Khodiyar Developers vs Vinay Bhasin and Others

R.S. Dalvi, J.—Admit. By consent heard forthwith.

The order which is impugned in this appeal is dated 06.11.2007 granting a temporary injunction against the respondent No. 4 and 5 from executing any sale deed in favour of the appellants creating third party right in respect of the suit property and carrying on any construction or development thereon. The respondent No. 1, 2 and 3 were the original plaintiffs, the respondent No. 4 and 5 were the original defendant No. 1 and 2 who are the vendors. The appellant herein was the defendant No. 3.

The plaintiffs claim to have entered into an agreement on 04.02.2006 with the defendant No. 1 and 2. The agreement is titled "Points of discussion." There are several points of discussion and typed on two sheets of paper, initialled by five parties on page 1 and signed by each of them on page 2. The agreement between the parties is in respect of the suit property. The agreement spells out the description of the suit property sought to be sold by the defendant No. 1 and 2, the consideration payable in cash as well as in kind to the defendant No. 1 and 2 for the said sale, development to be put up by the plaintiffs, the conveyance to be made by the plaintiffs and the stamp duty to be paid by them. The agreement also mentions the settlement with the mundkars in the suit property, the additional area for development of the property and the proposal to acquire the adjoining area. Based on these points a formal Memorandum of Understanding (MOU) was to be prepared within a period of 30 days.

The issue before the learned Judge was whether the points for discussion would constitute a written agreement between the parties. The points of discussion are not vague and signed by the parties. The earnest money is payable in future i.e. upon signing the MOU. Further amount was to be paid at the time of the execution of the conveyance. A part of consideration was directly payable to the mundkar and the share in a developed area to be given to the vendors.

It is the contention of the plaintiff that the draft of MOU was sent to the vendors but no action was taken thereon by them. The plaintiff gave a public notice on 10.05.2006. That has been replied by the vendors, defendant No. 1 and 2 on 13.05.2006 also by way of a public notice. The reply shows that they read the public notice in disbelief and that it was mischievous, malafide and deceitful and that the vendors have not signed or entered into any contract with the plaintiff.

The suit came to be filed by the vendors. An application for interim relief was taken out. It was brought to the notice of the plaintiff that the vendors have executed another contract with a third party, who is the defendant No. 3 in the suit. A fresh application was taken out restraining defendant No. 1 and 2 from alienating or transferring the suit property in favour of the defendant No. 3. An order of injunction has been passed. The appellant has contended that the earlier application was withdrawn by the plaintiff and a fresh application was taken out without liberty having been given by the Court. The later application is upon an entirely different cause of action which challenges the agreement of the defendant No. 3 while setting out the case of the plaintiff with the defendant No. 1and 2. The application challenging the agreement with the defendant No. 3 was not challenged in the earlier application. Hence liberty of the Court was not required for prosecuting such an application.

It is contended that the plaintiffs are partners and the partnership firm is not shown to be registered and hence the suit is liable to be dismissed u/s 69 (2) of the Partnership Act. The plaintiffs may be partners of a firm. The suit is not instituted on behalf of the firm. Section 69 (2) of the Act does not apply.

On merits, it is shown that the agreement between the appellant and the defendant No. 1 and 2 is prior to the suit agreement. It is MOU dated 10.01.2006. The MOU is not registered. It is executed on a stamp paper of Rs. 100/-, which is notorised by one Mr. Dhumatkar. It shows the suit plot agreed to be sold for Rs. 5 crores. It shows the earnest money of Rs. 50,00,000/- paid at the time of the execution. The balance amount of Rs. 4,50,00,000/- was to be paid at the time of the execution of the final deed of sale which was to be executed after the purchaser satisfies himself about the title of the vendors. Even if for any reason the Deed of sale was not executed, the balance consideration was to be paid on or before 31.05.2006. The consideration is stated to be paid on the last date mentioned in the agreement i.e. 31.05.2006. That is the date on which possession is stated to have been taken over for development by the defendant No. 3 upon payment of the entire consideration. How the consideration was paid is not shown. The Advocate for the appellant instructs the counsel on behalf of the appellant that part is paid by a flat in Mumbai and part in cash. He does not know the part of the cash component. Prima facie such a case cannot be accepted. Consideration of such a large amount cannot be stated to have been paid in cash. There was no reason to have such a prompt payment before the purchaser satisfies himself on the marketability of the vendors'' title or before the Sale Deed is executed. All these aspects are to be elicited in the trial.

The learned Judge has considered the agreement entered into by the parties. The title of the agreement does not matter. The execution of another agreement based on the same terms of the agreement also does not matter. The essence the Court has to see is the intention of the parties with regard to sale of the suit property as stated above. The execution of this "Point of Discussion" is not denied. The vendors have not even appeared. It is only contended by the appellant that the "Point of Discussion" which was to be framed by a MOU which has not been executed cannot amount to a legally enforceable contract. The form of the agreement does not determine its enforceability. The points of discussion, as enumerated above, show the requisite terms of an agreement to sell an immovable property. The learned Judge has correctly considered that a prima facie case is made out. How and when the MOU dated 10.01.2006 is executed and how the amount of consideration was paid on the last date of the agreement without execution of the sale deed and as now stated by the Advocate can be considered and at the trial. Pending the suit, the parties cannot be allowed to develop the property. Hence the impugned order does not suffer from any infirmity. Appeal from Order is dismissed.