Bharat Karsondas Thakkar vs M/S. Kiran Construction Co. & Ors

common questions of law are involved. Five 2

interlocutory applications, being I.A.Nos.4,5,6,7

and 8, filed in connection with the Special Leave

Petition, for clarification of the judgment dated

9th April, 2008, passed in Civil Appeal No.2573 of

2008 and for deletion of the names of some of the

parties and for filing additional documents, were

also taken up for disposal along with the Appeals.

While SLP(C)Nos.28267-28268 of 2008 have been filed

by the Official Receiver against the order dated

17th November, 2006, passed by the Division Bench of

the Bombay High Court in Appeal No.748/2001

challenging the order dated 21st June, 2001, passed

by the learned Single Judge and restoring Notice of

Motion No.140/99 for fresh hearing before the

learned Single Judge and SLP(C)Nos.28270-28271 of

2008 have been filed by the Vaitys against the same

order in Appeal No.747/2001 in Notice of Motion

No.2700/99, claiming the self-same reliefs. As

indicated hereinabove, three of the interlocutory

applications have been filed in Civil Appeal 3

No.2573/2008, for clarification of the Judgment

dated 9th April, 2008, passed in Civil Appeal

No.2573/2008, disposing of Appeal No.741 of 2001.

Applications have also been filed by the

petitioners in both the set of Special Leave

Petitions (now appeals) for condonation of delay in

filing the same on account of the fact that the

subject matter of the said Special Leave Petitions

was also the subject matter of SLP(C)No.2328/2007,

which was subsequently renumbered as Civil Appeal

No.2573/2008, but had remained undisposed of when

the appeal against the order dated 16th November,

2006, was finally disposed of by the judgment and

order dated 9th April, 2008. There being substance

in explanation given for condonation of delay in

filing the Special Leave Petition, such delay is

condoned.

2. On 27th May, 1949, the Collector of Thane

recorded a grant in favour of Mr. Sowar Ramji Vaity 4

entitling him to lease of lands relating to Survey

Nos.83 to 91 in Village Mulund for a term of 999

years. Mr. Sowar Ramji Vaity died in the year 1965,

leaving behind him surviving Jagannath, Babu,

Vishnu and Bhaskar (hereinafter referred to as `the

Vaitys') as his legal representatives to succeed to

his estate. On 1st October, 1973, the Vaitys

entered into an agreement to sell their rights and

interests in the aforesaid lands to one Mr. K.L.

Danani (the Respondent No.44 herein) for a total

consideration of Rs.2 lakhs. Under the Agreement,

Mr. Danani was required to obtain lease of the suit

lands from the Collector in favour of the Vaitys

within a period of two years. During the months

of April and June, 1974, Mr. Danani constituted a

partnership firm with Mr. K.V. Thakkar and Mr. S.S.

Thakkar under the name of M/s Swas Construction

Company. The Appellant herein, who was then a

minor, was admitted to the benefits of the

partnership firm. The time for completion of the 5

sale under the agreement dated 1st October, 1973,

was extended by two months till after the land was

converted to non-agricultural use or the Vaitys

made a clear and marketable title to the suit land,

whichever was later. It was recorded that M/s Swas

Construction Company had been put in possession of

the suit lands in part performance of the agreement

dated 1.10.1973.

3. In the meantime, the Urban Land (Ceiling and

Regulation) Act, 1976, was enacted and Mr. K.L.

Danani claiming possession under the said Agreement

filed a statement with the Urban Land Ceiling

Authorities in terms of Section 6(1) of the Act.

On 12th June, 1979, pursuant to a decision arrived

at in April, 1978, the Government of Maharashtra

executed a lease in favour of the Vaitys for a

period of 60 years. Immediately thereafter, on 18th

June, 1979, the Vaitys entered into an Agreement

with M/s Modern Development Corporation, the 6

Respondent No.24 herein, granting them development

rights in respect of the suit lands. On 24th

August, 1979, M/s Modern Development Corporation is

alleged to have entered into an agreement with the

Respondent No.1, M/s Kiran Construction Company, to

transfer its beneficial interests in the suit

lands, except for Serial No.91, in favour of the

Respondent No.1. Clause 12 of the Agreement

specifically required M/s Modern Development

Corporation to obtain confirmation from M/s Thakkar

& Associates that there was no subsisting agreement

for sale in their favour in respect of the property

agreed to be sold.

4. On 18th February, 1980, the Appellant and Mr.

K.V. Thakkar filed Suit No.252 of 1980 in the

Bombay High Court against Mr. K.L. Danani (the

Respondent No.44) and Mr. S.S. Thakkar, inter alia,

praying for a declaration that a partnership had

existed between them and that Mr. K.L. Danani and 7

Mr. S.S. Thakkar had retired from M/s Swas

Construction Company.

5. It appears that in February, 1980, in Notice of

Motion No.283 of 1980 filed in the said Suit, Mr.

K.L. Danani undertook not to part with possession

of the suit lands pending disposal of the Notice of

Motion, which was disposed of on 9th October, 1980,

by the Bombay High Court by appointing the Court

Receiver over the properties.

6. On 15th May, 1981, the Vaitys terminated the

Agreement dated 18th June, 1979, entered into with

M/s Modern Development Corporation (the Respondent

No.24). This prompted the Respondent No.1 to file

Suit No.1578 of 1981 against the Vaitys and the

partners of M/s Modern Development Corporation on

7th September, 1981, for specific performance of the

purported Agreements dated 18th June, 1979 and 24th

August, 1979. On 1st July, 1982, the Bombay High

Court passed an order restraining the Vaitys and 8

the partners of the Respondent No.4 from selling,

transferring, encumbering, alienating or further

parting with possession of the suit lands pending

disposal of Suit No.1578 of 1981. After the death

of Mr. Babu Vaity on 1st May, 1994, all the parties

to Suit No.252 of 1980, entered into a

comprehensive settlement with the Vaitys, Mr. K.L.

Danani (the Respondent No.44) and one Mulchand G.

Mehta (the Respondent No.47) and in order to give

effect to the settlement, the Vaitys and the

Respondent No.47 were joined as defendants in Suit

No.252 of 1980. On the very same day, the Bombay

High Court decreed the suit on consent terms.

Pursuant to the terms and conditions arrived at

between the parties, the Respondent No.48 took out

Notice of Motion No.140 of 1999 in Suit No.1578 of

1981, praying that the order dated 1st July, 1982,

be vacated. The Vaitys also took out Notice of

Motion No.2700 of 1999 in the said Suit, praying

for the same order. In August, 2000, M/s Kiran 9

Construction Company took out Chamber Summons

No.1203 of 2000 in Suit No.1578 of 1981, seeking to

amend the plaint so as to join the Respondent

Nos.13 to 19 as defendants and also to incorporate

a challenge to the decree dated 6.5.1998 passed by

the Bombay High Court in Suit No.252 of 1980. The

said Chamber Summons was dismissed by the learned

Single Judge of the Bombay High Court on 21st June,

2001, and the injunction granted on 1st July, 1982,

was vacated. The said order of injunction was also

vacated by a common order of even date passed in

Notices of Motion No.140 and No.2700 of 1999.

7. Three Appeals were filed by the Respondent No.1

herein before the Division Bench of the Bombay High

Court, being Appeal Nos.745, 747 and 748 of 2001,

all challenging the order dated 21st June, 2001,

passed by the Bombay High Court, vacating the

interim order of injunction dated 1st July, 1982.

The Division Bench of the Bombay High Court allowed 10

all the three Appeals by its orders dated 16th

November, 2006 and 17th November, 2006, passed in

Appeal No.745 of 2001 in Chamber Summons

No.1203/2000 in Suit No.1578/1981 filed by Kiran

Construction Company and in Appeal Nos.747 and 748

of 2001 in Notices of Motion Nos.2700 and 140 of

1999 respectively, filed in the said Suit. The

amendment of the plaint was allowed and the order

of injunction passed on 1st July, 1982, was

restored. The present Appeals have been filed

against the said orders of the High Court allowing

the amendment of the plaint and joining the

Respondent Nos.13 to 19 as additional defendants in

the suit.

8. Appearing for the appellants in these appeals,

Mr. Mukul Rohtagi, Senior Advocate, submitted that

there is no dispute that the lands forming the

subject matter of these proceedings originally

belonged to the Vaitys and that on 1st October, 11

1973, the Vaitys entered into an agreement for sale

of the said lands with Mr. K.L. Danani, who later

on brought the benefits of the said agreement to

M/s Swas Construction Company of which the

appellants are partners.

9. It is also not disputed that on 18th June,

1979, the Vaitys entered into a development

agreement with M/s Modern Development Corporation

which was an unregistered partnership firm. The

said partnership firm, in its turn, entered into an

agreement with M/s Kiran Construction Company on

24th August, 1979. Mr. Rohtagi submitted that both

Modern Development Corporation and Kiran

Construction Company had knowledge of the existing

agreements entered into by the Vaitys for sale of

the lands. It is on account of such knowledge that

the Respondent No.1 in its agreement with Modern

Development Corporation included a clause that the

latter would cause the Vaitys to make out a 12

marketable title to the property, and if they

failed to make out a marketable title, all the

monies paid to Kiran Construction Company would be

returned to it with interest at the rate of 12% per

annum. As indicated hereinbefore, the agreement

which was entered into between the Vaitys and

Modern Development Corporation on 18th June, 1979,

was terminated by the Vaitys on 15th May, 1981,

prompting Kiran Construction Company to file Suit

No.1578 of 1981 in the Bombay High Court in which

an interim order was passed by the Bombay High

Court restraining the Vaitys and the partners of

Modern Development Corporation from selling,

transferring or further parting with possession of

the suit lands.

10. Mr. Rohtagi submitted that in view of the said

order of injunction, on 10th November, 1981, Babu

Vaity filed an affidavit in Notice of Motion

No.1271 of 1981 indicating that on 15th May, 1981, 13

the Vaitys had terminated the agreement dated 18th

June, 1979, with Modern Development Corporation and

that a separate agreement had been executed in

favour of one Mr. Ashok Kumar Goyal and Mr. Gosalia

granting them development rights in respect of the

suit lands. Despite the above, on 1st July, 1982,

the Bombay High Court passed an order in Notice of

Motion No.12671 of 1981 in the suit filed by the

Respondent No.1 and restrained the Vaitys and the

partners of Modern Development Corporation from

selling, transferring, encumbering, alienating or

from further parting with possession of the suit

lands, pending disposal of the suit filed by the

Respondent No.1 herein. Mr. Rohtagi submitted that

on 27th March, 1984, the Respondent No.1 was

informed by a letter written on behalf of the

appellants regarding the claims of the appellants

herein, the filing of Suit No.252 of 1980 and the

appointment of the Court Receiver who had taken

over possession of the suit properties. 14

11. As indicated hereinbefore, on the death of Babu

Vaity, all the parties to Suit No.252 of 1980

arrived at a comprehensive settlement with the

Vaitys, the Respondent No.44 and one Mulchand G.

Mehta, the Respondent No.47. On the same day, the

Bombay High Court passed a decree on the consent

terms arrived at between the parties in Suit No.252

of 1980. Mr. Rohtagi submitted that the High Court

vide order dated 21st June, 2001, dismissed the

Chamber Summons taken out by the Respondent No.1

and also vacated the injunction granted in Suit

No.1578 of 1981 on 1st July, 1982. Mr. Rohtagi

submitted that the order of the learned Single

Judge was challenged in Appeal and was ultimately

set aside and the prayer for amendment of the

plaint made by the Respondent No.1 was allowed.

12. Mr. Rohtagi submitted that Kiran Construction

Company did not have any privity of contract with

the Vaitys. Furthermore, the Vaitys had terminated 15

their agreement with Modern Development Corporation

with whom Kiran Construction Company had entered

into an agreement and such termination had not been

challenged by Modern Development Corporation,

particularly since it is an unregistered firm and,

therefore, could not sue or be sued under the

provisions of Section 64 of the Partnership Act.

Mr. Rohtagi submitted that when Modern Development

Corporation was unable to compel the Vaitys to

perform their part of the contract, Kiran

Construction Company, whose claim, if any, to the

suit properties, was through Modern Development

Corporation, could not compel the Vaitys to

specifically enforce the contract between the

Vaitys and Modern Development Corporation.

Accordingly, the entire exercise undertaken by the

Respondent No.1 was but an exercise in futility and

the Division Bench while allowing the prayer for

impleadment made on behalf of Kiran Construction

Company erred in injuncting the Vaitys and also the 16

Thakkars from taking steps to develop the property.

13. Mr. Rohtagi urged that even the fact that a

Receiver had been appointed over the suit

properties and the properties were, therefore, in

custodia legis had been suppressed, and, in any

event, since the properties were in custodia legis,

the order of injunction could not have been passed.

Mr. Rohtagi submitted that since Kiran Construction

Company had no privity of contract with the Vaitys

and Modern Development Corporation being an

unregistered partnership, there was no possibility

whatsoever of the suit filed by Kiran Construction

Company ever being decreed. For such reason also,

the order of injunction passed by the Division

Bench was liable to be vacated.

14. Mr. Rohtagi submitted that from the orders

passed by the Division Bench of the Bombay High

Court on 17th November, 2006, disposing of Appeal

Nos. 747 and 748 of 2001 arising out of the orders 17

passed by the learned Single Judge in Notices of

Motion No.2700 and 140 of 1999, it would be evident

that the said appeals were allowed merely as a

consequence of the order passed earlier on 16th

November, 2006, in Appeal No.745/2001 in connection

with the Chamber Summons No.1203/2000 taken out by

Kiran Construction Company. Mr. Rohtagi submitted

that no reasons, other than what has been indicated

hereinabove, were given for allowing the said

appeals and accordingly, while Civil Appeal

No.2573/2008 was disposed of, consequential orders

were passed whereby the other appeals were also

disposed of.

15. Mr. Rohtagi submitted that since this Court had

earlier on 9th April, 2008, affirmed the order of

the learned Single Judge and had rejected the

Chamber Summons for impleadment, consequential

orders were required to be passed for setting aside

the order dated 17th November, 2006, passed by the 18

Division Bench of the Bombay High Court in Appeal

Nos.747 and 748 of 2001 and also to vacate the

interim order dated 1st July, 1982, passed in Suit

No.1578 of 1981 filed by the Respondent No.1

herein.

16. While adopting Mr. Rohtagi's submissions, Mr.

Ranjit Kumar, learned Senior Advocate appearing for

Respondent Nos.2A to 2E, 3 to 16, 18, 19 and 31 in

IA No.6 of 2008, prayed for clarification of the

judgment and order passed by this Court on 9th

April, 2008, in Civil Appeal No.2573 of 2008 to the

extent that as a consequence of the order dated 16th

November, 2006, passed in Appeal no.745 of 2001

being set aside, the order dated 17th November,

2006, passed by the Division Bench in Appeal No.747

of 2001 and Appeal no.748 of 2001 were also set

aside.

17. Mr. Ranjit Kumar submitted that after the

prayer for amendment of the plaint was disallowed 19

by this Court, it was only through inadvertence

that consequential orders were not recorded as far

as the two appeals are concerned and that when the

Vaitys were not before the Court in the suit filed

by it, the Respondent No.1 could have no

justification for submitting that the interim order

passed by the Division Bench of the High Court

should be allowed to remain. He also reiterated

Mr. Rohtagi's submissions that when there was no

privity of contract between the Respondent No.1,

Kiran Construction Company, and the Vaitys and its

suit was for relief only against Modern Development

Corporation, the agreement entered into between

Modern Development Corporation and the Vaitys could

not be specifically enforced by the said Respondent

and the Division Bench of the High Court had

committed an error in allowing the interim order of

injunction to continue against the appeals. 20

18. On the other hand, Mr. Buddy A. Ranganadhan,

learned Advocate appearing for Kiran Construction

Company, urged that the rejection of the prayer

made on behalf of the Respondent No.1 for leave to

amend the plaint did not mean that the orders

prayed for in these appeals would follow as a

matter of consequence. It was urged that the

judgment delivered by this Court on 9th April, 2008,

was only concerned with the challenge to the

amendment and that the scope of the appeal was

limited to the amendment of the plaint. According

to learned counsel, the prayer for injunction was

made on account of the decision of the Respondent

No.1 to file a separate suit and it was in that

context that the prayer for injunction to continue

till the hearing of the new suit could be taken up.

Mr. Ranganadhan submitted that, in any event, at no

point of time was any indication given that any

argument was to be advanced on the question of

remand to the Division Bench.

21

19. Mr. Ranganadhan also urged that the prayer for

vacating the interim order that had lasted for 16

years should not have been entertained. He

submitted that the appeals were misconceived and

were liable to be dismissed.

20. From the submissions made on behalf of the

respective parties and the materials on record, it

is quite apparent that the Chamber Summons No.1203

of 2000 taken out by Kiran Construction Company for

leave to amend its suit to incorporate a challenge

to the consent decree passed in Suit No.252 of 1980

and also to implead the appellants herein, Mr. K.L.

Danani and Mr. Mulchand G. Mehta as defendants in

the suit, was heard along with and Notice of Motion

No.140 of 1999 filed by the Receiver and Notice of

Motion No.2700 of 1999 filed by Vaitys for vacating

the order of injunction dated 1st July, 1982, were

taken up for hearing together. While Chamber

Summons filed by Kiran Construction Company was 22

dismissed, the Notices of Motion filed by the

Receiver and the Vaitys were allowed and the order

of injunction dated 1st July, 1982, was vacated.

21. Since the three appeals before the High Court

were filed by Kiran Construction Company against

the orders passed by the learned Single judge on

the Chamber Summons and the two Notices of Motion,

the Division Bench of the High Court, while

considering the said appeals, allowed the prayer

for amendment of the plaint and as a consequence

reversed the learned Single Judge's order on the

two Notices of Motion and remanded the Notice of

Motion for fresh hearing.

22. In the Civil Appeal filed by the appellants

herein against the three orders passed by the

Division Bench, although, by order dated 9th April,

2008, the Appeal was allowed and the order of the

Division Bench allowing the amendment prayed for by

the Respondent No.1 was set aside, through 23

inadvertence, no orders were passed in respect of

the appeals against the orders passed on the two

Notices of Motion for vacating the interim order

dated 1st July, 1982. It is for clarification of

the said order that the interim applications have

been filed which are under consideration.

23. Once the prayer for amendment of the plaint to

include the challenge to the consent decree passed

in Suit No.252 of 1980 was disallowed by this

Court, the question of restraining them from

dealing with the suit properties over which the

Respondent No.1 has no established claim would be

completely unreasonable and merely because the same

had been in force for a long time, would be no

ground to allow the same to continue.

24. Admittedly, as pointed out by Mr. Mukul Rohtagi

and Mr. Ranjit Kumar, learned Senior Advocates,

there is no privity of contract between Kiran

Construction Company and the Vaitys, its claim is, 24

therefore, restricted to Modern Development

Corporation alone and is also dependent upon the

right of Modern Development Corporation to specific

performance of its agreement with the Vaitys. In

other words, until and unless Modern Development

Corporation is able to establish a right over the

suit properties, Kiran Construction Company can

have no claim in respect thereof. Furthermore,

since the Receiver continues to be in possession of

the suit properties and the properties continue to

be in custodia legis, Kiran Construction Company

cannot ask for possession of the said properties.

25. In our view, the claim attempted to be set up

by Kiran Construction Company is highly tenuous and

is entirely dependent upon the claim of Modern

Development Corporation which has so far not

attempted to establish such claim. In such

circumstances it would be wholly inequitable to 25

allow the interim order to continue. The same is

accordingly vacated.

26. Accordingly, the appeals filed by the Official

Receiver and the Vaitys must succeed and are

allowed. Simultaneously, Interlocutory Application

Nos.4, 6 and 7 for clarification of the judgment

and order dated 9th April, 2008, passed in Civil

Appeal No.2573/2008 and Interlocutory Application

No.8 for filing additional documents are also

disposed of by virtue of this judgment. Further

more, the following clerical mistakes have been

pointed out in paragraph 7 of the I.A.No. 4 with

regard to the judgment dated 9.4.2008 passed in

Civil Appeal No. 2573 of 2008:

a. "In paragraph 2, page 1, line 3, the word "Serial" ought to be "Survey". b. The reference to "K.B. Thakkar" in paragraph 2, paragraph 4 and paragraph 11 ought to be "K.V.Thakkar";

c. The submission at paragraph 21 was in fact the submission made on behalf of the Petitioner and not on behalf of Respondent No.1.; and 26

d. In paragraph 16, page 15, line 1 the word "respondent" is to be read as "Respondent No.1."

Let a Corrigendum be issued with regard to the

errors indicated above. As far as Interlocutory

Application No.5 for deletion of the names of the

Respondent Nos.17, 20, 22, 25(a), 25(b), 25(c),

25(d) and 27, is concerned, the same is allowed at

the risk of the appellant.

27. Inasmuch as, these appeals have been taken from

interlocutory orders and the suit of the Respondent

No.1 is still pending, we make it clear that the

observations made in this order are only for the

purpose of disposal of the applications for

vacating the interim orders and such observations

should not influence the learned Trial Court from

disposing of the pending suits, in accordance with

law.

27

28. There will, however, be no order as to costs.

________________J.

(ALTAMAS KABIR)

________________J.

(CYRIAC JOSEPH)

New Delhi Dated: May 15, 2009