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2014 SCC OnLine Bom 99 : (2014) 3 Mah LJ 376 : (2014) 2 Bom

CR 693 : (2014) 2 Arb LR 160

In the High Court of Bombay

Relief of Specific Performance : Entitlement of
(O.O.C.J., Bombay)
(BEFORE R.D. DHANUKA, J.)

Heritage Lifestyle and Developers Ltd. …

Petitioners;
Versus
Cool Breeze Co-Operative Housing Society Ltd. and
others … Respondents.
Arbitration Petition No. 600 of 2013
Decided on January 21, 2014

(a) Specific Relief Act (47 of 1963), SS. 16(c) and 20 — Specific
performance of contract — Entitlement of — Execution of MOU for
redevelopment of building — Enforceability — MOU prima facie not concluded
contract between parties — Limited rights granted in favour of petitioner
subject to various permissions, sanctions, NOC's from authorities — At the
most it could be considered as an agreement to enter into an agreement in
future subject to

Page: 377

various contingencies — Such MOU cannot be specifically enforced — Specific

performance of an agreement to enter into an agreement cannot be granted.

(Paras 36 and 37)

(b) Specific Relief Act (47 of 1963), SS. 16(c) and 20 — Specific
performance of contract — Readiness and willingness — Redevelopment of
building — Limited rights given to developer subject to various contingencies
— Evidence showed that prima facie builder is not ready and willing to
perform his part of transaction — Members of society having lost confidence
in developer and in view of no progress made by him, members cannot be
forced to go for redevelopment of property through petitioner-developer —
Held, specific relief cannot granted. 2000 (3) Mh. LJ. 131, (2005) 7 SCC
534 and (1995) 5 SCC 115, Rel.
(Para 47)
(c) Arbitration and Conciliation Act (26 of 1996), S. 9 — Interim relief —
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Grant of — Application filed seeking relief of restraint on society to appoint

new developer for redevelopment of dilapidated property — Balance of
convenience is in favour of housing society — Interim relief restraining
society from appointing new developer cannot be granted.
(Paras 45 and 46)
For petitioner: S.U. Kamdar, Senior Advocate along with Sanjay Jain,
S.A. Oak instructed by Mahesh Menon and Co.
For respondent No. 1: Dr. Birendra B. Saraf along with Ashwin
Shete, Nikhil Wable, Karanadik, Ms. Apoorva Gupta instructed by
Jayakar and Partners
For respondent Nos. 34: Venkatesh Dhond, Senior Advocate along
with Murlidhar instructed by Joy Legal

List of cases referred:

1. Lakdawalla Developers Pvt. Ltd. v. Badal Mittal, (Para 20)

Appeal (L) No. 272 of 2013 decided on 25-6-2013

2. Gurudev Developers v. Kurla Konkan Niwas Co-op. (Paras 21, 50)

Hsg. Society, 2000 (3) Mh. L.J. 131

3. O.N. Bhatnagar v. Rukibai N. Bhavnani, 1982 Mh. (Para 21)

LJ. 484

4. Chheda Housing Development Corporation v. (Para 22)

Babijan Shaikh, 2007 (3) Mh. LJ. 402 : 2007 (2)
Bom. C.R. 587

5. Aniglase Yohannan v. Ramlatha, (2005) 7 SCC 534 (Paras 23, 51)

6. N.P. Thirugnanam v. Dr. R. Jagan Mohan Rao, (Paras 24, 33, 51)
(1995) 5 SCC 115

7. (2013) 1 Arbitration Law Reporter 380 (Para 28)

8. Gopi Gorwani v. Ideal Co-operative Housing (Paras 28, 33, 48)

Limited, Notice of Motion No. 1393 of 2012 in Suit
No. 762 of 2012 decoded on 10-6-2013

9. Shantilal J. Shah v. Jitendra Sanghavi, Appeal (L) (Paras 29, 48)

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No. 82 of 2013 decided on 23-9-2013

10. Trivenibhai v. Lilabhai, AIR 1959 SC 620 (Paras 31, 38)

11. Kollipara Sriramulu v. T. Aswatha Narayana, AIR (Paras 32, 38)

1968 SC 1028

Page: 378

12. Balawantgir Giri through his legal representatives (Para 33)

v. Manasi Construction and Developers, 2007 (1)
Bom. C.R. 212

13. Bharat Thakkar v. Kiran Construction Company, (Para 33)

(2008) 13 SCC 658

JUDGMENT
By this Petition filed under section 9 of the Arbitration and
Conciliation Act, 1996 (hereinafter referred to as the said Act) the
petitioner seeks an injunction restraining the respondent No. 1 from
appointing any other builder/Developer to re-develop the property
described in prayer (a) of the petition. Some of the relevant facts for
the purpose of deciding this petition are as under:
2. The respondent No. 1 is a Co-operative Housing Society. The
respondent Nos. 2 to 33 are members of the respondent No. 1 society.
Respondent No. 34 is impleaded as party-respondent pursuant to an
order dated 9-7-2013 passed by this Court.
3. The respondent No. 1 society wanted to re-develop the property
described in prayer clause (a) of the Petition. The respondent No. 1 is a
lessee of the Maharashtra Housing and Area Development Board
(MHADA) in respect of the said property. On 12-7-2012 the petitioner
submitted a proposal to the first respondent in respect of re-
development of the said property.
4. On 16-7-2012 the respondent No. 1 passed a resolution to cancel
the then existing agreement between Shikara Constructions Pvt. Ltd.
The respondent No. 1 resolved to appoint the petitioner as a Developer
in respect of the said property subject to 8 conditions mentioned
therein and further resolved that a letter of intent be issued in favour of
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the petitioner.
5. On 23-7-2012 the respondent Nos. 2 to 33 discussed and
approved the appointment of the petitioner as a Developer of the said
property by passing a resolution in the meeting held by the respondent
No. 1 society. The respondent No. 1 society conveyed the decision of
the society to the petitioner vide letter dated 21-7-2012. On 27-7-2012
the respondent Nos. 1 to 33 executed a Memorandum of Understanding
and confirmed the appointment of the petitioner as a Developer in
respect of the said property and granted development rights in respect
of the said property on terms and conditions recorded therein. The said
MOU has been signed by respondent Nos. 1 to 33. The said MOU is not
registered. The petitioner paid an amount of Rs. 5,00,000/- to the first
respondent under the said MOU.
6. It is the case of the petitioner that pursuant to the said MOU the
petitioner vide letter dated 10-9-2012, informed the respondent No. 1
society about the steps taken by the petitioner. The petitioner informed
that the petitioner applied to MHADA for demarcation of the said
property to ascertain the correct area of the said property. By the said
letter the petitioner also informed that the petitioner was waiting for
fresh policies of the MHADA as existing policies were not feasible for
development of the said building and the new policies were likely to
come in due course.
7. Vide letter dated 25-2-2013 the petitioner informed the first
respondent that the petitioner had approved the sum of Rs. 25,000/-
for construction of society office in the building of the society and
permitted the society to debit the amount

Page: 379

of Rs. 25,000/- for initial corpus of Rs. 5,00,000/- paid by the

petitioner to the society. By another letter dated 25-2-2013, to the
society petitioner informed the society that the petitioner had applied
for CTS plans, Property Card and Kami Jast Patrak (KJP) with the
approved authorities and the same would be received by the petitioner
tentatively in the second week of March, 2013 and the petitioner would
pay the full price on or before 31-3-2013 subject to the society
approving the plans. The petitioner informed that the petitioner has
sent the tentative plan to Mr. Praful Shahane Project Management
Consultant of the respondent No. 1 society on 16-2-2013 and
requested to finalise the same at an early date to enable the petitioner
to put up before the Municipal Corporation of Greater Mumbai for
approval of their proposal. The society was further informed that it was
the joint decision of the architect of the petitioner and of the society not
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to incorporate the name of the society and that the petitioner may not
get the same benefit of layout of FSI from the MHADA. The petitioner
was assured that the same would be done at a latter stage when the
petitioner would receive intimation from their architect to do so.

8. Vide letter dated 24-3-2013 in response to the letter dated 25-2-

2013 of the petitioner, the society agreed to the tentative plans
submitted by the petitioner to the Project Management Consultant of
the society and requested the petitioner to put up the file to the
MHADA with prior consent of the society after showing the file before
submitting to MHADA and requested to do the same immediately. The
society also placed on record that in so far as CTS record, property card
and Kami Jasta Pratrak are concerned, the petitioner had said that it
would be received in the second week of March, 2013 and requested to
inform the society whether the petitioner had received the same or not
and if not then to inform the status of the same.
9. Vide letter dated 13-4-2013 the petitioner informed the society
that the petitioner had made the file ready for submitting the same to
MHADA along with 2.5 F.S. I. tenements plans subject to the MHADA
and Municipal Corporation approval. A copy of the tentative plans were
enclosed for the record of the society. The petitioner requested the
society to attend the Office of the petitioner immediately with four
committee members along with seals and letter heads of the society to
enable the petitioner to submit to the MHADA on the letter heads of the
society. The society was informed that the proposal was based on
911.62 sq. meters plot area and in future if the petitioner would get the
lay out if any, petitioner would inform the society about the same. The
petitioner alleged that for the said reasons the petitioner had to hold
the procedure of incorporating the name of the society in the property
card mutually decided in the joint meeting with the Architect of the
petitioner and the society on 24-1-2013.
10. It is the case of the petitioner that by a letter dated 14-6-2013
sent by e-mail (received by the petitioner on 17-6-2013) the
respondent society proposed to terminate the MOU dated 27-7-2012
illegally.
11. By a letter dated 18-6-2013 the petitioner through their
Advocates to the respondent No. 1 society invoked clause 25 of the
MOU and appointed Mr. N.R. Jagtap Advocate as the sole Arbitrator and
requested the respondent Nos. 1 to 33 to give consent to the
appointment of Mr. N.R. Jagtap Advocate as the sole arbitrator.

Page: 380
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12. Mr. Kamdar learned senior counsel and Mr. Jain learned counsel
appearing for the petitioner submitted that the respondent No. 1
terminated the Development Agreement in respect of one more
developer before entering into MOU with the petitioner. My attention is
invited to the various clauses of the MOU dated 27-7-2012. It is
submitted that under the said MOU the petitioner had agreed to provide
32 individual alternate permanent accommodation and to enter into
individual agreements after obtaining letter/NOC from the MHADA and
NOC from Municipal Corporation of Greater Mumbai along with IOD,
TDR along with approved plans from the Municipal Corporation of
Greater Mumbai in the name of the society within a period of one year
from the date of execution of the said MOU. Under clause 5(ii) of the
said MOU the petitioner agreed to provide to the members of the
society 32 residential flats as permanent accommodation on ownership
basis each admeasuring 500 sq ft/carpet area and additional 40 sq. ft.
yard behind the two toilets. The petitioner also agreed to pay a sum of
Rs. 16,500/- per month to each of the existing members as
compensation as rent before the members vacating their respective
tenements. It was agreed that if the petitioner fails to complete the
new building within 24 months from the date of Commencement
Certificate the petitioner shall be liable to pay extra rent at the agreed
rent after expiry of 24 months. Under clause 10 of the said MOU, the
petitioner agreed that the petitioner shall be entitled to enter into
agreements with respective purchasers of the flats and other premises
in their own name. Under clause 11, it was agreed that the respondent
No. 1 society will admit such purchasers as members of the society as
per the list forwarded by the developer to the society after obtaining
and handing over the Commencement certificate by the petitioner in
respect of the intended buildings.
13. It is submitted by the learned Senior Counsel that the petitioner
had taken all the steps pursuant to the said MOU. The tentative plans
were approved by the society only on 24-3-3013. It is submitted that
under recital (x) the petitioner had agreed to provide alternate
permanent accommodation agreements and agreed to execute
agreement only after obtaining NOC from the Municipal Corporation of
Greater Mumbai and IOD along with TDR within a period of one year
from the date of execution of the said agreement. It is submitted that
on the date of termination of the agreement time to comply with, the
obligation of the petitioner to execute the individual permanent
alternate accommodation with members of the society had not expired.
It is submitted that the petitioner had already paid Rs. 5,00,000/-
payable under the MOU to the society. The learned senior counsel
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invited my attention to the additional affidavit in reply filed by the

respondent No. 1 society and in particular paras 8 and 9. The learned
Senior Counsel submits that it is the case of the respondent No. 1
society itself that since February, 2013, talks were being held by the
society for the redevelopment of the society falling under Sahakar
Nagar-III. As far as back as on 7-5-2013, 8 societies had addressed a
letter to the MHADA for granting them approval as per Rule 33(5)(2)(c)
(2) for joint redevelopment of the societies. It is submitted that the so
called termination letter was received by the petitioner by email on 17-
6-2013 though it was dated 14-6-2013. It is submitted that the society
had not even passed a resolution for termination of the MOU or to
appoint any other Developer in place of the petitioner.

Page: 381

14. Learned Senior counsel submits that it was predetermined by the

society to terminate the MOU for frivolous reasons as is apparent from
the correspondence into and the averments made in the additional
Affidavit. It is submitted that the respondent No. 1 society has not
taken any further steps pursuant to the so called termination of the
MOU entered into with the petitioner and if the society is allowed to
enter into any further agreement with the respondent No. 34 as alleged
or with any other developer, the rights of the petitioner would be
seriously prejudiced. The learned Senior Counsel pointed out that the
MOU was stamped on 14-6-2013 and was signed on 17-6-2013. The
petitioner has already invoked arbitration agreement. The Arbitral
Tribunal has been already constituted. The petitioner has filed a
statement of claim against the respondent Nos. 1 to 33. It is not in
dispute that respondent No. 34 is not impleaded as party-respondent to
the arbitration proceedings. The learned Senior Counsel thus submits
that the interim measures as prayed by the petitioner shall be granted
otherwise the entire arbitration proceedings filed by the petitioner
would become infructuous and the compensation would not be the
adequate relief.
15. Dr. Saraf learned counsel appearing on behalf of the society and
respondent No. 1 on the other hand submits that the MOU entered into
between the petitioner and respondent Nos. 1 to 33 is in the nature of
an agreement to enter into an agreement and thus no specific
performance of such an agreement can be granted by any Court or by
arbitrator. The learned Senior Counsel invited my attention to clause
(x) of the MOU at page 50 of the petition in which it is recorded that
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the detailed Development agreement, Power of attorney and individual

alternate Agreement would be executed by the Society only after
obtaining NOC from the Municipal Corporation or from Architect. In
clause 11 of the MOU it is recorded that it was necessary to enter into
MOU recording the broad parameters of the said redevelopment upon
execution of detailed Development agreement, Power of attorney and
32 individual alternate accommodation agreements. In clause 3 of the
MOU it is recorded that the society has granted development rights
subject to all necessary permissions/sanctions/NOC by the Corporation
and other statutory authorities and subject to due compliance of
Development Control Regulations within the time stipulated in the said
MOU and subject to the condition that the Development Agreement was
to be executed. Relying upon these clauses of the MOU, Dr. Saraf
learned counsel for respondent Nos. 1 to 33 submitted that the said
MOU cannot be construed as a concluded agreement but is only an
agreement to enter into an agreement and thus no specific performance
of such agreement can be granted. It is submitted that as the specific
performance of such agreement cannot be granted, interim measures
which is in aid of final reliefs cannot be granted. In the alternate to the
first submission made aforesaid, it is submitted that in the event this
Court coming to the conclusion that any interest is created under the
said MOU in favour of the petitioner by the society, and/or its members,
it shall be impounded under the provisions of Maharashtra Stamp duty
Act as the said agreement is not sufficiently stamped and such
document would be inadmissible in evidence even at this stage in this
petition filed under section 9 of the

Page: 382

Arbitration and Conciliation Act, 1996 and no reliefs can be granted

based on such insufficiently stamped document.

16. Dr. Saraf learned counsel then submitted that the said MOU does
not confer any right, in favour of the petitioner. The ownership of the
land would remain with the society. The petitioner was not required to
get any consideration for sale of the flats to the society and would have
been compensated for the costs of construction to be incurred as
against sale of some of the flats to flat purchasers who would have
become members of the society.
17. It is submitted that respondent No. 34 who is not a party to the
arbitration agreement and has been rightly not impleaded as party in
the claim filed before the learned arbitrator by the petitioner and thus
no reliefs can be granted against respondent No. 34 in these
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proceedings though the respondent No. 34 had applied for its

impleadment and this Court has permitted such impleadment. It is
submitted that MHADA is the owner of the land. The learned counsel
submits that though the petitioner had agreed to get the name of the
society entered into the property card and other title documents the
petitioner did not take any steps in spite of repeated demands. The
learned counsel invited my attention to letter dated 10-9-2012 from
the petitioner to the society and submits that even at that stage the
petitioner was waiting for the fresh policies of MHADA as according to
the petitioner the existing policies of MHADA was not feasible for
development of existing buildings and new policies were likely to be
announced in due course. It is submitted that this letter would itself
indicate that the petitioner was not ready and willing to comply with
their obligations under the said MOU even if this Court comes to the
conclusion the same was an agreement.
18. Dr. Saraf learned Counsel pointed out that the society vide letter
dated 24-3-2013 had reminded the petitioner to take appropriate steps
regarding CTS records and the petitioner had agreed to be do so in the
second week of March, 2013 but no steps were taken by the petitioner.
The petitioner also did not inform the respondent No. 1 about the
status of the CTS plan, property card/Kami Jast Patrak. It is submitted
that though the petitioner replied to the said letter vide letter dated 13-
4-2013 the petitioner did not deal with the requisition made by the
respondent No. 1 society regarding CTS plan, property card, Kami Jast
Patrak (KJP). The learned counsel invited my attention to the
photographs annexed to the affidavit in reply and would submit that
the condition of the building are deteriorated and required re-
development at the earliest. The petitioner had paid only Rs. 5,00,000/
- and seeks to block the entire property of respondent No. 1 society by
filing this frivolous proceeding. It is submitted that since there was no
progress done by the petitioner, respondent No. 1 was justified in
terminating the MOU. Substantial members of the society passed a
resolution to terminate the MOU and to enter into a development
agreement with another developer. It is submitted by the learned
counsel for the society that 8 societies falling under Sahakar Nagar-III
CTS NO. 51 made an application to MHADA for a comprehensive
integrated self re-development project of their societies. In February,
2013 M/s. Godrej Properties came into picture and 8 societies came
together and unanimously resolved to present 2009 application to
MHADA for joint development of all 8 societies. The respondent No. 1
society participated in

Page: 383
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the said discussions in the hope of extensive redevelopment coupled

with the fact that the petitioner was taking no concrete steps to
redevelop the plots.

19. On 7-5-2013 all the eight societies through the Project

Management consultant addressed a letter to MHADA for granting their
approval of premium policy scheme as per clause 33(5)(2)(c)(ii) for
joint development of societies. MHADA by offer letter dated 21-5-2013
granted permissible FSI of 2.5 to the respondent No. 1 society. Similar
offer letter has also been issued to other 7 societies. It is submitted
that by virtue of the said offer letters to the 8 societies, the
redevelopment work is in the process. It is submitted by the learned
counsel that any injunction order is passed by this Court it would affect
not only the respondent Nos. 1 to 34 but also the rights of more than
200 members of other 7 societies also as those societies cannot go
ahead with the joint redevelopment in the absence of the respondent
No. 1 society.
20. Dr. Saraf learned counsel appearing for the society placed
reliance on the Judgment of this Court delivered by the Division Bench
on 25-6-2013 in Appeal (L) No. 272 of 201 in case of Lakdawalla
Developers Pvt. Ltd. v. Badal Mittal, in support oi his submissions that if
the MOU is insufficiently stamped, the said issue has to be decided by
the Court while hearing the application under section 9 of the
Arbitration and Conciliation Act, 1996 by the learned Judge when the
documents came before the Court in the course of proceedings under
section 9. The Division Bench of this Court considered the provisions of
section 33(1) of Bombay Stamp Act and in particular Article 5(g-a) of
the Schedule to stamp duty payable on the agreement or the MOU
where it relates to the Promoter/Developer for construction or
development of sale or transfer of immovable property. This Court
passed an order impounding the MOU and directed the Office to forward
the said MOU to the Collector of stamps for adjudication of stamp duty
and penalty. Dr. Saraf further submitted that this submission of the
society is alternate submission and only in the event this Court coming
to the conclusion that any right is created in favour of the petitioner
under the said MOU, the said MOU is required to be stamped before the
same can be considered by this Court. In these proceedings filed under
section 9 of the Arbitration Act. Paras 3 to 6 of the said Judgment read
thus:
3. On behalf of the respondent it has been submitted that the
MOU dated 29th July, 2011 contemplates in clause 15 that parties
would enter into a final agreement with respect to development
and construction of the rehabilitation and free sale building for
each part of each phase of the property. Hence, it has been urged
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by the learned counsel for the respondents that the stamp duty
would be payable only on the execution of the final agreement for
each phase.
4. The agreement between the parties which is contained in the
MOU dated 29th July, 2011 prima facie does contemplate that the
respondents will finance the construction of and construct the
rehabilitation and free sale buildings on the property in question.
In consideration thereof, clause 4 stipulates that the Appellant
would hand over to the respondents a certain proportion of the
constructed area of the free sale buildings. Clause 6 required the
respondents to pay sum of Rs. 1.50 crores to the Appellant to
enable the Appellant to finance transit

Page: 384

accommodation for the slum dwellers which was payable every month
on and from 1st April, 2011 till the completion of the development of
the entire property. In the event of defaults on the part of the
respondents in making the said payment the Appellant was required to
repay the entire amount received and the cost of construction incurred
by the respondents on the property till the date of default. Clause I of
the MOU cast specific obligations on the respondents to construct the
rehabilitation and free sale buildings work being required to be
commenced after requisite permissions were received. The construction
was required to be completed within 36 months after receipt of
requisite permission for each building.

5. The objection in regard to the document being insufficiently

stamped ought to have considered by the learned single Judge
when the document came before the Court in the course of the
proceedings under section 9. A consideration of the issue could
not have been deferred to the arbitration proceedings having
regard to the provisions of section 13(1) of the Bombay Stamp
Act, 1958. Article 5(ga) of the Schedule relates to the stamp duty
payable on an agreement or MOU where it relates to giving
authority of power to a promoter or a developer by whatever name
called for construction on development of or sale or transfer (in
any manner whatsoever) of any immovable property. Prima facie
the document would require stamping and has been insufficiently
stamped having regard to the provisions of Article 5(ga) of the
Schedule to the Bombay Stamp Act. 1958.
6. In the circumstances, we pass the following order:
(i) The MOU dated 29th July 2011 (Exhibit D) is impounded. An
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authenticated copy of the MOU shall be forwarded by the

Prothonotary and Senior Master to the Collector of Stamps,
Mumbai Suburban District for adjudication of the stamp duty and
penalty if any payable on the document under the provisions of
the Bombay Stamp Act, 1958.
(ii) The Collector of Stamps, Mumbai Suburban District shall
expedite the determination in terms of clause (i) above and
complete the exercise within a period of four weeks of the receipt
of a duly authenticated copy of this order from the Prothonotary
and senior Master.
(iii) Pending further orders, the direction contained in the impugned
order of the learned single Judge dated 29 April, 2013 shall
remain stayed.
(iv) The further hearing of the appeal shall stand over to 19th
August, 2013.
21. Dr. Saraf learned Counsel placed reliance on the judgment of
this Court in the case Gurudev Developers v. Kurla Konkan Niwas Co-
op. Hsg. Society, 2000 (3) Mh. LJ. 131 in support of his submissions
that no specific performance can be granted by this Court in respect of
the Development Agreement. Reliance is placed on paras 5, 6 and 7 of
the said judgment. Relevant portion of the said paragraphs reads thus:

Page: 385

The counsel has further relied on 1982 Mh. LJ. 484, O.N. Bhatnagar
v. Rukibai N. Bhavnani In this case the Supreme Court has held on
page 495 para 17 as follows:
“17. In Deccan Merchants Co-operative Bank Ltd. v. Dalichand
Jugraj Jain, this Court had occasion to construe the meaning of the
expression touching the business of a society occurring in section 91
(1) of the Act. It was observed that the answer depends on the
words used in the Act and that the non obstante clause clearly ousts
the jurisdiction of Civil Courts if the dispute falls squarely within the
ambit of section 91(1) of the Act. The Court then went to enumerate
five kinds of disputes mentioned in section 91(1) first disputes
touching the constitution of a society secondly disputes touching
election of the office bearers of a society, thirdly dispute touching
the conduct of general meetings of a society, fourthly disputes
touching the management of a society and fifthly dispute touching
the business of a society. In the context, it was said (at p. 495).
“It is clear that the word ‘business’ in this context does not
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mean affairs of a society because election of office bearers

conduct of general meetings and management of a society
would be treated as affairs of a society. In this sub-section the
word ‘business’ has been used in a narrower sense and it
means the actual trading or commercial or other similar
business activity of the society which the society is authorised
to enter into under the Act and the Rules and its bye-laws.”
In regard to the question whether dispute touching the
assets of a society would be dispute touching the business of
the society, it was observed:
“Ordinarily, if a society owns buildings and lets out parts of
building which it does not require for its own purpose it cannot
be said that letting out of those parts is a part of the business
of the society. But it may be that it is the business of a society
to construct and buy houses and let them out to its members.
In that case letting out property may be part of its business”.
In my view, the observations made in the aforesaid judgments
make it clear that the suit filed by the plaintiff would not be
maintainable of the ground that the requisite notice as required
under section 164 of the Maharashtra Co-operative Societies Act
has not been served. Counsel has further submitted that even if
the suit is said to be maintainable yet no relief can be granted to
the plaintiff in the suit as the agreement dated 18th January,
1985 is merely development agreement and the same cannot be
specifically performed. Learned counsel has relied on a judgment
given in Notice of Motion No. 2716 of 1987 in Suit No. 2673 of
1987. A. Nihalani v. Mr. Wilfred D'Souza In that Notice of motion
this Court had the occasion to consider the nature of the
agreement as to whether the same was simply a development
agreement or an agreement for sale. Therein the agreement
contemplated a payment of Rs. 2,85,000/- to the owners i/b
defendant Nos. 1 and 2. It permitted the

Page: 386

plaintiff to develop the property and construct the building in which of

flats were to be sold on ownership basis as per the requirements and
guidelines of the lessors of the land viz Salset Catholic Co-operative
Housing Society Ltd. The agreement envisages that within a period of
18 months the developer should provide to the owners and tenants a
temporary alternative accommodation and that the owners should also
remove the person who is occupying the garage. When disputes had
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arisen the agreement was cancelled and the reserved rights in favour of
the plaintiff to develop the property had been withdrawn. The
defendants in fact after terminating the agreement entered into another
agreement with another developer for the purpose of developing the
property. It was argued on behalf of the society that having regard to
the provisions of section 14 of the Specific Relief Act, 1963 such an
agreement cannot be specifically enforced. This view was prima facie
accepted. It was held:

“The facts show that the plaintiff was not in a position to

develop within the period contemplated under the agreement.
It was not an agreement to sell. The plaintiff was to develop
and sell flats may be to Christians and earn his profit.
Therefore, in such a case if the agreement was put an end to,
at the highest the remedy of the plaintiff could be by way of
damages and there is no question of specific performance of
this contract.”
It may be noted that the agreement therein was very similar
to the agreement in the present case. Therefore, I am prima
facie of the view that no suit for specific performance would lie
in such circumstances.
6. Counsel for the defendant has brought to my notice
another judgment of this Court in which the same view has
been reiterated (Given in Notice of Motion No. 76 of 1987 in
Suit No. 3419 of 1986). Therein again a similar view has been
taken and held that such a development agreement cannot be
said to be an agreement to sell nor an agreement to lease. It
has been held that it is simply an agreement to develop the
property belonging to defendants on certain terms and
conditions. Thus suit has been held that such an agreement
cannot be specifically enforced. This judgment of the learned
Single Judge has been upheld in Appeal being Appeal No. 285
of 1988 decided on 7th March, 1988. The Division Bench has
observes as follows:
“7. In essence the suit agreement is a development agreement
where the aim of the professional builder/contractor (appellant)
is to make a profit by completing building and selling the flats
at a profit. A breach of such an agreement can be compensated
by way of damages. Merely because a temple and a guest
house of devotees were also to be constructed within the plot
makes no difference to the essence of the development
agreement. While we applaud the pious zest of the professional
builder contractor in seeking to ameliorate the spirits and
material comforts of the devotees the essence of the contract
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still remains a building contract entered into with the aim of

making profits by the expedient of constructing the building
and selling the flats at a profit. We agree with the learned

Page: 387

single Judge that damages for breach of such a contract would be the
adequate remedy.

Appeal dismissed.”
The Division Bench Judgment has been followed by a single
Judge bench in Notice of Motion No. 763 of 1989 in Suit No.
844 of 1989 on February 8, 1991. Therein also the parties were
entered into an agreement which was very similar to the
agreement in the present suit. The learned Judge after
considering the characteristics of the agreement has held:
“The plaintiffs are professional builders/contractors and their
claim in entering into the suit agreement was to make profit by
completing building and selling the flats therein. Breach of
such an agreement can be compensated by way of damages.
No interest in land has been created by the defendants in
favour of the plaintiff ‘s under the said agreement.”
Argument of the counsel is that an interest in the land had
been created by the defendants in favour of the plaintiffs
because the defendants had under the agreement agreed to
sell to the plaintiffs the entire second floor of the building to be
constructed and one shop also was rejected. The learned Judge
held:
“I am afraid it is not possible to accept this contention. It is
correct that under this clause the defendants have agreed to
give and allot to the plaintiffs the premises mentioned in sub-
clauses (a) and (b) thereof. However, this is nothing but due to
remunerating the plaintiffs for the services of construction of
the building which the plaintiffs have agreed to render to the
defendants under the said agreement.”
Relying on the aforesaid Division Bench judgment the
learned Judge has further held:
“I am supported in my view to the effect that the suit for
specific performance of development agreement is not
maintainable by an unreported judgment of the Division Bench
of this Court in Appeal No. 285 of 1988 in Notice of Motion No.
76 of 1987 in Suit No. 3419 of 1996 being the judgment of
Lentin and Sujata Manohar dated 7th March, 1988.”
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7. In this view of the matter, I have no manner of doubt in

holding that prima facie an agreement such as the one which is
the subject-matter of the present suit cannot be specifically
enforced. However, counsel for the plaintiffs has brought to my
notice the decision given in Notice of Motion No. 2475 of 1993 in
Suit No. 3872 of 1993 dated 24th October, 1996. In that case
there was an agreement dated 30th November, 1990 wherein the
defendants had agreed to assign to the plaintiffs the development
rights for developing the suit property. The plaintiffs were to
develop the suit property. The defendants wanted to back out of
the agreement and therefore suit for specific performance was
filed. A perusal of paragraph 11 of the Judgment would show that
the case put forward by the defendants therein was that there
was no concluded

Page: 388

agreement as such no specific performance could be granted. In

paragraph 12 of the judgment the argument of the defendant to the
effect that the agreement is merely a development agreement and
therefore, the same cannot be specifically performed was noticed. A
perusal of paragraph 14 shows that the Court came to the conclusion
that there is no termination of the agreement by the defendant. In
paragraph 16 it is observed that a reading of the agreement clearly
shows that the first defendant has in fact assigned the development
rights of the said property in favour of the plaintiff. The agreement says
that the authority and the arrangement as arrived at between the
plaintiff and defendant is irrevocable. It was therefore be served that
the defendant therein had entered into an agreement with the plaintiff
who had taken various steps in accordance with that in pursuance of
the said agreement. The plaintiffs were always ready and willing to
perform their part of the contract. As a consequence of this nothing was
pointed out on behalf of the first defendant which would disentitle the
plaintiffs from the relief on equitable consideration. Thus it was held
that the plaintiff had a prima facie case. The defendant therein was
held singularly responsible for not complying with this part of the
contract. A perusal of the said authority however shows that none of
the authorities mentioned above which had been pointed out by the
learned counsel for the defendants in this case were pointed to the
learned single Judge. This Court is bound by the decision given by the
aforesaid Division Bench.

22. Dr. Saraf learned counsel placed reliance on the Division Bench
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Judgment of this Court in case of Chheda Housing Development

Corporation v. Babijan Shaikh, 2007 (3) Mh. LJ. 402 : 2007 (2) Bom.
C.R. 587 and in particular paras 12, 13 and 14 in support of his
submissions that since no NOC is granted in favour of the petitioner
and no consideration is paid by the society to the Developer and the
Developer having been allowed to sell the flats to the purchasers, such
agreement cannot be specifically performed. Paras 12 to 14 of the said
Judgment reads thus:
12. On the other hand, on behalf of the respondents their learned
counsel relied on the unreported Judgment in the case of Asso
Rihalani v. Mr. Wilfred D'Souza dated 18th January, 1988 and the
order in Notice of Motion No. 76 of 1987 in Suit No. 3419 of 1986
and the Appeal from the Appellate Bench and the judgment in the
case of Lokhandwala Estates v. Development Company Ltd. v.
Goregaon Siddarth Nagar Sahakari Griha Nirman Sanstha Ltd.
dated 27th September, 1996 and the judgment in Gurudev
Developers v. Kurla Konkan Niwas Cooperative Housing Society,
1999 (supp) Bom. C.R. 257 and another judgment in The Peerless
General Finance and Investment Co. Ltd. v. Swan Mills Limited,
2000 (1) Bom. C.R. 48 to contend that a development agreement
cannot be enforced. All these Judgments on the facts of those
cases, have taken a view that a development agreement cannot
be specifically enforced. Reliance is also placed in the case of
Union Construction Co. (Private) Ltd. v. Chief Engineer Eastern
Command, Lucknow In that case the issue was whether a building
or engineering contract could be specifically performed

Page: 389

considering section 12(c) of the Specific Relief Act. The Court held that
compensation in money would be adequate remedy. What was in
consideration was the Explanation to section 10. The High Court was
dealing with a Second Appeal and not a matter arising from an interim
relief. Section 10 provides that specific performance of a contract of
immovable property should normally be granted as a Rule. However,
the explanation sets out that specific performance need not be granted
if the contrary is proved, meaning thereby that compensation in money
is adequate. In other words, in a case of transfer of immovable
property, the normal rule is that if there is a breach of contract to
transfer the immovable property, the normal rule is that if there is a
breach of contract to transfer the immovable property that cannot be
adequately relieved by compensation in money unless the contrary is
proved.
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13. In our opinion from a conspectus of these judgments, what

is relevant would be the facts of each case and the agreement
under consideration. Agreements considering what is discussed,
amongst others, could be:
(a) An Agreement only entrusting construction work to a party for
consideration;
(b) An Agreement for entrusting the work of development to a party
with added rights to sell the constructed portion to flat
purchasers, who would be forming a Co-operative Housing Society
to which society, the owner of the land, is obliged to convey the
constructed portion as also the land beneath construction on
account of statutory requirements.
(c) A normal agreement for sale of an immovable property.
An Agreement of the first type normally is not enforceable as
compensation in money is an adequate remedy. An Agreement of
the third type would normally be specifically enforceable unless
the contrary is proved. A mere agreement for development, which
creates no interest in the land would not be specifically enforced.
We are however dealing with a case of the second type. Courts
for construing such a contract in this State will have to take into
consideration, the Maharashtra Ownership Hats (Regulation of the
Promotion of Construction, Sale, Management and Transfer) Act,
1963 (hereinafter referred to as the Act, 1963 apart from the
Specific Relief Act. Under that Act, a local Act, there is an
obligation cast on the owners of the land to convey not only the
constructed portion but also his interest in the land beneath the
construction. Under the Act an owner of the land who causes the
construction to be put up becomes the promoter. Such
construction can be put up by a developer or builder, who in turn
sells the constructed portions to various persons by entering into
Agreements. These provisions, in our opinion would be relevant in
determining the true character of the document. Can such a
contract be specifically enforced. Let us, therefore, consider some
of the arguments advanced by the respondents to contend that
the agreement is a development agreement. Reliance was placed
by the 10th respondent on

Page: 390

Clause 6 of the Agreement to contend that no specific performance can

be claimed and that payment of interest is sufficient remedy. In our
opinion, such a contention is misplaced. The Clause, correctly construed
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prima facie would be a clause for liquidated damages in addition to

specific performance. The other contention is that, considering the
agreement was stamped and stamp duty paid as a Development
Agreement and it must be so held. In our opinion, mere payment of
stamp duty on an instrument will not change or alter the nature of the
Agreement. The Agreement will have to be read considering its terms.
Reliance is placed on the Judgment in Godhra Electricity Co. Ltd. v.
State of Gujarat, 1975 (2) SCR 42. The ratio of that judgment is that in
a case of an ambiguous instrument, there is no reason why subsequent
interpreting statement should be inadmissible and that extrinsic
evidence to determine the effect of an instrument is permissible where
there remains a doubt as to its true meaning and evidence of the acts
done under it, is a guide to the intention of the parties, particularly,
when acts are done shortly after the date of the instrument. In our
opinion the learned Single Judge has construed the various terms of the
agreement and the other material on record and at the prima facie
stage has come to the conclusion that the Agreement can be
specifically performed. An Appellate Court, more so a Court considering
an interim order which involves exercise of discretion normally will not
interfere with the finding of fact recorded by the trial Court and the
exercise of discretion unless the finding is perverse. Nothing has been
brought on record to hold that the findings are perverse. The document
on the face of it, cannot be an agreement for security. It can only be
construed as an Agreement to sell or a development agreement. In our
opinion in this case, the finding recorded by the learned Single Judge
was a finding eminently possible on the material on record. We are,
therefore, clearly of the opinion that the Agreement prima facie is an
agreement which can be specifically enforced and consequently the
Appellants have made out a prima facie case. The other predicates for
grant of an injunction will be answered in the discussion that follows.

14. We then come to the issue of the clarification to the order

issued by the learned Single Judge. The crux of the issue is,
whether after having come to the conclusion that the Agreement
could be specifically enforced, the learned single Judge could have
insofar as FSI/TDR clarified the earlier part of the order. It is no
doubt true that the clause in the Agreement provides that the
Appellants will purchase from the owners the right to F.S. I. in
respect of an area of 2,00,000 sq. ft. area to be used and utilised
by construction of the buildings free from all encumbrances and
as available on the property being part of Plot No. C-2 shown
shaded in green colour on plan “B” by use of the FSI available in
respect of Plot No. C-2 and potentiality of benefit of TDR by
whatever name called as generated or to be generated and
created by owners from and out of other portion of the entire
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property being subject to

Page: 391

reservations of D.P. Road, P.G., etc., and/or to be acquired by purchase

of Slum TDR, by the owners at their costs from the open market, free
from all encumbrances claims and demands at or for the consideration
of Rs. 500/- per sq. ft. (Built up area). From this, what emerges is
firstly that the FSI available from the suit land on which the buildings
are being put up can be used and balance to be supplied from the
remaining property or to be supplied by purchase of Slum TDR. The
expression TDR, is Transfer of Development Right. This enables the FSI
to be used on any other plot of land which is generated from some
other plot and can be used in terms of the D.C. Regulation in force.

23. Dr. Saraf placed reliance on the Judgment of the Supreme Court
in case of Aniglase Yohannan v. Ramlatha, (2005) 7 SCC 534 and in
particular paras 9 and 12 in support of his submissions that conduct of
the parties seeking specific performance has to be unblemished all
throughout to make him entitled to the grant of specific reliefs. It is
submitted that in this connection the petitioner had not taken any
steps except payment of Rs. 5,00,000/- and thus would not be entitled
to seek specific performance and thus no reliefs shall be granted by this
Court in favour of the petitioner. Paras 9 and 12 of the said Judgment
reads thus:
9. “The requirements to be fulfilled for bringing in compliance of
the section 16(c) of the Act have been delineated by this Court in
several judgments. Before dealing with the various judgments it
is necessary to set out the factual position. The agreement for sale
was executed on 15-2-1978 and the period during which the sale
was to be completed was indicated to be six months.
Undisputedly, immediately after the expiry of the six months
period lawyer's notice was given calling upon the present
appellant to execute the sale deed. It is also averred in the plaint
that the plaintiff met the defendant several times and requested
him to execute the sale deed. On finding inaction in his part, the
suit was filed in September, 1978. This factual position has been
highlighted in the plaint itself. Learned Single Judge after noticing
the factual position as reflected in the averments in the plaint
came to hold that the plaint contains essential facts which lead to
inference to plaintiffs readiness and willingness. Para 3 of the
plaint indicates that the plaintiff was always ready to get the sale
deed prepared after paying necessary consideration. In para 4 of
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the plaint reference has been made to the lawyer's notice calling
upon the defendant to execute the sale deed. In the said
paragraph it has also been described as to how after the lawyer's
notice was issued plaintiff met the defendant. In para 5 it is
averred that defendant is bound to execute the sale deed on
receiving the balance amount and the plaintiff was entitled to get
the document executed by the defendant. It is also not in dispute
that the balance amount of the agreed consideration was
deposited in Court simultaneously to the filing of the suit. While
examining the requirement of section 16(c) this Court in Syed
Dastagir v. T.R. Gopalakrishna Setty noted as follows: (SCC p.
341. para 9)

Page: 392

“9. So the whole gamut of the issue raised is, how to construe a
plea specially with reference to section 16(c) and what are the
obligations which the plaintiff has to comply with in reference to his
plea and whether the plea of the plaintiff could not be construed to
conform to the requirement of the aforesaid section, or does this
section require specific words to be pleaded that he has performed or
has always been ready and is willing to perform his part of the
contract. In construing a plea in any pleading, Courts must keep in
mind that a plea is not an expression of art and science but an
expression through words to place fact and law of one's case for a
relief. Such an expression may be pointed, precise, sometimes vague
but still it could be gathered what he wants to convey through only
by reading the whole pleading, depending on the person drafting a
plea. In India most of the pleas are drafted by counsel hence the
aforesaid difference of pleas which inevitably differ from one to the
other. Thus, to gather true spirit behind a plea it should be read as a
whole. This does not distract one from performing his obligations as
required under a statute. But to test whether he has performed his
obligations, one has to see the pith and substance of a plea. Where a
statute requires any fact to be pleaded then that has to be pleaded
may be in any form. The same plea may be stated by different
persons through different words; then how could it be constricted to
be only in any particular nomenclature or word. Unless a statute
specifically requires a plea to be in any particular form, it can be in
any form. No specific phraseology or language is required to take
such a plea. The language in section 16(c) does not require any
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specific phraseology but only that the plaintiff must aver that he has
performed or has always been and is willing to perform his part of
the contract. So the compliance of “readiness and willingness” has to
be in spirit and substance and not in letter and form. So to insist for
a mechanical production of the exact words of a statute is to insist
for the form rather than the essence. So the absence of form cannot
dissolve an essence if already pleaded.”
12. The basic principle behind section 16(c) read with
Explanation (ii) is that any person seeking benefit of the specific
performance of contract must manifest that his conduct has been
blemishless throughout entitling him to the specific relief. The
provision imposes a personal bar. The Court is to grant relief on
the basis of the conduct of the person seeking relief. If the
pleadings manifest that the conduct of the plaintiff entitles him to
get the relief on perusal of the plaint he should not be denied the
relief.”
24. Dr. Saraf learned counsel placed reliance on the Judgment of the
Supreme Court in the case of N.P. Thirugnanam v. Dr. R. Jagan Mohan
Rao, reported in (1995) 5 SCC 115 and in particular para 5 in support
of his submissions that remedy for specific performance is an equitable
remedy and party who seeks specific performance has to show that he
was always been ready

Page: 393

and willing to perform his obligations all throughout. Para 5 of the said
Judgment reads thus:

5. It is settled law that remedy for specific performance is an

equitable remedy and is in the discretion of the Court which
discretion requires to be exercised according to settled principles
of law and not arbitrarily as enumbrated under section 20 of the
Specific Relief Act, 1963 (for short “the Act”). Under section 20,
the Court is not bound to grant the relief just because there was a
valid agreement of sale. Section 16(c) of the Act envisage that
plaintiff must plead and prove that he had performed or has
always been ready and willing to perform the essential terms of
the contract which are to be performed by him other than those
terms the performance of which has been prevented or waived by
the defendant. The continuous readiness and willingness on the
part of the plaintiff is a condition precedent to grant the relief of
specific performance. This circumstance is material and relevant
and is required to be considered by the Court while granting or
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refusing to grant the relief. If the plaintiff fails to prove the same
he must fail. To adjudge whether the plaintiff is ready and willing
to perform his part of the contract the Court must take into
consideration the conduct of the plaintiff prior and subsequent to
the filing of the suit along with other attending circumstances.
The amount of consideration which has to pay to the defendant
must of necessity be proved to be available. Right from the date
of the execution will date of the decree he must prove that he is
ready and has always been willing to perform his part of the
contract. As stated the factum of his readiness and willingness to
perform his part of the contract is to be adjudged with reference
to the conduct of the party and the attending circumstances. The
Court may infer from the facts and circumstances whether the
plaintiff was ready and was always ready and willing to perform
his part of the contract.
25. It is submitted by Dr. Saraf that on 10-6-2013 the society had
passed a resolution which was attended by 30 members out of 32
members. Another meeting of the society was held on 16-6-2013 in
which it was resolved to enter into development agreement with
another developer. That resolution was passed by 25 members out of
32 members of the society. It is submitted that the members of the
society acts and speaks through the society. The society has already
pursuant to the resolution passed by the majority of members
terminated the MOU and thus separate termination letter from the
members was not required. The learned counsel submitted that thus no
case is made out by the petitioner for grant of any interim measures.
The MOU has been terminated as far back as on 14-6-2013. The
petitioner has already invoked Arbitration clause recorded in the MOU.
The Arbitral tribunal is already constituted. The petitioner has already
filed the statement of claim.
26. Dr. Saraf, learned counsel appearing for the respondent No. 1
submits that MHADA by its offer letter dated 21st May, 2013, MHADA
considered the request of the eight societies including respondent No. 1
for allotment of balance built up area in the proposed redevelopment of
eight builders under revised D.C. Regulations 33(5) on various terms
and conditions. On 10th November, 2013 in

Page: 394

the special general meeting of the 1st respondent society was held in
which all the members present in the said meeting voted in favour of
selecting M/s. Acme Properties Developer Pvt. Ltd. and respondent No.
1 society decided to re-verify and confirm the decision taken by the
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society on 16th June, 2013 and passed a resolution to select a common

developer to join eight societies, in presence of authorised officer of the
Deputy Registrar and voted in favour of M/s. Acme Properties Developer
Pvt. Ltd. as developer for redevelopment of eight participating societies.

27. On 16th December, 2013, respondent No. 1. M/s. Sahakar Nagar

Happy Home Co-operative Housing Society Limited, Dolly Friends Co-
operative Housing Society Limited and M/s. Acme Property Developers
Pvt. Ltd. entered into a development agreement on the terms and
conditions recorded therein. Copies of various resolutions and approvals
granted by MHADA were annexed to the said development agreement.
A copy of the said development agreement is furnished to the Court for
perusal and consideration by Dr. Saraf, learned counsel for respondent
No. 1. Learned counsel submits that condition of the building of the 1st
respondent is totally dilapidated. MHADA has not granted any approval
so far in favour of the petitioner. Even in MOU entered into between the
petitioner and the respondent No. 1, it was clearly stated that the
building of the 1st respondent are in dilapidated condition.
28. Learned counsel placed reliance on the judgment of the Division
Bench of this Court reported in (2013) 1 Arbitration Law Reporter 380
in support of his submission that this is not a case in which the
petitioner can get specific performance of the MOU and thus no interim
measures as demanded by the petitioner can be granted. Learned
counsel also placed reliance on the unreported judgment of this Court
delivered on 10th June, 2013 in Notice of Motion No. 1393 of 2012 in
Suit No. 762 of 2012 in case of Gopi Gorwani v. Ideal Cooperative
Housing Limited It is held by this Court in the said judgment after
considering the conduct of the plaintiff therein that the plaintiff was not
ready and willing to abide by the agreement at all times. In such a
scenario, the question of granting specific performance of the purported
contract based on the expression of interest did not arise and therefore
the question of granting any interim reliefs to the plaintiff also did not
release. It is held that the society has been waiting for about four years
for the redevelopment of its property. The balance of convenience is
also in favour of the society and against the developer. It is held that
the work of redevelopment of the housing society is such that a society
must have confidence in its developer and once members of the society
have-expressed loss of trust, faith and confidence in the developer on
account of various deviations and violations done by the developer,
which is clear from the correspondence on record, the society cannot be
forced to get the redevelopment work done through the plaintiff.
Paragraph (31) of the said judgment reads thus:—
31. From the aforesaid facts it is clear that the plaintiff has
repeatedly deviated from the terms of the EOI, of which the
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plaintiff has sought specific performance in the present suit. The

plaintiff has alleged a further Agreement to cover up such
violation, but not sought specific performance of the purported
further Agreement. The conduct of the

Page: 395

plaintiff also shows that the plaintiff was at all times not ready and
willing to abide by the Agreement. In such a scenario, the question of
granting specific performance of the purported contract based on the
EOI (at Exhibit C to the Plaint), does not arise and therefore, the
question of granting any interim relief to the plaintiff also does not
arise. The first defendant has been waiting for the last about four years
for redevelopment of its property. The balance of convenience is also in
favour of the first defendant and against the plaintiff. The work of
redevelopment of a Housing Society is such that a Society must have
confidence in its developers. Once the members of the Society have
expressed loss of trust, faith and confidence in the developer on
account of various deviations and violations done by the developer,
which is clear from the correspondence on record, the Society cannot be
forced to get the redevelopment work done through the plaintiff. In
view thereof, the plaintiff is not entitled to any interim relief and the
Notice of Motion is disposed of as dismissed.

29. Dr. Saraf placed reliance on the unreported judgment of the

Division Bench delivered on 23rd September, 2013 in Appeal (L) No. 82
of 2013 in case of Shantilal J. Shah v. Jitendra Sanghavi In the said
judgment after considering the fact that the building was in dilapidated
condition, Division Bench of this Court held that it would be far fetched
to presume that the parties contemplated that the owners would have
no more than a right to continue in occupation despite the failure of the
developer to carry on development, the owners, tenants and occupants
should only wait, stand by and see the building in their occupation
collapsing, as a result of the dilapidated position of the structure.
Learned counsel submits that all the members of the respondent No. 1
societies belong to low income group and in view of no progress of the
redevelopment of the dilapidated building, all the members of the
society have been suffering for no fault of theirs.
30. Mr. Dhond, learned senior counsel appearing for the respondent
No. 34 states that there is no arbitration agreement between the
petitioner and respondent No. 34. Respondent No. 34 is not a party to
the arbitration proceedings filed by the petitioner. Petitioner cannot
seek any declaration in the arbitration proceedings against respondent
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No. 34 or any other reliefs of any nature whatsoever against respondent

No. 34. It is submitted that the composite redevelopment agreement
has been already entered into between respondent No. 34 and other
seven societies and no reliefs thus can be granted of any nature which
would affect not only the respondent No. 1 society but also seven other
societies who have agreed to get their respective buildings redeveloped
through respondent No. 34 after obtaining permission from MHADA.
31. Mr. Jain, learned counsel appearing for petitioner in rejoinder
submits that respondent No. 1 society and/or respondent No. 34 have
not produced any documents showing the joint development of the
properties of seven societies duly approved by MHADA. The amount of
Rs. 5 lakhs paid by the petitioner to the 1st respondent society has not
been returned. Learned counsel submits that all the terms and
conditions mutually agreed by and between the petitioner and
respondent No. 1 have been duly recorded in the letter of respondent
No. 1 to the

Page: 396

petitioner addressed on 21st July, 2012 and thereafter in the

Memorandum of Understanding dated 27th July, 2012. Nothing is left
for negotiation or agreed upon between the parties. It is submitted that
MOU entered into between the parties was complete agreement.
Respondent No. 1 society had granted all permission/authority to the
petitioner under the said MOU. Learned counsel placed reliance on the
Judgment of the Supreme Court reported in AIR 1959 SC 620 in case of
Trivenibhai v. Lilabhai and more particularly paragraphs 6, 7, 14 and 15
in support of his submission that the Court has to consider the effect of
the document and must enquire whether it contains unqualified and
unconditional words of present demise and includes the essential terms
of the agreement.

32. Mr. Jain, placed reliance on the judgment of the Supreme Court
in case of Kollipara Sriramulu v. T. Aswatha Narayana, reported in AIR
1968 SC 1028 and in particular paragraph (3) thereof in support of his
submission that mere reference to a future formal contract would not
prevent a binding bargain between the parties. It is submitted that
merely because in the MOU it is provided that further documents would
be executed between the parties would not mean that the said MOU
would be an agreement to be entered into an agreement. Paragraph (3)
of the said judgment of the Supreme Court reads thus:—
3. We proceed to consider the next question raised in these
appeals, namely whether the oral agreement was ineffective
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because the parties contemplated the execution of a formal

document or because the mode of payment of the purchase
money was not actually agreed upon. It was submitted on behalf
of the appellant that there was no contract because the sale was
conditional upon a regular agreement being executed and so such
agreement was executed. We do not accept this argument as
correct. It is well-established that a mere reference to a future
formal contract will not prevent a binding bargain between the
parties. The fact that the parties refer to the preparation of an
agreement by which the terms agreed upon are to be put in a
more formal shape does not prevent the existence of a binding
contract. There are, however, cases where the reference to a
future contract is made in such terms as to show that the parties
did not intend to be bound until a formal contract is signed. The
question depends upon the intention of the parties and the special
circumstances of each particular case. As observed by the Lord
Chancellor (Lord Cranworth) in Ridgway v. Wharton the fact of a
subsequent agreement being prepared may be evidence that the
previous negotiations did not amount to a concluded agreement,
but the mere fact that persons wish to have a formal agreement
drawn up does not establish the proposition that they cannot be
bound by a previous agreement in Von Hatzfeldt-Wildenburg v.
Alexander it was stated by Parker, J. as follows:
“It appears to be well settled by the authorities that if the
documents or letters relied on as constituting a contract
contemplate the execution of a further contract between the
parties, it is a question of construction whether the execution
of the further contract is a condition or term of the bargain or
whether it is a mere expression of

Page: 397

the desire of the parties as to the manner in which the transaction

already agreed to will in fact go through. In the former case there is no
enforceable contract either because the condition is unfulfilled or
because the law does not recognize a contract to enter into a contract.
In the latter case there is a binding contract and the reference to the
more formal document may be ignored.”

33. Insofar as issue of insufficiency of stamp duty raised by the

society is concerned, learned counsel appearing for the petitioner
submits that the said MOU does not give any authority which would
attract payment of stamp duty under Article 5(ga). The said MOU does
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not grant any development rights but provides that the development
agreement would be entered into in future. No rights have been created
in favour of the petitioner till conditions set out in the said MOU are
satisfied. Learned counsel invited my attention to prayer (e) of the
statement of claims filed before the learned arbitrator. Reliance is
placed on the judgment of this Court in case of Balawantgir Giri
through his legal representatives v. Manasi Construction and
Developers, reported in 2007 (1) Bom. C.R. 212. Reliance is placed on
paragraphs 5, 6, 11 and 12 of the said judgment in support of his
submission that the said MOU would not attract payment of any stamp
duty under Article 5(ga) of the Maharashtra Stamps Act as canvassed
by the society. Learned counsel submits that what is required to be
stamped is not a transaction but the instrument as defined under
section 2(e) read with section 3 of the Maharashtra Stamps Act. Only a
document in writing can be stamped and not an oral agreement. In
case of any ambiguity in the instrument benefit is liable to be rendered
in favour of the assessee. Learned counsel submits that since execution
of the MOU is not in dispute, even if such MOU is not stamped, question
of tendering the arbitration agreement in evidence did not arise. It is
submitted that since arbitration agreement is asserted by the petitioner
in petition and is not denied by respondent No. 1 in reply, arbitration
agreement even otherwise is deemed to have existed under section 7 of
the Arbitration and Conciliation Act, 1996. A document which gives
authority as prescribed under Article 5(ga) only requires to be stamped
and not otherwise. The petitioner was given a right to construct a
building by utilising FSI, purchase of TDR, to sale flat to outsiders, allot
flats to members of respondent No. 1 and thus the petitioner was the
owner of the building and would be liable to execute a deed of
conveyance in favour of the society such document would fall under
Article 12(b). Learned counsel submits that respondent No. 1 society
has granted licence in favour of the petitioner to enter upon the land
which licence cannot be revoked and is enforceable. Learned counsel
submits that respondent No. 1 has neither pleaded that the petitioner
was unwilling to carry out their obligation under the MOU nor have
terminated the MOU on that ground. In any event, respondent No. 1
has condoned and/or waived the alleged delay on the part of the
petitioner in carrying out redevelopment. Respondent No. 1 did not
insist the petitioner to commence redevelopment before termination of
the MOU. Though petitioner was granted one year time under the said
MOU, the said MOU has been terminated even before expiry of the
contractual period. Learned counsel made attempt to distinguish the
judgment of the Supreme Court in case reported in (1995) 5 SCC 115.
Learned counsel submits that respondent
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Page: 398

No. 34 is not a bona fide purchaser and has acquired alleged rights with
notice. Reliance is placed on the judgment of the Supreme Court in
case of Bharat Thakkar v. Kiran Construction Company, reported in
(2008) 13 SCC 658 in support of his submission that the third party
purchaser is not a necessary party. Learned counsel made an attempt
to distinguish the judgment of this Court in case of Gopi Gorwani
(supra) on the ground that this Court in the said matter has come to
conclusion that there was no agreement.

34. Dr. Saraf, learned counsel appearing for the society vehemently
urged that the submission of the petitioner on the one hand that all the
rights and authorities were conferred upon the petitioner by respondent
No. 1 under the said MOU and on the other hand that no rights are
created under the said MOU and the development agreement was to be
entered into mutually on compliance with various conditions and would
not attract payment of stamp duty is self destructive and is
inconsistent with each other. Learned counsel submits that under
clause (3) of the said MOU, it was clearly provided that the
development agreement was to be entered into in future subject to
various events, no interest is created in the land in favour of the
petitioner. Learned counsel distinguished the judgment relied upon by
Mr. Jain in rejoinder. Learned counsel submits that there is no provision
for conveying the land and the building in favour of respondent No. 1 as
it always vest in the society. There was no question of granting any
licence under sections 52 and 60 as urged by the petitioner. In this
case, building was to be constructed for the members of the respondent
No. 1 society. The entry was permitted to the petitioner only for
construction of the building. It is submitted that respondent No. 1 was
demanding compliance of the obligations. The Architect of the society
could not waive the conditions of the MOU on behalf of the society as
alleged. In the termination notice respondent No. 1 has taken a stand
in writing that the petitioner had failed to comply with their obligations
and was not willing to comply with their obligations. It is submitted
that the balance of convenience is in favour of the members of the
society and against the petitioner.
Reasons and Conclusions:
35. One of the issue raised by the defendant in this proceedings is
whether MOU entered into between the petitioner and the respondent
Nos. 1 to 33 as such is enforceable in law is prima facie concluded
agreement and in respect of such writing whether petitioner can get
specific performance of such document at all. In support of this
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submission both parties have invited my attention to various clauses of

the MOU. A perusal of the MOU prima facie indicates that the MOU was
entered into for recording the broad parameters of the redevelopment
pending the execution and registration of the detailed development
agreement, POA and 22 individual permanent alternate
accommodations. Limited rights were granted in favour of the petitioner
subject to various permissions, sanctions, NOCs from authorities
subject to due compliance with the development regulations and
subject to development agreement being executed. The petitioner had
paid only a sum of Rs. 5 lakhs under the said MOU to respondent No. 1
society. It is not in dispute that no further writing is executed between
the petitioner and respondent Nos. 1 to 33 granting development rights
in favour of the petitioner.

Page: 399

36. At this stage it would be appropriate to refer to one of the

arguments advanced by the learned counsel appearing for the
petitioner that the said MOU would not require payment of any stamp
duty as the same did not grant any development rights but provided
that the development agreement would be entered in future. No rights
had been created in favour of the petitioner till conditions set out in the
said MOU were satisfied. At the same breath the petitioner also submits
that nothing is left for negotiation or to be agreed upon between the
parties in future. In my view, the argument of the petitioner that all the
terms and conditions are already agreed upon in the MOU and nothing
further was to be agreed upon by entering into a development
agreement is self destructive and is contrary to the submissions of the
petitioner that under the said MOU, no development rights are created
in favour of the petitioner but it provided that the development
agreement would be entered into in future and no rights had been
created in favour of the petitioner till conditions set out in the MOU
were satisfied.
37. In my prima facie view on perusal of the provisions of the MOU
and the fact that no further development agreement was entered nor
was there any compliance of any conditions set out in the MOU which
were not complied with according to the respondents, the said MOU at
the most could be considered as an agreement to enter into an
agreement in future subject to various contingencies set out therein. In
my prima facie view such MOU thus cannot be specifically enforced. In
my prima facie view specific performance of an agreement to enter into
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an agreement cannot be granted.

38. Insofar as judgment of Supreme Court in case of Kollipara
Sriramulu (supra) relied upon by the petitioner is concerned, it is held
that there are cases where the reference to a future contract is made in
such terms as to show that the parties did not intend to be bound until
a former contract is signed. The question depends upon the intention of
the parties and the special circumstances of each particular case. It is
one of the argument of the petitioner that such MOU did not grant any
development rights but provides that the development agreement
would be entered into future itself is sufficient to hold that the said
MOU is at the most is an agreement to enter into an agreement and
prima facie cannot be enforced. In my view the judgment of Supreme
Court relied upon by the petitioner is of no assistance to the petitioner.
In case of Trivenibai (supra) Supreme Court has held that the Court has
to consider the effect of the document and must inquire whether it
contains unqualified and unconditional words of present demise and
includes the essential terms of the agreement. In my prima facie view
the provisions of the MOU does not indicate that any rights are created
in favour of the petitioner or that it records any essential terms of the
agreement. It is not in dispute that various sanctions, NOCs required to
be obtained from various authorities have not been obtained by the
petitioner.
39. In the Memorandum of understanding dated 27th July, 2012, it
is recorded that the existing building of the society was in a dilapidated
condition and thus the society had decided to demolish the existing
buildings and to redevelop the said property. As majority of the society
members wanted to avail of the benefit of TDR without contribution by
them as most of the members were retired persons and necessary
expertise was not available for the construction of

Page: 400

the said intended buildings. It was desired by the society that

development rights would be granted by the society to a developer who
will spend monies required for the purpose of construction and
completion of the intended buildings. It was also recorded that a
detailed development agreement, power of attorney and 32 individual
permanent alternate accommodation agreements would be executed by
the society only after obtaining offer letter, NOC from MHADA, NOC
from Civil Aviation, IOD along with TDR loaded along with all
concessions approved from the authorities in the name of the society
within the period of one year from the date of execution of the said
MOU and to record the broad parameters of the said redevelopment, the
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said MOU be entered into between the society and the developers. It is
recorded that it was necessary to enter into the said MOU in respect of
the redevelopment of the said property recording the broad parameters
of the said redevelopment pending the execution and registration of the
detailed development agreement, power of attorney and 32 individual
permanent alternate accommodation agreements. It was provided that
the society granted, subject to all necessary permissions, sanctions,
NOCs from authorities, and subject to due compliance with
development control regulations within time prescribed under the said
MOU and subject to that development agreement would be executed,
development rights in respect of said property to the developers. The
developer also agreed to pay Rs. 16,500/- per month as compensation
towards rent to each of the members. Society agreed to make the
respective purchasers of the flat as members of the society. The society
permitted the developer to enter upon the said property for carrying out
detailed survey and demarcation of various areas for development and
for obtaining permissions and plans sanctioned along with
unconditional IOD etc. Clause 24 of the said agreement recorded that
the parties would be entitled to specific performance of the said MOU.

40. It is not in dispute that the parties did not enter into any
development agreement or any other writing as recorded in the said
MOU. The petitioner only paid sum of Rs. 5 lakhs under the said MOU to
the respondent No. 1 society. By letter dated 21st July, 2012 by the
society to the petitioner, it was recorded that the petitioner should
update the property card by incorporating name and correct area of the
society and shall obtain offer letter from MHADA, purchase FSI/TDR,
obtain NOC from Civil Aviation Authority. It was also stated that the
petitioner shall obtain various permissions in the name of society and
for the benefit of society within one year from the date of the said letter
of intent. It was recorded that after receipt of all the permissions by the
petitioner in the name of society, society would execute development
agreement and power of attorney on mutual terms and conditions
agreed between the parties attaching all the permissions. By letter
dated 12th September, 2012, the petitioner informed the society that
the petitioner had applied for fresh demarcation from the land Manager
from MHADA to ascertain the correct area of the plot. Petitioner was
waiting for fresh policies of MHADA as existing policies of MHADA were
not feasible for development of the existing building. The new policies
were likely to come in the due course. It is also stated that the up-
gradation of the property card of the plot of the society would be done
simultaneously along with MHADA offer letter.
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Page: 401

41. By letter dated 25th February, 2013, the petitioner informed the
society that the petitioner had applied for CTS plan, property card and
Kami-Jast Patrak with approved authorities and the same will be
received in second week of March, 2013 and thereafter petitioner would
put up the file before MHADA tentatively on or before 31st March, 2013
subject to the society approving the plans. Petitioner had sent tentative
plans finalized by the architect to the project management consultant
on 16th February, 2013 and requested the society to finalize the same
at the early date. It was alleged that in a joint decision of the architect
of the petitioner and the old architect of the society, it was decided not
to incorporate name of the society on the property card at that stage so
that the petitioner may get some benefit of lay out in respect of FSI
from MHADA and the same could be done at latter stage. The petitioner
assured that as and when petitioner receives any intimation from their
architect, it would be done. By letter dated 24th March, 2013 the
society informed the petitioner that the society agreed to the tentative
plans submitted by the petitioner to the project management
consultant and requested the petitioner to put up the file to MHADA
with prior consent of the society showing the file before submitting the
same to MHADA immediately. The respondent society placed on record
that the petitioner had stated that CTS plan, property card and Kami-
Jast Patrak would be received in the second week of March, 2013 and
called upon the petitioner to inform whether petitioner had received the
same or not and if not to disclose the status of the same.
42. By letter dated 13th April, 2013, the petitioner enclosed copy of
the tentative plan for record of the society and requested to attend the
office of the petitioner with all committee members along with seal of
the society, stamps and letterheads to enable the petitioner to draft the
required application to be submitted to MHADA on the letterhead of the
society. Petitioner informed that the present proposal was based on
911.62 sq. Mtrs. plot area and in future if petitioner gets the lay out
benefit, petitioner would inform the society about the same and for the
said reason, petitioner had to hold the procedure of incorporating the
name of the society on property card as alleged to have been mutually
decided in the joint meeting between the architect of the petitioner and
architect of the respondent society.
43. On 14th June, 2013, the society after recording various reasons,
terminated the MOU dated 27th July, 2012. The petitioner vide their
advocates letter dated 18th June, 2013 nominated Mr. N.R. Jagtap
advocate as sole arbitrator and requested to concur with his
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appointment. It is the case of the society that on 7th May, 2013,

petitioner along with other several societies had addressed a letter to
MHADA for granting their approval of premium policy scheme under
provisions of Development Control Regulations of joint development of
societies. MHADA by letter dated 21st May, 2013 granted permissible
FSI of 2.5 to respondent No. 1 society and addressed similar letter to
seven other societies. The respondent No. 1 and other seven societies
had made an application to MHADA for comprehensive integrated self-
redevelopment project of their societies. About more than 200
members of the other seven societies had also agreed for such joint
redevelopment. The society has placed on record that on 16th
December, 2013, respondent No. 1 and two other societies

Page: 402

entered into development agreement with respondent No. 34 on the

terms and conditions recorded therein. Various permissions and
approvals granted by MHADA are annexed to the said development
agreement. A copy of the said development agreement is produced on
record by the society. The respondent No. 1 society and other seven
societies have taken steps pursuant to the said agreement.

44. It is not in dispute and as recorded in the MOU itself that the
buildings of the respondent No. 1 society were in dilapidated condition.
Respondent society has also produced photographs showing the
existing condition of the buildings as deteriorated. It was recorded in
the MOU itself that the said buildings required redevelopment at the
earliest. A perusal of the record and correspondence indicates that
petitioner did not take any concrete steps under the said MOU. Neither
any permission is granted by MHADA nor any plans are sanctioned. The
petitioners themselves were waiting for fresh policies of MHADA as the
existing policies were not feasible according to the petitioner. The
members of the society in my view cannot be asked to wait
permanently for revised and favourable policy by MHADA in future. In
view of the dilapidated condition of the buildings, and the petitioners
not having taken positive steps under the MOU entered into, in my
prima facie view after decision taken by absolute majority of the
members, society was justified in terminating the MOU entered into
with petitioner and entering into fresh agreement with respondent No.
34.
45. It is not in dispute that the society has already terminated the
MOU on 14th June, 2013. Documents placed on record by the society
indicates that the respondent No. 1 society along with other 7 societies
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had applied for permission from MHADA for joint development which
permission is granted by MHADA. Pursuant to such permission/NOC,
respondent No. 1 along with other societies has already entered into
development agreement jointly with respondent No. 34. Resolution to
terminate the MOU with the petitioner was passed by majority of
members of respondent No. 1 society. Resolution is also passed by the
members of respondent No. 1 to enter into development agreement
with respondent No. 34. It is not in dispute that the petitioner has
already filed statement of claim before the arbitral tribunal. Respondent
No. 34 is not a party to arbitration proceedings. If any interim
measures in the facts of this case is granted as prayed, it would affect
not only the members of respondent No. 1 Society but would also affect
large number of members of the other 7 societies who have agreed for
joint development of their respective buildings with respondent No. 34.
46. In my prima facie view, the respondent No. 1 has rightly
terminated the said MOU which is subject-matter of arbitration
proceedings filed by the petitioner. No stay of such termination can be
ordered by this Court. In the event the petitioner succeeds in
arbitration proceedings, petitioner would be compensated in terms of
money.
47. A perusal of the correspondence annexed to the petition and
affidavits prima facie indicates that the petitioner was not ready and
willing to comply with the obligations under the said MOU, even if it is
considered as concluded. The petitioner was waiting for introduction of
revised and fresh policies of MHADA as according to the petitioner,
existing policies were not feasible for

Page: 403

development. Various permissions were to be obtained by the petitioner

from various authorities which have not been obtained by the petitioner
which were required for the purpose of commencement and completion
of the properties. The members of the respondent No. 1 society are
from middle class and most of the members have retired. It is an
admitted position that the condition of the buildings of respondent No.
1 was dilapidated even on the date when MOU was entered into. In my
prima facie view, members of the society having lost confidence in the
petitioner and in view of no progress on the part of the petitioner,
cannot be forced to go for redevelopment of the property through the
petitioner.

48. Division Bench of this Court in case of Shantilal J. Shah (supra)

has held that it would be far fetched to presume that the parties
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contemplated that the owners would have no more than a right to

continue in occupation despite the failure of the developer to carry on
development and the owners, tenants and occupants should only wait,
stand by and see the building in their occupation collapsing as a result
of the dilapidated condition of the structure. This Court in case of Gopi
Gorwani (supra) has held that the work of redevelopment of the
housing society is such that the society must have a confidence in its
developer and once members of the society have expressed loss of
trust, faith and confidence in the developer on account of various
deviations and violations done by the developer, society cannot be
forced to get the redevelopment work done through the same
developer. I am respectfully bound by the judgments of this Court
referred to above which in my view squarely apply to the fact of this
case.
49. In view of this Court having taken a prima facie view in this
Judgment that the MOU was not a development agreement and no
rights having been conferred under the said MOU, I do not propose to
go into the issue whether specific performance of the development
agreement itself can be granted by a Court or an arbitrator or whether
it would require any stamping under the provisions of Maharashtra
Stamp Act. I am thus not dealing with various judgments referred to
and relied upon by the parties on this issue.
50. Division Bench of this Court in case of Gurudev Developers
(supra) has held that even in case of a development agreement where
the aim of the professional builder/contractor is to make a profit by
completing building and selling the flat at profits and even if there is
any breach of such agreement it can be compensated by damages. No
interest in the land has been created by the defendants in favour of the
developer. It is held that there was no concluded agreement and no
specific performance could be granted.
51. Supreme Court in case of Aniglosa Yohallal (supra) has held that
conduct of parties seeking specific performance has to be unblemished
all through out to make him entitled to the grant of specific reliefs.
Supreme Court in case of N.P. Thirugnanam (supra) has held that
remedy for specific performance is an equitable remedy and even the
discretion of the Court has to be exercised according to settled
principles of law and not arbitrarily. Under section 20 of Specific Relief
Act, the Court is not bound to grant the relief just because there was a
valid agreement of sale. Court has to see that there was continuous
readiness and willingness on the part of the plaintiff which is condition
precedent to grant the relief of specific performance. Court has to take
into consideration

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the conduct of the plaintiff prior and subsequent to the filing of the suit
along with other attending circumstances. A perusal of the
correspondence prima facie indicates that the petitioner was never
ready and willing to comply with its obligations under the said MOU
even if it is considered as concluded agreement and in any event not all
through out. I am respectfully bound by the judgment of the Supreme
Court referred to aforesaid which in my view is squarely applicable to
the facts of this case.

52. Since I do not propose to grant any reliefs in favour of the

petitioner, I am not proposing to go into the issue whether any reliefs
can be granted against respondent No. 34 who is not party to
arbitration proceedings or agreement. In my view merely because
separate termination letter is not issued by members of the respondent
No. 1 society, it would not amount to termination only by society and
not by members. Members of the society had passed a resolution to
terminate the Memorandum of Understanding. Members of the society
acts through society.
53. In my view, balance of convenience is in favour of the
respondents and against the petitioner. No case is made out by the
petitioner for grant of interim measures. Petition is devoid of merits. I
therefore pass the following order.
54. Petition is rejected. No order as to costs.
Petition dismissed.
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