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IN THE HIGH COURT AT CALCUTTA
TAPABRATA CHAKRABORTY, PARTHA SARATHI CHATTERJEE, JJ.
Shyamal Kumar Roy - Appellant
Versus
Sushil Kumar Agarwal - Respondent
FA. No. 131 of 2017
Decided On : 15-02-2023
SPECIFIC PERFORMANCE OF CONTRACT - DEVELOPER AND OWNER - ARBITRATION CLAUSE - LIMITATION - ORDER 2 RULE 2 CPC - SECTION 14(3)(C) SPECIFIC RELIEF ACT, 1963 - CONDUCT OF PARTIES - EQUITABLE DISCRETION - The court held that the suit for specific performance of contract was not barred by the arbitration clause, limitation, Order 2 Rule 2 CPC, or Section 14(3)(c) of the Specific Relief Act, 1963. The court considered the conduct of the parties and exercised its equitable discretion in favor of the developer.
Fact of the Case:
The plaintiff/developer entered into a development agreement with the defendant/owner for the construction of a four-storied building. The agreement contained an arbitration clause and provided that the developer would complete the construction within 12 months from the date of obtaining and delivering the sanctioned plan and vacating and delivering possession of the premises. The owner submitted modified plans on repetitive occasions and submitted the plan for getting sanctioned five times before the competent authority. The sanctioned plan was handed over to the developer on 22.9.1995, and possession of the premises was handed over after Diwali of that year. The developer started construction diligently and completed the construction of the ground and first floor of the building and handed over possession to the owner. The owner, after taking possession of his allocation, started creating disturbance in the way to early completion of the rest of the construction, i.e., the developer's allocation. The owner off and on put a padlock on the storeroom and denied access of the plaintiff and his workers to the suit premises. The developer was prevented from entering the premises and from storing building materials. The owner terminated the contract on 18.10.1996. The developer filed a suit for specific performance of the contract.
Finding of the Court:
The court held that the owner had waived the arbitration clause by not filing an application for reference to arbitration before filing his written statement. The court also held that the suit was not barred by limitation as the period of limitation began to run from the date of repudiation of the contract by the owner, which was 18.10.1996. The court further held that the suit was not barred by Order 2 Rule 2 CPC as the first suit was withdrawn with liberty to file afresh on the self-same cause of action. The court also held that the suit was not barred by Section 14(3)(c) of the Specific Relief Act, 1963, as the agreement created a share and/or interest in favor of the developer. The court considered the conduct of the parties and exercised its equitable discretion in favor of the developer.
Issues: 1. Whether the suit is barred in view of the arbitration clause embodied in the agreement? 2. Whether the subsequent suit is barred in view of the provisions of Order 2 Rule 2 of CPC? 3. Whether the suit is barred by limitation? 4. Whether the suit is barred in view of Section 14(3)(c) of Specific Relief Act, 1963? 5. Whether in the given facts and circumstances, the learned court below has erred in decreeing the suit?
Ratio Decidendi: 1. The owner waived the arbitration clause by not filing an application for reference to arbitration before filing his written statement. 2. The suit was not barred by limitation as the period of limitation began to run from the date of repudiation of the contract by the owner, which was 18.10.1996. 3. The suit was not barred by Order 2 Rule 2 CPC as the first suit was withdrawn with liberty to file afresh on the self-same cause of action. 4. The suit was not barred by Section 14(3)(c) of the Specific Relief Act, 1963, as the agreement created a share and/or interest in favor of the developer. 5. The court exercised its equitable discretion in favor of the developer considering the conduct of the parties.
Final Decision: The appeal was dismissed, and the judgment and decree impugned were affirmed.
JUDGMENT
Partha Sarathi Chatterjee, J.
Preface :
1. The present appeal preferred at the instance of defendant/appellant is directed against the judgment and decree dated 15th June, 2016 passed by the learned Civil Judge (Senior Division), Second Court at Barasat, 24 parganas (North) in Title Suit no. 04 of 1999 whereby the suit for specific performance of contract and permanent injunction instituted by the developer against the owner was decreed.
Plaintiff/Respondent’s Case :
2. Facts epitomized in the plaint presented by the plaintiff/respondent/developer (in short, developer), in brief, are as follows :
ii. It was expressly agreed and/or understood that with effect from the date of execution of agreement and at all times during subsistence of the agreement, the developer shall have full and free and unfettered access into and out of the said premises;
iii. Developer shall pay Rs.7 (seven) lakhs to the owner as monetary consideration, out of which Rs.3,31,000/- was to be paid on the date of execution, Rs.51,000/- at time of handing over the sanctioned plan and rest Rs.3,18,000/- would be paid simultaneously with the delivery of possession by the developer to his nominee/nominees and/or purchaser, as the case may be, without payment of the said sum to the owner;
iv. Developer covenanted that construction shall be completed and he shall make the same tenantable and shall hand over possession within 12 months from the date of obtaining and delivering sanctioned plan and vacating and delivering possession of the premises;
v. It was agreed by and between the parties that owner shall get ground floor with one car parking space and the first floor as his allocation whereas developer’s allocation would be second and third floor of the building;
vi. It was claimed therein that plaintiff-developer paid Rs.3,31,000/- on the date of execution of agreement and then, from time to time he paid Rs.4,50,000/- to the owner till date;
vii. That the defendant being the owner submitted modified plan on repetitive occasions and submitted plan for getting sanctioned five times i.e. on 13.2.1995, 5.3.1995, 29.3.95, 11.4.95 and 22.5.95 before the competent authority and lastly, on 22.9.1995, sanctioned plan was handed over to the plaintiff and possession of the premises was handed over after Diwali of that year. In the result, there had been a delay of more than two months;
viii. That the developer started construction diligently and in the month of January, 1996 he completed construction of ground and first floor of the building and even handed over possession to the owner;
ix. That taking possession of ground and first floor, i.e. his own allocation, owner started creating disturbance in the way to early completion of the rest construction i.e. developer’s allocation. The owner off and on put padlock on the storeroom and denied access of the plaintiff and his workers to the suit premises. Lastly on 24.10.96, the developer was prevented from entering the premises and from storing building materi
The main legal point established in the judgment is the conditions for granting specific performance of a development agreement, including the need for a substantial interest in the performance of th....
Point of Law : An agreement for sale of immovable property purchaser can no longer take shelter under the principle that time is not of essence in performance of contracts relating to immovable prope....
The court's decision was influenced by the lack of good faith, absence of notice, and delay in filing the suit, which disentitled the plaintiff to specific performance.
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