Chamber Summons No.250 of 2012 in Suit No. 327 of 2012 decided on 9 April 2013).
26] Mr. Shailesh Shah, learned senior advocate for the plaintiffs in support of the appeal, made the following 12 of 35 ::: Downloaded on - 13/10/2014 23:48:38 ::: dssherla 13 app42-14@ nms2308.07 submissions:
(i) In the Schedule to the Chamber Summons containing the proposed text of the amendments, there were clear pleadings to the effect that the subsequent purchaser cannot be termed as a 'bona fide purchaser'.
As defined in the Law Lexicon, the expression 'bona fide purchaser' means the purchaser who purchases property without notice, actual or constructive of any adverse rights, claims, interest or equities of the other any and to the property sold. The view taken by the learned Single Judge that there were no pleadings, is therefore, clearly erroneous;
(ii) At the stage of seeking impleadment of a subsequent purchaser there is no necessity to place any evidence on record to establish want of bona fides on the part of subsequent purchaser. Similarly, the so called 'evidence' produced by the subsequent purchaser by way of his affidavit-in-reply to oppose impleadment, is also irrelevant, at this stage. The denial of leave to implead subsequent purchaser, on the ground that mere denials by the plaintiffs were woefully insufficient in the context of positive evidence led by the subsequent purchaser, was clearly erroneous;
(iii) The burden of proving good faith and lack of notice of the first contract is upon the subsequent 13 of 35 ::: Downloaded on - 13/10/2014 23:48:38 ::: dssherla 14 app42-14@ nms2308.07 purchaser and not the plaintiffs. Therefore, as long as it is established that the subsequent purchaser claims title under the vendor of the plaintiff, as opposed to setting up of an independent title in himself, leave to implead has to be necessarily granted by the trial court, in order, that an effective decree for specific performance can be passed in the matter;
(iv) Learned Single Judge misread or in any case misinterpreted the decision of the Division Bench of this Court in the case of M/s. Shree Kamal Constructions (supra). Further, learned Single Judge erred in not following the decision of the Supreme Court in the case of Kasturi v. Iyyamperumal & ors -(2005) 6 Supreme Court Cases 733, in which it is clearly held that subsequent purchaser is a necessary party, as he would be affected, if he had purchased the property with or without notice of the contract;
27] In the context of Notice of Motion No. 2308 of 2007, Mr. Shah, learned senior counsel for the plaintiffs submitted that repudiation of agreements dated 2 January 2004 by defendant Nos. 1 to 4 on the ground of some 'oral understanding' is patently illegal. In pursuance of the agreements dated 2 January 2004, the plaintiffs had not only paid defendant Nos.1 to 4 an amount of Rs.31,50,000/-, way back in the year 2004, but further the plaintiffs had undertaken several acts and activities, incurring 14 of 35 ::: Downloaded on - 13/10/2014 23:48:38 ::: dssherla 15 app42-14@ nms2308.07 both, efforts and expenses in the bargain. The suit was instituted within the prescribed period of limitation and no equities can be said to have arisen in favour of the defendant Nos.1 to 4 between the date of repudiation, i.e., 30 June 2005 and the date of the institution of the suit, i.e., 10 April 2007. The conduct of defendant Nos.1 to 4 reeks of bad faith, particularly, if the sequence of events between 31 May 2011 and 12 January 2012 is taken into consideration. During this period, defendant Nos.1 to 4 have attempted to create third party rights in or upon the suit properties in a clandestine manner. For all these reasons, Mr. Shah submitted that the plaintiffs have made out a prima-facie case and the balance of convenience is also in favour of grant of interim reliefs. Mr. Shah submitted that in matters of contracts relating to immovable properties, there is a presumption of law that compensation in terms of money is never an adequate relief and therefore, if interim reliefs are declined, the plaintiffs will suffer irreparable loss and injury.
28] Mr. Sancheti, learned senior counsel for the subsequent purchaser defended the impugned order by urging following:
(i) Neither in the proposed text of amendment nor in the affidavit in support of the Chamber Summons, is there any positive pleading/allegation to the effect that the subsequent purchaser is not a bona fide purchaser for value and without notice of the original contract. In absence of such pleading/material, no specific
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(ii) No amount of evidence, which is not backed by pleadings, can ever be looked into in the course of a civil trial. Therefore, even if, the subsequent purchaser is impleaded as a party, in absence of pleadings to the effect that such subsequent purchaser is not a bona fide purchaser for value and without notice of the original contract, it will be impermissible for the plaintiffs to lead any evidence on this score. In such circumstances, the joinder of a subsequent purchaser would be a useless and vexatious exercise. Such a joinder, will, unnecessarily create a cloud over the perfect title of the subsequent purchaser. This, in turn, would encourage the plaintiffs' extortionate monetary demands. Upon consideration of such relevant circumstances, learned Single Judge has rightly dismissed the Chamber Summons;
(iii) Even if, leave as prayed for were to be granted, upon meaningful reading of the plaint after incorporation of amendment in its truncated form, no cause of action would be disclosed as against the subsequent purchaser. Further, upon the plaintiffs giving up relief in terms of prayer clause (C-1) in the 16 of 35 ::: Downloaded on - 13/10/2014 23:48:38 ::: dssherla 17 app42-14@ nms2308.07 proposed text of amendment, no relief could ever be granted in respect of the conveyance in favour of the subsequent purchaser. The Trial Court, in such a situation, would have no option but to reject the plaint as against the subsequent purchaser by resort to the provisions contained in Order 7 and Rule 11 of the Code of Civil Procedure (CPC). Rather than prolong this inevitable result, Mr. Sancheti submitted that the learned Single Judge was entirely right in nipping in the bud, the attempt to implead the subsequent purchaser in the suit;
(iv) Finally, by adverting to the provisions contained in section 15 of the said Act, Mr. Sancheti submitted that primarily, specific performance of a contract may be obtained only by the parties thereto. Impleadment of the subsequent purchaser particularly, where the material on record establishes that such subsequent purchaser is a bona fide purchaser for value and without notice of the original contract, would substantially change the nature and character of the original suit seeking relief of specific performance. This, submits Mr. Sancheti, is clearly impermissible.
29] In the context of Notice of Motion No.2308 of 2007, Mr. Sancheti submitted that in pursuance of Deeds of Assignment dated 21 September 2011 and 12 January 2012, the subsequent 17 of 35 ::: Downloaded on - 13/10/2014 23:48:38 ::: dssherla 18 app42-14@ nms2308.07 purchaser has been placed in possession of the property bearing CTS No.515-C. The subsequent purchaser has, after entering into agreements with occupants of the building situated thereon, proceeded to demolish the same. The subsequent purchaser has purchased the property bearing CTS No.515-C after having carried out due diligence and payment of very substantial consideration to the tune of Rs.3.5 Crores (approximately). In contrast, the plaintiffs failed to register any notice of lis pendens in terms of section 52 of the Transfer of Property Act, 1881; failed to respond to the public notices issued by the Solicitors of the subsequent purchaser ; and approached the civil court after considerable delay. In such circumstances, Mr. Sancheti submitted that the plaintiffs have made out no prima-facie case. In any event, the balance of convenience is clearly against the grant of any interim relief, in favour of the plaintiffs. For all these reasons, Mr. Sancheti submitted that Notice of Motion No.2308 of 2007 is liable to be dismissed.
30] Mr. Ramchandran N., learned counsel for defendant Nos.1 to 3 submitted that the original agreements dated 2 January 2004, contemplated completion of development and construction within a period of 18 months from the date of the agreements. For a period of almost 15 months, there was no construction or development carried out by the plaintiffs. The interim reliefs in public interest litigation were clearly irrelevant and in any case, the same were issued much after the parties entered into agreement dated 2 January 2004. As such, it was contended that 18 of 35 ::: Downloaded on - 13/10/2014 23:48:38 ::: dssherla 19 app42-14@ nms2308.07 the termination of the agreements is legal and valid and in any case it was submitted that there is gross and unexplained delay and laches on the part of the plaintiffs, on account of which the plaintiffs ought not to be granted any interim reliefs.
31] Ms Usha Tiwari, learned counsel for defendant No.4 adopted the submissions made by Mr. Sancheti and Mr. Ramchandran N. and further submitted that in the Chamber Summons, there is no relief whatsoever applied for with regard to the Deed of Conveyance entered into by defendant No.4 with the subsequent purchaser.
32] Having heard the rival contentions and perused the record, we now proceed to evaluate the same.
33] The first issue to be determined is whether on the basis of pleadings or what is contended to be the lack of them in the proposed text of amendments, leave to implead the subsequent purchaser and carry out consequential amendments could have been denied to the plaintiffs. As noted earlier, in the context of amendment, the plaintiffs have undoubtedly averred that the subsequent purchaser 'cannot be termed as a bona fide purchaser'. Order 6 Rule 2 of CPC provides that pleadings must contain material facts and not evidence. The Law Lexicon, upon which reliance was placed by Mr. Shah, the expression 'bona fide purchaser' is defined thus:
'Bona fide purchaser is one who at the time of
19 of 35 ::: Downloaded on - 13/10/2014 23:48:38 ::: dssherla 20 app42-14@ nms2308.07 the purchase advances a new consideration, surrenders some security, or does some other act which leaves him in a worse position if his purchase should be set aside, and purchases in the honest belief that his vendor had a right to sell, without notice, actual or constructive of any adverse rights, claims, interest or equities of other in and to the property sold.' 34] At the stage of considering the chamber summons seeking leave to implead/amend, the Court is really not concerned with the veracity or otherwise of the statements made in the proposed text of the amendment. Therefore, at that stage, pleadings to the effect that the subsequent purchaser is not a bona fide purchaser would suffice. There is no requirement of producing any material or evidence for establishing that the subsequent purchaser is not a bona fide purchaser, at the stage when leave for impleadment/consequential amendments is being applied for. As noted earlier, the expression 'bona fide purchaser' means and implies a purchaser who purchases a property without notice, actual or constructive of any adverse rights, claims, interest or equities of other in and to the property sold. Therefore, at the stage of seeking leave to implead/carry out consequential amendment, in our opinion, there was no question of adverting to any evidence or the lack of it in determining whether the subsequent purchaser was indeed a bona fide purchaser for value and without notice of the original contract.
35] The provision contained in section 19(b) of the said
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Act which affords protection to a subsequent purchaser who purchases the contracted property in good faith and for value without notice of the original contract, is in the nature of an exception to the general rule. Therefore, it is a settled position in law that the onus of proof of good faith is upon the subsequent purchaser who takes a plea that he is an innocent or bona fide purchaser for value and without notice of the original contract. In the case of Shankarlal Narayandas Mundade v The New Mofussil Co. Ltd. & ors. AIR (33) 1946 Privy Council 97, in the context of section 27 of the Specific Relief Act, 1877, which corresponds to section 19 of the Specific Relief Act 1963, the Privy Council, by relying upon its earlier authority in the case of Bhup Narain Singh V. Gokul Chand Mahton - AIR 1934 PC 68 has held thus:
"Their Lordships have found it unnecessary to examine the evidence which was called on behalf of the plaintiff to show that these defendants in fact had notice of the earlier contract, since a decision of this Board is clear authority for the proposition that the burden of proving good faith and lack of notice lay upon the defendants".
36] In the case of R.K.Mohaammed Ubadullah Vs. Hajee C. Abdul Wahab (D) by L.Rs. - AIR 2001 SC 1658 , in the context of section 19 of the Specific Relief Act, 1963, the Supreme Court has observed thus :
14. ............
As can be seen from Section 19(a) and (b) extracted above specific performance of a contract can be enforced against (a) either party thereto and
(b) any person claiming under him by a title arising 21 of 35 ::: Downloaded on - 13/10/2014 23:48:38 ::: dssherla 22 app42-14@ nms2308.07 subsequent to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract. Section 19(b) protects the bona fide purchaser in good faith for value without notice of the original contract. This protection is in the nature of exception to the general rule. Hence, the onus of proof of good faith is on the purchaser who takes the plea that he is an innocent purchaser. Good faith is a question of fact to be considered and decided on the facts of each case.
(emphasis supplied) 37] The pleadings in the context of the proposed amendment have therefore to be construed in the light of legal position that the protection afforded to the subsequent purchaser by section 19(b) of the said Act is in the nature of an exception to the general rule and therefore, the onus of proving good faith is on the purchaser who takes the plea that he is an innocent purchaser. Ultimately, good faith is also question of fact to be considered and decided on the facts of each case. For this purpose, an opportunity has to be afforded to the parties to lead evidence in the course of trial. We are, therefore, unable to share the view taken by the learned Single Judge that in the facts and circumstances of the present case there were insufficient pleadings or evidence on the aspect of the subsequent purchaser not being a bona fide purchaser for value and without notice of the original contract.
38] Mr. Sancheti placed reliance upon the decision of the
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Supreme Court in the cases of National Textile Corporation Limited v. Nareshkumar Badrikumar Jagad & ors. - (2011) 12 SCC 695 and Union of India vs. Ibrahim Uddin & anr. - (2012) 8 SCC 148, to contend that no amount of evidence, which is not backed by pleadings can ever be looked into in the course of a civil trial. The position that evidence cannot travel beyond the pleadings, is quite well settled. However, since we are of the opinion that the pleadings as contained in the text of the proposed amendment constitute sufficient pleadings, there is no question of invocation of the said principle to the facts and circumstances of the present case. Besides, as noted earlier since the protection afforded to a subsequent purchaser is in the nature of an exception to the general rule, onus of proving good faith is on the purchaser who takes the plea that he is an innocent purchaser.
39] Mr. Sancheti then relied upon the decision of the Supreme Court in the case of Sopan Sukhdeo Sable & ors vs. Assistant Charity Commissioner - (2004) 3 SCC 137, to contend that the reading of the plaint has to be meaningful and not merely formal. Further, upon such meaningful reading of the plaint, if no cause of action is disclosed as against the subsequent purchaser, then no useful purpose would be served by grant of leave to implead and amend. There is no dispute regards the proposition that the reading of plaint, in the context of the provisions of Order 7 Rule 11 of the CPC, has to be meaningful and not merely formal. However, the very same decision also lays down that there cannot be any compartmentalization, dissection, segregation and 23 of 35 ::: Downloaded on - 13/10/2014 23:48:38 ::: dssherla 24 app42-14@ nms2308.07 inversions of the language of various paragraphs in the plaint.
Although it is the substance and not merely the form that has to be looked into, the pleading has to be construed as it stands without any addition or subtraction or words or change of its apparent grammatical sense. The intention of the party concerned is to be gathered primarily from the tenor and terms of his pleadings taken as a whole. The real object of Order 7 Rule 11 of the Code is to keep out of courts irresponsible law suits. As we have already noted, the pleadings in the present case are quite sufficient, particularly since the onus of proving good faith is on the purchaser who takes the plea that he is an innocent purchaser.
Therefore, we see no merit in the contention of Mr. Sancheti based upon the provisions contained in Order 7 Rule 11 of the CPC and the consequent futility in grant of leave to implead and amend.
40] In a suit for specific performance, when a subsequent purchaser is sought to be impleaded, the true test to be applied by the court is to determine whether the purchaser claims title under the vendor of the plaintiff or whether he claims a title independent of or adverse to the title of the vendor. There are decisions, both of the Supreme Court as also this court which take view that impleadment is permissible where the party which is proposed to be joined claims through the vendor and under a subsequent agreement. This is to be distinguished from a case where title adverse to or independent of the vendor is sought to be asserted. In the former case, it is but necessary to join the subsequent purchaser in order to ensure that when a 24 of 35 ::: Downloaded on - 13/10/2014 23:48:38 ::: dssherla 25 app42-14@ nms2308.07 decree is passed by the court at the trial of the suit, the subsequent purchaser can be directed to join in completing the title which may be required to be conferred upon the plaintiff.
41] In the case of Durga Prasad vs. Deep Chand - AIR 1954 SC 75, the Supreme Court held thus:
"42. In our opinion, the proper form of decree is to direct specific performance of the contract between the vendor and the plaintiff and direct the subsequent transferee to join in the conveyance so as to pass on the title which resides in him to the plaintiff. He does not join in any special covenants made between the plaintiff and his vendor; all he does is to pass on his title to the plaintiff. This was the course followed by the Calcutta High Court in Kafiladdin v. Samiraddin, AIR 1931 Cal 67 (C), and appears to be the English practice. See Fry on Specific Performance, 6th Edn., page 90, Paragraph 207 ;
also 'Potter v. Sanders'(1846) 67 ER 1057 (D). We direct accordingly".
42] In the case of Dwarka Prasad Singh v. Harikant Prasad Singh - (1973) 1 SCC 179, the Supreme Court observed thus:
"There appears to be some divergence between the High Courts on the question whether in a suit for specific performance against a purchaser with notice of a prior agreement of sale the vendor is a necessary party or not. In other words the conflict has arisen on the question whether the decree in a suit for specific performance when the property in dispute has been sold to a third party should be to only direct the subsequent purchaser to execute a conveyance or whether the subsequent purchaser and the vendor should both execute a conveyance in favour of the plaintiff : See Gourishankar & Others v. Ibrahim Ali
25 of 35 ::: Downloaded on - 13/10/2014 23:48:38 ::: dssherla 26 app42-14@ nms2308.07 and Kafiladdin & Others v. Samiraddin & Others. This Court has, however, held in Lala Durga Prasad & Another v. Lala Deep Chand & Others that in a suit instituted by a purchaser against the vendor and a subsequent purchaser for specific performance of the contract of sale the proper form of the decree is to direct specific performance of the contract between the vendor and the plaintiff and further direct the subsequent transferee to join in the conveyance so as to pass on the title which resides in him to the plaintiff. This was the course followed by the Calcutta High Court in the above case and it appears that the English practice was the same. Thus according to this decision, the conveyance has to be executed by the vendor in favour of' the plaintiff who seeks specific performance of the contract in his favour and the subsequent transferee has to join in the conveyance only to pass his title which resides in him. It has been made quite clear that he does not join in any special covenants made between the plaintiff and his vendor. All that he does is to pass on his title to the plaintiff.
In a recent decision of this Court in R. C. Chandiok & Another v. Chunni Lal Sabharwal & Others while passing a decree for specific performance of a contract a direction was made that the decree should be in the same form as in Lala Durga Prasad's case (supra). It is thus difficult to sustain the argument that the vendor is not a necessary party when, according to the view accepted by this Court, the conveyance has to be executed by him although the subsequent purchaser has also to join so as to pass on the title which resides in him to the plaintiff."
(emphasis supplied) 43] In the case of Kasturi (supra), the Supreme Court has observed thus:
"7. In our view, a bare reading of this provision,
26 of 35 ::: Downloaded on - 13/10/2014 23:48:38 ::: dssherla 27 app42-14@ nms2308.07 namely, second part of Order 1 Rule 10 sub-rule (2) CPC would clearly show that the necessary parties in a suit for specific performance of a contract for sale are the parties to the contract or if they are dead, their legal representatives as also a person who had purchased the contracted property from the vendor. In equity as well as in law, the contract constitutes rights and also regulates the liabilities of the parties.
A purchaser is a necessary party as he would be affected if he had purchased with or without notice of the contract, but a person who claims adversely to the claim of a vendor is, however, not a necessary party. From the above, it is now clear that two tests are to be satisfied for determining the question who is a necessary party. Tests are - (1) there must be a right to some relief against such party in respect of the controversies involved in the proceedings; (2) no effective decree can be passed in the absence of such party."
(emphasis supplied) 44] In the case of M/s. Shree Kamal Constructions & ors. (supra), the Division Bench of this court, upon analyzing the aforesaid decisions of the Supreme Court has ruled that a subsequent purchaser who claims under the vendor of the plaintiff and does not claim an independent title adverse to the vendor of the plaintiff can always be impleaded as a defendant in a suit for specific performance. In the facts and circumstances of the said case, no doubt, the plaintiffs had made a specific averment in the text of the amendment that the subsequent purchasers were not bona fide purchasers, but were purchasers who were aware of the rights and claims of the plaintiffs. However, the ratio of the said decision is not that in the absence of such pleadings, a subsequent 27 of 35 ::: Downloaded on - 13/10/2014 23:48:38 ::: dssherla 28 app42-14@ nms2308.07 purchaser cannot be impleaded as a defendant in the suit for specific performance. In fact, such an issue did not arise for consideration in the case of M/s. Shree Kamal Constructions (supra).
45] In the case of Sawstik Developers vs. Saket Kumar Jain & Anr. - 2014 (2) ALL MR 183, the Division Bench of this court, by reference to the decision in the case of M/s. Shree Kamal Constructions (supra), explained the position by observing the following :
4."Section 19 of the Specific Relief Act, 1963, provides that specific performance of a contract may be enforced against a party to the contract or any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract. In allowing an application for impleadment under Order 1 Rule 10 of the Code of Civil Procedure, 1908, the Court is required to consider whether the proposed addition is of a party who is either necessary or proper. Now, in a suit for specific performance, when a subsequent purchaser is sought to be impleaded, the true test that has to be applied by the Court is to determine whether the purchaser claims title under the vendor of the Plaintiff or whether, contrariwise, he claims a title independent of or adverse to the title of the vendor. Impleadment is permissible where the party which is proposed to be joined claims under the vendor of the Plaintiff and under a subsequent agreement. This is to be distinguished from a case where a title adverse to or independent of the vendor is sought to be asserted. In the former case, it is but necessary to join the
28 of 35 ::: Downloaded on - 13/10/2014 23:48:38 ::: dssherla 29 app42-14@ nms2308.07 subsequent purchaser in order to ensure that when a decree is passed by the Court at the trial of the suit, the subsequent purchaser is directed to join in completing the title which is to be conferred upon the Plaintiff."
(emphasis supplied) 46] The circumstance that prayer clause (C-1) from the text of the proposed amendment has been given up by the plaintiffs makes no difference particularly in the light of the law laid down by the Supreme Court in the case of Durga Prasad (supra) and Dwarka Prasad Singh (supra) which deal with the form of a decree to be passed in a suit for specific performance of a contract where the vendor has transferred the property to some other party. Therefore, if the trial court were to ultimately come to the conclusion that the plaintiffs are entitled to specific performance of the original contract, then conveyance has to be directed to be executed by the vendors in favour of the plaintiffs and the subsequent purchaser has to join in the conveyance only to pass the title which resides in him. Such subsequent purchaser cannot be compelled to join in any special covenants made between the plaintiffs and his vendors. Accordingly, the deletion of certain portion of the text of amendment, or prayer clause (C-1) cannot be regarded as bar to grant leave to implead and amend.
47] In the facts and circumstances of this case, the subsequent purchaser by virtue of Deeds of Assignment dated 21 September 2011 obtained undivided rights to the extent of 83% in the property bearing CTS No.515-C from defendant Nos.1 to 3. On 29 of 35 ::: Downloaded on - 13/10/2014 23:48:38 ::: dssherla 30 app42-14@ nms2308.07 13 December 2011, the subsequent purchaser was served with the chamber summons seeking his impleadment in the suit. The subsequent purchaser filed an affidavit-in-reply opposing the said chamber summons on 3 January 2012. Within a period of nine days thereafter, i.e., on 12 January 2012, the subsequent purchaser, however, entered into the conveyance with defendant No.4 for acquiring his undivided rights to the extent of remaining 17% in the suit properties bearing CTS Nos.725 and 515-C. 48] Accordingly, we are of the view that this is a fit case where leave to implead/amend ought to have been granted to the plaintiffs. Accordingly, we set aside the impugned judgment and order and make the Chamber Summons absolute in terms of prayer clause (a) and grant leave to the plaintiffs to amend the plaint in terms of the text extracted in paragraph '24' of this judgment and order. The Chamber Summons is accordingly, made absolute to the aforesaid extent.
49] In so far as Notice of Motion No.2308 of 2007 is concerned, the facts and circumstances relating to two plots bearing Nos.725 and 515-C shall have to be considered separately, at least in so far as the issue of balance of convenience and irreparable loss and prejudice is concerned.
50] On the aspect of prima-facie case, the material on record discloses that there was no legal infirmity as such in so far as the agreements dated 2 January 2004 were concerned. The 30 of 35 ::: Downloaded on - 13/10/2014 23:48:38 ::: dssherla 31 app42-14@ nms2308.07 allegations in the notice of termination dated 30 June 2005 to the effect that there was some fraud in the matter of execution thereof, are too vague to be accorded any credence at this prima-
facie stage. Further the allegations that there was an oral understanding that the construction upon the suit property was to commence within a period of six months from the execution of the agreements cannot be accepted at least at this prima-facie stage. This is because, the parties have entered into a written contract, in pursuance of which, defendant Nos.1 to 4 have received an amount of Rs.31,50,000/- in the year 2004. The allegation with regard to oral understanding has surfaced almost 15 months after the date of execution of the agreements. Normally, the contents of a written contract cannot be permitted to be varied by setting up some oral contract.
51] Further at least prima-facie there is no material whatsoever to indicate that the plaintiffs were either not ready or wiling to perform the part of the contract. In fact, in the course of the hearing, the plaintiffs even offered to deposit in this court the entire consideration as promised in the agreements dated 2 January 2004. It is settled position in law that unless established otherwise, there is a presumption that compensation in terms of money is never adequate, when it comes to enforcement of rights in respect of immovable property. Similarly, unless agreed otherwise, time is also not of the essence of the contract in matters of contracts concerning immovable property. Therefore, we are of the opinion that the plaintiffs have succeeded in making out a 31 of 35 ::: Downloaded on - 13/10/2014 23:48:38 ::: dssherla 32 app42-14@ nms2308.07 prima-facie case that they have a valid agreement, in their favour and that the purported repudiation thereof is neither legal nor valid.
52] In so far as the aspect of delay is concerned, undoubtedly there is some delay on the part of the plaintiffs in instituting the suit for specific performance. However, there is no dispute that the suit has been instituted within the prescribed period of limitation. Further in the matters of delay what has to be considered is not the mere physical running of time. What is relevant, is whether, on account of such delay any equities have arisen in the defendants, which it would be harsh or inequitable to dislodge at this point of time.
53] In so far as property bearing CTS No.515-C is concerned, defendant Nos.1 to 4 have already executed Deeds of Assignment/Conveyance in favour of the subsequent purchaser. Further, defendant Nos.1 to 4 claim to have placed the subsequent purchaser in possession of the said property bearing CTS No.515- C. The subsequent purchaser also claims to have entered into settlement with both the tenants of the building in the said property and thereafter demolished the building upon the said property, with a view to carry on construction and development thereon. Further, the subsequent purchaser prior to acquisition of the said property had caused an advertisement/public notice to be inserted in the Newspaper on or about 6 August 2010, to which there was no response from the plaintiffs. In Mumbai, the 32 of 35 ::: Downloaded on - 13/10/2014 23:48:38 ::: dssherla 33 app42-14@ nms2308.07 principle of lis pendens as provided in Section 52 of the Transfer of Property Act 1882 is prima-facie unenforceable, unless notice of lis pendens is duly registered. In the present case, the plaintiffs have admittedly not registered the notice of lis pendens. In these circumstances, whatever the prima-facie case, certainly, balance of convenience is not in favour of the plaintiffs, in the matter of grant of any interim reliefs qua the property bearing CTS No. 515-C. 54] However, in so far as the property bearing CTS No.725 is concerned, no such equities can be said to have arisen.
Defendant Nos.1 to 3 continue to retain their rights in the property bearing CTS No.725. Defendant No.4 vide Deed of Conveyance dated 12 January 2012 has conveyed his undivided rights to the extent of only about 17% in the said property to the subsequent purchaser. Admittedly, such conveyance is after the subsequent purchaser was served with a copy of the Chamber summon No.2087 of 2011 and had filed its reply thereto on 3 January 2012. Therefore, in so far as the Conveyance dated 12 January 2012 is concerned, at least prima-facie there is no question of the subsequent purchaser claiming to be a bona fide purchaser without notice of the original contract. Besides, the position in so far as property bearing CTS No.725 has also not undergone any change. The building thereon continues in its original condition. Thus, in so far as the property bearing CTS No.725 is concerned, it would be just, fair and proper, if the defendants are restrained from parting with the possession and 33 of 35 ::: Downloaded on - 13/10/2014 23:48:38 ::: dssherla 34 app42-14@ nms2308.07 /or creating any third party rights and/or inducting any new tenants.
55] Although Notice of Motion No.2308 of 2007 seeks appointment of receiver, as also directions to both plaintiffs and defendants to deposit certain amounts referred to therein, we are, at this stage, not inclined to grant such reliefs, as we are of the view, that the interests of justice would be served if the Notice of Motion is made absolute in terms of the prayer clause (b) restricted of course, to the suit premises described in Exhibit-A or the 1st Schedule to the plaint, being the property bearing CTS No.725.
56] Accordingly, we pass the following order;
(a) The impugned judgment and order dated 28 October 2013 is hereby set aside and leave is granted to the plaintiffs to amend the plaint in terms of the text extracted at paragraph 24 of this judgment and order.
The Chamber Summons No.2087 of 2011 is, accordingly, made absolute to the aforesaid extent;
(b) Amendment to be carried out by the plaintiffs within a period of four weeks from today;
(c) Notice of Motion No.2308 of 2007 in Suit
No.1241 of 2007 is made absolute in terms
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of prayer clause (b) thereof, however, the same shall be restricted to the suit premises described in Exhibit A or the 1 st Schedule to the plaint, being the property bearing CTS No.725.
57] Appeal No.42 of 2014 and Notice of Motion No.2308 of 2007 in Suit No.1241 of 2007 are disposed of accordingly. In the facts and circumstances of the present case, there shall be no order as to costs.
58] In view of the disposal of Appeal No.42 of 2014, Notice of Motion No.537 of 2014 does not survive and is accordingly disposed of.
CHIEF JUSTICE (M.S.SONAK, J.) 35 of 35 ::: Downloaded on - 13/10/2014 23:48:38 :::