How concept of lis pendens is applicable in suit for specific performance?

 The next submission of Mr. Anturkar is that the plaintiffs are not entitled to any interim and/or final relief on the ground that the plaintiffs despite being aware of the fact that a Development Agreement cum Deed of Assignment of Lease is already executed by and between defendant Nos. 1 to 3 and defendant No. 4, have not impugned the said transaction in the present suit. This submission is sought to be countered by Mr. Seervai by citing the decision of the Hon'ble Supreme Court in (Guruswamy Nadar Vs. P. Lakshmi Ammal (D) by L.Rs. and others) MANU/SC/7594/2008 : 2009 (2) Bom. C.R. 403 (S.C.): A.I.R. 2008 S.C. 2560. Mr. Seervai, relying on paragraph 3 of the said decision, seems to suggest that the principle of section 52 of the Transfer of Properly Act applies in the instant case inasmuch as the subsequent transaction with defendant No. 4 was entered into during the pendency of a legal proceeding, namely, arbitration between the plaintiffs and defendant Nos. 1 to 3 and therefore, the property cannot be transferred or otherwise dealt with so as to affect the plaintiffs rights under a decree or order that may be made in the present suit. It is doubtful whether section 52 of the Transfer of Property Act can be invoked in this case as suggested by Mr. Seervai. Firstly, section 52 has been amended by Bombay Act 4 of 1939 so as to require a notice of pendency of any suit or proceeding to be registered under section 18 of the Indian Registration Act, 1908 before the consequences provided for under section 52 can apply in respect of immovable properties situated in Greater Mumbai. Therefore, pendency of a suit or legal proceedings simpliciter does not entail consequences under section 52 in respect of immovable properties in Greater Mumbai, but there must further be a registered Lis pendens, plaintiff has not made out any case of registration of such Lis Pendens. Secondly, the principle of section 52 applies qua a decree or order that may be passed in a suit or proceeding during the pendency of which the subsequent transfer takes place. The plaintiff in this case seeks the benefit of section 52 qua a decree or order that may be passed not in the pending arbitration but in a suit subsequently filed by him after giving up the arbitration proceedings. Prima facie, therefore, the submission of Mr. Seervai on the principle of section 52 does not appear to be correct. I am, however, not convinced with the argument of Mr. Anturkar that the plaintiffs had to impugn the Development Agreement-cum-Deed of Assignment of Lease between defendant Nos. 1 to 3 and defendant No. 4 before he could claim any relief in this suit against defendant No. 4. Under section 19 of the Specific Relief Act, a plaintiff promisee entitled to specific performance of his agreement can claim the same against a transferee of the promisor and for that purpose need not challenge the transfer between the promisor and his transferee. Prima facie therefore the plaintiffs are entitled to the relief of specific performance against the defendant No. 4 transferee if they otherwise make out the case on merits. 

ORDINARY ORIGINAL CIVIL JURISDICTION 
IN

NOTICE OF MOTION NO. 2055  OF 2012
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
SUIT NO. 1963 OF 2012
Shantilal J. Shah & Ors. 
     
   Versus
Jitendra Sanghavi and others 

CORAM :  S. J. KATHAWALLA, J. 
DATE:           19   NOVEMBER, 2012
   
Citation: 2013(3)BomCR856,2013(7)ALLMR 112


1.
The above suit is filed by the Plaintiffs for, a declaration that the Development 
Agreement     dated     25th  September   2007   (Exhibit­A   to   the   Plaint)   (“the   said 
Agreement”) entered into between the Plaintiffs and Defendant Nos. 1 to 3 and the 
Irrevocable Power of Attorney dated 25 th October 2007 (Exhibit­B to the Plaint) (“the 
said POA”)   are valid, subsisting and binding  on the Plaintiffs and Defendant Nos. 1 
to   3   and   also   a   declaration     that   the   purported   letter   of   termination   dated     4 th 

October 2011 (Exhibit­E to the Plaint),   terminating   the said Agreement   and the 
said POA,  is illegal, wrongful, null and void, for possession from Defendant Nos. 1 
to 4 of the immovable property situated at Plot No. 270, Deodhar Road, Matunga, 
bearing New Survey No. 885 and Cadastral Survey No. 205/10 of Dadar­Matunga 
Division,   Mumbai­400   019   along  with   the   building   known  as   “Padmavati   Sadan” 
thereon consisting of ground plus 3 floors comprising of 19 tenements (“the suit 
property”) and ordering and directing the Defendant Nos. 1 to 4 to do all such acts, 

deeds  and things and execute and sign all documents and papers as are necessary 
for effectively acting upon, performing and implementing the said Agreement. The 
Plaintiffs have also taken out the above Notice of Motion seeking interim reliefs, that 
is, appointment of Court Receiver of the suit property and to restrain the Defendants 
by an order and injunction from in any manner alienating, encumbering, selling, 
transferring and/or creating any third party right, title and/or interest in respect of 
the suit property or any part thereof. 
The facts are briefly are set out hereunder: 
3. 2. The Defendant Nos. 1 to 3   are the owners   of the the suit property.   The 
building on the suit property by the name “Padmavati Sadan” is a MHADA   cessed 
property  which is an old and dilapidated structure constructed prior to 1940.  Out of 
19 tenements, 6 tenements being Nos. 4, 5, 7, 8, 9 and 11 are occupied by the family 
members of Defendant Nos. 1 to 3 and 13 tenements are occupied by tenants. 

  Pursuant to  the negotiations between the Defendant Nos. 1 to  3 and the 
4.
Plaintiffs, the said Agreement  came to be entered into between the Defendant Nos. 
1 to 3 and the Plaintiffs,  whereunder Defendant Nos. 1 to 3 granted development 
rights   in favour of the Plaintiffs on the terms and conditions more particularly set 
out therein. The said Agreement has been duly registered with the Sub­Registrar of 
Assurances under the provisions of the Indian Registration Act, 1908. Some of the 
relevant recitals and the terms and conditions of the said Agreement  are reproduced 
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hereunder for ready reference:
“B.       The   said   Plot   along  with   the  said   Old   Building  shall  
hereinafter collectively be  referred to as “the said Property”.
G.     The said property is a cessed building and is fully occupied  by  
the   tenants/occupants.     The   said   building   is   in   a   dilapidated  
condition   and   requires   heavy   repairs   and/or  
reconstruction/redevelopment;
H.       The Owners are at present using, occupying and residing in  
Flat   Nos.   7,   8   and   9   on   the   First   Floor   of   the   said   building  
“Padmavati   Sadan”   admeasuring   approximately   572   sq.ft.,   461  
sq.ft. and 419 sq.ft. (carpet area)respectively and Flat No.11 on  
the   Second   Floor   of   the   said   Building   “Padmavati   Sadan”  
admeasuring  approximately 572  sq.ft. (carpet area) (hereinafter  
referred to as “the existing residential premises”);
I.        The Owners are at present using and in occupation of the  
office/commercial premises bearing Nos. 4 and 5 on the Ground  
Floor   of   the   said   building   “Padmavati   Sadan”   admeasuring  
approximately 419 sq.ft. and 389 sq.ft. (carpet area) respectively  
(hereinafter   referred   to   as   “the   existing   office/commercial  
premises”);
J.     The Owners have decided to demolish the said building and to  
erect new building/s thereon by consuming FSI as well as floating  
FSI of the outside properties in the form of TDR, if any, under the  
redevelopment scheme as permitted by MHADA;
K.      Due to lack  of experience and shortage of funds, the Owners  

have decided to get the said proposed development done through  
some experienced Developers having sound financial position and  
who would be able to settle amicably  with the tenants/occupants  
occupying various premises in the said building;
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1. The   Owners     hereby   jointly   and   severally   entrust,   give   and  
grant all and full development rights to the Developers and hereby  
allow   the   Developers   to   enter   upon   and   develop   full   and   in   all  
respect and in all manner their property on “as is where is basis”  
being  all   these   pieces   or   parcels   of   land   or   ground   situate,  
lying and being at Deodhar Road, Matunga, Mumbai­400 019  
within   the   limits   of   Greater   Mumbai     in   the   district   and  
registration   sub­district     of   Mumbai   City   and   Mumbai  
Suburban bearing Plot No. 270 of Dadar­Matunga Estate and  
formerly   bearing   new   S.No.   885   and   C.S.   No.   205/10   of  
Dadar­Matunga Division admeasuring about 833 sq.yds. (i.e.  
696.49 sq.mtrs.) with a building standing thereon of ground  
and three upper floors then known as “Sanghavi Sadan” and  
now known as “Padmavati Sadan” and assessed to municipal  
taxes under 'F North' Ward No. 7365 (I), 7365 (ii) and Street  
No.   11,   Deodhar   Road   (“Old   Building”)   and   more  
particularly described in the First Schedule hereunder written  
and     delineated   on   the   plan   thereof   hereto   annexed   and  
thereon   shown   surrounded   by   red   colour   boundary   line,  
hereinafter known as “the said property” by demolishing the  
existing   building/s   and   constructing   thereon   new   building/s   by  
utilising the FSI as contemplated in this Agreement.
2 (a)     In consideration of the owners entrusting the development  
rights   in   respect   of   the   said   property   to   the   Developers,   the  
Developers hereby agree to pay to the Owners as under:
(i)                  the Developers have paid the sum of Rs. 99,00,000/­  
(Rupees Ninety Nine Lakhs only) to the Owners on or before the  
execution of this Agreement, the payment and receipt whereof, the  
Owners   jointly and severally do hereby admit and acknowledge  
and discharge the Developers for the same forever;
(ii) the   balance   amount   of   consideration   of   Rs.   12,00,000/­  
(Rupees Twelve Lakhs only) shall be paid by the Developers to the  
Owners on or before 13th October, 2007, time being the essence of  
the contract;
(iii)
(b)               shall   provide   to   the   Owners   Permanent   Alternate  

Residential Accommodation on ownership basis but free of costs of  
2,000 sq.ft. (carpet area) on the same floor, on the North East side  
of the Plot/Road facing, the Developers' Architect to give Certificate  
as to the area to be allotted as Permanent Alternate Residential  
Accommodation   to   the     Owners   herein   in   the   proposed   new  
building   along   with   two   stilt   parking   area   and   one   open   car  
parking   space   in   the   compound   of   the   said   building   lieu   of   the  
Owners   vacating   the   existing   residential   premises   presently  
occupied   by   them   in   the   said   building   “Padmavati   Sadan”and  
handing over vacant possession thereof to the Developers;
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(c )       shall provide to the Owners as Permanent Alternate Office  
Accommodation on ownership basis but free of costs to the extent  
of 800 sq.ft. (carpet area) on the same floor, on the North East side  
of   the   Plot/   Road   facing,   the   Developers'   Architect   to   give  
Certificate   as   to   the   area   to   be   allotted   as   Permanent   Alternate  
Office Accommodation to the Owners  herein in the said proposed  
new   Building   in   lieu   of   the   Owners   vacating   the   existing  
office/commercial premises presently occupied by them in the said  
building Padmavati Sadan and handing over vacant and peaceful  
possession thereof to the Developers;
(d)       In addition to the amount as set out in sub­clause 2 (a)  
above, the sum  of Rs. 27,00,000/­ (Rupees Twenty Seven  Lakhs  
only)   is   paid  to   the  Owners   as   non­refundable  amount   towards  
corpus and rent/license fee payable or to be incurred by them for  
the   temporary   alternate   accommodation   which   they   would   be  
taking   of   their   own   during   the   period   of   construction   and  
development of the said property. 
(e)     It is further agreed that the aforesaid consideration amount  
is   non­refundable   by   the   Owners   to   the   Developers   even   if   the  
Developers does not complete the development of the said property  
for whatever reason. 
(f)      It is further agreed that if the F.S.I. is available in excess of  
2.5 in respect of  the said property now or hereafter, the same shall  
be divided between the Owners and the Developers equally;
(g)    It is further agreed that the Developers shall not be entitled  
for   a   refund   of   proportionate   consideration   in   the   event   of  
reduction in the F.S.I. of 2.5;
3. In addition to the consideration paid/payable to the Owners as  

set out in Clause 2 (a) above, the Developers shall allot to all the  
existing tenants/occupants as set out in Annexure “A” hereto who  
have been in possession and occupation of various tenements in the  
said building and who shall handover their respective tenements to  
the Developers and execute necessary/requisite agreements with the  
Developers,   residential   premises   free   of   costs   and   on   ownership  
basis;
4. Upon execution of this Agreement, the Developers shall proceed  
with the development work on the said property, however, at their  
own costs and risk, so also in accordance with the Development  
Control Regulations.

5 (a)  The Owners have made out free, clear and marketable title  
to the said property free from all encumbrances subject to the lease  
in respect of the Plot and subject to the existing tenants/occupants  
and shall at their own costs get in all outstanding estates and clear  
all defects in title, if any.  The Owners shall also clear the claims, if  
any,   raised   by   any   concerned   parties   at   their   own   costs   and  
expenses;
(b)       The Developers agree, declare and confirm that they have  
already verified the Owners title to the said property as clear and  
marketable. The Developers shall not raise any objection and make  
any further requisition in respect to the Owners' title to the said  
property. 
6 (a)    It is specifically agreed that the developers shall negotiate  
with   the   tenants/occupants   occupying   various   tenements   in   the  
said building and join them in the proposed redevelopment scheme  
either   by   offering   Permanent   Alternate   Accommodation   on  
ownership   basis   or   obtaining   surrender   from   them   of   their  
respective   tenancy   rights   in   respect   of   the   premises   in   their  
possession and occupation on such terms and conditions as will be  
found fit and proper by the Developers. 
(b)    The Developers shall be entitled to effect transfer of tenancy  
rights   in   respect   of   any   of   the   premises   occupied   by   the  
tenants/occupants   and   shall   intimate   about   such  
transfer/surrender of tenancy to the Owners. 
7.       The Owners shave already paid and shall continue to pay  
from   time   to   time   all   the   dues     such   as   property   taxes,   N.A.  
Assessment, cesses, water charges, electricity charges, etc. till the  

date they hand over vacant   and peaceful possession of the said  
property   including   building/structure   standing   thereon.     If   any  
taxes, charges, dues are found due or in arrears, the same will be  
to the account of the Owners and paid by the Owners exclusively  
and the rent from the tenants shall be recovered by the Owners till  
they hand over possession of the said property to the Developers. 

10.           The parties hereto specially agree and confirm   that the  
existing   building known as 'Padmavati Sadan' standing   on the  
said property will be demolished  by the Developers herein. The old  
materials   such   as   M.S/Beam   Joys,   Cuddapah,   AC   Sheets,   Doors  
and   Windows,   Mangalore   Tiles   and/or   otherwise   whatsoever  
material from old building/structure/s on the said property will be  
the property of the Developers and the Developers  shall be entitled  
to dispose it of as he may deem fit and appropriate sale proceeds  
thereof without in any manner accountable or liable to the Owners  
or any of the tenants/occupants. 
11.    The Developers shall immediately commence the development  
work at their own costs and risk on the said property and make  
best   endeavour   to   obtain   Commencement   Certificate   within   6  
months from the date of obtaining vacant and peaceful possession  
of   the   entire   property,   which   may   be   extendable   mutually   and  
complete the same within a period of 30 months from the date of  
obtaining Commencement Certificate from the MCGM time being  
the   essence   of   the   contract.     The   Developers   shall   endeavour   to  
obtain Occupation Certificate from the MCGM within a period of  
30 months from the date of obtaining Commencement Certificate.  
The Developers shall indemnify and keep indemnified the  Owners  
in   respect   of   breach   of   any   of   the   terms   and   conditions   of   the  
sanctioned   plans   while   commencing,   continuing   and   completing  
the construction work on the said property and/or any terms of  
this Agreement. 
12 (a)   It is agreed  and understood that the Owners shall not any  
way   obstruct   the   construction   and/or   development   work   to   be  
carried out by the Developers and shall not do or omit to any act,  
matter or things whereby the Developers   will be prevented from  
carrying out the development work under this Agreement;
(b)           It is further agreed that if the development of the said  
property is not completed due to willful default on the part of the  
Owners or any of them, then, the Developers shall be entitled to  
specific performance of these presents by the Owners and in such  

event, the owners shall also remain liable and responsible for all  
losses and damages which may be sustained and/or suffered by the  
Developers due to the willful default by the Owners.
13.    The Owners hereby state, represent and declare that:

(d)     in the event,  the Owners desire to deal with or dispose off  
their   existing   and/or   Permanent   Alternate   residential   and/or  
office/commercial   premises   in   their   possession/occupation,   then  
they shall first offer the same to the Developers at the price/rate  as  
mutually   agreed   by   and   between   them.     In   the   event,   the  
Developers decline to acquire the same, the Owners will be entitled  
to dispose off the same to any third party and the Developers shall  
issue   a   No   Objection   Certificate   for   such   sale/transfer   without  
claiming any consideration;
(e)         The   Owner   shall     not   transfer,   agree   to   transfer,   accept  
surrender of any tenancy rights from any of the tenants/occupants  
of the said building/property from the date of this Agreement and  
the   same   shall   be   done   by   the   Developers     with   the   written  
intimation in that behalf to the Owners or any of them;
.....
.....
....
(f) .....
(g)            they   shall   execute   Conveyance/Deed   of   Transfer   in  
respect of the said property to and in favour of the proposed  
Society/Condominium of holders of various units/premises. 
15.     It is agreed between the Parties that (i) the possession of the  
entire property will be handed over  to the Developers within  30  
days  upon receipt of IOD from MCGM  to enable the Developers to  
take charge of the same and to commence the development work;  
(ii)     the   possession   of   the   tenanted   premises   occupied   by   the  
tenants shall be taken by the Developers directly from the tenants. 
16. The   Owners   confirm   that   they   have   issued   following  
permissions and rights to the Developers herein:
(a)         To   commence   and   complete   the   development   of   the   said  
property   as   agreed   herein   by   demolishing     existing  
building/structures as well as cutting of trees, if any, thereon with  
their   own   sources   and   cost   as   per   the   plans   approved   and  
permission   that   may   be   given   by   the   Municipal   Corporation   of  
Greater   Mumbai   and/or   such   other   Local   Authorities   with  

amendments thereof, if any,
(b)             To   enter   into   and   execute   agreements   with   the  
tenants/occupants   in   the   said   building/property     and   to   give  
permanent alternate accommodation in the new buildings to the  
existing owners/tenants/occupants as per Annexure “A” hereto or  
accept surrender/transfer of tenancies/rights from them;
(c )       To store building material and storage of other goods and  
equipments required for development of the property as well as for  
temporary sheds required to accommodate construction labourers;
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(d)  To deal with and/or dispose of on ownership basis or otherwise  
the Units/Premises in the new Buildings to be constructed on the  
said  property at such  price as the Developers may  deem  fit and  
proper from time to time and at their risk and costs; 
(e)               To   enter   into   Agreements   for   Sale     in   respect   of   the  
flats/units/office/premises in the Buildings to be erected or   any  
such further or additional area constructed on the said property on  
an ownership basis or otherwise with prospective buyer/s in their  
own name.
17  (a)  The Owners and each of them shall render all assistance,  
co­operation   and   sign   and   execute   or   caused   to   be   signed   and  
executed all applications, plans, authorities and other writings, as  
may be necessary or required to enable the Developers to develop  
and complete the development of the said property.  The Developers  
shall incur the necessary expenditure for the same.
(b)   The Owners shall not interfere   with the construction work,  
elevation   of   the   proposed   new   wing/building,     colour   scheme  
amenities etc.  proposed to be  provided by the Developers. 
20. It is specifically agreed   between the Parties hereto that, if for  
any   reason   the   building   plan   could   not   be   sanctioned   and/or  
approved by the MCGM, then, in that event, this Agreement shall  
not come to an end or terminated.  The Owners shall be entitled to  
retain the entire amount paid under this Agreement to them by the  
Developers   as   also   the   possession   of   the   premises   in   their  
possession/occupation if not handed over to the Developers and the  
Development rights granted under these presents shall vest with the  
Developers herein forever.

21. The   Owners   do   hereby     state   that   from   the   date   hereof   the  
Owners shall not create any tenancy in respect of the said property  
or any part thereof and shall deliver the possession  of the requisite  
tenements in their possession to the Developers upon sanction of  
the   plan   on   receipt   of   full   and   total   Commencement   Certificate  
from the MCGM, whichever is earlier and also not to enter into any  
Agreement  or documents for sale and transfer of the said property  
and/or accept any advance against the same nor create any third  
party right  of whatsoever nature in respect thereof.

22.       Simultaneously   with   the   execution   of   these   presents,   the  
Owners herein shall also execute an Irrevocable General Power of  
Attorney in favour of the Developers or their nominee/s as may be  
desired   by   the   Developers   for   the   purpose   of   signing   and/or  
executing  all  the applications, proceedings, plans, etc., to obtain  
necessary approval from   various authorities, in connection with  
the further   development of the said property to be submitted by  
the Developers on behalf of the Owners to the Competent Authority  
under   the   Urban   Land   (Ceiling   and   Regulation)   Act,   1976,  
Mumbai Municipal Corporation, Town Planning Authority or any  
other Government or Semi­government authorities and also for the  
purpose of execution any other appropriate documents in respect of  
the said property in favour of the MCGM, BES & T Undertakings or  
Reliance Energy Limited/Government.  The said Power of Attorney  
shall, inter alia, include power to execute/enter   into agreements  
with tenants/occupants, seek surrender of their tenancies and/or  
other   rights,   sign   and   execute     the   Transfer  
Deed/Conveyance/Assignment   to   and   in   favour   of   the  
Society/Condominium as well as Registration thereof. The Owners  
hereby agree that the said Power of Attorney shall not under any  
circumstances be revoked  by them or any of them. However, upon  
completion   of   the   entire   project   and   sale   and   allotment   of   last  
flat/unit/tenement/office and execution of Conveyance in favour of  
the   proposed   Society/Condominium   namely   'Padmalaya   Co­
operative Housing Society Limited, the said Power of Attorney shall  
automatically come to an end.” 
28. It is agreed that all the disputes either by the Owners or of the  
Developers shall be referred to the Arbitral Tribunal comprising of  
three persons one each to the nominated by the Owners and the  
Developers  and the  two Arbitrators shall appoint a third Presiding  
Arbitrator   and   the   decision   taken   by   the   Arbitral   Tribunal   so  
nominated   shall   be   final   and   binding   upon     the   parties   to   the  
dispute.  The arbitration will be conducted as per the provisions of  

the   Arbitration   &   Conciliation   Act,   1996.     All   the   costs   and  
expenses   incidental   to   the     Arbitration   proceedings   and   other  
charges to be paid in pursuance thereof shall be borne and paid by  
both   the   parties   equally.   Each   party   will   pay   the   fees   of   their  
respective Solicitors/Advocates.”
5.
According to the Plaintiffs, though the Defendant Nos. 1 to 3 agreed to fully 
co­operate   and   assist   the   Plaintiffs   to   commence   the   redevelopment   of   the   suit 
property   and   also   compensate   the   Plaintiffs   for   any   willful   obstructions   and 
omissions on the part of Defendant Nos. 1 to 3   to commence and complete the 

development work of the suit property, Defendant Nos. 1 to 3 have since signing of 
the   said   Agreement   only   been   disrupting   and   obstructing   all   the   efforts   of   the 
Plaintiffs   to   begin   the   redevelopment   work   and   have   not   co­operated   with   the 
Plaintiffs to get the necessary plans and documents approved from the Municipal 
Corporation   of   Greater   Mumbai   (“MCGM”).   According   to   the   Plaintiffs,   due   to 
instigations   and   wrongful   representations   by   the   Defendant   Nos.   1   to   3   to   the 
tenants, various tenants of the building on the suit property have refrained from 
entering into necessary agreements and/or are apprehensive   in handing over the 
vacant and peaceful possession of their respective tenements to the Plaintiffs and 
therefore it has become exceedingly difficult for the Plaintiffs to obtain the necessary 
permissions/IOD from the MCGM and carry out other activities pertaining to the 
redevelopment of the suit property.
6.
According to the Plaintiffs, despite the above conduct of the Defendant Nos. 1 
to 3, the Plaintiffs took steps towards carrying out development activities and have 
taken various steps towards commencement of the project with respect to the suit 

property, by appointing various professional agencies, carrying out geological survey 
and testing  of soil of the suit property. The Plaintiffs appointed Zed Geotechnios & 
Const.   to   conduct   Geo­technical   investigation   work   at   the   suit   property   and   also 
appointed   M/s.   P   Bhobe   &   Associates   as   Architects   and   Ascent   Structural 
.N.
Engineers Pvt. Ltd. to act as Consulting Structural Engineers for the purpose of the 
said redevelopment.  According to the Plaintiffs, whenever the  representatives of the 
said agencies visited the suit property for the purpose of carrying out inspection or 

survey or testing, Defendant Nos. 1 to 3 misbehaved and restrained the said agencies 
and/or their  representatives from carrying out the desired work.  It is submitted that 
the Plaintiffs were always ready and willing to perform their obligations under the 
said Agreement,  and are still ready and willing to undertake  the redevelopment of 
7.
the said building.  
According to the Plaintiffs, despite the hindrances created by Defendant Nos. 
1 to 3, the Plaintiffs with a view to resolve the pending issues,  made various efforts 
including holding meetings with relevant authorities and also the tenants of the said 
building. The  relevant correspondence exchanged by the Plaintiffs in this regard is 
annexed   as   Exhibits   D­1   to   D­4   to   the   Plaint.     According   to   the   Plaintiffs,   since 
Defendant Nos. 1 to 3 continued with their arbitrary and non­co­operative attitude 
leading   to   inordinate   delays   in   the   Plaintiffs   commencing   and   completing   the 
redevelopment works, the whole project came to a standstill.  In the meanwhile, the 
Plaintiffs incurred huge losses on account of several commissions and omissions  on 
the part of Defendant Nos. 1 to 3 for which Defendant Nos. 1 to 3 are liable to 

compensate the Plaintiffs in terms of the said Agreement. 
According to the Plaintiffs, they were shocked and surprised to receive a letter 
8.
dated 4th  October 2011, addressed by Defendant Nos. 1 to 3, inter alia contending 
that the  said Agreement executed between the Plaintiffs and Defendant Nos. 1 to 3 
stands terminated on account of willful default of the terms and conditions of the 
said Agreement by the Plaintiffs. Defendant Nos. 1 to 3 also issued public notice 
dated 7th  October 2011 in local newspapers i.e. Janmabhoomi dated 11 th  October 

2011 and Times of India dated 12th  October 2011.   In view thereof, the Plaintiffs 
through   their   Advocates   also   issued   public   notice   dated   12 th  October   2011   in 
Janmabhoomi and notice dated 14 th October 2011 in  Times of India. The Plaintiffs 
through   their   Advocate’s   letters   dated   10 th  October   2011   and   25 th  October   2011 
denied the allegations made by Defendant Nos. 1 to 3. The Plaintiffs also denied and 
disputed the purported termination of the said Agreement and revocation of the said 
irrevocable POA. 
9.
According to the Plaintiffs, in the circumstances the Plaintiffs issued notice to 
the Defendant Nos. 1 to 3 and invoked the Arbitration clause (i.e. Clause 28 of the 
said Agreement) and called upon Defendant Nos. 1 to 3 to nominate  an Arbitrator  
of their choice. Since  the Defendant Nos. 1 to 3 failed and neglected to comply with 
the said communication, the Plaintiffs filed Arbitration Application No. 149 of 2012 
in this Court under Section 11 of the Arbitration and Conciliation Act, 1996 (“the 
Act”), for appointment of an Arbitrator by this Court. The Plaintiffs also filed an 

application   under   Section   9   of   the   Act   for   interim   protective   reliefs   against 
Defendant Nos. 1 to 3.  However, by an order dated 1st December, 2011,  the learned 
Single   Judge   of   this   Court   (Coram:   S.J.   Vazifdar,   J.)   as   an   ad­interim   measure 
directed Defendant Nos. 1 to 3 to deposit in this Court a sum of Rs. 1.38 crores paid 
by the Plaintiffs to the Defendant Nos. 1 to 3, prior to entering into any development 
agreement with any third party. The Plaintiffs preferred an Appeal being Appeal No. 
25 of 2012 from the order passed by the learned Single Judge dated 1 st  December 

2011. The said Appeal was disposed of by the Hon’ble Division Bench of this Court 
dated 16th April 2012.  In the said order it was inter alia recorded that the learned  
Single Judge had not granted ad­interim relief by giving cogent reasons in his order 
dated 1st December 2011.  However, it was clarified that the observations made by 
the learned Single Judge while rejecting the ad­interim relief, are to be treated as  
only tentative in nature and the Arbitration Petition be decided on its own merit and 
in accordance with law. 
10.
By their affidavit dated 30th January, 2012, Defendant Nos. 1 to 3 averred that 
they had entered into a Development Agreement with Defendant No.4, pursuant to 
their depositing the said sum of Rs. 1.38 crores in this Court on 22 nd December 2011. 
Since Defendant Nos. 1 to 3 had failed to forward a copy of the  agreement entered 
into by and between them and the Defendant no.4 to the Plaintiffs, the Plaintiffs 
took out Chamber   Summons No. 295 of 2012 in Arbitration Petition No. 968 of 
2011,     seeking   directions   against   Defendant   Nos.   1   to   3     to   furnish   and   grant  
inspection of  the said  Development  Agreement­cum­Deed  of  Assignment  of  Lease 

dated   22nd  December   2011,   which   Chamber   Summons   was   allowed   by   an   order 
dated 19th  April, 2012 passed by this Court.   Though Defendant Nos. 1 to 3 had 
preferred an appeal impugning the order dated   19 th  April 2012, the said Appeal 
before the Division Bench was withdrawn, and a copy of the said Agreement dated 
22nd December 2011 was made available to the Plaintiffs.
In view of the Defendant Nos. 1 to 3 having created   third party rights in 
11.

respect of the suit property, on the application of the Plaintiffs this Court by its order  
dated 30th July 2012, allowed the Plaintiffs to  withdraw the Arbitration Petition with 
liberty to  file  a suit, to  seek  appropriate reliefs.   By  the said  order, the  amounts 
deposited by  Defendant Nos. 1 to 3 amounting to Rs. 1.38 crores along with interest  
accrued thereon was also directed to be transferred to the suit account to be retained 
therein until further orders.  By the said order, this Court also clarified that the  suit 
as well as the interim applications made therein shall be heard by this Court on 
merits without being influenced by any observations made in the orders passed in 
the  Arbitration proceedings. 
12.
The Plaintiffs thereafter filed the present suit against Defendant Nos. 1 to 3 
and   Defendant   No.4   in   whose   favour   Defendant   Nos.   1   to   3   have   executed     a 
Development   Agreement­cum­Deed   of   Assignment   of   Lease   dated   22 nd  December, 
2011 in respect  of the suit property. 
13.
Mr. N.H. Seervai, the learned Senior Advocate appearing for the Plaintiffs has, 

after taking me through the various clauses of the  said Agreement and the said POA, 
submitted   that   pursuant   to   the   said   Agreement,   the   Plaintiffs   have   paid   to   the 
Defendant Nos. 1 to 3 an aggregate amount of Rs. 1.38 crores. The Plaintiffs also 
appointed     Architects,   Structural   Engineers   and   Geo­technical   Consultants   in 
compliance   with   their     obligations   under   the   said   Agreement   and   started 
negotiations with the tenants. However, from the very outset, the Defendant Nos. 1 
to   3   repeatedly   caused   disturbance   and   obstruction   thereby   not   allowing   the 

Plaintiffs to carry out their work.   Defendant Nos. 1 to 3 have also instigated the  
other tenants not to enter into any agreement with the  Plaintiffs towards vacating 
their respective tenaments in the said building, and within a span of around 22 days 
after the passing of the Order dated 1 st December 2011, by the learned Single Judge 
of this Court in the Arbitration proceedings, completed the negotiations and entered 
into a development agreement with Defendant No.4, which   agreement cannot be 
said to have been entered into in a bona fide manner  or without prior notice of the 
claims   of   the   Plaintiffs   in   respect   of   the   suit   property.     It   is   submitted   that   the  
development agreement  with Defendant No.4 is ex­facie collusive as is evident from 
a   perusal   thereof,   inter   alia,   on   counts   of   consideration   and   obligations   of   the 
Assignee/Defendant   No.4.   It   is   submitted   that   no   steps   have   been   taken   since   8 
months   by   the   Assignee/Defendant   No.4   despite   rights   having     been   allegedly 
created in favour of Defendant No.4, which clearly goes to show that the same is  to 
prejudice the rights of the Plaintiffs.  Mr. Seervai has also submitted that the share  
capital of Defendant No.4 is admittedly in the sum of Rs. One lakh and therefore it is  
impossible for Defendant No.4 to carry out the re­development of the suit property 

involving   crores   of   rupees.     Mr.   Seervai   has   also   relied   on   the   letter   dated   9 th 
September 2009 written by the Defendant Nos. 1 to 3 to the Plaintiffs,  wherein the 
Defendant Nos. 1 to 3 have referred to the G.R. issued by the Govt. of Maharashtra 
through     its   Urban   Development   Department,   and   alleged   that   the   FSI   for     the 
development of  old   cessed  buildings under Regulation 33  (7) of  D.C. Regulation 
1991 was increased from 2.5 to 3, and in view thereof  as provided in  clause 2 (f) of 
the   said   Agreement,   the   increase   in   FSI   has   to   be   divided   equally   between   the 

Plaintiffs and the Defendant Nos. 1 to 3,  and that the Defendant Nos. 1 to 3 would 
be interested in having the said proportionate excess FSI added to their constructed 
area in addition to the area already agreed to be given to them.   Mr. Seervai has  
submitted that the said demand  made by the Defendant Nos. 1 to 3 was incorrect 
and illegal because the G.R. referred to by the  Defendant Nos. 1 to 3 in the letter 
dated 9th September, 2009  was only a proposal to increase FSI and the same came 
into   effect   and   the   FSI   was   actually   increased   only   in   May   2011.   In   the 
circumstances,   Mr.   Seervai   submitted   that   there   is   a   concluded   contract   for 
redevelopment of the suit property between the Plaintiffs and Defendant Nos. 1 to 3. 
The said  Agreement vested development rights in favour of the Plaintiffs in the suit 
property and the Plaintiffs are ready and willing to perform their obligations under 
the said Agreement at the earliest.  The Plaintiffs have also taken various and active 
steps   in   furtherance   of   the   said   Agreement   and   have   paid   the   entire     monetary 
consideration thereunder to Defendant Nos. 1 to 3. The Defendant Nos. 1 to 3 with  
ulterior   motives   and   without   any   valid   cause   have   sought   to   terminate   the   said 
Agreement   on   grounds   which   are   incorrect   to   their   knowledge.     The   right   of 

termination is absent in the said Agreement. The termination is therefore invalid and 
bad in law.  Even under clause 20 of the said Agreement, it is clearly stated that the  
Development Agreement entered into between the parties shall not come to an end 
or terminated if   for any reason the building plan could not be sanctioned and/or 
approved by the MCGM.  It is submitted that Defendant Nos. 1 to 3 have terminated 
the said Agreement for ulterior motives  to deprive the Plaintiffs of their legitimate 
rights and to derive certain benefits by   creating third party rights.   It is therefore  

submitted that the Plaintiffs are entitled to the reliefs sought in the Plaint and is also 
14.
entitled to the interim reliefs as prayed for in the above Notice of Motion. 
Mr. Anturkar, the learned Advocate appearing for Defendant Nos. 1 to 3 has 
submitted     that   the   said     Agreement   being   an     agreement   which   gives   only   the 
development rights in respect of the suit property to the Plaintiffs and nothing more 
cannot   be   specifically   enforced.     Without   prejudice   to   this   contention,   he   has 
submitted that the Plaintiffs having taken out proceedings under Section 9 of the Act 
against Defendant Nos. 1 to 3 seeking reliefs therein and having withdrawn the said 
proceedings, are not entitled to seek any reliefs against Defendant Nos. 1 to 3 in the 
present suit.  Mr. Anturkar has submitted that even otherwise the Plaintiffs are not 
entitled to any reliefs against Defendant Nos. 1 to 3 since Defendant Nos. 1 to 3 
have already sold and transferred all their rights in the suit property in favour of 
Defendant No. 4 and therefore the reliefs as prayed against Defendant Nos. 1 to 3 
have become infructuous.  Mr. Anturkar has submitted that the suit as framed is bad 
in law since the Plaintiffs despite having knowledge  of the fact that pursuant to the  

order passed by this Court dated 1 st  December 2011, Defendant Nos. 1 to 3 have 
deposited the amount of Rs. 1.38 crores in this Court and have thereafter entered 
into an agreement with Defendant No.4 selling/transferring all their rights in respect 
of   the   suit   property   in   favour   of   Defendant   No.4,   have   not   impugned   the   said 
transaction in the present suit.   In the absence of impugning  the said transaction in  
the present suit, no reliefs can be granted in favour of the Plaintiffs at the interim  
stage and/or at the final  stage.  Without prejudice to the aforesaid contention, Mr. 

Anturkar has also submitted that after execution of the  said Agreement and the said 
POA by Defendant Nos. 1 to 3, the Plaintiffs have not taken any steps whatsoever,  in 
pursuance of the same. The responsibility of dealing with the tenants was solely that 
of   the   Plaintiffs   under   the   said   Agreement.     At   no   stage     have   the   Plaintiffs 
complained   or made any grievance against   Defendant Nos. 1 to 3 that they have 
not co­operated with the Plaintiffs or have instigated the tenants,  and for the first 
time in their letter dated 25th October 2011 false and incorrect allegations are made 
against Defendant Nos. 1 to 3.     Mr. Anturkar has also drawn my attention to the  
letters   written   by   the   Plaintiffs   to   the   Income­tax   Authorities   from   time   to   time 
explaining the delay in commencing/carrying out the reconstruction work, where 
again no allegations are made against Defendant Nos. 1 to 3 as alleged for the first 
time on 25th October 2011.  Mr. Anturkar has therefore submitted that the Plaintiffs 
themselves  have failed to perform their obligations under the said Agreement which 
compelled Defendant Nos. 1 to 3 to terminate the said Agreement. The Plaintiffs 
now cannot be heard to say that they were always   ready and willing to perform 
their   part   of   the   contract   and   that   the   termination   is   bad.     Mr.   Anturkar   has 

submitted that the agreement entered into by Defendant Nos. 1 to 3 with Defendant 
No.4  is  a  bona  fide agreement  and  all  allegations  made  by  the  Plaintiffs  against 
Defendant Nos. 1 to 3 qua the same are denied and disputed by  Defendant Nos. 1 to  
3.
15.
Mr.   Chagla,     Learned   Senior   Advocate   appearing   for   Defendant   No.4,   has 
supported   the   submissions   advanced   on   behalf   of   Defendant   Nos.   1   to   3   by   Mr. 
Anturkar.     He   has   laid   stress   on   the   fact   that   this   Court   by   its   order   dated   1 st 

December 2011, on an application made by the Plaintiffs under Section 9 of the Act, 
allowed   Defendant   Nos.   1   to   3   to   enter   into   a   development   agreement   after 
depositing an amount of Rs. 1.38 crores in Court.  Pursuant  thereto,  the amount of 
Rs. 1.38 crores has been deposited in Court and an Agreement dated 22 nd December 
2011   transferring   the     development   rights   and   assignment   of   leasehold   rights   is 
executed   by     Defendant   Nos.   1   to   3   in   favour   of   Defendant   No.4.     Mr.   Chagla 
submitted that in view thereof, the Plaintiffs cannot question the bonafides   of the  
agreement dated 22nd  December 2011 and further cannot be heard to say that the 
agreement dated 22nd  December 2011 entered into by and between the Defendant 
Nos. 1 to 3 and Defendant No.4, is only a tool attempted to prejudice the rights of  
the   Plaintiffs.     As   regards   the   submission   of   Mr.   Seervai   on   the   share   capital   of 
Defendant   No.4   Company,   Mr.   Chagla   has   submitted   that   Defendant   No.4   is 
controlled and managed by Goshar Ventures Pvt. Ltd. which owns 81 per cent of the 
total paid up and subscribed capital of Defendant No.4.  The  Promoters of the said  
Goshar     Ventures   Pvt.   Ltd.   are   experienced   in   real   estate   development   and   have 

completed various   projects in the vicinity of Matunga, Mumbai. The Directors of 
Defendant No.4 are also running a successful business in the name of K.T. Exports, 
an Associate concern of   Defendant No.4, having annual turnover of Rs. 30 crores 
approx. and are capable of inducting further capital in the Defendant No.4 Company. 
Mr. Chagla has also taken me through the affidavit filed by Mr. Nimesh Sanghrajka 
dated 18th October 2012, wherein the deponent has set out the various steps taken 
by Defendant No.4 qua the suit property   after entering into the agreement dated 

22nd December 2011 with Defendant Nos. 1 to 3. Mr. Chagla has therefore submitted 
16.
that the Plaintiffs are not entitled to any reliefs as prayed for or otherwise. 
I have considered the submissions advanced on behalf of the Plaintiffs and the 
Defendants.    Before dealing with the main issues/defences raised by the Defendants 
as   aforestated,   I   would   first   deal   with   the   submission   of   Mr.   Anturkar   that   the 
Plaintiffs are not entitled to seek any reliefs   against Defendant Nos. 1 to 3 in the 
present suit since the Plaintiffs had earlier taken out proceedings under Section 9 of 
the Act and have withdrawn the said petition and further that the Plaintiffs despite 
being aware of the fact that Defendant Nos. 1 to 3 have sold the suit property to  
Defendant No.4 have not impugned the said transaction in the present suit because 
of which no reliefs can be granted in favour of the Plaintiffs at the interim stage 
and/or at the final stage.
17.
It is true that the Plaintiffs had earlier issued notice to the Defendant Nos. 1 
to 3 and  invoked the arbitration clause (i.e. clause 28 of the said Agreement) and 

called upon Defendant Nos. 1 to 3  to nominate an Arbitrator of their choice. Since 
Defendant Nos. 1 to 3  failed and neglected to comply with the said  communication, 
the Plaintiffs filed Arbitration Application No. 149 of   2012 in this Court and also  
filed an  application under Section 9 of the Act for interim protective reliefs against  
Defendant Nos. 1 to 3.  However, by an order dated 1 st December 2011, the  Learned 
Single  Judge  of   this  Court  (Coram:  S.J.   Vazifdar,  J.)     as  an    ad­interim  measure 
directed Defendant Nos. 1 to 3 to deposit a sum of Rs. 1.38 crores   in this Court, 

prior to Defendant Nos. 1 to 3 entering into any Development Agreement with any 
third party. The Defendant Nos. 1 to 3 thereafter deposited the said sum with the 
Prothonotary   and   Senior   Master   of   this   Court   and   executed   a   Development 
Agreement­cum­Deed of Assignment  of Lease dated 22 nd December 2011 in respect 
of the suit property in favour of Defendant No.4. Since Defendant No.4 was not a 
party to the Arbitration Agreement, the Plaintiffs withdrew the Arbitration Petition 
with liberty to file a suit against Defendant Nos. 1 to 4. This Court by its order dated 
30th July, 2012 allowed the Plaintiffs to withdraw the Arbitration Petition with liberty 
to file a suit against Defendant Nos. 1 to 4.   Pursuant to the said liberty  granted by 
this Court to the Plaintiffs, the Plaintiffs filed the present suit against Defendant Nos. 
1   to   4   seeking   aforestated   reliefs.     I   am   therefore   not   inclined   to   accept   the 
submission   advanced   by   Mr.   Anturkar   that   since   the   Arbitration   Petition   was 
withdrawn by the Plaintiffs, the present suit cannot be filed by the Plaintiffs   and 
interim/final reliefs   cannot be granted in favour of the Plaintiffs.   Hence the said 
submission is rejected.

The next submission of Mr. Anturkar  is that the Plaintiffs  are not entitled to 
18.
any interim and/or final relief on the ground that the Plaintiffs despite being aware 
of   the   fact   that   a   Development   Agreement­cum­Deed   of   Assignment   of   Lease   is 
already executed by and between Defendant Nos. 1 to 3 and Defendant No.4,  have 
not impugned the said transaction in the present suit. This submission  is sought to 
be countered by Mr. Seervai by citing the decision of the   Hon'ble Supreme Court in
Guruswamy Nadar vs. P. Lakshmi Ammal (D) by L.Rs and others 1.  Mr. Seervai, relying 

on paragraph 3 of the said decision, seems to suggest that the principle of Section 52  
of   the   Transfer   of   Property   Act   applies   in   the   instant   case   inasmuch   as   the 
subsequent transaction with Defendant No.4 was entered into during the pendency 
of a legal proceeding, namely, arbitration between the Plaintiffs and Defendant Nos. 
1 to 3  and therefore, the property cannot be transferred or otherwise dealt with so 
as to affect the Plaintiffs rights under a decree or order that may be made in the 
present suit.  It  is doubtful whether Section 52 of the Transfer of Property Act can be 
invoked   in   this   case   as   suggested   by   Mr.   Seervai.     Firstly,   Section   52   has   been  
amended by Bombay Act 4 of 1939 so as to require a notice of pendency  of any suit  
or proceeding to be  registered under Section 18 of the Indian Registration Act, 1908 
before   the   consequences   provided   for   under   Section   52   can   apply   in   respect   of 
immovable properties situated in Greater Mumbai.  Therefore, pendency of a suit or 
legal   proceedings   simplicitor   does   not   entail   consequences   under   Section   52   in 
respect of immovable properties    in Greater Mumbai, but there must further be a 
registered  Lis pendens.     Plaintiff has not made out any case of registration of such 
1 AIR 2008 SC 2560
23 of 40

Lis   Pendens.       Secondly, the principle of Section 52 applies qua a decree or order  
that   may   be   passed   in   a   suit   or   proceeding   during   the   pendency   of   which     the 
subsequent  transfer takes place. The Plaintiff in this case seeks the benefit of Section 
52 qua a decree or order that may be passed not in the pending arbitration but in a  
suit   subsequently filed by him after giving up the arbitration proceedings. Prima 
facie, therefore, the submission of Mr. Seervai on the principle of Section 52 does not 
appear   to   be   correct.     I   am,   however,   not   convinced   with   the   argument   of   Mr. 

Anturkar that the Plaintiffs had to impugn the Development Agreement­cum­Deed of 
Assignment of Lease between Defendant Nos. 1 to 3 and Defendant No.4 before he 
could claim any relief in this suit against Defendant No.4.  Under Section 19 of the 
Specific   Relief   Act,   a   Plaintiff   promisee     entitled   to   specific   performance     of   his 
agreement  can  claim  the  same  against  a  transferee  of   the  promisor  and  for   that 
purpose need not challenge the transfer between the promisor and his transferee. 
Prima facie  therefore the Plaintiffs are entitled to the relief of specific performance 
against the Defendant No.4 transferee if they otherwise make out the case on merits. 
In the present suit, presumably on that footing the relief for specific performance 
including possession is claimed against all the Defendants including Defendant No.4. 
19.
  I   shall   now   deal   with   the   main   issues/defences   raised   by   Mr.   Anturkar 
recorded hereinabove.  The first main issue which needs to be determined is whether 
the said Agreement entered into by and between Defendant Nos. 1 to 3 and the 
Plaintiffs can be specifically enforced.  The relevant clauses setting out the terms and 
conditions of the said Agreement are already set out hereinabove.   It is clear from 

(the Plaintiffs herein) under the said Agreement agreed as follows:
the same that the Vendors (i.e. Defendant Nos. 1 to 3 herein) and the Developers 
  Under Clause 1, the Vendors have jointly and severely entrusted, given and 
granted full development rights to the Developers and have given them the right to 
enter upon the suit property and develop the same in all respects and in all manner 
by   demolishing   the   existing   building   and   constructing   thereon   new   buildings   by 
Under   Clause   2   (a),   the   Vendors   and   the   Developers   have   agreed   that   in 

utilizing the FSI as contemplated in the said Agreement;
consideration of  the Vendors entrusting  development  rights  in respect  of  the  suit 
property   to   the   Developers,   the   Developers   shall   provide   to   the   Vendors   the 
following:
(a)
The   Vendors     have   already   been   paid   an   amount   of   Rs.   99   lakhs   by   the 
Developer   on   or   before   the   execution     of   the   said   Agreement     and   the   balance  
consideration of Rs. 12 lakhs shall be paid by the  Developers to the Vendors  on or 
before 13th October 2007.  
(b)
The   Developers   shall   in   lieu   of   the   residential   premises     presently   in 
occupation of the Vendors provide free of costs to the Vendors, permanent alternate 
residential accommodation on ownership basis free of cost admeasuring 2000 sq.ft. 
(carpet area) in the proposed new building, along with two stilt parking areas and 
one open area parking space in the compound of the said new building. 
(c )         In   lieu of the Vendors vacating  the existing office/commercial premises 

presently   occupied   by   them   in   the   said   building   and   handing   over   vacant   and 
peaceful  possession     of   the   same  to   the  Developers,  the  Developers  shall   further 
provide free of costs to the Vendors 800 sq.feet (carpet area) in the proposed new 
building as permanent alternative office accommodation on ownership basis.    
(d)    The Developers shall also pay an amount of Rs. 27 lakhs to the Vendors as non­
refundable amount towards rent/license fee payable or to be incurred by the Vendors 
for   the   temporary   alternate     accommodation   which   the   Vendors   would   procure 
(e)

during the period of construction and development of the suit property. 
In the event of additional FSI being made available i.e. in excess of 2.5 in 
respect of the suit property, the same would be divided between the Vendors and the 
Developers equally. 
20.3
Under  Clause 3, the Developers agreed  with the Vendors that the Developers 
shall allot  residential premises free of cost and on ownership basis to all the existing 
tenants/occupants   who   have   been   in   possession   and   occupation   of   various 
tenements in the said building and who shall hand over their respective tenements to 
the Developers and execute necessary/requisite agreements with the Developers,. 
20.4
Under   Clause   4   it   was   agreed   that   the   Developers   shall   proceed   with   the 
development work on the suit property upon execution of the said Agreement. 
20.5
Under Clause 5 it was provided that the Vendors have made out a free, clear 
and marketable title to the suit property, free from all encumbrances, subject to the 

lease in respect of the plot and subject to the existing tenants/occupants  and shall at 
their own costs clear all defects in title, if any. The said clause further provides that 
the Developers agree and confirm that they have already verified the Vendors title to 
the suit property as clear and marketable. 
20.6
Under Clause 6 (a) it was provided that the  Developers shall negotiate with 
the  tenants/occupants  occupying  various  tenements in  the  said  building  and  join 
them   in   the     proposed   re­development   scheme   either   by   offering   permanent 

alternate accommodation on ownership basis or obtaining surrender from them of 
their  respective tenancy  rights  in respect  of  the premises in their possession  and 
occupation,  on such terms and conditions as found fit and proper by the Developers. 
The Developers shall also be entitled to effect transfer of tenancy in respect of any of 
the   premises   occupied   by   the   tenants/occupants   and   only   give   intimation   about 
such transfers/surrender of tenancy to the Vendors.  
20.7
Under Clause  7 of the  said  Agreement, it is agreed  that  the Vendors shall 
continue to pay all the dues such as property taxes, N.A. assessment,  cesses, water 
charges, electricity charges, etc. till the date they hand over vacant and peaceful 
possession of the suit property including buildings/structures standing thereon to the 
Developers. 
20.8
Under Clause 10 it is agreed that the present building on the suit property 
shall be demolished by the Developers and the old materials such as M.S. Beam, 

Joys, Cuddapah,A.C. Sheets, Doors and Windows, Mangalore tiles and whatsoever 
material from old building/structures on the suit property, will be the property of the 
Developers and the Developers shall be entitled to dispose of  the same as they may 
deem   fit   and   proper   without   in   any   manner   being   accountable   or   liable   to   the 
Vendors or to the tenants/occupants. 
20.9            Under Clause 12 (a) it is agreed that the Vendors shall not in any way 
obstruct construction and/or development work to be carried out by the Developers 

and shall not do or omit to do any act, matter or thing whereby the Developers will 
be prevented from carrying out the development work under the Agreement.  
20.10     Under Clause 13 (e), the Vendors have agreed that they shall not transfer, 
agree   to   transfer   accept   surrender   of   any   tenancy   rights   from   any   of   the 
tenants/occupants of the said building/property from the date of the said Agreement 
and the same shall be done only by the Developers with written intimation in that 
behalf to the Vendors or any of them.
20.11               Under   Clause   13   (g),   it   is   agreed   that   the   Vendors   shall   execute 
conveyance /Deed of Transfer in respect of the said property (i.e. the plot of land 
with buildings thereon) to and in favour of the proposed Society/Condominium of 
holders of various units/premises.  
20.12  
In Clause 15 it was  agreed between the parties that the possession of 
the suit property will be handed over to the Developers within 30 days upon receipt 

of IOD from MCGM to enable the Developers to take charge of the same and to 
commence   the   development   work   and   the   possession   of   the   tenanted   premises 
occupied by the tenants shall be taken by the Developers directly from the tenants. 
20.13        Under Clause 16 (d) of the said   Agreement, the Vendors have given the  
right to the Developers to deal with and/or dispose of units/premises in the new 
buildings to be constructed on the suit property on ownership basis or otherwise at 

such price as the Developers may deem fit and proper from time to time at their risk 
and costs. 
20.14          Under  Clause  17,  the  Vendors  had   agreed   that  they  shall  render    all 
assistance, co­operation and sign and execute or caused to be signed and executed 
all   applications,   plans,   authorities   and   other   writings   as   may   be   necessary   or 
required to enable the Developers to develop and complete the development of the 
suit property and that the Developer shall incur the necessary expenditure for the 
same.     The   Vendors   further   agreed   not   to   interfere   with   the   construction   work, 
elevation   of   the   proposed   new   wing/building,   colour   scheme,   amenities   etc. 
proposed to be provided by the Developers in the new wing/building.

20.15   
Under Clause 20 it is agreed between the parties that if for any reason 
the building plan could not be sanctioned and/or approved by the MCGM, then in 
that event the said Agreement shall not come to an end  or terminated.  The Vendors 
shall be entitled  to retain the entire amount paid under the said Agreement to them 

by   the   Developers   as   also   the   possession   of   the   premises   in   their 
possession/occupation, if not handed over to the Developers and the development 
rights granted under the said Agreement shall vest with the Developers for ever. 
20.16  
Under Clause 21 it was provided that the Vendors shall not create any 
tenancy in respect of the suit property or any part thereof, after execution of the said 

20.17  
Agreement.  
Under Clause 22, it is agreed that simultaneously with the execution of 
the said Agreement, the Vendors shall also execute an Irrevocable Power of Attorney 
in favour of the Developers or their nominees as may be desired by the Developers 
for the purpose of signing and/or executing all the applications, proceedings,  plans, 
etc. to obtain   necessary approval from various authorities in connection with the 
further   development   of   the   suit   property,   to   be   submitted   by   the   Developers   on 
behalf of the Vendors to the Competent Authority under the Urban Land (Ceiling and 
Regulations) Act, 1976, Mumbai Municipal Corporation, Town Planning Authority or 
any other Government or semi­government authorities and that the POA shall inter 
alia include power to execute/enter into agreements with tenants/occupants, seek 
surrender     of   their   tenancies   and/or   other   rights,   sign   and   execute   the   transfer 
deed/conveyance/assignment to and in favour of the Society/Condominium as well 
as   registration   thereof.     It   was   agreed   that   the   Vendors   shall   not   under   any 
circumstances revoke the said POA.  However, upon completion  of the entire project 
and sale and allotment of the last flat/unit/office and execution of conveyance in 

Society Ltd.  the said POA shall automatically come to an end. 
favour of the proposed Society/Condominium viz. Padmalaya Co­operative Housing 
20.18            From  the date  of  execution  of  the said Agreement, the Vendors have  
simultaneously executed in favour of the Plaintiffs the said   POA whereunder the 
Plaintiffs­Developers are given all the rights as agreed under   the said Agreement, 
including the right to execute/enter into agreements with tenants/occupants, seek 
surrender   of   the   tenancies   and/or   other   rights,   the   right   to   sell   all   the 

flats/units/tenements/offices on ownership basis and keep the sale proceeds without 
giving   any   accounts   to   the   Vendors   and   to   also   sign   and   execute   transfer   deed, 
conveyance or assignment to and in favour of the Society/Condominium as well as 
its registration thereof. 
21.
From   the   aforesaid   terms   of   the   said   Agreement   and   power   given   by   the 
Vendors   to   the   Developers,   I   am   prima   facie   of   the   view   that   though   the   said 
Agreement is termed as a Development Agreement, it is an agreement whereunder 
interest is created in favour of the Developers in respect of the suit property which 
includes the structures   thereon. As can be seen from the above, all the rights to  
develop   the   property   have   been   given   by   the   Vendors   to   the   Developers.     The 
Vendors have already received   the monetary consideration as set out in the said 
Agreement from the Developers. Except for the premises agreed to  be given to the 
Vendors by the Developers in lieu of the premises used and occupied by them in the  
said building, the Vendors have given all the rights to the Developers to deal with the 
tenants   in   the   manner   they   desire   and   after   providing   them   with   alternate 

accommodation   in   the   newly   constructed   building   or   elsewhere   or   giving   them 
monetary consideration in lieu of their tenements, the Developer   is given full and 
complete   right   to   sell   the   flats/units/shops   etc.   on   ownership   basis   without   any 
interference from the Vendors.  The right to decide the elevation of the building, the 
colour scheme, etc. is also given to the Developers by the Vendors. The Vendors have  
also   agreed   that   they   shall   execute     the   Conveyance   Deed/Deed   of   Transfer   in 
respect of the said property (i.e. the plot of land with buildings thereon) to and in 

favour of the proposed Society/Condominium of holders of various units/premises. 
The   Vendors   have   in   the   said   Agreement   itself   provided   that   they   will   be 
simultaneously executing  a POA, inter alia, giving  the right to the   Developer  to 
construct a new building, accommodate the Vendors and the tenants as agreed and 
most important to sign and execute the transfer deed/conveyance/assignment   to 
and in favour of the Society/Condominium as well as effect its registration.   In the 
circumstances   I am prima facie satisfied that the said Development Agreement is 
capable of being specifically enforced.  I am fortified  in my view by the decision of 
the Hon'ble Division Bench of this Court in Chheda Housing Development Corporation  
vs. Bibijan Shaikh Farid and others1.
22.
Despite being of the prima facie view that the said Agreement is capable of 
being specifically enforced, the next question   that arises before this Court at the 
interim stage is whether the conduct of the Plaintiffs entitles them to seek specific 
performance of the said Agreement and interim reliefs in this regard.  Under clause 6 
1 2007 (3) Mh.L.J. 402

(a)   of   the   said   Agreement,   the   Developers   were   required   to   negotiate     with   the 
tenants/occupants  occupying     various  tenements  in  the said  building   and   to   join 
them   in   the   proposed   redevelopment,     either   by   offering   permanent   alternate 
accommodation   on   ownership     basis   or     obtaining   surrender   from   them   of   the 
respective   tenancy   rights   in   respect   of   the   premises   in   their   possession   and 
occupation on such terms and conditions as may be found fit and proper by the 
Developers.       For   this   purpose,   the   Developers   were   to   execute   necessary 

writings/agreements   with   the   existing   tenant/occupants   at   their   own   cost   and 
expense as provided in clause 9  of the said Agreement.  Under clause 11 of the said 
Agreement,  the  Developers had agreed to immediately  commence the development 
work at their own costs and risk on the said property and make best endeavour to 
obtain   commencement   certificate   within   six   months   from   the   date   of   obtaining 
vacant   and   peaceful   possession   of   the   entire   property   which   could   be   mutually 
extended and complete the same within a period of 30 months from the date of 
obtaining commencement certificate from the MCGM, time being the essence of the 
contract.   The Developers also agreed to endeavour to obtain occupation certificate  
from   the   MCGM   within   a   period   of   30   months   from   the   date   of   obtaining   the 
commencement certificate. However, from the documents annexed to the Plaint by 
the  Plaintiffs­Developers, it is clear that though the  Plaintiffs obtained a quotation 
from   Zed   Geotechnics   &   Const.,   for   geological   investigation   work   on   the   suit 
property and also appointed an Architect on 10 th August, 2007, they have not made 
any     progress   thereafter.   After   approximately   two   years   from   the   date   of   the 
execution  of  the said  Agreement,  the Plaintiffs appointed  a Consulting  Structural 

Engineer   for   the   proposed   redevelopment   of   the   suit   property.   The   first   letter 
addressed  by the Plaintiffs to  the tenants and annexed  to the Plaint is dated  2 nd 
November 2008 i.e. after more than a year from the date of execution of the said 
Agreement. The second letter  addressed by the Plaintiffs to the tenants is dated  24 th 
November 2008 wherein the Plaintiffs have recorded that the points raised by the 
tenants  need further discussion across the table. However, it was also recorded that 
the Plaintiffs were not available upto 15 th December 2008 and will keep the tenants 

informed about the future date for the said discussion to be held at a convenient 
time and place.   The Plaintiffs have suggested to the tenants that in the meantime 
they should consider giving a NOC for MHADA  formalities which is revocable at any 
point of time till a   final registered agreement is arrived at between the parties. A  
copy of the draft consent letter   to be issued by the tenants to the Chief Officer, 
Mumbai Building, Repairs and Reconstruction Board (MBRRB) is annexed at page 75 
of the plaint.  The same is titled “Occupants irrevocable consent” . In paragraph 2 of 
the said consent letter it is provided that the Developer shall construct self­contained 
tenements   in   the   new   building   proposed   to     be   constructed   by   demolishing   the 
existing building and shall allot  “the tenant  carpet area of ____ sq.ft.” in the new 
building.  Without any agreement entered into between the tenants/occupants with 
the   Plaintiffs­Developers,   it   would   be   impossible   for   the   tenants   to   give   their 
irrevocable consent to the  MBRRB  as suggested by the Plaintiffs.  Though a plan is 
annexed at page 76 and at page 77 of the Plaint, certain   general conditions have 
been set out and the signatures of the occupants/tenants are obtained, there is no 
further   correspondence   entered   into   by   and   between   the   Plaintiff   and   the 

occupants/tenants. The Plaintiffs have not produced a single letter addressed to the 
occupants/tenants   inter   alia   recording   that     the   tenants   are   allegedly   not   co­
operating   with   the   Plaintiffs.   In   one   of   the   letters   dated   17 th  December   2010 
addressed to the Income­tax Officer, the Plaintiffs have recorded that  no progress is 
made     in   the   matter   in   the   last   three   years   i.e.   3   years   after   executing   the  
development agreement with  Defendant Nos. 1 to  3  because  of  non­co­operation 
from the “remaining tenants”.  In the subsequent letters dated  17 th December 2010 

addressed to the Income Tax Officer 17 (2) (3) and 17 (2) (4), the Plaintiffs have 
recorded the cause for the delay in taking any steps in the matter. The Plaintiffs have  
not mentioned anything regarding non­co­operation by the Defendant Nos. 1 to 3 
but have stated that as the agreement is towards the sale  of development rights and 
as the said property is tenanted, it shall be possible  to redevelop once the following  
conditions are complied with:
➢
Written   consent   from   all   the   existing   tenants   towards   re­development     is  
obtained;
➢
➢
No   Objection   Certificate   (NOC)   from   Maharashtra   Housing   &   Area  
Development Authority  (MHADA) to be obtained subject to their conditions 
being complied with. 
Approvals & NOC's from various government offices to be obtained  subject to 
their conditions being fulfilled for the purpose of re­development. 
In fact, the main reason attributed by the Plaintiffs for   the non­commencement of 
the development work  is as under:
“Since this Development Agreement was entered into three years ago,  
after which there has been an extremely slow or no progress mainly  
due to the global melt down in 2008 and also non­clarity from the  
government   on   the   redevelopment   of   the   Cess   Category   Building  

23.
followed  by the    negotiation   with the tenants &  ambiguity  on   the  
grounds of extra area being offered by way of increase in the Floor  
Space Index (FSI.)'
From the aforesaid facts it is clear that the Plaintiffs except for exchanging 
some correspondence in the year 2009 with the occupants/tenants, have not taken 
up the matter with the tenants/occupants any further. The Plaintiffs have not taken 
any steps whatsoever under the said Agreement. In view thereof, the Defendant Nos. 

1 to 3 by their letter dated 4 th  October 2011, after recording the failure on the part 
of the Plaintiffs to take any steps whatsoever upon execution of the said Agreement, 
terminated the said  Agreement.  In response, the Plaintiffs by their letter dated 25 th 
October 2011 i.e. 4 years after the  execution of the said Agreement for the first time 
alleged as follows:
“However, since the signing of the Agreement till date, you have  
only been disrupting   and obstructing all efforts of our clients to  
proceed   with   the   redevelopment   work   and   have   not   co­operated  
with our clients to get the necessary plans and documents approved  
from the MCGM to commence the said re­development work. Thus,  
there   is   failure   on   your   part   to   perform     a   promise     which   is  
required   to   be   performed   prior   to   seeking   performance   of   any  
reciprocal   promises   by   you   from   our   clients.   Therefore,   you   are  
liable  to our clients to compensate them for all the financial losses  
and damages incurred by them due to the delay and obstructions  
so   caused   by   you   and   failure/breach   to   perform   your   prior  
obligations. Moreover, due to your direct and indirect instigations  
and wrongful representations, various tenants of the building have  
been caused by you not to enter into necessary agreements and/or  
are   apprehensive   in   handing   over   the   vacant   and   peaceful  
possession   of   their   respective   tenements   to   our   clients.   This   has  
further hampered the efforts in our clients to obtain the necessary  
permissions/IOD from the MCGM for the said redevelopment of the  
said property.”

The above allegations against Defendant Nos. 1 to 3  by the Plaintiffs are clearly an  
afterthought. The Plaintiffs have not written a single letter to Defendant Nos. 1 to 3 
making any such allegations during the period of 4 years i.e. between the date of the  
said Agreement   dated 25 th  September 2007 and 25 th  October 2011.   Even in the 
letters addressed to the Income tax Authorities the Plaintiffs have never alleged that 
they are unable to proceed with the development work  since Defendant Nos. 1 to 3 

are disrupting  or obstructing their efforts to proceed with the redevelopment work. 
In view thereof, I am prima facie satisfied that the allegations made by the Plaintiffs 
against Defendant Nos. 1 to 3 in the letter dated 25 th  October 2011 and in the plaint 
to the effect that Defendant Nos. 1 to 3 are instigating the tenants and are disrupting 
and obstructing the efforts  of the Plaintiffs to proceed with the redevelopment work 
is false and incorrect to the knowledge of the Plaintiffs.
The grievance made by Mr. Seervai qua the letter dated 9 th September, 2009 
24.
written by Defendant Nos. 1 to 3 to the Plaintiffs informing them that the Urban  
Development Department has issued G.R. whereby the FSI for redevelopment  of  old 
cessed building  under D.C. Regulation 33 (7) of D.C. Regulation, 1991 is increased 
from   2.5   to   3   and   therefore   they   would   be   interested   in   having     the  excess   FSI 
proportionately added to their constructed area in addition to the area agreed to be  
given to Defendant Nos. 1 to 3, does not assist the Plaintiffs in any way since by the 
said letter the Defendant Nos. 1 to 3 have only expressed their interest in the excess 
FSI and have not   placed   any conditions in their said letter.   In fact, the Plaintiffs 

have ignored the letter and not responded to the same,  after which the Defendants 
25.
have also not pursued the matter any further. 
The submission of Mr. Seervai on behalf of the Plaintiffs that the agreement 
executed by and between Defendant Nos. 1 to 3   and Defendant No.4 dated 25 th 
September 2007 is not   bona fide and strong reliance placed on the fact that   the 
share capital of Defendant No.4 is only Rs. One lakh,  also renders no assistance to 

the  Plaintiffs.  The Defendant Nos. 1  to 3 were allowed by an order of this Court 
dated 1st December, 2011  to enter into any development agreement in respect of the 
suit property with any third party after depositing a sum of Rs. 1.38 crores in Court. 
Pursuant thereto, Defendant Nos. 1 to 3   have deposited  an amount of Rs. 1.38 
crores   in   Court   and   have   entered   into   a     Development   Agreement­cum­Deed   of 
Assignment   of   Lease   dated   22nd  December   2011   with   Defendant   No.4.     In   view 
thereof, the question of the agreement dated 22 nd December 2011 not being a bona 
fide  agreement for  the  reasons alleged   is  baseless and  untenable.  As  regards the 
share capital of Rs. One lakh, Defendant No.4 have in their affidavit explained that 
Defendant No. 4   is controlled and managed by Goshar Ventures Pvt. Ltd. which 
owns 81 per cent of the total paid up and subscribed share capital of the Defendant 
No.4. The Promoters of the said Goshar Ventures   Pvt. Ltd. are experienced in real 
estate development and have completed various projects in the vicinity of Matunga, 
Mumbai.   It is further explained that Directors of Defendant No.4  are also running a 
successful business in the name of K.T. Exports, an associate concern of Defendant 
No. 4,  having an annual turnover of Rs. 30 crores approximately and are capable of 

inducting further capital in the Defendant No.4 Company. As set out in the affidavit 
of Defendant No.4, Defendant No.4 by its letter dated  13 th March, 2012, applied to 
the MBRRB inter alia seeking permission to approach the MCGM for taking further 
steps to develop the suit property and that MBRRB by its Letter of Intent dated  10 th 
April 2012 inter alia permitted Defendant No.4 to approach MCGM for development 
of the property.  Defendant No.4 is in the process of submitting plans to MCGM and 
is   also   negotiating   with   the   tenants/occupants.     Defendant   No.4   has   also   in   its 

affidavit stated that since August 2012 the Defendant No.4 has also started  taking 
bookings   for   flats   that   will   be   available   for   sale,     after   making   the   necessary 
provisions   for   permanent   alternative   accommodation   for   the   existing 
tenants/occupants   in  the   proposed   new   building   to     be   constructed     on   the   suit 
property. 
26.
From the aforesaid facts it is clear that the Plaintiffs after entering into the 
said Agreement have not taken any steps for more than 4 years which the Plaintiffs  
were required to take under the said Agreement. The Plaintiffs failed to work out an 
agreement with any of the tenants/occupants of the said building as agreed in the 
said Agreement and as set out hereinabove. After 4 years,   for the first time   the 
Plaintiffs have tried to blame the Defendant Nos. 1 to 3 for the same. The Plaintiffs  
are not entitled to rely on para 20 of the said Agreement which if at all is applicable  
in law, would be only if the building plans are not sanctioned and/or approved by 
MCGM.   In the instant case, the Plaintiffs have not even submitted any plans to 
MCGM. In  view thereof, the Plaintiffs  have failed  and neglected to carry out their  

obligations under the said Agreement and are therefore not entitled to seek reliefs 
under the Specific Relief Act qua the suit property.   The balance of convenience is 
also in favour of the Defendants.   In view thereof, the question of granting   any 
reliefs in favour of the Plaintiffs and against the Defendants does not arise.   The 
Notice of  Motion is therefore dismissed. 
(S. J. KATHAWALLA, J.)

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