Bangalore District Court
M/S.Raghavendra Developers vs Smt.Rangamma on 20 April, 2017
THE COURT OF THE V ADDL. CITY CIVIL JUDGE,
AT BANGALORE CITY.
(CCH-13)
DATED THIS THE 20th DAY OF APRIL, 2017
PRESENT
Sri.Muhammed Khan .M. Pathan,
B.Com., LL.B.(Spl), LL.M.(Business Law)
V ADDL.CITY CIVIL & SESSIONS JUDGE
BANGALORE
O.S.NO.3957/2012
PLAINTIFF: M/s.Raghavendra Developers
Having its office at No.30/1,
Behind Srinivasa Kalayana Mantapa
Mathikere, Bangalore-560 054
By its Managing Partner
Sri.Samamalla Reddy
S/o Raghava Reddy,
Aged about 41 years
(By Sri.Malipatil P.S, Advocate)
/VS/
DEFENDANTS: 1. Smt.Rangamma
W/o Late Chikkagangaiah
Aged about 68 years,
2. Smt.Puttamma
D/o Late Chikkagangaiah
Aged about 49 years,
3. Sri.Ramesh
S/o Late Chikkagangaiah
Aged about 46 years,
Defendant Nos.1 to 3 are r/at
No.205, II Cross,
Mariyappanapalya,
Maseedi Block,
Sreerampuram,
Bangalore-560 021.
2 O.S.No.3957/2012
4. Smt.P.R.Vijaya
W/o V.H.Bhat
Aged about 40 years, r/at
No.38, I floor, II main,
Mahalakshmi Layout,
Bangalore-560 086.
5. Sri.V.Haridar Bhat
S/o K.V.Bhat
Aged about 45 years, r/at
No.38, 1st floor, II main,
Mahalakshmi Layout,
Bangalore-560 086.
6. Sri.P.R.Venkatesh
S/o P.V.Ramamurthy Bhat
Aged about 44 years, r/at
No.76, II cross,
Shiradi Sai Rathna Layout,
Rachenahalli village,
Hegde Nagara,
Bangalore.
(By Sri.K.A, Advocate for D5,
D1 to 4 and 6 are placed exparte).
Date of Institution of the 13-07-2010
suit
Nature of the suit (suit on Declaration & Injunction
pronote, : suit for declaration Specific Performance
and possession ,suit for
injunction, etc.)
Date of Commencement of 06-12-2016
recording of evidence
Date on which judgment was 19-04-2017
Pronounced
Duration Years Months Days
06 09 06
(Muhammed Khan .M. Pathan)
V ADDL.CITY CIVIL JUDGE
BANGALORE
*****
3 O.S.No.3957/2012
JUDGMENT
The plaintiffs' suit is for the Specific Performance of contract directing the defendant Nos.4 to 6 to handover vacant possession of the schedule property and to execute the General Power of Attorney in favour of the plaintiff as per the terms and conditions of the joint development agreement dated 13/07/2010 and to declare that joint development agreement dated 13/10/2016 is not binding on the defendant Nos.4 to 6 and for possession and Mandatory Injunction directing the defendant Nos.4 to 6 to execute General Power of Attorney as per the terms and conditions of joint development agreement dated 13/07/2010. The suit schedule property as described in the plaint is as below.
SCHEDULE PROPERTY All the part and parcel of the immovable residential property BDA Site No.97, PID No.14- 75-97, situated at West of Chord Road, II Stage, Basaweshwaranagar, BBMP Ward No.14, 4 O.S.No.3957/2012 Bangalore, measuring 2400 sq.ft. alongwith (8) squares of RCC roofed house, with red-oxide flooring, cement and bricks used for the construction of walls together with all civic amenities thereon and bounded as follows:
East by : Site No.96 West by : Site No.98 North by : 10th D Cross road South by : Site No.95
.2. The brief facts of the plaint averments are as under:
The plaintiff is a registered partnership firm and is carrying on the business of construction and development of properties. The defendant No.1 is the owner of the property No.97, PID No.14-74-97 WCR, II Stage, Basaveswara Nagar, Bangalore measuring East to West 40 feet and North to South 60 feet and a total of 2400 sq.ft. consisting of ground and 1st floor. The defendant Nos.2 and 3 are the 1st defendant's children. The defendant No.1 purchased the schedule property under registered sale deed dated 30/06/2008 5 O.S.No.3957/2012 registered on 01/07/2008 and accordingly, khatha is effected in the name of defendant No.1. The schedule property consists of a building of ground and first floor. The defendant Nos.1 to 3 were in occupation of the ground floor and the first floor was rented out by the 1st defendant.
The plaintiff further states that defendant Nos.1 to 3 approached the plaintiff for the development of the schedule property and they executed a registered Joint Development Agreement dated 13/07/2010 in favour of the plaintiff. The defendant Nos.1 to 3 executed a registered General Power of Attorney in favour of the plaintiff on the same day. As per the Joint Development Agreement, the schedule property is encumbered to the plaintiff for development of the schedule property. They agreed for construction of multistoried residential apartment building consisting of basement for parking space. The plaintiff had to obtain sanction plan and the owners of the property 6 O.S.No.3957/2012 had to deliver the property to the possession for the development after getting the tenants vacated from the suit property. It was agreed that plaintiff should complete the construction within one year with a grace period of two months from the date of delivery of vacant possession of the schedule property. Under the Joint Development Agreement, the plaintiff has paid a sum of Rs.15 lakhs as refundable security deposit to defendant Nos.1 to 3. The plaintiff firm applied for sanction of the plan from the BBMP and BBMP sanctioned the plan by their letter dated 30/10/2010.
The plaintiff paid the charges of Rs.41,352/- to the BBMP and another sum of Rs.38,862/- through separate demand drafts and obtained the receipts. The plaintiff further states that after sanction of plan, plaintiff approached the defendant Nos.1 to 3 to deliver vacant possession of the schedule property, so as to demolish and construct the multi stored building as per the Joint Development Agreement. The 7 O.S.No.3957/2012 defendant No.1 requested the plaintiff that as the marriage of her granddaughter i.e., daughter's daughter was fixed and they would handover the possession after the said marriage. So far they have not vacated the premises. The plaintiff was shocked to know that defendant Nos.1 to 3 had sold the schedule property in favour of defendant Nos.4 and 5 by executing registered sale deed on 25/03/2011 and another sale deed on 25/03/2011 in favour of defendant No.6 behind back of the plaintiff and without his knowledge with an ulterior motive to deprive the right of the plaintiff.
The plaintiff had agreed to complete the construction of the multi storied building in all respects within a period of one year with two months grace period from the date of obtaining the plan sanctioned by the BBMP and from the date of delivery of possession of the schedule property to the plaintiff. Further, it has come to the knowledge of the plaintiff 8 O.S.No.3957/2012 that son-in-law of the defendant No.1 by name Nagaraj had taken a loan from the Canara Bank by mortgaging his property as security. The Canara Bank initiated the recovery proceedings in the DRT in O.A.No.47/2002, but the schedule property was not mortgaged to the said bank. The defendant No.4 is the Legal Advisor to the Canara Bank. Taking the advantage of the said position, the defendant Nos.4 and 5 jointly purchased half of the schedule property and the remaining half of the schedule property is purchased by defendant No.6, by registered sale deeds dated 25/03/2011. Therefore, defendant Nos.4 to 6 have purchased the property during the period of subsistence of joint development agreement. The defendant No.4 using his position as legal advisor of Canara Bank got some deductions in the interest rate on the loan of son-in-law of defendant No.1 and purchased the schedule property. The plaintiffs have filed a suit in O.S.No.2528/2011 for permanent injunction and the suit was withdrawn with a liberty. 9 O.S.No.3957/2012 The defendant Nos.1 to 3 have already executed sale deed in favour of defendant Nos.4 to 6. The defendants have purchased the suit schedule property alongwith all its encumbrances and they are bound by the terms and conditions of the Joint Development Agreement. The defendant Nos.1 to 3 with an intention to defraud the plaintiff sold the suit property. The defendant Nos.4 to 6 have purchased the property having knowledge of General Power of Attorney. The defendant Nos.4 to 6 are bound by the terms of the joint development agreement. The plaintiff was ever ready and willing to perform their part of contract as per the terms. He has obtained sanction plan from BBMP. The defendants have avoided the construction due to one or the other reason, but they have executed sale deed in favour of defendant Nos.4 to 6 without the knowledge of the plaintiff. The plaintiffs are even now ready and willing to perform their part of contract dated 07/04/2012 to the defendants to deliver possession to develop the property. Hence, the suit is 10 O.S.No.3957/2012 filed for the relief of specific performance of contract and for declaration and injunction.
SCHEDULE PROPERTY All the part and parcel of the immovable residential property BDA Site No.97, PID No.14- 75-97, situated at West of Chord Road, II Stage, Basaweshwaranagar, BBMP Ward No.14, Bangalore, measuring 2400 sq.ft. alongwith (8) squares of RCC roofed house, with red-oxide flooring, cement and bricks used for the construction of walls together with all civic amenities thereon and bounded as follows:
East by : Site No.96 West by : Site No.98 North by : 10th D Cross road South by : Site No.95
3. On issue of suit summons, the defendant No.5 appeared through his counsel and filed the following written statement contending that suit of the plaintiff is not maintainable. The averments made in the plaint that as per the Joint Development Agreement, the plaintiff was to vacate the schedule premises and get the existing tenants vacated is denied as false. The 11 O.S.No.3957/2012 further averment that the plaintiff should complete the construction within one year with a grace period of two months, is not within the knowledge of this defendant. However, plaintiff has not acted upon the alleged Joint Development Agreement and he has not obtained the plan for construction of the building and he has not started the construction of the building within the specified time. The plaintiff had paid to the defendants Rs.15,00,000/- as refundable security deposit, is denied as false. Further, defendant states the applicant there was no contract between this defendant and the plaintiff at any point of time. The plaintiff has not made any payment of any amount. The defendant No.5 further states that Smt.G.N.Geetha, W/o N.P.Govindaiah was the owner of the suit schedule property. She mortgaged the suit schedule property in favour of the Canara Bank, Basavangudi Branch as security for the loans availed by M/s.Vishnu Gas Bottling plant. As the loans were not repaid, the Canara Bank initiated recovery 12 O.S.No.3957/2012 proceedings by issuing demand notice and taking possession of the schedule property. In the meanwhile, compromise was entered into between the parties and a portion of the schedule property was sold to this defendant by the 1st defendant to discharge the said loans. This defendant was not aware of the joint development agreement entered into between the plaintiff and the defendant Nos.1 to 3. The plaintiff has not constructed the building in terms of the attested joint development agreement. If the construction of the building commenced and completed within the time, the defendant Nos.1 to 3 could have paid the dues of the Canara Bank and Bank would not have resorted to sell the mortgaged property. The plaintiff was aware that property has been mortgaged in favour of Canara Bank. When the plaintiff failed in settling the dues of the mortgagee, he realized that he would not be able to construct and sell the flats to any persons. Since the loan has been now discharged by the defendants, the plaintiff wanted to 13 O.S.No.3957/2012 take advantage of the situation and filed this present suit. As per the clause 5(ii) of the Joint Development Agreement, the owners/defendants are entitled to 50% of the total built up area in the 1st, 2nd and 3rd floor and the promoter/plaintiff is entitled for 50% oft eh super builtup area in 1st, 2nd and 3rd floors. The said agreement cannot be implemented and performed because as per the bylaws of the Corporation, only 4 houses can be constructed on the said schedule property and each floor cannot be divided equally between the plaintiff and defendants. The court fees on the plaint not properly paid. The entire schedule property is subject matter of mortgage in favour of Canara Bank. The Canara Bank, being a mortgagee is necessary party to the case is not impleaded. Hence, suit is liable to rejected for non-joinder of necessary party. The defendants do not want any new building/apartment on their property. The plaintiff has already collected back the advance/deposit paid by him to defendant Nos.1 to 3. Therefore, he has not 14 O.S.No.3957/2012 made any claim for money. Hence, prays to dismiss the suit.
.4. On the basis of the above pleadings, the following issues are framed ;
1) Whether the plaintiff proves that defendant Nos.1 to 3 have executed a registered Joint Development Agreement and General Power of Attorney in favour of the plaintiff on 30/07/2010 ?
2) Whether the plaintiff further proves that he has obtained sanctioned plan from BBMP on payment of necessary charges and requested the defendants to deliver vacant possession for its development ?
3) Whether the plaintiff further proves that defendant Nos.1 to 3 have executed a sale deed in favour of defendant Nos.4 to 6 in violation of the Joint Development Agreement ?
4) Whether defendant No.5 proves that he is a bonafide purchaser for value without notice of the plaintiffs claim ?
5) Whether the defendants prove that the
plaintiff has no financial capacity to
construct new building as per Joint
Development Agreement ?
6) Whether the plaintiff is entitled for the reliefs sought for ?
15 O.S.No.3957/2012
7) What order or decree?
.5. The partner of the plaintiff firm has filed his affidavit evidence and examined as P.W.-1 and got marked Ex.P.1 to Ex.P.12 and closed his side. On behalf of defendants, defendant No.5 has examined himself as D.W-1 and marked documents Ex.D.1 to Ex.D.14.
.6. Heard the arguments on both the sides. .7. My findings on the above Points are as follows:
Issue No. 1: In the Affirmative Issue No. 2 : In the Affirmative Issue No. 3 : In the Affirmative Issue No. 4 : In the Negative Issue No. 5 : In the Negative Issue No. 6 : In the Affirmative Issue No. 7 : As per final order for the following:
REASONS .8. Issue Nos.1 to 3 : These issues are taken together for common discussion to avoid repetition of facts.16 O.S.No.3957/2012
The plaintiff, M/s.Raghavendra Developers, registered partnership firm, carrying on the business of construction and development of properties have entered into a Joint Development Agreement with the 1st defendant on 13/07/2010 in respect of the suit schedule property. The suit schedule property as described in the plaint is reproduced below:
SCHEDULE PROPERTY All the part and parcel of the immovable residential property BDA Site No.97, PID No.14- 75-97, situated at West of Chord Road, II Stage, Basaweshwaranagar, BBMP Ward No.14, Bangalore, measuring 2400 sq.ft. alongwith (8) squares of RCC roofed house, with red-oxide flooring, cement and bricks used for the construction of walls together with all civic amenities thereon and bounded as follows:
East by : Site No.96 West by : Site No.98 North by : 10th D Cross road South by : Site No.95
She had purchased the schedule property under registered sale deed dated 30/06/2008 registered on 17 O.S.No.3957/2012 01/07/2008 from Smt.G.N.Geetha W/o late Govindaiah and defendant Nos.1 to 3 are in occupation of the ground floor and the first floor was rented out by the 1st defendant. In view of the Joint Development Agreement and General Power of Attorney executed by the defendant, encumbrance is effected, as the joint development agreement referred as suit agreement is a registered document. The plaintiff as per the terms of the suit agreement, obtained sanction plan. The owners defendant Nos.1 to 3 were to handover the possession of the schedule property for development and get the existing tenant vacated and handover the schedule premises to the plaintiff to commence the construction work as per the agreement and the construction was completed within one year with a grace period of two months from the date of delivery of vacant possession of the schedule property. The defendant Nos.1 to 3 have received a sum of Rs.15 lakhs as refundable security deposit to be repaid after the completion of the construction.18 O.S.No.3957/2012
.9. As per the terms of the suit agreement, the plaintiff has obtained sanction plan from BBMP and BBMP has sanctioned the plan vide letter dated 30/10/2010 and he has paid the charges of Rs.41,352/- to the BBMP and another sum of Rs.38,862/- through separate demand drafts and obtained the receipts. After obtaining sanction plan, plaintiff approached the defendant Nos.1 to 3 to deliver vacant possession of the schedule property to demolish and construct the multi stored building as per the Joint Development Agreement. The defendant No.1 requested the plaintiff that as the marriage of her grand daughter was fixed and possession would be handover to the plaintiff for development. .10. The plaintiff, to his surprise came to know that defendant Nos.1 to 3 had sold the schedule property in favour of defendant Nos.4 to 6 by executing registered sale deed on 25/03/2011 and another sale deed on 25/03/2011 in favour of defendant No.6. The 19 O.S.No.3957/2012 plaintiff has reliably learnt that son-in-law of the defendant No.1 had availed loan from the Canara Bank by mortgaging his property as security. The Canara Bank mortgaged his property as security and for non- payment of the loan, DRT case in O.A.No.47/2002 was registered. The schedule property was not mortgaged to the bank. The defendant No.4 is the Legal Advisor to the Canara Bank. Taking the advantage of the said position, the defendant Nos.4 and 5 jointly purchased half of the schedule property and the remaining half of the schedule property is purchased by defendant No.6, by registered sale deeds dated 25/03/2011. The defendant Nos.4 to 6 had the knowledge of the suit agreement. Therefore, defendant Nos.4 to 6 have purchased the property during the period of subsistence of the suit agreement. The plaintiffs have filed a suit in O.S.No.2528/2011 before the Principal City Civil and Sessions Judge, Bangalore for permanent injunction. However, the suit was withdrawn with a liberty as the sale deeds were already 20 O.S.No.3957/2012 executed in favour of the defendant Nos.4 to 6 and the present suit is filed by the plaintiff. .11. The plaintiff firm got examined P.W-1, Samamalla Reddy in support of their case. P.W-1, Samamalla Reddy filed his evidence affidavit stating the plaint facts. Apart from the oral evidence, the plaintiff has produced the document Ex.P.1 to Ex.P.12. .12. The defendant No.5 has filed the detailed written statement denying the plaint averments. The defendant Nos.1 to 3 were placed exparte. The Canara Bank has initiated recovery proceedings before the DRT by filing OA No.47/2002 is admitted. The suit property was not mortgaged to the bank is false. The defendant has purchased a portion of the schedule property and he was not aware that suit schedule property was subjected to joint development agreement. The plaintiff filed a suit in O.S.No.2528/2011 for injunction is admitted. The plaintiff was ready and willing to perform his part of 21 O.S.No.3957/2012 joint development agreement is not true. The defendant has specifically contended that Smt.G.N.Geetha, W/o N.P.Govindaiah was the owner of the suit schedule property. She mortgaged the suit schedule property in favour of the Canara Bank, Basavangudi Branch as security for the loans availed by M/s.Vishnu Gas Bottling plant. As the loans advanced by the bank was not repaid by the borrower, the legal action was initiated under Section 19 of DRT Act for recovery of the amount interalia by sale of mortgage property. The mortgagee, Canara Bank initiated recovery proceedings under the provisions of SARFESIA Act, 2002 to take vacant physical possession of the schedule property. The mortgagee, Canara Bank auctioned the schedule property. In the meantime, the borower/mortgager, M/s.Vishnu Gas Bottling plant negotiated with the bank and entered into compromise and arranged for private sale of the schedule property to discharge loan. Accordingly, the portion of the schedule property was sold to this 22 O.S.No.3957/2012 defendant by 1st defendant. This defendant was not aware of the joint development agreement entered into plaintiff and defendant Nos.1 to 3. the plaintiff has not constructed the building in terms of the joint development agreement. He has not commenced the construction. The plaintiff is a speculator. He was aware of the mortgage of the schedule property in favour of the Canara Bank. Therefore, he did not commence the construction. Since the loan has been discharged by the defendant, the plaintiff wanted to take advantage of the situation by coercing the defendant, has filed this suit. He has not at all constructed the building as per the terms of the agreement. As per the clause 5(ii) of the Joint Development Agreement, the owners are entitled to 50% of the total built up area and the developer is entitled for the remaining 50%. The plaintiff shall sell 50% of the super built up area to the owner at the rate of Rs.3,750/- per sq.ft., on executing sale deed. Thus, as per the joint development agreement, plaintiff 23 O.S.No.3957/2012 cannot sell the constructed area to any person other than defendants themselves. As per the clause 5(ii) of Joint Development Agreement, the owners are entitled for 50% of the total built up area in the 1st, 2nd and 3rd floors. Agreement cannot be implemented and performed because as per bylaws of the Corporation, only 4 houses can be constructed in each floor and the same cannot be divided equally between the plaintiff and defendants. As per clause No.16 of the Joint Development Agreement, if any dispute arise, the matter is to be referred to Arbitration. Hence, the suit is not maintainable. He has not paid the proper court fees on the plaint as per the market value. The suit is liable to be dismissed. The entire schedule property is subject matter of mortgage in favour of Canara Bank. The Canara Bank, being a mortgagee is necessary party to the case is not impleaded. Hence, suit is liable to rejected for non-joinder of necessary party. The 5th defendant stepped into the witness box and examined himself as D.W-1. In his evidence affidavit, 24 O.S.No.3957/2012 he has stated the facts pleaded in his written statement. In addition to the oral evidence, the defendant relied on the certified copy of the application filed in OA No.447/2002 before the DRT, copy of the order in OA No.447/2002, certified copy of the recovery certificate in OA No.447/2002, certified copy of the ordersheet in OA No.447/2012, certified copy of the order in I.A. in O.S.No.2859/2007 at Ex.D.5, certified copy of the letter evidencing deposit of title deeds dated 30/06/2000, Encumbrance Certificate, sanction memorandum dated 16/03/2011, copy of two letters dated 29/03/2011, certificate of interest collected on loan and statement of accounts produced at Ex.D.13, subject to objections.
.13. In the course of arguments, learned counsel appearing for the plaintiff submitted his written synopsis and in addition to his written synopsis, he has submitted that suit agreement is a joint development agreement between plaintiff and 25 O.S.No.3957/2012 defendant Nos.1 to 3, the owner of the plaintiff has executed joint development agreement and as per the terms of the agreement, plaintiff is entitled to receive the vacant possession of the property, subsequently defendant Nos.1 to 3 have sold the suit property to defendant Nos.4 to 6 and the suit agreement is binding on the defendant Nos.4 to 6. The plaintiff has relied on the documents Ex.P.1, acknowledgement of registration of firm, joint development agreement dated 13/07/2010 at Ex.P.2, certified copy of the General Power of Attorney dated Ex.P.3, certified copy of the Encumbrance Certificate at Ex.P.4, plan at Ex.P.5, certified copy of the sale deeds dated 25/03/2011 at Ex.P.6 and Ex.P.7, office copy of the notice dated 07/04/2012 at Ex.P.8, postal receipts at Ex.P.9 certified copy of the sale deed dated 30/06/2008 at Ex.P.10, two receipts at Ex.P.11 and attested copy of the pay order at Ex.P.12. The learned counsel for the plaintiff has relied on the following decisions reported in :26 O.S.No.3957/2012
1. ILR 2014 Kar 233 (Smt.Padmini Raghavan V/s Mr.H.A.Sonnappa, since dead by his LRs and others)
2. (2013) 5 SCC 397 (Thomson Press (India) Limited V/s Nanak Builders and Investors Private Limited and others) .14. The learned counsel for the defendant has also filed his written arguments and submitted that the plaintiff firm had the knowledge of mortgage of the suit property by Smt.Geetha in favour of the Canara Bank.
The defendant Nos.4 to 6 are the bonafide purchasers for value without notice of the suit agreement. The plaintiff was not ready and willing to perform his part of contract. The suit agreement is not binding on defendant Nos.4 to 6 and he requested to dismiss the suit of the plaintiff. In this connection, defendant has relied on the following decisions reported in :
1. Extract from Section 27 of the Karnataka Rent Act, 1999.27 O.S.No.3957/2012
2. Extract from Section 14(1)(a) and 3(c)(ii) of the Specific Relief Act, 1963.
3. 2012(5) KCCR SN 390 (Smt.Narasamma Nagappa and others V/s K.V.Ramprasad and Another)
4. AIR 1986 Punjab & Haryana page 14 (Smt.Harbans Atma Singh V/s Ramesh Kumar)
5. AIR 1999 Delhi Page 18 (State Bank of India v/s M/s.Aditya Finance & Leasing Co. Pvt. Ltd., and another)
6. (2002) 6 SCC 678 (Nilesh Nandkumar Shah v/s Sikandar Aziz Patel)
7. ILR 1990 Kar. 2639 (Govindamma V/s Murugresh Mudaliar) .15. The 1st defendant has purchased the suit property from Smt.G.N.Geetha through a registered sale deed in the year 2008. The defendant Nos.1 to 3 have entered into a registered joint development agreement in favour of the plaintiff firm on 13/07/2010. The plaintiff firm is registered firm and 28 O.S.No.3957/2012 registration certificate is produced at Ex.P.1, certified copy of the joint development agreement is placed on record at Ex.P.2. Further, the defendants have executed a General Power of Attorney in favour of the plaintiff firm for development of the suit schedule property. The defendant Nos.1 to 3 have remained absent and they were placed exparte. The defendant Nos.4 to 6 are the subsequent purchasers of the suit schedule property by virtue of 2 sale deeds on 25/03/2011. The plaintiff has specifically contended that defendant Nos.1 to 3 during the subsistence of the suit agreement, have alienated the suit property in favour of defendant Nos.4 to 6 to defeat the right of the plaintiff. The plaintiff has acted upon the suit agreement and has obtained the sanctioned plan from BBMP by spending an amount of Rs.41,352/- and Rs.38,862/- to the BBMP. The plaintiff has placed on record, the sanctioned plan at Ex.P.4. The plaintiff has instituted the suit for specific performance of contract to enforce the suit agreement. 29 O.S.No.3957/2012
.16. The defendant Nos.4 to 6, who are the subsequent purchasers, the defendant No.5 has filed his detailed written statement. He has entered into witness box and got himself examined as D.W-1. The defendants have contended that they are the bonafide purchasers for the value without notice of the suit agreement. The suit agreement is a merely construction agreement and no substantial right is created in favour of the plaintiff firm. In the event of specific performance of contract is granted, the defendant Nos.4 to 6, who are the bonafide purchasers will be put to greater hardship. In the alternative, the defendants in the course of arguments submitted that the plaintiff is entitled to receive the amount deposited with the defendants as security deposit to the tune of Rs.15 lakhs and interest by way of compensation from defendant Nos.1 to 3 and nothing more from these defendants. Further, defendant No.5 pleads hardship in the event of a decree for specific performance of 30 O.S.No.3957/2012 contract. The defendants have purchased the property by raising loan from Canara Bank.
.17. According to the defendants, the subject matter of the suit property is mortgaged to the Canara Bank and Smt.Geetha is a party before the Debt Recovery Tribunal initiated by the Canara Bank in OA No.447/2002. Smt.Geetha has alienated the property in favour of the defendant No.1 subject to the loan of Canara Bank, the Canara Bank is the necessary and proper party to the suit. The plaintiff has not brought the bank as a party. Moreover, the plaintiff had knowledge of the loan raised from Canara Bank. The plaintiff cannot execute the BBMP plan as the time for construction is over. Moreover, he cannot provide super built up area for a sum of Rs.3,750/- per sq.ft. The suit agreement cannot be enforced in law. Further, the defendant contended that the plaintiff would not be able to construct building as per the terms of the Joint Development Agreement. The super 31 O.S.No.3957/2012 built up area cannot be provided for Rs.3,750/- sq.ft. The suit agreement Joint Development Agreement has not created any right. It is only a permission to construct and it is not enforceable.
.18. The plaintiff has not filed the suit against the tenant to vacate for development and vacant possession was not handedover cannot be accepted. The tenants are protected under Section 27 of the Rent Act, under Sec.14(c) (ii) of Specific Relief Act. The contract cannot be enforced as money is an adequate relief for compensation for non-performance. In view of Section 14(3)(c)(ii), the Plaintiff has no substantial interest. Further, the tenants are protected under Section 27 of the Rent Act. In view of this, the defendants relied on the decision reported in ILR 1999 Kar. 2639. Further, they also relied on the decision reported in 2002 (6) SCC 678.
.19. The Ex.P.6 is the registered sale deed executed by Smt.Rangamma, the 'A' schedule property 32 O.S.No.3957/2012 measuring 40' X 60' and 'B' schedule property, the ground floor of the building constructed on 'A' schedule property together with undivided half share and the remaining half share is sold in favour of P.R.Venkatesh, the 6th defendant. As per the sale deeds, the sale consideration is for Rs.40 lakhs. The vendor has put the purchasers in actual possession of the 'B' schedule property and delivered the title deeds pertaining to 'A' schedule property. Similarly, as per the sale deed, Ex.P.7 in favour of Defendant No.6, the actual possession of 'B' schedule property has been delivered by the vendor under the sale deeds. In the circumstances, the contention raised by the defendants that the tenant is protected under Sec.27 of Karnataka Rent Act is not applicable to the case on hand.
.20. The defendant Nos.1 to 3 have executed the suit agreement in favour of the plaintiff before the sale deed Ex.P.6 and Ex.P.7 in favour of defendant Nos.4 to 33 O.S.No.3957/2012
6. The suit agreement is not denied by the executants defendant Nos.1 to 3. They have been placed exparte. They have not contested the suit. The absence of defendant Nos.1 to 3 amounts to admission of the case of the plaintiffs in view of the provision under Order VIII Rule 6 of Code of Civil Procedure.
.21. The decisions relied by defendant No.5 referred above relating to the protection of tenants i.e.,
1. Extract from Section 27 of the Karnataka Rent Act, 1999.
2. Extract from Section 14(1)(a) and 3(c)(ii) of the Specific Relief Act, 1963.
3. 2012(5) KCCR SN 390 (Smt.Narasamma Nagappa and others V/s K.V.Ramprasad and Another)
4. AIR 1986 Punjab & Haryana page 14 (Smt.Harbans Atma Singh V/s Ramesh Kumar)
5. AIR 1999 Delhi Page 18 (State Bank of India v/s M/s.Aditya Finance & Leasing Co. Pvt. Ltd., and another) 34 O.S.No.3957/2012
6. (2002) 6 SCC 678 (Nilesh Nandkumar Shah v/s Sikandar Aziz Patel)
7. ILR 1990 Kar. 2639 (Govindamma V/s Murugresh Mudaliar) .22. The defendants have not produced any lease deed or rent agreement to establish that the tenants are in occupation of the suit schedule property. The sale deeds in favour of defendant Nos.4 to 6 clearly indicate that possession is delivered to the purchasers under the sale deed. The question of tenancy rights does not arise for consideration.
.23. The defendants have raised a contention to the effect that in view of the Arbitration clause in the suit agreement Ex.P.2, Joint Development Agreement, the matter is to be referred to the Arbitration in case of any dispute. The plaintiff has not submitted the dispute for Arbitration. It is pertinent to note that the executants of the suit agreement defendant Nos.1 to 3 have alienated the suit property subsequent to the suit 35 O.S.No.3957/2012 agreement Ex.P.2. The suit agreement is the registered document. In view of the Arbitration clause No.16, as per the agreement, they have not raised this objection at the first instance. Moreover, the defendant Nos.4 to 6 have not filed any application under Section 8 of the Arbitration Act to refer the dispute as per clause No.16 of the Arbitration and Conciliation Act, 1996. In view of this, there is a clear waiver by the defendants seeking reference to Arbitration. Therefore, the contention raised by them subsequently cannot be accepted. Now the matter cannot be referred to Arbitrator.
.24. The Joint Development Agreement, Ex.P.2 remains unchallenged by defendant Nos.1 to 3. The subsequent purchasers are claiming the property by virtue of the sale deed executed by defendant Nos.1 to 3 after the suit agreement. The suit agreement, Ex.P.2 is a registered document and General Power of Attorney is executed by the defendant Nos.1 to 3 in 36 O.S.No.3957/2012 favour of the plaintiff firm vide Ex.P.3. The General Power of Attorney is coupled with interest for development of the suit property. The suit agreement to develop the property is entered by defendant Nos.1 to 3 before alienating the suit property to defendant Nos.4 to 6. Therefore, the registered suit agreement Joint Development Agreement prevails over the subsequent sale deeds in favour of the purchasers, defendant Nos.4 to 6. The plaintiff firm is a registered firm and the development agreement is registered and it creates a substantial right to the plaintiff firm for developing the property as per the terms of the registered agreement. Therefore, the property in question is already a subject matter of the suit agreement and the subsequent sale deeds cannot create a right to the purchasers as against the interest of the present plaintiff firm. The defendants have not taken any steps to cancel the suit agreement before the sale deeds are executed in favour of the purchasers or even after the sale deeds. The material placed by the 37 O.S.No.3957/2012 plaintiff on record clearly establishes that the suit agreement is enforceable against the defendant Nos.4 to 6. The purchasers, defendant Nos.4 to 6 are bound by the terms of the suit agreement. The plaintiff has obtained the sanction plan from BBMP by paying the necessary charges. The competent authority has permitted for development. The plaintiffs have acted upon the suit agreement. The plaintiff firm is ready and willing to perform their part of contract. The defendants No.1 to 3 have alienated the suit property during the subsistence of the suit agreement and executed the sale deed in favour of the purchasers, defendant Nos.4 to 6 in violation of the suit agreement Ex.P.2, Joint Development Agreement. Therefore, I answer issue Nos.1 to 3 in the Affirmative in favour of the plaintiff.
.25. Issue Nos.4 to 6 : These issues are taken together for common discussion to avoid repetition of facts.
38 O.S.No.3957/2012The burden is on the defendant Nos.4 to 6 to prove that he is a bonafide purchaser for value without notice of the plaintiff's claim. Further, the defendants have raised the plea that plaintiff has no financial capacity to construct the new building as per the Joint Development Agreement. I have examined the claim of the plaintiff with reference to the substantial defence raised by the defendant. The contesting defendant No.5 has set up the defence that Joint Development Agreement entered into between the plaintiff and the defendant Nos.1 to 3 was illegal and in violation of the order passed by the Debt Recovery Tribunal. The purchasers have raised loan from Canara Bank and they have mortgaged the property as security for loan. The entire schedule property is a subject matter of mortgage in favour of Canara Bank. The defendants have placed the copy of the order passed in OA No.447/2002, Ex.D.2. It is pertinent to note that defendants have not placed any material evidence to prove that the executants defendant Nos.1 to 3 are 39 O.S.No.3957/2012 party before the Debt Recovery Tribunal. Moreover, there is no auction notice issued by the Debt Recovery Tribunal. Further more, the suit schedule property is not mortgaged by a registered instrument. .26. The burden is on the defendant Nos.4 to 6 to establish that they are the bonafide purchasers of the suit property without notice of the suit agreement, Ex.P.2. In this connection it is pertinent to note that defendant has relied on Ex.D.9, the memorandum of loan sanction agreement. There is a reference relating to the suit agreement, which reads as under :
"LSR refers to a Joint Development Agreement entered into by Smt.Rangamma and others with M/s.Raghavendra Developers on 13/07/2010. Branch to advice the party to take steps to do the needful for cancellation of the same." .27. From the loan sanction memorandum it is clear that the suit agreement is in existence and it is well within the knowledge of the purchasers, defendant 40 O.S.No.3957/2012 Nos.4 to 6. The purchasers have not taken any steps to cancel the suit agreement, Ex.P.2 before purchasing the suit property. The 5th defendant, who is examined as D.W.1, has deposed during the course of cross- examination as below:
"It is not true to say that the bank has advised me in Ex.D.9 to take steps to do the needful for cancellation of the Joint Development Agreement in favour of the plaintiff. Now I am shown Ex.D.9. Witness says that I am not aware of the contents of the Ex.D.9. It is not true to say that I am aware of the Joint Development Agreement in favour of the plaintiff. I have not seen Ex.D.9 before my sale deed. I came to know the contents of the Ex.D.9 after filing of this suit. I am not initiated any action as against Ex.D.9."
The evidence of D.W.1 is not consistent and the defendant cannot disown his own document Ex.D.9. The purchasers had the previous knowledge of suit agreement, which is a registered document. The registration of the suit agreement itself is a notice. 41 O.S.No.3957/2012 Therefore, I hold that the defendants had the knowledge of the suit agreement before purchasing the suit schedule property. The sale deeds in favour of the purchasers are from defendant Nos.1 to 3 and not from the auction of the suit property for the recovery of debts of Canara Bank. They are not the bonafide purchasers. The defendants have failed to prove that they are the bonafide purchasers.
.28. As far as the question of enforcement of suit agreement is concerned, the defendants have raised the plea that the plaintiff has no financial capacity to construct new building as per the Joint Development Agreement. In this connection the defendants have not placed any material evidence on record to substantiate that the plaintiff firm has no financial capacity to put up construction as per the suit agreement. The defendants relied on the admissions of P.W.1, who has stated that as per the Joint Development Agreement, 50% of the super built up 42 O.S.No.3957/2012 area of the plaintiff is to be sold to the defendant at the rate of Rs.3,750/- per sq.ft. The present value is Rs.6,000/- to Rs.7,000/- per sq.ft. Further, he admits that it is not possible to construct now at the rate of Rs.3,750/- per sq.ft. It is also admitted that the plaintiff has no right to sell the super built up area to the 3rd party. The suit agreement is of the year 2010. The prevailing rates of Rs.3,750/- is entered as on the date of the suit agreement. The defendant Nos.1 to 3 have not surrendered the suit property for development. Instead they have sold the suit schedule property during the subsistence of the suit agreement. There is no fault on the part of the plaintiff, who is a developer of the property for not carrying out the development work as possession was not delivered. The price of Rs.3,750/- sq.ft. is of the year 2010. The prices of the construction materials are increasing day by day. The cost of construction is not static as that of the year 2010 till date. The plaintiff has to sell the super built up area as per the agreement as of the rate 43 O.S.No.3957/2012 prevailing in the market as on the date of this order. The plaintiff firm is a registered partnership firm engaged in the activities of the construction work and it is registered under the Partnership Act. Ex.P.1 is the acknowledgement of registration of firm for the relevant year 2009-2010. The registration is effected as Raghavendra Developers. The General Power of Attorney is issued at Ex.P.3 in support of the suit agreement. The plaintiff has substantial right to carry out the development work of the suit property. The defendants No.4 to 6 have purchased the suit property ignoring the suit agreement. The defendant No.5 is an advocate and has not taken any steps to cancel the suit agreement before purchasing the suit property. Therefore, I conclude that defendants are bound by the suit agreement, which remains unchallenged. The plaintiff is entitled for the relief of specific performance of contract and the consequential reliefs as sought for. The defendants have raised the plea of hardship. The plaintiff firm has entered into suit agreement in the 44 O.S.No.3957/2012 year 2010 and the defendants are subsequent purchasers. They are bound by the suit agreement. The suit property is subject matter of agreement for development. The plaintiff has spent amount for obtaining the necessary permission from the competent authority, BBMP and the construction plan is approved. The plaintiff firm has caused notice Ex.P.8 on 07/04/2012 before filing of the suit. The copy of the notice and postal receipts are placed on record. The decision relied by the learned counsel for the defendant in AIR 1986 Punjab & Haryana page 14 (Smt.Harbans Atma Singh V/s Ramesh Kumar), compensation was awarded in the said case as permission of Estate Officer was refused and it is held that plaintiff was not entitled to decree for specific performance of contract. But in the present case, the question of permission does not arise. The aforesaid decision is not applicable to the case on hand. Similarly in the case of AIR 1999 Delhi Page 18 (State Bank of India v/s M/s.Aditya Finance & Leasing Co. 45 O.S.No.3957/2012 Pvt. Ltd., and another), the agreement was between the owner and Bank on lease property of former to Bank on terms agreed and the construction made as per the bank specification and it was considered with the property earmarked for residential purpose in contravention of Section 14. The lease agreement will be void and not enforceable. In the present case, there is no such question of lease agreement as the suit for specific performance is enforceable. The decision relied by the defendant is not applicable to the case on hand. Moreover, the question of tenancy is not involved and that aspect of the matter, the defendants' contention that there is regulation for protection of tenants from eviction cannot be accepted as there is no question of tenancy in the matter. The contract between the plaintiff and defendant Nos.1 to 3 is enforceable in law and it is binding on the purchasers defendant Nos.4 to 6. Therefore, the plea of hardship raised by the defendant Nos.4 to 6 cannot be accepted. The property in question is a subject matter of the suit 46 O.S.No.3957/2012 agreement and the subsequent purchasers are bound by the development agreement. Therefore, I answer issue Nos.4 and 5 in the Negative and issue No.6 in the Affirmative.
.29. Issue No.4 : In view of my answers to issue Nos.1 to 3, the suit of the plaintiff succeeds. In the result, I pass the following :
ORDER The suit of the plaintiff is hereby decreed with costs.
The plaintiff is entitled for specific performance of contract as per the suit agreement.
It is hereby ordered and decreed that the Joint Development Agreement dated 13/07/2010 is binding on the defendant Nos.4 to 6.Consequently, defendant Nos.4 to 6
shall execute a General Power of Attorney in favour of the plaintiff as per the terms of Joint Development Agreement.47 O.S.No.3957/2012
Eventually, the defendant Nos.4 to 6 are directed to handover the vacant possession of the schedule property to be developed as per the terms and conditions of the Joint Development Agreement within 6 months from the date of this Order and the super built up area is to be sold to the defendant Nos.4 to 6 as per the prevailing market rate as on the date of this Order.
Draw decree accordingly.
(Dictated to the Judgment Writer directly on computer, typed by her, corrected and then pronounced by me in open court this the 20th day of April, 2017.).
(Muhammed Khan .M. Pathan) V ADDL.CITY CIVIL JUDGE, BANGALORE.
**** ANNEXURE List of witnesses examined for the plaintiff :
P.W.1 Samamalla Reddy List of witnesses examined for the defendant :
D.W.1 V.Haridas Bhat List of documents marked for the plaintiff :
Ex.P.1 Extract of acknowledgement of registration of firm Ex.P.2 Certified copy of the joint development agreement dated 13/07/2010 48 O.S.No.3957/2012 Ex.P.3 Certified copy of the General Power of Attorney dated 13/07/2010 Ex.P.4 Certified copy of the Encumbrance Certificate Ex.P.5 Duplicate plan Ex.P.6 Certified copy of the sale deed dated 25/03/2011 Ex.P.7 Certified copy of the sale deed dated 26/03/2011 Ex.P.8 Office copy of the notice dated 07/04/2012 Ex.P.9 Postal receipts Ex.P.10 Certified copy of the sale deed dated 30/06/2008 Ex.P.111 Two receipts Ex.P.12 Attested copy of pay order List of documents marked for the defendants : Ex.D.1 Certified copy of the application filed in OA.447/2002 before DRT Ex.D.2 Certified copy of the order in OA.447/2002 Ex.D.3 Certified copy of the recovery certificate in O.A.No.447/2002 Ex.D.4 Certified copy of the ordersheet in OA.447/2002 Ex.D.5 Certified copy of the order in OA2859/2007 Ex.D.6 Certified copy of the letter dated 12/03/2001 Ex.D.7 Certified copy of the letter evidence of deposit of title deeds dated 30/06/2000 Ex.D.8 Encumbrance Certificate Ex.D.9 Sanction memorandum dated 16/03/2011 Ex.D.10 & Copy of two letters dated 29/03/2011 11 Ex.D.12 Certificate of interest collected on loan Ex.D.13 Statement of accounts Ex.D.14 Statement of accounts of Canara Bank (Muhammed Khan .M. Pathan) V ADDL.CITY CIVIL JUDGE BANGALORE **** 49 O.S.No.3957/2012