Headnote:(i) Civil Procedure Code, 1908 -Order 39 Rule 1-Injunction-Grant of-Main firm purchased land with intention to develop and sell same-S group had 66 and ‘J’ group 34 share-Sub-firm entered into sub-partnership ‘J’ group and ‘L’ group had 1 : 1 (17 : 17 ) share-In ‘L’ group ‘M’ had 38 share out of 17 -Main firm applied for sanction of layout plan -Sanctioned-Dissolution of main firm-‘J’ group got six plots and ‘S’ group six plots-Builder obtained three separate agreements-One from, ‘S’-One from J and one from ‘L’-Last one stating that ‘M”s heirs given up their share-First respondent ignoring fractional share of ‘M’ entered into agreement for entire share stating therein that ‘M’s heirs released their share-Release dead by plaintiffs accepted to be concocked document-Builder respondent that he would not make any construction on plots 8 to 12 which fallen to ‘S’ group-Suit-Builder and ‘J’ group contended that ‘M’ died in 1976-Sub-firm dissolved in 1976-Suit filed in 1997 for dissolution of firm and accounts barred by time-Plaintiffs prayed for temporary injunction-Resisted-Prima facie case of title to immovable property made out by ‘L’-Heirs of ‘M’-Plaintiffs prima facie continue to have share in plots 8 to 12 and other common property-Builder and ‘J’ denying prima facie just right of ‘M’s heirs in property-Release deed forged document-Temporary injunction granted-Open to builder or others to come forward for modification of order subject to offering adquate safeguard in respect of interest of plaintiffs in property.
       Held : It is true that normally a plaintiff who stands - by when another is making construction on his property could not seek injunction to stop construction. But, the manner in which Kanhayalal Lokram set up a release deed which is prima facie false the manner in which the Builder & Jains raised contentions regarding alleged interpolation of a registered rectification deed - which plea we have held to be prima facie untenable - we are of the view that after Murlidhar’s death in 1976, the confidence which his widow and children had in Kanhayalal was prima facie abused by setting up a false release deed. Then the Builder and the Jains together started denying the prima facie just rights of Murlidhar’s widow and children in the property. We are, therefore, not inclined to deny a temporary injunction to the plaintiffs notwithstanding the investments made by the Builder. The Builder had never shown any anxiety before us to come to terms and avoid an injunction by offering certain terms to plaintiffs. (Para 49)
       It will however be open to the Builders, 8th defendant or others to come forward for modification of this order subject to offering adequate safeguard in respect of the interests of the plaintiffs in the property. If any such application is filed, it will be entered after the summer vacation. (Para 52)
       (ii) Transfer of Property Act, 1882-Section 3-Whether builder can be said to be bona fide purchaser for consideration-Without notice of right of heirs of ‘M’ in ‘L’ group-Once notice there actual as well as constructive-Plea of bona fide purchaser without notice of rights of ‘L’-Group not permissible-Agreement of ‘K’ cannot be treated as agreement to transfer title of heirs of ‘M’-If release deed goes-Their title remains untransferred.
       Held : Inasmuch as the rectification deed is a registered deed, it is deemed to be notice to the Builder in view of Section 3 of the Transfer of Property Act. (Para 41)
       Once notice is there, actual as well as constructive, a plea of bona fide purchaser without notice of rights of Lokram group is not permissible. For the present we are not going into the question whether the fiction of a so-called release deed by Murlidhar’s heirs is a creation of Kanhayalal Lokram alone or whether the Builder has also a role in the creation of the release deed. (Para 42)

Judgement Key Points

Key Points:- The court holds that the rectification deed, being registered, provides notice to the builder under Section 3 of the Transfer of Property Act, affecting bona fide purchaser arguments. (!) (!) (!) (!) - The court finds prima facie that Lokram group has title to immovable property in plots 8 to 12 and that the alleged release deed dated 27.3.79 is forged, implying Murlidhar’s heirs retain a share in 8 to 12. (!) (!) (!) - There is evidence from letters (2.11.93; 3.1.94) and the rectification deed supporting Lokram group’s rights in the property, indicating the heirs’ title extends beyond mere profits in dissolution. (!) (!) (!) - The court limits itself to interlocutory relief under Order 39 Rule 1 CPC, recognizing that the suit will be decided on full evidence and that safeguards may be offered to protect plaintiffs’ interests. (!) (!) (!) - The injunction is granted to restrain construction on plots 8 to 12 and related development activities using the aggregate F.S.I.of the entire land, pending trial, with potential modification on terms safeguarding plaintiffs’ rights. (!) (!)

What is the status of Murlidhar’s heirs' rights in plots 8 to 12 and related common property in the context of a registered rectification deed?What is the effect of notice under Section 3 of the Transfer of Property Act on a purchaser's rights when a registered instrument (rectification deed) concerns the property and the rights of co-owners/heirs?What determines the entitlement to temporary injunction in a title-dispute involving a builder and co-partners where there are competing claims to immovable property and alleged forged release deeds?

JUDGMENT

M. Jagannadha Rao, J. - Leave granted.

This appeal is filed by the four plaintiffs, the widow and children of late Murlidhar Lokram Hemdev who died intestate on or about 8.5.1976. The appeal is directed against the order of the High Court of Bombay in Appeal No. 1019 of 1997 dated 12.9.97 confirming the order of the learned Single Judge dated 11.7.1997 in an application under Order 39 Rule 1 C.P.C. in Special Suit No. 83 of 1997.

2. The facts of the case are as follows :

3. There was an unregistered partnership w.e.f. 27.7.1964 (to which, of course late Murlidhar was not party) under a deed dated 4.9.1964 between five persons who were in two groups, the Sankhala group having 66 share and the Jains having 34 share. The said firm purchased land admeasuring31,075 sq. feet in Thane, with the intention of developing and selling the same. This firm is called the ‘main firm’ in these proceedings before us.

4. The main group entered into a sub-partnership, a registered firm dated 29-7-1964 with Lokram group consisting of 4 partners : (1) Kanhaiyalal Lokram Hemdev, (ii) Murlidhar Lokram Hemdev (deceased) (father of plaintiffs-appellants), (iii) Kanhaiyalal Sewaram and (iv) Srichand Dharamdass. In this sub-partnership, the Jain group and the Lokram group share in the ratio of 1:1 (i.e. 17 :17 overall). In the Lokram group Murlidhar (the predecessor-in-interest of plaintiffs) had a 38 share out of 17 (i.e. 6.46 ), the 1st defendant (R1) held 44 of 17 , the 2nd defendant held 12 out of 17 and balance by the 3rd defendant. It is stated in the deed of the sub-firm dated 29.7.64 in clause 10 that Rajendra K. Jain of the Jain group was entitled to deal with the entirely of the 34 share of Jain-Lokram group. This firm is called to ‘sub-firm’ in these proceedings.

5. The unregistered main firm applied in February 1975 to the Thane Municipal Corporation for sanction of a lay-out plan. The corporation sanctioned the same and divided the land into 2 plots bearing No. 1 to 12 and an internal road subject to certain other conditions namely that open space in plot No. 2 shall be kept permanently open to sky and shall be handed over to Municipal Corporation and shall not admeasure less than 15 of the F.P. No. 325 after demarcation.

6. Initially, the Sankhalas and Jains divided the property of the main firm. There was an MOU dated 4.2.76 between the partners of the main firm. It refers to the sub-contract dated 29.7.64 by the Jain Group with their sub-partner (para vi). It refers to a dissolution of the main firm between the Sankhala group and the Jain Group w.e.f. 30.1.76 and states that out of the lay-out, Jain group got plots 8, 9, 10, 11 and 12 comprising 5774.78 sq. met. and the Sankhala got plots 1, 3, 4, 5, 6 and 7 comprising 11,189.37 sq. met., that plot 2 of the final plot 325 (TPSI) admeasuring 3209 sq. met. was reserved for garden and for providing access road to the above plots, and that the access road covers 1200 sq. met. The two groups would be entitled to the benefits derived from the concerned authorities either by way of compensation.F.S.I. in the ratio of 34 (group Jain) and 66 (Group Sankhala) besides common use of access road (Para (i) (viii). The MOU says in para 3 that the Sankhala Group “is not concerned with sub-partners of Jain group and that they carry out their own obligation with their sub-partners individually”. On 26-12-1991, a registered partition deed (called the main partition deed) in implementation of the MOU dated 4.2.76 between Sankhala group and Jain group was executed and it stated that the plots as stated in the MOU became absolute properties of each group subject to the common right in the road and vacant plot No. 2. The benefits as stated in the MOU dated 4.2.76 were repeated. It was further clarified that both the groups would be entitled to avail of benefits of the F.S.I. which might be available to the entire plot of land and that the F.S.I. shall only be confirmed to the reservation and inter

Click Here to Read the rest of this document

1999 Supreme(SC) 664

Cases Referred (1)