IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 30 TH DAY OF JULY 2014 PRESENT THE HON’BLE MR.JUSTICE K.L.MANJUNATH AND THE HON’BLE MR.JUSTICE RAVI MALIMATH Regular First Appeal No.958 of 2010 (DEC-INJ) BETWEEN: M/s.Kolte Patil Developers Ltd Being a Company incorporated Under the Companies Act 1956 Having its registered office at: Navipeth District Jalagaon Maharastra. And Branch Office at: No.22/11, Vittal Malya Road, 1 st Floor, “Park West” Bangalore – 560 001. Represented by its Joint Managing Director Mr.Naresh A.Patil. … APPELLANT (By Sri Yoga Narasimha, Senior Advocate and Sri Raju Ramachandran, Sr.Advocate for Sri G.L. Vishwanth, Advocate) ®
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IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 30TH DAY OF JULY 2014
PRESENT
THE HON’BLE MR.JUSTICE K.L.MANJUNATH
AND
THE HON’BLE MR.JUSTICE RAVI MALIMATH
Regular First Appeal No.958 of 2010 (DEC-INJ) BETWEEN: M/s.Kolte Patil Developers Ltd
Being a Company incorporated Under the Companies Act 1956 Having its registered office at: Navipeth District Jalagaon Maharastra.
S/o late N.Venkatasubba Shastry Aged about 75 years No.73, 9th Main, RMV Extension Bangalore – 560 080
*Since deceased by LRs 2(a) Smt.Sharadamma
W/o late CVL Shastry Aged about 72 years
2(b) B.L.Nagendraprasad S/o late CVL Shastry Aged about 50 years 2(c) L.Narendra Prasad
S/o late CVL Shastry Aged about 45 years All are residing at No.73, 9th Main, RMV Extension Bangalore – 560 080. … RESPONDENTS
*Amended as per Court order dated 14.9.2012
(By Sri K.S. Nagaraja Rao, Advocate for C/R1; Sri C.V. Nagesh, Sr. Advocate for
Sri K. Suman, Advocate for R2 (a to c))
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This RFA is filed under Section 96 of CPC, against the
judgment dated 19.3.2010 passed in O.S.No.1572/2005 on the file of the XVII Additional City Civil Judge, (CCH.No.6), Bangalore, dismissing the suit for declaration and permanent injunction.
This RFA coming on for final hearing this day,
K.L.Manjunath J., delivered the following:-
J U D G M E N T The legality and correctness of the judgment and
decree passed by the XVII Additional City Civil Judge,
Bangalore dated 19.03.2010, passed in O.S. No.1572/2005
is called in question by the unsuccessful plaintiff.
2. Heard the learned counsel for both the parties.
3. On an earlier occasion, this Court had heard two
learned Senior Counsel appearing for the appellants
Sri.Yoga Narasimha and Sri.Raju Ramachandran and the
learned Senior Counsel, Sri.C.V.Nagesh for respondents
2(a) to (c) and Sri.Nagaraja Rao, the learned counsel for
respondent no.1. After conclusion of the arguments, an
application was filed by the appellant under Order-6,
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Order-17 of C.P.C., to amend the plaint which application
was considered and rejected by this Court by a detailed
order dated 25.02.2014 and thereafter the matter is again
heard on merits.
4. The facts leading to this appeal are as hereunder:
The plaintiff is a private limited company. The first
defendant is a society registered under the provisions of the
Karnataka Cooperative Societies Act. According to the
plaint averments, the first defendant-society was the owner
of 16 acres, 20 guntas of land situated in survey Nos. 12/6,
13/1, 13/2 and a portion of survey No.19 of
Nagashettyhalli Village, Kasaba Hobli at Bangalore, which
was purchased from the first defendant-society from the
Bangalore Development Authority under a registered
transfer deed dated 23.11.1988. According to the plaint
averments, the second defendant was instrumental in
bringing about the transfer of the land in his capacity as a
General Power Attorney Holder of the original land owners
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which was the subject matter of the writ petitions before
this Court in W.P. No.21168-72/1997, which matter was
taken up to the Hon’ble Supreme Court in SLP (Civil)
No.21317-321/2001 decided on 25.01.2002.
5. The plaintiff was put in possession of 5 acres of land
in the aforesaid survey numbers in the month of
October’1995 under different agreements executed by the
first defendant-society in favour of the plaintiff. Later the
society also confirmed the delivery of possession to an
extent of 5 acres of land. The first defendant-society also
executed the Power of Attorney in the name of Sri.N.A.Patil
and Sri.A.V. Patil, who are directors of the company and
also executed declaration under indemnity bond on
21.10.1995 and deed of no objection in favour of the
plaintiff to develop the property.
6. During October’1995, the plaintiff was put in
possession. The first defendant had already obtained a
sanction plan from BDA on 10.11.1995 for construction of
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the entire 5 acres of land for residential multistoried
apartment buildings. The plaintiff accepted the project and
later discovered that there was discrepancy in the
measurement of the property and thereafter the entire land
was fenced and commenced the construction. The plaintiff
constructed a multistoried apartments complex known as
‘Whispering Meadows’ which comprise four blocks.
7. In 1997 some disputes arose between the society and
the plaintiff which resulted in the society filing a suit
against the plaintiff before the City Civil Court, Bangalore
in O.S. No.5649/1997 for a perpetual injunction from
restraining the plaintiff from exercising any rights under
the agreements executed and further restraining the
plaintiff from proceeding with the construction. It was
contended in the suit that the agreements and the General
Power of Attorney executed by the society in favour of the
plaintiff was got cancelled. Ultimately, the said suit came to
be compromised by virtue of an agreement and declaration
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dated 24.07.1999. In the compromise petition the society
withdrew all the allegations made against the plaintiff and
similarly the plaintiff withdrew the allegations made against
the respondent-society and as per the compromise petition,
the society confirmed the enforcement of the General Power
of Attorney by the plaintiff and further agreed not to
obstruct the construction work. As per the terms and
conditions of the compromise entered in
O.S.No.5649/1997, the plaintiff agreed to allot 35,000 sft.
of built-up area in the project called ‘Whispering Meadows’
to the Society in two installment of 20560 sft. and 14440
sft., respectively. Accordingly, the parties identified the
areas to be allotted to the first defendant and later on
allotment letter was also issued on 02.08.1999.
8. As per the terms of the compromise and settlement
entered into on 29.07.1999, the first defendant-society had
undertaken to sanction all the revised building plan within
9 months from the said date, after the revised building plan
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was obtained, the plaintiff has to put up construction and
put the first defendant-society in possession of the
remaining portion of 14,440 sft. and an additional
extension of 15,000 sft. built-up area provided the revised
building plan is obtained by the first defendant-society on
or before 29.04.2000.
9. As per the terms of the compromise, in order to
secure the revised building plan, the first defendant-society
entered into a Memorandum of Understanding with the
second defendant on 30.10.1999 and entrusted the work of
obtaining sanction of the revised plan from the Bangalore
Development Authority, with some other
conditions. As per the terms of the Memorandum of
Understanding, the first defendant-society undertook the
transfer of 50,000 sft. of the built-up area to the second
defendant and the second defendant has to pay an amount
of Rs.1,00,00,000/- (Rupees One Crore Only) to the first
defendant.
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10. According to the plaintiff, in terms of the letter dated
18.02.2000, the first defendant-society informed the
plaintiff to allot 10045 sft. of built-up area to the second
defendant. Accordingly, the same was allotted to the second
defendant. Again certain disputes arose between the
defendants interse, on account of the same the
Memorandum of Understanding was cancelled by the
society on 13.02.2000. Consequently, the allotment of
10045 sft. was also cancelled.
11. On account of the cancellation of the Memorandum of
Understanding, the second defendant initiated arbitration
proceedings against the society in A.C. No.42/2000 before
City Civil Court, Bangalore under Section-9 of the
Arbitration and Reconciliation Act to restrain the society
from alienating or encumbering or parting with the
possession of the 7 flats approximately measuring 10045
sft. Thereafter, an arbitrator was appointed. The Arbitral
Tribunal gave a verdict in favour of the second defendant
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and based on the findings of the Arbitrator the first
defendant-society has sold 3 acres of land which is the
subject matter of the present suit without the knowledge of
the plaintiff. Therefore, the present suit is filed contending
that the first defendant-society has no right to alienate the
suit property and any sale deed executed by the first
defendant is not binding on the society and for perpetual
injunction.
12. The prayer in the suit are as hereunder:
a) “For declaration that the Sale Deed dated rd September 2004 bearing registration No.44576/04-05 registered in the Office of the Sub-Registrar, Bangalore North Taluk obtained by the Second Defendant from the first Defendant is a sham, collusive and
fictitious document, not intended to be acted upon and therefore the second Defendant has derived no right, title, interest or possession in respect of the Schedule Property and the said Sale Deed is not binding on the Plaintiff and does not affect its rights or interest in the
Schedule Property. b) For a permanent injunction restraining the
second Defendant or his agents or any one claiming under him from alienating, transferring, encumbering or otherwise
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creating any third party rights or raising any
loans or finance on the strength of and under the Sale Deed dated 3rd September, 2004, executed in his favour by the first Defendant with respect to the Schedule Property.
c) For permanent injunction restraining the
Defendants, their agents or any one claiming through them from interfering with the Plaintiff’s possession and enjoyment of the Schedule Property and /or from trespassing on the Schedule Property in any manner whatsoever.
d) For costs and such other relief/s.”
13. The suit property is 3 acres of land situated in survey
Nos.12/6, 13/1, 13/2 and part of survey No.19 situated in
Nagashettyhalli Village, Kasaba Hobli, Bangalore North
Taluk, Bangalore. The suit came to be contested by both
the defendants. The contention of the first defendant is as
hereunder:
The suit is not maintainable, since no notice as
required under Section-125 of the Karnataka Cooperative
Societies Act is issued to the first defendant-society. The
first defendant-society admitted its ownership of the land in
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question by the society and having obtained sanction from
the Bangalore Development Authority and also admitted
the earlier litigation initiated by the owners of the land.
14. It is the specific case of the first defendant-society
that the first defendant-society has not executed any
registered sale deed or documents confirming the right, title
or interest in favour of the plaintiff either in respect of the
entire five acres of land or to the extent of the suit schedule
property. However, the first defendant admitted the
execution of the Joint Development Agreement in respect of
45 plots in 5 acres of land for the benefit of the first
defendant-society.
15. It is also the specific case of the defendant that the
plan was obtained to develop the entire 5 acres of land in
the name of the first defendant and the plaintiff has
developed only 2 acres of land and constructed residential
apartments known as ‘Whispering Meadows’ also known as
‘Dollar Apartments’. It is also the contention of the first
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defendant that the plaintiff was never in the possession of 5
acres of the land and that only 2 acres of the land was in
possession of the plaintiff as a developer.
16. It is the case of the first defendant-society that since
the plaintiff committed a breach of the agreement at
various stages and non-compliance of terms and conditions
of the development agreement, a suit came to be filed which
ended in compromise. According to the society, the plaintiff
has never derived any title because the development
agreement, power of attorney, declaration and indemnity
bond are documents that are compulsorily to be registered
and on account of non-registration of the documents, the
plaintiff cannot rely upon these documents.
17. It is also denied that the plaint schedule properties is
integral and inseparable part of plaintiff’s alleged project.
The first defendant was the owner of 5 acres of land and
that no right is granted in favour of the plaintiff and the
status of the plaintiff was that of a developer only and they
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cannot claim ownership of the land at any stretch of
imagination and further confirmed that the plaintiff can
claim legal possession to an extent of two acres of land and
not to the extent of the entire property. It was also
contended that the first defendant-society was in
possession of the suit schedule property till the same was
sold in favour of the second defendant and that the plaintiff
has no right to question the sale deeds executed by the first
defendant-society in favour of the second defendant and
further confronted that the second defendant is in actual
possession of the suit schedule property.
18. It is also contended that the plaintiff having not filed
any suit for specific performance against the first defendant
and since the development agreements are barred by
limitation, the plaintiff has lost its rights over the same and
that the plaintiff having violated the terms and conditions
of the compromise, the first defendant-society filed a suit in
O.S. No.2482/2001 restraining the plaintiff-developer from
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alienating or encumbering the remaining 2 acres of land
which is the subject matter of the suit.
19. It is also the case of the first defendant that even if
the compromise petition is filed under Order-23, Rule-3
read with Section-151 of C.P.C., the same is not binding
upon the parties since no decree is drawn as the suit is one
for bare injunction and the terms and conditions were
altogether different and on account of non-drawing up of a
decree, the plaintiff cannot maintain the suit.
20. It is also the case of the defendant that in terms of the
compromise also, the plaintiff did not adhere to the terms
and conditions of the compromise. Therefore, the first
defendant-society was to sell the property in favour of the
second defendant on account of the lapses committed by
the plaintiff. The first defendant-society has also stated in
detail, the circumstances, which compelled the first
defendant-society to sell the property in favour of the
second defendant. It is also contended by the first
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defendant that the right of the plaintiff is only to seek
enforcement of the development agreement in the court of
law and nothing more than that the joint development
agreement executed by the first defendant-society in favour
of the plaintiff and others is barred by limitation and does
not create any ownership in favour of the plaintiff in order
to seek cancellation of the sale deed executed by the first
defendant in favour of the second defendant. According to
the first defendant, they are seeking the relief under the
Specific Relief Act since the development agreements have
become barred by time, the suit filed is not maintainable.
21. It was also contended by the first defendant that all
the development agreements that are executed by the first
defendant in favour of others are unregistered and does not
create any contract of agency coupled with interest at any
stretch of imagination and that all the development
agreements have become time barred and the plaintiff has
no subsisting or enforceable contract in respect of the land
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in question against the plaintiff. It was also contended that
the society has already cancelled the joint development
agreement entered into by the plaintiff and in favour of
others long back, for non-payment of the amount payable
It was also contended that the suit is also barred by the
provisions of C.P.C. and the suit is bad for non-joinder of
the parties.
22. The second defendant filed the written statement
separately. The contention of the second defendant is more
or less similar to that of the first defendant and therefore
we are of the view that there is no necessity to traverse the
averments made in the written statement filed by the
second defendant.
23. Based on the above pleadings, the following issues
were framed by the court:
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“1. Whether the Plaintiff has proved that the
suit property is in his possession? 2. Whether the Plaintiff has proved interference? 3. Whether the Plaintiff is entitled for the
reliefs?
4. What order or decree?”
Additional Issues framed on 30.11.2007:
Whether the suit filed in the present form is maintainable in law?
Additional issues framed on 10.02.2010:
“1. Whether the Plaintiff is entitled for the
declaration as prayed for in the Plaint?
2. Whether the 1st Defendant has proved that the suit has to be dismissed for non-joinder of necessary parties and proper parties?
3. Whether the Court Fee of Rs.75/- paid by
the Plaintiff is proper? 4. Whether the Defendants have proved that
the suit is liable to be dismissed for there being no cause of action.
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Additional issue framed on 11.02.2010:
5. Whether the Defendants have proved that
the Sale Deed dated 03.02.2004 executed
by 1st Defendant in favour of the 2nd Defendant is a sham, collusive and fictitious document?”
24. In order to prove their respective contentions on
behalf of the plaintiff one of the Director’s of the plaintiff
company, Shri.A.V.Patil got examined himself as PW-1 and
he relied upon Exhibits P1 to P195. The former secretary of
the first defendant Shri.Vijaysingh, got examined as DW-1
and the second defendant was examined as DW-2. The
defendants relied upon Exhibits-D1 to D75. The trial court
after appreciating the oral and documentary evidence held
issue nos.1 to 3 and additional issue framed on 30.11.2007
and additional issue nos.1 to 3 framed on 10.02.2010 and
additional issues framed on 11.02.2010 in negative and
additional issue no.2 framed on 10.02.2010 in affirmative,
issue nos. 2 and 4 in affirmative and ultimately the suit of
the plaintiff came to be dismissed by the judgment and
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decree dated 19.03.2010. The Registry was directed to draw
the decree by the court below provided the plaintiff pays the
court fee on the basis of the sale consideration shown in
Exhibit-P7, dated 03.09.2004.
25. Challenging the legality and correctness of the
judgment and decree of the court below the present appeal
is filed. Though several grounds are urged in the
memorandum of appeal at the time of arguments, the
Learned Senior Counsel who argued the matter from time
to time and the instructing counsel for the plaintiff during
the course of the their arguments have raised the following
grounds:
i. According to them the trial court has committed an
error in dismissing the suit as not maintainable. It was
contended by the learned counsel for the appellant that the
appreciation of the evidence by the court below is perverse
and liable to be reappreciated by this court. According to
them, the trial court did not appreciate that the first
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defendant-society having entrusted the entire 5 acres of
land to the plaintiff for development and having allowed the
plaintiff to develop and construct the residential
apartments in 2 acres of land and in view of the
compromise entered into in O.S. No.5649/1997, the first
defendant-society could not have executed the sale deed in
favour of the second defendant and execution of such sale
deed does not bind the plaintiff who has been in possession
of the suit schedule property as a developer.
ii. According to him there is a collusion between the
defendants interse, since the second defendant was aware
of the development agreement of the plaintiff. It is also
contended that in view of the settlement arrived at in O.S.
No.5649/1999 as the plaintiff was ready and willing to
perform its part of contract to deliver the possession of the
constructed area and also another 50,000 sft. constructed
area pursuant to the revised plaint, the first defendant
could not have sold the property in favour of the second
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defendant and they further contend that the very initiation
of the arbitration proceedings in A.C. No.4/2001, the award
being obtained behind the back of the plaintiff and such an
award having not been challenged by the first defendant
and thereafter having agreed to sell the property, amply
proves that all was not well within the defendants inter se
and only to knock the valuable rights given to the plaintiff
the sale deed has been executed.
iii. According to the plaintiffs, the Trial Court has also
committed an error in coming to the conclusion that the
suit was not maintainable in the absence of 17 purchasers,
who had agreed to develop the property. According to them
PW-1, the Managing Director of the Company, has
represented the remaining agreement holders, since all of
them are family members of PW-1. They further contend
that when the remaining development agreement holders
have not questioned and when they are represented by the
plaintiff, the trial court was required to hold that the
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plaintiff, in a representative capacity, has filed the suit to
protect the interest of the remaining 17 development
agreement holders in respect of the suit schedule property.
According to them, the compromise petition entered into in
O.S.No.5649/1997 has not been properly appreciated by
the court below.
26. Sri C V Nagesh, learned senior counsel for Sri K
Suman, appearing for the second respondent, submits that
the plaintiff, which has filed the suit claiming ownership
over three acres of land, has not placed any materials to
show its existing rights over the property either on the date
of institution of the suit or subsequent to the suit.
According to him, the appellant-plaintiff has not placed any
material to show that it was the owner of the suit schedule
property pursuant to any document executed by the first
defendant in the manner known to law. According to him,
when the plaintiff is claiming ownership under a joint
development agreement, it has to produce the documents
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to show that such a document was executed in respect of
the whole extent of the suit schedule property, since a right
has to be transferred in respect of an immovable property
whose worth is more than Rs 100/-. According to him, the
plaintiff has relied upon the joint development agreements
said to have been executed by the first defendant in favour
of different persons, in all 45 persons. Amongst the 45
persons, the plaintiff has entered into an agreement to
develop the property to an extent of 5100 sqft and that the
document relied upon by the plaintiff to show the existence
of the joint development agreement in favour of the
plaintiff, is only in respect of an extent of 5100 sqft as per
ExP55. Relying on ExP55, he contends that when the
plaintiff can claim only an extent of 5100 sqft to develop the
property and when PW1 has admitted that other
agreements with 44 different persons have been entered
into to develop the property, the plaintiff alone could not
have instituted the suit. He further submits that the
plaintiff cannot rely upon the terms and conditions of the
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compromise entered into in OS No 5649 of 1997, since a
decree is not drawn by the court below based on the
compromise, on account of non-payment of court fee by the
plaintiff.
27. It is also the contention of the learned Senior Counsel
that OS No 5649 of 1997 was filed by the first defendant-
society against the plaintiff for a perpetual injunction to
restrain the plaintiff in the present suit from interfering
with the possession of the property by the society and to
restrain the plaintiff herein from proceeding with the
construction. In the suit, the parties have settled the
dispute amicably and filed a compromise petition, the trial
court has accepted the compromise petition subject to
payment of court fee. However, the plaintiff has failed to
pay the court fee to draw a decree based on the terms of
the compromise and hence the plaintiff cannot be permitted
to file a suit for negative declaration.
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28. According to him, even if the plaintiff has
acquired a right under the compromise petition, without
getting its right crystallized by filing a suit for specific
performance of the contract in the manner known to law,
the plaintiff cannot maintain a suit for negative declaration
to declare that the sale deed executed by the first
defendant-society in favour of the second defendant is not
maintainable. He contends that as such, filing of such a
suit is contrary to the judgment of the Hon’ble Supreme
Court in the case of SARDESH ORES (P) LTD vs HEDE
AND COMPANY [(2007) 5 SCC 614]. He further submits
that when the suit for negative declaration is not
maintainable, the plaintiff is also not entitled for perpetual
injunction, since under ExP55, the plaintiff has secured
possession of only an area of 5100 sqft and the remaining
extent of the land, even according to the plaintiff, it is in
possession of other agreement holders. When the other
agreement holders having not come before the court and
when the plaintiff has not filed the suit on behalf of the
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remaining agreement holders, either as a power of attorney
holder or in any other capacity, the plaintiff cannot claim
that the plaintiff company is in possession of the same. He
further submits that PW1, the then managing director of
the plaintiff-company, in his cross-examination has
admitted that the plaintiff is not in possession of the suit
schedule property. If the plaintiff is not in possession of
the suit schedule property, either on the date of filing of the
suit or subsequent to the institution of the suit, no court
can grant a decree for perpetual injunction. In the
circumstance, he requests the court to dismiss the appeal.
29. Sri K S Nagaraja Rao, learned counsel for first
respondent contends that since the plaintiff did not adhere
to the terms and conditions of the agreement entered into,
the first defendant-society had every right to execute a sale
deed in favour of the second defendant and the sale deed
executed by the first defendant in favour of the second
defendant cannot be attacked by the plaintiff, since the
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plaintiff has no existing right and has not derived any right,
title or interest over the suit schedule property. He also
contends that under ExP55, the plaintiff has agreed to
develop the property to an extent of 5100 sqft, but the suit
is filed in respect of three acres of land. He also contended
that at no point of time, the plaintiff or any other agreement
holders were put in possession of the property. He further
contends that in order to claim right over the suit schedule
property by the plaintiff for itself or as representative of
other agreement holders, the agreement should be a
compulsorily registered document, since under the
agreement, a right has been created to transfer the interest
in an immovable property in favour of the agreement
holders permitting them to develop the property.
Therefore, he contends that the suit is not maintainable.
He further contends that the plaintiff being a company
cannot represent the other family members of PW1 –
managing director of the company. When the suit is filed
only in the name of a company, the company cannot
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represent the family members of the managing director or
any director of the company and such an argument is
unknown to law. In the circumstances, he requests the
court to dismiss the appeal.
Having heard the learned counsel for the parties, we
have to consider the following points in this appeal:
i) Whether the plaintiff being an agreement holder could have filed the suit seeking for a negative declaration, to declare the sale deed executed by the first defendant in favour of second defendant as not binding on the plaintiff and that the second
defendant has not derived any title, without filing a suit for specific performance on the basis of compromise entered into in O.S. No. 5649/1997 dt. 24.07.1999?
ii) Whether the plaintiff was in lawful
possession of the suit schedule property on the date of institution of the suit and whether the plaintiff is entitled for a decree of perpetual injunction even if the first relief is not granted to the plaintiff; and
iii) Whether the judgment and decree of the trial court requires to be interfered with in this appeal?
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The admitted facts in this appeal are that: The
plaintiff is claiming right through the first defendant
society. According to the plaint averments, first defendant
society had agreed to permit the plaintiff to develop a total
extent of 5 acres of land situated in different survey
numbers of Nagashettihalli village and the plaintiff has
developed the property only in an area of 2 acres by
constructing residential apartments known as ‘Whispering
Meadows’. The only dispute is in regard to the remaining
three acres of land, which is the subject matter of the suit.
30. According to plaint averments, the first defendant has
executed joint development agreements to develop different
extents of land in the suit schedule property in favour of 44
persons. The plaintiff is a private limited company
registered under the Companies Act, 1956. The first
defendant is a cooperative society, registered under the
provisions of Karnataka Cooperative Societies Act, 1959. It
is also not in dispute that on an earlier occasion, the first
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defendant-society had filed a suit against the plaintiff in the
present suit in OS No 5649 of 1997 for the relief of
permanent injunction only with a request to restrain the
plaintiff herein from proceeding with any construction
work, which suit was contested by the plaintiff-company.
The said suit came to be disposed of by virtue of a
compromise petition filed in the suit. As per the terms and
conditions of the compromise, the averments made in the
plaint in the aforesaid suit and the contentions raised by
the defendants in the suit in the written statement were to
be withdrawn and thereafter the first defendant-society has
to confirm the agreements and general powers of attorney
which were executed earlier and they should be in force
and withdraw the revocation of the agreements and GPAs.
31. It was agreed that the first defendant-society has to
receive a sum of Rs 3,50,00,000/- from the plaintiff herein
and also 35000 sqft of super built-up area. It was further
agreed in the compromise petition that the plaintiff herein
was required to construct flats and deliver 20560 sqft area
32
amounting to 13 flats and deliver to the first defendant-
society in three blocks viz., B, C, C, which were already
constructed and the remaining 14460 sqft of super built-up
area was to be delivered to the first defendant-society after
constructing all the buildings by obtaining necessary plan.
It was also agreed in the compromise that an additional
area of 15000 sqft built-up area has to be delivered to the
first defendant within nine months from the date of
approval of the revised plan.
32. Though the compromise petition was filed, the trial
court has not drawn a decree in terms of the compromise,
on the ground that the joint development agreements and
the terms of the compromise required registration and
payment of stamp duty. The trial court has specifically
directed the office to draw the decree only after payment of
the court fee by the plaintiff. The compromise petition was
accepted by the court below subject to the aforesaid
condition on 29-7-1999. It is also an admitted fact that till
33
today, the court fee has not been paid by the parties and a
decree as such has not been drawn. Therefore, it is the
contention of the defendants that on account of non-
payment of court fee and on account of non-drawing of the
decree, the terms of the compromise agreed upon between
the parties in the earlier suit cannot be looked into, since
the compromise has not been acted upon.
33. It is the case of the defendants that on account of the
non-payment of court fee, the terms of the compromise are
unenforceable. It is also their case that if the plaintiff was
interested in getting the compromise culminating in
drawing up of a decree by the court, the plaintiff was
required to pay the court fee. The other alternative
argument of the learned counsel for the respondents is that
even if the court fee had not been paid in the earlier suit, at
least the plaintiff was required to file a suit for enforcement
of the terms of the compromise within three years from the
date of filing of the compromise petition. On account of
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date of filing of the compromise petition. On account of
non-filing of a suit for specific performance, the plaintiff
cannot contend that the plaintiff-company is having a right
over the suit schedule property.
34. The plaintiff is not sure as to whether the suit is
based on ExP55 or on the base of the compromise petition.
If the suit is based on the compromise petition, this court
has to consider the validity of the compromise petition and
its enforceability in favour of the plaintiff. If the suit is not
based on the terms of the compromise and if the claim of
the plaintiff has to be considered based on the joint
development agreement executed between the plaintiff and
the first defendant-society, then the question would be
whether the plaintiff can lay claim on three acres of land,
even though under ExP55 the plaintiffs is having a right
only to an extent of 5100 sqft, and whether the plaintiff can
file a suit on behalf of the other agreement holders, as
35
representative of individuals or family members of the
directors or managing director of the company.
35. In order to appreciate these contentions, we have to
advert to the evidence let in by both parties. As stated
supra, on behalf of the plaintiff, its managing director A V
Patil has been examined as PW1. His examination-in-chief
is nothing but a replica of the pleadings in the plaint. In
the cross-examination, he has made several admissions.
He has admitted as hereunder:
… It may be that the 1st Defendant Society has executed 45 Joint Development Agreements in favour of 45 individuals in respect of these lands. The Witness volunteers that the Deed executed is not Development Agreements but they are Agreements of Sale. I do not remember if the
Agreement are executed between 4.10.1995 to 09.10.1995. I do not remember whether the Agreements are not registered. I have to enquire if the Plaintiff Company is in possession of the said Agreements. I have not looked into these Agreements before giving evidence before the
Court Commissioner. Witness again says that I have looked into them.
36
In para-21 of his cross-examination, PW1 admits to the
following effect:
I am not aware if the Katha of the Suit Schedule Property stands in the name of 2nd Defendant. May be that the Plaintiff Company has filed
objections before the Bangalore City Corporation objecting to transfer of Katha of the Suit Schedule Property in favour of 2nd Defendant.
In para-24, PW1 admits to the following effect:
It is true that Plaintiff Company was a party to the Arbitration Case No. 42/2000 on the file of the City Civil Court, Bangalore filed by the 2nd Defendant. It was so in the beginning but not afterwards.
In para-31 of his cross-examination, PW1 admits to the
following effect:
In order to indicate the Title or Possession of an
immovable property basic thing is a document. Question: To show one’s title to the property or one’s possession to the property the primary evidence is the document under which the title is acquired or the document under which
possession is delivered? Answer: It is so if it is a lawful document.
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Question : The documents that would indicate
possession in relation to an immovable property are title deed under which possession is delivered, agreement under which possession is delivered, Katha endorsement, tax paid receipts, licence, plan, if any.
Answer: It is so if the documents are lawful.
In paras-32 & 33 of his cross-examination, PW1 admits to
the following effect:
The Plaintiff have not acquired title or possession to the suit schedule property under a Sale Deed. Plaintiff has acquired title and possession to the suit property under an Agreement of Sale.
Question: The Plaintiff is put in possession of the suit schedule property in part performance under the Agreement of Sale.
Answer : Yes. I do not remember the total amount of consideration agreed for the sale of suit schedule property. The witness volunteers that there were 45 Agreements of Sale.
Under those 45 Agreements of Sale each one of the purchasers mentioned in the Agreements were put in possession separately. Plaintiff is one such Agreement Holder in respect of a portion of suit schedule property.
38
Question: Out of the 45 persons who entered
into Agreements of Sale the Plaintiff is one such person and has alone filed the suit. Answer: The Plaintiff includes all the 44 persons.
In para-36 of his cross-examination, PW1 admits to
the following effect:
I cannot name all those 44 persons.
The Plaintiff does not have Power of Attorney of all the 44 persons. The suit is filed on behalf of Plaintiff only and not on behalf of 44 persons.
Without looking into the record I cannot say the date, month and year of the Agreement of Sale of a portion of suit schedule property in favour of the Plaintiff.
[Emphasis is supplied by us]
In para-41 of his cross-examination, PW1 admits to the
following effect:
The Plaintiff is in possession of the Agreement of
Sale in respect of a portion of the suit schedule property.
In para-51 of his cross-examination, PW1 admits to the
following effect:
39
I did not feel it necessary to institute suit for
specific performance on receiving the notice of termination/cancellation of the Agreements, GPA and Indemnity bond from the 1st Defendant Society. Witness volunteers because the Owner had no right to do the said things.
In para-52 of his cross-examination, PW1 admits to the
following effect:
It was on the date of Agreement of Sale the Plaintiff was put in possession of the portion of
the property which is the subject matter of Agreement of Sale. Question: Please point out the documents produced in the Court under which the Plaintiff came to be put in actual physical possession of
the portion of the suit property in respect of which the contract is entered into. Answer: I require reasonable time to go through the records produced in the Court to point out
the document under which actual physical possession is delivered. I have gone through the records and it seems that the possession document executed by the Land owner in favour of Plaintiff is not submitted in the Court.
In para-57 of his cross-examination, PW1 admits to the
following effect:
The Plaintiff Company has purchased the share of other buyers in respect of suit property. The
documents are not registered. They are with the
40
Plaintiff Company. I cannot say the Day, Month
and Year of purchase of the share of others by the Plaintiff Company.
In para-58 of his cross-examination, PW1 admits to the
following effect:
After looking into the records the Witness says “I have not produced the records referred above”. The other purchasers of different potions of suit property never surrendered possession of the portions of suit property to the 1st Defendant
Society from the date they acquired possession till today.
In para-59 of his cross-examination, PW1 admits to the
following effect:
Different purchasers of portions were not parties to the document.
In para-67 of his cross-examination, PW1 admits to the
following effect:
I visited the suit property on the last occasion about 3 or 4 months back. I cannot say whether the vacant land shown in photographs Ex. D-11 & D-12 is the suit property. The vacant land
shown in Ex.D-8 is not the suit property. The Plaintiff is not possession of the vacant land shown in Ex.D-8. Similarly the Plaintiff is not in possession of the vacant land shown in Ex.D-11 & D-12. The Plaintiff is also not in possession of the vacant land shown in Ex.D-9 & D10. The
41
Plaintiff has also not exhibited any board as
seen in Ex.D-9 & D10. It is true that Ex.D-9 & D-10 it is a board of stating “This property belongs to CVL Sastry”.
On perusal of the evidence of PW1, it is clear that the
plaintiff has filed the suit based on ExP55 joint
development agreement. ExP55 is a development
agreement entered into between the plaintiff and the first
defendant-society on 5-10-1995, wherein it is agreed to
develop the suit schedule property for a consideration of Rs
22,93,317/- and of course certain amount was paid as
advance. The balance consideration of Rs 7,83,317/- was
to be paid by the plaintiff to the first defendant after
fulfilling certain conditions by the first defendant-society.
36. By looking into the pith and substance of this
document [ExP55], though the document is styled as a
‘development agreement’, it is virtually a deed transferring
the property in favour of the plaintiff-company. The
schedule to ExP55 is only in respect of 5100 sqft, which is
42
mentioned as schedule-C to the agreement. Admittedly, it
is not a registered document. Under ExP55, the plaintiff
cannot claim any right over and above 5100 sqft of land.
Even if it is considered that the plaintiff has acquired any
right under ExP55, at the best, the court can come to the
conclusion that the plaintiff is having right only to an
extent of 5100 sqft, but not the whole extent of 3 acres.
Along with ExP55, a sketch is also annexed to show that
site No 5 earmarked in the sketch is a land granted to the
plaintiff for development. In the sketch, in all 45 sites
have been formed and the remaining 44 sites are sold to
different persons under similar agreements. They are
marked as ExP56 to 99. These are the all similar
agreements of sale as that of ExP55. These agreements
are executed by the first defendant-society in favour of
different individuals.
37. If the first defendant-society has executed different
agreement in favour of different persons and even if those
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persons are relatives or family members of the managing
director of the plaintiff-company, the company cannot
institute a suit on behalf of family members of the director
or managing director of the company. It is also not the
case of the plaintiff that it has filed the suit on behalf of the
remaining 44 agreement holders. In the cross-examination
of the PW1, he has stated that he has not obtained any
powers of attorney from such persons and it is not
represented the aforesaid persons.
38. When such being the case, this court has to consider
as to whether based on the compromise entered into earlier
in OS No 5649 of 1997, the plaintiff has acquired right to
file a suit to claim 3 acres of land and based on such
existing right, a negative declaration relief can be granted
in favour of the plaintiff, holding that the sale deed
executed by the first defendant-society in favour of second
defendant does not bind it? To seek such a relief, the
plaintiff must have a right over the property in question.
44
Learned counsel for both parties are not disputing the fact
that a decree has not been drawn on the basis of the
compromise on account of non-payment of commensurate
court fee. If the decree is not drawn, it can be assumed
that the terms of the compromise have not been accepted
by the court. Then, this court has to see whether the
plaintiff can still maintain a suit seeking a negative
declaration based on the terms of the compromise petition?
39. According to Sri G L Viswhanath, learned counsel for
the appellant-plaintiff, the terms of the compromise are
more in the nature of an agreement and the same is
binding on the plaintiff and the first defendant-society.
According to him, even if the compromise petition is
accepted by the court below in the earlier suit and the
decree is not drawn on account of non-payment of court
fee, still the compromise petition and its terms are binding
upon the parties.
45
40. Even if we accept the contention of Sri Vishwanath,
still, the plaintiff has to enforce the terms of the
compromise when it styled the document as an agreement.
If it is an agreement entered into between the plaintiff and
the first defendant, it is nothing but a contract. When it is
a contract between the parties, unless and until the
contract is got crystallized by executing a sale deed in
respect of the immovable property in favour of the plaintiff
by the first defendant-society, the plaintiff cannot contend
that it has acquired the right, title or interest over the suit
schedule property.
41. After arriving at the terms of the compromise petition,
both the plaintiff and the first defendant-society were
required to perform their parts of contract. According to
the first defendant-society, the plaintiff committed breach
of terms of the compromise and therefore it has terminated
the contract and the plaintiff cannot enforce the same.
46
42. PW1, who entered in the witness box on behalf of the
plaintiff, has spoken about the receipt of notice got issued
by the first defendant-society, terminating the agreement.
But unfortunately, for the reasons best known to the
plaintiff-company, it did not file a suit for specific
performance of the contract, even to enforce the terms of
the compromise. If the plaintiff had filed a suit to enforce
the terms of the compromise, this court could have
appreciated the contentions of the learned counsel for the
appellant-plaintiff. Unfortunately, the plaintiff did not
exercise its right within three years from the date of
compromise petition, even though a decree is not drawn in
accordance with law due to non-payment of court fee.
During the final hearing of this appeal, the plaintiff had
filed an application before this court under Order VI Rule
17 CPC, to amend the prayer to incorporate the following
additional prayer:
a [i] or in the alternative to declare that the terms of compromise dated 29.07.1999 entered in O.S. No. 5649/1997 are valid
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and binding on the Defendants and
consequently to direct them to abide by and comply with the terms, conditions and obligations of the said compromise petition
This application was heard and rejected on merits by the
order dated 25-2-2014, holding that such a relief cannot be
considered by this court 15 years after the filing of the
compromise petition in the earlier suit.
However, it is also to be seen that with regard to the
appropriate relief to be claimed by the plaintiff, the plaintiff
has admitted to the fact that the relief sought for by him
was not proper. The trial court referred to this issue in
para-25 of its Judgment which reads as follows:-
“25. When the Court questioned the Advocate for the Plaintiff regarding the declaratory relief, he admitted that he should not
have sought declaratory relief in this way and that the Plaintiff had been given power to develop even the 3 acres of suit land and as the 2nd Defendant attempted to interfere with the said 3 acres of land and as the numbers put by the Plaintiff were removed, the Plaintiff was forced
to come to the Court. As the Advocate for the Plaintiff directly admitted that the declaratory
48
relief sought by him was not proper, the said
matter was not discussed in detail.”
Therefore, it is not a case of any inadvertence in not
seeking the relief. But the fact is that even during the
pendency of the suit, the plaintiff was aware that the relief
sought by him is inappropriate.
43. When the plaintiff has not filed a suit in terms of the
compromise petition within three years, contending that
the plaintiff is having a right over three acres of land and
on the basis of the same, the sale deed executed by the first
respondent-society in favour of second defendant is not
binding on the plaintiff, the same cannot be countenanced
by this court, because, at the first instance the terms of
compromise cannot be enforced by the plaintiff by filing a
suit based only on ExP55, which agreement permits the
plaintiff only to develop the property to an extent of 5100
sqft only. Of course the said assertion has also been denied
by the defendants, and that the plaintiff has not even filed
a suit to enforce the said agreement. Under these
49
circumstances, if the trial court has held that the suit filed
by the plaintiff is not maintainable and such an equitable
relief cannot be granted, this court cannot interfere with
such a decision and cannot grant any relief to the plaintiff,
more particularly in view of the law laid down by the
Hon’ble Supreme Court in the case of SARDESH ORES (P)
LTD [supra], wherein it is held as under, in regard to grant
of negative relief:
39. We are of the view that the respondents are right in contending that enforcement of the negative covenants presupposes the existence of
a subsisting agreement. As noticed earlier, the law is well settled that the renewal of an agreement or lease requires execution of a document in accordance with law evidencing the renewal. The grant of renewal is also a fresh grant. In the instant case, the appellant-plaintiff
did exercise their option and claimed renewal. The respondents denied their right to claim renewal in express terms and also unequivocally stated that the agreement did not stand renewed as contended by the appellants. Having regard to these facts it must be held that
a cause of action accrued to the appellant-plaintiff when their right of renewal was denied by the respondents. This happened in December, 2001 and, therefore, within three years from that date they ought to have taken appropriate proceedings to get their right of
50
renewal declared and enforced by a court of law
and/or to get a declaration that the agreement stood renewed for a further period of 5 years upon the appellants' exercising their option to claim renewal under the original agreement. The appellants-plaintiffs have failed to do so. However, the plaint proceeds on the assumption
that the original agreement stood renewed including the negative covenants contained in clauses 15 and 20 of the original agreement which authorised only the appellants to extract ore from the mine with an obligation cast on the respondents-defendants not to interfere with the
enjoyment of their rights under the agreement. In the facts of this case, in the suit prayer for injunction based on negative covenants could not be asked for unless it was first established that the agreement continued to subsist. The use of the words "during the subsistence of this
agreement" in clause 15, and "during the pendency of this indenture" in clause 20 of the agreement is significant. In the absence of a document renewing the original agreement for a further period of 5 years and in the absence of any declaration from a court of law that the
original agreement stood renewed automatically upon the appellants exercising their option for grant of renewal, as is the case of the appellants, they cannot be granted relief of injunction, as prayed for in the suit, for the simple reason that there is no subsisting
agreement evidenced by a written document or declared by a court. If there is no such agreement, there is no question of enforcing clauses 15 and 20 thereof. The appellants ought to have prayed for a declaration that their agreement stood renewed automatically on
51
exercise of option for renewal and only on that
basis they could have sought an injunction restraining the respondents from interfering with their possession and operation. Having not done so, they cannot be permitted to camouflage the real issue and claim an order of injunction without establishing the subsistence of a valid
agreement. In the instant suit as well they could have sought a declaration that the agreement stood renewed automatically but such a claim would have been barred by limitation since more than 3 years had elapsed after a categoric denial of their right claiming
renewal or automatic renewal by the respondents-defendants.
Under these circumstances, we are of the view that the
finding of the trial court on the question of maintainability
of the suit and consideration of the prayer (a) has to be
accepted and the appreciation of evidence by the trial court
cannot be held to be perverse. Accordingly, the first point
is answered against the appellant-plaintiff.
44. In so far as the relief of injunction is concerned, even
according to the plaintiff there are 45 agreements and in
each agreement different persons are claiming to be in
possession of specific and defined extents. The plaintiff is a
52
company, which is said to have been in possession of only
5100 sqft in a vacant piece of land. The plaintiff has no
right, title or interest over the property, because, ExP55 is
not an enforceable agreement by the plaintiff in a manner
known to law. There is nothing on record to show that the
plaintiff is in possession of the property. On the contrary,
the evidence of PW1 shows that the plaintiff is not in
possession of the suit schedule property. If the plaintiff is
not in possession of the suit schedule property, the
question of considering the second prayer to grant a decree
of perpetual injunction will also not arise for consideration.
45. If the plaintiff’s right in respect of vacant site is
emphatically denied by the defendants, the remedy
available to the plaintiff is only to seek the comprehensive
relief of positive declaration with the consequential relief of
permanent injunction, if it is of the firm opinion that it is in
possession of the same or for possession if the adversary is
in possession of the same. Principles to this effect have
53
been clearly laid down by the Hon’ble Apex Court in the
case of ANATHULA SUDHAKAR Vs BUCHI REDDY [AIR
2008 SC 2033]. Plaintiff has not adopted this approach.
On the other hand the plaintiff has very intelligently made
an attempt to seek the negative relief of declaration in lieu
of positive declaration of having acquired absolute title. As
already discussed at length, plaintiff has not acquired any
title on the basis of a compromise entered into in a suit
filed for permanent injunction by the 1st defendant earlier,
more particularly, in not attempting to enforce the alleged
right acquired on the basis of compromise. Even on this
count also the present suit is not at all maintainable in law
or on facts.
46. Though the learned counsel for the appellant-plaintiff
contends that the plaintiff is in possession of the land,
which is a fact on the face of the compromise petition filed
by the parties in the earlier suit, the plaintiff is bound to
show that as on the date of filing of the present suit, it was
54
in possession of the entire suit schedule property. When
the plaintiff’s witness admits that the plaintiff is not in
possession of the property but different agreement holders
are in possession of the property, even if the case of the
plaintiff is accepted, no injunctive relief can be granted in
favour of the plaintiff. Accordingly, the second point is
also answered against the appellant-plaintiff.
47. The trial court has properly analyzed the entire
evidence on the touchstone of intrinsic probabilities after
properly narrating the facts. It has adopted right approach
to the real state of affairs and has applied proper law to the
facts of the case.
48. In the result, we do not find any merit in this appeal
and accordingly appeal is dismissed.
49. At this juncture, learned counsel for the appellant-
plaintiff submits that the interim order granted earlier at
the time of admission of the appeal may be continued for a
55
further period of eight weeks to enable the plaintiff-
appellant to take up the matter to Hon’ble Supreme Court.
50. This appeal was admitted on 31-8-2010. While
admitting the appeal, this court had directed the parties to
maintain status quo and not to change the nature of the
property. If the appellant is intending to challenge this
judgment, we are of the view that the interim order granted
on 31-8-2010 shall be in force for a period of eight (8)
weeks only from today. Ordered accordingly. There is no
