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Bombay High Court
Nusli N. Wadia And 2 Ors vs Bastion Constructions on 27 June, 2025
Author: A. S. Gadkari
Bench: A. S. Gadkari
2025:BHC-OS:10849-DB
sbw/sns 1-os-app-289-2015-J.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO.289 OF 2015
IN
SUIT NO.353 OF 2009
1. Mr. Nusli N. Wadia ]
2. Mrs. Maureen N. Wadia ]
3. Mr. Rajesh Batra ]
In their capacity as Trustees of ]
F.E. Dinshaw Trust having their ]
Office at 412, Churchgate Chambers ]
5, Sir Vithaldas Thackersay Marg, ] ...Appellants.
Mumbai - 400 020. ] (Original Defendants)
V/s.
Bastion Constructions ]
A Partnership firm having its ]
Registered office at B/11, Yuwan ]
Apartment, Mount Mary Road, ] ... Respondent.
Bandra (West), Mumbai - 400 050 ] (Original Plaintiff)
______________________________________
Mr. Navroz Seervai, Senior Advocate a/w. Mr. Yash Momaya a/w Adv.
Rujuta Patil, Adv. Yohaan Shah, Adv. Hasan Mushabber and Adv. Masira
Lulanja i/b Negandhi Shah and Himayatullah for Appellants.
Mr. Ravi Kadam, Senior Advocate a/w. Mr. Vineet Naik, Senior Advocate
a/w. Adv. Bhushan Deshmukh, Adv. Chirag Kamdar, Adv. Dhawal Metha,
Adv. Jasmine Kachalia, Adv. Tanvi Shah, Adv. Aryan Srivastava, Adv.
Shubadha Khandekar, Mr. Sahil Singh and Adv. Dorcas Jonas i/by Wadia
Ghandy and Co. for Respondent
Mr. S.K. Dhekale, Court Receiver, High Court Bombay, O.S. and Mrs. P.P.
Sarang, Section Officer, Court Receiver, High Court Bombay, present.
_____________________________________________
Digitally
signed by
SUMEDH
SUMEDH NAMDEO
NAMDEO SONAWANE
SONAWANE Date:
2025.07.15 1/190
18:14:48
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CORAM : A. S. GADKARI AND
KAMAL KHATA, JJ.
RESERVED ON : 26th March, 2025.
PRONOUNCED ON : 27th June, 2025
Judgment (Per : Kamal Khata, J) :-
1) Present appeal is directed against the Judgment and Decree dated
4th March 2015 (impugned judgment) passed by the learned Single Judge,
inter alia, decreed specific performance of suit Agreement dated 18 th March
2002, pertaining to two pieces or parcels of land situated at Village Malad,
Taluka Borivali, Mumbai Suburban District. The lands form part of Survey
No. 504A, and are more particularly described as:
i) CTS Nos. 1406-G/3 (part), admeasuring 68,359.1 sq. Meters;
and
ii) CTS Nos 1406-G/5 (part), admeasuring 31,350 square meters
(hereinafter referred to as “suit property” or “suit lands”), in
favour of the Respondent.
PARTIES:
2) The Appellants i) Mr. Nusli N. Wadia, ii). Mrs. Maureen N. Wadia
and iii) Mr. Rajesh Batra (collectively, “the Wadias) – in their capacity as
trustees of the F. E. Dinshaw Trust Public Charitable Trust, (“the Trust”),
are owners and Vendors of the suit property and were the Defendants in the
suit.
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sbw/sns 1-os-app-289-2015-J.doc 3) The Respondent - Bastion Constructions, is the purchaser of the
suit lands and the Original Plaintiff in the suit.
BRIEF FACTS:
4) The Wadias intended to realize such value for the suit property as
could be obtained and accordingly proposed to sell it on “as is where is
basis”. This decision was influenced by multiple factors such as, pending
litigations affecting the property; the adjoining lands (admeasuring about
15 acres) being used by the Brihanmumbai Municipal Corporation (BMC)
as a refuse dumping ground; the suit lands being low lying and a major
nala passing through them; growing slums encroachments in the vicinity;
and the persistent threat of further encroachments on the suit lands.
Additionally, the Trust was burdened with recurring expenses for payment
of non-agricultural assessment, land revenue, property taxes and costs
associated with safeguarding the properties.
5) More critically, the suit properties were governed by the
provisions of Urban Land (Ceiling & Regulations) Act, 1976 (“ULC Act“)
and was at risk of acquisition by the Authorities, which would have resulted
in only nominal compensation. In the light of these circumstances, the
Trustees invited offers for the properties. Of the fourteen entities that
purchased the offer forms, only one M/s Bastion Constructions (“Bastion”)
submitted an offer. At the request of the Wadias, Bastion enhanced their
offer to ₹ 14 crores, which was accepted vide letter dated 18 th March 2002.
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An amount of the ₹ 5 crores was paid upon acceptance of the offer and
following the Charity Commissioner’s sanction of the sale dated 27 th
December 2002, Bastion paid the balance consideration of ₹ 9 crores. Thus,
the entire consideration of ₹ 14 crores under the Agreement stood fully
paid to the Wadias on 10th November 2003.
6) Under the Charity Commissioner’s Order as well as the
Agreement, the Wadias were obligated to execute the Conveyance upon
receipt of the full consideration, subject to obtaining the requisite
permission, clearance, or No Objection Certificate from the Competent
Authority under Urban Land Ceiling Act, 1976 and to handover possession
accordingly.
7) It is an admitted fact that, Bastion appointed security guards in
July 2003 and commenced constructing of a retaining wall along the nalla
in November 2003 and completed it in May 2005. On 3 rd October 2006 the
Wadias submitted an application to the Competent Authority under ULC Act
seeking exemption for surplus vacant land under section 20 of the ULC Act.
While this Application was pending, the ULC Act was repealed with effect
from 29th November 2007. Thereafter, Bastion, by its letter dated 12 th
February 2008, called upon the Wadias to execute a conveyance of the suit
property in its favour. Following an exchange of correspondence between
the parties, the Wadias proceeded to terminate the agreement dated 18 th
March 2002 and forfeited the entire consideration of ₹ 14 crores paid by
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Bastion. This led to filing of the suit for specific performance by Bastion
against the Wadias.
8) In view of the pleadings on record the learned Judge framed the
following issues :
1. Whether the Suit contract as comprised in the terms
and conditions of Offer Documents1, read with the Plaintiff
letters dated 19th January 20022, read with the Defendants’
letters dated 18th March 20023 is valid and subsisting as
alleged in paragraph 46 of the plaint?
2. Whether the Plaintiff was and is ready and willing to
perform the suit contract/ Agreement as alleged in paragraph
46 of the plaint ?
3. Whether the Charity Commissioner’s Order dated 27th
December 2002 (Exhibit “G” to the plaint) read with Order
dated 25th March 2002 (Exhibit ‘H’ to the plaint) has become
void for reasons alleged in paragraphs 5(d) and 34 of the
Written Statement?
4. Whether termination of the suit contract / agreement
effected vide letter dated 26th November 2008 (Exhibit ‘BB’ to
the plaint) is valid as alleged in paragraph 35 of the Written
Statement?
5. Whether the Plaintiff proves that they have taken
effective control and possession of the suit properties as
alleged in paragraph 14 of the plaint ?
6. Whether the Plaintiff is entitled to specific performance
of the suit contract?
1 Exhibits 'C' and 'C-1' to the plaint 2 Exhibits 'D' and 'D-1' to the plaint 3 Exhibits 'E' and 'F' to the plaint 5/190 ::: Uploaded on - 15/07/2025 ::: Downloaded on - 19/07/2025 03:22:26 ::: sbw/sns 1-os-app-289-2015-J.doc 7. In the event, issue No.6 being answered in the negative, a. Whether the Plaintiffs in the alternative are entitled to recover from the Defendants Rs.14,00,00,000/- (Rs. Fourteen Crores only) paid
by the Plaintiff to the Defendants as consideration for
the sale of the suit properties along with interest
thereon at the rate of 18 % per annum from the date of
the suit till payment?
b. Whether the Plaintiff in the alternative are
entitled to recover from the Defendants damages as per
particulars of claim set out in Exhibit ‘GG’ of the plaint?
c. Whether the Plaintiff is entitled to enforce the
charges on the suit property for recovery of its dues
from the Defendants as claimed in the plaint by sale of
the suit property?
8. Additional Issue – Whether the suit is not maintainable
for want of the leave of the Charity Commissioner under
Section 50 of the Bombay Public Trusts Act, 1950 for
filing of the Suit?
8.1.1) We find that, the learned Single Judge has addressed each of
the issues raised, as well as other relevant aspects that emerged in the
matter, in the impugned Judgment. For the sake of clarity and a structured
analysis, we shall now proceed to address the submissions pointwise or
subject-wise, as deemed appropriate, in the sub-paragraphs that follow the
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arguments and thereafter summarise our findings in the reasons and
conclusions.
9) Mr. Navroz Seervai, learned Senior Counsel for the Wadias has
advanced the following submissions:
a. What is the true construction and import of Clause 10 of
the Contract:
b. Whether Clause 10 is an Essential / Fundamental Term
of the Contract or Not:
9.1) He submitted that the Learned Single judge has gravely erred
in construing Clause 10 of the Contract.
9.2) Clause 10 of the Offer Document (in respect of both Suit
Properties4) is reproduced herein for ready reference and provides as under:
“10. It will be solely the responsibility of the Purchaser to
obtain the Permission/Clearance/No Objection from the
Competent Authority under the Urban Land (Ceiling and
Regulation) Act, 1976 to enable the Conveyance to be made
and the amount paid will not be refundable on the ground
that the requisite Permission/NOC/Exemption is not
forthcoming or is refused.”
(Emphasis supplied)
9.3) He argued that, it was for the Purchaser to obtain
permission/clearance/NOC under the ULC Act. The in-built consequence of
the permission/clearance/NOC not being obtained is provided in Clause 10
4 Vol II @ 318, 325 Page 2 of 53
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itself, viz. that the amount paid by the Purchaser would not be refundable
and no Conveyance would be executed in favour of the Purchaser
necessarily therefore, the Suit Properties continue to be owned by the
Wadias’. Absent the said permission/clearance/NOC, Wadias’ obligation to
execute a Conveyance, obviously, did not arise and the Suit Properties
would continue to be owned by the Wadias. The Purchaser (Bastion) being
entitled to specific performance could not, in law, and would not in fact,
arise. Further, Clause 10 that without the Permission/Clearance/NOC under
the ULC Act, the Conveyance could not be made.
9.3.1) This argument is partially correct. It is accurate to the extent
that the obligation to obtain permission rested solely with the Purchaser,
and that failure to do so would result in forfeiture of the consideration and
no execution of the conveyance- leaving ownership of the properties with
the Wadias. However, with the repeal of the ULC Act and the fact that the
entire consideration had already been paid, the contractual obligation was
rendered redundant, thereby entitling the Purchaser to specific
performance.
9.4) He submitted that, the Learned Single Judge’s findings in
Paragraphs 10-12 of the Impugned Judgment fly in the face of the express
language of Clause 10, and as such, are liable to be interfered with and
reversed. Judge’s interpretation of Clause 10 is ex-facie erroneous, being
untenable in fact and in law.
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sbw/sns 1-os-app-289-2015-J.doc 9.4.1) This argument advanced by Mr. Seervai is rejected. The
learned Single Judge, in paragraph 8, has applied the factual matrix to the
relevant contractual clauses set out in paragraph 9 and has, in paragraphs
10 to 12 of the impugned Judgement, provided a clear and reasoned
explanation as to why the contract could not be terminated. Clause 10 has
been interpreted in consonance with settled legal principles and the
evidence on record. We are in full agreement with the observations and
conclusions of the learned Single Judge.
9.5) Mr. Seervai asserted that, there can be no doubt that obtaining
permission/clearance/NOC was also a statutory requirement 5 and therefore
an essential term of the agreement without compliance of which the
Conveyance could not be obtained by the Purchaser. This critical aspect of
the matter, though argued and placed in written submissions by the
Wadias, has not even been dealt with or considered by the learned Single
Judge in the impugned Judgment.
9.5.1) This assertion is incorrect. The case of Nathulal (supra) is not
an authority on either essential term or statutory requirement and therefore
not applicable to this case. A plain reading of paragraph 11 makes it evident
that the learned Single Judge has duly addressed the issue. The conclusion
was drawn after a comprehensive consideration of the arguments advanced,
5 Nathulal vs. Phoolchand, (1969) 3 SCC 120.
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in conjunction with the pleadings, evidence, and applicable law. We find no
infirmity in the reasoning or conclusion.
9.6) He submitted that, in the absence of the NOC / permission
being obtained and therefore, the condition imposed by Clause 10 not being
fulfilled, there was no obligation on the Wadias to execute the Conveyance.
In such circumstances, a suit for specific performance was not maintainable
and if filed, ought to have failed. In the facts of the present case, without
the NOC / permission being obtained, the Purchaser directly sought specific
performance. This is in the teeth of and contrary to Clause 10, which
expressly contemplates a Conveyance only if and when NOC / permission is
obtained. It is no answer to say that the NOC / permission is no longer
required, as that amounts to re- writing of the Contract, which the Court is
not empowered to do.
9.6.1) This submission, in our view, is plainly incorrect. It is wholly
untenable for a party who consciously offered the property for sale,
accepted the entire consideration, and derived full benefit under the
agreement, to terminate the contract after a lapse of five years and then
contend that there was no obligation to execute the conveyance. Such a
stance reflects a deliberate and distorted misreading of Clause 10,
motivated solely by self-interest. It is a classic case of seeking to retain the
benefit while disowning the corresponding obligation–an argument we
unreservedly reject.
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sbw/sns 1-os-app-289-2015-J.doc 9.7) Mr. Seervai contended that, one test to judge whether in the
circumstances, Clause 10 was an essential / fundamental term is to ask
whether the Conveyance could be executed absent the ULC clearance /
NOC / permission, at the time the Contract was entered into. Clearly, it
could not. As such, Clause 10 is, necessarily and obviously an essential and
fundamental term, as without its compliance, no Conveyance could be
executed in favour of the Purchaser.
9.7.1) This argument is to be stated to be rejected. It is a non-starter.
There is no basis to evaluate Clause 10 as an essential term solely with
reference to the time when the contract was executed. Its relevance must be
assessed at the point of termination. By the time the contract was
purportedly terminated, the ULC Act had already been repealed, rendering
Clause 10 redundant to the extent of the obligations contemplated therein.
This contention is, yet again, thoroughly self-serving. The Learned Judge
has succinctly and appropriately dealt with the issue in paragraph 11 of the
impugned Judgement.
9.8) He further submitted that, a bare reading of Clause 10 would
indicate that it imposes a consequence as harsh as losing the entire
consideration for the Purchaser’s failure to obtain the NOC. This belies the
view of the learned Single Judge that Clause 10 is only ” relevant only from
the standpoint of the purchaser”. It is impossible to conceive of how a
clause that denies a party of its right to a conveyance and imposes a
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forfeiture of the entire consideration, can ever be termed as being non-
essential. A clause that imposes a harsh and drastic penalty upon a party
can never be termed as being for his or her benefit. Such a clause must,
necessarily, be construed to be a fundamental and essential term of the
contract. Similarly, a term the fulfillment of which alone would impose the
obligation on the Wadias to execute a Conveyance has to be a fundamental
and essential term without its fulfilment, further steps were not to be taken.
9.8.1) The argument that, it is impossible to conceive how a clause–
which denies a party the right to conveyance and imposes forfeiture of the
entire consideration–can be regarded as non-essential, is thoroughly
misconceived. Such a submission could only be advanced when driven by
self-interest. We find no flaw in the conclusion reached by the learned
Judge, who has carefully evaluated the facts, evidence, and applicable legal
principles to hold that Clause 10 is relevant only from the standpoint of the
purchaser. This argument conveniently overlooks the fact that the Vendors
had received the entire consideration, and that it was only after a lapse of
five years–following the repeal of the ULC Act–that they attempted to
reinterpret Clause 10 in their favour. In truth, the clause must be construed
solely from the purchaser’s perspective.
9.9) Mr. Seervai submitted that, the view of the learned Single
Judge that whether or not the permission under the ULC Act was obtained
would have no bearing on the Contract as far as the Wadias is concerned is
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patently erroneous. If the permission / NOC / clearance under the ULC Act
was not obtained or the same was rejected, or the same was not
forthcoming [as indeed was the position in the present case], under Clause
10 the Wadias would not be obligated to execute the Conveyance and
would, subject to ULC, be entitled to retain both the Suit Properties as also
the monies paid by the Purchaser. How a clause that results in such a
consequence from the Wadias’ perspective can ever be termed to have no
bearing on the Contract as far as the Wadias is concerned is not clear ex
facie the clause has a material, and indeed critical bearing even from the
Defendant’s perspective.
9.9.1) In our view, this argument too amounts to a deliberate
misreading of the learned Judge’s observations. While the argument is
premised on Clause 10 as it stood on the date of execution of the
agreement, the learned Judge’s reasoning is grounded in subsequent
developments–specifically, the repeal of the ULC Act. Clause 10
undoubtedly had relevance while the ULC Act was in force; however, its
effect was neutralized upon repeal. We therefore find no error in the
conclusion drawn by the learned Judge.
9.10) He further submitted that, if the contract could be effectuated
(i.e., the Conveyance executed) without the ULC clearance, then the term
would not be a fundamental / essential term and its breach could not be
called a repudiatory breach entitling termination of the Contract. However,
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if on the other hand, the Conveyance could not be executed in the absence
of ULC permission / sanction / NOC, then the failure to obtain such ULC
and did constitute a repudiatory breach warranting and justifying the
termination of contract as also rendering the contract unenforceable and
void. The essentiality of Clause 10 and it’s viewed in this light, i.e. without
its compliance, nothing further could take place in performance of the
Contract.
9.10.1) This argument too is premised on a flawed foundation. Clause
10 might have had legal significance had the ULC Act remained in force.
However, following its repeal, the clause became redundant. The
conclusion drawn by the learned Judge, therefore, is unassailable and does
not warrant interference.
9.11) He submitted that, in a suit for specific performance the test to
be applied is whether the NOC was necessary at the time of execution of the
Contract and during the subsistence of the NOC under the ULC Act. If the
NOC under the ULC Act was necessary/mandatory at the relevant time [i.e.
when the agreement was entered into; that being the very basis of the
agreement, as set out below] then the obligation to obtain the same is not
capable of being dispensed with even in the light of subsequent events or
the subsequent repeal of the ULC Act.
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sbw/sns 1-os-app-289-2015-J.doc 9.11.1) This argument too is based on a flawed foundation. The
obligation is not being dispensed with but has become redundant on
account of repeal of the Statute. Bastion has no role to play in the change.
9.12) Clause 10 was thus clearly a ” promissory condition”. In this view of
the matter, the learned Single Judge has erred in holding that clause 10
was not a “promissory condition”.
9.13) Anson (on Contract), 30th Edition at Page 149, defines a
condition as a promise, as to fact or as to future conduct which forms an
essential term of the contract. If the fact proves untrue or the promise is not
fulfilled, the breach may be treated as a repudiation which entitles the
innocent party to be discharged from further performance of the contract.
Applying the aforesaid principle of contract law to the facts of the present
case, it is clear that Clause 10 was a condition in the nature of a promise as
to the obtaining of the NOC by the Purchaser. Thus, the obtaining of the
NOC / clearance / permission under the ULC Act was an essential term of
the contract. It can be further inferred that even without repudiating the
contract, the Defendants were discharged from their obligation to perform
the contract.
9.13.1) The learned counsel’s submission may have had some merit if
the contract were to be viewed solely within the framework of the law
prevailing prior to the repeal of the ULC Act. However, as rightly held by
the learned Judge, that reasoning does not withstand scrutiny when
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examined in the context of the legal position after the repeal. Consequently,
the definition of a “condition” as a promise, as drawn from Anson, has no
relevance to the facts of the present case and stands entirely misapplied.
Crucially, the fact that the obligation contemplated under Clause 10 stood
discharged by operation of law due to the repeal of the ULC Act cannot be
ignored. There was no question of repudiation of the contract, as the
Plaintiffs had already paid the entire consideration, and the sole remaining
obligation was for the Defendants to execute the conveyance in their
favour.
9.14) Mr. Seervai contended that, in fact on the promise not being
fulfilled, the Defendants treated the breach thereof as a repudiation which
discharged the Defendants from further performance of the contract viz.
execution of the Conveyance. The fact that the compliance of Clause 10 was
an express term and fundamental basis of the Charity Commissioner’s
sanction under Section 36(1) and of the Agreement was stated by the
Defendants in their termination Notice dated 25.11.2008 6 itself. The
persistent failure to apply for NOC from 2002 to 2006 was inter alia the
basis of termination by the Defendants. While dealing with the said aspect
the Purchaser has in its reply dated 14.01.2009 7 merely stated that the
Purchaser did not owe the Defendants any obligation to obtain the said
NOC / permission. However, the Purchaser has not denied or disputed (i)
6 Vol. IV / P-44 / 780
7 Vol. IV / P-47 / 789
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that the NOC was required to be obtained to enable conveyance and (ii) has
not denied that it was a fundamental term of the sanction of the Charity
Commissioner as also the Agreement between the parties. It has also not
been denied that it was a condition of sale that the Purchaser was required
to apply to the Competent Authority and fulfil Clause 10. The Purchaser
merely chose to gloss over these facts by stating that in view of the repeal of
the ULC Act, these facts have become irrelevant. Apart from the above, the
contention in the reply dated 14.01.2009, issued post termination, is a
complete volte face and is belied by the admissions contained in
correspondence and cross-examination8.
9.14.1) In our view, the conduct of the Defendants in repudiating the
contract is, at the very least, deeply dishonest. It is evident that, following
the repeal of the ULC Act, the Defendants became motivated by greed and,
unable to accept the resultant windfall in favour of the Plaintiffs, sought to
resile from the agreement. The contention now advanced is founded upon a
clear misreading and misapplication of the correspondence and the cross-
examination on record. We find no merit in the submission, and accordingly
reject it.
9.15) He contended that if it was the Purchaser’s case that Clause 10
was not an essential term, then it was for the Purchaser to plead so. The
Purchaser has not pleaded so and the Plaint is silent in this respect. This,
8 Vol. II / P-29 / 370 / Para 1; Vol. II / P-27 / 366; See Footnotes 8 to 11, below.
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despite the contract having been terminated for non-performance of Clause
10. On the contrary, the conduct of the parties [including the Purchaser]
subsequent to the Contract and prior to filing of the Suit clearly discloses
that the Purchaser at all material times was aware, conscious and thus
treated Clause 10 to be a fundamental / essential term / condition, by way
of both writing, as confirmed in oral evidence by PW-1. In the absence of
the fulfillment of Clause 10, the contract could not be completed by
execution of a conveyance9, as confirmed by the Purchaser itself.
9.15.1) In our view, the strategy adopted by the Defendants’ Advocates
appears to be deliberately fragmented–akin to the compound vision of a
fly–projecting multiple perspectives on the same issue, seemingly with the
intent to obfuscate rather than assist the Court in a fair adjudication. This
contention appears calculated to manufacture yet another controversy
where none exists. It cannot be disputed that Clause 10 was an essential
term at the time of execution, when the ULC Act was in force. However,
with the passage of time and the repeal of the ULC Act, the clause ceased to
have operative effect and became redundant. Accordingly, while Clause 10
may have been essential at the time of execution, it no longer retained that
character post-repeal. We therefore find no merit in the contention and
reject it.
9 Vol. II / P-27 / 366; Vol. II / P-29 / 370.
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sbw/sns 1-os-app-289-2015-J.doc 9.16) Mr. Seervai contended that, in fact if the Purchaser's position
was that Clause 10 was irrelevant from the Defendant’s perspective and the
same was not essential, the Purchaser would have stated so, at least in the
Suit if not prior thereto to the complete contrary, the Purchaser attempted
to make a false show of compliance of Clause 10 and a false show of
various steps allegedly taken by it to comply with Clause 10, thus
highlighting how the Purchaser itself understood Clause 10 all throughout,
even during the course of the trial of the Suit.
9.17) Accordingly, the Purchaser did not lead any evidence to
suggest that Clause 10 was not a fundamental/essential term. On the
contrary in cross examination10, PW-1 has repeatedly admitted and
accepted that Clause 10 was a fundamental and essential term and that in
the absence of NOC from ULC Authorities, no conveyance could be
executed. The Purchaser has also recognized and acknowledged that
because of the Charity Commissioner’s sanction, no conveyance could be
executed without ULC clearance. The only thing that PW-1 tried to
improvise upon (clearly contrary to the express language of Clause 10) was
that the obligation of the Purchaser would arise only upon the Defendants,
the Trust, making the application for NOC.
9.18) He submitted that even during cross examination, it was not
even remotely suggested by PW-I that the requirement of the Charity
10 Questions 140, 243-247, 268, 280, 360, 363, 535, 536, 538-542, 544, 545, 611, 683, 684,
amongst others.
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Commissioner’s sanction could be dispensed with or waived. PW-1, in fact,
in terms admits that this term was not dispensed with by the Defendant 11 In
fact, that the hurdle of ULC clearance was a determining factor was written
and dictated by PW-1 himself12 in the Minutes of Meeting of 19.01.2002.13
9.19) He submitted that, the learned Single Judge has completely
ignored all the above referred material [and other relevant material in this
regard] which was on record before the Hon’ble Court with regard to the
essentiality and relevance of Clause 10, including the inter partes
correspondence and the oral evidence of PW-1, a partner in the purchaser-
Firm and the purchaser’s main witness. To overcome the weight of
evidence, oral and documentary, as regards Clause 10, the learned Single
Judge has held that “The whole contract is before the Court and whether or
not a particular term of it is essential or material, is a question of law. It is
for this Court to construe the contract and hold a term to be essential or
otherwise. It does not even matter if any witness of the Purchaser says
otherwise.”. This is egregiously wrong and contrary to settled law 14. The
Learned Single Judge could not have ignored the oral evidence as also
contemporaneous inter-partes correspondence, which is directly germane to
11 Question 696.
12 Question 218
13 Vol. II / P-8 / 329; Vol. II / P-9 / 331
14 Transmission Corporation of Andhra Pradesh v. GMR Vemagiri, (2018) 3 SCC 716, Paras
10, 25, 26; Adani Power v. Gujarat Electricity Regulatory Commission, (2019) 19 SCC 9,
Para 24; Bharat Aluminium Company v. Kaiser Aluminium Technical Services, Inc., (2016)
4 SCC 126, Para 10; Food Corporation v. Abhijit Paul, (2023) 15 SCC 40, Para 26.
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the interpretation and effect of Clause 10. The Learned Single Judge has
ignored well settled principles of contractual interpretation to justify a
patently erroneous finding.
9.19.1) In our view, it is wholly immaterial what the Plaintiff may have
stated or done in relation to obtaining permission from the ULC Authorities.
Having already paid the entire consideration to the Defendant, any act or
omission on the part of the Plaintiff would operate solely to their own
detriment and would not, in any manner, affect the Defendant’s obligations
under the contract. This is precisely the conclusion drawn by the Learned
Single Judge. The reliance placed on the decision in Transmission
Corporation (supra) is clearly misconstrued. The judgement is in favour of
the Plaintiff because it holds that if the contract is capable of interpretation
on its plain meaning with regard to the true intention of the parties it will
not be prudent to read implied terms on the understanding of a party, or by
the Court, with regard to business efficacy. The contentions raised are
nothing but a smokescreen–designed to divert the Court from the real
issue and procure a finding that may subsequently be challenged to delay
final adjudication. We, therefore, unhesitatingly reject these submissions.
9.20) Mr. Seervai submitted that, all of the above referred material
demonstrated that not only were parties ad idem that Clause 10 was a
material and essential term of the Contract, but they were also ad idem as
to its effect and consequences. However, the learned Single Judge has erred
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by not even addressing this issue and instead proceeding in a manner
entirely unknown to law, ignoring the evidence on record. All of the above
referred material demonstrated that not only were parties ad idem that
Clause 10 was a material and essential term of the Contract, but they were
also ad idem as to its effect and consequences. However, the Learned Single
Judge has gravely erred by not even addressing this issue and instead
proceeding in a manner entirely unknown to law, ignoring the evidence on
record.
9.21) Mr. Seervai submitted that, in the light of the above, including
the evidence of PW-1, the reasoning and finding of the Learned Single
Judge with respect to Clause 10 is ex facie erroneous, and in fact constitutes
error apparent on the face of the Impugned Judgment.
9.22) He submitted that, the learned Single Judge’s holding that
“Whether or not such permission, etc. came about, it would have no impact
on the validity of the suit contract as far as the vendors were concerned ” is
egregiously and self-evidently wrong, as, if such permission was not
forthcoming [as in the facts of the present case], the Purchaser’s
entitlement to a Conveyance ceased, and the Contract effectively came to
an end. This is the express language of Clause 10, which the Learned Single
Judge has misinterpreted to the extent of virtually re-writing the clause.
9.23) Similarly, the learned Single Judge’s view that Clause 10 is
only relevant from the standpoint of the purchaser is also egregiously
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wrong. If the consequence of not obtaining ULC clearance / ULC clearance
being refused is that the Defendant is no longer obliged to execute a
Conveyance in favour of the Purchaser [and consequently, may even retain
the Suit Properties], it is inconceivable to state that Clause 10 is not
relevant from the standpoint of the Defendant as well as the Purchaser.
9.23.1) In our view, it is entirely immaterial what the Plaintiff may
have stated or done in relation to obtaining permission from the ULC
Authorities during the period when the ULC Act was in force. It is
undisputed that such permission was required at that time. However,
following the repeal of the ULC Act–when the Purchaser had no role to
play–such permission ceased to be necessary. These contentions are,
therefore, wholly unwarranted, if not raised with the sole intent of securing
a finding that could later be challenged, thereby prolonging the final
adjudication. The underlying objective appears to be to deprive the
Purchaser of the fruits of the bargain. This observation gains force from the
fact that the entire consideration had already been paid to the Defendant;
thus, any act or omission on the part of the Plaintiff would operate solely to
their own detriment and would not, in any manner, dilute or discharge the
Defendant’s contractual obligations. This is precisely the conclusion reached
by the Learned Single Judge. The submissions advanced are nothing but a
smokescreen–an attempt to divert attention from the core issue and delay
resolution. We, therefore, unhesitatingly reject them.
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sbw/sns 1-os-app-289-2015-J.doc 9.24) He contended that the consequence of not obtaining
permission under the ULC Act was germane for both parties. For the
Purchaser, it was germane because the Purchaser would then not be
entitled to a conveyance, and for the Defendant it was germane because the
Suit Properties would no longer be subject to the Contract.
9.24.1) It is true that, on the date of the contract, the consequence of
not obtaining permission under the ULC Act was significant for both parties.
If such permission was not granted or was rejected, the Purchaser would
not have been entitled to a conveyance. It is also true that this legal
uncertainty was the very basis on which the suit properties were sold.
Equally, the fact remains that the entire purchase price was demanded by
the Defendants and was voluntarily paid by the Purchasers. As rightly held
by the learned Judge, once the entire consideration had been received, any
loss arising from the absence or rejection of permission would fall solely
upon the Purchasers, who could not thereafter seek a refund. However, the
subsequent repeal of the ULC Act–a development not contemplated by
either party–altered the legal landscape. With that repeal, the Purchasers
were no longer required to obtain permission from the ULC authorities.
9.25) Mr. Seervai asserted that, Clause 10 was an essential /
fundamental term of the Contract, and its breach and/or non-compliance
entitled the Defendant to terminate the Contract, as set out below.
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sbw/sns 1-os-app-289-2015-J.doc 9.26) He submitted that, the learned Single Judge's view that " Once
this restriction goes away, in this case because of the repeal of the ULC Act,
Clause 10 cannot be said to prevent the purchaser from obtaining a
conveyance. That appears to be the plain meaning and implication of the
clause.” is also incorrect. The learned Single Judge has ignored the
relevance of the Charity Commissioner’s sanction, the fact that the Suit
Properties being affected by ULC was a determinative factor in the
valuation, amongst other relevant factors. The repeal of ULC therefore has
an altogether different consequence on the Contract than that as held by
the learned Single Judge.
9.26.1) In our view, the learned Judge has arrived at the correct
conclusion, and we find no anomaly in the reasoning adopted. The sanction
granted by the Charity Commissioner was based on the valuation prevailing
at the time, which was directly influenced by the applicability of the ULC
Act. The Defendants received the entire consideration in light of the then-
existing legal risks and uncertainties. To now rely on a sanction granted five
years earlier–when the ULC Act was in force–as a basis to deny the
benefit of the contract to the Purchaser, after the repeal of the very statute
that gave rise to those risks, is plainly dishonest. The Purchaser accepted
and acted upon the risks associated with the prevailing legal regime; the
Defendants cannot, with the benefit of hindsight, invoke a subsequent
change in law to unjustly deprive the Purchaser of the fruits of the bargain.
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sbw/sns 1-os-app-289-2015-J.doc 9.26.2) Additionally, in the face of the plain language of Clause
10 as also the documentary and oral evidence on record, the Learned Single
Judge has fallen back on what, in the Learned Single Judge’s view,
“appears” to be the “implication” of Clause 10. In the face of the plain
language as understood by the parties, it is inconceivable how the Learned
Single Judge could fall back on his own conjecture, surmise, and
implication. The observation made by the learned Judge is appropriate and
rooted in the findings of the case; it is neither a conjecture, nor a surmise,
nor an implication as alleged by learned counsel.
9.27) Mr. Seervai submitted that, similarly the finding that ” In other
words, non-fulfilment of the promise contained in Clause 10 does not have
any consequence for the vendors. It only has a consequence for the
purchaser. If that is so, breach of that promise cannot entitle the vendors to
treat the contract as discharged or to be released from all further
performance of the contract. The intention of the parties, as can be
gathered from the terms of the contract and the subject matter to which it
relates, is not to make clause 10 as a ‘promissory’ condition from the point
of view of the Defendants vendors. The entire consideration is receivable by
the Defendants for their promise to sell the property, without reference to
the condition or promise contained in clause 10. ” is entirely incorrect, as
the evidence itself revealed. Non-fulfillment of Clause 10 has a direct
consequence for the vendors (i.e. the Defendants) viz. that the Defendants
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are entitled to retain the monies paid by the Purchaser and are also not
obliged to execute any Conveyance in respect of the Suit Properties. This is
a very material consequence, which the learned Single Judge has
completely ignored.
9.27.1) This submission amounts to nothing more than an
unwarranted and gratuitous parsing of a well-reasoned Judgment and is
wholly uncalled for. It is accordingly rejected.
9.27.2) Additionally, obtaining of the
Permission/Clearance/NOC under the ULC Act was, in fact, the determining
factor in the fixation of the contract price when the contract was entered
into15, as set out below. As such, compliance of Clause 10, which requires
obtaining of Permission/Clearance/NOC under the ULC Act, is, necessarily,
a material and essential term, as its compliance was itself a determining
factor in the fixation of the contract price.
9.28) Mr. Seervai asserted that, obtaining ULC clearance was a
fundamental term / condition precedent has been categorically laid by the
Hon’ble Supreme Court in a number of decisions16
9.29) He submitted that, the argument of the Purchaser that Clause
10 was entirely for their benefit and therefore, could be waived by the
15 This is elaborated upon in greater detail when dealing with the voiding of the Charity
Commissioner’s sanction, and the question of discretion to grant specific performance.
16 V.R. Sudhakara Rao & Ors. v. T. Y. Kameswari – (2007) 6 SCC 650; K. Narendra v. Riviera
Apartment Pvt. Ltd., AIR 1999 SC 2309; Pushparani S. Sundaram v. Pauline Manomani
James, (2002) 9 SCC 582.
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Purchaser is fallacious. During the subsistence or continuance of the ULC
Act, this submission could never have been made. Clause 10 was not for the
Purchaser’s benefit as claimed by the Purchaser, but was a pre-requisite and
essential condition required to be fulfilled before the Purchaser could claim
an entitlement to Conveyance (and possession) of the Suit Properties.
9.30) He submitted that, Clause 10 of the contract between the
parties was impressed with the sanction of the Charity Commissioner which
sanction could not be ignored by either party as it formed the basis of the
contract being given life. Thus, it had to be performed. Even otherwise NOC
of ULC Authority being a mandatory statutory requirement, was an implied
essential term of the Contract.
9.31) Further, obtaining the NOC of the ULC Authorities was a
mandatory statutory requirement which neither party could have waived or
ignored since the consequence thereof would have rendered the contract
void and the same could never have fructified 17. In these circumstances, it is
not possible to submit, as the Purchasers have done, that Clause 10 of the
Agreement was for their sole benefit which therefore could be waived.
Thus, far from proving readiness and willingness to comply with Clause 10
of the Agreement, the Purchaser, after repeal, has sought to disown Clause
No.10.
17 Nandlkishore Lalbhai Mehta v. New Era Fabrics, (2015) 9 SCC 755, Paras 3, 5, 43
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9.31.1) The reliance on V R Sudhakara Rao and others (supra) as well
as Nandkishore Mehta (supra) is entirely misplaced and argued out of
context because obtaining ULC permission was a condition till such time
that the ULC Act was in force but became redundant on repeal. The above
submissions, in our view, amounts to a needless repetition and mere
reiteration of earlier contentions in different words. In light of our findings
above, it does not merit any further consideration.
9.32) Mr. Seervai urged us to note that, the Purchaser could never
have made a submission against the essentiality prior to the repeal of the
ULC Act. In fact, the Purchaser did not disown Clause 10 prior to the repeal
of the ULC Act. On the contrary by letters dated 04.04.2005 18 and
25.01.200619, during the subsistence of the ULC Act, the Purchaser claimed
that it was actively pursuing the ULC Authorities. The Learned Single Judge
has completely overlooked the said letters and their effect. Not only has this
been established to false, but importantly at the relevant time, the
Purchaser knew that the Purchaser had to comply with Clause 10 and that
it was the sole responsibility of the Purchaser to comply with the same 20,
18 Vol. II / P-27 / 366
19 Vol. II / P-29 / 370 / Para 1
20 Section 16 of the Specific Relief Act, 1963; V.R. Sudhakara Rao & Ors. v. T. Y. Kameswari
– (2007) 6 SCC 65; Pushparani S. Sundaram v. Pauline Manomani James, (2002) 9 SCC
582. In the case of Pushparani (supra), the aspect of ULC clearance has been considered
from the point of view of being a term, the non-performance of which disclosed lack of
readiness and willingness on the part of the Purchaser under Section 16(c) of the Specific
Relief Act. It is clear that had it not been for the fact that the obtaining of the NOC of the
ULC Authorities is an essential term of a contract, the Hon’ble Supreme Court would not
have given it the importance it did while holding that non-obtaining of the permission by
the Purchaser in that case exhibited a lack of readiness and willingness to perform an
essential term, disentitling the Purchaser from getting specific performance.
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and that such compliance was an essential term. This is an admission by the
Purchaser that obtaining ULC permission / clearance / NOC was an
essential term of the contract.
9.32.1) In our view, the learned Judge has appropriately and
comprehensively considered the effect of Clause 10 in the impugned
judgment. The reasoning is self-explanatory and warrants no interference.
9.33) In so far as the Purchaser’s argument that, time to comply with
Clause 10 was not made the essence of the contract is concerned, the
Defendants have never stated that time was of the essence of the contract
for fulfillment of Condition No. 10. However, the Defendants have stated
the following:
a. that the obligation imposed by Clause 10 had to be fulfilled
within a reasonable time.
b. that there was a complete failure on the part of the
Purchaser in fulfilling the said obligation / condition.
c. that the said obligation/ condition was a pre-condition to
execution of Conveyance.
d. that the failure in complying with Clause 10 amounted to a
repudiatory breach of the fundamental / essential term of
the contract; and
e. that this breach entitled the Defendants to terminate the
contract.
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sbw/sns 1-os-app-289-2015-J.doc 9.33.1) This submission too does not lie in the mouth of the
Defendants who have without any demur accepted the entire consideration
when the suit property was at risk of being acquired under the ULC Act and
now seek to renege from the contract merely because the ULC Act is
repealed taking help of the action or inaction on the part of the Plaintiffs in
obtaining the permission from the ULC authorities. The learned Judge has
rightly observed in paragraph 12 that – “In our case, as noted above, clause
10, rather than entitling the Defendants to treat the contract as discharged
for want of permission from the ULC authorities, simply allowed the
Defendants to withhold the conveyance on the ground that it cannot be
executed in the absence of a ULC permission. There is clearly no time limit
for performance of the purchaser’s obligation of obtaining the ULC
permission. As noted above, there is a good reason for not providing such
time limit. Payment of consideration to the vendors is not dependent upon
or subject to the ULC permission. So long as the permission does not come
through, the purchaser does not get his conveyance, since for want of such
permission the conveyance is not possible under the ULC Act, but it has no
other consequence as far as the vendors are concerned. In other words,
non-fulfilment of the promise contained in Clause 10 does not have any
consequence for the vendors. It only has consequence for the purchaser. It
that is so, breach of that promise cannot entitle the vendors to treat the
contract as discharged or to be released from all further performance of the
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sbw/sns 1-os-app-289-2015-J.doccontract. In view of the above observations we do not find in reason to
interfere.
c. Whether the Purchaser was ready and willing to perform the essential
term of the Contract, viz. Clause 10:
10) Mr. Seervai submitted that, on a plain reading of Clause l0, the
obligation to obtain the permission/NOC/clearance/exemption from the
ULC Authorities was cast solely upon the Purchaser. Section 16 (c) of the
Specific Relief Act mandates that the Purchaser must plead and prove that it
was, at all material times ready and willing to perform the essential terms
of the contract. “At all material times” means from the time of entering into
the agreement, till the hearing of the Suit 21. In purported discharge of this
mandatory requirement of law, the Purchaser has pleaded that it performed
its obligations under the agreement and continued to be ready and willing
to perform its obligations22. Similarly, in such purported discharge, in his
Examination in Chief, PW-1 has once again made a bare statement of the
Purchaser’s readiness and willingness 23. In the Written Statement, the
Defendant has denied the claim that, the Purchaser was ready or willing to
comply with Clause 10 and that in fact the termination was inter alia on the
ground that the Purchaser had failed to perform its contractual obligation
under Clause 1024.
21 Shenbagam v KK Rathinavel 2022 SCC OnLine 71, Paras 16, 17, 20.
22 Plaint, Paras 46, 28, 29
23 PW-1, Examination in Chief, Paras 82, 88 @ 55, 160
24 Written Statement, Paras 27, 29, 42
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10.1) However, the evidence and record establish that from the date
of the Agreement till November 2007, the Purchaser did absolutely nothing
to obtain NOC from the ULC Authorities. The Purchaser did not even apply
for the NOC25. This is despite it being the Purchaser’s obligation, and the
Purchaser being empowered to apply in terms of the Trust’s letter dated
02.01.2003. The Purchaser has acknowledged that the said letter was a
letter of authority given by the Trust to the Purchaser 26. There is absolutely
no explanation as to why the Purchaser did not apply for the permission /
clearance / NOC, necessitating an adverse inference being drawn by the
Court, viz, that the Purchaser had not the slightest desire to apply for, let
alone obtain, the ULC NOC.
10.2) Mr. Seervai submitted that, the Purchaser had to make efforts
which included making / preparing the application for the NOC /
permission. However, even after the letter of authority was given to the
Purchaser, there was complete inaction on the part of the Purchaser
towards compliance of Clause 10.
10.3) He submitted that the Purchaser has refused to fulfill its
obligation by failing to apply for and obtaining the requisite NOC from the
ULC Authorities. Far from asking the Defendants to apply [which may have
been consistent with the afterthought plea raised by the Defendant] the
Purchaser (falsely, as it so turned out) kept assuring the Defendants that it
25 PW – I, Q. Nos 561, 563, 594, 595, 596, 611, 696, 1184 and 1185
26 PW-1, Q. Nos. 552, 554, 555, 560
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is actively pursuing the ULC Clearance 27. As such, the Purchaser deliberately
misled and induced the Defendants to believe that the Purchaser was taking
steps to comply with Clause 10 of the Agreement.
10.4) However, the record reveals that between 02.01.2003, when
the Defendant Trust authorized the Purchaser to apply under the ULC Act
for the NOC / Clearance, and 03.10.2006, the Purchaser did not take any
steps [or was in any event unable to establish that it took any steps]. Even
going by what the Learned Single Judge has held, viz. that after an
application, 2-3 years would be a reasonable time within which the NOC /
Clearance could be expected [Para 12 of the Impugned Judgment], then
had the Purchaser been ready and willing, it would have taken steps on
02.01.2003 or shortly thereafter, which would have been decided by the
authorities well before 03.10.2006 [more than 3 years later]. The fact that
the Purchaser did not do so demonstrates [if not establishes] the lack of
readiness and willingness on the part of the Purchaser.
10.5) He submitted that in fact, even after 03.10.2006 28, since the
Purchaser had taken no steps, the Trust made an application to the ULC
Authorities for NOC. Even after this, however, the Purchaser did nothing for
14 months. The Purchaser did not even follow up with the said application
made by the Trust.
27 Purchaser's Letter dated 25.01.2006, Vol. II / P-29 / 370 / Para 1 28 Appeal No.289 of 2015 / Ex. - R / 211 34/190 ::: Uploaded on - 15/07/2025 ::: Downloaded on - 19/07/2025 03:22:26 ::: sbw/sns 1-os-app-289-2015-J.doc 10.5.1) The above submissions are, to say the least, devoid of
substance and appear to have been advanced merely for the sake of
argument. The real question is this: what conceivable prejudice could be
caused to the Defendants–who have already received the entire sale
consideration–in relation to the Plaintiff’s readiness and willingness to
comply with Clause 10? We see no reason to delve into the Plaintiff’s
‘readiness and willingness’ to obtain ULC permission, as the full
consideration had already been paid. Clause 10 simply provides that the
Defendants were not obliged to execute the conveyance if the requisite
permission was not obtained or was rejected–nothing more, nothing less.
Upon the repeal of the ULC Act, no such permission was required. It is as
straightforward as that. The legal principles laid down in the authorities
relied upon are not in dispute; however, they have no application to the
facts of the present case.
10.6) After the repeal of the ULC Act, the Purchaser has simply
sought to wish away Clause 10 of the Agreement. Thus, it is clear that right
from the time that the contract was entered into the Purchaser had no
intention to apply for and obtain the NOC from the ULC Authorities. The
Purchaser had decided to sit tight and in fact sat tight and did nothing. The
Purchaser waited for almost 5 years till the ULC Act was repealed. In other
words, the Purchaser was never ready and willing to perform its obligation
under clause 10.
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sbw/sns 1-os-app-289-2015-J.doc 10.7) After the Defendants' Application dated 03.10.2006, Orders
dated 31.10.200629 and 11.12.2006 were passed under Section )) of the
ULC Act. Even at this stage the Purchaser did nothing, despite the drastic
consequences of those Orders. Since, the Purchaser claims to have
appointed consultants, the Purchaser ought to have known about the
Section 8(4) orders. However, the Purchaser did not take any steps to set
aside the orders. In fact, the Purchaser alleges that he was not even aware
of the orders till May 2008 30 – this is patently unbelievable, exposing the
falsity of the Purchaser’s case, and PW-1’s testimony.
10.8) Mr. Seervai submitted that, the Defendants had to
independently at their own cost and expenses and without any assistance or
involvement of the Purchaser, adopt proceedings against the said Section
8(4) Orders, including filing Writ Petition No. 6050 of 2008 31 before this
Court. These proceedings were adopted by the Defendants in their own
right, at their own cost to protect their own interest and not for any alleged
or claimed interest of the Purchaser. In the said Writ Petition, there is
absolutely no reference to the Purchaser, the sanction of the Charity
Commissioner, or anything to do with the transaction with the Purchaser.
As such, the Writ Petition was filed and prosecuted de hors the Agreement
with the Purchaser, as with the Orders dated 31.10.2006 and 11.12.2006
29 Vol. III / P-35 / 467
30 PW-1, Q.Nos. 1196
31 Vol. III
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the contract having come to an end, the question of referring to the same
could not, and did not, arise.
10.9) He submitted that the Learned Single Judge has failed to even
consider or take into account these aspects in the impugned Judgment.
10.10) The total and complete inaction on the part of the Purchaser,
and its failure to obtain the ULC clearance / NOC, apart from being a
repudiatory breach entitling the Defendants to terminate the contract,
shows the complete lack of readiness and willingness on the part of the
Purchaser to perform its obligation. This lack of readiness and willingness
constitutes a personal bar against the Purchaser from seeking enforcement
of the Agreement.
10.11) In reply to the termination notice 32 (with the comfort of the
ULC Act having been repealed), the Purchaser (for the very first time)
falsely alleged that there was no obligation cast on the Purchaser to obtain
NOC from the ULC Authorities. Even during the course of arguments before
the Learned Single Judge, and as recorded in the Impugned Judgment, it
was urged on behalf of the Purchaser that except for making payment, there
was no other obligation on the Purchaser. This stand – contrary to the
Contract, amounting to an open refusal to fulfill and essential term – should
have immediately denied specific performance to the Purchaser. The
Learned Single Judge gravely erred in this regard.
32 Vol. IV / Exh. P-46 / 789 37/190 ::: Uploaded on - 15/07/2025 ::: Downloaded on - 19/07/2025 03:22:26 ::: sbw/sns 1-os-app-289-2015-J.doc 10.12) Mr. Seervai submitted that, the steps taken by the Defendant
viz., making the application for ULC clearance is entirely irrelevant for
determination as to whether the Purchaser was ready and willing to
perform its obligation under Clause 10. The Purchaser cannot take
advantage of this act on the part of the Defendants. In order to avoid the
personal bar imposed by Section 16 of the Specific Relief Act, it is for the
Purchaser to plead and prove that the Purchaser was at all times ready and
willing to perform its obligation under Clause 10 of the contract. The
Purchaser has not done so. This was irrespective of whether the Defendants
application had been successful or unsuccessful33.
10.13) He submitted that, it is not the case of the Purchaser in the
pleadings or in the evidence that by the Defendants making the application
to the ULC Authorities, the Defendants waived the Purchaser’s obligation to
obtain the NOC from the ULC Authorities. Though this was argued by the
Purchaser before the learned Single Judge, the same is impermissible
inasmuch as the plea of waiver is unsupported by pleadings or evidence.
Further, the Defendants submit that waiver is a question of fact which must
33 Pushparani (2002) 9 SCC 582; (in) Punjab Urban Planning & Development Authority vs.
Shiv Saraswati Iron & Steel Re-rolling Mills (1998) 4 SCC 539.
Significantly in Pushparani (supra), the Supreme Court refused specific performance to the
Purchaser even though the Defendant had succeeded in obtaining ULC clearance, pursuant
to her application for the same. It is submitted that this judgment is decisive to this case,
and non- suits the Purchaser.
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be specifically pleaded and proved after an issue is framed on the question
of waiver34.
10.13.1) In our view as well and as rightly held by the learned
Judge, Clause 10 became redundant upon the repeal of the ULC Act—
particularly in light of the fact that the entire consideration had already
been paid to the Defendants. The reliance placed on the judgment in
Pushparani (supra) is both misplaced and misconceived. In the present
case, the Plaintiff had paid the entire sale consideration, whereas in
Pushparani, only part payment had been made and additional conditions
were stipulated. Similarly, the reliance placed on the judgment in Motilal
(supra) is equally untenable. There is no question of waiver in the present
case, as the requirement for permission itself ceased to exist upon the
repeal of the ULC Act. The line of arguments now advanced have no
bearing whatsoever on the factual or legal matrix of this case. They appear
to be nothing more than subterfuge–arguments constructed as a
smokescreen, with the apparent intent to mislead and distract the Court
from the real issues.
d. Whether the sanction of the Charity Commissioner under Section 36
of the Maharashtra Public Trusts Act, 1950 is still valid with the repeal of
the ULC Act?
34 Motilal Padampat Sugar Mills Co. Ltd vs. State of Uttar Pradesh & Ors, (1979) 2 SCC409.
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sbw/sns 1-os-app-289-2015-J.doc 11) Mr. Seervai submitted that the sanction of the Charity
Commissioner under Section 36 was clearly predicated upon ULC Clearance
/ NOC / Sanction being required, and being obtained prior to any
Conveyance.
11.1) This is evident from inter alia (i) the Affidavits of Mr. Rajesh
Batra, Trustee of the Trust, in support of the applications, which makes
specific reference to the issue of ULC Clearance as a ” negative factor”35; (ii)
Mr. Kirit Kapadia, the valuer whose report was submitted to the Charity
Commissioner, also specifically kept the ” need for ULC clearances” in mind
when submitting his valuation report, on the basis of which the Charity
Commissioner’s permission was obtained3637. As such, obtaining of the NOC
under the ULC Act was not capable of being dispensed with.
11.2) Mr. Seervai submitted that, the sanction of the Charity
Commissioner cannot be read in isolation. It necessarily has to be read in
the context of the application made by the concerned parties for sanction,
the documents filed therewith, and the circumstances obtaining when such
application was filed and made. To hold otherwise would be to assume that
the Charity Commissioner, a statutory functionary discharging important
statutory functions, acts with blinkers, and is not aware of the totality of the
35 Vol. I / P-3 / 74 / Para 5
36 Vol. I / P-3 / 104 / Para 7
37 The Purchaser itself was ad idem that the requirement of ULC clearance was a “negative
factor” as confirmed by the Minutes of Meeting dated 19.01.2002 [Vol. II / P-8, P-9 /
329]. PW-1, Mr. Salim Juda, partner of the Purchaser Firm, himself dictated that
portion of the said Minutes [Question 218].
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circumstances before him [more so when they are expressly brought to his
attention]. This is an untenable fiction and ought never to have been
accepted by the Learned Single Judge.
11.3) It is a matter of record that, the parties while fixing the price
and the Charity Commissioner while according to his sanction to such price
did take into account the existence / hurdle of the provisions of the ULC Act
and as such the price was a depressed price. Had the Charity Commissioner
known that the contract between the parties, which had been arrived at for
the sum of INR 14 Crores was to be kept in abeyance till the repeal of the
ULC Act, the Charity Commissioner would not have sanctioned the sale at
the price of INR 14 Crore – even otherwise, whether or not the Charity
Commissioner would have accepted such a price is something in the realm
of speculation, which itself renders the sanction void.
11.3.1) These submissions are wholly baseless and unwarranted in the
context of the present case. By no stretch of the imagination can it be
contended that the entire consideration received by the Defendants was to
be held in abeyance, as argued. This contention deserves to be rejected
outright. Clause 10 is self-explanatory; it contains no stipulation requiring
the Defendants to return the consideration under any circumstance. It is
only under Clause 7 that, upon rejection of sanction by the Charity
Commissioner, the amount paid by the successful offeror was to be
refunded. Moreover, as per clause 11, offers were for a lump sum amount,
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unconditional and for the entire land offered. Accordingly, the argument
lacks even a semblance of substance and rests entirely on conjecture and
surmise.
11.4) Further, the Purchaser has not denied that it was a
fundamental term of the sanction of the Charity Commissioner as also the
Agreement between the parties that ULC clearance would be obtained, i.e.,
to say that non-obtainment of the ULC clearance would render the Charity
Commissioner’s sanction ineffective. It also not been denied by the
Purchaser that it was a condition of sale that the Purchaser was required to
apply to the Competent Authority and fulfill Clause 10. As such, the
Purchaser has not disputed the Defendants’ claim in this regard.
11.5) He submitted that the effect of the repeal of the ULC Act, far
from lifting the hurdle as contended by the Purchaser, on the contrary
makes the sanction void. The sanction was given by the Charity
Commissioner in the circumstances existing on the date of sanction viz., the
hurdles and disadvantages of the ULC Act. In view of the repeal, the parties
would have had to go back to the Charity Commissioner and seek fresh
sanction in view of the repeal of the ULC Act. This jurisdiction is exclusively
given to the Charity Commissioner under Section 36 of the Maharashtra
Public Trusts Act.
11.5.1) In our view, there was never any question of denying the
applicability of the term, as the ULC Act was very much in force at the
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relevant time. The contention that failure to obtain ULC permission would
render the Charity Commissioner’s sanction ineffective is wholly devoid of
merit. There exists no basis–either in law or on the record–to suggest that
the sanction stands vitiated on such grounds. These arguments are
speculative and entirely without substance. Moreover, there was no “failure
to obtain” as alleged, since the ULC Act was repealed, thereby rendering the
requirement to obtain such permission redundant.
11.5.2) It is wholly absurd to suggest that the repeal of the ULC Act
rendered the Charity Commissioner’s sanction void. Such an argument
might have been available to the Defendants under an entirely different set
of contractual terms–but certainly not in the present case, and certainly
not after the Defendants had already appropriated the entire consideration.
In fact, Clause 10 of the Agreement expressly stipulated that the Defendants
would be entitled to forfeit the entire consideration in the event that ULC
permission was either not forthcoming or was rejected. The contract did not
contemplate a scenario involving the repeal of the ULC Act. Thus, the
Defendants had sufficiently protected themselves through contractual
safeguards. No part of the agreement envisaged the requirement of seeking
a fresh sanction from the Charity Commissioner in the event of repeal or
otherwise.
11.5.3) Indeed, the operative portion of the Charity Commissioner’s
sanction order reads as follows:
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sbw/sns 1-os-app-289-2015-J.doc 1. Application is allowed. 2. ...
3. The sanction is subject to all the laws and rules applicable in that
behalf and the following conditions:
(a) The purchaser shall pay total consideration of ₹4,00,00,000
within a period of 3 months.
(b) The trustees shall execute the conveyance deed after receipt of
the total consideration as stated above and subject to compliance
with all laws and rules.
(c) The purchaser shall be entitled to possession of the property
after due execution of the conveyance deed as stated above.
(d) The trustees shall deposit the amount of sale consideration in a
long-term fixed deposit with any nationalised bank or in government
securities. This amount shall form part of the corpus of the Trust.
(e) The trustees shall be entitled to use the said amount for
achieving the objects of the Trust.
11.5.4) A plain reading of the Order makes it clear that the
consideration was intended to be fully appropriated by the Trust and
utilised for the fulfilment of its objectives. There was no occasion or legal
requirement for seeking a fresh sanction, as is now sought to be argued.
11.6) Mr. Seervai contended that, the private contractual terms
agreed between the parties had become a mandate of the law when the
Charity Commissioner had granted the initial sanction. The parties are
bound to obey the same, in totality. If on account of changed circumstances,
the parties need to deviate from the sanction of the Charity Commissioner
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in any manner, they are necessarily required to go back to the Charity
Commissioner and not ignore the terms of the sanction of the Charity
Commissioner, or to re-write the terms by their unilateral acts. In these
circumstances, because Clause 10 became impossible of performance, the
sanction would become void and the further performance of the Agreement
without fresh sanction from the Charity Commissioner would be legally
impossible and practically impermissible.
11.6.1) There is no deviation from the sanction as alleged. The
requirement in question has ceased to exist. More importantly, having
received the entire consideration and utilised it for over five years–which
strikes at the very core of the present issue–the Defendants now seek,
under the garb of technical objections, to renege on the contract solely
because the value of the suit lands has appreciated exponentially.
11.7) He submitted that, the Learned Single Judge has gravely erred,
in Paragraph 13 of the Impugned Judgment, by holding that the ” sanction
was not specifically premised upon the condition of obtaining any ULC
clearance; it was generally subject to all laws and rules applicable in that
behalf.” First and foremost, this is not so. The applications made to the
Charity Commissioner clearly reveal that the requirement of ULC clearance
was specifically known and disclosed to the Charity Commissioner. Further,
the phrase “all laws” necessarily includes the ULC Act, which was a critical
issue before the Charity Commissioner when granting sanction under
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Section 36. Therefore, not expressly mentioning ULC is of no consequence.
The construction of the sanction by the Learned Single Judge is thus
patently erroneous and myopic. This is more so considering the nature of
the permission required under the ULC Act [which the Charity
Commissioner is deemed to be aware of as a statutory functionary], and the
public interest purpose of such permission / NOC, which underlies Section
20 and the terms of the ULC Act [elaborated upon below].
11.7.1) The learned Judge has considered all relevant arguments and
has rightly rejected the contentions advanced by the Defendants. The
submissions now sought to be re-agitated are unwarranted, overly fixated
on minutiae, and deserve to be rejected outright.
11.8) In N. D. Constructions v. State of Maharashtra, (2012) 1 Bom
CR 24138, [a matter concerning sanction of the Charity Commissioner under
Section 36], though it was not urged or contended by any party before this
Hon’ble Court that the price needs to be re-fixed or re-evaluated, a Division
Bench of its own in Paragraph 28 of the judgement held that there may be a
further appreciation in the land value in view of the repeal of the ULC Act.
This was an additional ground for a fresh sale. The Division Bench ordered
refund of the amount paid by the purchaser in that case, with interest.
11.8.1) In our view, reliance on this judgment is entirely misplaced, as
the facts in that case are materially distinct from those in the present
38 (2012) 1 Bom CR 241.
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matter. It is not the Defendants’ case that the Charity Commissioner was
misled, failed to apply his mind, or that any material facts were suppressed
at the time sanction was granted. In the present case, pursuant to the
sanction, the entire consideration was paid by the Purchaser and accepted
by the Defendants. The conveyance was to be executed only upon receipt of
the requisite permission–permission that has since become unnecessary
due to the repeal of the ULC Act.
11.9) Further, in Rizvi Builders v. Joint Charity Commissioner39,
despite full consideration having been paid to acquire the trust property,
and sanction having been accorded by the Charity Commissioner, the
sanction was effectively terminated because the transaction was not
consummated within time for want of ULC clearance. Therefore, mere
payment of [even full] consideration is not ground to say that the sanction
of the Charity Commissioner is not vitiated.
11.9.1) The reliance placed on these judgments is misplaced and of no
assistance to the Defendants. In that case, the Charity Commissioner’s
sanction was expressly conditional upon completion of the sale within a
stipulated period of one year. In contrast, no such time-bound condition
39 Judgment dated April 17, 2007 in Writ Petition No. 769 of 2007; to similar effect are the
judgments in D. T. Mandriwala v. State of Maharashtra, Judgment dated July 20, 2007 in
Writ Petition No. 1621 of 2007, and Feroz Malik v. Joint Charity Commissioner, Judgment
dated March 12, 2008 in Writ Petition No. 4409 of 2007.
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was imposed in the present case. Accordingly, the judgment has no
application to the facts at hand.
11.10) Additionally, view of Section 20 of the ULC Act, conditions
would have been imposed in the NOC/clearance that was to be obtained by
the Purchaser, which conditions would have attached to the Suit Properties.
These conditions would have been in the public interest and would have
been mandatory for the Purchaser to comply with [See T. R. Thandur v.
Union of India, (1996) 3 SCC 690 40, Para 11]. The Hon’ble Supreme Court
has held one of these conditions that was imposed by the State of
Maharashtra, viz providing dwelling units for weaker sections of society, is
traceable to Article 21 [see Shantistar Builders v. Narayan Khimlal Totame,
(1990) 1 SCC 52041, Paras 11, 13].
11.11) Illustratively, some conditions that may have been imposed
were: (i) construction of dwelling units for “weaker sections of society” –
See Shantistar Builders v. Narayan Khimlal Totame (supra) Paras 6, (ii)
surrender of FSI /constructed area to allottees nominated by Government –
See Nargis Jal Haradhvala v. State of Maharashtra, (2015) 4 SCC 259 42,
Paras 11, 13; (iii) the land be used for a specified purpose for example a
newspaper industry – See State of A. P. v. V. Venkateswara Rao, (2004) 4
SCC 22043, Para 5.
40 (1996) 3 SCC 690.
41 (1990) 1 SC 520.
42 (2015) 4 SCC 259.
43 (2004) 4 SCC 220.
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sbw/sns 1-os-app-289-2015-J.doc 11.12) He submitted that the Charity Commissioner, as a state
functionary discharging a public duty and function, was aware of the
conditions on which the clearance under Section 20 would be granted. The
fact that such conditions [illustratively set out above] would have to be
complied with by the purchaser [in this case the Purchaser] would be a
relevant criterion considered by the Charity Commissioner when deciding
whether or not to grant sanction to the proposed transaction. That such
conditions are in the public interest would also be a relevant consideration
for the Charity Commissioner. Had the Charity Commissioner been aware
that such conditions would not be imposed on the purchaser, the Charity
Commissioner would [or at the very least may] never have granted sanction
in the first place.
11.12.1) These submissions, in our view, are based on conjecture and
surmise and fail to take into account the fact that the ULC Act has been
repealed. They are, therefore, liable to be rejected.
11.13) Mr. Seervai submitted that the Learned Single Judge, by
holding that “No doubt, the doing away of the restrictions has dramatically
changed the value of the land. But if anyone is lawfully entitled to this
bonanza, it is the Purchaser, who had fully paid a competent price in 2003
and was awaiting a conveyance on 27 November 2007, when the ULC Act
was repealed” accepted that: (i) the conditions were onerous from a
commercial/business/profit oriented party’s perspective; (ii) with such
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conditions now being done away with, there is a bonanza now coming to
the Purchaser – this is a relevant factor when considering the validity of the
sanction of the Charity Commissioner [as also other issues as set out
below], as the Charity Commissioner would never have accorded sanction
had such a “bonanza” been known.
11.13.1) These submissions are liable to be rejected outright. A party
that voluntarily offered a property for sale cannot, after the passage of time
and a change in market circumstances, seek to renege on the contract
merely because the value of the property has subsequently appreciated.
There was no compulsion exerted by the Purchasers upon the Trust to sell
the property. The property was put up for sale by the Trust of its own
volition. The Purchasers responded to that offer, agreed to the terms, and
paid the entire consideration, even in the absence of a conveyance being
executed. It was a commercial bargain freely entered into by the
Defendants, and they cannot now be permitted to resile from it.
11.14) Mr. Seervai contended that, in view of the non-obtaining of
clearance under Section 20, such conditions would not be imposed; the
fundamental basis for the agreement is thus changed. The fact that the
Defendant is a public charitable trust must be kept in mind in this regard.
This aspect is elaborated upon below.
11.15) He submitted that the Learned Single Judge has, in Paragraph
13 of the Impugned Judgment, completely misconstrued the purport of the
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requirement of ULC clearance in the context of the sanction of the Charity
Commissioner. The Learned Single Judge has, it is respectfully submitted,
in a hyper-technical manner held that the sanction was not specifically
premised upon the condition of ULC clearance. This flies in the face of the
material that was placed before the Charity Commissioner at the time
sanction was sought in the first place, as also the actual sanction. There is
no requirement of the Charity Commissioner specifically referring to the
ULC clearance.
11.15.1) We are unable to accept these submissions, particularly when
the entire consideration has been received under the very contract now
sought to be avoided. The requirement of ULC clearance had no bearing on
the obligations of the Defendants under the contract. Their sole remaining
duty was to execute the conveyance and deliver possession–nothing more.
e. What is the effect of the Section 8(4) Order?
12) Mr Seervai next submitted that, the learned Single Judge has
completely failed to even address this important issue in the Impugned
Judgment, and the Defendants submission has not even been noted, despite
the same being specifically urged.
12.1) If the Trial Court does not deal with an important issue that
has been raised in the matter, the entire judgment is vitiated and liable to
be set aside in Appeal.
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sbw/sns 1-os-app-289-2015-J.doc 12.2) De hors and without prejudice to all other submissions with
regard to Clause 10 and the ULC clearance, on the passing of the said
Section 8(4) Orders (Vol. III / Exh. P-35 / 467), Purchaser’s right to a
Conveyance automatically and contractually, ended – this is the plain
language and meaning of Clause 10. The passing of the Section 8(4) orders
meant that the NOC / permission under the ULC Act was, in fact, refused.
Clause 10 reads as under:
“10. It will be solely the responsibility of the Purchaser to
obtain the Permission/Clearance/No Objection from the
Competent Authority under the Urban Land (Ceiling and
Regulation) Act, 1976 to enable the Conveyance to be
made and the amount paid will not be refundable on the
ground that the requisite Permission/NOC/Exemption is
not forthcoming or is refused.”
12.3) The operative portion of the Section 8(4) Orders provides:
“In view of the. above position the lands adm.
1212844.8 Sq. Mtrs. as shown in the
accompanying statement is declared as surplus
vacant land with the declarant Trust. Final
statement u/s 9. of the Act and notification
u/s.10(1) of the Act should be issued
accordingly."
12.4) Under the scheme of the ULC Act, the Section 8(4) Orders were
the first step towards acquisition of the Suit Properties [and the other lands
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sbw/sns 1-os-app-289-2015-J.docof the Defendant-Trust], culminating in acquisition under Section 10 of the
ULC Act. Upon the Section 8(4) Orders being passed, there is no question of
any exemption under Section 20 being granted, i.e. the clearance /
exemption that the Purchaser was required to be obtain under Clause 10
was “refused” or was not “forthcoming”. The NOC that the Purchaser
therefore had to obtain was thus refused.
12.5) Mr. Seervai contended that, accordingly, in view of the
provisions of Sections 9 and 10 of the ULC Act and the scheme of the ULC,
it was held that the Suit Properties (together with numerous other
properties of the Trust) were surplus vacant land, and therefore to be
acquired and vested in the State Government. This necessarily means that
Permission/Clearance/No Objection from the Competent Authority under
the Urban Land (Ceiling and Regulation) Act, 1976, under Section 20, was
refused, under the scheme of the ULC Act.
12.6) He submitted that the effect of the refusal of the NOC on the
contract in the light of Clause 10 has to be considered as on the date of the
refusal, during the existence / continuance of the ULC Act, and not as on
the date of the filing of the Suit. Everything that happened after the refusal
[i.e. after the Section 8(4) Orders] is not germane in this regard. The ULC
Act was repealed subsequently [06.12.2007], the Section 8(4) Orders were
set aside subsequently [08.04.2009]. However, these subsequent events do
not and cannot undo the effect of the Section 8(4) Orders.
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sbw/sns 1-os-app-289-2015-J.doc 12.7) He contended that the Contract, and more specifically Clause
10 contemplates and provide for a situation in which the permission /
clearance / NOC is refused – the consequence of which is two-fold: (i) the
Purchaser is not entitled to possession or Conveyance; and (ii) the
Purchaser is not entitled to refund of the amounts paid by it.
12.8) Consequently, the Contract became incapable of performance
on the date of the Section 8(4) Orders; as also on the date of the
termination of the said Contract; as also and even on the date of the filing
of the suit, due to the Section 8(4) Orders. Notably, the Section 8(4) Orders
subsisted on the date of filing of the Suit. The relevant dates in this regard
are as under:
a. Section 8(4) Orders – 31.10.2006.
b. The Suit was filed – 06.02.2009.
c. The Section 8(4) Orders were quashed – 08.04.2009.
12.9) Significantly, Writ Petition No. 6050 of 2008 [filed by the
Defendant-Trust, on its own, for its own purpose, and without reference to
the Purchaser or the Contract] was pending even on the date of the filing of
the Suit (06.02.2009). Thus, on the date of the filing of the Suit, the suit
property was not in the ownership of the Defendant Trust. The question as
to whether specific performance could have been granted, has to be seen on
06.02.2009, and not thereafter, taking into account subsequent events. Writ
Petition No. 6050 of 2008 was only allowed on 08.04.2009. Since the
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sbw/sns 1-os-app-289-2015-J.docPurchaser’s rights came to an end at all the relevant times as already stated
hereinabove, including on 27.11.2007 when the ULC Act was repealed and
on 06.02.2009, when the Suit was filed (long after repeal of the ULC Act),
it can hardly be rationally suggested as a proposition of law that a
contractual right to a conveyance stands ” revived” as a result of the
Defendants (of their own volition, and without reference to the Purchaser
or the transaction with the Purchaser) succeeding, in April 2009, in getting
the Section 8(4) orders set aside. In the circumstances there is no question
of specific performance of the said Contract being granted to the
Purchaser44.
12.10) He submitted that the significance and effect of the Section
8(4) Orders may be assessed by testing what would have happened had the
Section 8(4) Orders not been challenged by the Trust. Had the Trust
accepted the Section 8(4) Orders, the Trust’s land holdings, including the
Suit Property, would have vested in the State Government; there would
thus have been no question of any Conveyance being executed in favour of
the Purchaser. This was the position on the date of filing of the Suit.
12.11) Mr. Seervai submitted that, any reliance on the repeal of the
ULC Act is erroneous because as on the date of the repeal, the 8(4) Order
was in force, and no conveyance was possible.
44 K. Narendra vs. Riviera Apartment Pvt. Ltd. - AIR 1999 SC 2309
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12.11.1) In our view, the argument advanced is entirely presumptive. By
no stretch of imagination can an order passed under Section 8(4) of the
ULC Act be construed as a final order. It merely represents the initial step in
the process of acquisition. The learned counsel has overlooked the statutory
appeal mechanisms available under Sections 12, 13, and 33 of the ULC Act,
as well as the revisional jurisdiction conferred upon the State Government
under Section 34. In light of these provisions, the argument lacks legal
foundation.
12.11.2) Furthermore, the order passed under Section 8(4) was in any
event quashed on 8th April 2009. Accordingly, the argument that the
learned Judge failed to consider or record submissions regarding the 8(4)
order is of no consequence. It has no bearing on the judgment or the final
outcome. This line of argument appears to be yet another attempt to deflect
from the core issues and mislead the Court.
f. Whether this is a fit case for the Court to exercise discretion to grant
specific performance under Section 20 of the Specific Relief Act, 1963?
13) Without prejudice to the other submissions advanced in these
submissions hereinbelow, Mr. Seervai submitted that as a result of the
repeal of the ULC Act and even otherwise, it would be grossly and
egregiously iniquitous to compel the Defendant Trust to sell the Suit
Properties to the Purchaser for INR 14 Crore, when according to the
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Purchaser, it was worth at least INR 386 Crores 45 in 2009 when the Suit
was filed, and probably considerably more in 2015 when the Impugned
Judgment was passed, and yet more today 46. This was clearly something
never contemplated or bargained by both the Purchaser and the
Defendants47.
13.1) He submitted that it is evident from the entire record, including
the record before the Charity Commissioner that with respect to the price of
the Suit Properties, the ULC issue was the crucial and determinative factor
both for the Trust to agree to sell as also for the Charity Commissioner to
give his sanction for sale at the price of Rs.14 Crores. The Affidavits of Mr.
Rajesh Batra48, Trustee of the Trust, in support of the applications, makes
specific reference to the issue of ULC clearance as a ” negative factor”.
Similarly, Mr. Kirit Kapadia, the valuer whose report was submitted to the
Charity Commissioner, also specifically kept the “need for ULC clearances”
in mind when submitting his valuation report, on the basis of which the
Charity Commissioner’s permission was obtained 49. In fact, that the hurdle
of ULC clearance was a determining factor was written and dictated by PW-
1 himself50 in the Minutes of Meeting of 19.01.200251.
45 See Appeal memo, Plaint, Para 47 / 134, Prayer (d) / 139, Exh. GG / 267.
46 In the range of INR 900 Crores.
47 Something the Learned Single Judge accepts, by recording that a ” bonanza” was available,
albeit to the Purchaser.
48 Vol. II / 74, 195.
49 Vol. II / 104, 227.
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performance in the facts of this case is grossly unjust and inequitable, for
the following reasons:
a. In the circumstances existing in 2002, the Trust was faced with the
prospect of the ULC Authorities acquiring the Suit Properties, as also having
to deal with encroachments, defending litigations, payment of taxes, etc.
b. The biggest danger was that of acquisition by the ULC Authorities.
c. The Purchaser was aware of this danger. d. In these circumstances, as opposed to facing the prospect of the
property being acquired, the Trust chose to get the best possible price in
those given circumstances i.e., during the continuance of the ULC Act.
e. Under these very same circumstances, the Purchaser offered a price
which was less than what the price would have been in the absence of the
f. In view of the provisions of the ULC Act, even if NOC from ULC
Authorities was granted, viz., exemption under Section 20 of the ULC Act,
the said NOC would have been impressed with several conditions in the
public interest, as set out above.
g. Significantly, these conditions [if imposed, had the Purchaser fulfilled
its obligation to apply for, and obtain clearance under Section 20 of the
ULC Act] in the public interest on the land would have inured even after
lapse of the Act, by virtue of Section 3(1)(6) of the 1999 Repeal Act.
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sbw/sns 1-os-app-289-2015-J.doc h. While giving the offer of INR 14 Crores, the Purchaser also in these
circumstances factored in these disadvantages / risks apart from the
possibility that a substantial portion of the property could have been
acquired.
i. Therefore, for both the parties, the existence and the effect /
consequences of the ULC Act was the fundamental and determinative factor
in arriving at the price. Undisputedly the price is one of the fundamental
term of any agreement. This price in the given circumstances also formed
the basis on which the Charity Commissioner accorded his sanction looking
to the best interest of the Trust.
j. Now on account of the repeal of the ULC Act, the following events
immediately occurred:
i. The risk of acquisition of the property by ULC Authorities
disappeared.
ii. The possibility of conditions being imposed while granting
exemption under Section 20 of the ULC Act also disappeared. The Suit
Properties are thus free of all conditions / restrictions [imposed in the
public interest] that would have accompanied the ULC Clearance, a pre-
requisite for the Purchaser to obtain a Conveyance in the first place.
iii. As a consequence, the price of the property admittedly
skyrocketed by an astronomical amount.
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iv. As such, the mere fact of repeal of the ULC Act changed the
circumstances so drastically that the position that the parties were left in on
the date of the repeal was completely altered and different from the
position as they were in on the date of the contract. v. The above position is
similar to what is stated in the judgment of K. Narendra Riviera52 as relied
upon by the Defendants, where the Supreme Court quotes with approval
Chitty on Contracts (27th Edition, 1994, Vol I, at pg. 1296) viz., that
“Severe hardship may be a ground for refusing specific performance even
though it results from circumstances which arise after the conclusion of the
contract and for which the Purchaser is in no way responsible”.
vi. As such, the repeal of the ULC Act had far reaching consequences
for both the parties. The Purchaser stood to make astronomical gains out of
an amount paid at the time of the contract on account of the then existing
circumstances.
k. The Defendants on the other hand stood to lose the benefit of the
repeal despite being the owners on the date of the repeal. This despite the
Defendants being entirely blameless for the contract not culminating in a
conveyance, and the Purchaser being solely responsible for this state of
affairs for 5 years, till the ULC Act was repealed.
52 (1999) 5 SCC 77 60/190 ::: Uploaded on - 15/07/2025 ::: Downloaded on - 19/07/2025 03:22:27 ::: sbw/sns 1-os-app-289-2015-J.doc l. As such, in the changed circumstances, to bind the Defendants to the
price fixed in 2002, but to allow the Purchaser to reap exceptional and
astronomical benefit and profit out of the same would be completely
inequitable, and would be an improper and arbitrary exercise of discretion.
Regrettably, the judgment has fallen into this error, thereby allowing the
Purchaser to unjustifiably reap a huge windfall, while depriving the Trust of
its valuable property.
m. It is to be noted that, the Purchaser eventually quoted the price of
INR 14 crores in view of the rigors of the ULC Act. Correspondingly, the
Defendants had agreed to accept this price in view of the existing rigors of
the ULC Act. It would cause severe hardships to the Defendants and would
be inequitable to now force the Defendants to accept that price when the
rigors and disadvantages of the ULC Act have ceased to exist. The inequity
would be all the greater considering that the delay in conveying the
property was entirely on account of the deliberate and calculated avoidance
on the part of the Purchaser from applying for the NOC.
13.3) Mr. Seervai submitted that, the Learned Single Judge fell into
grave error by holding that merely because the Defendant-Trust had
received the monetary consideration upfront, no hardship is caused to it.
Hardship may take many forms – in the context of a public charitable trust,
the non- requirement of compliance with conditions imposed under Section
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20 of the ULC Act [conditions in the public interest as aforesaid] is itself
one instance / category of hardship.
13.4) He submitted that quite apart from the plea of the Defendants
that the ULC repeal rendered the Agreement and the sanction of the Charity
Commissioner void, even if it remained valid, the drastically changed
circumstances would preclude / prevent the Hon’ble Court from exercising
discretion to grant specific performance thereby giving the Purchaser an
unjustified and unwarranted windfall gain, at the expense of the Trust.
13.5) He contended that a court of equity keeping in mind Section 20
of the Specific Relief Act will not grant specific performance to the
Purchaser, especially a Purchaser who has been the cause of delay in
seeking performance and has in fact defaulted in its obligation to perform a
term of the contract, if by doing so, severe hardship is caused to the
Defendants. This is even if the hardship is caused by an event which is
subsequent to the contract and which affects the Defendants personally
rather than the subject matter of the contract. An essential feature of this
discretion and equitable consideration is the test of reasonable time taken
in the period between the entering into the contract and the time at which
specific performance is sought by the Purchaser.
13.6) He submitted that in this case it is clear that Clause 10 of the
Agreement had to be performed within a reasonable period of time. The
Purchaser who did nothing to perform that obligation, cannot, in equity be
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heard to say after a delay of 5 years that since the ULC Act is repealed he is
relieved of that obligation. If on account of delay which is solely
attributable to the Purchaser, the obligation becomes impossible of
performance on account of a subsequent event (the Repeal) then in exercise
of discretion in the grant of equitable relief, the Hon’ble Court ought not to
exercise discretion in favour of the Purchaser. To do so is to put a premium
on the Purchaser’s default/wrongdoing.
13.7) Mr. Seervai submitted that, further the fact that there is an
astronomical rise in price of land (especially in urban areas) due to
substantial lapse of time has now been judicially well recognized 53. It is the
Purchaser’s own case that at the time of filing the Suit, according to the
Purchaser, the value of the property had risen to approximately INR 386
Crores54. The Hon’ble Court ought to exercise discretion guided by the
aforesaid judicial principles. It is submitted that the increase from INR 14
Crores to INR 386 Crores is an astronomical rise in prices. Though lapse of
time is one factor for not granting specific performance, the principle is that
astronomical rise in prices makes enforcement of a contract inequitable.
Now if another factor, viz. the repeal of the ULC Act also results in
astronomical rise in price, then even on that count the relief of specific
performance ought not to be granted, in exercise of equitable jurisdiction.
53 K.S. Vidyanandan & Ors. vs. Vairavan, AIR 1997 SC 1751; K. Narendra vs. Riviera
Apartment Pvt. Ltd., AIR 1999 SC 2309.
54 It is estimated that the present value of the Suit Properties is approximately INR 900
Crores.
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In the present case it is both lapse of time and the repeal of the ULC Act
which have led to the astronomical increase in price of the Suit Properties.
13.8) He submitted that the hardship that would be caused to the
Defendants is on account of circumstances which could not be foreseen at
the at time at which the contract was entered into. Grant of specific
performance will give the Purchaser an unfair advantage over the
Defendants.
13.9) Further, he submitted that it is solely the Purchaser who is
responsible for the delay by not having obtained the NOC of the ULC
Authorities within a reasonable time. It is submitted that though time was
not the essence of the contract in this case, nonetheless, keeping in view the
provisions of Section 46 of the Indian Contract Act, 1872, the Purchaser
was required to comply with its obligations within a reasonable time 55.
Further, the Defendants were not required to perform their obligation to
execute the conveyance until the Purchaser first performed its prior
reciprocal obligations to obtain the NOC of the ULC Authorities, as required
under the provisions of Sections 52 read with 54 of the Indian Contract
Act56. In fact, Sections 52 read with 54 would indicate that the Purchaser
could not claim performance of the reciprocal promise from the Defendants
to execute the conveyance. The repeal of the ULC Act five years after the
55 K. Narendra vs. Riviera Apartment Pvt. Ltd., AIR 1999 SC 2309.
56 Nathulal vs. Phoolchand (1969) 3 SCC 120.
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Purchaser had to first comply with and fulfill its obligation cannot possibly
make a difference to this principle of law.
13.10) If the result of the repeal of the ULC Act which was not
foreseen at the time when the contract was entered into, results in the
Purchaser making astronomical gains, not bargained for at the time of
entering into the contract and consequently resulting in severe hardship
and loss to the Defendants, a Public Charitable Trust, equitable principles
would require that in the absence of any balance of the equities between
the parties at the time of granting performance, performance ought not to
be granted.
13.11) In Jayakantham v. Abhaykumar, (2017) 5 SCC 17857, the
Hon’ble Supreme Court held that the conduct of the parties at the time of
entering into the agreement and the circumstances under which the
agreement was entered into are relevant factors to be considered when
determining whether or not to grant specific performance. In that case,
mere payment of a large part of the consideration in advance does not itself
entitle a Purchaser to specific performance.
13.12) In Nanjappan v. Ramasamy, (2015) 14 SCC 34158, also a case
where consideration was paid in advance, the Hon’ble Supreme Court
refused to grant specific performance. In doing so, the Hon’ble Supreme
Court took into account (a) the increase in the value of property in urban
57 (2017) 5 SCC 178.
58 (2015) 14 SCC 341.
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areas, resulting in an unfair advantage to the Purchaser, and great hardship
to the defendant; and (b) the comparative hardship caused to the
defendant. In the facts of that Nanjappan, the suit property was the
defendant’s only property, where he had constructed a house, and was
residing. In the present case, the Defendant is a Trust, established for
charitable purposes, as against the Purchaser, a real estate developer. The
question of comparative hardship, therefore, must square be answered in
favour of the Defendant.
13.13) Without prejudice to the above, Mr. Seervai submitted that, in
view of the words of Clause 10 of the Agreement that the amount will not
be refundable as also Conveyance was not required to be executed in the
event of (i) the exemption not forthcoming or (ii) the exemption being
refused, on the orders dated 31.10.2006 and 11.12.2006 being passed, it is
clear that the NOC of the ULC Authorities was not forthcoming. As such, in
terms of the sanction of the Charity Commissioner, the contract became
impossible of further performance viz., the Defendants could not execute
the Conveyance.
13.13.1) The learned Judge has duly considered these arguments, as
well as the judgments cited in that context, in paragraphs 19 to 29 of the
impugned judgment. We are in full agreement with the view taken. The
reliance placed on the judgment in K. Narendra (supra) is entirely
misplaced and contextually irrelevant. Unlike the facts in that case, there is
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no consideration in the present matter that remained receivable by the
Defendant contingent upon the Plaintiff’s performance or non-performance
in obtaining ULC permission.
g. Whether by virtue of the Repeal of the ULC Act, what was ordered to be
specifically performed was a different contract from the one the parties
entered into?
14) Mr. Seervai submitted that, the Trust is a public charitable trust,
established under a Trust Deed dated 28.12.1973 (Vol. I / P-2 / 17).
Clauses 4 and 5 of the Trust Deed provide the objects of the Trust, which
are wholly and obviously charitable in nature.
14.1) In view of Section 20 of the ULC Act, conditions would have
been imposed on the user of the Suit Properties, in the NOC/clearance that
was to be obtained by the Purchaser. These conditions would have been in
the public interest and would have been mandatory for the Purchaser to
comply with. These conditions would have been in the public interest and
therefore, broadly, aligned with the objects of the Trust. In view of the non-
obtaining of sanction, such conditions would not be imposed; the
fundamental basis for the agreement is thus changed. The fact that the
Defendant is a public charitable trust must be kept in mind in this regard, as
set out above.
14.2) These public interest conditions attaching to the Conveyance of
the Suit Properties were, obviously, a relevant consideration when the
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Contract was consummated – these conditions were relevant in the minds
of the Purchaser, the Defendant, as also the Charity Commissioner who
accorded sanction.
14.3) With the repeal of the ULC Act, these conditions would no
longer be applicable. Thus, by virtue of the repeal of the ULC Act, what was
being sought to be specifically enforced was an altogether different contract
from the one the parties entered into. There is a frustration of the contract
that was entered into between the parties [See Naihati Jute Mills v.
Khyaliram Jagannath, 1967 SCC OnLine 1059, Paras 5 – 9].
14.4) Given the nature of contract, even if the Defendants had not
terminated the contract, the impossibility to perform Clause 10 of the
Agreement / the changed circumstances, by virtue of the repeal of the ULC
Act, rendered the Agreement void, being incapable of performance, and the
Purchaser was not entitled to seek performance. In law, therefore, the
Defendants were not required to terminate the Contract, as the Contract
itself came to an end.
14.4.1) In our view, this argument represents yet another attempt to
evade the contractual obligations willingly undertaken by the Defendants
with full knowledge and without any element of coercion, fraud, or undue
influence. By withholding execution of the conveyance for nearly fifteen
years after having received the entire consideration, the Defendants have
59 1967 SCC OnLine 10.
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sought to frustrate a bona fide transaction. It would be wholly
inconceivable for any court to grant relief in such circumstances, as doing
so would effectively reward dishonesty and undermine the sanctity of
commercial transactions. The repeated raising of frivolous defences and the
consistent attempts to delay adjudication at every stage render the conduct
of the Defendants palpably dishonest and mala fide, and such conduct
deserves to be unequivocally condemned.
h. Whether the Purchaser was in possession of the Suit Properties?
15) Mr. Seervai submitted that, the Purchaser has sought two reliefs in
the Plaint. The Purchaser has sought both, a declaration that it is in valid
and lawful possession of the Suit Properties [Prayer (b)], or in the
alternative, a declaration that it is entitled to vacant and peaceful
possession of the Suit Properties [Prayer (c)].
15.1) Clause 8 of the Offer Documents, i.e., the contract which the
Purchaser seeks performance of, provides:
“The Vendors will not be responsible to give vacant possession
of the land. Possession such as its nature admits, shall be
deemed to be given at the time of Conveyance.”
15.2) Similarly, the Order of the Charity Commissioner under Section
36 provides:
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“d) Purchaser shall be entitled to possession of property after
due execution of Conveyance Deed as stated above ” [Vol. II /
P – 20 / 357].
15.3) He submitted that, there was thus no question, whether in
terms of the Contract or in terms of the statutory sanction accorded on the
basis of which the Contract was entered into, which statutory sanction was
mandatory to comply with, that the Purchaser could ever have been in
possession prior to the Conveyance deed being executed. Despite this, the
Purchaser made a false claim to being in ” physical control and effective
possession” of the Suit Properties [Plaint # 25 / Appeal Memo /121].
15.4) He submitted that the evidence before the learned Single Judge
clearly established that it was the Defendant Trust and not the Purchaser
that was in possession of the Suit Properties. This is more particularly
elaborated upon in the List of Dates, including:
a. The Offer Documents, which made it clear that possession will be
given only on Conveyance.
b. The Order of the Charity Commissioner under Section 36(1),
which made it clear that the Purchaser would be entitled to possession only
on Conveyance.
c. The Purchaser’s letters dated 15.11.2023, 04.04.2005, 25.01.2006,
all of which make it clear, and affirm, that possession is not handed over by
the Trust to the Purchaser.
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d. The fact that no claim by the Purchaser of it being in possession
was ever made till the Contract was terminated.
15.5) Mr. Seervai submitted that, crucially, in the Order dated
08.04.2009 in Writ Petition No. 6050 of 2008, this Hon’ble Court rendered
a definitive finding that the Defendant is in possession of the Suit Property
(Vol. III @ 384). This finding on the possession of the Trust, is given
keeping in mind the affidavit filed by Mr. V P Shah. To arrive at his finding
on possession based on the said affidavit, the Learned Single Judge ignores
the definitive finding of this Hon’ble Court that the Defendant is in
possession of the Suit Property.
15.6) He submitted that in the Impugned Judgment, the learned
Single Judge has entirely disregarded this overwhelming evidence and has
effectively founded the entire finding on possession upon one sentence,
torn out of context, in the Affidavit dated 05.10.2006 filed by the Trust’s
authorized representative, in Writ Petition No. 114 of 2006. The Learned
Single Judge has gravely erred, both in fact and in law, in this regard. The
overwhelming material on record confirmed that the Purchaser was never
put into possession of the Suit Properties. Further, the said Affidavit could
never have been read in evidence owing to the provisions of Section 33 of
the Evidence Act, as also the provisions of Section 1 of the Evidence Act60.
60 Padam Singhi v. Praful Desai, 2008 SCC OnLine Bom 183, Paras 14, 17, 22, 23. For
Section 1, reference may be made to the judgment in Sudha Devi v. MP Narayanan,
(1988) 3 SCC 366, Para 4.
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sbw/sns 1-os-app-289-2015-J.doc 15.7) He submitted that in the Impugned Judgment, the learned
Single Judge has held that, the said Affidavit ” effectively puts paid to the
Defendants’ contention that … the Purchaser was not in possession or
control of the suit properties.”61 However, the Learned Single Judge has not
considered or engaged with the evidence of Mr. V. P. Shah (DW-1), the
affiant of the said Affidavit, who has (a) explained the circumstances in
which that Affidavit was executed62. Further, Mr. Shah was not cross
examined on this aspect, nor was he confronted with the said Affidavit to
give him an opportunity to explain the same63.
15.8) Mr. Shah’s Affidavit has clearly been read by the Learned
Single Judge completely out of context. The said Affidavit, which is solely
and exclusively relied upon to render an otherwise non-maintainable Suit
maintainable, does not, at any place, state that possession of the Suit
Property has been handed over to the Purchaser. No statement or averment
regarding possession is made by Mr. Shah. Despite this, the said Affidavit is
relied upon for that very purpose. This finding is not only erroneous, but is
perverse.
15.9) The Affidavit is filed in a Writ Petition alleging unauthorized
cutting of mangroves at the Suit Property (See Vol. V @ 962). It is to
defend the allegations made in that Writ Petition that Mr. Shah has filed the
61 Impugned Judgment; Para 18.
62 Paragraphs 27 and 28; Vol. X, Page 1776.
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Affidavit. Even in the Affidavit, Mr. Shah has not whispered a word about
possession.
15.10) He submitted that relying on this Affidavit as the singular piece
of evidence that turned the question of possession is clearly and egregiously
erroneous, particularly when faced with the weight of the evidence to the
contrary. One sentence which does not even speak of possession has been
taken completely out of context to enable the Suit to be maintainable. This
perverse and arbitrary finding ex-facie constitutes error apparent on the
face of the Judgment and Order, vitiating it entirely and rendering it liable
to be set aside in appeal.
15.10.1) We are unable to accept the sweeping rhetoric that, the learned
Judge’s findings are ex facie perverse or arbitrary. The issue of possession
has been carefully addressed by the learned Judge in paragraphs 16 to 18
of the impugned Judgment. Leaving aside the arguments, one must ask,
having paid the entire purchase price to the Trust, what if anything, could
the Trust legitimately retain? Particularly when Bastion had assumed all
liabilities relating to the suit property, including its protection, was it not
only logical that they also took possession to safeguard their interest?
15.10.2) What obligation remained on the Trust to protect the property?
None. The Trust had received the full consideration. Beyond conferring
juridical possession to enable Bastion to perfect title through execution of
the conveyance, there was nothing further to deliver. The argument
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advanced is nothing more than a smokescreen designed to mislead the
Court.
15.10.3) In our view, there was nothing beyond the prayers in the
plaint, Clause 8 of the offer document, the Charity Commissioner’s order,
the contemporaneous correspondence and the Court’s own findings that Mr.
Seervai could rely upon to contend that the Trust remained in possession.
What he was required to establish, but failed to do, was the Defendants’
continuing obligation to maintain and protect the property. That obligation,
on the facts of this case, had clearly been assumed by Bastion, who had
paid the entire consideration and taken responsibility for safeguarding the
suit property. In the above context, the reliance placed on the judgment in
Padam Singhi (supra) is equally misplaced and contextually irrelevant.
15.10.4) The prayers in the plaint clearly seek a declaration that the
Plaintiff’s possession is lawful, and further seek possession in the legal sense
i.e. juridical possession, as contemplated under law, as well as in the offer
document, the Charity Commissioner’s order, and the parties’
correspondence. This position has been merely denied by the Defendants
for the sake of form, without any substantive rebuttal. The learned Judge
has appropriately appreciated both oral and documentary evidence and
reached a well-founded conclusion that the Plaintiff was in physical
possession and effective control of the suit property. We are in full
agreement with that finding.
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i. Whether the Suit is not maintainable in view of Section 50 of the
Maharashtra Public Trusts Act, 1950?
16) Mr. Seervai respectfully submitted that, the Learned Single Judge
has gravely erred in construing Section 50 as also the judgment of the
Hon’ble Supreme Court in Sainath Mandir Trust v. Vijaya 64, (2011) 1 SCC
623. In Sainath Mandir (supra) the Hon’ble Supreme Court held:
“13. Supplementing the aforesaid arguments, it was still
further contended that in view of the “dedication” of the
property to the idol of which the appellant is a trustee, any
suit for possession against such property could not have
been filed without the requisite permission of the Charity
Commissioner under Sections 50 and 51 of the Bombay
Public Trusts Act, 1950. A mere perusal of Section 50 sub-
section (ii) of the Bombay Public Trusts Act specifically
indicates that “where a direction or decree is required to
recover the possession of or to follow a property belonging
or alleged to be belonging to a public trust” and a dispute
arises in regard to the same, permission of the Charity
Commissioner was clearly a necessary legal requirement.
Hence, it was submitted that as the appellant Trust is in
possession of the plot in question and the relief of
possession was sought by the Purchaser, the requisite
permission under Sections 50 and 51 became mandatory
before filing such a suit, failing which the suit ought to have
been rendered as not maintainable. The requirement or
necessity of such a permission is the basic requirement at64 (2011) 1 SCC 623.
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the very threshold and it is impermissible for the Court to
enter into the merits of the matter vis-a-vis the validity of
the transfer, etc. in such a suit which does not comply with
the basic requirement of obtaining such a permission.
Under the aforesaid background, the contention of the
learned counsel for the appellant that permission should
have been obtained from the Charity Commissioner under
Sections 50 and 51 of the Bombay Public Trusts Act
assumes significance and its legal implication cannot be
overlooked. When the disputed plot had already been
dedicated in favour of the idol by virtue of a deed of gift, of
which the appellant is a trustee and the same was acted
upon as possession also was delivered to the appellant
Trust, it was surely necessary for the Purchaser-
Respondents 1 to 7 purchaser of the suit land and also
incumbent upon Respondent 8 vendor of the sale deed to
seek permission from the Charity Commissioner before a
sale deed could be executed in regard to the disputed plot
and more so before a civil suit could be instituted. We,
therefore, find substance in the contention of the learned
counsel for the appellant, that the dedication dated 31-1-
1974 of the plot for charitable purpose in the nature of gift
having been acted upon as a result of which the possession
also was delivered to the appellant Trust, the civil suit filed
by the predecessor of contesting Respondents 1 to 7 for
possession was expressly barred in terms of Sections 19, 20,
79 and 80 of the Bombay Public Trusts Act, 1950.76/190
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“18. Under the aforesaid background, the contention of the
learned counsel for the appellant that permission should
have been obtained from the Charity Commissioner under
Sections 50 and 51 of the Bombay Public Trusts Act
assumes significance and its legal implication cannot be
overlooked. When the disputed plot had already been
dedicated in favour of the idol by virtue of a deed of gift, of
which the appellant is a trustee and the same was acted
upon as possession also was delivered to the appellant
Trust, it was surely necessary for the Purchaser-
Respondents 1 to 7 purchaser of the suit land and also
incumbent upon Respondent 8 vendor of the sale deed to
seek permission from the Charity Commissioner before a
sale deed could be executed in regard to the disputed plot
and more so before a civil suit could be instituted. We,
therefore, find substance in the contention of the learned
counsel for the appellant, that the dedication dated 31-1-
1974 of the plot for charitable purpose in the nature of gift
having been acted upon as a result of which the possession
also was delivered to the appellant Trust, the civil suit filed
by the predecessor of contesting Respondents 1 to 7 for
possession was expressly barred in terms of Sections 19, 20,
79 and 80 of the Bombay Public Trusts Act, 1950.
25. But even if we were to accept the contentious issue or
leave it open and express no final opinion that the deed of
gift executed in favour of the appellant Trust having not
been registered, did not confer any title on the appellant
Trust, it is not possible to brush aside the contention that77/190
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sbw/sns 1-os-app-289-2015-J.docRespondents 1 to 7, purchaser of the plot in question were
legally bound by Section 51 of the Bombay Public Trusts
Act, 1950 to obtain consent of the Charity Commissioner
before institution of the suit against the appellant which was
admittedly in possession of the property after the gift deed
was executed in its favour by Respondent 8.
26. It would be relevant to quote Section 51 at this stage
which lays
down as follows:
“51. Consent of Charity Commissioner for institution of suit.-
(1) If the persons having an interest in any public trust
intend to file a suit of the nature specified in Section 50,
they shall apply to the Charity Commissioner in writing for
his consent. If the Charity Commissioner after hearing the
parties and making such enquiries (if any) as he thinks fit is
specified that there is a prima facie case, he may within a
period of six months from the date on which the application
is made, grant or refuse his consent to the institution of such
suit. The order of the Charity Commissioner refusing his
consent shall be in writing and shall state the reasons for the
refusal.”
27. Section 51 further envisages the right of appeal by the
affected party if the Charity Commissioner refuses his
consent to the institution of the suit. Prior to this Section
50(ii) already envisages that where a direction or decree.
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28. It is difficult to overlook that the decree-holder/the
respondent herein although had gone to the extent of
publishing a notice in a local daily Mathrubhumi inviting
objections indicating that he intended to purchase the suit
land, he conveniently ignored the provisions of Section 51
of the Bombay Public Trusts Act, 1950 and refused to apply
to the Charity Commissioner before instituting a suit against
the appellant Trust especially when the possession of the
plot was delivered to the appellant Trust way back in the
year 1974 but after more than eight years, Respondent 8
vendor executed a sale deed in favour of the predecessor of
Respondents 1 to 7. The relevance of Section 51 of the
Bombay Public Trusts Act, 1950 although is clearly apparent
and the appellant had also raised it before the High Court,
the learned Single Judge of the High Court has not even
addressed this important issue having a legal bearing on the
right of the appellant to retain the plot, which although had
been in the form of a deed of gift, in fact it was practically in
the nature of dedication to the appellant Trust for charitable
purpose which was to
construct a “Bhakta Niwas” for the devotees of Saibaba.
31. Section 79(1) of the same Act also lays down that any
question, whether or not a trust exists and such trust is a
public trust or particular property is the property of such
trust, is required to be decided under its statutory force by
the Deputy or Assistant Charity Commissioner as provided
under the Act and Section 80 bars jurisdiction of the civil
court to decide or deal with any question which is by or
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under this Act to be decided or dealt with by any officer or
authority under this Act. Thus, when the appellant Trust
was in occupation and possession of the property in
question then the respondent- Purchaser clearly could not
have approached the civil court ignoring the specific
provision under the Bombay Public Trusts Act, 1950 which
has laid down provisions to deal with disputes relating to
the property of the trusts.
32. It also cannot be overlooked that in the instant case, it is
the original owner of the property i.e. Respondent 8 who
had executed a deed of gift in favour of the appellant Trust
and subsequently after ten years, executed a sale deed in
favour of the predecessor of Respondents 1 to 7, who
approached the Court for recovery of his property in which
case it could perhaps have been available for the owner of
the property to approach the civil court. But in the case at
hand, it is the purchaser of the property, predecessor of
Respondents 1 to 7 who filed the suit for possession which
clearly can be construed as the suit for recovery of
possession from the appellant Trust which was in possession
of the property. In that view of the matter, it was the
statutory requirement of the Bombay Public Trusts Act,
1950 to approach the Charity Commissioner before a suit
could be instituted.”
16.1) Mr. Seervai submitted that, in the present case, admittedly no
permission / sanction under Section 50 was obtained prior to the filing of
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the Suit. The Suit was thus hit by Section 50. The learned Single Judge has
patently and gravely erred both in his interpretation of Sainath Mandir
(supra) in Paragraph 35 of the Impugned Judgment, and his attempt to
distinguish it on facts , when for all practical purposes there was no real
difference on facts qua the principle of law laid down by the Court .
Contrary to the express ruling in Sainath Mandir (supra) adverted to above,
the Learned Single Judge has erroneously held that Section 50 permission
was not held to be mandatory.
16.1.1) We are unable to agree with the submission advanced by Mr.
Seervai. The learned Judge has lucidly explained the scope and applicability
of Section 50 of the Maharashtra Public Trusts Act, in conjunction with the
relevant provisions of the Code of Civil Procedure, as they apply to the facts
of the present case. This analysis is clearly set out in paragraphs 31 to 33 of
the impugned judgment, followed by cogent reasons in paragraphs 34 and
35. We fully concur with the view taken by the learned Judge and find no
reason to interfere with the same.
j. What are the factual questions at issue in the matter?
17) Mr Seervai argues that, there was a serious contest between the
parties as to the Purchaser’s readiness and willingness to perform the
essential terms of the Contract, viz. Clause 10. The learned Single Judge
has avoided entering into that factual question by rendering an erroneous
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finding on whether Clause 10 of the Contract was an essential term of the
Contract or not.
17.1) By erroneously holding that Clause 10 itself was not an
essential term of the Contract, the Learned Single Judge has, in substance,
avoided addressing this issue altogether.
17.2) This is already elaborated above.
17.3) There was also a serious contest between the parties as to
whether in the facts of the present case, the Court ought to exercise
discretion in favour of the Purchaser to grant specific performance under
section 20 of the Specific Relief Act, 1963.
17.3.1) In our view, the findings of the learned Judge have been
misconstrued by the Appellants to serve their own self-interest. The learned
Judge has not overlooked or avoided any aspect of the matter. On the
contrary, he has carefully sifted the material on record–separating the
chaff from the wheat–and has crystallised each issue with clarity and
precision. We unreservedly concur with his reasoning and find no basis to
interfere with the conclusions drawn.
SUBMISSIONS OF MR. KADAM
Gist of the Plaintiff’s Case.
18) Mr. Kadam learned Senior Counsel for Bastion (Plaintiff)
submitted that the Plaintiff’s pleaded case, in the Plaint was as under:
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(i) The Plaintiff and Defendant arrived at a contract/agreement dated 18th
March 2002 (“Suit Agreement”) for sale of the Suit Properties for an
aggregate consideration of Rs. 14 crores. [Ref: Appeal Memo/Plaint – Para
9/Pg.110]
(ii) As the Suit Properties belonged to the Defendant Trust, which was a
Public Charitable Trust, the Defendants made separate applications dated
30th April 2002 to the Charity Commissioner for sanctioning the sale
thereof. The substance of the applications and its accompaniments was that
the terms of the Suit Agreement for sale of the Suit Properties being on “as
is where is basis”, the risk of various claims/litigations, danger of trespasser
and encroachment and risk of obtaining clearance under the Urban Land
(Ceiling & Regulation) Act, 1976 (“ULC Act“) was being taken by the
Plaintiff. who would make payment of the consideration of Rs. 14 crores
irrespective of the attendant risks and that that consideration was at a fair
market value. which the Defendant could expect from the Suit Properties.
[Ref: Appeal Memo/Plaint – Para 10/Pg.1101
(iii) The Plaintiff paid the entire consideration for the Suit Properties (i.e.,
the entire Rs. 14 crore) by 4 November 2003: [Ref: Appeal Memo/Plaint –
Para 12/Pg.111-1121
(iv) Upon making the entire payment by November 2003, the Plaintiff
immediately thereafter took effective control of the suit properties and had
taken on hand the completion of the retaining wall of the nala and its
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training and the with the consent and knowledge of the Defendants
appointed security agency called “Om Security Services” who has a long
standing association with the Plaintiff’s partner Salim Judha, to look after
the suit properties. [Ref: Appeal Memo/Plaint – Para 14/Pg.1131
(v) The Defendant (at the Plaintiff’s request) addressed a Letter dated 22nd
March 2006 to the Collector, Mumbai Suburban, inter-alia, recording that it
had agreed to sell the Suit Properties to the Plaintiff [Ref: Appeal
Memo/Plaint – Para 20/Pg.1191
(vi) The Defendants have at the behest of the Plaintiff made an application
dated 3rd October 2006 to the Competent Authority for exemption of
surplus vacant land comprised in the Suit Properties under Section 20 of
the ULC Act; [Ref: Appeal Memo/Plaint – Para 24/ Pg.1201
(vii) In Writ Petition No. 114 of 2006, filed by one WAMA Group, and
arraying the Defendant as a party respondent thereto, the Defendant filed
an Affidavit dated 5th October 2006 confirming that “.. formal execution of
conveyance in favour of Bastion Construction had not yet taken place, for
want of permission from the competent authority under the Urban land
Ceiling Act, 1973… …Hence, although, the formal execution of the
conveyance in favour of Bastion Construction remains to be executed for all
real and practical purposes and intent Respondent No. 8 has transferred its
rights in the plot to Bastion Construction…Bastion Construction is not
developing the plot as a developer engaged by Respondent No. 8, but in its
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own right…”; Ref: Appeal Memo/Plaint – Para 22/ Pg.119 r/w Para 26 &
27/Pg.121-1231
(viii) The Defendants have for all real and practical purposes and intent
transferred to the Plaintiff their rights in the Suit Properties. The Plaintiff is
protecting the suit properties in its own right and on its own account and
only a formal conveyance thereof remained to be executed in favour of the
Plaintiff, as the permission of the Competent Authority under the ULC Act,
which was in force till November 2007, was awaited: [Ref: Appeal
Memo/Plaint – Para 28/ Pg.124J
(ix) The ULC Repeal Act was notified by Notification dated 6th December
2007, issued by the Government of Maharashtra, and by which the ULC Act
ceased to apply to the Suit Properties with effect from 29th November
2007; [Ref: Appeal Memo/Plaint – Para 30/ Pg.1251
(x) By virtue of this repeal, the condition in clause 10 of the Suit Agreement
ceased to apply and the Defendants were bound to execute conveyance of
the Suit Properties in favour of the Plaintiff: [Ref: Appeal Memo/Plaint –
Para 30/Pg.125]
(xi) By Letter dated 12th February 2008 the Plaintiff called upon the
Defendant to execute the conveyance in light of the repeal of the ULC Act;
[Ref: Appeal Memo/Plaint – Para 31/ Pg.1251
(xii) By Letter dated 30th May 2008 the Defendant, inter-alia, called upon
the-Plaintiff to obtain a confirmation from the Competent Authority that the
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Defendant could execute conveyance of the Suit Properties in favour of the
Plaintiff; [Ref: Appeal Memo/Plaint – Para 33/ Pg.126]
(xiii) The Plaintiff addressed a Letter dated 5th August 2008 to the
Defendant forwarding a copy of the decision of the Bombay High Court in
the Voltas case wherein the Court has, inter alia, held that surplus vacant
land that is not taken over by the State Government prior to notification of
the Repeal Act will stand released. [Ref: Appeal Memo/Plaint – Para
35/Pg.127]
(xiv) The Competent Authority (in response to an application that had been
made by the Plaintiff in February 2008) by Order dated 4th October 2008
noted that no order had been passed in respect of the Suit Properties under
Section 10(5) of the ULC Act and in view of the Repeal Act the Suit
Properties are outside the purview of the ULC Act and that accordingly the
Competent Authority did not have any objection to transfer the Suit
Properties; [Ref: Appeal Memo/Plaint- Para 37/Pg.128]
(xv) The Plaintiff forwarded a copy of the Order dated 4th October 2008,
under cover of Letter dated 7th October 2008, and stated that by obtaining
the said Order the Plaintiff had fully satisfied the Defendant’s requirement
indicated in their letter dated 30th May 2008 for executing the conveyance
in favour of the Plaintiff, though in Plaintiff’s view there was no
requirement to obtain such order; [Ref: Appeal Memo/Plaint- Para
38/Pg.128]
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(xvi) The Defendant by their Letter dated 25th November 2008 refused to
execute conveyance of the Suit Properties and purported to determine /
terminate the Suit Agreement and forfeit the entire consideration of Rs. 14
crores. inter alia, on the basis that the Plaintiff failed and neglected to apply
to the Competent Authority for permission and that such failure has in in
breach of the Suit Agreement and the basis of Order dated 27′ December
2002 passed by the Charity Commissioner. ‘Ref: Appeal Memo/Plaint- Para
39/Pg.128-1291
(xvii)The Plaintiff has discharged and performed all its obligations under
the Suit Agreement and has at all material times been and continues to be
ready and willing to perform its obligations under the terms of the Suit
Agreement; [Ref: Appeal Memo/Plaint- Para 46/Pg.132]
(xviii) The Plaintiff accordingly sought. inter-alia, (i) specific performance
of the Suit Agreement (ii) declaration that the Plaintiff is in possession of
the Suit Properties and in alternate declare that the Plaintiff is entitled to
possession or the Suit Properties; (iii) in alternate Defendants be decreed to
pay to the Plaintiff damages of Rs.386,24,11,200/- together with interest at
18% p.a from the date of filing of the Suit till payment thereof. [Ref: Appeal
Memo/Plaint– Prayers @Pg.138- 142]
Gist of the Defendant’s Case.
19) He submitted that the summary of Defendant’s pleaded case, in
the Written Statement, is as under:
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(i) It was mandatory to obtain the NOC for transfer the Suit
Properties unto the Plaintiff as per Clause 10 of the Offer Documents. It is
clear as per the sanction order dated 27″ December 2002 r/w the terms of
the Offer Documents, that it was solely the responsibility of the Plaintiff to
obtain the NOC under ULC Act. The Plaintiff failed to obtain the requisite
permission within reasonable time. [Ref: Appeal Memo/Written Statement –
Para 5.a r/w 5.b /Pg.276-278]
(ii) From 2003 till the year 2008, the Plaintiff took no steps to obtain
the requisite permission from the Competent Authority and the condition as
stated in the Offer Documents was not complied with. [Ref: Appeal Memo/
Written Statement-Para 5.e/Pg.279)
(iii) It was only after the ULC Act was repealed that the Plaintiff did
apply to the Competent Authority for the permission.[Ref: Appeal
Memo/Written Statement – Para 5.e/Pg.279]
(iv) The Charity Commissioner’s order was a conditional order
whereby the sale was accorded sanction only on the fulfillment of all
conditions. Hence if the permission of the Competent Authority, is not
necessary after the repeal of the ULC Act, then the Charity Commissioner
becomes void. [Ref: Appeal the sanction granted Memo/Written Statement
– Para 5.e/Pg.279 r/w Para 7/Pg.281-282]
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(v) The Competent Authority could not have entertained the
Plaintiff’s alleged application dated 5th February 2008 as it had become
functus officio. [Ref: Appeal Memo/ Written Statement – Para 5.e/Pg.279j
(vi) The Competent Authority passed Orders dated 31 st October 2006
and 11th December 2006 declaring various lands including the Suit
Properties to be excess vacant land and sought acquisition thereof which
was challenged by the Defendant in Appeal No.32 of 2007 before the
Additional Commissioner, Konkan Division. By an Order dated 31st August
2007 there was a status quo order passed which was continued from time-
to-time upto 10th December 2007. [Ref:, Appeal Memo/ Written Statement
– Para 5.c/Pg.278] pendency of the aforesaid Appeal before the Additional
Commissioner, Konkan Division, the ULC Act was repealed with effect from
29th November 2007 and Additional Commissioner refused to continue the
interim order and hearing of the Appeal was adjourned sine-die. [Ref:
Appeal Memo/Plaint- Para 5.c/Pg.278]
(vii) During the pendency of the aforesaid Appeal before the
Additional Commissioner, Konkan Division, the ULC Act was repealed with
effect from 29th November 2007 and Additional Commission refused to
continue the interim order and hearing of the Appeal was adjourned sine-
die [Ref: Appeal Memo/Plaint-Para 5.c/pg.278]
(viii) The Defendants filed a Writ Petition No. 6050 of 2008
challenging the orders dated 31st October 2006, and 11th December 2006
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passed by the Competent Authority which was allowed by an Order dated
8th April 2009. [Ref: Appeal Memo/Written Statement – Para 5.f/Pg.280
(ix) Defendants have stated at Paragraph 16 of their Written
Statement, [Ref: Appeal Memo/ Written Statement – Pg.284] that the
contents of Paragraph 6 to 9 of the Plaint are substantially correct.
Defendant has stated at Paragraph 18 of their Written Statement, [Ref:
Appeal Memo/ Written Statement — Pg.285] that Paragraph 11 and 12 of
the Plaint are substantially correct.
(x) For the sake of convenience of the Plaintiff, the Defendants made
an application dated 3rd October 2006 to the Competent Authority for
exemption under Section 20 of the ULC Act and permit the Plaintiff to
develop the Suit Properties. [Ref: Appeal Memo/ Written Statement — Para
27/Pg.293]
(xi) Initiatives were taken by the Defendants for necessary permission
under the ULC but delay were caused by the Plaintiff and therefore the
transaction of sale could not be completed within time and inspite thereof
the Plaintiff did not pursue the said application before the Competent
Authority. [Ref: Appeal Memo/ Written Statement — Para 27 r/w Para
29/Pg.293-294] The Defendants made the application dated 3rd October
2006 as the Plaintiff for more than 3 years did not obtain permission of the
Competent Authority. [Ref: Appeal Memo/Written Statement — Para
30/Pg.295-296].
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(xii) The contentions raised by the Defendants in the Affidavit dated
5th October 2006 were rejected by the Hon’ble Division Bench of this
Hon’ble Court. [Ref: Appeal Memo/ Written Statement– Para 29/Pg.294]
In any event, in paragraph 17 of the Affidavit dated 5th October 2006, the
Defendants had clearly stated that “…the legal ownership of the said plot
still vests in Respondent No.8 … “. [Ref: Appeal Memo/ Written Statement
— Para 26/Pg.292]
(xiii) Without prejudice, it is stated that by an Order dated 8th April
2009 passed in Writ Petition No. 6050 of 2008 filed by the Defendants, the
provisions of the ULC Act were no longer applicable to the Suit Properties
and the same have devolved back upon the Defendants. In view of the
change in circumstances, it would be necessary to obtain a fresh sanction
from the Charity Commissioner and the Defendants are not bound to
execute conveyance of the Suit Properties in favour of the Plaintiff. [Ref:
Appeal Memo/Written Statement — Para 31/Pg.296]
(xiv) The value of the Suit Properties was determined and Charity
Commissioner’s approval was obtained on the basis of several factors
including that sanction of the Competent Authority under the ULC Act was
mandatory. [Ref: Appeal Memo/Written Statement — Para 34/Pg.297]
CIRCUMSTANCES IN WHICH THE DEFENDANT TRUST AGREED TO SELL
THE SUIT PROPERTY.
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sbw/sns 1-os-app-289-2015-J.doc 20) Pursuant to the Plaintiff's offer to purchase the Suit Properties
being accepted on 18th March 2002 [Ref: Ex. E & F @ Pg.173 & Pg.174 /
Appeal Memo], the Defendants made two separate applications, both dated
30th April 2002, to the Charity Commissioner for sanctioning sale of the
Suit Properties to the Plaintiff.
20.1) These applications, inter alia, record the background and
circumstances in which the Plaintiff had decided to sell the Suit Properties.
as follows and that the same was in the interest of the Defendants and there
was compelling necessity:
(a) The Plaintiffs had offered, at the meeting held on 19th January
2002, to purchase the Suit Properties for Rs. 14 crores.
Pertinently during these meetings, the Plaintiff raised its offer
from Rs. 8.25 crores to Rs. 14 crores. The same was duly
accepted by the trust vide its letters of acceptance dated 18th
March 2002 [Ref: Para 2.3 r/w Pg.57 Vol 1 & Pg.179 Vol II];
(b) In the Affidavits in support of these applications the Defendant
Trustees disclosed the compelling necessity for selling the Suit
Properties as claims, pending litigations which, inter alia,
included, “…various negative factors including the proximity of
the BMC dumping ground, ULC clearance, low lying area
requiring considerable filling, reservations, proximity of slums
and slum like structures, nala running through the land, the
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market conditions and other relevant factors…” [Ref: Para
5/Pg.74/Vol I and Para 5/Pg.195/Vol II];
(c) The Defendant Trust also obtained and filed, along with these
applications, Valuation Reports, from M/s Kirit G. Kapadia,
which also disclosed these reasons being relevant while
ascertaining the fair market value for the Suit Properties [Ref:
Para 7/Pg.104/Vol I and Para 7/Pg.227/Vol II];
20.2) In addition to the above applications filed before the Charity
Commissioner, L.S. Lulla, Advisor to the Defendant Trust, prepared an
Office Note dated 26th December 2000 which also disclosed the
background, inter alia, recording that “…there is a risk of the State
Government taking steps to proceed to take over the aforesaid 17 to 18
acres of surplus vacant land. This would be a tempting proposition for the
State. It is accordingly for the consideration whether we should invite offers
for each of the above two pieces of land making it, as usual, the
responsibility of the Purchaser to obtain the NOC under the ULC Act.”
(Emphasis supplied)
Ref: Ex h P-58 4-4),Pg. 826-827/ Vol IV]
20.3) The Defendant’s witness — DW-1 (Mr. V.P. Shah) has
specifically deposed in evidence that the possibility of acquisition under the
ULC Act was instrumental in the decision to sell the Suit Properties. This is
by stating at para 8, Pg. 1767/Vol X of the DW-1’s Affidavit in Evidence,
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that “under the circumstances as they then existed, i.e. the Suit Property
becoming subject matter of acquisition proceedings, the said Trust agreed
to sell the Suit Property at the best price available under the then prevalent
circumstances.” [Ref: Para 8, pg. 1767/Vol X].
20.4) In the course of cross examination, DW-1 confirmed that there
were multiple reasons as to why the Defendant Trust had decided to sell the
Suit Properties, including already existing encroachments, reservations,
litigations and an apprehension that the Suit Properties may he acquired
under the provisions of the ULC Act.
Q.45 [Shown Clause 3 of the Invitation to Offer] This Clause says
that the land is offered for sale on “as-is-where-is basis” subject to, inter
alia. claims, if any, of encroachers. In this because there was already an
encroachment on the suit land when the Invitation for Offer was issued?
Ans. Yes, some encroachments were there.
Q.46 Did the Trust apprehend that there could be further
encroachments, because of which it was also necessary to include such a
Clause ?
Ans. Yes.
Q.47 You. have said that as on the date of Invitation to Offer, there
were already some encroachments on the suit land. Can you broadly
indicate when such encroachments on the suit land were noticed by the
Trust?
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Ans. Exact time is not known, but there was an encroachment on part of the
suit property.
Q.48 [Shown paragraph 8 of the Affidavit of Evidence in
Examination-in-chief of the witness and the witness’s attention is drawn to
the sentence with “Under the circumstances … the then prevalent
circumstances. ” What do you mean by “the said Property becoming subject
matter of acquisition proceedings”?
Ans. This is the apprehension that the lands may be acquired under
the provisions of the ULC Act.
(Emphasis supplied)
[Ref: Pg. 1795-1796/ Vol X]
20.5) Even the Impugned Judgement passed by the Learned Single
Judge records the Defendant’s contentions that “…the suit transaction was
entered into in 2002, when the Defendants were faced with the prospect of
the ULC authorities acquiring the suit land under the provisions of the ULC
Act, which then governed the suit properties…” [Ref: Para 19, pg. 64/
Appeal Memo]
20.6) From the above material and evidence, it is clear that:
a. the Defendant Trust took the decision to monetize the lands by
selling the Suit Properties, at the best available price on account of
multiple reasons (as set out in paragraph 4(b) above), including the
encroachments on the Suit Properties and the significant
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sbw/sns 1-os-app-289-2015-J.docapprehension within the Defendant Trust that the Suit Properties
may be acquired under the provisions of the ULC Act;
b. the Charity Commissioner duly sanctioned the sale of the Suit
Properties vide Order dated 27th December 2002 in light of the
compelling necessities recorded under the applications, the affidavit
in support and the valuation reports and that the sale consideration
would he in the beneficial interest of the Defendant trust which is in
complete compliance with the requirement of Section 36 of the MPT
Act [Ref: Pg. 310 and pg. 355/ Vol II].
RELEVANT CLAUSES OF THE SUIT AGREEMENT.
21) The Suit Agreement was therefore entered into in the aforesaid
background. Some of the relevant clauses of the Suit Agreement are as
follows:
(i) Clause 1: – “Offers are invited by F.E. Dinshaw Trust in respect of the
aforesaid land. F.E. Dinshaw Trust is a registered Public Charitable
Trust. What is offered for sale is the right, title and interest of these
Vendors in the land on “as is where is” basis at the time of
Conveyance.”1pg.153 / Appeal Memo I
(ii) Cause 7:- “Sale will be subject to the sanction of the Charity
Commissioner; Maharashtra State. Bombay In the event of the
Charity Commissioner: declining sanction in favour of the successful
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sbw/sns 1-os-app-289-2015-J.docofferor, the amount paid by the successful offeror will be returned to
him without interest.[pg.156 / Appeal Memo]
(iii) Clause 10:-. It will be solely the responsibility of the Purchaser to
obtain the permission / Clearance / No objection from the Competent
Authority under the Urban Land (Ceiling and regulation) Act, 1976
to enable the Conveyance to be made and the amount paid will not
be refundable on the ground that the requisite
Permission/NOC/Exemption is not forthcoming or is refused.”
[pg.157 / Appeal Memo]
(iv) Clause 19:-“The offers received including the enhanced offers if any
made at the time of opening of the offers, will be considered by the
Trustees within two months of the opening of the offers, during
which period the offerors will not be entitled to withdraw their
offers. In the event of rejection of all the offers, the amount paid by
each of the offerors will be returned to them without interest. Within
6 months of the Acceptance of any offer by the Trustees, payment
must be made of a further sum to make up along with the deposit of
R. 3 Crores mentioned hereinabove, the full amount of the offer and
failure to make this payment will, ipso facto, result in forfeiture of
the amount paid and cancellation of the agreement due to the default
of the purchaser. The Conveyance must be completed within 3
months of the sanction of the Charity commissioner and the
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clearance of the Competent Authority under the provisions of the
Urban Land (Ceiling and Regulation) Act. Time for payment shall be
of the essence of the Contract. There will be no obligation on the
Vendors to execute Conveyance in favour of a nominee of the
Purchaser” [pg.159 / Appeal Memo]
21.1) The Defendant Trust applied to the Charity Commissioner for
seeking an extension of time stipulated under the Order dated 27th
December 2002. The Charity Commissioner vide its Order dated 25th
March 2004 duly extended the time for payment of consideration by the
Plaintiff to the Defendant Trust [Ref: Pg. 358/ Vol II]
21.2) Pursuant to the Sanction received and the Suit Agreement, the
Plaintiff had paid the entire consideration for the Suit Properties (i.e., the
entire Rs. 14 crore) by 4th November 2003 [Ref: Plaint/ Appeal Memo —
Para 12/ Pg. 111 – 112].
vi. ANALYSIS OF CLAUSE 10 OF THE SUIT AGREEMENT.
22) The primary contention advanced by the Defendant, in the present
Appeal, centres around the interpretation of Clause 10 of the Suit
Agreement.
22.1) Clause 10 of the Suit Agreement, reads as follows:
“It will be solely the responsibility of the Purchaser to obtain
the Permission/Clearance/No Objection from the Competent
Authority under the Urban Land (Ceiling and Regulation)98/190
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sbw/sns 1-os-app-289-2015-J.docAct, 1976 to enable the Conveyance to be made and the
amount paid will not be refundable on the ground that the
requisite Permission/NOC/Exemption is not forthcoming or is
refused.”
(Emphasis supplied)
[Ref: Pg.157/Appeal Memo]
22.2) In essence, this clause provides that:
(i) It was the Plaintiff’s obligation to obtain necessary clearance under
the provisions of the ULC Act before the conveyance of the Suit
Properties could be made to the Plaintiff by the Defendant; and
(ii) The Plaintiff cannot seek a refund of the consideration paid under the
Suit Agreement in the event that ULC Clearance was not forthcoming
or was refused. From a plain reading of this clause, it is evident that
no timeline was provided for obtaining this ULC NOC.
22.3) The stark difference in language of clause 7 and 10 of offer
document makes it clear that refund of consideration was contemplated
ONLY if Charity Commissioner refused sanction for sale. The payment of
agreed consideration was not dependent on the ULC Clearance.
THE PURPOSE OF CLAUSE 10 WAS TO PASS THE ENTIRE RISK OF
ACQUISITION UNDER THE ULC ON THE PURCHASER.
23) Mr. Kadam submitted that, the purpose of clause 10 was to ensure
that the risk was acquisition of the Suit Properties no longer rests with the
Defendant trust.
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sbw/sns 1-os-app-289-2015-J.doc 23.1) In cross-examination, PW- 1 was asked the following questions with regard to risk of acquisition under the ULC:
Q.140. Did you consider any factors with regard to the suit
property before giving your offer?
Ans. There were many factors and amongst them the biggest
one is ULC, nala, filling, the property was open from all sides,
unguarded, there were slums around the property. If it is
acquired under ULC I would not get the money refunded and
that was my risk. [Ref: Pg.1329/Vol VIII]
Q.223. What enquiries did you make with regard to the suit
properties as referred to in this part of paragraph 15?
Ans. I made enquiries and as per discussion with Mr Lulla. I
enquired about the ULC Notice to Mr. Dinshaw regarding
acquisition and this Notice was also to be given to the Trust.
The enquiry was also relating to the fact that if the ULC
Notice is received then I have to pay full amount to the Trust
and they will not refund any amount, I also made enquiry
regarding the dumping ground, reservation, filling work,
litigations etc. [Ref: Pg.1345-1346/Vol VIII]
Q.267. Shown answer of the Witness to Question No. 247.
What do you understand by the words “it was the
responsibility of the purchaser to obtain permission/No
objection under the ULC Act, 1976“?
Ans. What I understood by these words is that I had no
responsibility towards the Trust. It was my responsibility that
if I do not obtain permission from ULC Authorities and if the
property is acquired then I would not get my monies
refunded and that was the risk.
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[Ref: Pg.1357Nol VIII]
(Emphasis supplied)
23.2) No further questions were put to PW-1 to discredit his
testimony, i.e., that Clause 10 of the Suit Agreement passed the risk of
acquisition under the ULC onto the Plaintiff.
23.3) Mr. Kadam submitted that, the Defendant has not put forward
any other explanation as to why the Suit Agreement required payment of
the entire consideration to be made before the ULC NOC was obtained and
further provided, in Clause 10, for the forfeiture of the entire consideration,
in the event that the same was not obtained.
23.4) In cross examination, DW-1 was asked the following questions
in relation thereto:
Q57. Under the terms of the offer documents, the conveyance
has been made subject to, inter alia, obtaining permissions.
Why did the Trust not make the receipt of the entire
consideration by the Trust also subject to the same condition?
Ans. This was the general practice followed by us in respect
of all sales. (Ref: Pg.1798/Vol X]
Q60. Even if this Clause is a continuation of the so-called
general practice of the Trust, can you as the Manazer of the
Trust explain the rationale behind the Clause which requires
full consideration to be paid much before the procurement of
ULC clearance?
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Ans. Because there were many rigors and very hard
procedures to get the NOC under the ULC Act and that is
why, this condition was being mentioned by the Trust. [Ref:
Pg.1799/Vol X]
Q61. So, to put it differently, would you agree that the Trust
wanted to avoid the “many rigors and very hard procedures
„ as mentioned by you above, and therefore, wanted to
receive the entire consideration prior to the procurement of
such ULC clearance so as to safeguard its position?
Ans. Yes, in the interest of the Trust. [Ref: Pg.1799/Vol X]
(Emphasis supplied)
23.5) He submitted that, the above evidence of PW-1 and DW-1clearly exposes the fact that the only reason Clause 10 was introduced into
the Agreement to absolve the Defendant Trust of all risks associated with
the Suit Properties, including any acquisition under the ULC Act.
23.6) He contended that Clause 10 is not a provision containing any
promise to the Defendant that the Defendant has to receive or get on
performance of the Suit Agreements. This Clause merely recognises the
legal position that existed on the date of the Suit Agreements, i.e., that the
Plaintiff cannot get a conveyance of the Suit Properties in view of the
embargo contained in the ULC Act and absolved the Defendant Trust of any
liability to refund the consideration in the event that the ULC NOC was not
obtained.
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sbw/sns 1-os-app-289-2015-J.doc 23.7) He submitted that the observations of the Learned Single Judge
contained in paragraph 11 of the Impugned Judgement, viz., that Clause 10
does not amount to a ‘promissory condition’ are rendered in this context.
The Defendants in the present Appeal are attempting to misinterpret the
intention of the parties behind Clause 10 of the Suit Agreements to suggest
that this clause contained any ‘promissory condition’ made in favour of the
Defendants. This is incorrect in light of the above material and evidence.
23.8) He submitted that, the Defendants’ purported reliance on the
decisions of the Supreme Court in the cases of (1) Transmission
Corporation of Andhra Pradesh Limited and Ors. v/s. GMR Vemagiri Power
Generation Limited and & Anr. 65 ( 2018 3 SCC 716:) and (2) Adani Power
(Mundra) Limited vs Gujrat Electricity Regulatory Commission & Ors. 66
2019 19 SCC 9, to contend that Clause 10 of the Suit Agreements was an
essential term of the contract.
23.9) He submitted that, these judgements do not support the
Defendant’s case that Clause 10 was a ‘promissory condition’ towards the
Defendant. The Learned Single Judge has categorically held that “…the
obligation to obtain ULC permission/ clearance under Clause 10 was not an
‘essential term’ in the sense of being a `promissory condition’, for the breach
of which the Defendants would be entitled to terminate the suit
agreement.” From this finding it is clear that the Learned Single Judge has
65 2018 3 SCC 716
66 2019 19 SCC 9
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sought to draw a distinction between an ‘essential term’ and a `promissory
condition’ which entitles the Defendants to terminate the contract. The
Defendants have wholly lost sight of this distinction drawn by the Learned
Single Judge in the challenge now advanced in the present Appeal.
23.10) Mr. Kadam submitted that, in fact, these very judgements, hold
that the Court must give effect to the business efficacy as agreed to by the
parties in the contract. In the present case, the intention of the parties was,
as the evidence above unequivocally demonstrates, to absolve the
Defendant Trust of the risk of acquisition and to pass this risk on to the
Plaintiff. [See: paragraph 26, Trans Co of AP v. GMR Vemagiri Power
(supra); Paragraph 24, Adani Power v. GERC (supra)]
23.11) He submitted that, the learned Single Judge interpreted Clause
10 keeping in mind the intention of the parties. This is evident from the
following findings:
“These clauses, read together and in the context of the whole
offer document, clearly imply that the suit properties were
offered for sale by the Defendants on “as is where is” basis.
That is to say, whatever be the claims and encumbrances
including any pending litigation in respect of the property,
whatever be the nature of possession being offered, whatever
be the property taxes levied or leviable, the vendors owed no
responsibility to the purchaser towards the same and no
adjustment or refund of the consideration was contemplated
on any ground whatsoever. Clause 10 of the terms was in104/190
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sbw/sns 1-os-app-289-2015-J.dockeeping with this general stipulation… …Whether or not such
permission etc came about, it would have no impact on the
validity of the suit contract as far as the vendors were
concerned. In the event of such permission etc not coming
through, the vendors would not he bound to either execute
conveyance or refund money paid under the suit contract.
Full payment of the consideration to the vendors was to be
made within 6 months of the acceptance of the offer, without
reference to the permission, etc of the Competent Authority,
that is to say, whether or not such permission was
forthcoming. By the same token, clause 10 does not entitle
the vendors to terminate the suit contract and indeed there is
absolutely no conceivable reason to terminate the contract for
want of such permission, since neither the amount nor the
manner of payment of consideration is dependent on such
permission. Once payment is made, clause 10 is relevant only
from the standpoint of the purchaser, since read with clause
19, in absence of a permission/NOC from Competent
Authority it forbids the purchaser from either demanding a
conveyance or refund of his money paid under the contract….
Once this restriction goes away, in this case because of the
repeal of the ULC Act, Clause 10 cannot be said to prevent
the purchaser from obtaining a conveyance…”
(Emphasis supplied)
THE ULC ACT REQUIRED THE APPELLANT (i.e., HOLDER) TO MAKE
APPLICATIONS THEREUNDER
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24) Mr. Kadam contented, as also the evidence indicates, that the
application under the ULC Act had to be made by the Defendant Trust (i.e.,
holder) and only thereafter the Plaintiff’s obligation to obtain the clearance
would kick in. This is borne out from the evidence:
Q.246. Would I be correct in saying that the
responsibility to obtain the permission from the ULC
Authorities was entirely upon the purchaser of the suit
property under the terms of the offer of sale?
Ans. To obtain the permission was my responsibility. They
made application on 3rd October 2006 and it is only
thereafter I had to obtain the permission. [Ref:pg.1351/Vol
VIII]
Q.361. What steps did you take to obtain the NOC from the
ULC Authorities upto March 2003?
Ans. I had not made the payment and unless the Trust
applied, I could not take any steps to obtain NOC from ULC
Authorities. [Ref:.1382/Vol VII ]
Q.362. Is it your case that it was the obligation of the
Defendants Trust to apply for and obtain the NOC from. the
ULC Authorities?
Ails. It is my case that it was the obligation of the Trust to
apply for NOC from ULC Authorities and it is only thereafter I
have to obtain the same. fRef:pg.1382/Vol VIII]
Q.363. Therefore is it your understanding that you have to
merely go and pick up the NOC from the ULC Authority and
do nothing else?
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Ans. It is not my understanding that I have to merely go and
pick tip the NOC from the ULC Authorities and do nothing
else. But only when the Trust make application I have to
obtain permission and the Trust made application at my
instance on 3 October 2006 and thereafter the Act was
repealed and then I made application for Conveyance I wrote
several letters that the Act had been repealed and requested
them to make Conveyance. I had sent the draft of Conveyance
also.
[Ref:pg.1382-1383/Vol VIII]
(Emphasis supplied)
24.1) The above evidence is also consistent with the law which is
discussed below.
24.2) Section 2(1) of the ULC Act defines the expression to hold” as
follows-
“to hold” with its grammatical variations, in relation to any
vacant land, means-
(i) to own such land; or
(ii) to possess such land as owner or as tenant or as
mortgagee or under an irrevocable power of attorney or
under a hire- purchase agreement or partly in one of the said
capacities and partly in any other of the said capacity or
capacities.
Explanation.-Where the same vacant land is held by one
person in one capacity and by another person in another
capacity, then, for the purposes of this Act, such land shall be
deemed to be held by both such persons; ”
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sbw/sns 1-os-app-289-2015-J.doc 24.3) He submitted that a perusal of the various Sections of the ULC
Act, including Sections 4 (2), 5, 6(1), 7, 9, 10, 16, 19(1), 20 and 21 clearly
demonstrates that all steps required to be taken in relation to lands that are
subjected to the ULC Act must be taken by the holder of such lands.
24.4) Sections 19(1), 20 and 21 of the ULC Act, which provide for
the grant of an exemption to vacant land from the provisions of the ULC
Act, clearly contemplate such grant to the ‘holder’ of such lands. This is
clear from the plain language of these provisions.
24.5) Even the prescribed form under the ULC Rules which provide
for making an application under Section 20 of the ULC Act, being Form 5.
does not contemplate any category of persons. other than the holder, within
the meaning of Section 2(1) of the ULC Act, to apply for the necessary
exemption.
24.6) He submitted that the Hon’ble Supreme Court, in the case of
State Bank of India v. Special Secretary Land of W.B. & Ors. – 1995 Supp
(4) SCC 30 has clarified at paragraph 7 of the decision that it is only the
‘holder” of the surplus vacant land, as defined in Section 2(1) of the ULC
Act that can apply for an exemption under Sections 19 and 20. In that case,
the State Bank of India held trust properties in the due course of executing
and administering a trust for the benefit of the beneficiaries but was held
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not to be entitled to seek an exemption under these provisions of the ULC
Act as it was not the ‘holder’ as defined under Section 2(1) thereof.
24.7) He submitted that in the present case, the Plaintiff clearly does
not fall under any of the categories referred to in the definition of the
expression “to hold” as contemplated in Section 2(1) of the ULC Act.
24.8) It is infact admitted by the Defendants in DW-1’s cross
examination that the Plaintiff is not a “holder” under the provisions of the
Q. 76. Can you explain how an application for exemption
could have been made alone by the Plaintiff in the absence of
a conveyance?
Ans. The application can be made by the Plaintiff and if some
reference is made by the ULC Authority to the trust, an
appropriate reply is being given.
Q. 77.Are you suggesting that at that time, the Plaintiff was a
“holder” of the suit property ?
Ans. No, the Plaintiff was not the holder of the suit property.
[Ref: pg.1803-1804/Vo1 X]
(Emphasis supplied)
24.9) Mr. Kadam submitted that, the Letter dated 2nd January 2003
addressed by the Defendant Trust to the Plaintiff, which, inter alia, directs
the Plaintiff to take immediate action to obtain the requisite clearance
cannot be said to constitute an “irrevocable power of attorney” within the
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meaning of Section 2(1) of the ULC Act such as to enable the Plaintiff to
make the requisite application under Sections 19(1) or 20 thereof.
24.10) It is also pertinent to not that the provisions of the ULC Act.
and in particular Section 2(1) and Section 20 thereof came up for
consideration before the Hon’ble Supreme Court in the case of Special
Officer & Competent Authority, Urban Land Ceilings, Hyderabad and Anr:
v. P.S. Rao – (2000) 2 SCC 451 where the Supreme Court has at paragraphs
7 – 9 and 11 inter alia held that:
a. The definition of the words “to hold – in Section 2(1) is
relevant at the time of computation of the ceiling area and at
the stage of the preliminary determination of excess and final
determination, under Sections 8 and 9 of the Act, the excess
is to be determined on the basis of the land permitted by the
Act to be held by a person;
b. It is not possible to make any meaningful application
for exemption under Section 20(1)(a) or (b) unless the exact
quantum of excess is determined under Section 10 after
following the various provisions of the Act relating to
statutory deductions and mode of computation; and
c. Section 20 application is maintainable even if filed
after an order of vesting of excess land is passed under
Section 10.
24.11) From the aforesaid decision, it, inter alia, becomes clear that:
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a. The procedure for determination of excess land commenced under
Section 8 and concludes under Section 10;
b. An application for exemption under Section 20 can be filed even after an
order under Section 10 is passed;
c. Clearly therefore, even the passing of an order under Section 8(4) of the
ULC Act does not defeat the right of the holder of the surplus vacant land to
seek an exemption under Section 20.
24.12) He submitted that in view of the aforesaid evidence, and the
clear provisions of the ULC Act, the Defendants’ argument on readiness and
willingness is thoroughly misconceived. It is submitted that the application
for exemption under the ULC Act was first required to be made by the
Defendant Trust before the Plaintiff could obtain the same. In fact, and as
detailed herein below, the Defendant Trust did make such an application
(admittedly at the behest and request of the Plaintiff) on 3rd October 2006.
NO TIMELINE PROVIDED FOR OBTAINING ULC NOC
25) Mr. Kadam submitted that, DW-1 has, in relation to the timeline
for obtaining the ULC NOC. deposed that [Ref : Para 14/ Vol 10 Pg.1769]:
“14. The Plaintiff was required to obtain ULC clearance and/or
the NOC, from the Competent Authority within a reasonable
period of time…”
(Emphasis supplied)
25.1) In cross-examination, DW- I was asked the following questions
in relation to this deposition:
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Q.62. When drafting Clause 10 of the Invitation to Offer
Document, why did the Trust not include a specific time
frame for making the application to the ULC Authority and
for obtaining ULC clearance?
Ans. It was not possible and it was not being- done.
Q.64. You have also said that it was “not possible” to indicate
a specific
time frame in Clause 10. Why was that so?
Ans. There was no guarantee that the clearance of the ULC
Authority will be received in a specified time.
Q.65. [Shown paragraph 14 of the Affidavit of Evidence in
Examination-in-chief of the witness and his attention is
drawn to the first sentence and in particular the phrase
“within a reasonable period of time”.] Considering that the
Charity Commissioner’s approval was granted on 27 th
December 2002, what is your understanding of a “reasonable
period of time” within which the ULC clearance was to be
obtained?
Ans. I think it should be maximum period of 2-3 years.
Q.66. If you have this clear understanding of reasonable
period of time within which the ULC clearance was to be
obtained, why was this specific time limit of 2-3 years not
included in Clause 10 of the Invitation to Offer?
Ans. We were never mentioning this time limit as per our
practice in the Offer Document.
Q.67. You have not answered my previous question above. If
you as a Manager of the Trust have a clear idea of the
reasonable period of time being 2-3 years, why was this not
incorporated in the Offer Document?
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Ans. This period varies in each case. The facts of the case are
different.
Q.68. [Witness’s attention is drawn to the second sentence of
paragraph 14 of the Affidavit of Evidence in Examination-in-
chief of the witness and in particular the phrase “as soon as
possible”.] Are you in a position to say specifically. how
much time would constitute “as soon as possible” for
obtaining ULC clearance?
Ans. This is the maximum time I have mentioned earlier i.e.
2-3 years. [Ref: Pg.1799-1801/VoI X]
(Emphasis supplied)
25.2) He contended that the above cross-examination demonstrates:
a. DW-1 accepted that it was not possible to provide any fixed time
for which ULC NOC could be obtained;
b. the reasonable period of 2-3 years was the general belief of the
trustees and act of DW-I himself DW-1 referred to identify these
trustees.
25.3) He submitted that it is therefore clear that the Defendant Trust
intentionally did not provide for any timeline in the Suit Agreements for
obtaining ULC NOC because the trust was well aware of the fact that there
was no guarantee that the clearance would be obtained within a specified
time.
25.4) This is further evident from the fact that time has not been
made the essence of the contract for the purposes of obtaining the ULC
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sbw/sns 1-os-app-289-2015-J.docNOC under Clause 10 of the Suit Agreements. On the other hand, the
Defendant Trust expressly made time of the essence for the payment of
consideration under Clause 19 of the Offer Document. There is no
grievance with regard to the payment of consideration being within time.
25.5) He submitted that it is in this context of facts, the conduct of
the parties, and the evidence adduced the Learned Single Judge rightly held
at paragraph 11 of the Impugned Judgement as follows:
“….In the present case, what we are concerned with is,
whether or not the particular term, namely, clause 10, is a
‘promissory’ condition, that is to say, its breach would entitle
the innocent party to be discharged or released from further
performance of the contract. Whether a particular term is
such a promissory’ condition must depend upon the intention
of the parties to be gathered, in each particular case, from the
terms of the agreement itself, and from the subject matter to
which it relates. In our case, as noted above, clause 10, rather
than entitling the Defendants to treat the contract as
discharged for want of permission from the ULC authorities,
simply allowed the Defendants to withhold the conveyance
on the ground that it cannot be executed in the absence of a
ULC permission. There is clearly no time limit for
performance of the purchaser’s obligation of obtaining the
ULC permission. As noted above, a there is a good reason for
not providing such time limit. Payment of consideration to
the vendors is not dependent upon or subject to the ULC
permission. So long as the permission does not come114/190
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sbw/sns 1-os-app-289-2015-J.docthrough, the purchaser does not get his conveyance, since for
want of such permission the conveyance is not possible under
the ULC Act, but it has no other consequence as far as the
vendors are concerned. In other words, non-fulfillment of the
promise contained in Clause 10 does not have any
consequence for the vendors. It only has a consequence for
the purchaser If that is so, breach of that promise cannot
entitle the vendors to treat the contract as discharged or to be
released from all further performance of the contract. The
intention of the parties, as can be gathered from the terms of
the contract and the subject matter to which it relates, is not
to make clause 10 as a ‘promissory’ condition from the point
of view of the Defendants vendors…”
(Emphasis supplied)
[Ref: Pg. 53/ Appeal Memo]
25.6) He submitted that the Defendants have failed to make out any
case in appeal to justify interference with this finding in the Impugned
Judgement.
THE OBLIGATIONS CONTAINED IN CLAUSE 10 ARE NOT IN THE NATURE
OF RECIPROCAL PROMISES
26) Mr. Kadam next submitted that, the Appellant has sought to assail
the Impugned Judgement, inter alia, on the ground that Clause 10 of the
Suit Agreement comprises reciprocal obligations or promises such that the
Defendant was obliged to execute a conveyance only after the Plaintiff
fulfilled its obligation to obtain the NOC of the ULC Authorities.
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sbw/sns 1-os-app-289-2015-J.doc 26.1) This contention is evidently baseless because as held by the
Learned Single Judge, Clause 10 does not contain any ‘promissory
condition’. The requirement to apply and obtain ULC clearance was not a
promise made to the Defendant but a non-promissory condition required to
be fulfilled for the conveyance to be executed as per the law prevailing at
the time of the contract. Consequently, Section 52 of the Contract Act has
no bearing or application in the facts of the present case.
26.2) He submitted that the decision in Nathulal v. Phoolchand —
(1969) 3 SCC 120 relied on by the Defendants has no applicability in the
facts of the present case where Clause 10 does not at all contain reciprocal
obligations. In fact, the decision in that case was on account of the vendor
being required to establish his title/ entitlement to the land so as to enable
the vendor to convey the same. without hindrance, to the purchaser. It was
on such clear title being established that the reciprocal promise to make
payment of the balance consideration would arise. This decision is not an
authority for the proposition that getting statutory clearances for a
conveyance of property is a reciprocal promise to be performed prior to the
promise of conveyance. This judgment, to the extent that it considers the
aspect of reciprocal promises, only says that the vendor making out a clear
title to the property is a reciprocal promise to be first performed before
claiming balance consideration.
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sbw/sns 1-os-app-289-2015-J.doc 26.3) In any event and strictly without prejudice and only for the sake of argument, it is submitted that the Plaintiff on obtaining the
clarification letter dated 4th October 2008 [Ref: P-69/ Pg. 1034 — 35/ Vol
V] as forwarded to the Defendants on 7 th October 2008 [Ref: P-43/ Pg. 778
— 9/ Vol IV] had duly performed any purported obligation to obtain the
requisite clearance under the ULC Act so as to enable the Defendants to
comply with their obligation to execute a conveyance in favour of the
Plaintiff. The Defendants therefore could not have terminated the Suit
Agreements for any failure of Clause 10 after the Plaintiffs had duly
complied with this purported obligation.
PLAINTIFF ACTIVELY PURSUED THE SUIT AGREEMENT AND ACTED IN
FURTHERANCE THEREOF IN MULTIPLE WAYS INCLUDING BY PURSUING
ITS OBLIGATION TO OBTAIN THE ULC NOC:
27) Mr. Kadam submitted that, in performance of the Plaintiff’s
obligations under the Suit Agreement, the Plaintiff has:
a. Paid full consideration to the Defendants by November 2003;
b. Incurred significant expenditure towards guarding the Suit
Properties by appointing security guards and constructing a wall;
c. Carried on improvement works on the Suit Properties, including
training the nalla;
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d. Appointed consultants to ascertain the process for obtaining ULC
clearance, including to ascertain whether the Plaintiff would be able
to make the application in its own name; and
e. calling upon the Defendant to make an application to the
competent authority so as to enable the Plaintiff to obtain the
requisite clearance.
27.1) He submitted that in regard to the appointment of the security
personnel for guarding the Suit Properties, DW-1’s cross evidence that the
same was at the behest and under the aegis of the Plaintiff:
Q.122. Prior to 2nd July 2003, is it not correct that the Trust
had no dealing or interaction with Mr. Shyam Pandey, the
Proprietor of Om Security Services?
Ans. Yes. It is correct.
Q.123. Prior to 2nd July 2003, did the Trust issue any public
notice or advertisement indicating that it was looking to
engage a security agency for protecting the suit property?
Ans: No.
[Ref: Pg.1815-1817/Vol X]
Q.131. So therefore it is your case, that it is a matter of sheer
coincidence that Mr Shivam Pandey lands up in your office
and asks to be appointed as a security agent to guard the suit
property just about the time when Mr Lulla told you that he
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sbw/sns 1-os-app-289-2015-J.dochad discussions with Mr Batra for appointing security guards
to protect the suit property. Is that correct ?
Ans. It is not correct. Mr. Judha had told Mr. Lulla about Om
Security’s work of protecting the suit property. Accordingly,
Mr. Lulla had told Mr. Judha to brine Shri. Pandey of Om
Security. [Ref: Pg.1817/Vol X]
(Emphasis supplied)
27.2) PW-1 was cross examined extensively on the obligation to
obtain the ULC NOC. The relevant cross examination is as follows:
Q.285. At the time of entering into the transaction, did you
consult such expert, especially when the notice for acquisition
was expected against the Defendants?
Ans. Yes. I had consulted the expert.
Q.286. Who was the person you had consulted?
Ans. I had consulted Mr. Dinesh.
Q.287. What is it that he informed you?
Ans. He informed me that if the owner makes application
then we can start the process. [Ref: pg.1361/ Vol VIII]
Q.390. Can you explain why the said professionals could not
obtain the permission of ULC Authorities within a reasonable
time from the date of their appointment?
Ans. Unless and until the Trust made the application even the
professionals could not obtain the permission from the ULC
Authorities within a reasonable time from the date of
appointment. [Ref: pg.1390/ Vol VIII]119/190
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sbw/sns 1-os-app-289-2015-J.docQ.404. When according to you did the Plaintiff make the first
application/request to the Defendants Trust to make
application to the ULC Authorities?
Ans. After making the full payment I had requested the Trust
several times orally to make application and for the first time
the Plaintiff made request in writing to the Trust in 25 th May
2006 for making application or NOC of ULC. The Witness had
checked the document at Exhibit ‘P-31’ and given the exact
date i.e. 25th May 2006.
[Ref: pg.1395/ Vol VIII]
Q.407. When was the first time that Plaintiff requested the
Defendants to make application to ULC Authorities?
Ans. Immediately after the Plaintiff made full payment the
Plaintiff requested several times to the Trust to make
application for NOC to the ULC Authorities.
(Ref: pg.1396/ Vol VIII]
Q.408. How soon after the last payment was made do you
remember having made a request to the Defendants to make
the application for NOC to ULC Authorities?
Ans. The last payment was in November 2003 and
immediately thereafter the Plaintiff started requesting the
Trust to make application for NOC to ULC Authorities. [Ref:
pg.1396/ Vol VIII]
Q.421. Under Clause 10 of the Terms of Offer when
according to you was the obligation of the Plaintiff arise for
obtaining NOC from ULC Authority?
Ans. As per Clause 10 of the Terms of Offer the obligation of
the Plaintiff, according to me would arise for obtaining NOC
from ULC Authority, only after the Trust made an application120/190
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sbw/sns 1-os-app-289-2015-J.docand when the full payment was made and the permission of
the Charity Commissioner was obtained. [Ref: p2.1396/ Vol
VIII]
Q.437. In what manner where the Plaintiff actively pursuing
obtaining ULC clearance from the time Plaintiff made full
payment and prior to January 2006?
Ans. The Consultant of the Plaintiff were following to find out
whether there is any policy under which there is no need for
no objection from the Owner.
Q.438. Other than that did the Plaintiff do anything else
towards obtaining ULC permission?
Ans. The Plaintiff could not do anything else towards
obtaining ULC permission till the time owner applied for
permission front ULC. [ Ref: pg.1407/ Vol VIII]
Q.442. Would I be correct in saying that the Plaintiff were
not anxious to obtain clearance from ULC Authority to enable
execution of conveyance?
Ans. When the full payment was made by the Plaintiff they
were interested in developing the property and therefore the
Plaintiff was very much anxious to obtain clearance from the
ULC Authority to enable execution of conveyance but the
Trust were not makin,t; any application to ULC Authority.
Witness volunteers and says that I have invested my entire
life saving in the said property and therefore the Plaintiff was
making all the efforts required to get the ULC permission.
[Ref: pg.1408/ Vol VIII]
(Emphasis supplied)
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27.3) He submitted that a brief summary of the relevant
correspondences, and material in respect of the improvement works carried
on by the Plaintiff on the Suit Properties is as follows:
Sr. Date and Particulars
No. Reference
1. 02.07.2003 A letter addressed by PW-3 (Pandey) of Om
Ex.D-1 Securities at the instance of the Plaintiff to the
Vol VII/1164 Defendants offering security for the Suit Properties.
2. 02.07.2003 The Defendants vide its letter dated 2 nd July 2003
Ex.D-2Vol addressed to PW-3 (Pandey) of Om Securities
VII/1165-1166 appointed his security services to guard the Suit
Properties.
3. 20.10.2003 Letter by Mahavir Constructions, through its
Ex. P-60 Proprietor, Hasmukh Doshi, recorded the terms on
Vol IV/832-834 which Mahavir Constructions was appointed as
Contractor by the Plaintiff for carrying out the
construction of the retaining wall of nalla.
4. 15.11.2003 Letter of the Plaintiff to the Defendant for seeking
Ex-P-107 permission to carry out work of nalla on the Suit
Vol VI/1163 Propeties.
Ex-22 Letter by Defendant giving permission to the
Vol II/359 Plaintiff to carry out construction of the retaining
wall of nalla
5. 17.11.2003 Letter addressed by the Plaintiff’s Architect (who
Ex.P-91 was PW-4 and has stated in his affidavit of evidence
Vol VI/1127 at para 4-7/Pg 1710-1712-Vol X, that he was
appointed by the Plaintiff) informing the Storm
Water Drain Department of the Municipal
Corporation that their client would be undertaking
the work of construction of the retaining wall of the
nalla.
6. 02.06.2004 Letter addressed by the Storm Water Drain
Ex. P-61 Department of the Municipal Corporation to
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Vol IV/835 Plaintiff’s Architect.
7. 04.04.2005 Letter addressed by the Plaintiff to the Defendants,
Ex.P-27/VII/ inter-alia, stating that the Plaintiff shall reimburse
Pg.366-367 the cost incurred by the Defendants on security
guards and that Mr. Shyamdhar Pandey of OM
securities shall be the de facto agent of the Plaintiff,
and the appointment of such security shall be at the
risk of the Plaintiff.
8. 25.11.2005 Letter addressed by the Plaintiff to the Collector,
Ex.P-63 Mumbai Suburban District requesting permission to
Vol IV/837 carry out filing work.
9. 25.01.2006 The Plaintiff’s letter seeking the Defendant’s NOC
Ex. P-29 for permission to be issued by the Collector for
Vol II/370-371 carrying out filing on the Suit Properties.
10. 22.03.2006 Letter addressed by the Defendant to the Collector,
Ex. P-30 Mumbai Suburban District referring to the
Vol II/372-373 requirement that NOC of the Defendant who are the
owners be obtained for carrying on filing on the
Suit Properties.
11. 17.04.2006 Permission granted by the Collector for carrying on
Ex. P-64 filing work on the Suit Properties to the Defendant
Vol IV/838 through the Plaintiff on the conditions mentioned
therein.
12. P-78, 80/Pg Various documents such as sketches of security
1044, 1046 Vol cabins, digital images, etc., concerning the security
V arrangement made by the Plaintiff on the Suit
Properties.
27.4) He submitted that the above evidence and documents
additionally demonstrate that the Plaintiff was at all times affirming the
contract, abiding by the same and acting in furtherance thereof.
27.5) He submitted that the Learned Single Judge has considered the
above material and evidence, inter alia at paragraphs 17 and 18 of the
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Impugned Judgement, albeit in the context of deciding whether the Plaintiff
was in possession of the Suit Premises.
BOTH PARTIES HAVE, BY THEIR POSITIVE ACTS, AFFIRMED THE SUIT
AGREEMENT RIGHT UPTO TERMINATION AND THEREFORE ANY
COMPLAINT OF NON-PERFORMANCE UNDER CLAUSE 10 IS, IN ANY
EVENT IS IRRELEVANT AND AS AN AFTERTHOUGHT
28) Mr. Kadam next submitted that it is an admitted position that the
Defendant had, at the request of the Plaintiff applied for ULC permission on
3rd October 2006 [Ref: Exh P-33 @Pg. 376-377/Vol Ill.] This was a clear,
unequivocal and positive act by the Defendant affirming the Suit Agreement
as continuing to bind the parties.
28.1) He submitted that without prejudice to the Plaintiff’s
arguments on the procedure to be followed under the ULC Act as set out
above, even assuming strictly for the sake of argument that the Plaintiff had
been unable to obtain the ULC NOC- within a “reasonable time” as
contended by the Defendant, the fact of the matter is that the Defendant, by
making the Application dated 3rd October 2006 seeking ULC clearance, at
the request of the Plaintiff, and, going by the Defendant’s own case, as a
“concession” to the Plaintiff, has unequivocally affirmed the Suit
Agreement.
28.2) DW- I has, in the course of cross-examination squarely
admitted that the application made on 3rd October 2006 was at the request
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of the Plaintiff and was a concession to the Plaintiff. The relevant questions
are as under:
Q.91. If, according to you, Mr. Judha had assured you even in
2006 that ULC clearance would be obtained, why is it that
the Defendants then made an application for the same
clearance on 3rd October 2006 ?
Ans. Since the Plaintiff could not obtain the ULC clearance till
October 2006, he made a special request to make an
application. to the ULC Authority for development of the land
for IT purposes. This was a concession which is normally not
being done by the Defendants’ Trust.
Q.92 What was this special request made by the Plaintiff to
Defendants ?
Ans. It was prior to 3rd October 2006. [Ref: pg1807/Vol X]
Q.165. [Shown Clause 10 of the Terms and Conditions
(Exhibit P-6) and also Exhibit P-33 being application dated
3rd’ October 2006.] As the Defendants filed an application
under Section 20 of the ULC Act (Exhibit P-33), did the
Defendants expect the purchaser to obtain clearance under
Section 20 of the ULC Act under Clause 10 of the terms and
conditions?
And : As 1 have stated earlier, normally, we do not make
applications directly to the ULC Authority. This was a
concession to the Plaintiff and this was also requested by the
Plaintiff [Ref: pg.1826/ Vol X]
Q.169. If you say that under Clause 10, you expected the
purchaser to obtain permission/clearance/ no objection,
apart from the exemption under Section 20, then why did the125/190
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sbw/sns 1-os-app-289-2015-J.docTrust make an application under Section 20 alone when it
made the application referred at Exhibit P-33?
Ans : ULC clearance was expected from the Plaintiff
However, since he could not obtain the clearance, it was a
special request made by him-to us to make application under
Section 20. As I have said earlier. This was a concession in
this case.
(Ref: pg.1827/ Vol X)
(Emphasis supplied)28.3) He submitted that in these circumstances, any alleged or
purported delay on the part of the Plaintiff in making an application or
obtaining the ULC NOC under Clause 10 for the period between November
2003 and October 2006 becomes entirely irrelevant and redundant.
28.4) He submitted that the Learned Single Judge has, in the
Impugned Judgement, appreciated the above evidence in the following
terms: [Ref: Pg.55/Appeal Memo]
“12. … There cannot be any requirement of time as being of
essence for its performance. Besides, the Defendants
themselves had actually applied for ULC clearance by their
application dated 3 October 2006. If that so, surely the
Defendants did not treat the contract as repudiated by the
Plaintiff by any breach as of 3 October 2006. Having applied
for ULC clearance on 3rd October 2006, the Defendants were
required to await the clearance for some reasonable period
and could not have treated any breach on the part of the126/190
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sbw/sns 1-os-app-289-2015-J.docPlaintiff as repudiatory breach ,within such reasonable
period…”
(Emphasis supplied)
28.5) Mr. Kadam submitted that, the Defendants have failed to makeout any case to dislodge the aforesaid finding in the present Appeal and
have been unable to give any reason, even in the course of arguments of the
present Appeal, to explain why the Defendant Trust made this application
in the event that it considered the Plaintiff to be in breach of its obligations
under Clause 10 of the Suit Agreement.
28.6) In fact, the Defendants continued to treat the Suit Agreement
to be alive and binding on the parties even after 3″ October 2006. The
Defendants have confirmed their obligation to convey the Suit Properties to
the Plaintiff right till the date of the Termination Notice issued on 25th
November 2008.
28.7) This is evident from the following facts which transpired after
the Application dated 3′ October 2006 was filed by the Defendant:
(i) The Manager of the Defendant i.e. DW-1 (V. P. Shah) filed
an Affidavit dated 5th October 2006 in PIL No.114 of 2006,
inter-alia, stating as follows:
“12. The formal execution of a conveyance in favour of Bastion
Construction has not yet taken place, for want of permission
from the competent authority under the Urban Land Ceiling
Act, 1973.
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13. Hence, although, the formal execution of the conveyance in
favour of Bastion Construction remains to be executed for all
real and
practical purposes and intent Respondent No. 8 has transferred
its rights in the plot to Bastion Construction.
14. Bastion-Construction is not developing the said plot as a
developer engaged by Respondent No. 8, but in its own right…”
(Emphasis supplied)
[Ref. Exh. P-34 @Pg. 378-381/Vol II]
(ii) The Plaintiff addressed a letter dated 12th February 2008
requesting the Defendants to execute a conveyance of the Suit
Properties in the Plaintiff’s favour since the entire consideration
for sale of the Suit Properties was paid, the Charity
Commissioner’s permission had been obtained, and in view of
the Repeal Act being adopted by the State of Maharashtra. [Ref.
Exh. P-67 * Pg.1026- 1030/ Vol V].
(iii) The Defendants addressed a letter dated 30th May 2008 to
the Plaintiff (acknowledging receipt of letter dated 12th
February 2008) whereunder the Defendants; inter alia,
contended that the provisions of the ULC Act continue to apply
to the Suit Properties and called upon the Plaintiff to obtain a
confirmation in writing from the Competent Authority that the
Defendants could execute the conveyance despite the Orders
dated 31st October 2006 and 11th December 2006.[Ref. Ex. P-38
*Pg.708-710/ Vol IV]
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28.8) In fact, even prior to the Application dated 31 October 2006
filed by the Defendant, the Plaintiff vide its letter dated 25 th May, 2006
requested the Defendant to convey the portion of the Suit Property
admeasuring 30,000 square meters, which was reserved for P.G. and were
not covered by the ULC Act. [Ref. Ex. P-31 @Pg.374 / Vol III]. In response
to the aforesaid letter, the Defendant simply asked for the DP remark to
consider the same and did not allege breach of the Suit Agreement at all.
28.9) He submitted that from the above. it is evident that the
Defendant in no manner ever contended/informed to the Plaintiff that the
Suit Agreement has stood frustrated or any other ground for that matter
which the Defendant seeks to agitate before this Hon’ble Court. In fact, it is
evident that the Defendant consistently affirmed the Suit Agreement,
including on-oath before this Hon’ble Court as well as in correspondence
with the Plaintiff.
28.10) The effect of having made the Application dated 3rd
October 2006, and these subsequent positive acts set out herein above, is
that the Defendants could not treat any prior delay as ground for a
repudiatory breach of the contract. Looked at from this perspective, the fact
of the application being made negates the grounds of termination as
contained in the Defendants’ letter dated 25th November 2008 [Ref: Ex. P-
44, pg. 780-784/ Vol. IV]. The termination letter dated 25 th November
2008, conspicuously fails to mention the fact that the Defendants made the
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application dated 3rd October 2006. Accordingly, the suit contract
remained valid, subsisting and binding as between the Plaintiff and
Defendants and was treated as such by the parties.
28.11) The following passage from Chitty on Contracts, as affirmed by
the Hon’ble Supreme Court in the case of Ganga Retreat & Towers Ltd. and
Anr.: v. State of Rajasthan and Ors. reported in (2003) 12 SCC 91 at para
30, is relevant in the present case:
“Once an innocent party has elected to affirm the contract,
and this has been communicated to the other party, then the
choice becomes irrevocable. There is no need to establish
reliance or detriment by the party in default. Thus the
innocent party, having affirmed, cannot subsequently change
his mind and rely on the breach to justify treating himself as
discharged.”
(Emphasis supplied)
28.12) He submitted that the doctrine of affirmation is also explained
by the UK Supreme Court of Judicature (Court of Appeal), in the case of
Tele 2 International Card Company SA & Ors. v. Post Office Ltd. — [2009]
EWCA Civ 9 holding, inter alia. That …where, with knowledge of the
relevant facts, the party that has the right to terminate the contract acts in
a manner which is consistent only with it having chosen one or other of two
alternative and inconsistent courses of action open to it (i.e. to terminate or
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affirm the contract), then it will be held to have made its election
accordingly. (Emphasis supplied)
28.13) In fact, the Learned Single Judge has made specific note of the
above facts in paragraph 12 of the Impugned Judgement, in the following
terms:
“It is submitted by learned Counsel for the Defendants
that even after 3rd October 2006, the Plaintiff did nothing for
14 months; the Plaintiff did not follow up with the ULC
authorities. Learned Counsel relied on the cross-examination
of the Plaintiffs witness (Cross of PW1, Question/Answer
No.1196) and submitted that even, after the Defendants’
application, when orders were passed under Section 8(4) of
the ULC Act on 31st October 2006 and 11 th December 2006,
the Plaintiff did not take any steps to set aside the orders; it
was the Defendants who had to adopt proceedings to
challenge the order by filing a Writ Petition (Writ Petition
6050 of 2008). The fact of the matter is that the Defendants
had applied for ULC clearance on 3rd October 2006 and
would have to await the result of the application at least for a
reasonable period of lime. It has been brought out in the
cross-examination of the Defendants’ witness (DW 1, cross:
questions 65 to 69) that a period of about 2-3 years would be
a reasonable period within which ULC clearance could be
expected. As it happens, within about 13-14 months of the
Defendants’ application, the ULC Act was repealed and it was
no longer necessary to obtain a ULC clearance before
executing conveyance of the property. Soon after the repeal,131/190
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sbw/sns 1-os-app-289-2015-J.docthe Plaintiff (vide its letter dated 12 February 2008)
demanded conveyance of the suit properties. On that day, the
Defendants had certainly not treated any purported breach of
clause 10 by the Plaintiff as a repudiator”, breach. Thus, at the
relevant time the Defendants were bound to honour the
requisition for conveyance in favour of the Plaintiff and would
not be entitled to determine the contract. The Plaintiff has
followed up its demand for conveyance by forwarding a draft
conveyance (letter dated 3 April 2008). In response, the
Defendants communicated to the Plaintiff (letter dated 30th
May 2008) that they could execute the conveyance only after
the Plaintiff obtained a confirmation in writing from the
Competent Authority that no permission was required for such
conveyance. Accordingly, an order dated 4th October 2008
was obtained by the Plaintiff from the Competent Authority
conveying it’s no objection to the transfer of the suit
properties. This no objection was conveyed by the Plaintiff to
the Defendants- (letter dated 7th October 2008); and it was
only thereafter, when there was absolutely no impediment to
the execution of the conveyance, that the Defendants
purported to terminate the suit contract (letter dated 25 th
November 2008). On 25th November 2008, the Defendants
clearly had no right to treat the suit contract as having been
repudiated by the Plaintiff by a breach and terminate the
same. The termination of 25th November 2008 is clearly
illegal and not binding on the Plaintiff.
(Emphasis supplied)
[Ref: Para 12/ Pg. 54/ Appeal Memo]
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28.14) He submitted that in the backdrop of this specific finding as
well as the earlier findings set out herein above with regard to the
interpretation of Clause 10, its purpose and effect, the Learned Single Judge
has, at paragraph 15 of the Impugned Judgement, concluded the issue on
readiness and willingness, by observing, inter alia, as follows:
” It is to be borne in mind that such readiness and willingness
must be for performance of “the essential terms of the
contract” which are to be performed by the plaintiff; and the
averment and proof tendered must be for performance of the
contract “according to its true construction”. Now, it is an
admitted position that the Plaintiff here has performed all its
obligations other than the obligation to obtain the ULC
permission under Clause 10. I have already held above that
according to the true construction of the contract, the
obligation to obtain ULC permission/ clearance under Clause
10 was not an ‘essential term’ in the sense of being a
‘promissory condition’, for the breach of which the
Defendants would be entitled to terminate the suit
agreement. The reasons for holding so equally apply to the
determination as to whether or not the same is an essential
term from the point of view of assessing the Plaintiffs
readiness and willingness. The obligation to obtain ULC
clearance was not a promissory condition; it was not subject
to any time limit; its non-performance till 3rd December 2006
was at any rate not treated as a repudiatory breach by the
Defendants; on 3rd October 2006, the Defendants applied for
ULC clearance; and whilst this application was pending, the133/190
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sbw/sns 1-os-app-289-2015-J.docULC Act was repealed, thereby doing away with the
requirement of ULC clearance itself In the premises, the term
is neither essential within the `meaning of Section 16(c) of
the Specific Relief Act nor is the Plaintiff guilty of its non-
performance. It cannot be said that the Plaintiff was not
ready or willing to perform any essential term of contract
according to the true construction of the contract. The issue is
answered in favour of the Plaintiff and against the
Defendants.
(Emphasis supplied)
[Ref: Para 15/ Pg. 58 — 59/ Appeal Memo]
28.15) He submitted that the Wadias have sought to assail this finding
on the singular basis / argument Learned Single Judge has wrongly held
Clause 10 not to be an ‘essential term’ of the bargain despite both parties
understanding this clause to be essential. This contention however entirely
overlooks the context in which the Learned Single Judge holds Clause 10 to
not be an ‘essential term’, i.e., firstly, in being a ‘promissory condition’
which would entitle the Defendants to terminate the contract: and
secondly, within the meaning of Section 16(c) of the Specific Relief Act.
28.16) He submitted that the challenge by the Defendants to these
findings is entirely misdirected in as much as it fails to appreciate the
Learned Single Judge’s reasons in the correct perspective and context in
which the same were made.
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sbw/sns 1-os-app-289-2015-J.doc REJOINDER OF MR SEERVAI 29) Mr. Seervai in rejoinder submitted as under:. A. There is no "Affirmation" of the Suit Contract by the Defendant
1. The Plaintiff has submitted that “both parties have, by their
positive acts, affirmed the Suit agreement right upto termination and
therefore any complaint of non-performance under Clause 10” is
irrelevant.
2. First, and foremost, the Plaintiff’s contention with regard to
“affirmation” is, as stated in the Plaintiff’s Note, based on the ratio of
the judgments in Ganga Retreat & Towers v. State of Rajasthan,
(2003) 12 SCC 91 and Tele2 International Card Company SA v. Post
Office Ltd., [2009] EWCA Civ 9. It is submitted that neither judgment
supports the case of the Plaintiff if properly read as a whole, and not
selectively as done by the Plaintiff, merely reading Paras 30, 45 and
47 of Ganga Retreat (supra).
a. In Ganga Retreat (supra), the facts were as follows:
(i) the State of Rajasthan auctioned properties on the
basis of certain terms and conditions, including as too
FAR (i.e. FSI), with a represented FAR of 2.0 [Para 2];
(ii) Ganga Retreat was the successful bidder for the
properties, and made payments for the same albeit with
delay [Para 4]; (iii) Ganga Retreat then submitted plans
for sanction to the Jaipur Municipal Corporation [Para
5]; (iv) the development control rules were amended,135/190
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sbw/sns 1-os-app-289-2015-J.docand the FAR was reduced from 2.0 to 1.75, and the land
was subjected to the ULC Act [Para 6, 7]; (v) Ganga
Retreat actually started construction on the basis of FAR
1.75, despite knowledge of the above [Para 45]. In
these circumstances, Ganga Retreat was denied relief on
the basis of “affirmation”, or, more accurately, election.
What weighed with the Court was that by conduct, the
fact that construction had taken place and the position
was irreversible, and thus there was election by Ganga
Retreat [Para 47]. None of the acts of alleged
“affirmation” or “election” in the present case are of like
nature, or even of similar nature – the alleged acts of
“affirmation”, even if construed as the Plaintiff suggests,
are in no way akin to the acts in Ganga Retreat (supra)
– this is elaborated upon below. The reliance on the
judgment is entirely misplaced and misconceived.
b. In Tele2 (supra), the facts were of a contract for sale
of pre-paid phone cards [Para 5]. The alleged breach
which led to the termination was a failure to provide a
parent company guarantee, which Tele2 failed to do for
1 year, during which however the contract remained
alive [Para 7]. There was no dispute in that case that
the parties continued to perform, which performance
Post Office Limited continued to accept [Para 50]. It is
in these circumstances that the Court applied the
doctrine of election / affirmation, in Para 53. In the
present case, there is no act that constitutes
performance of the Suit Contract by the Plaintiff, which
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was accepted by the Defendant, that can be, or has been
pointed to. The acts pointed by the Plaintiff to are not
in the nature of performance of the contract by the
Plaintiff which were accepted by the Defendant.
29.1) Additionally, the doctrine as enunciated in the above decisions
is, in essence based on waiver and estoppel, and more particularly estoppel
in pais [See HDIL v. MIAL, 2013 SCC OnLine Bom 1513, Paras 26-28].
Notably, this Hon’ble Court expressly distinguished the judgment in Tele2
(supra) at Para 26. In the present case, it is inconceivable how the principle
of waiver or estoppel or estoppel in pais can come into play, all being
fundamentally equitable principles. The facts that form the basis of the
alleged election / affirmation can never be the basis of a claim based on
equity, as set out below.
29.2) The alleged acts of the Defendant which constitute such
“affirmation” do not constitute the same:
a. The Defendant’s application dated 03.10.2006 for sanction under
Section 20 of the ULC Act was not an act of affirmation, but merely a
concession to the Plaintiff; the obligation to obtain ULC sanction being the
Plaintiff’s exclusively. The cross-examination of DW-1 in this regard [Q.91
in particular] makes it clear that this act by the Defendant was merely a
concession. It is inconceivable how a concession, i.e. an act done by a party
in good faith, though not obligated, can ever be an affirmation of a
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sbw/sns 1-os-app-289-2015-J.doccontract, or how the same can create any equity in favour of the opposite
party, as is sought to be alleged. The relevant excerpts from the cross
examination are as under67:
DW-1, Mr. V. P. Shah:
Q.91 If, according to you, Mr. Judha had assured you even in
2006 that ULC clearance would be obtained, why is it that the
Defendants then made an application for the same clearance on
3rd October 2006?
Ans. Since the Plaintiff could not obtain the ULC clearance till
October 2006, he made a special request to make an application
to the ULC Authority for development of the land for IT
purposes. This was a concession which is normally not being
done by the Defendants’ Trust.
PW-1, Mr. Salim Judha:
Q.696. I put it to you that at no point of time, the Defendants
had dispensed with the requirement of the Plaintiff obtaining
NOC from the ULC Authority. What do you want to say?
Ans. It is true that till the time ULC Act was repealed, at no
point of time the Defendants had dispensed with the67 The reference to the transaction between the Trust at Valentine Properties Pvt. Ltd. is,
strictly, not relevant to the issue of who could apply for the clearance under the ULC
Act. The application by Valentine Properties Pvt. Ltd. was under Section 6 of the ULC
Act, and not under Section 20 [See Vol. X @ 1858]. Section 6 is crucially and
materially different, in that only the holder / person holding vacant land can invoke it,
on its plain meaning; this is completely distinct from Section 20. The reference to the
transaction with Valentine Properties Pvt. Ltd. on buttresses the point that the
application dated 03.10.2006 was a concession to the Plaintiff, as no instance of the
Trust actually applying was forthcoming.
In any event, DW-1 Mr. Shah clarified this matter at Q.166 to 178.
Rather than shaking Mr. Shah’s evidence, the facts pertaining to Valentine Properties
Pvt. Ltd. only strengthens the same, and buttresses that under Section 20, the Plaintiff
could have applied, and the Trust did so only as a concession.
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requirement of the Plaintiff obtaining NOC from the ULC
Authority.
b. Thus, apart from the conduct and understanding of the Defendant,
the understanding of the Plaintiff, as evident from Q.696, shows that
neither party considered the Defendant’s application dated 03.10.2006 for
sanction under Section 20 of the ULC Act (at the behest of the Plaintiff) as
constituting any alleged “affirmation”. The Plaintiff’s admission that the
application dated 03.10.2006 was at the “behest” of the Plaintiff [Plaint,
Para 24, Appeal Memo @ 120], is, in fact, an admission that the Plaintiff
itself failed to apply, thereby demonstrating its lack of readiness and
willingness.
c. The reliance upon the Plaintiff’s payment for security services, nalla
work, and filling carried out at the Suit Properties as acts of “affirmation” is
contrary to the terms on which the Defendant permitted such acts:
i. With regard to filling, the Defendant gave its permission on
the basis of the Plaintiff’s letter dated 25.01.2006 [Exh. P-29,
Vo. II @ 370], in which it was made clear that “We also
confirm that this shall not mean or deemed to mean a transfer
of the said land to us nor mean or deemed to mean that we are
in possession of the said land nor shall we claim any equity on
the ground of filing up the said land”.
Further, filling is in no way performance of the Suit Contract
accepted by the Defendant so as to constitute the basis of a claim for
election.
ii. Similarly, with regard to payment for security services and
nalla work, the same was not done by the Plaintiff in139/190
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sbw/sns 1-os-app-289-2015-J.doccompliance with any contractual obligation, and thus cannot
form the basis of a claim of election by the Defendant.It is therefore thoroughly dishonest, disingenuous and iniquitous for
the Plaintiff to allege that these acts constitute “affirmation”.
29.3) Whether or not the Defendant treated the Suit Contract as alive
even after 03.10.2006, does not, and cannot, constitute “affirmation” by the
Defendant such as to absolve the Plaintiff from its legal requirement of
continuous readiness and willingness. In law, it was for the Plaintiff to
establish and prove its readiness and willingness, which it has woefully
failed to do [See Punjab Urban Planning & Development Authority vs. Shiv
Saraswati Iron & Steel Re-Rolling Mills, (1998) 4 SCC 539, Para 10, where
the Court held: “The plaintiff/Appellant must succeed or fail on his own
case and cannot take advantage of weakness in the Defendant
/Respondent’s case to get a decree.” (emphasis supplied)].
29.4) The correspondence exchanged between the parties in 2008,
i.e. the letters dated 12.02.2008, 03.04.2008 and more particularly the
Trust’s letter dated 30.05.2008, cannot constitute an act of “affirmation” or
election, as by that date, the contract had already come to an end in view of
the Section 8(4) Order, the Charity Commissioner’s sanction was no longer
valid. Thus, this act by the Trust through its general manager [Mr. VP
Shah], who is not skilled in law, cannot override the legal position that
obtained as on that date. Additionally, without prejudice, the Trust merely
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sbw/sns 1-os-app-289-2015-J.docstating that a confirmation letter may be obtained from the Competent
Authority does not create an equity in favour of the Plaintiff – surely
obtaining one single letter does not create any substantial equity in favour
of a party so as to constitute estoppel in pais.
B. The Plaintiff could have obtained sanction under Section 20 of the ULC
Act itself, and in its own name
30) The Plaintiff’s contention that “the ULC Act required the Appellant
(i.e. the Holder”) to make applications thereunder”, and that only then
could the Plaintiff “obtain” the ULC Clearance, is patently incorrect. Faced
with the plain language of Clause 10, and the correspondence by the
Plaintiff repeatedly affirming that it was the Plaintiff’s sole obligation to
obtain ULC NOC/ clearance, the disingenuous submission distinguishing
between applying for permission and obtaining it, was a belated
afterthought post the termination of the contract. The contention flies in
the face of Section 20 of the ULC Act, which provides as under:
20. Power to exempt.–
(1) Notwithstanding anything contained in any of the
foregoing provisions of this Chapter–
(a) where any person holds vacant land in excess of the
ceiling limit and the State Government is satisfied, either on
its own motion or otherwise, that, having regard to the
location of such land, the purpose for which such land is
being or is proposed to be used and such other relevant
factors as the circumstances of the case may require, it is141/190
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Government may, by order, exempt, subject to such
conditions, if any, as may be specified in the order, such
vacant land from the provisions of this Chapter;
(b) where any person holds vacant land in excess of the
ceiling limit and the State Government, either on its own
motion or otherwise, is satisfied that the application of the
provisions of this Chapter would cause undue hardship to
such person, that Government may by order, exempt, subject
to such conditions, if any, as may be specified in the order,
such vacant land from the provisions of this Chapter:
Provided that no order under this clause shall be made unless
the reasons for doing so are recorded in writing.
(2) If at any time the State Government is satisfied that any
of the conditions subject to which any exemption under
clause (a) or clause (b) of sub-section (1) is granted is not
complied with by any person, it shall be competent for the
State Government to withdraw, by order, such exemption
after giving a reasonable opportunity to such person for
making a representation against the proposed withdrawal
and thereupon the provisions of this Chapter shall apply
accordingly.
30.1) There is nothing in Section 20 to even remotely suggest that
only the “holder” could apply thereunder. In fact, Section 20 is entirely to
the contrary, and is a power that can be exercised suo motu by the State
Government. This conclusively puts paid to the suggestion that only the
“holder” could apply. Section 20 is an exemption provision and has nothing
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to do with who can apply for the exemption. The exemption can be given
by Government “… on its own motion or otherwise…”, i.e. on the
application of any person or entity, and not only the “holder”, as
erroneously argued by the Plaintiff.
30.2) The reliance by the Plaintiff on the Urban Land (Ceiling and
Regulation) Rules, 1976, is thoroughly misplaced and misleading. Form V
@ Page 680, which was relied upon by the Plaintiff, is relatable to Rule 11.
Rule 11, in turn, is relatable to Section 21 [and not Section 20]. Section 21,
in terms, postulates a declaration by a person holding surplus vacant land
that he will abide by the conditions set out in the Section. Form V @ Page
680 is clearly that very declaration, which in terms of the statute has to be
made by the holder. This is not the same as the application for exemption
under Section 20, which is what the present matter is concerned with.
30.3) In this context, the reliance upon the judgment in State Bank of
India v. Special Secretary Land, 1995 Supp (4) SCC 30, Paras 5 and 7 is
thoroughly misplaced. That decision was rendered in the context of Section
19 of the ULC Act and a claim made thereunder by SBI to be the “holder” of
the land in question, and thus entitled to an exemption. The Supreme Court
held that in the facts of that case, SBI as a trustee could not be said to be
the “holder”, so as to claim the benefit under Section 19. Section 19, unlike
section 20, specifically applies to a holder of land. The judgment has
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absolutely nothing to do with the facts of the present case and is therefore
completely irrelevant.
C. The Section 8(4) Orders Do result in the Suit Contract coming to an end.
31) The Plaintiff’s submission that the Section 8(4) Orders do not
result in the Suit Contract coming to an end on the basis of the Plaintiff’s
construction of the provisions of the ULC Act is incorrect and misdirected.
First, the Section 8(4) Order dated 31.10.2006 [Vol. III @ 467 at 479] in
the present case is in issue before the Court, and it is therefore this Order
that must be considered. This Order directs as under:
“In view of the above position the lands adm.1212844.8 Sq.
Mtrs. As shown in the accompanying statement is declared as
surplus vacant land with the declarant Trust.Final statement u/s. 9 of the Act and notification u/s10(1) of
the Act should be issued accordingly.”
(emphasis supplied)
31.1) Thus, the Competent Authority has, in the Section 8(4) Order
dated 31.10.2006 not only held that the Suit Properties are surplus vacant
land, but that a final statement u/s. 9 of the Act, and a notification under
Section 10(1) should be issued – i.e. the surplus vacant land should be
acquired. Consequent thereon a final statement u/s. 9 was issued. Thus,
steps towards acquisition were in fact initiated. It is submitted that not all
Section 8(4) Orders are alike – the Order in the present case is clear in its
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terms, and recommends steps for acquisition, thus constituting refusal of
exemption under Section 20.
31.2) That the Section 8(4) Order had drastic and serious effect is
confirmed by the fact that the Defendant [for itself] filed Writ Petition No.
6050 of 2008 [Vol. III] before this Hon’ble Court impugning the Section
8(4) Order [Prayer @ 438]. That Writ Petition proceeds on the basis inter
alia that the Respondents therein would precipitate steps for execution of
the Order dated 31.10.2006 [@ 427]. A Division Bench of this Hon’ble
Court found merit in the Defendant’s contentions, and allowed the Writ
Petition by Order dated 08.04.2009 [for a complete copy, See Defendant’s
Convenience Compilation on ULC Permissions @ 145]. The Division Bench
did not dispose of the Writ Petition on the basis that the same was
academic, or that the Section 8(4) Order was, a nullity or meaningless or of
no legal consequence absent further steps as is effectively contended by the
Plaintiff at this stage. Thus, the Suit Contract having come to an end on
such refusal, as explicitly stated in Clause 10 of the contract, the same could
not stand revived by virtue of subsequent events [See N. L. Mehta v. New
Era Fabrics, (2015) 9 SCC 755, Para 29; K. Narendra v. Riviera Apartment
Pvt. Ltd., (1999) 5 SCC 77, Para 36, in which the Court held: “We do not
think that the subsequent events can be pressed into service for so reviving
the contract as to decree its specific performance.”]
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31.3) In any event, in the present case, the question is the
contractual covenant i.e. Clause 10, and not the provisions of the ULC Act
in abstract or in vacuo. Under Clause 10, the moment the ULC exemption
was refused or not forthcoming, the right to a conveyance ended, the Suit
Contract having been frustrated. The consequence was that the contract
came to an end. The Section 8(4) Order had that very effect, necessitating
filing of an Appeal and thereafter a Writ Petition by the Defendant. The
Plaintiff’s attempt to deflect the contractual issue of frustration by referring
in abstract to the scheme of the Act and/or Section 8(4), and citing
irrelevant judgments in that regard, is unavailing and misdirected.
Significantly, there is no answer to the question of the contractual covenant
i.e. Clause 10, and whether upon refusal of ULC permission the contract
stood frustrated; and could not be revived by subsequent events.
31.4) The facts on the basis of which the Defendant submitted that
the Suit Contract stood frustrated were pleaded in the Written Statement
[Written Statement, Appeal Memo, Para c @ 278, Para e @ 279]. The
argument was specifically canvassed before the Learned Single Judge [Vol.
XII @ 2379 # 12], and was attempted to be met by the Plaintiff in
Rejoinder submissions before the Learned Single Judge [Vol. X, Plaintiff’s
Rejoinder Submissions, Para 12 @ 2413]. The Plaintiff was thus put to
notice of the contention, which was squarely at issue based on the facts on
record, and their legal effect and import.
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sbw/sns 1-os-app-289-2015-J.doc 31.5) It is therefore not open in Appeal, for the Plaintiff to argue that
frustration was not pleaded, or that no issue was struck on it. Significantly,
the Plaintiff did not object to the submission being made and argued before
the learned single judge. Nor has the learned single judge refused to deal
with this submission on any of these grounds. He has failed entirely to do so
only because he has not dealt with the argument on the Section 8(4)
Orders, and their effect.
31.6) Clause 10, and the Plaintiff’s disentitlement to a conveyance
comes into effect the moment the permission under the ULC Act is either
“not forthcoming” or “is refused”. Whilst the expression “refused” is, fairly,
susceptible to two interpretations; one being a first refusal, and the other
being a final refusal after exhaustion of all appellate remedies, in the
present case, it is submitted that this is immaterial. The reality of the facts
of the present case are that the permission was refused, and was never
obtained, before which the ULC Act was repeated; thus, the facts that
obtain the present matter are of refusal, without further caveat.
31.7) Additionally, the permission was also “not forthcoming” as it
was never obtained or even sought by the Plaintiff.
31.8) Thus, tested on either conditionality of Clause 10, the Plaintiff
is not entitled to a conveyance.
D. Section 50 of the Public Trusts Act DOES Apply
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32) In Sainath Mandir Trust v. Vijaya, (2011) 1 SCC 623, the party-
plaintiff who was non-suited on the basis of Section 50 of the Public Trusts
Act was the private party [Respondent before the Supreme Court] who had
filed the Suit against the public trust for title to and possession of the suit
property [Para 4]. In this fact situation, which is akin to the present case,
the plaintiff was non-suited on the basis of Section 50. Thus, the
interpretation of Section 50 and the provisions of the Public Trusts Act
canvassed by the Plaintiff flies in the face of the ratio of this judgment, and
therefore ought to be rejected.
32.1) The Plaintiff has not contended that the judgment in Sainath
Mandir (supra) is per incuriam; the judgment therefore binds this Hon’ble
Court. Thus, the Plaintiff errs in relying upon the judgment in Vinayak Dev
v. Shivram, (2005) 6 SCC 641, which is of a co-equal strength (2 Learned
Judges) to Sainath Mandir (supra), when Sainath Mandir (supra) directly
considers the provisions of Section 50, and renders a conclusive finding and
interpretation thereof; Vinayak Dev (supra) is thus inapplicable to the facts
of the present case. Further, decisions have held that when there are
conflicting decisions of benches of co-equal strength, the later decision [in
this case Sainath Mandir (supra)] ought to be preferred.
32.2) Further, having itself sought reliefs in respect of possession in
the Suit, it is not open to the Plaintiff to contend, that too at this belated
stage, that “in a suit for specific performance, the question of possession is
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really not germane to the main controversy and delivery of possession are
inherent and ancillary to the relief of specific performance”. Having itself
put the question of possession at issue, and sought reliefs in that regard, the
Plaintiff cannot fall back on a contention the aforementioned contentions
only to escape the consequences of Section 50 of the Public Trusts Act.
32.3) The reliance upon this Hon’ble Court’s Order dated 20.12.2024
passed in Chamber Summons No. 151 of 2018 is also misplaced. The said
Order was passed at an incipient stage, when this Hon’ble Court had not
heard the Appeal finally, or considered the evidence and the law in its
fullness. Observations in interlocutory orders, such as the Order dated
20.12.2024, are not binding on the Court at the final hearing of the
proceeding.
32.4) Most importantly, however, the Plaintiff has studiedly and
conspicuously omitted to even attempt to address the evidence, including
the correspondence addressed by it that makes it beyond any doubt that the
Plaintiff was never in possession of the Suit Properties. This includes:
a. The Offer Documents which make it clear that possession will
be given only at the time of conveyance.
b. The Charity Commissioner’s sanction dated 27.12.2002 which
makes it clear that possession will only be given at the time of conveyance.
c. The Trust’s letter dated 15.11.2003, wherein the Trust made it
clear that possession was not parted with.
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d. The Plaintiff's letter dated 04.04.2005, wherein the Plaintiff
itself admitted that it is not in possession.
e. The Plaintiff's letter dated 25.01.2006, wherein the Plaintiff
itself admitted that it is not in possession.
f. The fact that no claim to being in possession was made till just
prior to the termination of the Suit Contract.
32.5) Mr. Seervai submits that, rather than addressing the issue of
possession, the Plaintiff has made a reference to a series of letters, not one
of which speaks a whisper about possession of the Suit Properties. The
Plaintiff has sought to place reliance upon irrelevant and immaterial
evidence, rather than the evidence directly germane to the issue at hand.
E. Mr. V. P. Shah’s Affidavit dated 05.10.2006 filed in Writ Petition No.
114 of 2006
33) He submitted that Mr. Shah’s Affidavit has clearly been read by
the Learned Single Judge completely out of context. The said Affidavit,
which is solely and exclusively relied upon to render an otherwise non-
maintainable Suit maintainable, does not, at any place, state that possession
of the Suit Property has been handed over to the Plaintiff. No statement or
averment regarding possession is made by Mr. Shah. Despite this, the said
Affidavit is relied upon for that very purpose. This finding is not only
erroneous, but is perverse. The Affidavit is filed in a Writ Petition alleging
unauthorized cutting of mangroves at the Suit Property (See Vol. V @ 962).
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It is to defend the allegations made in that Writ Petition that Mr. Shah has
filed the Affidavit. Even in the Affidavit, Mr. Shah has not whispered a word
about possession.
F. Charity Commissioner's Sanction 34) It is not the Trust's contention that the Charity Commissioner's
sanction was predicated upon the ULC Act clearance alone; there is no
doubt that it was predicated upon numerous factors. However, what the
record before the Learned Single Judge established is that the requirement
of ULC clearance was a determinative factor in the transaction, as also in
the sanction of the Charity Commissioner. It is for this reason that Clause
10 was specifically incorporated into the Suit Contract, i.e. keeping this
critical factor in mind.
34.1) This is evident from inter alia (i) the Affidavits of Mr. Rajesh
Batra, Trustee of the Trust, in support of the applications, which makes
specific reference to the issue of ULC Clearance as a “negative factor”; (ii)
Mr. Kirit Kapadia, the valuer whose report was submitted to the Charity
Commissioner, also specifically kept the “need for ULC clearances” in mind
when submitting his valuation report, on the basis of which the Charity
Commissioner’s permission was obtained. As such, obtaining of the NOC
under the ULC Act was not capable of being dispensed with.
34.2) Critically, both in the context of the sanction of the Charity
Commissioner, as also on the question of discretion, the Appellant has
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failed to address the fact that in view of Section 20 of the ULC Act,
conditions would have been imposed in the NOC/clearance that was to be
obtained by the Plaintiff, which conditions would have attached to the Suit
Properties. These conditions would have been in the public interest and
would have been mandatory for the Plaintiff to comply with [see T. R.
Thandur v. Union of India, (1996) 3 SCC 690, Para 11]. The Hon’ble
Supreme Court has held one of these conditions that was imposed by the
State of Maharashtra, viz providing dwelling units for weaker sections of
society, is traceable to Article 21 [see Shantistar Builders v. Narayan
Khimlal Totame, (1990) 1 SCC 520, Paras 11, 13].
34.3) Illustratively, some conditions that may have been imposed
were: (i) construction of dwelling units for “weaker sections of society” –
See Shantistar Builders v. Narayan Khimlal Totame, (1990) 1 SCC 520,
Paras 6, (ii) surrender of FSI / constructed area to allottees nominated by
Government – See Nargis Jal Haradhvala v. State of Maharashtra, (2015) 4
SCC 259, Paras 11, 13; (iii) the land be used for a specified purpose for
example a newspaper industry – See State of A. P. v. V. Venkateswara Rao,
(2004) 4 SCC 220, Para 5, 13.
34.4) The Charity Commissioner, as a state functionary discharging a
public duty and function, was aware of the conditions on which the
clearance under Section 20 would be granted. The fact that such conditions
[illustratively set out above] would have to be complied with by the
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purchaser [in this case the Plaintiff] would be a relevant criterion
considered by the Charity Commissioner when deciding whether or not to
grant sanction to the proposed transaction. That such conditions are in the
public interest would also be a relevant consideration for the Charity
Commissioner. Had the Charity Commissioner been aware that such
conditions would not be imposed on the purchaser, the Charity
Commissioner would [or at the very least may] never have granted sanction
in the first place.
34.4.1) In our view, the reliance placed on T.R. Thandur (supra),
Shantistar (supra), and Nargis Jal (supra) is entirely misplaced and
contextually irrelevant. There is no occasion to examine the duties or
awareness of the Charity Commissioner in relation to obtaining ULC
permissions once the Defendants had received the entire consideration
within the stipulated period. The Charity Commissioner’s consideration is
relevant only as on the date of sanction and, at most, until the final
payment is received by the Trust–not for events occurring thereafter.
G. Discretion under Section 20 of the Specific Relief Act
35) As regards the exercise of discretion under Section 20, there is no
gainsaying that it is not a rule of universal application that the rise in prices
of urban immovable property is a ground to refuse to exercise discretion to
order specific performance. The question of whether to exercise discretion
or not is, inevitably, case-specific and fact specific.
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sbw/sns 1-os-app-289-2015-J.doc 35.1) In the present case, the astronomical price rise owing to the
repeal of the ULC Act, and the centrality of the ULC clearance to the
fixation of the price, coupled with the conditions under Section 20 that
would have been imposed and the fact that the Plaintiff is a public
charitable trust of repute are all material considerations that ought to weigh
strongly against the exercise of discretion. None of the cases cited by the
Plaintiff are in similar facts as the present case; and none have a fact
situation where a buyer has failed to obtain ULC clearance, and thus
benefited by a shocking windfall, at the cost of a Public Charitable Trust,
that too without them being required to comply with the requirements of
Section 20 conditions.
REASONS AND CONCLUSION:
36) Upon consideration of the pleadings, oral and documentary
evidence, and the extensive submissions made on both sides, we hold that
the learned Single Judge has correctly appreciated the legal and factual
matrix. We endorse the analysis advanced by Mr. Ravi Kadam, learned
Senior Counsel for the Respondent-Plaintiff, whose submissions, firmly
rooted in legal authority and the record, materially assist this Court in
resolving the dispute.
37) This appeal is manifestly an attempt to prolong litigation and
deprive the Respondent of the benefit of a transaction voluntarily entered
into, lawfully sanctioned, and substantially performed. The arguments
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tailored to an entirely different factual matrix and bear no relevance to the
present case.
38) We see no occasion to delve into the evidence, for the facts are
straightforward and the documents relied upon are unambiguous and
unequivocally reflect the true intent of the parties. The contentions now
raised are craftily constructed, designed solely to muddy the waters and
divert attention from the real issue at hand.
39) The case is simple. The suit property was sold by the Appellants
on an “as is where is” basis, and the full consideration of ₹14 crores was
received well before any conveyance was due. The Appellants’ subsequent
refusal to execute conveyance rests on grounds that became irrelevant upon
the repeal of the ULC Act.
40) The continued pendency of execution and the benefit of a stay
Order dated 28th November 2016–now in effect for nearly eight years–
has resulted in grave injustice to the Respondent. Bastion has been denied
the fruits of a decree it secured over seven years ago, while the Appellants
have suffered no prejudice.
41) We find that the contentions advanced by the Appellants,
particularly as to the construction of Clause 10, readiness and willingness,
the effect of the repeal of the ULC Act, and the Charity Commissioner’s
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sanction, are deliberately fragmented, akin to a fly’s vision, multiplying
issues without merit and obscuring the real controversy.
42) The points that arise for our consideration in the present appeal
are as follows:
(a) Whether the Wadias were entitled to terminate the Contract, and
if so, under which clause or ground;
(b) Whether Clause 10 of the Contract constitutes an “essential” or
“fundamental” term of the Contract, and whether the learned Judge
correctly interpreted the its scope and effect;
(c) Whether non-compliance with Clause 10 would entitle the
Wadias to terminate the contract;
(d) Whether the repeal of the ULC Act has any bearing on the
sanction granted by the Charity Commissioner under Section 36 of
the Maharashtra Public Trusts Act, 1950.
(e) What is the effect of the order passed under Section 8(4) of the
Urban Land Ceiling Act on the Contract;
(f) Whether assertion of possession-based on permission to carry out
work, or full payment of consideration- affects a claim for specific
performance seeking possession to perfect title.
WHETHER THE WADIAS WERE ENTITLED TO TERMINATE THE CONTRACT, AND IF SO,
UNDER WHICH CLAUSE OR GROUND?
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sbw/sns 1-os-app-289-2015-J.doc 43) In our view, the Wadias had no justifiable reason to terminate the
agreement as they had already received the entire consideration of ₹14
crores for the suit property. Was the property sold under threat, coercion,
or undue influence? The answer is a categorical “No.” The property was
offered for sale and the Wadias obtained the requisite permission from the
Charity Commissioner. The sale was effected on an “as is where is” basis.
43.1) As the record presently stands, the Wadias have terminated the
contract. On what basis? Allegedly because Bastion failed to secure
clearance from the competent authority under the ULC Act. Is this a valid
ground under the contract for termination? In our view, emphatically not–
especially since the Wadias have already received the entire consideration.
43.2) Was Bastion entitled to specific performance? Yes. Why?
Because the learned Single Judge correctly held that, having received the
entire consideration, the Wadias could not terminate the contract and
forfeit the amount merely on grounds such as:
i) Bastion did not take requisite steps;
ii) Bastion was not ready and willing to comply with Clause 10;
iii) Wadias took steps by filing petitions before the ULC
authorities;
iv) An order was passed under Section 8(4) of the ULC Act; or for
any other reason.
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Once the Wadias had received the full consideration, neither in law nor in
equity could they rescind the contract.
43.3) In this context, let us examine Clause 10. The clause requires
Bastion to obtain permission from the ULC authorities “to enable the
Conveyance to be made” by the Wadias, and further provides that the
amount paid shall not be refundable in the event that such permission is
not obtained or is refused.
43.4) Mr Seervai has construed clause 10 in a manner wholly
antithetical to its object.
43.5) The learned Single Judge’s findings regarding Clause 10 of the
agreement are reproduced below for ready reference.
i. the Learned Single Judge has interpreted Clause 10 of the
Contract to be of such nature that whether or not the
permission under the ULC Act was obtained would have no
bearing on the Contract as far as the Defendant is concerned.
In terms, the Learned Single Judge held that:
“Whether or not such permission, etc. came about,
it would have no impact on the validity of the suit
contract as for as the vendors were concerned”.
ii. the Learned Singe Judge has further held that Clause 10
does not entitle the Defendant to terminate the Contract.
iii. the Learned Single Judge has further held that want of
permission under the ULC Act is not a reason to terminate the
Contract since neither the amount nor the manner of
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payment or consideration were dependent on such
permission.
iv. the Learned Single Judge has further held once payment is
made, Clause 10 is only from the perspective of the Plaintiff,
and not the Defendant.
v. the Learned Single Judge held that once the restriction
under the ULC Act goes away, in this case because of repeal
of the ULC Act, Clause 10 cannot be said to prevent the
Plaintiff from obtaining a conveyance.
vi. In summation, the Learned Single Judge has held that:
“… Once this restriction goes away, in this case
because of the repeal of the ULC Act, Clause 10
cannot be said to prevent the purchaser from
obtaining a conveyance. That appears to be the
plain meaning and implication of the clause”.
43.6) In paragraph 11, the Learned Singe Judge observed:
“i. Whether or not a particular term of a contract is essential
or material is a “question of law”, and it is for the Court to
construe the contract and hold a term to be essential or
otherwise. The Learned Single Judge has held that Clause 10
not an essential or material term, because according to him it
is not a “promissory condition”.
ii. The Learned Single Judge went so far as to say that it does
not matter what a witness says in this regard. In terms, the
Learned Single Judge held that “The whole contract is before
the Court and whether or not a particular term of it is
essential or material, is a question of law. It is for this Court
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to construe the contract and hold a term to be essential or
otherwise. It does not even matter if any witness of the
Plaintiff (Bastion) says otherwise.”
(emphasis supplied)
iii. The Learned Single Judge held that rather that entitling
the Defendant (Wadias) to treat the Contract as discharged
for want of permission under the ULC Act, Clause 10 only
allowed the Defendant (Wadias) to withhold the conveyance
on the ground that it cannot be executed in the absence of
ULC permission.
iv. The Learned Single Judge held that the Contract is
“enforceable by the vendors without reference to” permission
under the ULC Act.”
43.7) Then in Paragraph 12:
i. The Learned Single Judge held that the fact that the ULC
permission was applied for on 03.10.2006 by the Defendant
(Wadias), meant that the Defendant itself did not treat the
Contract as repudiated as of that date at least.
ii. He further held that having ” applied for ULC clearance on
3 October 2006, the Defendants were required to await the
clearance for some reasonable period and could not have
treated any breach on the part of the Plaintiff as repudiatory
breach within such reasonable period”.
iii. Thereafter, the Learned Single Judge held that a
reasonable time was required to be waited for the ULC
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permission to be granted, which DW-1 said would be 2-3
years.
43.8) Viewed from another perspective, Clause 1 of the suit
Agreement explicitly stated that the suit lands were offered for sale on an
“as is where is” basis.
43.9) Pertinently, Clause 7 specifically stated that, the sale was
subject to the sanction of the Charity Commissioner. If such sanction was
refused, the amount paid by the successful purchaser would be refunded
without interest. Therefore, only in the event that the Charity
Commissioner declined to sanction the sale would the transaction stand
cancelled with refund without interest.
43.10) Clause 10 imposed the responsibility of obtaining all
permissions, clearances, and no-objection certificates under the ULC Act on
the purchaser. The learned Single Judge rightly observed that the Wadias
were not obliged to execute the conveyance on failure to receive or its
refusal.
43.11) In other words, if permission was refused, Bastion could not
claim a refund, and the Wadias would be entitled to forfeit the entire
consideration. Thus, a suit for specific performance for execution of
conveyance in favour of Bastion or refund based on refusal of ULC
permission would not be tenable against the Wadias. However, it is clear
that the parties had not contemplated repeal of the ULC Act. Undoubtedly,
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had this possibility been foreseen, the consideration would have been
substantially higher. The fear of acquisition under the ULC Act was a
principal reason for the sale by the Wadias.
43.12) The entire thrust of the Appellants’ case before us hinges on
Clause 10 of the Contract. In this regard, we accept the analysis offered by
Mr. Kadam that Clause 10 was not a “promissory condition” the breach of
which would entitle the vendors to treat the contract as repudiated. Rather,
as Mr. Kadam emphasized, Clause 10 was a risk-shifting provision intended
solely to absolve the Appellants of any liability in the event ULC permission
was not forthcoming. The clause did not impose any reciprocal obligation,
nor did it render the Agreement voidable at the instance of the Appellants.
43.13) We also agree with Mr. Kadam’s submission that, Clause 10
must be interpreted in its proper commercial context. The Agreement
expressly contemplated that the purchaser would assume the risk of not
obtaining ULC clearance. The full consideration was to be paid and was in
fact paid, irrespective of whether such clearance was obtained. Once the
statute requiring that clearance was repealed, Clause 10 ceased to have any
operative significance. The Appellants could not thereafter rely on a clause
that had become legally redundant to justify termination of the Agreement.
43.14) Mr. Kadam correctly pointed out that even after the ULC
repeal, the Appellants continued to act in furtherance of the Agreement by
demanding a no-objection from the competent authority and accepting
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communications from the Purchaser indicating readiness and willingness to
proceed with conveyance. These facts, as Mr. Kadam submitted, constituted
clear affirmation of the contract by the Appellants and undermine any
purported grievance based on Bastion’s conduct.
43.15) The argument advanced on readiness and willingness also
stands squarely answered by Mr. Kadam’s submission that Clause 10
imposed no time-bound or promissory obligation. As the learned Single
Judge has observed and we affirm Clause 10 merely permitted the
Appellants to withhold execution of conveyance until clearance was
obtained; it did not create a right to terminate. Once that clearance became
unnecessary in law, no further legal or equitable barrier remained to the
conveyance.
43.16) Accordingly, the parties’ intention as evidenced by the clauses
can be clearly discerned. We therefore concur with Mr. Kadam’s
submissions. It follows that if clearance under the ULC Act was not granted,
the Wadias could forfeit the consideration and deny conveyance, but
Bastion could not compel execution of conveyance.
43.17) In our view, the non-grant of ULC clearance would, at most,
have the effect of inordinately delaying the execution of the conveyance
and, consequently, the Plaintiff’s right to develop the suit property.
43.18) However, a rejection by the ULC authorities could have
resulted in the acquisition of the suit land, thereby frustrating the contract.
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In such an event, Bastion would have lost the entire consideration paid,
without any remedy against the Wadias.
43.19) The object of Clause 10 was to secure the Wadias the full
purchase price irrespective of whether ULC clearance was ultimately
granted. In either scenario, the Wadias stood to benefit–not only by having
received the entire consideration but also, in the event of acquisition, from
any compensation awarded.
43.20) From the purchaser’s perspective, the transaction was
effectively akin to a lottery, where all material risks, including the refusal of
permission, were squarely borne by Bastion.
43.21) We, therefore, concur with the view of the learned Single
Judge that, the grant or refusal of ULC permission had no bearing on the
contractual rights of the Wadias. The contractual arrangement operated to
their advantage inasmuch as, even after receiving the entire consideration,
they could not be compelled to execute the conveyance in the absence of
such permission.
43.22) We further agree with the learned Single Judge that, in clause
10 there was no reciprocal obligation on Bastion that would entitle Wadias
to terminate the contract. It was a defence available to the Wadias who
could deny Bastion the grant of conveyance for want of permission or on
account of rejection in the event Bastion sued Wadias for specific
performance. Thus, Bastion could not claim specific performance on the
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ground that Wadias had a reciprocal obligation to convey the suit property
having received the entire consideration.
43.23) We hold that the Wadias were not entitled to terminate the
Agreement. Having received the full consideration, their essential
remaining obligation was to execute the conveyance. There existed no legal
or contractual basis to justify termination, particularly after the repeal of
the ULC Act. The transaction was neither coerced nor contingent upon any
future event beyond the limited scope of Clause 10.
Whether clause 10 of the Constract is an “Essential” or “Fundamental” term
and whether the learned Single Judge Correctly Interpreted it ?
44) Clause 10’s alleged essentiality has been repeatedly emphasized
by Mr. Seervai. However, we are unable to accept his contention that
failure to obtain clearance under the ULC Act constituted a repudiatory
breach that rendered the contract void or unenforceable. The requirement
to obtain such permission, even if statutory, was not an “essential term” of
the contract, especially when the Wadias had received the entire sale
consideration. The learned Single Judge rightly held that Clause 10 neither
made payment nor conveyance contingent upon obtaining such permission.
44.1) Clause 10 imposed the responsibility of obtaining ULC
permission on the Purchaser and allowed the Vendors to withhold
conveyance in its absence. However, it did not entitle the Vendors to
terminate the Agreement. We adopt Mr. Kadam’s analysis that Clause 10
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was a risk-shifting provision, crafted to shield the Vendors from the risk of
non-clearance, without constituting a promissory condition.
44.2) The clause did not contemplate a mutual obligation or
reciprocal promise, but rather protected the Vendors from a refund
obligation. Once the ULC Act was repealed, the statutory requirement
ceased, and Clause 10 became legally redundant. The Appellants’ reliance
on this clause post-repeal is misconceived.
44.3) The Agreement, construed as a whole, and Clause 10 in
particular, must be interpreted in its commercial context. The learned
Single Judge correctly held that non-fulfilment of Clause 10 had no bearing
on the Vendors’ obligations after repeal. We affirm this view.
44.4) Correctly interpreting the clause, the Single Judge held that
Clause 10 merely offered the Wadias a defence against conveyance in the
absence of ULC clearance, but only so long as the Act remained in force.
Following the repeal of the ULC Act, the basis for that defence ceased to
exist. Thus, the clause could not be treated as a fundamental term, the
breach of which would justify termination.
44.5) The Wadias’ conduct appears opportunistic and dishonest.
Having received full consideration and sold the property on an “as is where
is” basis, they now attempt to renege on the agreement solely to profit from
the repeal of the ULC Act. Their only avenue to do so was by invoking
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Clause 10 to terminate the contract–a step unsupported by the clause’s
actual language or purpose.
44.6) With regard to the caselaw relied upon under these arguments
our comments are stated herein above are summarised as under:
a) The case of Nathulal (supra) is not an authority on either
essential term or statutory requirement and therefore not applicable to this
case.
b) The reliance placed on Transmission Corporation is clearly
misconstrued. The judgement is in favour of the Plaintiff because it holds
that if the contract is capable of interpretation on its plain meaning with
regard to the true intention of the parties it will not be prudent to read
implied terms on the understanding of a party, or by the Court, with regard
to business efficacy.
c) The reliance on V R Sudhakara Rao and others (supra) as well
as Nandkishore Mehta (supra) is entirely misplaced and argued out of
context because obtaining ULC permission was a condition till such time
that the ULC Act was in force but became redundant on repeal.
Whether non-compliance with clause 10 entitled the Wadia’s to terminate
the Contract?
45) We fully agree with the learned Single Judge’s finding that Clause
10 is neither an essential nor material term and does not amount to a
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“promissory condition.” Its non-compliance did not entitle the Wadias to
terminate the contract. Clause 10 does not stipulate that ULC clearance was
a precondition for either payment or conveyance. With full consideration
having already been paid by Bastion, any failure in obtaining such
clearance, if at all, would prejudice Bastion alone. The Wadias, having
suffered no loss, cannot now use Clause 10 to justify repudiation.
45.1) Mr. Seervai’s argument that the ULC clearance remained
mandatory even after repeal is equally untenable. The very foundation of
the suit for specific performance rests on the repeal of the ULC Act,
rendering any such requirement under Clause 10 redundant. The
assumption that Clause 10 was an essential term even after the statutory
repeal is unsustainable.
45.2) The reliance on Anson (Contract, 30th Ed., p.149), which
defines a condition as a promise, does not assist the Appellants. There is no
unfulfilled promise or false representation that would justify repudiation.
Since the Act was repealed, Bastion had no remaining obligation to secure
clearance, and the Wadias, having already received the entire
consideration, cannot refuse to execute the conveyance.
45.3) The essence of the matter is this; the Wadias, having
voluntarily accepted full consideration and agreed to sell the property on an
“as is where is” basis, cannot now deny Bastion conveyance simply because
the ULC Act was repealed and the property value has appreciated. The
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Charity Commissioner’s prior requirement of ULC clearance cannot override
the binding terms of the contract or absolve the vendor of the obligation to
complete the sale.
READINESS AND WILLINGNESS TO PERFORM:
46) The arguments advanced by the learned senior counsel are, with
respect, devoid of substance and appear to have been raised merely for the
sake of argument. The pivotal issue is; what prejudice, if any, would the
Defendants–who have already received full consideration, suffer due to
any alleged failure on the part of the Plaintiff to comply with Clause 10?
We find no nexus between the consideration paid and the obligation to
obtain ULC permission, insofar as the Vendors are concerned. The contract
explicitly permitted the Vendors to withhold conveyance in the absence of
permission, but did not oblige them to refund the consideration–nothing
more and nothing less.
46.1) As rightly held by the learned Single Judge, Clause 10 became
redundant upon the repeal of the ULC Act, especially in light of the fact that
the entire consideration had already been paid. The arguments now sought
to be introduced are irrelevant to the legal and factual matrix of this case.
They are no more than a smokescreen–an attempt to divert the Court from
the real issues through misdirection.
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sbw/sns 1-os-app-289-2015-J.doc 46.2) Mr. Seervai's contention that Bastion was not "ready and
willing” to perform the essential term of the contract, i.e., Clause 10, and
alleged that the learned Single Judge failed to consider this aspect, we are
unable to agree. In Paragraph 15 of the impugned judgment, the learned
Single Judge specifically held that Clause 10 is not an essential term within
the meaning of Section 16(c) of the Specific Relief Act, 1963. The Judge
concluded that the Plaintiff could not be said to have failed to perform an
essential term of the contract “according to its true construction.”
46.3) To place the issue in proper perspective, Section 16(c) of the
Specific Relief Act bars enforcement of specific performance where a
plaintiff fails to prove that they have performed or have always been ready
and willing to perform the essential terms of the contract, other than those
prevented or waived by the defendant. The explanation clarifies that in
contracts involving payment, actual tender or deposit is not required unless
directed by the Court, and readiness must be assessed in light of the true
construction of the contract.
46.4) In the present case, Section 16(c) is not attracted. The ULC Act
stood repealed, and thus the obligation to obtain ULC permission ceased to
exist. Notably, the Wadias never terminated the contract on the ground of
non-compliance with Clause 10 at any time before the repeal.
46.5) Mr. Seervai’s argument is, in our view, a red herring. The
learned Single Judge neither misread Clause 10 nor failed to address
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Bastion’s readiness and willingness. The clause imposed risk only on the
purchaser; it did not create a basis for the vendor to repudiate the contract.
If anything, Clause 10 would be relevant had Bastion sought a refund–not
specific performance. It cannot now be used to justify repudiation,
particularly when the entire consideration has been received by the vendor.
46.6) The learned Single Judge has dealt with these issues
comprehensively in Paragraphs 11 to 15 of the judgment. We find no error
warranting interference.
46.7) The Appellants’ argument that the Plaintiff failed to apply for
clearance is specious. As correctly submitted by Mr. Kadam and affirmed by
the learned Single Judge, Clause 10 imposed no time-bound obligation. The
Plaintiff acted upon the Agreement, paid full consideration, secured security
services, and requested the Vendor to make the necessary applications.
Once the ULC Act was repealed, there remained no legal bar to conveyance.
46.8) The Appellants themselves applied for exemption in October
2006, thereby affirming the contract. Their conduct negates any assertion of
repudiation by the Purchaser. The requirement under Section 16(c) of the
Specific Relief Act stands satisfied.
Whether the Repeal of the ULC Act has any bearing on the sanction granted
by the Charity Commissioner under Section 36 of the Maharashtra Public
Trusts Act, 1950?
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sbw/sns 1-os-app-289-2015-J.doc 47) The next issue pertains to whether the sanction granted by the
Charity Commissioner under Section 36(1) of the Maharashtra Public
Trusts Act, 1950, continues to be valid notwithstanding the repeal of the
Urban Land (Ceiling and Regulation) Act, 1976 (“ULC Act“).
47.1) The allegation that the Charity Commissioner’s sanction stood
vitiated on account of repeal of the ULC Act is also devoid of merit. Mr.
Kadam rightly submitted that the repeal did not alter the parties’
obligations or the legal effect of the sanction. The Charity Commissioner
granted approval to a sale that was fully performed financially by the
Plaintiff and for which no condition precedent of re-sanction upon statutory
repeal was stipulated.
47.2) The learned Single Judge addressed this issue in paragraph 13
of the impugned judgment and rightly rejected the contention that the
sanction had become void. Specifically:
a. He held that the sanction was not rendered invalid merely because
Clause 10 of the contract, requiring ULC clearance, was approved as
part of the sanctioned transaction.
b. He clarified that the sanction was not “specifically premised” on
the procurement of ULC permission but was generally subject to the
applicable laws at the time.
c. Since the law at that time required ULC clearance prior to
conveyance, the obligation then existed. However, with the repeal of
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sbw/sns 1-os-app-289-2015-J.docthe ULC Act, the legal landscape changed, and such clearance was no
longer necessary. Consequently, the general condition of complying
with the applicable law stood satisfied by virtue of the repeal.
47.3) The learned Judge also considered the judgments cited by the
Defendants on this issue in Paragraphs 24 to 28 and correctly distinguished
them.
47.4) The reliance placed on the judgments in N D Constructions
(supra) and Rizvi Builders (supra), T R Thandur (supra) Shantistar Builders
(supra) are misplaced and of no assistance to the Defendants. In N D
Construction‘s (supra) case, the Charity Commissioner’s sanction was
expressly conditional upon completion of the sale within a stipulated period
of one year. In contrast, no such time-bound condition was imposed in the
present case. Accordingly, the judgment has no application to the facts at
hand.
47.5) We find no perversity in the learned Single Judge’s reasoning.
The repeal of the ULC Act did not vitiate or invalidate the Charity
Commissioner’s sanction. On the contrary, the sanction expressly obligated
the Wadias to execute the conveyance and deliver possession upon receipt
of permission, whether under then-existing laws or as modified thereafter.
The approval was not based solely on Clause 10 or the ULC regime, but also
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on considerations such as the property’s encumbrances, competing claims,
and fair market value.
47.6) A subsequent rise in property value or the repeal of the ULC
Act, occurring years later, does not permit the Wadias to renege on their
obligation. They had already received full consideration under a validly
sanctioned transaction. Any benefit arising from a change in law accrues to
the purchaser, not to the vendor who has already been paid in full.
47.7) The argument that the sanction was rendered void upon repeal
of the ULC Act is devoid of merit. The sanction order required compliance
with applicable laws at the time of execution. No clause mandated a fresh
sanction if the ULC Act was repealed. The consideration had already been
paid and accepted; the repeal of the ULC Act imposed no new condition
and created no vitiating circumstance.
What is the effect of the Order passed under Section 8(4) of the Urban Land
Ceiling Act on the Contract?
48) We find no merit in the submission made by the learned senior
counsel regarding the order passed under Section 8(4) of the ULC Act. Such
an order cannot be construed as a final determination or “final rejection” by
the ULC authority. Rather, it represents merely an initial procedural step in
the acquisition process.
48.1) The learned Single Judge has adequately explained–
particularly in paragraphs 20, 23, and 24 of the impugned judgment–that
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the ULC proceedings do not affect the validity or enforceability of the
contract, especially since the Wadias have already received the full
consideration. Their reliance on the 8(4) order is thus wholly misplaced.
48.2) The argument is entirely speculative and legally untenable. It
ignores the statutory appellate and revisional remedies available under
Sections 12, 13, and 33 of the ULC Act, as well as the revisional jurisdiction
conferred upon the State Government under Section 34. In this context,
treating the Section 8(4) order as conclusive is both premature and
contrary to statutory design.
48.3) We also adopt Mr. Kadam’s analysis that, the purported Section
8(4) order passed under the ULC Act could not, in law or equity, constitute
a ground for rescission. As he demonstrated, the said order–ultimately
quashed by a competent authority on 8th April 2009–was, at best, an
interim administrative step. It had no final or determinative bearing on the
rights of the parties under the Agreement. Consequently, the contention
that the learned Single Judge failed to consider or address the implications
of the Section 8(4) Order is irrelevant and without consequence. This
argument appears to be a diversionary tactic aimed at shifting focus from
the substantive issues and misleading the Court.
Whether Discretion to grant specific performance ought to be exercised
under Section 20 of the Specific Refief Ac, 1963?
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sbw/sns 1-os-app-289-2015-J.doc 49) To consider this issue, Section 20 of the Specific Relief Act is extracted below:
“20. Substituted performance of contract.–(1) Without
prejudice to the generality of the provisions contained in the
Indian Contract Act, 1872 (9 of 1872), and, except as
otherwise agreed upon by the parties, where the contract is
broken due to non-performance of promise by any party, the
party who suffers by such breach shall have the option of
substituted performance through a third party or by his own
agency, and, recover the expenses and other costs actually
incurred, spent or suffered by him, from the party committing
such breach.
(2) No substituted performance of contract under sub-section
(1) shall be undertaken unless the party who suffers such
breach has given a notice in writing, of not less than thirty
days, to the party in breach calling upon him to perform the
contract within such time as specified in the notice, and on his
refusal or failure to do so, he may get the same performed by
a third party or by his own agency:
Provided that the party who suffers such breach shall not be
entitled to recover the expenses and costs under sub-section
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sbw/sns 1-os-app-289-2015-J.doc(1) unless he has got the contract performed through a third
party or by his own agency.
(3) Where the party suffering breach of contract has got the
contract performed through a third party or by his own agency
after giving notice under sub-section (1), he shall not be
entitled to claim relief of specific performance against the
party in breach.
(4) Nothing in this section shall prevent the party who has
suffered breach of contract from claiming compensation from
the party in breach.”
49.1) This Section is misapplied to the facts of this case. The plea is
based on the false premise of non-performance of promise. As explained
earlier, we find no non-performance of promise. Assuming for the sake of
argument that there was non-performance the Wadias had not filed a suit
for specific performance against Bastion. The plea of non-performance is
raised only after the ULC Act was repealed.
49.2) It is significant that, at the Plaintiff’s instance, the Defendants
applied on 3rd October 2006 to the Competent Authority under Section 20
of the ULC Act seeking exemption for the surplus land forming part of the
suit properties. Additionally, in Writ Petition No. 114 of 2006 (filed by the
WAMA Group), the Defendants confirmed by affidavit dated 5th October
2006 that although the conveyance had not yet been formally executed, for
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all practical purposes, Bastion had been transferred rights over the land and
was developing it in its own right.
49.3) This is reinforced by the Defendants’ own admission that they
had, in all material respects, transferred their rights in the suit properties to
the Plaintiff, and that only formal execution of the conveyance was pending
due to the need for ULC clearance, which was still applicable at the time.
49.4) Following repeal of the ULC Act by notification dated 6th
December 2007 (effective 29th November 2007), Clause 10 of the Suit
Agreement ceased to have effect. Consequently, the Defendants were bound
to execute conveyance in the Plaintiff’s favour.
49.5) The Plaintiff called upon the Defendants to do so by letter
dated 12th February 2008. In response, by letter dated 30th May 2008, the
Defendants insisted on confirmation from the Competent Authority that
conveyance could be executed without contravening the ULC Act.
49.6) To comply with this demand, the Plaintiff wrote on 5th August
2008 enclosing a copy of the Bombay High Court’s decision in Voltas, which
held that surplus land not acquired prior to repeal would stand released.
Thereafter, by order dated 4th October 2008, the Competent Authority
confirmed that no action under Section 10(5) had been initiated and, as
such, the suit properties were outside the ULC Act‘s purview. The Authority
expressly stated it had no objection to the transfer.
178/190
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sbw/sns 1-os-app-289-2015-J.doc 49.7) The Plaintiff forwarded a copy of this order to the Defendants
on 7th October 2008, asserting that this satisfied the condition imposed in
the Defendants’ 30th May 2008 letter, albeit without conceding that such
approval was necessary in the first place.
49.8) Despite this, by letter dated 25th November 2008, the
Defendants wrongfully refused to execute the conveyance, purported to
terminate the agreement, and sought to forfeit the entire consideration of
₹14 crores. This repudiation was allegedly based on the Plaintiff’s failure to
secure permission–despite the fact that the law had changed and the
Plaintiff had fulfilled all obligations under the Agreement.
49.9) In our view, the Plaintiff remained ready and willing at all
times to perform its obligations under the Suit Agreement and accordingly
sought: i) Specific performance of the Agreement; ii) A declaration of
lawful possession or, alternatively, entitlement to possession;
49.10) Further, as regards Section 20 of the Specific Relief Act, we are
satisfied that the Appellants have not demonstrated any hardship that
would justify denial of specific performance. As Mr. Kadam rightly pointed
out, this is not a case where performance would be inequitable; rather, it is
a case where denial would reward strategic delay and opportunism. The
Appellants accepted the entire consideration at a time when the risks were
fully known and voluntarily shifted to the Purchaser. To deny conveyance
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now, after repeal of the ULC Act and appreciation in market value, would
be to confer an unjust enrichment on the Appellants.
49.11) In view of the above, the reliance on the judgment in K.
Narendra (supra) to contend that severe hardship may constitute a ground
for refusing specific performance is nothing but a disingenuous reversal of
roles, driven by mala fide intent and self-interest. At the cost of repetition, it
was the Plaintiff who willingly assumed the risks and obligations associated
with the transaction by offering and paying a consideration higher than any
other received by the Trust. Now, with property values having appreciated
exponentially following the repeal of the ULC Act, the Defendants raise a
plea of ‘hardship.’ One is left to wonder what conceivable hardship is being
asserted in such circumstances.
49.12) The reliance placed on the judgment in Jayakantham v.
Abhaykumar68 is wholly baseless and unwarranted, as the facts of that case
are entirely distinguishable. In Jayakantham, the agreement to sell was
found, on facts, to be a mere security for a loan advanced by the purchaser
to the vendor. In contrast, the present case involves a voluntary sale
transaction duly sanctioned by the Charity Commissioner. It would
therefore be both mischievous and inequitable to draw any parallel or rely
upon that judgment in the present context.
68 (2017) 5 SCC 178 180/190 ::: Uploaded on - 15/07/2025 ::: Downloaded on - 19/07/2025 03:22:27 ::: sbw/sns 1-os-app-289-2015-J.doc 49.13) Similarly, the reliance placed on the judgment in Nanjappan v.
Ramasamy & Anr.69 is misconstrued and factually distinguishable from the
present case as discussed hereinbelow.
49.14) We therefore concur with the reasoning of the learned Single
Judge and the submissions of Mr. Kadam. The Appellants’ conduct in
seeking to resile from a fully concluded and substantially performed
transaction is devoid of bona fides. The decree for specific performance is
liable to be upheld.
Whether the repeal of the ULC Act, renders the contract different?
50) In this context, in Paragraphs 19 to 29 the Learned Single Judge
discussed judicial discretion and the impact of price escalation. He rightly
held that while such escalation may sometimes justify denial of relief, this is
not such a case. The judgments cited by the Defendant that astronomical
rise in price of land in urban areas is judicially recognized, whilst
considering cases of specific performance. The learned Single Judge noted
that there may well be circumstances, where it may be inequitable to grant
the relief of specific performance. The Learned Single Judge ultimately
rejected Wadias’ contentions, and held that it was a fit case to exercise
discretion on the basis that the Defendants got their full price under the
ULC regime at the time when it was the best available price. The Learned
Single Judge held “Correspondingly, the Plaintiff had paid a competent
69 (2015) 14 SCC 341
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price, and a full price at that, in 2003. The conveyance could not be
effected in its favour despite payment of the entire price only due to ULC
restrictions and pendency of ULC clearance. Now that the ULC restrictions
have been done away with, the conveyance must follow. No doubt, the
doing away of the restrictions has dramatically changed the value of the
land. But if anyone is lawfully entitled to this bonanza, it is the Plaintiff,
who had fully paid a competent price in 2003 and was awaiting a
conveyance on 27 November 2007, when the ULC Act was repealed. ”
50.1) The Wadias argue that the repeal of the ULC Act, eliminated
the need for permission, caused the value of the property to appreciate, and
thus, changed the nature of the contract, disentitling Bastion from relief.
[Appeal Memo / Written Statement / Para 46 @ 304].
50.2) While it is true that post -repeal, no permission is required to
hold excess vacant land, it logically follows that the requirement under
Clause 10 no longer survives. As Bastion complied with the remaining
conditions – payment of full consideration and obtaining the sanction from
the Charity Commissioner – they are entitled to a conveyance.
50.3) In view of the above, the reliance placed on the judgment in
Naihati Jute Mills Ltd. v. Khyaliram Jagannath 70 is similarly misplaced and
inapplicable to the facts of the present case. There is no question of
invoking Section 56 of the Indian Contract Act, as the contract in question
70 (1967) SCC OnLine SC 10
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was neither impossible of performance nor unlawful. On the contrary, the
obligation under the contract became both possible and lawful by reason of
the repeal of the ULC Act.
Whether claiming to be in possession based on permission to carry out
work, or on account of the entire consideration being paid, affects a suit for
specific performance seeking poseession to perfect title?
51) As regards the factual question of whether the Plaintiff was in
possession of the Suit Property or not, the learned Single Judge addressed
the same at Paragraphs 16 to 18 of the Impugned Judgment. The Learned
Single Judge has noted that the Contract makes it clear that possession was
to be given only at the time of execution of the Conveyance. The Learned
Single Judge records that “Besides the extensive oral evidence, which has
stood the test cross-examination, there is voluminous documentary
evidence in support of the Plaintiff’s case of being in physical possession of
the suit properties. There is evidence in the form of … “. The Learned Single
Judge has placed heavy reliance upon the Affidavit dated 05.10.2006 filed
by the Defendant in Writ Petition No. 114 of 2006, holding that this
Affidavit “effectively puts paid to the Defendants’ contention that whatever
the Plaintiff did with respect to the suit properties was under an express
authority taken from the Defendants for the purpose and that such
authority was required because the Plaintiff was not in possession or control
of the suit properties. On the other hand, it supports the Plaintiff’s case that
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these authorizations in favour of the Plaintiff were made at the Plaintiff’s
request, only because the various authorities required official
communications from the formal owners, and that for all practical purposes
the control over the suit properties was exercised by the Plaintiff. Thus, the
possession issue needs to be answered in favour of the Plaintiff. The
Plaintiff was put in effective control and possession of the suit properties
and continues to be so ever since.”
51.1) We are unable to accept the sweeping assertion that the
learned Single Judge’s findings on possession are ex facie perverse or
arbitrary. The issue has been carefully examined in paragraphs 16 to 18 of
the impugned judgment. A fundamental question arises; having received
the entire purchase price, what legitimate basis did the Trust have to retain
possession of the property? Particularly when Bastion had assumed all
liabilities relating to the property, including its protection, it was only
natural and necessary that they also took possession to safeguard their
interest.
51.2) Once the Trust had received full consideration, its obligation to
protect the property ceased. Beyond conferring juridical possession–
enabling Bastion to perfect title through execution of conveyance–there
was nothing further to deliver. The contention to the contrary is merely a
smokescreen designed to mislead and distract the Court.
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sbw/sns 1-os-app-289-2015-J.doc 51.3) There is nothing in the prayers of the plaint, Clause 8 of the
offer document, the Charity Commissioner’s sanction, the contemporaneous
correspondence, or the findings of the Court that support the Defendants’
claim that the Trust remained in possession. What Mr. Seervai was required
to establish, but failed to demonstrate, was that the Trust had a continuing
obligation to maintain or protect the property. On the contrary, Bastion had
taken over those responsibilities upon full payment.
51.4) In the above context, the reliance placed on the judgment in
Padam Singhi (supra) is equally misplaced and contextually irrelevant.
51.5) Similarly, the reliance placed on the judgment in Nanjappan v.
Ramasamy & Anr.71 is misconstrued and factually distinguishable from the
present case. That case involved part payment of consideration, and
accordingly, the issue of the plaintiff’s readiness and willingness to perform
was directly in question. In contrast, in the present case, the entire
consideration has already been paid. The Plaintiff was only required to
obtain ULC permission as a procedural entitlement to execution of the
conveyance. With the repeal of the ULC Act, that requirement ceased to
exist, leaving no surviving obligation. Consequently, the question of
readiness and willingness to perform, as contended, does not arise.
51.6) The prayers in the plaint clearly seek a declaration of lawful
possession by the Plaintiff and, in legal terms, seek juridical possession,
71 (2015) 14 SCC 341
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distinct from mere physical custody. This is consistent with the contract, the
Charity Commissioner’s sanction, and the surrounding correspondence. The
Defendants’ denials on this point are perfunctory and lack substantive
rebuttal. The learned Single Judge has carefully appreciated both oral and
documentary evidence to arrive at a reasoned conclusion; that Bastion was
in physical possession and effective control of the suit property. We find no
error on facts and on law with this conclusion and fully concur with learned
Single Judge in that behalf.
51.7) Bastion’s claim is therefore one for juridical possession,
symbolically rooted in the fact of full payment. No further inquiry is
required. Upon the grant of specific performance, the Wadias are obligated
to formally record delivery of juridical possession, distinct from physical
possession, as required under law.
51.8) The learned Single Judge has correctly held that the Plaintiff
was in effective possession, having secured the land and undertaken works.
The Trust had no residual obligation to protect the land after receiving full
consideration. The Plaintiff’s possession is consistent with the prayers in the
plaint and the overall scheme of the Agreement.
Whether the Suit is not maintainable in view of Section 50 of the
Maharashtra Public Trusts Act, 1950?
52) In Paragraphs 30 to 36, the learned Single Judge considered
whether the suit was barred by Section 50. He concluded that this was a
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suit for private rights and not public trust interests, and hence not governed
by Section 50–just as such claims are not covered under Section 92 of the
CPC.
52.1) The reliance placed on the judgment in Sainath Mandir Trust v.
Vijaya & Ors72. is misplaced and inapplicable to the facts of the present case.
In Sainath Mandir, the plaintiff was not in possession and had instituted a
suit against the Trust, which asserted possession over the suit property. In
contrast, in the present case, the Trust has already sold the property to the
Plaintiff after obtaining sanction from the Charity Commissioner, who
directed the Trust to execute a conveyance upon receipt of consideration
and the necessary permission from the ULC authorities. The payment has
been made in full, and the ULC Act has since been repealed. Therefore, the
question of seeking prior permission of the Charity Commissioner to sue the
Trust for execution of conveyance and delivery of juridical possession
simply does not arise.
52.2) We fully concur with the reasoning and conclusion of the
Learned Single Judge.
FACTUAL ISSUES:
53) We have examined the evidence in detail and find that the
Defendants have failed to disprove the Plaintiff’s physical possession of the
suit property, either through documentary evidence or in the course of
72 (2011) 1 SCC 623
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sbw/sns 1-os-app-289-2015-J.doccross-examination. The legal possession and ownership may be
undisputedly with the Defendants. We therefore concur with the finding of
the learned Single Judge, who rightly identified the sole factual issue as
that of possession, and addressed it in Paragraph 7 in the following terms:”
“7. There is no serious contest between the parties as to
the facts of the case, except perhaps the question of
possession of the suit properties….”
53.1) We agree with Mr. Kadam’s submission that the issue of
possession is not central to the adjudication and is merely incidental to the
principal relief of specific performance of the agreement, as contemplated
under Section 55 of the Transfer of Property Act, 1882. In particular,
Section 55(1)(f) of the Act clearly stipulates that the seller is bound to
deliver possession of the immovable property to the buyer upon completion
of the sale. We also concur with Mr. Kadam’s contention that the Learned
Single Judge did not rely solely on the Affidavit dated 5th October 2006 but
took into account several documents while recording a finding on
possession, as is evident from paragraphs 16 to 18 of the impugned
judgment. In our view, Bastion’s claim is one of juridical possession,
symbolic and legal in nature, arising from full payment of the
consideration. No further deliberation is necessary. Upon the decree of
specific performance, the Wadias are bound to record delivery of juridical
possession, which is distinct from physical possession.
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sbw/sns 1-os-app-289-2015-J.doc CONCLUSION 54) We find that this appeal is a classic instance of luxury litigation
initiated by the Wadias, aimed solely at frustrating and delaying the
Plaintiff’s legitimate rights. Through calculated and prolonged obstruction,
the Defendants have succeeded in depriving Bastion of the conveyance and
juridical possession they are lawfully entitled to. In our considered view,
this proceeding amounts to an elite form of extortion and is a manifest
abuse of the process of law. Such misuse of judicial machinery must be
deterred in the strongest terms.
55) The issues involved were, in fact, straightforward and ought to
have been resolved without delay. Instead, the Defendants’ engaged in a
strategy of manufactured complexity, raising illusory issues where none
existed–all while having accepted the entire sale consideration. Their
conduct was designed solely to obstruct the Plaintiff from enjoying the
fruits of their investment.
56) Ordinarily, we would have imposed exemplary costs upon the
Defendants, who richly deserve to pay the same to the Plaintiff. However, in
order to avoid further controversy and delay, we exercise restraint and
award only a symbolic nominal sum by way of costs.
57) The Appellants’ submissions are devoid of merit. Their conduct in
repudiating a fully performed and legally enforceable agreement is
dishonest, opportunistic, and stands condemned. In view of the foregoing,
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we are of the view that, the impugned judgment of the learned Single
Judge does not require any interference in this Appeal. There is no error
either in law or on facts committed by the learned Single Judge while
passing the impugned Judgment.
57.1) We accordingly uphold the decree of specific performance.
58) We dismiss the Appeal with costs quantified at ₹1 lakh, payable to
the Respondent, Bastion withnin aperiod of four weeks from the date of
uploading of present Judgment on the official website of High Court of
Bombay.
(KAMAL KHATA, J.) (A.S. GADKARI, J.) 59) At this stage, learned Advocate appearing for the Appellants, prays
that, the operation and implementation of the present Judgment be
deferred for a period of eight weeks to enable the said Appellants to test the
correctness of this Judgment before the Hon’ble Supreme Court.
59.1) However, taking into consideration the request of learned Adovcate
for the Appellants, the operation and implementation of the present Order
is stayed for a period of seven weeks from the date of uploading of present
Judgment on the official website of High Court, Mumbai.
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