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M/s. Gandhi Builders and Developers Vs. Shyamlal s/o Ramchandra Yadav (since deceased) through his legal heirs.and Others - Court Judgment

LegalCrystal Citation
CourtMumbai Nagpur High Court
Decided On
Case NumberAppeal Against Order No. 102 of 2014
Judge
AppellantM/s. Gandhi Builders and Developers
RespondentShyamlal s/o Ramchandra Yadav (since deceased) through his legal heirs.and Others
Excerpt:
specific relief act, 1963 - section 14(3) (c) -.....to be paid to the original defendant and on 5-5-2012, the appellant received possession of the suit property. thereafter on 17-7-2012 another notice came to be issued to the original defendant to complete the transaction in question. however, as no steps were taken by the original defendant and subsequently by his legal heirs, suit for specific performance of agreement dated 26-11-2007 came to be filed in march, 2013. 3. the legal heirs of the original defendant filed their written statement in which it was stated that the agreement between the parties was only for developing the property and not for selling the same. it was denied that possession was handed over to the appellant on 5-5-2012. it was also stated that the payment of rs.2,00,000/- was made by the appellant on 29-4-2012.....
Judgment:

Oral Judgment:

1. This appeal filed by the original plaintiff takes exception to the order passed by the trial Court refusing to grant any interim injunction in favour of the appellant during pendency of the suit.

2. It is the case of the appellant – plaintiff that on 26-11-2007, an agreement was entered into with the predecessor of the respondents original defendant. As per said agreement, the parties agreed that the work of developing the property in question which was an open plot for the purposes of constructing an apartment scheme should be undertaken by the appellant subject to various terms and conditions. According to the appellant, it was permitted to develop said property subject to the original defendant paying a sum of Rs.531 per square foot as consideration. Initially, an amount of Rs.3,00,000/- was paid to the original defendant. The balance amounts were to be paid in the manner prescribed in the agreement. According to the appellant, on 18-3-2011, a notice came to be issued to the original defendant calling upon said defendant to take all necessary steps in terms of said agreement so as to complete the contract. Thereafter, on 4-5-2012 an amount of Rs.2,00,000/- came to be paid to the original defendant and on 5-5-2012, the appellant received possession of the suit property. Thereafter on 17-7-2012 another notice came to be issued to the original defendant to complete the transaction in question. However, as no steps were taken by the original defendant and subsequently by his legal heirs, suit for specific performance of agreement dated 26-11-2007 came to be filed in March, 2013.

3. The legal heirs of the original defendant filed their written statement in which it was stated that the agreement between the parties was only for developing the property and not for selling the same. It was denied that possession was handed over to the appellant on 5-5-2012. It was also stated that the payment of Rs.2,00,000/- was made by the appellant on 29-4-2012 only for the purposes of bringing the suit within limitation. On these grounds, the suit came to be opposed.

4. During pendency of the said suit, the appellant moved an application below Exhibit-5 praying that the appellant was always ready and willing to perform its part of the agreement and that the respondents were not interested in completing the transaction. It was, therefore, prayed that during pendency of the suit, the respondents be restrained from disturbing the possession of the appellant and also that no third party rights be created in the suit property. This application was opposed by the respondents on the same stand that was taken in the written statement.

5. The trial Court after considering the material available on record held that the agreement dated 26-11-2007 was not a registered agreement nor was it sufficiently stamped and, therefore, no right was created in the appellant. It also recorded a finding that the appellant could not show that it had been placed in possession. For aforesaid reasons, the trial Court rejected the application for temporary injunction. 6. Shri R. R. Srivastava, the learned Counsel appearing for the appellant submitted that the trial Court misdirected itself in holding that as the agreement was unregistered and insufficiently stamped, the same could not be acted upon. Relying upon judgment of learned Single Judge in Marine Container Services (I) Pvt. Ltd. v. Rajesh Dhirajlal Vora 2001(4) Mh.L.J. 353, it was submitted that the aspect regarding non-registration of the document and it being insufficiently stamped did not carry much weightage when an application for temporary injunction was being considered. He then submitted that merely because the document was titled as a development agreement, the same will not disentitle the appellant for the relief of specific performance. He relied upon the provisions of Section 14(3) (c) of the Specific Relief Act 1963 (for short the said Act) to urge that the appellant was entitled to seek specific performance of the agreement in question. He referred to various clauses of agreement to urge that it was, in fact, an agreement of sale that was titled as a development agreement. In that regard, he placed reliance on judgment of the Full Bench of the Calcutta High Court in Ashok Kumar Jaiswal V. Ashim Kumar Kar AIR 2014 Calcutta 92 wherein it was held that a suit at the instance of a developer for specific performance was maintainable. He also submitted that even otherwise, the appellant had made out a prima facie case and was, therefore, entitled to the reliefs sought in the application for temporary injunction.

7. Aforesaid submissions were opposed by Shri A. A. Naik, learned Counsel appearing for the respondents. It was submitted that in view of provisions of Section 14(1)(a) of the said Act, the appellant could be compensated in monetary terms and hence, there was no question of granting any specific performance of the agreement in question. It was submitted that the agreement between the parties was purely a development agreement and the same was evident from various terms that were agreed between the parties. He submitted that no interest in the land was created in favour of the appellant and it was only to receive certain amounts for developing the property. In this regard, the learned Counsel placed reliance on the judgment of the learned Single Judge in GurudevDevelopers vs. Kurla Konkan Niwas Co-op. Hsg. Society 2000 (3) Mh.L.J. 131 wherein after referring to an earlier judgment of the Division Bench, it was held that an agreement of development could not be specifically enforced. Reliance was also placed on the judgment of the Division Bench in ChhedaHousing Development Corporation vs. Bibijan Shaikh Farid and others 2007 (3) Mh.L.J. 402 to urge that the nature of the agreement itself indicated that the same was a development agreement and the same could not be specifically enforced. It was then urged that the amount of Rs.2,00,000/- was shown to be paid in May, 2012 which was almost after four years of the agreement. It was also submitted that the appellant had never handed over possession of the suit property and the respondents continued to be in possession thereof. On these counts, it was, therefore, urged that the trial Court had rightly rejected the prayer for interim relief.

8. I have considered the respective submissions and I have gone through the documents filed on record. The execution of the agreement between the parties is not in dispute. As per said agreement dated 26-11-2007, the original defendant intended to develop his open piece of land by constructing an apartment scheme. The work of developing the property was, therefore, handed over to the appellant on certain terms and conditions. As consideration for development of the property, it was agreed that the original defendant would pay a sum of Rs.531/- per square foot of the property in question on the terms as agreed. An amount of Rs.3,00,000/- was initially paid. An amount of Rs.2,00,000/- was to be paid within 15 days of the names being mutated in the revenue records or within three months from the date of the agreement. The balance amount was to be paid within six months of the second installment or within 9 months from the date of the agreement. The possession was to be handed over when the second installment was to be paid. It was agreed that the original defendant would take steps to correct the mutation records and indicate clear title in the suit property. All necessary documents were to be executed in that regard. After the development and construction was completed, the owner was to grant to the appellant conveyance of the said property as per provisions of Maharashtra Apartment Ownership Act, 1970. These are the terms broadly agreed between the parties.

9. The fact that initially an amount of Rs.3,00,000/- was paid when the agreement was executed is not disputed. The second installment is claimed to have been paid on 4-5-2012. There is some dispute between the parties inasmuch as, according to the appellant, the said amount was paid as it was so demanded by the respondents while according to the respondents said amount was deposited in the Bank account without their knowledge. It is on this basis that the appellant claims that possession was handed over on the next day which is 5-5-2012.

10. The trial Court while examining the agreement in question found that the same was not registered and it was also insufficiently stamped. On that basis, the trial Court held that said document did not create any right whatsoever in favour of the appellant and hence, it did not examine the nature of said agreement any further. Considering the law as laid down in Marine Container Services (supra), at the stage of considering a prayer for interim relief, the nature of the document could not be a ground for declining interim relief or for considering the application for interim relief. Hence, to that extent the finding of the trial Court that as the agreement was unregistered and insufficiently stamped, there was no prima facie case cannot be sustained.

11. The nature of the agreement entered into between the parties prima facie indicates that the original defendant intended to develop his property and in view of such development being carried out, the appellant was to be paid consideration at the rate of Rs.531/- per square foot. This arrangement prima facie to pay aforesaid consideration by itself would not amount to creating any interest in the land in question.

The question whether a development agreement amounts to an agreement of sale was considered by a Division Bench of this Court in Appeal No.285/1988 that was decided on 7-3-1988. After examining the agreement therein, it was prima facie found that merely because certain amounts were being paid to the developer as consideration for developing the property, the same would not make it an agreement of sale. In said case, right had been granted to the developer therein to construct and sell part of the property therein. It was further held that such arrangement also amounted to a mode of remunerating the developer for undertaking the construction. Following said adjudication, learned Single Judge in GurudeoDevelopers (supra) had refused to grant interim relief on the ground that the agreement in question could not be specifically enforced. The Division Bench in ChhedaHousing Development Corporation (supra) has emphasized the manner in which such agreements are to be construed and after examining the same, it observed that if no interest in the land is created, then such agreement cannot be specifically enforced as it is restricted to developing the property. It is to be noted that the Division Bench also considered the provisions of the Maharashtra Ownership Flats (Regulation of Promotion of Construction, Sale, Management and Transfer) Act 1963 in aforesaid decision.

12. The Full Bench of the Calcutta High Court considered provisions of Section 14(3)(c) of the said Act and proceeded to hold that a suit by a developer seeking enforcement of a development agreement was not prohibited by Section 14(3)(c) of the said Act. It has thereafter observed that even if such suit was not barred, the considerations for grant of interim relief would have to be examined in the facts of the respective cases.

13. In the light of law laid down by the Division Bench of this Court referred to supra, at this prima facie stage, in my view, the agreement between the parties appears to be a development agreement on the basis of which the appellant was to be remunerated for developing the suit property. Having prima facie found so, I have further considered whether the appellant is entitled for grant of any interim relief. The suit as filed is for specific performance of agreement dated 26-11-2007. The various clauses as stipulated in the agreement prima facie indicate that the parties intended that the project in question should be expeditiously completed. The first notice that has been issued by the appellant is dated 18-3-2011 which is almost 3 ½ years after the agreement. The second installment that has been paid is on 4-5-2012 of which there is some dispute regarding the manner in which the amount was paid. Thereafter, another notice was issued on 17-7-2012 and the suit has been filed in March, 2013. In these set of facts, it cannot be said that the appellant has acted expeditiously to be entitled for the relief of interim injunction while seeking specific performance. For seeking specific performance of an agreement dated 26-11-2007, the suit has been filed in March, 2013. Similarly, there is no document on record to indicate possession of the appellant. The fact that possession was handed over to the appellant is not supported by any document. Said fact has also been specifically denied by the respondents. Further, it is not pointed out that the protection as provided by Section 52 of the Transfer of Property Act, 1882 is inadequate and hence, the interests of the appellant are required to be protected. Hence, in my view there is no case made out for grant of interim relief.

14. In view of aforesaid findings which are prima facie in nature, the order passed by the trial Court is confirmed though for distinct reasons. It is, however, clarified that these observations are only for the purposes of considering the application for interim relief and the trial Court is free to decide the suit on the basis of evidence before it without being influenced in any manner whatsoever with aforesaid observations. The rival contentions on the legal aspects of the agreement dated 26-11-2007 and its nature are kept open.

15. Hence, for aforesaid reasons, there is no case made out for interference. Appeal, therefore, stands dismissed with no order as to costs.

16. At this stage, the learned Counsel for the appellant seeks continuation of the order of status quo that has been operating during pendency of the proceedings. Said request is opposed by the learned Counsel for the respondents. The order of status quo granted on 19-9-2014 shall continue to operate for a period of eight weeks from today and shall cease to operate automatically thereafter.


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