2012(2) ALL MR 809
IN THE HIGH COURT OF JUDICATURE AT BOMBAY

R.S. DALVI, J.

Nirav Deepak Modi Vs. Najoo Behram Bhiwandiwala & Ors.

Notice of Motion No.1443 of 2006,Suit No.1166 of 2006

3rd February, 2012

Petitioner Counsel: Mr. ASHISH KAMATH along with Mr. SARTHAK SHAH, Mr.VATSAL SHAH i/b. NAIK, NAIK & CO
Respondent Counsel: Mr. KARL TAMBOLY along with Mr. P. GOYAL i/b. WADIA GHANDY & CO., for Defendant No.1.Mr. RAHUL CHITNIS Mr. RAJIV SETH Mr. H.H. NAGI

(A) Civil P.C. (1908), O.39 R.1 - Specific Relief Act (1963), S.10 - Registration Act (1908), S.49 - Interim relief - Suit for specific performance - Plaintiff purchaser stating there is oral agreement to sell - Reliance placed on unregistered, non notarised declarations by defendant sellor - Suit for specific performance can be filed upon unregistered documents - Lack of registration and notarisation cannot disentitle plaintiff of prima facie relief for protection of premises agreed to be purchased by plaintiff. 2009 (3) Bom.C.R. 363, 2009(2) ALL MR 108 Ref. to. (Para 33)

(B) Civil P.C. (1908), O.39 R.1 - Specific Relief Act (1963), S.12 - Interim relief - Suit for specific performance - Plaintiff stating there is oral agreement to sell - Reliance placed on declarations in this regard by defendant sellor - Evidence makes out prima facie case of plaintiff - Plaintiff is entitled to interim and final relief only on showing readiness and willingness to perform his part of contract by paying agreed consideration - Order accordingly. (Paras 34, 35)

Cases Cited:
Bipin Ganatra Vs. Keshavrao J. , 2009 (3) Bom. C.R. 363 [Para 32]
KBC Picture Vs. A.R. Murgadoss & Ors, 2009(2) ALL MR 108= [Para 32]


JUDGMENT

JUDGMENT :- The plaintiff has filed the above suit for specific performance of an oral agreement stated to have been entered into by the plaintiff with defendant No.1 in the beginning of April, 2002 pursuant to which the defendant No.1 made two declarations on 29 August, 2002 and 21 March 2003 and for other ancillary reliefs.

2.The plaintiff has taken out the above Notice of Motion for appointment of Court Receiver and the usual injunctions for protecting the suit property.

3.The plaintiff is admittedly the licensor of the defendant No.1. The license is created in the name of defendant No.2, the Company of the plaintiff in which he is a director, The license is in respect of two flats in the building known as "Nepean House" at Malabar Hill, Mumbai showing Defendant No.1 as the owner.

4.It is the plaintiff's case that consequent upon the license in his favour, defendant No.1 and the plaintiff negotiated for purchase of the licensed premises by the plaintiff. The negotiations culminated in an oral agreement under which the plaintiff was given option to purchase the suit property licensed to him for a sum of Rs.16 crores. The option was to be exercised during the period of the license between 1st December, 2003 and 30 November 2008. The consideration then payable by way of earnest was Rs.10 lakhs. The purchase would be under the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 ("Apartment Ownership Act").

5.The plaintiff claims to have paid Rs.10.00 lakhs as earnest to defendant No.1 on 21 March, 2003 by cheque. The plaintiff accordingly claims to have exercised his option.

6.It is the case of the defendant No.1 that she executed what is stated to be her declarations under a misrepresentation that those declarations were under Section 2 of the Apartment Ownership Act. She has , therefore, refuted the option to purchase the licensed premises by the plaintiff. She claims that the declarations are bogus and no consideration is received by her. This is upon the premise that the declarations are inconsistent with each other and are blank in certain material particulars. She further claims that she has already executed a conveyance in respect of the suit premises in favour of the defendant Nos.3 and 4 who have been inducted in the licensed premises after possession of the licensed premises was obtained by her in a litigation filed by her from the plaintiff in the competent forum.

7.Defendant Nos.3 and 4 are in possession of the said flats. A Memorandum of Understanding (MoU) dated 11 April, 2007 has been executed between defendant No.1 and defendant No.4 recital G of in which the factum of this litigation and the dispute between the plaintiff and defendant No.1 is expressly mentioned. The factum of the declaration dated 21 March 2003 got executed from her without being informed of the content, meaning and purport thereof is also mentioned. Clause 7.1.5 of the MoU shows the earnest of Rs..10.00 lakhs received by her by cheque No.128276 dated 21 March 2003 from the plaintiff sent to her by the then Advocates M/s.D.M. Harish and Co., and held by them in escrow, which was not encashed by her.

8.The plaintiff claims that this clause itself shows sufficient notice of the plaintiff's claim upon defendant Nos.3 and 4 and consequently defendant Nos.3 and 4 are purchasers with notice of the plaintiff's claim. The plaintiff has also registered notice of lis pendens on 3 May 2004, a fortnight after the filing of the suit and before the execution of the MoU on 11 April 2007 between defendant No.1 and defendant No.4.

9.For grant of the reliefs to the plaintiff, the prima facie case of the plaintiff which is required to be seen by the Court would be essentially upon reading the declarations themselves as also circumstantial evidence.

10.There are four declarations relied upon by the plaintiff. Two declarations are of defendant No.1 dated 29 August 2002 and 21st March 2003 granting the plaintiff the option to purchase the property. Two declarations are of the plaintiff exercising his option on paying the earnest amount for the sale to be executed in his name or in the name of his Company. These declarations are marked as Exhibits.

Exhibit D-1 is executed by defendant No.1 on stamp paper purchased on 29 August 2002 under No.3997 in the name of the defendant No.1. Clause 16 thereof mentions the leave and license agreement and the option to purchase the licensed premises on a consideration of Rs.16,00,00,000/-. Rs.16,00,00,000/- are made of Rs. 15,90,00,000/- and Rs.10,00,000/-, which appears to be the earnest amount liable to be forfeited with no right of refund if the option is not exercised. Credit of the security deposit paid by the plaintiff under the license agreement initially executed on 28 August 2002 is allowed. A declaration under Section 2 of the Apartment Ownership Act was to be executed by defendant No.1 for conveying and transferring to the plaintiff, as the option holder, the suit premises.

The declaration Exhibit D-2 is executed by the plaintiff also on stamp paper purchased on 29 August 2002 under No.3998. The draft of both these declarations was annexed to the declaration dated 29 August, 2002. A Condominium was to be formed and the administration of the Condominium was to be as described in the declaration to be executed which facts were also mentioned in the said declaration. Incidentally the draft declaration under Section 2 of the Apartment Ownership Act annexed to the declaration itself has been signed and initialled by defendant No.1.

11.The declaration of the plaintiff shows an oral agreement between the parties arrived at on 29 August 2002, the date of its execution and the purchase of the stamp paper. The agreement mentions about the declaration of the same date executed by the defendant No.1 and the acceptance of all the terms and conditions thereof by the plaintiff.

12.Declaration at Exhibit D-3 has been executed by defendant No.1 on 21 March 2003 and the declaration at Exhibit D-4 by the plaintiff on the same date. Both these documents are executed on stamp paper purchased on 17 March 2003 by both the parties from the same stamp vendor. Declaration at Exhibit D-3 bears the stamp No.159 and declaration at Exhibit D-4 bears the stamp No.162. Similar recitals, consideration and clauses are in these declarations as in the declaration dated 29 August 2002 save and except the fact about the licensed property.

Exhibit D-3, the declaration of 21 March 2003 of defendant No.1, shows the consideration of Rs.10,00,000/- required to be paid on that day which is paid by cheque and acknowledged by a signed receipt. The particulars of the cheque are not mentioned in the declaration. A receipt is separately shown by the plaintiff setting out the description of the property to be purchased, but without the particulars of the cheque. The Xerox copy of the Account Payee cheque No.129276 dated 21 March 2003 in the name of defendant No.1 for Rs.10,00,000/- is produced by the plaintiff. Though the receipt of Rs.10,00,000/- is orally denied on behalf of defendant No.1, the plaintiff's Counsel has shown the same cheque bearing the same number mentioned in Clause 7.1.5 of the MoU between the defendant No.1 and defendant Nos. 3 and 4 dated 11 April 2007. The earnest amount, therefore, is shown to have been paid by the plaintiff. Of course it is not credited by the defendant No.1. That is at her volition.

13.The declarations bear the docket of the plaintiff's Attorneys. However, the plaintiff has shown that both the parties were represented and advised by their respective Solicitors. Defendant No.1 was represented by two Solicitors of two different firms, Mr. Anil Harish of M/s. D.M. Harish & Co., and Mr. Adil Kajiji of Gagrat & Co.

14.The two declarations do not show anything amiss except for the fact that the declaration under Section 2 of the Apartment Ownership Act annexed to the declaration of defendant No.1 dated 29 August 2002 has been signed by defendant No.1, though it is in the form of a draft annexed to that declaration.

15.Since the purport of the declaration is not accepted and admitted by the parties, the circumstantial evidence about its execution and the state of defendant No.1 at or before the time of its execution would be required to be seen from other contemporaneous circumstantial evidence. The plaintiff has sought to show this by certain correspondence between the Attorneys and the parties aside from the aforesaid payment of the cheque admittedly received by the defendant No.1 and made known to defendant Nos. 3 and 4.

16.The correspondence would, therefore, have to be seen. The first letter is dated 26 August 2004 written about one and half years after the declarations were executed by the parties requiring the defendant No.1 to execute further declaration under Section 2 of the Apartment Ownership Act and the ultimate sale in favour of the plaintiff.

17.The letter dated 26 August 2004 written by Mr. Adil Kajiji on the letterhead of M/s.Gagrat & Co., to the plaintiff shows two Supplementary Agreements, the draft of which were enclosed with that letter. These are immaterial for our consideration. Page 2 of the letter mentions about the declaration dated 21 March 2003. It specifies that the rights of the plaintiff would relate only to the premises covered under the Agreements executed between the parties on 28 August 2002 and 21 March 2003 for the incorporation of the Condominium and the rest of the property known as Nepean House would remain vested in defendant No.1. This letter shows that the plaintiff would not have the rights of a co-owner in the entire property. It reflects the intent of defendant No.1 to form a Condominium so that the ownership rights of the plaintiff would be contained within the premises licensed to the plaintiff and occupied by the plaintiff alone. These licenses were under the Agreement dated 28 August 2002, a day prior to the first declaration of defendant No.1 and 21 March 2003 the date of the 2nd declaration of defendant No.1. It was, therefore, present to the defendant No.1 that there would be a purchase of the property by the plaintiff, but that would be only the licensed premises and not of the other part of the property. The plaintif would, therefore, be a member of the Condominium and but not a co-owner with defendant No.1 and would have no right in the other part of the property of defendant No.1. This letter, therefore, shows specifically the option to purchase the licensed premises, if not more.

18.The copy of the letter is not marked to the defendant No.1 and is accordingly refuted by the defendant No.1. The plaintiff was called upon to produce the original letter for inspection. It is stated that the plaintiff has not produced that letter. The Court called upon the plaintiff to produce the letter. The plaintiff has produced the original letter in the Court. The original letter is as per the photocopy annexed to the plaint. Prima facie it appears to have been written by Mr. Adil Kajiji. Mr. Adil Kajiji has since expired.

19.The next letter also written by Mr. Adil Kajiji is the letter dated 25 October 2005, more than a year after the first letter. The copy of the letter is not marked to the defendant No.1 and is refuted by the defendant No.1. It is addressed to the other Attorney of defendant No.1 Mr. Anil Harish. It is not known how the plaintiff obtained the copy of the letter. It is, of course, for the plaintiff to prove the truth of the contents of these letters received by the plaintiff at the time of trial.

20.The letter dated 25 October 2005 relates to the conversion of Nepean House property under the Apartment Ownership Act and drafting of relevant documents. It also relates to transfer of premises in Nepean House and drafting of relevant documents. It refers to a meeting held on 7 October 2005 when the four documents were discussed. These four documents are an agreement recording the exercise of purchase option, declaration under the Act (Section 2 of the Apartment Ownership Act), Bye-laws and Rules and Regulations of the Condominium and the date of sale of apartment. It shows that there were certain drafts prepared before this letter. These drafts were read and revised by the author of the letter. They were engrossed for the approval of the other Attorney and also defendant No.1. If approved they were to be sent to the plaintiff for approval.

Two subject matters are unmistakenly shown; not only the formation of condominium, but the transfer of the premises. The only occupants of the entire Nepean House consisting of a building of ground plus four upper floors are defendant No.1 and the plaintiff. The transfer of the premises, therefore, could only be from defendant No.1 to the plaintiff. The documents which were to be drafted were for the conversion of the property and the transfer of the premises. The conversion would be from ownership to condominium. The transfer would be from defendant No.1 to the plaintiff. The condominium would be in respect of the entire property. The transfer would be in respect of the licensed premises.

The four documents show that the draft agreement for recording the exercise of purchase option was made out. It, therefore, shows the negotiations to that end as is the plaintiff's case. The declarations under the Act mentioned in the letter is indeed the declaration under Section 2 of the Act, a draft of which was annexed to the aforesaid two declarations of the defendant No.1 herself. These drafts were to be finalised. The bye-laws, and the Rules and Regulations show the specific intent to form a condominium. The only outsider in the condominium was the plaintiff. Hence without his option to purchase the condominium could not have been formed. The last of the document is a Deed of Sale of the apartment which follows as a corollary to the other documents.

21.If defendant No.2 had executed the declarations on 29 August 2002 and 21 March 2003 there would not have been any use or necessity to draft the four documents mentioned in this letter. The declarations can go only as far as that. It grants the option to purchase to the plaintiff. Upon such agreement recording such purchase a Deed of Sale would be executed. To specify that the sale was only for flats and occupation of the plaintiff, the declaration under Section 2 of the Apartment Ownership Act would have to be made upon the formation of the condominium and for which the bye-laws, Rules and Regulations would have to be drafted. Once approved by the defendant No.1, it would have to be sent for approval to the plaintiff. The letter, therefore, shows the acts done by the defendant No.1 through her Attorneys upon the option to purchase given to the plaintiff which came to be exercised by the plaintiff on the dates of the declarations made by defendant No.1.

22.The third communication is an email dated 14 November 2005 following upon the letter sent a fortnight earlier. It is sent by Mr. Kajiji to the plaintiff attaching the agreement recording the exercise of purchase option, the bye-laws, Rules and Regulations of the condominium, the declaration under the Act and the Deed of Sale of Apartment, precisely the documents which were in draft form sent under the letter dated 25 October, 2005. The subject matter of the said email is identical to the subject matter in the letter dated 25 October, 2005. The drafts of the said four documents were sent to the plaintiff. Consequently the defendant No.1 acted upon the drafts and brought them fruition.

23.By his letter dated 27 December 2005 the partner of the Attorney's firm of the plaintiff confirmed the option to purchase, the specific premises in the occupation of the plaintiff upon the consideration as mentioned in the initial declarations of the defendant No.1. However, the Attorneys required Rs.6,00,00,000/- being paid as security deposit under the license agreements of the plaintiff to be adjusted as part consideration by defendant No.1. The Attorneys wanted the convenient dates for the completion of the transaction.

24.Instead of completing the transaction, appropriating the security deposit and admitting the receipt of the earnest shown to have been received by the defendant No.1 and completing the transaction, the defendant No.1 failed to comply with the letter. There is, however, no denial of the receipt of that letter.

25.Another letter was addressed by the partner of the plaintiff's Attorneys firm to the defendant No.1 on 25 January 2006 recording the exercise of the option and the consideration payable and making time the essence of the contract.

26.Defendant No.1 refuted the transaction and repudiated the option by her Attorneys letter dated 21 February 2006. The earlier supplementary agreement, breaches of the agreements, etc., have been recited in the said letter with which the suit is not concerned. The defendant No.1 appropriated Rs.1.5 crores from the security deposit of Rs.6,00,00,000/-, terminated the license agreement and sought to return to the plaintiff Rs.4.5 crores. With regard to the suit transaction and the obligation of defendant No.1 therein she contended that she was given to understand that the documents which she signed were declarations under Section 2 of the Apartment Ownership Act. She did not have the originals. She stated about certain irregularities therein being that they were registered and that she did not recollect the execution of two separate declarations for the same purpose. She specifically refuted Clause 18 of the declaration dated 21 March 2003 (which is analogous to Clause 16 of the declaration dated 29 August 2002). She contended that it was "jarringly thrown in". The said clause shows the consideration under the contract as also the credit for the security deposit amount claimed in the plaintiff's Attorneys' notice and the consequent conveyance and transfer of the premises to the plaintiff and the formation and administration of the condominium as required by the defendant No.1. The clause in fact fits in with the cheque for the earnest amount issued by the plaintiff and admitted by the defendant No.1 in the MoU executed with defendant Nos.2 and 4 as also the 4 documents mentioned in Mr.Adil Kajiji's letter and email dated 25 October 2005 and 14 November 2005 respectively, being the subject matter of the two communications and the documents in that behalf. The receipt of the earnest amount is for no other transaction.

27.The repudiation by the defendant No.1 is, therefore, seen to be without cause. This would constitute a breach of the Agreement between the parties as reflected in the two declarations and the consequent correspondence. The case of oral agreement of the plaintiff is prima facie substantiated by this corroborative evidence.

28.After this the defendant No.1 sought to terminate the license of the plaintiff and recover possession of the licensed premises from the plaintiff. She put the defendant Nos. 2 and 4 in possession of the premises under the MoU executed by her dated 11 April 2007. She however, put them to notice of the plaintiff's claim. The plaintiff's claim is for specific performance of the oral agreement including two declarations dated 29 August 2002 and 21 March 2003.

29.It is argued on behalf of the defendant No.1 that the consideration mentioned in the declarations which defendant No.1 was made to sign under a misrepresentation that it was the declaration under Section 2 of the Apartment Ownership Act was much lower than the market value of the premises on the date of the declarations. The plaintiff has produced the extract of the Ready Recknor of that area of 2002 which shows the same market value prevailing in the area. It, therefore, shows that the consideration for the option to purchase was not only an approximate market value, but was rather accurate. If there was no option to purchase, the condominium of the defendant No.1 and her daughter alone would have served the purpose. The draft agreements mentioned in the correspondence of Mr.Adil Kajiji relate also to such transfer and demonstrate the option to purchase without which such transfer would not have been effectuated. The fact that the documents were emailed to the plaintiff shows the status is that the plaintiff would reside in the condominium which was intended to be formed.

30.This evidence makes out the prima facie case of the plaintiff of the oral agreement claimed to have been entered into by and between the plaintiff and defendant No.1.

31.The plaintiff has produced an affidavit of the broker of the parties showing the brokerage received for the license created and the brokerage receivable for the purchase to be effected. The email of the broker addressed to the plaintiff dated 8 April 2002 make a reference to the exercise of the option of purchasing the property for Rs.16,00,00,0000/- as the agreed price. The letter of the broker to the Attorney of defendant No.1, Mr. Anil Harish dated 11 April 2002 makes a reference to the right of refusal to be exercised by the plaintiff in the event of sale of any other part of the family house. This shows the pre-emptive right that the plaintiff claimed in the property. The further letters of the broker set out the brokerage received and receivable. The broker has, however, not shown his bank account statement showing the amount of brokerage credited to his account. Consequently the receipts stated by him are not otherwise substantiated by documentary evidence. The evidence of the broker would be required to prove the letters and emails stated to have been written by him. This would be only corroborative evidence and may not be taken into account for seeing the prima facie case of the plaintiff which is demonstrated even without such evidence.

32.The defendant No.1 has contended that the declarations which are shown to be notorised were not indeed signed by her before any Notary. Defendant Nos. 3 and 4 have filed affidavits in that behalf. It is of course not known how defendant Nos.3 and 4 would be in a position to mention about the bonafides of the transaction between the plaintiff and the defendant No.1. They have produced the letter of the Notary stating that the documents were not executed in their presence and were not registered in the Notarial Register. Of course the statutory requirement under the Notories Act read along with the Government Circular dated 18 December 2001 mandatorily requires the Serial number of Notorisation including the number of the Register maintained by the Notary public to be disclosed in the notorised document which is not shown in this case. The absence of this mandatory particulars themselves may rule out notorisation of the document. The declarations must, therefore, be taken not to have been notorised. (See Bipin Ganatra vs. Keshavrao J. Bhosle 2009 (3) Bom. C.R. 363 and KBC Picture vs. A.R. Murgadoss & Ors, 2009 (2) All MR 108).

33.It is also contended that the declarations are not registered. However, the suit for specific performance can be filed upon unregistered documents under the proviso to Section 49 of the Indian Registration Act. In fact a specific performance suit can be filed, as in this case, also upon an oral agreement. It is the agreement that the plaintiff essentially seeks to have specifically enforced as per the declaration executed by the parties. Consequently, the lack of notorisation or registration cannot dis-entitle the plaintiff to the relief at least prima facie for protection of the premises agreed to be purchased by the plaintiff.

34.The plaintiff would be entitled to interim reliefs in the Notice of Motion as also final relief in the suit only upon the plaintiff showing his readiness and willingness to perform his part of the contract. The plaintiff is a purchaser of two flats. The only part of the contract required to be performed by the plaintiff is the payment of the agreed consideration. The agreed consideration is Rs.16,00,00,000/-. The adjustment of Rs.6,00,00,000/- for security deposit claim by the plaintiff is not an admitted position. The licensed premises has been recovered from the plaintiff. Certain damages to the suit property are claimed by the defendant No.1. Certain damages incurred by the defendant No.1 are, therefore, claimed to have been recovered by the defendant No.1 in a sum of Rs.1.5 crores. The defendant No.1 has deposited the amount less than the security deposit of Rs.6,00,00,000/- in the Rent Court upon obtaining possession. It would not be appropriate to enter into arithmetics of the security lying to the credit of the plaintiff which could be adjusted by defendant No.1 or by the Court in view of the dispute between the parties. The plaintiff would, therefore, have to deposit the entire consideration under the option to purchase as reflected in the two declarations of defendant No.1.

35.Under these circumstances the relief of injunction for protecting the suit property is required to be granted, but only upon the plaintiff performing his part of the contract, which the plaintiff is required to be ready and willing to perform at all material times including at the time of filing the suit. This would be only upon payment of the entire consideration by the plaintiff which is the only obligation that the plaintiff is required to perform.

Since the defendant Nos. 3 and 4 are in possession, the further transfer by the defendant Nos. 3 and 4 would have to be restrained for protection of the suit premises pending the suit upon the consideration under the suit transaction being paid by the plaintiff.

A case for appointment of Court Receiver is not made out.

The alienation of the premises by defendant Nos. 1, 3 and 4 is required to be restrained as also the demolition of the suit property being the two flats agreed to be purchased by the plaintif pending the suit.

36.Hence the following order :-

(i) The plaintiff shall deposit in the Court Rs.16,00,00,000/- (Rupees Sixteen Crores Only) within two weeks from today. If the plaintiff deposits the said amount the defendant Nos. 1, 3 and 4 shall not sell, alienate, dispose of, encumber, create any third party rights or otherwise induct any third party in the suit premises pending the suit. Defendant Nos. 1, 3 and 4 shall also not demolish the suit property or carry out any development activity in the suit premises.

(ii)If the plaintiff fails to deposit the aforesaid consideration of Rs.16,00,00,000/- (Rupees Sixteen Crores Only) within two weeks from today there shall be no interim relief in favour of the plaintiff.

(iii)Notice of Motion is disposed of accordingly.

Ordered accordingly.