Indian Kanoon - Search engine for Indian Law

4. I have heard both the learned counsel at a length and both of them have extensively taken me through the proceedings and the case law.

5. The defendant as the owner of the suit property has entered into an MOU on 24th July, 2002 with the plaintiff who are described as the "developer" in the said MOU, on the stipulated terms and conditions mentioned in the said MOU. It appears that the plaintiffs had agreed with the owner-defendant to develop the suit property for the consideration as set out in the MOU which was required to be paid by the plaintiffs to the defendant in two instalments of Rs. 10,50,000/- and Rs. 39,50,000/-. There are other terms and conditions in respect of construction of the building and the T.D.R. and also permanent alternative accommodation to be given to the old tenants/occupants and also the right to the plaintiffs to sell, assign, transfer, let, lease, charge, mortgage the balance construction of the shops, flats etc. The total consideration agreed was Rs. 1 Crore payable by the plaintiffs to the defendant. The plaintiffs were also obliged to give to the defendant free of cost tenament of an area equal to the premises presently in occupation and possession of the defendant. It was further agreed between them that the defendant owner shall within six months from the date of the MOU and prior to payment of consideration as per Clause 4(c) procure consent agreements from the tenants/occupants to surrender the tenancy, occupancy within six months and also for alternative permanent accommodation in the newly constructed building. The defendant was obliged under the M.O.U. to provide for accommodation of an area equivalent to the area in their respective occupation and possession subject to a minimum of 225 sft. carpet area under the MHADA scheme. It appears and it is an admitted fact that the plaintiffs paid to the defendants the first instalment of Rs. 10,50,000/-. According to the conditions stipulated the balance payment was to be made was Rs. 39,50,000/- on the owner's procuring consent of all the tenants for vacating the premises in their respective possession and within fifteen days from the date of the public notice. The balance payment of Rs. 50 lakhs was to be paid against all the tenants/occupants executing the necessary agreement with the owner/developer to vacate the premises in their occupation. According to the plaintiffs, after execution of the MOU they had taken all the steps for development of the property. According to the plaintiffs, the defendant was not ready and willing to perform her part of the contract under the MOU. According to the plaintiffs, the first step after receipt of Rs. 10,50,000/- from the plaintiffs, the defendant ought to have approached the tenants/occupants to obtain consent letters from them as provided under the MOU. According to the plaintiffs, the defendants did nothing towards the said direction to comply with the said mandatory term prescribed in the MOU. According to the plaintiffs, the defendant did not even approach the tenants requiring them to furnish their consent letters, and agreements from the tenants/occupants and enjoyed the amount of Rs. 10,50,000/-. The MOU provided six months period for completion of the terms. Since the defendant did not take any steps, the plaintiffs addressed a letter dated 23rd January, 2003 to the learned Advocate for the defendant forwarding to cheque for Rs. 39,50,000/- in her favour and requested him to hand over the said cheque to the defendant after the defendant's obtaining and furnishing to the plaintiffs the consent letters from the tenants/occupants for vacating the premises in their respective possession. Finally, however, the plaintiffs received a letter from the defendant's advocate dated 25th January, 2003 wherein it was recorded that the tenants were not responding satisfactorily and were not agreeable for permanent alternative accommodation and therefore she terminated the MOU. The defendant returned to the plaintiffs the cheque for Rs. 39,50,000/- and Rs. 10 lakhs paid by the plaintiffs as the earnest money under the MOU. The act of the defendant to terminate the MOU by the said letter dated 25th January, 2003 is under challenge in this suit on the grounds which are mainly enumerated in para 17 of the plaint and the plaintiffs have sought specific performance of the MOU at the first instance and for Rs. 15 Crores towards damaged in the alternative to the relief of specific performance of the MOU.

10. There is little doubt or dispute that both the parties were dealing with the immovable property and interest in the immovable property. This intention of the parties appears crystal clear from the MOU. According to Shri Dwarkadas, the learned Counsel for the plaintiffs it was a transaction of sale of the Immovable property while according to Shri Samdani, the learned Counsel for the defendant, it was an agreement for development of the said property.

11. In ordinary and common parlance as understood a transaction for sale is an exchange of a commodity or service for cash or kind. The vendor or the seller barters away his property, movable or immovable, for valuable consideration in cash or in kind paid or payable by the buyer. Under the MOU under question, the plaintiffs have paid to the defendant a price in part of the total price agreed between the parties. The total price agreed was Rs. 1 Crore for the property. In return the plaintiffs were promised by the defendant-owner the rights and Interest in the property to be developed by them and to be sold by them in the open market the additionally constructed flats on permissible F.S.I. and to earn or retain the whole amount with them. They were also given all the rights of the landlord qua the tenants/occupants of the suit premises. They were virtually put in the place of the owner-defendant of the building while dealing with the tenants in every respect as provided in the MOU, including the right to collect rent from the tenants-occupants. The plaintiffs have virtually stepped in the shoes of the landlord of the buildings, i.e. the defendant, under the MOU. Such a role cannot be assigned to a developer -- simplicitor of the structure. He will merely develop the building as per agreement and will get out after getting his price for the work. He will render his services and get his agreed amount and nothing more in the bargain. The tenants and their rights and liabilities will not be his problems. He will not be required to pay any amount to the owner of the building or to provide any permanent accommodation to the owner and the tenants in addition to the work of the development to be done by him for the owner, In the present case, the plaintiffs have to pay a sum of Rs. 1 Crore in addition to provision of permanent alternative accommodation for the defendant and her tenants and also do the work of development of the structure to earn out of the sale of the additionally developed area. It is, therefore, quite clear that the plaintiffs are to pay to the defendant a sum of Rs. 1 crore as consideration in cash and also to provide for her and her tenants permanent accommodation in return of the suit property with all the other appertaining rights and interest as also the obligations of the ownership of the property. The plaintiffs rights are not restricted to get only a sum of consideration out of the development but they actually step in the shoes of the owner of the property in every respect after they fulfill their obligation of payment of the agreed amount in cash and the consideration in kind in the form of provisions' of alternative permanent accommodation to the owner and to the tenants. In the bargain, he gets the right to sell the developed flats and also rent from the tenants and all other rights of the landlord-owner. Such a right never accrues to a developer simplicitor unless the whole property gets vested in the developer. In that case the developer ceases to be a developer as ordinarily understood. Ordinarily, it is the right of the owner of the property to sell or to deal with the property as he likes. No developer gets a right to sell or deal with the property unless he is given such right specifically and specially. All these ingredients of sale are present in the MOU. The intention of transfer of the Interest in the immovable property can be seen from the MOU if we pierce the curtain of the transaction. From the following terms mentioned in the MOU the real intention of the parties become further clear and visible.