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BOMBAY HIGH COURT
D.YChandachud and M.S. Sonak, JJ.
Shantilal J. Shah and Ors. —Appellants
versus
Jitendra Singhavi and Ors. —Respondents
Appeal No. 82 of 2013 in Notice of Motion No. 2055 of 2012 in Suit No. 1963 of 2012 with Notice of Motion No. 326 of 2013
Decided on 23.9.2013
Counsels for the Parties:
For the Appellants: Ravi Kadam, Sr. Counsel with Chetan Kapadia, Tejash Shah and
Ashish Rao i/b M&M Legal Ventures
For the Respondent Nos. 1 to 3: A.Y. Anturkar with Tanaji Matugade i/b S.B.Deshmukh
For the Respondent No.4: I M. Chagla, Sr. Counsel with Gaurav Mehta, Darsban Mehta, Naresh Chheda i/b Dhruve Liladhar & Co.
IMPORTANT POINT
Court would not grant injunctive relief merely because prima facie case is made out.
Headnote:(A) Specific Relief Act, 1963—Sections 16(c) and 37—Specific performance of contract—Court declined to grant interim relief finding that no prima-facie case has been made out since Appellants have failed to comply with their obligations under agreement for a period of more than four years by failing to negotiate with tenants or even to submit building plans to Municipal Corporation—Even if Appellants were held to have made out a prima facie case, it would manifestly not be proper for Court to grant injunctive relief—Suit for specific performance is in nature of equitable remedy and Court would not grant injunctive relief merely because prima facie case is made out—Balance of convenience is against grant of relief—Grant of any injunctive relief was not warranted in view of clear failure on part of Appellants to fulfill their obligations under agreement—In appeal which arises from order of Single Judge on Motion, High Court as a court of appeal would be slow to interfere with exercise of discretion unless in a given case, Court comes to conclusion that exercise of discretion is perverse or contrary to law—Appeal dismissed. (Paras 8, 12, 15 and 17)
(B) Contract Act, 1872—Section 202—Interest of agent—Specific performance of contract— Before Section 202 can be invoked, agent must have interest in property—Agreement for development which was entered into between parties does not create any interest of agent in property—Power which is conferred upon developer to negotiate or settle with tenants and to obtain surrender of tenancy rights was to effectuate and facilitate redevelopment of property and would not by itself create prima facie an interest in property—It is not possible to come to conclusion that Appellants were conferred with an interest in property under terms of development agreement. (Para 16)
Result: Appeal dismissed.
D.Y. Chandrachud, J.— The Appeal arises from an order of a learned Single Judge declining relief in a Motion which was taken out by the Appellants in a suit for specific performance. The Plaintiffs are in Appeal.
2. Respondents 1 to 3 are the owners of a property known as Padmavati Sadan at Matunga, Mumbai. An agreement was entered into between the Appellants and Respondents 1 to 3 for development of the property on 25 September 2007. The agreement records that the building is a cessed building in the occupation of tenants/occupants and is in a dilapidated condition requiring heavy repairs and/or reconstruction or redevelopment. By the agreement, the owners conferred upon the Appellants full development rights. The total consideration for the agreement was Rs.1.38 Crores in addition to which, as stipulated in Clause 2(b) and Clause 2(c) of the agreement, the owners were entitled to ownership rights in a carpet area ad-measuring 2000 sq.ft. of residential accommodation and of 800 sq.ft. for commercial use in the building which was to be constructed by the Appellants. Under Clause 6, the Appellants were to negotiate with the tenants/occupants by offering them permanent alternate accommodation on ownership basis or by a surrender of tenancy rights. The Appellants were to be entitled to effect a transfer of tenancy rights from the tenants/occupants. Clause 11 of the Agreement provided as follows:
“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 endeavor 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.”
Clause 20 provided as follows:
“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.”
Under Clause 22, an Irrevocable General Power of Attorney was to be executed by Respondents 1 to 3 in favour of the Appellants.
Clause 2(e) stipulated that the consideration of Rs.1.38 Crores was not to be refunded by the owners to the developers even if the developers do not complete or develop the property for any reason whatsoever.
3. In pursuance of the agreement, an amount of Rs.1.38 Crores was paid by the Appellants. An irrevocable power of attorney was executed by the owners in favour of the Appellants.
4. Admittedly, the Appellants neither entered into any settlement with the tenants or occupants, nor did they commence construction upon the property. As a matter of fact, it is also not in dispute that the Appellants did not submit any building plans to the Municipal Corporation for sanction. In a letter dated 17 December 2010 addressed to the Income Tax Officer, the Appellants referred to the fact that there was “an extremely slow progress” or “no progress” in the implementation of the Development Agreement for the following reasons:
“Since this Development Agreement was ent
