Full Judgment Text
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
I.A. NOS.4, 6, 7 & 8 IN
CIVIL APPEAL NO.2573 OF 2008
Bharat Karsondas Thakkar … Appellant
Vs.
M/s Kiran Construction Co. & Others … Respondents
WITH
CIVIL APPEAL NOs.________ OF 2009
(Arising out of S.L.P.(C)Nos.28267-28268 of 2008 and
28270-28271 of 2008)
J U D G M E N T
ALTAMAS KABIR, J.
1. Leave granted in Special Leave Petition (Civil)
Nos.28267-28268 of 2008 and 28270-28271 of 2008.
All the Appeals were taken up together for disposal
as they arise out of the same set of facts and
common questions of law are involved. Five
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interlocutory applications, being I.A.Nos.4,5,6,7
and 8, filed in connection with the Special Leave
Petition, for clarification of the judgment dated
th
9 April, 2008, passed in Civil Appeal No.2573 of
2008 and for deletion of the names of some of the
parties and for filing additional documents, were
also taken up for disposal along with the Appeals.
While SLP(C)Nos.28267-28268 of 2008 have been filed
by the Official Receiver against the order dated
th
17 November, 2006, passed by the Division Bench of
the Bombay High Court in Appeal No.748/2001
st
challenging the order dated 21 June, 2001, passed
by the learned Single Judge and restoring Notice of
Motion No.140/99 for fresh hearing before the
learned Single Judge and SLP(C)Nos.28270-28271 of
2008 have been filed by the Vaitys against the same
order in Appeal No.747/2001 in Notice of Motion
No.2700/99, claiming the self-same reliefs. As
indicated hereinabove, three of the interlocutory
applications have been filed in Civil Appeal
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No.2573/2008, for clarification of the Judgment
th
dated 9 April, 2008, passed in Civil Appeal
No.2573/2008, disposing of Appeal No.741 of 2001.
Applications have also been filed by the
petitioners in both the set of Special Leave
Petitions (now appeals) for condonation of delay in
filing the same on account of the fact that the
subject matter of the said Special Leave Petitions
was also the subject matter of SLP(C)No.2328/2007,
which was subsequently renumbered as Civil Appeal
No.2573/2008, but had remained undisposed of when
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the appeal against the order dated 16 November,
2006, was finally disposed of by the judgment and
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order dated 9 April, 2008. There being substance
in explanation given for condonation of delay in
filing the Special Leave Petition, such delay is
condoned.
th
2. On 27 May, 1949, the Collector of Thane
recorded a grant in favour of Mr. Sowar Ramji Vaity
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entitling him to lease of lands relating to Survey
Nos.83 to 91 in Village Mulund for a term of 999
years. Mr. Sowar Ramji Vaity died in the year 1965,
leaving behind him surviving Jagannath, Babu,
Vishnu and Bhaskar (hereinafter referred to as ‘the
Vaitys’) as his legal representatives to succeed to
st
his estate. On 1 October, 1973, the Vaitys
entered into an agreement to sell their rights and
interests in the aforesaid lands to one Mr. K.L.
Danani (the Respondent No.44 herein) for a total
consideration of Rs.2 lakhs. Under the Agreement,
Mr. Danani was required to obtain lease of the suit
lands from the Collector in favour of the Vaitys
within a period of two years. During the months
of April and June, 1974, Mr. Danani constituted a
partnership firm with Mr. K.V. Thakkar and Mr. S.S.
Thakkar under the name of M/s Swas Construction
Company. The Appellant herein, who was then a
minor, was admitted to the benefits of the
partnership firm. The time for completion of the
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st
sale under the agreement dated 1 October, 1973,
was extended by two months till after the land was
converted to non-agricultural use or the Vaitys
made a clear and marketable title to the suit land,
whichever was later. It was recorded that M/s Swas
Construction Company had been put in possession of
the suit lands in part performance of the agreement
dated 1.10.1973.
3. In the meantime, the Urban Land (Ceiling and
Regulation) Act, 1976, was enacted and Mr. K.L.
Danani claiming possession under the said Agreement
filed a statement with the Urban Land Ceiling
Authorities in terms of Section 6(1) of the Act.
th
On 12 June, 1979, pursuant to a decision arrived
at in April, 1978, the Government of Maharashtra
executed a lease in favour of the Vaitys for a
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period of 60 years. Immediately thereafter, on 18
June, 1979, the Vaitys entered into an Agreement
with M/s Modern Development Corporation, the
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Respondent No.24 herein, granting them development
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rights in respect of the suit lands. On 24
August, 1979, M/s Modern Development Corporation is
alleged to have entered into an agreement with the
Respondent No.1, M/s Kiran Construction Company, to
transfer its beneficial interests in the suit
lands, except for Serial No.91, in favour of the
Respondent No.1. Clause 12 of the Agreement
specifically required M/s Modern Development
Corporation to obtain confirmation from M/s Thakkar
& Associates that there was no subsisting agreement
for sale in their favour in respect of the property
agreed to be sold.
th
4. On 18 February, 1980, the Appellant and Mr.
K.V. Thakkar filed Suit No.252 of 1980 in the
Bombay High Court against Mr. K.L. Danani (the
Respondent No.44) and Mr. S.S. Thakkar, inter alia,
praying for a declaration that a partnership had
existed between them and that Mr. K.L. Danani and
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Mr. S.S. Thakkar had retired from M/s Swas
Construction Company.
5. It appears that in February, 1980, in Notice of
Motion No.283 of 1980 filed in the said Suit, Mr.
K.L. Danani undertook not to part with possession
of the suit lands pending disposal of the Notice of
th
Motion, which was disposed of on 9 October, 1980,
by the Bombay High Court by appointing the Court
Receiver over the properties.
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6. On 15 May, 1981, the Vaitys terminated the
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Agreement dated 18 June, 1979, entered into with
M/s Modern Development Corporation (the Respondent
No.24). This prompted the Respondent No.1 to file
Suit No.1578 of 1981 against the Vaitys and the
partners of M/s Modern Development Corporation on
th
7 September, 1981, for specific performance of the
th th
purported Agreements dated 18 June, 1979 and 24
st
August, 1979. On 1 July, 1982, the Bombay High
Court passed an order restraining the Vaitys and
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the partners of the Respondent No.4 from selling,
transferring, encumbering, alienating or further
parting with possession of the suit lands pending
disposal of Suit No.1578 of 1981. After the death
st
of Mr. Babu Vaity on 1 May, 1994, all the parties
to Suit No.252 of 1980, entered into a
comprehensive settlement with the Vaitys, Mr. K.L.
Danani (the Respondent No.44) and one Mulchand G.
Mehta (the Respondent No.47) and in order to give
effect to the settlement, the Vaitys and the
Respondent No.47 were joined as defendants in Suit
No.252 of 1980. On the very same day, the Bombay
High Court decreed the suit on consent terms.
Pursuant to the terms and conditions arrived at
between the parties, the Respondent No.48 took out
Notice of Motion No.140 of 1999 in Suit No.1578 of
st
1981, praying that the order dated 1 July, 1982,
be vacated. The Vaitys also took out Notice of
Motion No.2700 of 1999 in the said Suit, praying
for the same order. In August, 2000, M/s Kiran
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Construction Company took out Chamber Summons
No.1203 of 2000 in Suit No.1578 of 1981, seeking to
amend the plaint so as to join the Respondent
Nos.13 to 19 as defendants and also to incorporate
a challenge to the decree dated 6.5.1998 passed by
the Bombay High Court in Suit No.252 of 1980. The
said Chamber Summons was dismissed by the learned
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Single Judge of the Bombay High Court on 21 June,
st
2001, and the injunction granted on 1 July, 1982,
was vacated. The said order of injunction was also
vacated by a common order of even date passed in
Notices of Motion No.140 and No.2700 of 1999.
7. Three Appeals were filed by the Respondent No.1
herein before the Division Bench of the Bombay High
Court, being Appeal Nos.745, 747 and 748 of 2001,
st
all challenging the order dated 21 June, 2001,
passed by the Bombay High Court, vacating the
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interim order of injunction dated 1 July, 1982.
The Division Bench of the Bombay High Court allowed
10
th
all the three Appeals by its orders dated 16
th
November, 2006 and 17 November, 2006, passed in
Appeal No.745 of 2001 in Chamber Summons
No.1203/2000 in Suit No.1578/1981 filed by Kiran
Construction Company and in Appeal Nos.747 and 748
of 2001 in Notices of Motion Nos.2700 and 140 of
1999 respectively, filed in the said Suit. The
amendment of the plaint was allowed and the order
st
of injunction passed on 1 July, 1982, was
restored. The present Appeals have been filed
against the said orders of the High Court allowing
the amendment of the plaint and joining the
Respondent Nos.13 to 19 as additional defendants in
the suit.
8. Appearing for the appellants in these appeals,
Mr. Mukul Rohtagi, Senior Advocate, submitted that
there is no dispute that the lands forming the
subject matter of these proceedings originally
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belonged to the Vaitys and that on 1 October,
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1973, the Vaitys entered into an agreement for sale
of the said lands with Mr. K.L. Danani, who later
on brought the benefits of the said agreement to
M/s Swas Construction Company of which the
appellants are partners.
th
9. It is also not disputed that on 18 June,
1979, the Vaitys entered into a development
agreement with M/s Modern Development Corporation
which was an unregistered partnership firm. The
said partnership firm, in its turn, entered into an
agreement with M/s Kiran Construction Company on
th
24 August, 1979. Mr. Rohtagi submitted that both
Modern Development Corporation and Kiran
Construction Company had knowledge of the existing
agreements entered into by the Vaitys for sale of
the lands. It is on account of such knowledge that
the Respondent No.1 in its agreement with Modern
Development Corporation included a clause that the
latter would cause the Vaitys to make out a
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marketable title to the property, and if they
failed to make out a marketable title, all the
monies paid to Kiran Construction Company would be
returned to it with interest at the rate of 12% per
annum. As indicated hereinbefore, the agreement
which was entered into between the Vaitys and
th
Modern Development Corporation on 18 June, 1979,
th
was terminated by the Vaitys on 15 May, 1981,
prompting Kiran Construction Company to file Suit
No.1578 of 1981 in the Bombay High Court in which
an interim order was passed by the Bombay High
Court restraining the Vaitys and the partners of
Modern Development Corporation from selling,
transferring or further parting with possession of
the suit lands.
10. Mr. Rohtagi submitted that in view of the said
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order of injunction, on 10 November, 1981, Babu
Vaity filed an affidavit in Notice of Motion
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No.1271 of 1981 indicating that on 15 May, 1981,
13
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the Vaitys had terminated the agreement dated 18
June, 1979, with Modern Development Corporation and
that a separate agreement had been executed in
favour of one Mr. Ashok Kumar Goyal and Mr. Gosalia
granting them development rights in respect of the
st
suit lands. Despite the above, on 1 July, 1982,
the Bombay High Court passed an order in Notice of
Motion No.12671 of 1981 in the suit filed by the
Respondent No.1 and restrained the Vaitys and the
partners of Modern Development Corporation from
selling, transferring, encumbering, alienating or
from further parting with possession of the suit
lands, pending disposal of the suit filed by the
Respondent No.1 herein. Mr. Rohtagi submitted that
th
on 27 March, 1984, the Respondent No.1 was
informed by a letter written on behalf of the
appellants regarding the claims of the appellants
herein, the filing of Suit No.252 of 1980 and the
appointment of the Court Receiver who had taken
over possession of the suit properties.
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11. As indicated hereinbefore, on the death of Babu
Vaity, all the parties to Suit No.252 of 1980
arrived at a comprehensive settlement with the
Vaitys, the Respondent No.44 and one Mulchand G.
Mehta, the Respondent No.47. On the same day, the
Bombay High Court passed a decree on the consent
terms arrived at between the parties in Suit No.252
of 1980. Mr. Rohtagi submitted that the High Court
st
vide order dated 21 June, 2001, dismissed the
Chamber Summons taken out by the Respondent No.1
and also vacated the injunction granted in Suit
st
No.1578 of 1981 on 1 July, 1982. Mr. Rohtagi
submitted that the order of the learned Single
Judge was challenged in Appeal and was ultimately
set aside and the prayer for amendment of the
plaint made by the Respondent No.1 was allowed.
12. Mr. Rohtagi submitted that Kiran Construction
Company did not have any privity of contract with
the Vaitys. Furthermore, the Vaitys had terminated
15
their agreement with Modern Development Corporation
with whom Kiran Construction Company had entered
into an agreement and such termination had not been
challenged by Modern Development Corporation,
particularly since it is an unregistered firm and,
therefore, could not sue or be sued under the
provisions of Section 64 of the Partnership Act.
Mr. Rohtagi submitted that when Modern Development
Corporation was unable to compel the Vaitys to
perform their part of the contract, Kiran
Construction Company, whose claim, if any, to the
suit properties, was through Modern Development
Corporation, could not compel the Vaitys to
specifically enforce the contract between the
Vaitys and Modern Development Corporation.
Accordingly, the entire exercise undertaken by the
Respondent No.1 was but an exercise in futility and
the Division Bench while allowing the prayer for
impleadment made on behalf of Kiran Construction
Company erred in injuncting the Vaitys and also the
16
Thakkars from taking steps to develop the property.
13. Mr. Rohtagi urged that even the fact that a
Receiver had been appointed over the suit
properties and the properties were, therefore, in
custodia legis had been suppressed, and, in any
event, since the properties were in custodia legis ,
the order of injunction could not have been passed.
Mr. Rohtagi submitted that since Kiran Construction
Company had no privity of contract with the Vaitys
and Modern Development Corporation being an
unregistered partnership, there was no possibility
whatsoever of the suit filed by Kiran Construction
Company ever being decreed. For such reason also,
the order of injunction passed by the Division
Bench was liable to be vacated.
14. Mr. Rohtagi submitted that from the orders
passed by the Division Bench of the Bombay High
th
Court on 17 November, 2006, disposing of Appeal
Nos. 747 and 748 of 2001 arising out of the orders
17
passed by the learned Single Judge in Notices of
Motion No.2700 and 140 of 1999, it would be evident
that the said appeals were allowed merely as a
th
consequence of the order passed earlier on 16
November, 2006, in Appeal No.745/2001 in connection
with the Chamber Summons No.1203/2000 taken out by
Kiran Construction Company. Mr. Rohtagi submitted
that no reasons, other than what has been indicated
hereinabove, were given for allowing the said
appeals and accordingly, while Civil Appeal
No.2573/2008 was disposed of, consequential orders
were passed whereby the other appeals were also
disposed of.
15. Mr. Rohtagi submitted that since this Court had
th
earlier on 9 April, 2008, affirmed the order of
the learned Single Judge and had rejected the
Chamber Summons for impleadment, consequential
orders were required to be passed for setting aside
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the order dated 17 November, 2006, passed by the
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Division Bench of the Bombay High Court in Appeal
Nos.747 and 748 of 2001 and also to vacate the
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interim order dated 1 July, 1982, passed in Suit
No.1578 of 1981 filed by the Respondent No.1
herein.
16. While adopting Mr. Rohtagi’s submissions, Mr.
Ranjit Kumar, learned Senior Advocate appearing for
Respondent Nos.2A to 2E, 3 to 16, 18, 19 and 31 in
IA No.6 of 2008, prayed for clarification of the
th
judgment and order passed by this Court on 9
April, 2008, in Civil Appeal No.2573 of 2008 to the
th
extent that as a consequence of the order dated 16
November, 2006, passed in Appeal no.745 of 2001
th
being set aside, the order dated 17 November,
2006, passed by the Division Bench in Appeal No.747
of 2001 and Appeal no.748 of 2001 were also set
aside.
17. Mr. Ranjit Kumar submitted that after the
prayer for amendment of the plaint was disallowed
19
by this Court, it was only through inadvertence
that consequential orders were not recorded as far
as the two appeals are concerned and that when the
Vaitys were not before the Court in the suit filed
by it, the Respondent No.1 could have no
justification for submitting that the interim order
passed by the Division Bench of the High Court
should be allowed to remain. He also reiterated
Mr. Rohtagi’s submissions that when there was no
privity of contract between the Respondent No.1,
Kiran Construction Company, and the Vaitys and its
suit was for relief only against Modern Development
Corporation, the agreement entered into between
Modern Development Corporation and the Vaitys could
not be specifically enforced by the said Respondent
and the Division Bench of the High Court had
committed an error in allowing the interim order of
injunction to continue against the appeals.
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18. On the other hand, Mr. Buddy A. Ranganadhan,
learned Advocate appearing for Kiran Construction
Company, urged that the rejection of the prayer
made on behalf of the Respondent No.1 for leave to
amend the plaint did not mean that the orders
prayed for in these appeals would follow as a
matter of consequence. It was urged that the
th
judgment delivered by this Court on 9 April, 2008,
was only concerned with the challenge to the
amendment and that the scope of the appeal was
limited to the amendment of the plaint. According
to learned counsel, the prayer for injunction was
made on account of the decision of the Respondent
No.1 to file a separate suit and it was in that
context that the prayer for injunction to continue
till the hearing of the new suit could be taken up.
Mr. Ranganadhan submitted that, in any event, at no
point of time was any indication given that any
argument was to be advanced on the question of
remand to the Division Bench.
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19. Mr. Ranganadhan also urged that the prayer for
vacating the interim order that had lasted for 16
years should not have been entertained. He
submitted that the appeals were misconceived and
were liable to be dismissed.
20. From the submissions made on behalf of the
respective parties and the materials on record, it
is quite apparent that the Chamber Summons No.1203
of 2000 taken out by Kiran Construction Company for
leave to amend its suit to incorporate a challenge
to the consent decree passed in Suit No.252 of 1980
and also to implead the appellants herein, Mr. K.L.
Danani and Mr. Mulchand G. Mehta as defendants in
the suit, was heard along with and Notice of Motion
No.140 of 1999 filed by the Receiver and Notice of
Motion No.2700 of 1999 filed by Vaitys for vacating
st
the order of injunction dated 1 July, 1982, were
taken up for hearing together. While Chamber
Summons filed by Kiran Construction Company was
22
dismissed, the Notices of Motion filed by the
Receiver and the Vaitys were allowed and the order
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of injunction dated 1 July, 1982, was vacated.
21. Since the three appeals before the High Court
were filed by Kiran Construction Company against
the orders passed by the learned Single judge on
the Chamber Summons and the two Notices of Motion,
the Division Bench of the High Court, while
considering the said appeals, allowed the prayer
for amendment of the plaint and as a consequence
reversed the learned Single Judge’s order on the
two Notices of Motion and remanded the Notice of
Motion for fresh hearing.
22. In the Civil Appeal filed by the appellants
herein against the three orders passed by the
th
Division Bench, although, by order dated 9 April,
2008, the Appeal was allowed and the order of the
Division Bench allowing the amendment prayed for by
the Respondent No.1 was set aside, through
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inadvertence, no orders were passed in respect of
the appeals against the orders passed on the two
Notices of Motion for vacating the interim order
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dated 1 July, 1982. It is for clarification of
the said order that the interim applications have
been filed which are under consideration.
23. Once the prayer for amendment of the plaint to
include the challenge to the consent decree passed
in Suit No.252 of 1980 was disallowed by this
Court, the question of restraining them from
dealing with the suit properties over which the
Respondent No.1 has no established claim would be
completely unreasonable and merely because the same
had been in force for a long time, would be no
ground to allow the same to continue.
24. Admittedly, as pointed out by Mr. Mukul Rohtagi
and Mr. Ranjit Kumar, learned Senior Advocates,
there is no privity of contract between Kiran
Construction Company and the Vaitys, its claim is,
24
therefore, restricted to Modern Development
Corporation alone and is also dependent upon the
right of Modern Development Corporation to specific
performance of its agreement with the Vaitys. In
other words, until and unless Modern Development
Corporation is able to establish a right over the
suit properties, Kiran Construction Company can
have no claim in respect thereof. Furthermore,
since the Receiver continues to be in possession of
the suit properties and the properties continue to
be in custodia legis, Kiran Construction Company
cannot ask for possession of the said properties.
25. In our view, the claim attempted to be set up
by Kiran Construction Company is highly tenuous and
is entirely dependent upon the claim of Modern
Development Corporation which has so far not
attempted to establish such claim. In such
circumstances it would be wholly inequitable to
25
allow the interim order to continue. The same is
accordingly vacated.
26. Accordingly, the appeals filed by the Official
Receiver and the Vaitys must succeed and are
allowed. Simultaneously, Interlocutory Application
Nos.4, 6 and 7 for clarification of the judgment
th
and order dated 9 April, 2008, passed in Civil
Appeal No.2573/2008 and Interlocutory Application
No.8 for filing additional documents are also
disposed of by virtue of this judgment. Further
more, the following clerical mistakes have been
pointed out in paragraph 7 of the I.A.No. 4 with
regard to the judgment dated 9.4.2008 passed in
Civil Appeal No. 2573 of 2008:
a. “In paragraph 2, page 1, line 3, the word
“Serial” ought to be “Survey”.
b. The reference to “K.B. Thakkar” in
paragraph 2, paragraph 4 and paragraph 11
ought to be “K.V.Thakkar”;
c. The submission at paragraph 21 was in fact
the submission made on behalf of the
Petitioner and not on behalf of Respondent
No.1.; and
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d. In paragraph 16, page 15, line 1 the word
“respondent” is to be read as “Respondent
No.1.”
Let a Corrigendum be issued with regard to the
errors indicated above. As far as Interlocutory
Application No.5 for deletion of the names of the
Respondent Nos.17, 20, 22, 25(a), 25(b), 25(c),
25(d) and 27, is concerned, the same is allowed at
the risk of the appellant.
27. Inasmuch as, these appeals have been taken from
interlocutory orders and the suit of the Respondent
No.1 is still pending, we make it clear that the
observations made in this order are only for the
purpose of disposal of the applications for
vacating the interim orders and such observations
should not influence the learned Trial Court from
disposing of the pending suits, in accordance with
law.
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28. There will, however, be no order as to costs.
________________J.
(ALTAMAS KABIR)
________________J.
(CYRIAC JOSEPH)
New Delhi
Dated: May 15, 2009