Bombay High Court
Vinesh Rashmikant Shah And 3 Ors vs Pee Jay Traders And 3 Ors And Zeenith … on 29 November, 2024
Author: R.I. Chagla
Bench: R.I. Chagla
2024:BHC-OS:19386
J-CHS 397.19 with IA 55.19, NMS 1798.17 in S 463.16 with S 463.16 new.doc
Kavita S.J.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
CHAMBER SUMMONS NO.397 OF 2019
IN
SUIT NO.463 OF 2016
Zenith Enterprises ...Applicant
(Intervener)
In the matter between:
Vinesh Rashmikant Shah and Ors. ...Plaintiffs
Versus
Pee Jay Traders and Ors. ...Defendants
WITH
INTERIM APPLICATION NO.55 OF 2019
IN
SUIT NO.463 OF 2016
Vinesh Rashmikant Shah and Ors. ...Applicants/
Plaintiffs
Versus
Pee Jay Traders and Ors. ...Defendants
WITH
KAVITA NOTICE OF MOTION NO.1798 OF 2017
SUSHIL
JADHAV
Digitally signed
IN
by KAVITA
SUSHIL JADHAV
Date: 2024.11.29
17:13:16 +0530
SUIT NO.463 OF 2016
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Vinesh Rashmikant Shah and Ors. ...Applicants/
Plaintiffs
Versus
Pee Jay Traders and Ors. ...Defendants
WITH
SUIT NO.463 OF 2016
Vinesh Rashmikant Shah and Ors. ...Plaintiffs
Versus
Pee Jay Traders and Ors. ...Defendants
----------
Mr. Zubin Behramkamdin, Senior Counsel a/w Ms. Jennifer Michael,
Mr. Som Sinha, Ms. Divya Vishwanath i/b Som Sinha and Associates
for the Applicant/Intervenor in CHS No.397 of 2019.
Mr. Rohaan Cama, Counsel a/w Mr. Anish Karande, Counsel a/w Mr.
Danish Qureshi i/b Mahimtura & Co., for the Plaintiff.
Ms. Purnima G. Bhatia a/w Ms. Roshan D'sa for Defendant Nos.1 and
2 in CHS No.397 of 2019.
Mr. Prabhat J. Dubey a/w Ms. Aarti Yadav for Defendant No.4.
----------
CORAM : R.I. CHAGLA, J.
RESERVED ON : 24th JULY, 2024.
PRONOUNCED ON : 29th NOVEMBER, 2024.
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JUDGMENT :
1. The Chamber Summons and the Interim Application filed
in the above Suit have been heard together. By the Chamber
Summons, the Applicant – M/s Zenith Enterprises (hereinafter
referred to as “Zenith”) has sought impleadment in the Suit. Further,
consequential relief has been sought in the Chamber Summons. By
the Interim Application No. 55 of 2019 filed in the above Suit, the
Plaintiffs have sought an Order from this Court under Order XXIII or
Order XII Rule 6 of the Code of Civil Procedure (“CPC”), 1908, to
pass a decree recording the compromise arrived at between the
Plaintiffs and Defendant Nos. 1 and 2 in terms of the Consent Terms
signed by the parties and their Advocates, annexed at Exhibit D to
the Interim Application (hereinafter referred to as ” the Consent
Terms”), and for directions from this Court to permit the Plaintiffs to
withdraw the amount of Rs.2.70 Crores deposited by the Plaintiffs
with the Prothonotary and Senior Master of this Court pursuant to an
Order dated 4th July, 2018 passed by this Court, together with the
accrued interest thereon.
2. It is relevant to give a brief background of facts leading
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up to the filing of the present Suit as well as the above Applications
and relevant orders passed thereon, which are as under:
(i) A Memorandum of Understanding (“MoU”) had
been executed between the Defendant No.1 as Vendor and
Plaintiff Nos. 1 and 2 as Purchasers on 27 th May, 2004 whereby
Defendant No.1 agreed to sell and transfer Flat Nos. 801 and
802, 901 and 902 to be constructed on the 8 th and 9th Floors
together with terrace admeasuring 1000 sq.ft. attached to Flat
No.901, for consideration and on the terms and conditions
stated therein. This had been preceded by an MoU dated 25 th
July, 2002 for construction of upper floors to be carried out in
the subject building.
(ii) Thereafter an MoU was executed between
Defendant No.2 and Zenith on 21st August, 2008 in respect of
joint development of proposed construction on “B” Wing of the
subject building described as “Mangal Kunj” “B” Wing CHS
Limited.
(iii) An Allotment Letter was issued by Defendant No.1
in favour of Plaintiff No.1 on 11th September, 2010 allotting the
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complete 9th and 10th Floors of the subject building (floors
under construction) in lieu of 8 th and 9th floors which have
been allotted earlier.
(iv) On 31st December, 2010 there were four registered
Agreements for Sale executed by Defendant No.2 as Developer
and Plaintiff Nos. 1 and 2 as Purchasers, whereby Defendant
No.2 agreed to sell and transfer to Plaintiff Nos. 1 and 2, the
Flat No.901, 902, 1001 and 1002 alongwith respective one
open car parking space, at / or for the consideration and on
the terms and conditions stated therein.
(v) Further, on 31st December, 2010, registered
Agreement for Sale was executed by Plaintiff Nos. 1 and 2 as
Vendors and Defendant No.2 as Purchaser, whereby Plaintiff
Nos. 1 and 2, who had been transferred Flat No.G-1 in the
subject building by Defendant No.1, agreed to transfer, convey
and assign the said Flat No.G-1 in favour of Defendant No.2 at
or for the consideration and in the manner contained therein.
(vi) Housing Loan of Rs.2.5 Crores was sanctioned by
the Bank of Baroda in favour of the Plaintiffs on 18 th January,
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2012 in respect of purchase of the Flat Nos. 901 and 902, 1001
and 1002.
(vii) Letters dated 26th March, 2012 were addressed by
Defendant No.2 giving No Objection to the Bank of Baroda
giving loan to the Plaintiffs and mortgaging the Flat Nos. 901
and 902, 1001 and 1002.
(viii) The Bank of Baroda deposited / transferred on 31 st
March, 2012 a sum of Rs.1 Crore into bank account of
Defendant No.2.
(ix) The Share Certificates bearing Nos. 14 and 15
were issued by the Society in favour of Plaintiff No.1 / Plaintiff
No.2 and Plaintiff No.3 / Plaintiff No.1 respectively. Further,
the Share Certificate pertaining to Flat No.G-1 was issued by
the Society in favour of Plaintiff No.1 and Plaintiff No.2.
(x) A registered Sale Deed dated 27th February, 2013
was executed by Defendant No.2, as the Developer and Zenith
as the Purchaser, whereby Defendant No.2 agreed to sell to
Zenith Flat Nos.1001 and 1002 alongwith exclusive right for
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use of one open car parking space in the compound of the
subject building at or for the consideration and on the terms
and conditions contained therein.
(xi) It is the Plaintiff’s case that Defendant No.2 in
October, 2013 handed over possession of Flat Nos. 901 and
902 for carrying out interior works.
(xii) A Registered Sale Deed was executed by
Defendant No.2 as Developer and Zenith as Purchaser on 19 th
December, 2013, whereby Defendant No.2 agreed to sell to
Zenith Flat Nos. 901 and 902 alongwith exclusive right for use
of one open car parking space in the compound of the subject
building, at or for the consideration and on the terms and
conditions contained therein.
(xiii) A registered Agreement for Sale was executed
between Zenith as Seller and one Mrs. Sabina Irfan Khandwani
and Mr. Irfan Sayeed Khandwani (“Khandwanis”) as
purchasers on 30th December, 2013, whereby Zenith agreed to
sell and transfer Flat Nos.1001 and 1002 alongwith exclusive
right for use of one open car parking space in the compound of
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subject building in favour of the Khandwanis, at or for the
consideration and on the terms and conditions contained
therein.
(xiv) A purported Receipt issued by Defendant No.2 on
26th March, 2014 in respect of sum of Rs.6 Lakh paid by Zenith
towards Service Tax on VAT in respect of Flat Nos. 1001 and
1002 under the registered Sale Deed dated 27th February, 2013.
(xv) Purported Possession Letter issued by Defendant
No.2 in favour of Zenith on 21st April, 2014 recording, inter
alia the handing over possession of Flat Nos.1001 and 1002.
(xvi) There were disputes between the Plaintiffs and
Defendant Nos.1 and 2 regarding the performance of the
Registered Agreement for Sale dated 31st December, 2010 in
respect of Flat Nos. 901 and 902, 1001 and 1002 and Flat
No.G-1 situated in the subject building. This led to the
Plaintiff’s filing the present Suit in March, 2016 and taking out
Notice of Motion No.2012 of 2016 therein, particularly since
Defendant Nos. 1 and 2 had failed to take necessary steps for
handing over possession of Flat Nos. 1001 and 1002 and had
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illegally placed a lock on the door of Flat Nos. 901 and 902 of
the subject building.
(xvii) An order was passed by this Court on 28 th March,
2016 in the Notice of Motion No.2012 to 2016 appointing a
Commissioner to visit the Suit Flats and verify the status of the
Flats and submit Report to this Court.
(xviii) Report prepared on 30th March, 2016 by the
Commissioner pursuant to directions of this Court.
(xix) A purported Possession Letter issued by Defendant
Nos. 2 on 27th July, 2017 in favour of Zenith recording, inter
alia, handing over of possession of Flat Nos.1001 and 1002.
(xx) A Notice of Motion No.1798 of 2017 was filed on
10th October, 2017 by the Plaintiffs seeking, inter alia to permit
the Plaintiffs to peacefully enjoy and occupy Flat Nos. 901 and
902, 1001 and 1002.
(xxi) An Order dated 4th July, 2018 was passed by this
Court in the said Notice of Motion No.1798 of 2017 directing
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the Plaintiffs to deposit an amount of Rs. 2.70 Crores in this
Court and on such deposit being made, direction to Defendant
Nos.1 and 2 to forthwith handover possession of the Suit Flats
to the Plaintiffs and to execute necessary documents, if any.
(xxii) The Plaintiffs deposited the said amount of Rs.2.70
Cores in this Court on 14th July, 2018.
(xxiii) An Order dated 18th July, 2018 was passed by this
Court in the said Notice of Motion No.1798 of 2017 appointing
a Court Receiver in respect of Flats on the 10 th Floor and
recorded that Zenith had handed over keys of Flat No.1001
and 1002 in this Court and directions to Defendant Nos.1 and
2 to hand over possession of 9th Floor Flats to the Plaintiffs.
Pursuant to this order, the Plaintiffs claimed to have broken
open the locks of Flats 901 and 902 and have been in quiet,
peaceful and uninterrupted possession of the Flats since then.
(xxiv) Order dated 21st July, 2018 passed by this Court in
Notice of Motion No. 1798 of 2017 directing the Court
Receiver to take possession of Flat Nos. 1001 and 1002 upon
the said Order dated 18th July, 2018 being lodged with the
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Court Receiver.
(xxv) The above Chamber Summons No.397 of 2019
was filed by Zenith on 24 th July, 2018, whereby Zenith sought
impleadment in the present Suit.
(xxvi) The Orders dated 11th March, 2019 and 8th April,
2019 passed by this Court in the said Chamber Summons
No.397 of 2019.
(xxvii) The undated Consent Terms executed between the
Plaintiffs and Defendant Nos. 1 and 2.
(xxviii) An Order dated 20th August, 2019 passed by this
Court recording statement made on behalf of the Defendant
Nos. 1 and 2 that although Consent Terms were to be filed,
Defendant Nos.1 and 2 were not agreeable to settle the matter
in those terms. Further, that the Consent Terms had been
arrived at and signed but the Defendant Nos. 1 and 2 had
given instructions to their Advocates not to proceed to settle
the present Suit as contemplated in the said Consent Terms.
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(xxix) Interim Application No.1 of 2019 filed by Plaintiff
No.1 which is now numbered as Interim Application No.55 of
2019 seeking inter alia that this Court be pleased to pass a
Decree in terms of the compromise / Consent Tems entered
into between the Plaintiffs and Defendant No.1.
3. The above Chamber Summons although heard alongwith
Interim Application No.55 of 2019 is first being addressed as it seeks
impleadment of Zenith in the present Suit.
4. It is the case on behalf of Zenith that when Zenith found
prospective purchasers for the 10th Floor Flats viz. Khandwanis, they
applied for bank loan on the basis of Agreement for Sale dated 30 th
December, 2013 entered into with the Khandwanis. Zenith was
informed by their bankers that said 10 th Floor Flats which was subject
matter of the said Agreement, were also agreed to be sold by
Defendant No.2 to someone else. This is when Zenith claims to have
come to know for the first time about the sale of the 10 th Floor Flats
carried out by Defendant No.2 which they term as ‘illegal sale’. It is
the further case of Zenith that when they confronted Defendant No.2
regarding the aforementioned sale, Defendant No.2 admitted that he
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had executed agreements with the Plaintiffs, not only in respect of
10th Floor Flats but also of the 9th Floor Flats. Zenith states that the
Defendants assured Zenith that the issue will be resolved amicably,
and that no detriment or prejudice shall be caused to Zenith. Further,
Zenith claims that Defendant No. 2 had informed them that although
the 10th Floor Flats were agreed to be sold to the Plaintiffs, the
Plaintiffs had failed to pay the consideration agreed upon, which
resulted in the termination of the Agreements by the Defendant No.
2.
5. Zenith has further contended that in respect of the said
9th Floor Flats, Defendant No. 2 requested Zenith to accept two Flats
on the 12th Floor of the subject Building viz. Flat Nos. 1201 and 1202
in lieu of the said 9th Floor Flats. This was agreed to by Zenith.
6. It is Zenith’s contention that Zenith was put into
possession of 10th Floor Flat and Possession Letter dated 27th July,
2017 was issued by the Defendant No. 2 on Zenith’s request, which
was notarized and executed by the Defendant No. 2 in favour of
Zenith, confirming the latter’s possession over the said 10th Floor
Flats. That it was further confirmed by Defendant No.2 in the
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Possession Letter that he has received full consideration under the
Sale Deed from Zenith and Zenith had full rights to occupy / deal
with the 10th Floor Flats in the manner Zenith deemed fit.
7. Further the contention of Zenith is that the Defendant
No.2 was not resolving the issue in respect of said 10 th Floor Flats. A
complaint had been filed with Bandra Police Station and upon
Defendant No.2 was upon being summoned gave a statement to the
police officials that the matter pertaining to the said 10 th Floor Flats
was settled by Defendant No.2 with the Plaintiffs and some time was
required to pay the Plaintiffs the necessary consideration. Further, the
Defendant No.2 had not let out a whisper regarding the pendency of
a Suit filed in respect of the said 10th Floor Flats, let alone any other
proceeding. Zenith claims to have only come to know of present
proceedings, when the Defendant No. 2 approached the Partner of
Zenith in / around 4th July, 2018 informing him that Zenith may
have to vacate the said 10th Floor Flats, as possession of the same
may have to be handed over to the Plaintiffs in terms of orders passed
by this Court. Zenith claims to have immediately approached its
Advocates for necessary steps to be taken in the present Suit.
Thereafter, Chamber Summons has been filed and in which the
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aforementioned orders have been passed by this Court including
directing Zenith to handover the 10th Floor Flats to the Receiver as
per directions of this Court.
8. Mr. Zubin Behramkamdin, learned Senior Counsel
appearing for Zenith has submitted that the Plaintiffs claim to have
purchased the said 10th Floor Flats under a Agreement for Sale dated
31st December, 2010. However, the said Agreements are only
Agreements to sell at a future date, and not Sale Deeds/Conveyances
at all, which makes the Plaintiffs incomplete Purchasers. He has in
this context referred to Clauses 1(a), 2, 5, 12, 20 and 29 of the said
Agreements. He has submitted that payments were infact never
made and there is nothing on record to substantiate the same.
9. Mr. Behramkamdin has submitted that since the prior
Agreements of the Plaintiffs are merely Agreements for Sale, they do
not attract the Public Notice Doctrine set out in Section 3 of the
Transfer of Property Act. He has submitted that this has been held
by this Court in the case of Hirachand Himatlal Marwari Vs.
Kashinath Thakurli Jadhav 1. He has submitted that the Plaintiffs’
1 AIR 1942 Bom 339
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registered Agreements are meaningless. Furthermore, when the
Agreements for Sale were signed, there was no Commencement
Certificate for the said 10th Floor Flats.
10. Mr. Behramkamdin has submitted that the Plaintiffs have
not paid consideration for the 10th Floor Flats (as is clear from the
registered Agreement for Sale) which caused the Agreement for Sale
to be terminated. He has submitted that the Plaintiff has only paid a
sum of Rs.5,00,000/- each under the said Agreements i.e.
Rs.10,00,000/- in total. The claim of the Plaintiffs that the balance
consideration payable was “adjusted” against alleged MoUs of 25th
July, 2002 and 22nd May, 2004 and / or there was an “understanding”
between the parties. This false stand has been exposed by the
Agreements for Sale itself as there is no recording in the Agreements
for Sale of such adjustments made in 2002 or 2004.
11. Mr. Behramkamdin has submitted that this false plea of
the Plaintiffs of adjustments of balance consideration has to be
rejected by this Court as s u c h p l e a i s contrary to Sections 91
and 92 of the Indian Evidence Act, particularly since such
adjustment is not reflected in any of the Agreements executed
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between the Plaintiffs and Defendant Nos.1 and 2, and is in fact is
contrary to what is expressly stated in the said Agreements.
12. Mr. Behramkamdin has submitted that this Court did not
believe the Plaintiffs’ case in this regard, and the Plaintiffs were
ordered to deposit monies vide Order dated 4th July, 2018. He has
submitted that the contract was never performed and completed by the
Plaintiffs unlike Zenith’s contract which was fully completed. The
Plaintiffs themselves filed Notice of Motion No.1798 of 2017 with
a specific prayer that they be allowed to deposit an amount of
Rs.2,70,00,000/- by way of Bank Guarantee in respect of the 9th and
10th Floor Flats respectively.
13. Mr. Behramkamdin has submitted that the non-payment
of consideration clearly shows that the Plaintiffs were not ready and
willing to perform their part of the Agreement. The fact that they
deposited an amount in Court pursuant to the Court’s direction does
not change this position. This has been held by the Supreme Court
in the case of U. N. Krishnamurthy (Since deceased) through LRs
Vs. A.M. Krishnamurthy 2 wherein it was held that the readiness and
2 2022 SCCOnline SC 840,
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willingness should be there since the beginning of the contract and
depositing money pursuant to a Court order does not show readiness
or willingness as stated in Section 16 of the Specific Relief Act, 1963.
14. Mr. Behramkamdin has submitted that the Plaintiffs were
entitled to possession only after full payment. In this context he has
placed reliance upon Clause 2 and 20 of the Agreements for Sale in
respect of the 10th Floor Flats, wherein it was provided that possession
was to be given to Plaintiffs only after full payment. Thus, the
Plaintiffs would be entitled to enjoy the said 10th Floor Flats only after
making full payment for the same, which is why they could never
have been given possession of the Suit Flats.
15. Mr. Behramkamdin has submitted that Zenith on the
other hand has fully performed, and has registered Sale Deeds in its
favour. Zenith has also been handed over possession of the said 10 th
Floor Flats on 21st April, 2017.
16. Mr. Behramkamdin has referred to Section 3 of the
Transfer of Property Act, wherein the phrase “a person is said to have
notice” is contained. He has submitted that the meaning of the said
phrase assumes importance in such a case. This Court in Hirachand
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Himatlal Marwari (supra) has held that if an Agreement was
compulsorily registrable and was in fact properly registered, only then
can it be deemed to give constructive notice, otherwise not.
Therefore, there can be no deemed notice attributed to Zenith,
because the Agreements dated 31st December, 2010 relied upon by
the Plaintiffs do not fulfill the legal requirements of constructive
notice.
17. Mr. Behramkamdin has submitted that the Plaintiffs have
themselves admitted in Paragraph 36 of the Plaint that there was a
finalised settlement between them and Defendant No.2 prior to filing
the above Suit. The Plaintiffs have produced the Consent Terms
finalised between the parties, whereunder the Plaintiffs agreed to
accept money in lieu of surrendering their purported rights in respect
of the said 10th Floor Flats. It means that the Plaintiffs have accepted
that compensation / money is an adequate remedy for the supposed
breaches committed by the Defendant Nos. 1 and 2. Having admitted
this, they cannot now maintain an action for specific performance.
18. Mr. Behramkamdin has submitted that Zenith’s possession
amounts to constructive notice to the Plaintiffs as per Section 3 of the
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Transfer of Property Act. Zenith has produced Possession Letters
issued in its favour which had not been denied. The Defendant No.2
has also admitted the fact that the possession of the said Flats was
with Zenith which was later handed over to the Court Receiver.
19. Mr. Behramkamdin has submitted that it is pertinent to
note that the Plaintiffs in the captioned Suit have raised claims
against Flat No.G-1 situated in the subject Building and have
challenged illegal transfer of the said Flat by the Defendant Nos.1
and 2 in favour of the Defendant No. 3. The Plaintiffs have made
Defendant No.3 a party Defendant to the Suit, and though having
done so, they are opposing Zenith’s Application for impleadment to
the Suit who are similar transferees in respect of the 10th Floor Flats.
20. Mr. Behramkamdin has submitted that Zenith is a
necessary and proper party and there cannot be an effective decree in
favour of the Plaintiffs or against Defendant Nos.1 and 2 without
Zenith, since it has purchased the 10th Floor Flats prior to the
institution of the Suit. He has referred to Section 19(b) of the
Specific Relief Act, which provides that specific relief cannot be
granted against a transferee for value without notice. He has submitted
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that this is an issue of relevance in the present Suit. Zenith is a
necessary and proper party inasmuch as Zenith can prove that it is a
bonafide purchaser for value without notice.
21. Mr. Behramkamdin has submitted that Zenith is in
possession of the said 10th Floor Flats and which possession has
also been confirmed by this Court’s Order dated 18 th July, 2018. The
possession of the said 10th Floor Flats was taken from Zenith. Now,
Zenith cannot be displaced in this manner by collusive Consent Terms
signed between the Plaintiffs and Defendant Nos. 1 and 2. In view of
the Zenith’s possession, the Plaintiffs would have to make Zenith a
party to the Defendant in the present Suit.
22. Mr. Behramkamdin has submitted that Zenith would be
deprived of its rights under Section 53A of the Transfer of Property
Act if it is not impleaded in the present Suit. Possession had been
taken by this Court from Zenith and if Zenith is not made a party, then
Zenith could have defended any Suit merely by its possession as
specified in Section 53A of the Transfer of Property Act. He has
placed reliance upon decision of this Court in Balasaheb Manikrao
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Deshmukh Vs. Rama Lingoji Warthi 3.
23. Mr. Behramkamdin has submitted that the Plaintiffs’
alleged transaction with Defendant Nos. 1 and 2 is not a genuine sale
transaction. The Plaintiffs have stated in the Plaint that they are
builders themselves and that the monies paid to Defendant Nos. 1
and 2 were investments for construction. Therefore, there was no
real sale transaction so as to entitle them to specific performance.
24. Mr. Behramkamdin has also referred to the Judgment of
this Court in Prem Kaliaandas Daryanani Vs. Natvarlal C. Modi 4 Page
120, wherein this Court has held that for deciding the question as to
who is a proper party in the Suit for specific performance, the
guiding principle is that the presence of such a party is necessary to
adjudicate the controversies involved in the Suit. He has also relied
upon the decision of this Court in Murali CHS Ltd. Vs. Ayappa
Construction Company & Anr. 5, in which necessary parties were
added as Defendants to the Suit, as their rights were directly affected
by any outcome in the Suit, as is the case in the present matter.
3 AIR 2000 Bom 337
4 2015 (6) Mh.L.J.,
5 (2016) SCC OnLine Bom 10462
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Further, in Kasturi Vs. Iyyamperumal & Ors. 6 the Supreme Court,
whilst examining the scope of O.1, R.10 (2) of the CPC, held inter
alia that a necessary party is someone in the absence of whom no
effective Decree can be passed. Further, in Ram Chandra Singh Vs.
Savitri Devi & Ors. 7 the Supreme Court has held that the rights of a
third-party cannot be set at naught by a Consent Order, and the same
are bound to be taken into consideration. In Sumtibai & Ors. Vs.
Paras Finance Co. 8 the Supreme Court has held that if a party can
show a fair semblance of title or interest, he can certainly file an
Application for impleadment, in support of Kasturi’s case as
mentioned above.
25. Mr. Behramkamdin has submitted that Zenith has shown
sufficient proof that it is the owner of the said 10th Floor Flats and has
also produced supporting documents substantiating the same.
26. Mr. Behramkamdin has also referred to the Judgment of
Supreme Court in Thomson Press (India) Ltd. Vs. Nanak Builders &
Investors Pvt. Ltd. & Ors. 9, wherein the Supreme Court has held that
6 (2005) 6 SCC 733,
7 (2003) 8 SCC 319
8 (2007) 10 SCC 82,
9 (2013) 5 SCC 397
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the Court can invoke enabling provision of O.22, R.10 of the CPC to
add a party pendente lite as party Defendant, and furthermore, the
Court is empowered to add any person as party at any stage of the
proceedings if such person’s presence is necessary for effective
adjudication of issues involved in the Suit.
27. Mr. Behramkamdin has submitted that it is the contention
of the Plaintiff that Zenith should have filed independent proceedings
in respect of its claim. He has submitted that when the possession
was with Zenith, it was not necessary for them to approach any court
of law for any reliefs. Zenith at the relevant point in time rightly
approached this Court by filing the captioned Chamber Summons
when the possession of the said 10th Floors Flats was taken from it and
handed over to the Court Receiver. Therefore, the said argument that
Zenith should file its independent proceeding is absolutely baseless
and should be rejected on the face of it.
28. Mr. Behramkamdin has submitted that this Court must
take cognizance of the fact that the interest of Zenith needs to be
protected as the possession of the said 10th Floor Flats were taken
from it vide an order of this Court. Hence, it is of absolute
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importance that the Zenith be impleaded as a party to the captioned
Suit.
29. Mr. Rohaan Cama, learned Counsel appearing for the
Plaintiffs has submitted that the only question in the present
Chamber Summons that arises is whether Zenith being a third party
to the transaction between the Plaintiffs and Defendant Nos. 1 and 2,
is required to be joined as a party to the present Suit filed by the
Plaintiffs for specific performance of the Agreements entered into by
Defendant Nos.1 and 2 in favour of the Plaintiffs. The ancillary
question that may arise, albeit not strictly necessary to be gone into,
is whether the Consent Terms entered into by the Plaintiffs with
Defendant Nos. 1 and 2 are in any manner binding on Zenith. If the
answer to both of these questions is in the negative, then there is no
question of joinder of Zenith. Any rights that Zenith claims to have
would have to be asserted by Zenith in a separate Suit filed on their
behalf, which in any event would be completely time barred at this
stage.
30. Mr. Rohaan Cama has submitted that the arguments
raised by Zenith seeking to challenge the Agreements entered into by
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the Plaintiffs in respect of the said Flat Nos. 1001 and 1002 are
untenable and cannot be raised by a third party in this manner.
Zenith has not sought to challenge the Agreements in favour of the
Plaintiffs despite having knowledge of the same.
31. Mr. Rohaan Cama has submitted that any action
challenging the Agreements in favour of the Plaintiffs would be ex
facie time barred. During the course of arguments, Zenith has
accepted this position.
32. Mr. Rohaan Cama has submitted that the only arguments
raised by Zenith is that it does not need to challenge the Plaintiffs’
Agreements as it has allegedly paid consideration for purchase of Flat
Nos.1001 and 1002. He has submitted that this contention raised by
Zenith is wholly untenable. In any event, if Zenith wished to set up
any claim to title based on its own Agreements and displace the
Agreements of the Plaintiffs, it cannot do so unless it files its own
Suit, and not even if joined as a Defendant in the present Suit.
33. Mr. Rohaan Cama has submitted that strictly without
prejudice to the above submissions, and while maintaining that no
such challenge has been raised by Defendant Nos.1 and 2 and cannot
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be raised by a rank stranger like Zenith that too not in its own Suit,
so long as it is prima facie shown to this Court that the Agreements
entered into by the Plaintiffs with the Defendant Nos.1 and 2 are
valid and proper Agreements and payments have prima facie been
made, as is evidently the case, there is no question of this Court
involving Zenith in the present Suit.
34. Mr. Rohaan Cama has submitted that at highest Zenith’s
involvement in the present litigation only affects Flat Nos.1001 and
1002 and will have no bearing on the Plaintiffs’ claim in respect of
Flat Nos.901, 902 and the sum of Rs.2.70 Crores which is to be
refunded as admitted in the Consent Terms.
35. Mr. Rohaan Cama has submitted that in a Suit for
specific performance against Defendant Nos. 1 and 2 in respect of the
Plaintiffs’ Agreements, Zenith is neither a necessary nor a proper
party and has no right whatsoever in this regard merely because it
claims some possessory right, which both factually and legally is not
only incorrect, but also is not a ground for impleadment.
36. Mr. Rohaan Cama has submitted that the position of law
in respect of impleadment of a third party, even when claiming
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through the same vendor as the Plaintiff claims, in a Suit for specific
performance, is now well settled and has been laid down inter alia in
the following judgments:
(i) Kasturi vs. Iyyamerumal & Ors. 10
(ii) Gurmit Singh Bhatia vs. Kiran Kant Robinson &
Ors. 11
(iii) Jagannath Khanderao Kedar v Gopinath Bhimaji
Kedar 12; Chitralekha Builders vs. G.I.C. Employees 13
37. Mr. Rohaan Cama has submitted that from the
aforementioned Judgments, the propositions of law laid down in this
regard are broadly set out as under:
(i) The Plaintiff is dominus litus. The Plaintiff cannot
be forced to join a third party and bring into issue in its
suit, the rights and issues raised by the third party
and/or be forced to dispel or deal with a third party’s
agreement in the Plaintiff’s specific performance suit
against its own contracting party / vendor.
10 (2005) 6 SCC 733
11 (2020) 13 SCC 773
12 2022 (4) ABR 551
13 2021 SCC OnLine SC 153
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(ii) It is a very different position when the Plaintiff in a
suit for specific performance seeks to add a third party
subsequent purchaser with a view to perfect its right and
title and a very different position, as in the present case,
when the third party seeks impleadment as a Defendant.
In the former category, as the Plaintiff is dominus litus
and as the Plaintiff has the discretion to decide whether
or not to join a party in the suit, the Plaintiff is at liberty
to join the said third party. However in a situation like
the present where the Plaintiff does not wish to join a
third party and have the third party’s issues agitated in
the Plaintiff’s suit for specific performance, the Plaintiff
cannot be foisted with having to do so.
(iii) The failure on the part of the Plaintiff or the
refusal to join a party may perhaps enure to the risk of
the Plaintiff but that by itself will not give any ground to
a third party to insist on being impleaded.
(iv) Even if competing claims of possession are raised,
it is not open to a Court to join a party who is a rank
third party to the transaction of which specific
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performance is being sought, merely so as to ascertain
who is in possession. The fact that a dispute arises as
regards possession is not a ground to join a third party in
the present Suit for specific performance, as categorically
as held in Kasturi (supra) and Gurmit Singh (supra). It is
always open to the third party to take any steps available
to it in law in the event that possession is decreed.
38. Mr. Rohaan Cama has submitted that the Judgment in
Prem Kaliaandas Daryanani v. Natvarlal C. Modi & Ors. 14 relied
upon by Zenith, is inapposite to the facts of the present case. He has
submitted that the Judgment is only an authority for the proposition
that if the Plaintiff desires so, a third party may be joined. This
judgment clearly holds that the Suit ought not to be enlarged beyond
the scope of the decision as to enforceability of the Suit agreement
according to law.
39. Mr. Rohaan Cama has submitted that the Judgment of
the Supreme Court in Mumbai International Airport Limited Private
Limited vs. Regency Convention Centre and Hotels Private Limited &
14 [2015(6) Mh.L.J. 120]
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Ors. 15 relied upon by Zenith is equally inapposite. The Judgment
does not state that a third party is entitled to be joined in a Suit for
specific performance. The Judgment only states that a Plaintiff may
join a party who is a necessary or proper party or if the Plaintiff fails
to do so and if the Court feels that such party is a necessary or proper
party then the Court may join that third party.
40. Mr. Rohaan Cama has submitted that the contention of
Zenith that the Judgment in Kasturi’s case (supra) would not apply
where the third party who is seeking to be joined was claiming
through the same vendor as the Plaintiff to the specific performance
Suit, is contrary to the legal position as laid down in Jagannath and
Gurmit’s case (supra). In both those Judgments it was clearly held
that the party that was seeking to be joined was a third party who
claimed under a subsequent agreement to that of the respective
Plaintiffs, and who claimed through the very same vendor who had
entered into the transaction with the Plaintiffs. It makes no difference
to the legal position qua impleadment whether the third party claims
an independent right to the property or claims a right through the
same vendor against whom the Plaintiff is suing.
15 (2010) 7 SCC 417
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41. Mr. Rohaan Cama has submitted that Zenith’s Agreement
is void ab initio and Zenith is not a bonafide purchaser for value
without notice who can set up any claim to rival that of the Plaintiff.
He has submitted that Zenith’s purported Agreement is subsequent in
point in time to the Plaintiffs registered Agreements dated 31 st
December, 2010. The Plaintiffs having executed and registered
Agreements prior in point of time, Zenith’s Agreement is void ab
initio. He has placed reliance upon Section 8 of the Transfer of
Property Act, 1882, which provides that a person can transfer all
interest which he is capable of passing in the property at the time of
the Agreement. By virtue of the earlier Agreements in favour of the
Plaintiffs, which are duly registered, on the date of the purported
Agreement with Zenith in 2013, Defendant Nos.1 and 2 had no right,
title or interest in the said Flat Nos. 1001 and 1002. Having no
interest, there was nothing for them to pass on to Zenith and
therefore Zenith can have no interest in the said flats. He has also
placed reliance upon Section 48 of the Transfer Property Act, 1882,
which provides that if two persons claim under, different registered
agreements, the first agreement will supercede the second, and
therefore on this principle as well, the second agreement is
meaningless and of no effect.
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42. Mr. Rohaan Cama has placed reliance upon the
Judgment of the Supreme Court in Eureka Builders & Ors. vs.
Gulabchand 16 at paragraphs 36 to 38, wherein the Supreme Court
has held that it is a settled principle of law that a person can only
transfer to another person a right, title or interest of which he is
possessed on the date of the purported transfer. If the person does
not possess any interest, there is nothing for him to transfer. In such
an eventuality, subject to the contract between the parties, the
subsequent second purchaser would only have a right to claim a
refund from his vendor.
43. Mr. Rohaan Cama has submitted that the Supreme Court
in Prem Singh & Ors. vs. Birbal & Ors. 17 at paragraphs 14 to 16, has
held that where a document is void ab initio, as would be the case for
Zenith’s 2013 Agreement having regard to the position laid down in
Eureka Builders (supra), then the said document is “…non est in the
eye of the law, as it would be a nullity”.
44. Mr. Rohaan Cama has submitted that since 2013
16 (2018) 8 SCC 67
17 (2006) 5 SCC 353
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Agreement is itself a nullity, then Zenith has no agreement which is
capable of enforcement and the entire basis of its claim to be
impleaded in the present Suit does not subsist or survive. Thus,
Zenith has no right whatsoever to be joined as a party to the present
Suit.
45. Mr. Rohaan Cama has submitted that the contention that
Zenith is a bonafide purchaser for value without notice is
misconceived in law as the Plaintiffs’ Agreements are of 31 st
December, 2010 and have been duly registered. These registered
Agreements constitute constructive notice under Section 3 of the
Transfer Property Act, 1882.
46. Mr. Rohaan Cama has submitted that Zenith is deemed
to have constructive notice of the registered Agreements of the
Plaintiffs, and cannot claim it is an alleged purchaser ‘without notice’.
47. Mr. Rohaan Cama has placed reliance upon the decision
of Karnataka High Court in Mahadevappa vs. Uday Kumar 18 at
paragraph 16, wherein the Court has analysed the provisions of
18 ILR 2015 KAR 5767
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Section 3 of the Transfer of Property Act and has conclusively held in
the context of Section 48 of the Transfer of Property Act, 1882 that
no man can convey a better title than that which he possesses.
48. Mr. Rohaan Cama has submitted that the contention on
behalf of Zenith that the Plaintiffs’ Agreements are vitiated on the
ground of them allegedly not being Agreements for sale and
consideration allegedly not being paid is a misconceived contention.
In any event, the only person who could have questioned the
Agreements, if at all, without prejudice to the aforesaid contentions
on the admissions etc., was Defendant Nos. 1 and 2, which they have
not. Zenith has no locus standi to raise these issues questioning the
Agreements of the Plaintiff. If Zenith desired to challenge the
Agreements executed with the Plaintiffs, it was open to Zenith to file
their own suit, which they have studiously avoided doing for the last
more than 10 years.
49. Mr. Rohaan Cama has then addressed the contentions on
behalf of the Zenith that the Plaintiffs have not made payments for
the said Flats. He has submitted that the fundamental fallacy in this
argument is presuming that an alleged non-payment would vitiate an
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Agreement. He has submitted that the contract between the Plaintiffs
and Defendant Nos. 1 and 2 came into being immediately upon its
execution and which is a valid execution as it is nobody’s case that
the contract has not been validly executed. Any non-payment of
balance consideration by the Plaintiffs to Defendant Nos. 1 and 2,
under the validly executed agreement, at the highest would give
Defendant Nos. 1 and 2 a right as an unpaid seller to file a Suit for
performance/recovery of the balance amount. In no circumstances
and under no provision of law does the Agreement stand vitiated. In
the present case, Defendant Nos. 1 and 2 have not filed a Suit for
recovery or for specific performance of the sale consideration and
have admitted in the Consent Terms, that the entire consideration has
in fact been paid.
50. Mr. Rohaan Cama has submitted that the Plaintiffs have
made payment of the purchase consideration and he has relied upon
documents in support thereof. He has submitted that the deposit of
Rs.2.70 Crores in the Court which has been recorded in the Order of
4th July, 2018 cannot be considered to be an admission of the fact
that payments have not been made. This was as per alternate prayer
in Notice of Motion No.1798 of 2017 taken out by the Plaintiffs and
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purely without prejudice to the Plaintiffs’ rights and contensions so as
to enable the Plaintiffs to forthwith receive possession of the Flats
even pending the present Suit.
51. Mr. Rohaan Cama has submitted that the contention on
behalf of Zenith that the Plaintiffs’ Agreements use the term ‘ shall
pay’ does not mean that the full payment was to be made in future.
The Agreements are standard form agreements as per the
requirements of Maharashtra Ownership Flats (Regulation of the
promotion of construction, sale, management and transfer) Act, 1963
(hereinafter referred to as ” the MOFA Act”). This has borne out from
the fact that the Agreements themselves refers to the MOFA Act in
more than one place.
52. Mr. Rohaan Cama has also dealt with the contention on
behalf of Zenith that the Plaintiffs’ agreements are Agreements to Sell
and not an Agreements for Sale. He has submitted that this
contention is entirely misconceived. Agreements as aforementioned
are standard format agreement as per MOFA and which format uses
the terminology ‘shall’ and uses words such as “is selling”. He has
submitted that holistic reading of the Agreements and the clauses
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therein would show that the Agreements are nothing but Agreements
for Sale. He has referred to the title to the document which itself
says ‘Agreement for Sale’ as well as recitals and clauses therein which
are clearly in format of standard form agreements of MOFA.
53. Mr. Rohaan Cama has submitted that it is not even the
case of Zenith’s in the Chamber Summons that there is no valid
Agreements for Sale executed between the Plaintiffs and Defendant
Nos. 1 and 2 and in fact, it is Zenith’s case that there were valid
Agreements in favour of the Plaintiffs, but Defendant No. 1 had
assured Zenith that the Agreements would be cancelled.
54. Mr. Rohaan Cama has submitted that the contention of
Zenith that the Agreements were optionally registered and therefore
did not constitute constructive notice is completely misplaced. He has
submitted that the Plaintiffs’ Agreements were not optionally
registered Agreements. These are evidently Agreements for Sale and
were correctly registered and therefore operate as constructive
notice. The Judgment relied upon on behalf of Zenith in support of
its contention viz. Hirachand Himatlal Marwari (supra) is to be read
in context of the document which was under consideration viz. a
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mortgage document, and not an Agreement for Sale. The Court
concluded on the facts of that case that the document was not
compulsorily registrable and therefore did not constitute constructive
notice.
55. Mr. Rohaan Cama has submitted that it is Zenith’s
contention that it was put in possession of Flat Nos.1001 and 1002
and that possession of these flats were taken from Zenith by the
Order dated 18th July, 2018. He has submitted that this contention is
completely false and cannot be believed as it is contrary to the
pleadings viz. Paragraph 19 of Zenith’s Rejoinder in the Chamber
summons. Zenith has itself admitted that it was not in possession of
Flat Nos.1001 and 1002 as the subject building did not have
Occupation Certificate till date. Further, it is not the contention of
Defendant Nos. 1 and 2 that Zenith was put in possession of said Flat
Nos. 1001 and 1002. The Court Commissioner’s Report dated 30 th
March, 2016 filed pursuant to the Order dated 28 th March, 2016
records that the keys for Flat Nos.1001 and 1002 were with
Defendant No.2 who opened the main entrance to these flats.
Further, the photographs annexed to the Report show that the said
flats were in bare shell condition with certain building materials
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stored therein. The said Report of the learned Commissioner has not
been challenged till date. Further, Zenith has besides filing Chamber
Summons, made no attempt to seek a declaration of its rights to Flat
Nos. 1001 and 1002 and/or to claim that it was in possession thereof.
Mr. Rohaan Cama has submitted that it is well settled by the Supreme
Court and confirmed in the Judgment of Maria Margarida Sequeira
Fernandes & Ors. Vs. Erasmo Jack De Sequeira & Ors. 19at paragraph
66 to 70 that possession is not to be seen in vacuum to the
underlying agreement. A person is only said to be in possession and
can be permitted to continue in possession if the said person claims
under some valid, legal document. In the present case, as the
Agreement of Zenith is void ab-initio and non-est, and hence, Zenith
still would assuming that it was put in jurisdictional possession not
be entitled to claim that it had any possessory rights as the
underlying agreements on which it has based its alleged rights are
void ab-initio and non-est.
56. Mr. Rohaan Cama has submitted that Section 53A of
Transfer of Property Act relied upon by Zenith has no application in
the facts of the present case as the Agreement under which Zenith
19 (2012) 5 SCC 370
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claims to be in possession is itself void ab intio.
57. Mr. Rohaan Cama has submitted that it is not open for a
Court to join a party such as Zenith who is a rank third party to the
transaction of which specific performance is being sought, merely so
as to ascertain who is in possession. The fact that a dispute has been
raised as regards possession is not a ground to join a third party in
the present Suit. It is always open to the third party to take any steps
available to it in law in the event that possession is decreed.
58. He has submitted that there is no question of Zenith
being a bonafide purchaser without notice and therefore the
provisions of Section 3 of the Transfer Property Act, 1882 will kick in.
Zenith has no rights whatsoever in the subject property and
accordingly has no right to be impleaded in the present Suit. On
these grounds alone the impleadment application ought to be
rejected.
59. Mr. Rohaan Cama has made submissions on behalf of the
Plaintiffs in support of the relief sought for in the Interim Application
No.55 of 2019 viz. for a decree recording the compromise arrived at
between the Plaintiffs and Defendant Nos. 1 and 2 in terms of the
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Consent Terms signed by the parties and their Advocates, annexed at
Exhibit D to the Interim Application. Further, directions have been
sought permitting the Plaintiffs to withdraw the amount of Rs.2.70
Crores deposited by the Plaintiffs with the Prothonotary and Senior
Master of this Court pursuant to Order dated 4 th July, 2018 passed by
this Court, together with the accrued interest thereon. He has
submitted that though the relief sought for in the Interim Application
is for a decree in terms of entire Consent Terms recording
compromise arrived at in terms thereof, he has restricted the decree
sought to the Consent Terms in respect of the said Flat Nos. 901, 902
and Flat Nos. 1001 and 1002 and not to the said Flat No.G-1 in the
subject building.
60. Mr. Rohaan Cama has submitted that the Consent Terms
entered into between the parties are an Agreement / Contract
between them. The mere fact that the Consent Terms have not
formally been taken on record does not alter this position. He has
submitted that the Consent Terms are an agreement between the
parties and when they are taken on record, they merely receive the
imprimatur of the Court. Thus, the Consent Terms not yet receiving
the imprimatur of the Court does not in any manner dilute their
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binding nature and/or the admissions contained therein which
admittedly have been made by the parties of their own free will and
without any coercion, fraud or undue influence.
61. Mr. Rohaan Cama has referred to the Consent Terms and
the factual assertions by Defendant Nos.1 and 2 therein viz. of having
executed the Agreement, received full consideration and putting the
Plaintiffs in possession of Flat Nos. 901/902 as well as the factual
assertion that the sum of Rs.2.70 Crores was required to be refunded
as full consideration had been received for the said Flat Nos. 901,
902 and 1001, 1002.
62. Mr. Rohaan Cama has referred to Order XXIII, Rule 3 of
the CPC which contemplates a situation where parties have
compromised or settled their disputes in the Suit but the compromise
has not been taken on record or not being formally accepted by the
Court. The proviso to Order XXIII, Rule 3 clearly contemplates a
situation where a party having agreed to settle or compromise, seeks
not to go ahead with the settlement, then it is for the Court to
determine, without any adjournment, whether such a compromise
was indeed arrived at. He has submitted that the Court in doing so
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does not require the parties to lead evidence.
63. Mr. Rohaan Cama has submitted that the Supreme Court
in Prithvichand Ramchand Sablok vs. S.Y. Shinde 20 at paragraph 7,
has held that it is settled law that unless the terms of the contract are
ambiguous, the intention of the parties must be gathered from the
terms themselves. It is only where the terms are ambiguous and
capable of more than one meaning that evidence aliunde can be
permitted in order to gather the intention of the parties. In the
present case, it is the Plaintiffs’ submission that the terms of the
Consent Terms themselves are clear. There is no dispute on the
signature of the Defendant Nos. 1 and 2 and/or that of their
Advocates. He has submitted that to accept the contention of
Defendant Nos. 1 and 2 that some extraneous promise had been
made to settle with Zenith as a condition for the Consent Terms, is to
read into the Consent Terms matters which are evidently not
provided for.
64. Mr. Rohaan Cama has submitted that under Sections 91
and 92 of the Indian Evidence Act, 1872 this Court will not permit
20 (1993) 3 SCC 271
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any evidence to be led by way of oral evidence to ascertain the terms
of the contract. The Consent Terms are nothing but a contract
between the parties, and the Court is entitled to decide whether the
compromise has been entered into or not under the proviso to Order
XXIII, Rule 3. He has in this context placed relied upon the decision
of the Supreme Court in Mahalaxmi Cooperative Housing Society
Limited & Ors. v. Ashabhai Atmaram Patel 21 at paragraph 43.
65. Mr. Rohaan Cama has also placed reliance upon the
Judgment of Supreme Court in Dr. Renuka Datla vs. Solvay
Pharmaceuticals B.V. & Ors. 22 , where the Supreme Court has noted
in paragraph 13 that if certain terms were desired to be added in the
terms of settlement, the same ought to have been specifically and
expressly mentioned in the terms of settlement.
66. Mr. Rohaan Cama has submitted that the Consent Terms
in the present case are clear and unambiguous and have not been
disputed as being incorrectly recorded. The contention of Defendant
Nos. 1 and 2 in the Reply to the Interim Application, viz. that that the
Consent Terms were executed purportedly on the representation of
21 (2013) 4 SCC 404
22 (2004) 1 SCC 149]
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the Plaintiffs that they had settled with Zenith is purely an oral
arbitrary contention.
67. Mr. Rohaan Cama has submitted that there is no
contemporaneous material whatsoever to show that there was any
agreement between the parties that the Consent Terms would be
executed on the basis that the Plaintiffs would settle with Zenith.
There is indeed nothing but the bare word of Defendant Nos. 1 and 2
who expect this Court to simply accept their word because they say
so, without anything more.
68. Mr. Rohaan Cama has submitted that once the terms of
the settlement / contract / compromise are clear, then it is not for
this Court to go into the alleged intention of the parties and what
they purportedly may have or may not have wanted to insert.
69. Mr. Rohaan Cama has submitted that if the settlement
with Zenith was fundamental to the Consent Terms, surely there
would have been at least one sentence qua Zenith somewhere in the
Consent Terms, which there is not.
70. Mr. Rohaan Cama has submitted that in every case of
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Order XXIII, Rule 3, proviso, the Court will be faced with a situation
where the Defendants try to back out of the compromise or
settlement. For the Defendants to simply argue that because they
have raised a dispute in their Reply to the Interim Application,
evidence is required and this Court cannot accept the compromise or
hold the Defendants to the terms of the compromise, would be then
to allow a party to play mischief with this Court. In every case a
Defendant or a party who wishes to back out of the Consent Terms
will simply say that some other term had been orally agreed between
the parties and on that ground seek to vitiate signed and executed
terms of compromise/settlement/consent terms. He has submitted
that this ought not to be countenanced, as it would render Order
XXIII Rule 3 redundant in every case.
71. Mr. Rohaan Cama has submitted that this Court be
pleased to hold the Defendants to the terms of the Consent Terms
under Order XXIII, Rule 3 and the proviso thereto and to record that
parties had in fact validly executed the Consent Terms and, therefore,
decree the present Suit in terms thereof.
72. Mr. Rohaan Cama has submitted that without prejudice
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to the aforesaid submissions on Order XXIII Rule 3 and proviso
thereto and for the Court to hold the Defendants to the terms of the
Consent Terms under the said provision, under Order XII, Rule 6 of
the CPC, this Court may pass a decree on admission. This is assuming
arguendo that the Consent Terms are not taken on record by this
Court as Consent Terms itself. He has submitted that the document
executed between the parties and their Advocates making certain
uncontroverted statements of fact, be read as an admission for the
purposes of Order XII, Rule 6 of the CPC and a decree be passed in
those terms. He has in support of his submission, placed reliance
upon the decision of the Supreme Court in Jineshwar Das vs. Jagrani
& Anr. 23 at paragraph 8, wherein the Supreme Court has held that
judgment or a decree passed as a result of consensus arrived at
before the Court need not always be on a compromise or a settlement
or an adjustment, but it may also sometimes be a judgment on
admission. He has further relied upon the decision of the Supreme
Court in Ashok Kumar & Ors. vs. A.D. Kumar & Ors. 24 paragraphs 12
to 14, where the Delhi High Court has held that where a
Memorandum of Compromise was sought to be resiled from, even
23 (2003) 11 SCC 372
24 2010 (116) DRJ 222
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prior to the same having been taken on record by the Court, it
nonetheless constituted a valid contract between the parties and
accordingly the same could be enforced.
73. Mr. Rohaan Cama has also placed reliance upon the
following Judgments viz. HSBC Bank, USA v. Silverline Technologies
Ltd. & Anr. 25 at paragraphs 5, 6, 19 and 20 ; K Kishore and
Construction (HUF) v. Allahabad Bank 26 at paragraph 12 and Karam
Kapahi & Ors. vs. Lal Chand Public Charitable Trust & Anr. 27 at
paragraphs 37 to 48, in support of his contention that an admission
need not be contained in pleadings and it can be contained in any
document executed by a party. This was on an interpretation of the
words of Order XII, Rule 6 of CPC, which states that the admission
may be in a pleading “or otherwise”.
74. Mr. Rohaan Cama has also placed reliance upon the
decision of the Supreme Court in Nagindas Ramdas vs. Dalpatram
Ichharam & Ors. 28 at paragraphs 27 and 28, where the Supreme
Court has held that admissions in pleadings or judicial admissions
25 2006(3) Mh.L.J. 107
26 1998 (44) DRJ 596
27 2010) 4 SCC 753
28 (1974) 1 SCC 242
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made by the parties or their agents at or before the hearing of the
case, stand on a higher footing than evidentiary admissions.
75. Mr. Rohaan Cam has submitted that if the Consent Terms
are read, they amount to an admission by Defendant Nos.1 and 2
that the Agreements are duly and validly executed, that consideration
has been paid, that the Plaintiffs are entitled to Flat Nos.901, 902,
and upon failure of the Defendants to purchase the Flat Nos.1001,
1002, they are also entitled to Flat Nos.1001 and 1002. The prayers
in the present Suit are evidently all answered by these admissions.
76. Mr. Rohaan Cama has submitted that if the Defendants’
oral claim of the Plaintiffs agreeing to settle with Zenith is accepted,
it would mean that in no case would Order XXIII, Rule 3 or Order XII,
Rule 6 ever be applied because in every case the party wishing to
back out of the Consent Terms and/or the admission would simply
file an Affidavit stating that in addition to what was agreed or
admitted, some other terms were orally agreed.
77. Mr. Rohaan Cama has submitted that alternatively to the
case on Order XXIII, Rule 3, this Court be pleased to decree the
present Suit qua Flat Nos. 901, 902 and 1001, 1002 in terms of the
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Consent Terms as a decree on admission of what is stated in those
Consent Terms.
78. Mr. Rohaan Cama has submitted that in the year 2015
(much prior to Zenith coming into the picture), draft Consent Terms
had been exchanged between the Plaintiffs and Defendant Nos.1 and
2 which were nearly identical to the present Consent Terms. He has
submitted that the draft Consent Terms had recognized the rights of
the Plaintiffs to Flat Nos. 1001 and 1002 and provided for them
being given up in lieu of Rs.1.55 crores being paid to the Plaintiffs by
the Defendants. The present Consent Terms executed in the year
2019 are also on identical terms, but provide a slightly higher
amount for buying off the rights in respect of Flat Nos. 1001 and
1002 due to the fact that several further proceedings had been
instituted by the Plaintiffs, the market value of the flats had gone up
and various other litigations were pending between the parties by
this stage. Thus, there is nothing unbelievable about Defendant Nos.
1 and 2 having entered into the present Consent Terms, without any
alleged assurance by the Plaintiffs to settle with Zenith as is now
mischievously being sought to be canvassed.
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79. Mr. Rohaan Cama has submitted that qua the
aforementioned flats and the sum of Rs. 2.70 Crores, the Consent
Terms ought to be given effect to and/or the Suit ought to be decreed
on the basis of the admissions of the Defendants.
80. Mr. Zubin Behramkamdin has submitted that Zenith had
filed Intervention Application in form of the above Chamber
summons on 24th July, 2018. He has submitted that during the
hearing on 11th March, 2019, the Plaintiffs and Defendant Nos. 1
and 2 tried to file the Consent Terms behind Zenith’s back knowing
very well that Zenith’s Intervention Application was pending. The
said act of the Plaintiffs and Defendant Nos. 1 and 2 was strongly
objected by Zenith. He has placed reliance upon the Order of Justice
Menon on 11th March, 2019 which had recorded that the said 10th
Floor flats are part of Consent Terms, on which Zenith is claiming
rights and hence, Consent Terms were not taken on record. He has
submitted that it is pertinent to note that in Paragraph 6 of the said
order, the learned Judge categorically granted liberty to the parties
present on that date of hearing i.e. the Plaintiffs, Defendants and
Zenith to mention the matter in the event of settlement. He has
submitted that much was harped upon by the Plaintiffs at the time of
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hearing that the said direction was only in respect of the Plaintiffs
and the Defendants, which interpretation is absolutely baseless
and frivolous.
81. Mr. Behramkamdin has placed reliance upon the
Order dated 8th April, 2019, which shows that Justice Menon
removed the matter from the caption of Consent Terms and once
again, the parties were given liberty to sign the Consent Terms and
mention the matter. The Plaintiffs deliberately and intentionally tried
to tender the Consent Terms on 20th August, 2019 which the
Defendants rightly objected to the filing of the same and withdrew
their consent in respect of filing of the same, as the Plaintiffs failed to
settle the matter with the Zenith. This Court had categorically made
it clear to settle the matter and once all the parties sign, then file the
Consent Terms. He has submitted that by filing the captioned Interim
Application, the Plaintiffs are trying to mislead this Court and seek a
Decree on the basis of the same Consent Terms which were infact
rejected by this Court with specific directions to settle the matter as a
whole including with Zenith.
82. Mr. Behramkamdin has submitted that though the
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Plaintiffs objected to Zenith having a say on the Interim Application,
this Court rightly allowed Zenith to conduct its arguments. He has
submitted that Zenith has paid full consideration in respect of the
said 10th Floor Flats. Further,, Zenith has followed the Orders of this
Court and voluntarily handed over possession of the said 10 th Floor
Flats. Therefore, the interests of Zenith cannot be superseded by
allowing such absurd Application made by the Plaintiffs. In the light
of the facts and circumstances, the Plaintiffs’ Interim Application
deserves to be rejected.
83. Ms. Purnima G. Bhatia, learned Counsel appearing for
Defendant Nos. 1 and 2 has opposed the Interim Application and
supported the Chamber Summons taken out by Zenith. She has once
again reiterated what has been submitted in the Affidavit-in-Reply to
the Interim Application namely that the Plaintiffs have made an
extraneous promise prior to entering into the Consent Terms that
they would settle the matter with Zenith as a condition for the
Consent Terms. She has submitted that the Consent Terms would not
have been entered into without a settlement having been arrived at
with Zenith. She has submitted that the prior Draft Consent Terms
in 2015 had been entered into in peculiar circumstances viz. the
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Defendants were faced with an FIR filed. She has submitted that
otherwise, the Defendant Nos. 1 and 2 would not have entered into
Draft Consent Terms knowing fully well that the said Flat Nos. 1001
and 1002 had been sold to Zenith.
84. Ms. Bhatia has accordingly submitted that there is no
merit in the Interim Application taken out by the Plaintiffs for
seeking a decree recording the compromise arrived at between the
Plaintiffs and Defendants Nos. 1 and 2 in terms of the Consent Terms.
Further, there is no merit in the the Plaintiffs placing reliance on
earlier Draft Consent Terms entered into in 2015. She has submitted
that unless Zenith is brought as a party in the present Suit, the
Defendant Nos. 1 and 2 cannot be made to compromise the Suit in
favour of the Plaintiff. She has submitted that Zenith is a necessary
and proper party in the Suit in view of their having possessory rights
of the said Flat Nos. 1001 and 1002. She has accordingly submitted
that the Chamber Summons for impleadment of Zenith be allowed,
whilst dismissing the Interim Application taken out by the Plaintiffs.
85. Having considered the rival submissions I shall first
address the issue, as to whether Zenith is a necessary and proper
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party required to be impleaded in the present Suit as prayed for in
the above Chamber Summons. It is pertinent to note that Zenith at
no point of time has adopted its own remedy for cancellation of the
Agreements entered into between the Plaintiffs and Defendant Nos. 1
and 2 in respect of Flat Nos. 1001 and 1002. Zenith has by taking
out the present Chamber Summons sought impleadment in the Suit
filed by the Plaintiffs by raising contentions that the 2010
Agreements executed between the Plaintiffs and Defendant Nos. 1
and 2 are merely Agreements to Sell and would not amount to
constructive notice to Zenith who had executed their Agreement with
Defendant Nos. 1 and 2 viz. the same vendors subsequent to the
2010 Agreements. Zenith has thus sought to set up its claim to title
based on its own Agreement by displacing the prior Agreement of the
Plaintiffs. In my view, Zenith cannot do so unless it files its own Suit.
86. I find much merit in the submissions on behalf of the
Plaintiffs that the Plaintiffs being dominus litus cannot be forced to
join a third party and bring into issue in their Suit, the rights and
issues raised by the third party. The Plaintiffs have discretion to
decide whether or not to join a party in the Suit. The Plaintiffs cannot
be foisted with joining the third party. and having the third parties
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issues adjudicated in a Suit for specific performance. There could be
a risk that the Plaintiffs may face for refusal to join the third party
but that by itself will not give any ground to the third party to insist
upon being impleaded. Further, where there are competing claims of
possession raised, it is not open to a Court to join a party who is a
rank third party to the transaction of which specific performance is
sought, merely so as to ascertain who is in possession. This has been
held in the decisions relied upon by Mr. Rohaan Cama on behalf of
the Plaintiff viz. Kasturi (supra) and Gurmit Singh (supra). The
settled law is that it is always open to the third party to take any
steps available to it in law in the event that the possession is decreed.
87. The Judgments of Kasturi (supra) and Gurmit Singh
(supra) were in a Suit for specific performance, where a third party
sought to join. It was held that the third party had no right to be
joined and cannot be considered to be a necessary party in the Suit
for specific performance. Thus, given the settled law, Zenith cannot
be considered to be a necessary or proper party.
88. The Judgments relied upon by Mr. Behramkamdin on
behalf of Zenith viz. Prem Kaliaandas Daryanani (supra) and Mumbai
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International Airport Limited Private Limited (supra) do not support
his contention that a third party is entitled to be joined in a Suit for
specific performance. These Judgments only state that the Plaintiff
may join a party who is a necessary or proper party and it is upon the
Plaintiffs’ desire to do so. Further, if the Court feels that such third
party is a necessary or proper party then the Court may join that
third party.
89. The contention on behalf of Zenith that Kasturi’s case
(supra) will not apply where the third party seeking to be joined was
claiming through the same Vendor as the Plaintiff in the specific
performance Suit is a misplaced contention, considering that this
very position arose in Jagannath (supra) and Gurmit Singh (supra)
where a third party was claiming through the same Vendor as the
Plaintiff in the specific performance Suit. It has been held in those
cases that the third party was neither a necessary nor a proper party
to the Suit for specific performance, particularly where the third
party is claiming right through the same Vendor as the Plaintiffs and
in respect of a subsequent transaction and not the transaction in
respect of which the Plaintiffs have claimed specific performance.
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90. I am of the view that Zenith’s Agreement being
subsequent in point of time to the Plaintiffs’ registered Agreements
dated 31st December, 2010, Zenith’s Agreement is void ab initio.
Zenith cannot be considered to a bonafide purchaser for value
without notice under the subsequent Agreement dated 27 th February,
2013 entered into with Defendant Nos. 1 and 2. Section 8 of the
Transfer of Property Act, 1882, provides that a person can transfer all
interest which he is capable of passing in the property at the time of
the Agreement. When the agreement was entered into with Zenith in
2013, Defendant Nos. 1 and 2 had already executed registered
Agreements in favour of the Plaintiffs in respect of the same Flat Nos.
1001 and 1002 as in the 2013 Agreement. Hence, the Defendant Nos.
1 and 2 had no interest in the said Flats for them to pass on to Zenith
and therefore Zenith cannot have interest in the said Flats. Section
48 of the Transfer Property Act, 1882, makes it clear that if two
persons claim under different registered agreements, the first
agreement will supercede the second, and therefore the second
agreement is meaningless and of no effect.
91. The Judgments of the Supreme Court in Eureka Builders
(supra) and Prem Singh (supra) relied upon by Mr. Rohaan Cama on
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behalf of Plaintiffs are apposite. These Judgments lay down the
settled principle of law that a person can only transfer to another
person a right, title or interest of which he is possessed on the date of
the purported transfer. If the person / Vendor does not possess any
interest, there is nothing for him to transfer. Thus, the subsequent
document seeking to transfer right, title or interest which the
person / Vendor does not have, would be held to be ” …non est in the
eye of the law, as it would be a nullity “. Acordingly, Zenith’s 2013
Agreement would be a nullity and incapable of enforcement and that
being the entire basis of Zenith’s claim of being impleaded in the
present Suit does not subsist or survive.
92. I further find much merit in the submission on behalf of
the Plaintiffs that Zenith cannot be considered to be a bonafide
purchaser for value without notice. The Plaintiff’s registered
Agreements dated 31st December, 2010 constitute constructive notice
under Section 3 of the Transfer Property Act, 1882. Thus, Zenith is
deemed to have constructive notice of the registered Agreements of
the Plaintiffs and cannot claim that it is an alleged bonafide
purchaser “without notice”.
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93. The contention on behalf of the Zenith that the Plaintiff’s
Agreements are vitiated on the ground of them allegedly not being
Agreements for sale and consideration allegedly not being paid is
misplaced. The Plaintiffs’ Agreements are standard format
Agreements as per the format prescribed in Form V of the MOFA Act
and would in my view be Agreements for Sale and not Agreements to
Sell as contended by on behalf of the Zenith. This is a from a plain
reading of the Plaintiffs’ Agreement which clearly provide that these
are Agreements contemplated under Section 4 of the MOFA Act.
Further, Defendant Nos.1&2 have not disputed that the consideration
for sale of the aforementioned Flats had in fact been paid.
94. The Judgments relied upon on behalf of Zenith to
contend that the Plaintiffs’ Agreements were optionally to be
registered and therefore, did not constitute constructive notice in
relation to the Plaintiffs’ Agreement is entirely misplaced. The
Plaintiffs’ Agreements are not optionally registered Agreements and
operate as constructive notice under Section 3 of the Transfer of
Property Act, 1882, once they have been duly registered
95. The issue of whether Zenith was in possession of Flat
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Nos. 1001 and 1002 cannot be raised in the Plaintiffs’ Suit as held
above. In any event, this contention of Zenith is belied by its own
pleadings on record i.e. its Rejoinder to the Chamber Summons
where Zenith itself states that it could not actually occupy the said
10th Floor Flats because the subject building did not have Occupation
Certificate till date.
96. Thus, I find no merit in the Chamber Summons of Zenith
seeking its impleadment, as in my considered view, Zenith is neither
a necessary nor a proper party in the Plaintiffs’ Suit particularly in
view of the finding that Zenith is not a bonafide purchaser and in fact
is a purchaser under a subsequent agreement which is void ab initio,
being a nullity in the face of the Plaintiffs’ prior registered
Agreements.
97. Now turning to the Interim Application No.55 of 2019
taken out by the Plaintiffs seeking passing of a decree recording
compromise arrived at between the Plaintiffs and Defendant Nos. 1
and 2 in terms of the Consent Terms signed by the parties and their
advocates, annexed at Exhibit-D to the Interim Application.
98. The Plaintiffs’ case in the present Suit is based on the
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Agreement for Sale dated 31st December, 2010 which have been duly
registered and under which Plaintiffs have been sold Flat Nos. 901,
902 and 1001 and 1002. There is no dispute that the Plaintiffs and
Defendant Nos. 1 and 2 had entered into the Agreements for Sale in
respect of the aforementioned Flats. The present Suit has been filed
on account of failure of Defendant Nos. 1 and 2 for taking steps to
handover possession of Flat Nos. 1001 and 1002 and although
handing over possession of Flat Nos. 901 and 902 to the Plaintiffs,
they had placed a lock on the door of the said Flats.
99. In the said Consent Terms Defendant Nos. 1 and 2 have
asserted that they executed the said Agreements and have received
full consideration and put the Plaintiffs in possession of Flat Nos. 901
and 902. Further, they asserted that the sum of Rs.2.70 Crores which
had been deposited by the Plaintiffs in this Court for grant of
alternate prayer in Notice of Motion No.1798 of 2017 viz. for being
immediately handed over possession of the said Flats, was required
to be refunded to the plaintiffs, as full consideration had been
received for the said Flat Nos. 901, 902 and 1001, 1002. Thus, the
prayers sought for in the present Suit in respect of the said Flats have
been compromised by entering into the Consent Terms. The dispute
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now sought to be raised with regard to the compromise of the Suit is
that, there was an additional term agreed to between the Plaintiffs
with Defendant Nos. 1 and 2 but which finds no place in the Consent
Terms viz. that the Plaintiffs had made an alleged promise to settle
the dispute with Zenith as a condition for the Consent Terms. This
extraneous promise to settle Zenith as a condition for the Consent
Terms, is being sought by Defendant Nos. 1 and 2 to be read into the
Consent Terms matter which are evidently not provided for.
100. The Interim Application seeks recording of compromise
in terms of the Consent Terms under Order XXIII Rule 3. The
Supreme Court in Prithvichand Ramchand Sablok (supra) has held
that it is settled law that unless the terms of the contract are
ambiguous, the intention of the parties must be gathered from the
terms themselves. It is only where the terms are ambiguous and
capable of more than one meaning that evidence aliunde can be
permitted in order to gather the intention of the parties. In my view,
the terms of the Contract / Consent Terms in the present case are
unambiguous and do not call for any extrinsic material to gather the
intention of the parties.
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101. Further, Section 91 and 92 of the Indian Evidence Act,
1872 does not permit any evidence to be led by way of oral evidence
to ascertain the terms of contract. The Consent Terms is nothing but
a contract between the parties. The Supreme Court in Mahalaxmi
Cooperative Housing Society Limited (supra) has enjoined upon the
Court hearing the matter under Order XXIII, Rule 3 proviso, to decide
the question forthwith without adjourning the matter, which would
include adjourning the matter for leading evidence. Having held that
in view of there being no dispute that Defendant Nos. 1 and 2 have
executed the Consent Terms and this has also been recorded vide
Order dated 20th August, 2019, the only test required to be
considered by the Court under Order XXIII Rule 3 and proviso thereto
has in fact been satisfied.
102. The Supreme Court in Dr. Renuka Datla (supra) has held
that if certain terms were desired to be added in the terms of
settlement, the same ought to have been specifically and expressly
mentioned in the terms of settlement. It is not for the Court to
consider, whether a particular term is to be incorporated, particularly
where one of the parties has disputed that such a term was ever
agreed upon. The terms of the Consent Terms being clear and
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unambiguous and having not been disputed as being incorrectly
recorded, is required to be given effect to. Further, I have held that
Zenith is neither a necessary nor a proper party as Zenith’s
Agreement with Defendant Nos. 1 and 2 is subsequent in point of
time to the Plaintiffs’ Agreement and hence a nullity as the Defendant
Nos. 1 and 2 had no interest remaining in the said flats to transfer.
There is no question of the Plaintiffs settling the dispute with Zenith
as a condition for entering into the Consent Terms. In accepting the
Defendants’ contention that the settlement with Zenith was a
condition to enter into the Consent Terms which had been orally
agreed upon would amount to vitiating a signed and executed
Compromise / Consent Terms. This would result in rendering Order
XXIII Rule 3 and its proviso redundant.
103. Having arrived at the aforesaid findings on Order XXIII
and proviso thereto, it is not necessary to consider the alternate plea
of the Plaintiffs that there are admissions on the part of the
Defendant Nos. 1 and 2 in the Consent Terms for the purposes of
Order XII Rule 6 of the CPC. In any event, it is settled law as can be
seen from the Judgments relied upon on behalf of the Plaintiffs that
uncontroverted statements of fact in the Consent Terms are to be
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read as admissions for the purposes of Order XII Rule 6 of the CPC
and a decree may be passed in terms thereof.
104. Having held that the Consent Terms record a
compromise between the parties and being of the view that it is
required to be taken on record under Order XXIII Rule 3 of the CPC,
the Suit is required to be partially decreed in so far as Flat Nos. 901,
902 and 1001 and 1002 are concerned. There is no merit in the
submissions on behalf of Zenith that the Plaintiffs are seeking a
decree on basis of Consent Terms which have been rejected by this
Court with specific direction to settle the matter as a whole including
with Zenith. Having held that Zenith is neither a necessary nor a
proper party, it has no right to raise such a contention. In fact a
reading of the prior orders of this Court makes it clear that this Court
had never considered that a settlement was required to be arrived at
with Zenith in the Plaintiffs’ Suit, particularly since the Chamber
Summons had still to be heard and which has been heard and
rejected by this Judgment and Order.
105. In view thereof, the following order is passed:
(i) The Chamber Summons No.397 of 2019 is dismissed.
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There shall be no orders as to costs.
(ii) The Interim Application No.55 of 2019 is partially
allowed in the following terms:
(a) The Suit is partially decreed by
recording the compromise between the
Plaintiffs and Defendant Nos. 1 and 2 in terms
of the Consent Terms viz. to the extent of Flat
Nos. 901, 902 and 1001 and 1002 and
permission granted to the Plaintiffs to
withdraw an amount of Rs.2.70 Cores
deposited by the Plaintiffs with the
Prothonotary and Senior Master of this Court
pursuant to Order dated 4th July, 2018 passed
by this Court with accrued interest thereon till
date. This is by taking on record the Consent
Terms executed btween the Plaintiffs and
Defendant Nos. 1 and 2 being Exhibit-D to the
Inteirm Application.
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(b) The Prothonotary and Senior Master of
this Court is directed to allow the Application
of the Plaintiffs to withdraw the amount of
Rs.2.70 Cores alongwith accured interest
thereon till date and which amount has been
deposited pursuant to Order dated 4th July,
2018 passed by this Court, within a period of
three weeks from the date of uploading of this
order.
(c) The drawing up of the partial Decree is
dispensed with unless the parties seek the
drawn up decree/order, in which case they are
entitled to apply.
(d) The Suit No.463 of 2016 and Notice of
Motion No.1798 and 2017 shall continue to be
proceeded with by the Plaintiffs against the
Defendants in respect of Flat No.G-1 situated in
Mangal Kunj, ‘B’ Wing CHS Limited situated at
the junction of 32nd and 36th Road, Bandra
(West), Mumbai 400 050.
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(e) The Interim Application No.55 of 2019
is accordingly disposed of. There shall be no
orders as to costs.
[R.I. CHAGLA, J.]
106. The Defendant Nos. 1 and 2 and the Applicant – Zenith
Enterprises have applied for a stay of this Judgment and Order.
107. Having arrived at the above findings that the Applicant –
Zenith Enterprises is neither a necessary nor a proper party to the
Suit as well as the finding that the Defendant Nos.1 and 2 had
compromised the Suit with the Plaintiffs by executing the Consent
Terms, the Application for stay of the Judgment and Order is
rejected.
[R.I. CHAGLA, J.]
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