IN THE HIGH COURT OF KARNATAKA AT BANGALORE

Transcription

1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE BETWEEN: DATED THIS THE 30 TH DAY OF JULY 2014 PRESENT THE HON BLE MR.JUSTICE K.L.MANJUNATH AND THE HON BLE MR.JUSTICE RAVI MALIMATH Regular First Appeal No.958 of 2010 (DEC-INJ) M/s.Kolte Patil Developers Ltd Being a Company incorporated Under the Companies Act 1956 Having its registered office at: Navipeth District Jalagaon Maharastra. And Branch Office at: No.22/11, Vittal Malya Road, 1 st Floor, Park West Bangalore Represented by its Joint Managing Director Mr.Naresh A.Patil. APPELLANT (By Sri Yoga Narasimha, Senior Advocate and Sri Raju Ramachandran, Sr.Advocate for Sri G.L. Vishwanth, Advocate)

2 2 AND: 1. NTI Housing Co-Operative Society No.5, C Palace Orchards Apartments No.51, RMV Extension 6 th Cross, 9 th Main road, Bangalore Sri CVL Shastry S/o late N.Venkatasubba Shastry Aged about 75 years No.73, 9 th Main, RMV Extension Bangalore *Since deceased by LRs 2(a) Smt.Sharadamma W/o late CVL Shastry Aged about 72 years 2(b) B.L.Nagendraprasad S/o late CVL Shastry Aged about 50 years 2(c) L.Narendra Prasad S/o late CVL Shastry Aged about 45 years All are residing at No.73, 9 th Main, RMV Extension Bangalore RESPONDENTS *Amended as per Court order dated (By Sri K.S. Nagaraja Rao, Advocate for C/R1; Sri C.V. Nagesh, Sr. Advocate for Sri K. Suman, Advocate for R2 (a to c))

3 3 This RFA is filed under Section 96 of CPC, against the judgment dated passed in O.S.No.1572/2005 on the file of the XVII Additional City Civil Judge, (CCH.No.6), Bangalore, dismissing the suit for declaration and permanent injunction. This RFA coming on for final hearing this day, K.L.Manjunath J., delivered the following:- J U D G M E N T The legality and correctness of the judgment and decree passed by the XVII Additional City Civil Judge, Bangalore dated , passed in O.S. No.1572/2005 is called in question by the unsuccessful plaintiff. 2. Heard the learned counsel for both the parties. 3. On an earlier occasion, this Court had heard two learned Senior Counsel appearing for the appellants Sri.Yoga Narasimha and Sri.Raju Ramachandran and the learned Senior Counsel, Sri.C.V.Nagesh for respondents 2(a) to (c) and Sri.Nagaraja Rao, the learned counsel for respondent no.1. After conclusion of the arguments, an application was filed by the appellant under Order-6,

4 4 Order-17 of C.P.C., to amend the plaint which application was considered and rejected by this Court by a detailed order dated and thereafter the matter is again heard on merits. 4. The facts leading to this appeal are as hereunder: The plaintiff is a private limited company. The first defendant is a society registered under the provisions of the Karnataka Cooperative Societies Act. According to the plaint averments, the first defendant-society was the owner of 16 acres, 20 guntas of land situated in survey Nos. 12/6, 13/1, 13/2 and a portion of survey No.19 of Nagashettyhalli Village, Kasaba Hobli at Bangalore, which was purchased from the first defendant-society from the Bangalore Development Authority under a registered transfer deed dated According to the plaint averments, the second defendant was instrumental in bringing about the transfer of the land in his capacity as a General Power Attorney Holder of the original land owners

5 5 which was the subject matter of the writ petitions before this Court in W.P. No /1997, which matter was taken up to the Hon ble Supreme Court in SLP (Civil) No /2001 decided on The plaintiff was put in possession of 5 acres of land in the aforesaid survey numbers in the month of October 1995 under different agreements executed by the first defendant-society in favour of the plaintiff. Later the society also confirmed the delivery of possession to an extent of 5 acres of land. The first defendant-society also executed the Power of Attorney in the name of Sri.N.A.Patil and Sri.A.V. Patil, who are directors of the company and also executed declaration under indemnity bond on and deed of no objection in favour of the plaintiff to develop the property. 6. During October 1995, the plaintiff was put in possession. The first defendant had already obtained a sanction plan from BDA on for construction of

6 6 the entire 5 acres of land for residential multistoried apartment buildings. The plaintiff accepted the project and later discovered that there was discrepancy in the measurement of the property and thereafter the entire land was fenced and commenced the construction. The plaintiff constructed a multistoried apartments complex known as Whispering Meadows which comprise four blocks. 7. In 1997 some disputes arose between the society and the plaintiff which resulted in the society filing a suit against the plaintiff before the City Civil Court, Bangalore in O.S. No.5649/1997 for a perpetual injunction from restraining the plaintiff from exercising any rights under the agreements executed and further restraining the plaintiff from proceeding with the construction. It was contended in the suit that the agreements and the General Power of Attorney executed by the society in favour of the plaintiff was got cancelled. Ultimately, the said suit came to be compromised by virtue of an agreement and declaration

7 7 dated In the compromise petition the society withdrew all the allegations made against the plaintiff and similarly the plaintiff withdrew the allegations made against the respondent-society and as per the compromise petition, the society confirmed the enforcement of the General Power of Attorney by the plaintiff and further agreed not to obstruct the construction work. As per the terms and conditions of the compromise entered in O.S.No.5649/1997, the plaintiff agreed to allot 35,000 sft. of built-up area in the project called Whispering Meadows to the Society in two installment of sft. and sft., respectively. Accordingly, the parties identified the areas to be allotted to the first defendant and later on allotment letter was also issued on As per the terms of the compromise and settlement entered into on , the first defendant-society had undertaken to sanction all the revised building plan within 9 months from the said date, after the revised building plan

8 8 was obtained, the plaintiff has to put up construction and put the first defendant-society in possession of the remaining portion of 14,440 sft. and an additional extension of 15,000 sft. built-up area provided the revised building plan is obtained by the first defendant-society on or before As per the terms of the compromise, in order to secure the revised building plan, the first defendant-society entered into a Memorandum of Understanding with the second defendant on and entrusted the work of obtaining sanction of the revised plan from the Bangalore Development Authority, with some other conditions. As per the terms of the Memorandum of Understanding, the first defendant-society undertook the transfer of 50,000 sft. of the built-up area to the second defendant and the second defendant has to pay an amount of Rs.1,00,00,000/- (Rupees One Crore Only) to the first defendant.

9 9 10. According to the plaintiff, in terms of the letter dated , the first defendant-society informed the plaintiff to allot sft. of built-up area to the second defendant. Accordingly, the same was allotted to the second defendant. Again certain disputes arose between the defendants interse, on account of the same the Memorandum of Understanding was cancelled by the society on Consequently, the allotment of sft. was also cancelled. 11. On account of the cancellation of the Memorandum of Understanding, the second defendant initiated arbitration proceedings against the society in A.C. No.42/2000 before City Civil Court, Bangalore under Section-9 of the Arbitration and Reconciliation Act to restrain the society from alienating or encumbering or parting with the possession of the 7 flats approximately measuring sft. Thereafter, an arbitrator was appointed. The Arbitral Tribunal gave a verdict in favour of the second defendant

10 10 and based on the findings of the Arbitrator the first defendant-society has sold 3 acres of land which is the subject matter of the present suit without the knowledge of the plaintiff. Therefore, the present suit is filed contending that the first defendant-society has no right to alienate the suit property and any sale deed executed by the first defendant is not binding on the society and for perpetual injunction. 12. The prayer in the suit are as hereunder: a) For declaration that the Sale Deed dated rd September 2004 bearing registration No.44576/04-05 registered in the Office of the Sub-Registrar, Bangalore North Taluk obtained by the Second Defendant from the first Defendant is a sham, collusive and fictitious document, not intended to be acted upon and therefore the second Defendant has derived no right, title, interest or possession in respect of the Schedule Property and the said Sale Deed is not binding on the Plaintiff and does not affect its rights or interest in the Schedule Property. b) For a permanent injunction restraining the second Defendant or his agents or any one claiming under him from alienating, transferring, encumbering or otherwise

11 11 creating any third party rights or raising any loans or finance on the strength of and under the Sale Deed dated 3 rd September, 2004, executed in his favour by the first Defendant with respect to the Schedule Property. c) For permanent injunction restraining the Defendants, their agents or any one claiming through them from interfering with the Plaintiff s possession and enjoyment of the Schedule Property and /or from trespassing on the Schedule Property in any manner whatsoever. d) For costs and such other relief/s. 13. The suit property is 3 acres of land situated in survey Nos.12/6, 13/1, 13/2 and part of survey No.19 situated in Nagashettyhalli Village, Kasaba Hobli, Bangalore North Taluk, Bangalore. The suit came to be contested by both the defendants. The contention of the first defendant is as hereunder: The suit is not maintainable, since no notice as required under Section-125 of the Karnataka Cooperative Societies Act is issued to the first defendant-society. The first defendant-society admitted its ownership of the land in

12 12 question by the society and having obtained sanction from the Bangalore Development Authority and also admitted the earlier litigation initiated by the owners of the land. 14. It is the specific case of the first defendant-society that the first defendant-society has not executed any registered sale deed or documents confirming the right, title or interest in favour of the plaintiff either in respect of the entire five acres of land or to the extent of the suit schedule property. However, the first defendant admitted the execution of the Joint Development Agreement in respect of 45 plots in 5 acres of land for the benefit of the first defendant-society. 15. It is also the specific case of the defendant that the plan was obtained to develop the entire 5 acres of land in the name of the first defendant and the plaintiff has developed only 2 acres of land and constructed residential apartments known as Whispering Meadows also known as Dollar Apartments. It is also the contention of the first

13 13 defendant that the plaintiff was never in the possession of 5 acres of the land and that only 2 acres of the land was in possession of the plaintiff as a developer. 16. It is the case of the first defendant-society that since the plaintiff committed a breach of the agreement at various stages and non-compliance of terms and conditions of the development agreement, a suit came to be filed which ended in compromise. According to the society, the plaintiff has never derived any title because the development agreement, power of attorney, declaration and indemnity bond are documents that are compulsorily to be registered and on account of non-registration of the documents, the plaintiff cannot rely upon these documents. 17. It is also denied that the plaint schedule properties is integral and inseparable part of plaintiff s alleged project. The first defendant was the owner of 5 acres of land and that no right is granted in favour of the plaintiff and the status of the plaintiff was that of a developer only and they

14 14 cannot claim ownership of the land at any stretch of imagination and further confirmed that the plaintiff can claim legal possession to an extent of two acres of land and not to the extent of the entire property. It was also contended that the first defendant-society was in possession of the suit schedule property till the same was sold in favour of the second defendant and that the plaintiff has no right to question the sale deeds executed by the first defendant-society in favour of the second defendant and further confronted that the second defendant is in actual possession of the suit schedule property. 18. It is also contended that the plaintiff having not filed any suit for specific performance against the first defendant and since the development agreements are barred by limitation, the plaintiff has lost its rights over the same and that the plaintiff having violated the terms and conditions of the compromise, the first defendant-society filed a suit in O.S. No.2482/2001 restraining the plaintiff-developer from

15 15 alienating or encumbering the remaining 2 acres of land which is the subject matter of the suit. 19. It is also the case of the first defendant that even if the compromise petition is filed under Order-23, Rule-3 read with Section-151 of C.P.C., the same is not binding upon the parties since no decree is drawn as the suit is one for bare injunction and the terms and conditions were altogether different and on account of non-drawing up of a decree, the plaintiff cannot maintain the suit. 20. It is also the case of the defendant that in terms of the compromise also, the plaintiff did not adhere to the terms and conditions of the compromise. Therefore, the first defendant-society was to sell the property in favour of the second defendant on account of the lapses committed by the plaintiff. The first defendant-society has also stated in detail, the circumstances, which compelled the first defendant-society to sell the property in favour of the second defendant. It is also contended by the first

16 16 defendant that the right of the plaintiff is only to seek enforcement of the development agreement in the court of law and nothing more than that the joint development agreement executed by the first defendant-society in favour of the plaintiff and others is barred by limitation and does not create any ownership in favour of the plaintiff in order to seek cancellation of the sale deed executed by the first defendant in favour of the second defendant. According to the first defendant, they are seeking the relief under the Specific Relief Act since the development agreements have become barred by time, the suit filed is not maintainable. 21. It was also contended by the first defendant that all the development agreements that are executed by the first defendant in favour of others are unregistered and does not create any contract of agency coupled with interest at any stretch of imagination and that all the development agreements have become time barred and the plaintiff has no subsisting or enforceable contract in respect of the land

17 17 in question against the plaintiff. It was also contended that the society has already cancelled the joint development agreement entered into by the plaintiff and in favour of others long back, for non-payment of the amount payable by the plaintiffs and others to an extent of Rs.7,50,00,000/- (Rupees Seven Crores Fifty Lakhs Only). It was also contended that the suit is also barred by the provisions of C.P.C. and the suit is bad for non-joinder of the parties. 22. The second defendant filed the written statement separately. The contention of the second defendant is more or less similar to that of the first defendant and therefore we are of the view that there is no necessity to traverse the averments made in the written statement filed by the second defendant. 23. Based on the above pleadings, the following issues were framed by the court:

18 18 1. Whether the Plaintiff has proved that the suit property is in his possession? 2. Whether the Plaintiff has proved interference? 3. Whether the Plaintiff is entitled for the reliefs? 4. What order or decree? Additional Issues framed on : Whether the suit filed in the present form is maintainable in law? Additional issues framed on : 1. Whether the Plaintiff is entitled for the declaration as prayed for in the Plaint? 2. Whether the 1 st Defendant has proved that the suit has to be dismissed for nonjoinder of necessary parties and proper parties? 3. Whether the Court Fee of Rs.75/- paid by the Plaintiff is proper? 4. Whether the Defendants have proved that the suit is liable to be dismissed for there being no cause of action.

19 19 Additional issue framed on : 5. Whether the Defendants have proved that the Sale Deed dated executed by 1 st Defendant in favour of the 2 nd Defendant is a sham, collusive and fictitious document? 24. In order to prove their respective contentions on behalf of the plaintiff one of the Director s of the plaintiff company, Shri.A.V.Patil got examined himself as PW-1 and he relied upon Exhibits P1 to P195. The former secretary of the first defendant Shri.Vijaysingh, got examined as DW-1 and the second defendant was examined as DW-2. The defendants relied upon Exhibits-D1 to D75. The trial court after appreciating the oral and documentary evidence held issue nos.1 to 3 and additional issue framed on and additional issue nos.1 to 3 framed on and additional issues framed on in negative and additional issue no.2 framed on in affirmative, issue nos. 2 and 4 in affirmative and ultimately the suit of the plaintiff came to be dismissed by the judgment and

20 20 decree dated The Registry was directed to draw the decree by the court below provided the plaintiff pays the court fee on the basis of the sale consideration shown in Exhibit-P7, dated Challenging the legality and correctness of the judgment and decree of the court below the present appeal is filed. Though several grounds are urged in the memorandum of appeal at the time of arguments, the Learned Senior Counsel who argued the matter from time to time and the instructing counsel for the plaintiff during the course of the their arguments have raised the following grounds: i. According to them the trial court has committed an error in dismissing the suit as not maintainable. It was contended by the learned counsel for the appellant that the appreciation of the evidence by the court below is perverse and liable to be reappreciated by this court. According to them, the trial court did not appreciate that the first

21 21 defendant-society having entrusted the entire 5 acres of land to the plaintiff for development and having allowed the plaintiff to develop and construct the residential apartments in 2 acres of land and in view of the compromise entered into in O.S. No.5649/1997, the first defendant-society could not have executed the sale deed in favour of the second defendant and execution of such sale deed does not bind the plaintiff who has been in possession of the suit schedule property as a developer. ii. According to him there is a collusion between the defendants interse, since the second defendant was aware of the development agreement of the plaintiff. It is also contended that in view of the settlement arrived at in O.S. No.5649/1999 as the plaintiff was ready and willing to perform its part of contract to deliver the possession of the constructed area and also another 50,000 sft. constructed area pursuant to the revised plaint, the first defendant could not have sold the property in favour of the second

22 22 defendant and they further contend that the very initiation of the arbitration proceedings in A.C. No.4/2001, the award being obtained behind the back of the plaintiff and such an award having not been challenged by the first defendant and thereafter having agreed to sell the property, amply proves that all was not well within the defendants inter se and only to knock the valuable rights given to the plaintiff the sale deed has been executed. iii. According to the plaintiffs, the Trial Court has also committed an error in coming to the conclusion that the suit was not maintainable in the absence of 17 purchasers, who had agreed to develop the property. According to them PW-1, the Managing Director of the Company, has represented the remaining agreement holders, since all of them are family members of PW-1. They further contend that when the remaining development agreement holders have not questioned and when they are represented by the plaintiff, the trial court was required to hold that the

23 23 plaintiff, in a representative capacity, has filed the suit to protect the interest of the remaining 17 development agreement holders in respect of the suit schedule property. According to them, the compromise petition entered into in O.S.No.5649/1997 has not been properly appreciated by the court below. 26. Sri C V Nagesh, learned senior counsel for Sri K Suman, appearing for the second respondent, submits that the plaintiff, which has filed the suit claiming ownership over three acres of land, has not placed any materials to show its existing rights over the property either on the date of institution of the suit or subsequent to the suit. According to him, the appellant-plaintiff has not placed any material to show that it was the owner of the suit schedule property pursuant to any document executed by the first defendant in the manner known to law. According to him, when the plaintiff is claiming ownership under a joint development agreement, it has to produce the documents

24 24 to show that such a document was executed in respect of the whole extent of the suit schedule property, since a right has to be transferred in respect of an immovable property whose worth is more than Rs 100/-. According to him, the plaintiff has relied upon the joint development agreements said to have been executed by the first defendant in favour of different persons, in all 45 persons. Amongst the 45 persons, the plaintiff has entered into an agreement to develop the property to an extent of 5100 sqft and that the document relied upon by the plaintiff to show the existence of the joint development agreement in favour of the plaintiff, is only in respect of an extent of 5100 sqft as per ExP55. Relying on ExP55, he contends that when the plaintiff can claim only an extent of 5100 sqft to develop the property and when PW1 has admitted that other agreements with 44 different persons have been entered into to develop the property, the plaintiff alone could not have instituted the suit. He further submits that the plaintiff cannot rely upon the terms and conditions of the

25 25 compromise entered into in OS No 5649 of 1997, since a decree is not drawn by the court below based on the compromise, on account of non-payment of court fee by the plaintiff. 27. It is also the contention of the learned Senior Counsel that OS No 5649 of 1997 was filed by the first defendantsociety against the plaintiff for a perpetual injunction to restrain the plaintiff in the present suit from interfering with the possession of the property by the society and to restrain the plaintiff herein from proceeding with the construction. In the suit, the parties have settled the dispute amicably and filed a compromise petition, the trial court has accepted the compromise petition subject to payment of court fee. However, the plaintiff has failed to pay the court fee to draw a decree based on the terms of the compromise and hence the plaintiff cannot be permitted to file a suit for negative declaration.

26 According to him, even if the plaintiff has acquired a right under the compromise petition, without getting its right crystallized by filing a suit for specific performance of the contract in the manner known to law, the plaintiff cannot maintain a suit for negative declaration to declare that the sale deed executed by the first defendant-society in favour of the second defendant is not maintainable. He contends that as such, filing of such a suit is contrary to the judgment of the Hon ble Supreme Court in the case of SARDESH ORES (P) LTD vs HEDE AND COMPANY [(2007) 5 SCC 614]. He further submits that when the suit for negative declaration is not maintainable, the plaintiff is also not entitled for perpetual injunction, since under ExP55, the plaintiff has secured possession of only an area of 5100 sqft and the remaining extent of the land, even according to the plaintiff, it is in possession of other agreement holders. When the other agreement holders having not come before the court and when the plaintiff has not filed the suit on behalf of the

27 27 remaining agreement holders, either as a power of attorney holder or in any other capacity, the plaintiff cannot claim that the plaintiff company is in possession of the same. He further submits that PW1, the then managing director of the plaintiff-company, in his cross-examination has admitted that the plaintiff is not in possession of the suit schedule property. If the plaintiff is not in possession of the suit schedule property, either on the date of filing of the suit or subsequent to the institution of the suit, no court can grant a decree for perpetual injunction. In the circumstance, he requests the court to dismiss the appeal. 29. Sri K S Nagaraja Rao, learned counsel for first respondent contends that since the plaintiff did not adhere to the terms and conditions of the agreement entered into, the first defendant-society had every right to execute a sale deed in favour of the second defendant and the sale deed executed by the first defendant in favour of the second defendant cannot be attacked by the plaintiff, since the

28 28 plaintiff has no existing right and has not derived any right, title or interest over the suit schedule property. He also contends that under ExP55, the plaintiff has agreed to develop the property to an extent of 5100 sqft, but the suit is filed in respect of three acres of land. He also contended that at no point of time, the plaintiff or any other agreement holders were put in possession of the property. He further contends that in order to claim right over the suit schedule property by the plaintiff for itself or as representative of other agreement holders, the agreement should be a compulsorily registered document, since under the agreement, a right has been created to transfer the interest in an immovable property in favour of the agreement holders permitting them to develop the property. Therefore, he contends that the suit is not maintainable. He further contends that the plaintiff being a company cannot represent the other family members of PW1 managing director of the company. When the suit is filed only in the name of a company, the company cannot

29 29 represent the family members of the managing director or any director of the company and such an argument is unknown to law. In the circumstances, he requests the court to dismiss the appeal. Having heard the learned counsel for the parties, we have to consider the following points in this appeal: i) Whether the plaintiff being an agreement holder could have filed the suit seeking for a negative declaration, to declare the sale deed executed by the first defendant in favour of second defendant as not binding on the plaintiff and that the second defendant has not derived any title, without filing a suit for specific performance on the basis of compromise entered into in O.S. No. 5649/1997 dt ? ii) iii) Whether the plaintiff was in lawful possession of the suit schedule property on the date of institution of the suit and whether the plaintiff is entitled for a decree of perpetual injunction even if the first relief is not granted to the plaintiff; and Whether the judgment and decree of the trial court requires to be interfered with in this appeal?

30 30 The admitted facts in this appeal are that: The plaintiff is claiming right through the first defendant society. According to the plaint averments, first defendant society had agreed to permit the plaintiff to develop a total extent of 5 acres of land situated in different survey numbers of Nagashettihalli village and the plaintiff has developed the property only in an area of 2 acres by constructing residential apartments known as Whispering Meadows. The only dispute is in regard to the remaining three acres of land, which is the subject matter of the suit. 30. According to plaint averments, the first defendant has executed joint development agreements to develop different extents of land in the suit schedule property in favour of 44 persons. The plaintiff is a private limited company registered under the Companies Act, The first defendant is a cooperative society, registered under the provisions of Karnataka Cooperative Societies Act, It is also not in dispute that on an earlier occasion, the first

31 31 defendant-society had filed a suit against the plaintiff in the present suit in OS No 5649 of 1997 for the relief of permanent injunction only with a request to restrain the plaintiff herein from proceeding with any construction work, which suit was contested by the plaintiff-company. The said suit came to be disposed of by virtue of a compromise petition filed in the suit. As per the terms and conditions of the compromise, the averments made in the plaint in the aforesaid suit and the contentions raised by the defendants in the suit in the written statement were to be withdrawn and thereafter the first defendant-society has to confirm the agreements and general powers of attorney which were executed earlier and they should be in force and withdraw the revocation of the agreements and GPAs. 31. It was agreed that the first defendant-society has to receive a sum of Rs 3,50,00,000/- from the plaintiff herein and also sqft of super built-up area. It was further agreed in the compromise petition that the plaintiff herein was required to construct flats and deliver sqft area

32 32 amounting to 13 flats and deliver to the first defendantsociety in three blocks viz., B, C, C, which were already constructed and the remaining sqft of super built-up area was to be delivered to the first defendant-society after constructing all the buildings by obtaining necessary plan. It was also agreed in the compromise that an additional area of sqft built-up area has to be delivered to the first defendant within nine months from the date of approval of the revised plan. 32. Though the compromise petition was filed, the trial court has not drawn a decree in terms of the compromise, on the ground that the joint development agreements and the terms of the compromise required registration and payment of stamp duty. The trial court has specifically directed the office to draw the decree only after payment of the court fee by the plaintiff. The compromise petition was accepted by the court below subject to the aforesaid condition on It is also an admitted fact that till

33 33 today, the court fee has not been paid by the parties and a decree as such has not been drawn. Therefore, it is the contention of the defendants that on account of nonpayment of court fee and on account of non-drawing of the decree, the terms of the compromise agreed upon between the parties in the earlier suit cannot be looked into, since the compromise has not been acted upon. 33. It is the case of the defendants that on account of the non-payment of court fee, the terms of the compromise are unenforceable. It is also their case that if the plaintiff was interested in getting the compromise culminating in drawing up of a decree by the court, the plaintiff was required to pay the court fee. The other alternative argument of the learned counsel for the respondents is that even if the court fee had not been paid in the earlier suit, at least the plaintiff was required to file a suit for enforcement of the terms of the compromise within three years from the date of filing of the compromise petition. On account of

34 34 date of filing of the compromise petition. On account of non-filing of a suit for specific performance, the plaintiff cannot contend that the plaintiff-company is having a right over the suit schedule property. 34. The plaintiff is not sure as to whether the suit is based on ExP55 or on the base of the compromise petition. If the suit is based on the compromise petition, this court has to consider the validity of the compromise petition and its enforceability in favour of the plaintiff. If the suit is not based on the terms of the compromise and if the claim of the plaintiff has to be considered based on the joint development agreement executed between the plaintiff and the first defendant-society, then the question would be whether the plaintiff can lay claim on three acres of land, even though under ExP55 the plaintiffs is having a right only to an extent of 5100 sqft, and whether the plaintiff can file a suit on behalf of the other agreement holders, as

35 35 representative of individuals or family members of the directors or managing director of the company. 35. In order to appreciate these contentions, we have to advert to the evidence let in by both parties. As stated supra, on behalf of the plaintiff, its managing director A V Patil has been examined as PW1. His examination-in-chief is nothing but a replica of the pleadings in the plaint. In the cross-examination, he has made several admissions. He has admitted as hereunder: It may be that the 1 st Defendant Society has executed 45 Joint Development Agreements in favour of 45 individuals in respect of these lands. The Witness volunteers that the Deed executed is not Development Agreements but they are Agreements of Sale. I do not remember if the Agreement are executed between to I do not remember whether the Agreements are not registered. I have to enquire if the Plaintiff Company is in possession of the said Agreements. I have not looked into these Agreements before giving evidence before the Court Commissioner. Witness again says that I have looked into them.

36 36 In para-21 of his cross-examination, PW1 admits to the following effect: I am not aware if the Katha of the Suit Schedule Property stands in the name of 2 nd Defendant. May be that the Plaintiff Company has filed objections before the Bangalore City Corporation objecting to transfer of Katha of the Suit Schedule Property in favour of 2 nd Defendant. In para-24, PW1 admits to the following effect: It is true that Plaintiff Company was a party to the Arbitration Case No. 42/2000 on the file of the City Civil Court, Bangalore filed by the 2 nd Defendant. It was so in the beginning but not afterwards. In para-31 of his cross-examination, PW1 admits to the following effect: In order to indicate the Title or Possession of an immovable property basic thing is a document. Question: To show one s title to the property or one s possession to the property the primary evidence is the document under which the title is acquired or the document under which possession is delivered? Answer: It is so if it is a lawful document.

37 37 Question : The documents that would indicate possession in relation to an immovable property are title deed under which possession is delivered, agreement under which possession is delivered, Katha endorsement, tax paid receipts, licence, plan, if any. Answer: It is so if the documents are lawful. In paras-32 & 33 of his cross-examination, PW1 admits to the following effect: The Plaintiff have not acquired title or possession to the suit schedule property under a Sale Deed. Plaintiff has acquired title and possession to the suit property under an Agreement of Sale. Question: The Plaintiff is put in possession of the suit schedule property in part performance under the Agreement of Sale. Answer : Yes. I do not remember the total amount of consideration agreed for the sale of suit schedule property. The witness volunteers that there were 45 Agreements of Sale. Under those 45 Agreements of Sale each one of the purchasers mentioned in the Agreements were put in possession separately. Plaintiff is one such Agreement Holder in respect of a portion of suit schedule property.

38 38 Question: Out of the 45 persons who entered into Agreements of Sale the Plaintiff is one such person and has alone filed the suit. Answer: The Plaintiff includes all the 44 persons. In para-36 of his cross-examination, PW1 admits to the following effect: I cannot name all those 44 persons. The Plaintiff does not have Power of Attorney of all the 44 persons. The suit is filed on behalf of Plaintiff only and not on behalf of 44 persons. Without looking into the record I cannot say the date, month and year of the Agreement of Sale of a portion of suit schedule property in favour of the Plaintiff. [Emphasis is supplied by us] In para-41 of his cross-examination, PW1 admits to the following effect: The Plaintiff is in possession of the Agreement of Sale in respect of a portion of the suit schedule property. In para-51 of his cross-examination, PW1 admits to the following effect:

39 39 I did not feel it necessary to institute suit for specific performance on receiving the notice of termination/cancellation of the Agreements, GPA and Indemnity bond from the 1 st Defendant Society. Witness volunteers because the Owner had no right to do the said things. In para-52 of his cross-examination, PW1 admits to the following effect: It was on the date of Agreement of Sale the Plaintiff was put in possession of the portion of the property which is the subject matter of Agreement of Sale. Question: Please point out the documents produced in the Court under which the Plaintiff came to be put in actual physical possession of the portion of the suit property in respect of which the contract is entered into. Answer: I require reasonable time to go through the records produced in the Court to point out the document under which actual physical possession is delivered. I have gone through the records and it seems that the possession document executed by the Land owner in favour of Plaintiff is not submitted in the Court. In para-57 of his cross-examination, PW1 admits to the following effect: The Plaintiff Company has purchased the share of other buyers in respect of suit property. The documents are not registered. They are with the

40 40 Plaintiff Company. I cannot say the Day, Month and Year of purchase of the share of others by the Plaintiff Company. In para-58 of his cross-examination, PW1 admits to the following effect: After looking into the records the Witness says I have not produced the records referred above. The other purchasers of different potions of suit property never surrendered possession of the portions of suit property to the 1 st Defendant Society from the date they acquired possession till today. In para-59 of his cross-examination, PW1 admits to the following effect: Different purchasers of portions were not parties to the document. In para-67 of his cross-examination, PW1 admits to the following effect: I visited the suit property on the last occasion about 3 or 4 months back. I cannot say whether the vacant land shown in photographs Ex. D-11 & D-12 is the suit property. The vacant land shown in Ex.D-8 is not the suit property. The Plaintiff is not possession of the vacant land shown in Ex.D-8. Similarly the Plaintiff is not in possession of the vacant land shown in Ex.D-11 & D-12. The Plaintiff is also not in possession of the vacant land shown in Ex.D-9 & D10. The

41 41 Plaintiff has also not exhibited any board as seen in Ex.D-9 & D10. It is true that Ex.D-9 & D- 10 it is a board of stating This property belongs to CVL Sastry. On perusal of the evidence of PW1, it is clear that the plaintiff has filed the suit based on ExP55 joint development agreement. ExP55 is a development agreement entered into between the plaintiff and the first defendant-society on , wherein it is agreed to develop the suit schedule property for a consideration of Rs 22,93,317/- and of course certain amount was paid as advance. The balance consideration of Rs 7,83,317/- was to be paid by the plaintiff to the first defendant after fulfilling certain conditions by the first defendant-society. 36. By looking into the pith and substance of this document [ExP55], though the document is styled as a development agreement, it is virtually a deed transferring the property in favour of the plaintiff-company. The schedule to ExP55 is only in respect of 5100 sqft, which is

42 42 mentioned as schedule-c to the agreement. Admittedly, it is not a registered document. Under ExP55, the plaintiff cannot claim any right over and above 5100 sqft of land. Even if it is considered that the plaintiff has acquired any right under ExP55, at the best, the court can come to the conclusion that the plaintiff is having right only to an extent of 5100 sqft, but not the whole extent of 3 acres. Along with ExP55, a sketch is also annexed to show that site No 5 earmarked in the sketch is a land granted to the plaintiff for development. In the sketch, in all 45 sites have been formed and the remaining 44 sites are sold to different persons under similar agreements. They are marked as ExP56 to 99. These are the all similar agreements of sale as that of ExP55. These agreements are executed by the first defendant-society in favour of different individuals. 37. If the first defendant-society has executed different agreement in favour of different persons and even if those

43 43 persons are relatives or family members of the managing director of the plaintiff-company, the company cannot institute a suit on behalf of family members of the director or managing director of the company. It is also not the case of the plaintiff that it has filed the suit on behalf of the remaining 44 agreement holders. In the cross-examination of the PW1, he has stated that he has not obtained any powers of attorney from such persons and it is not represented the aforesaid persons. 38. When such being the case, this court has to consider as to whether based on the compromise entered into earlier in OS No 5649 of 1997, the plaintiff has acquired right to file a suit to claim 3 acres of land and based on such existing right, a negative declaration relief can be granted in favour of the plaintiff, holding that the sale deed executed by the first defendant-society in favour of second defendant does not bind it? To seek such a relief, the plaintiff must have a right over the property in question.

44 44 Learned counsel for both parties are not disputing the fact that a decree has not been drawn on the basis of the compromise on account of non-payment of commensurate court fee. If the decree is not drawn, it can be assumed that the terms of the compromise have not been accepted by the court. Then, this court has to see whether the plaintiff can still maintain a suit seeking a negative declaration based on the terms of the compromise petition? 39. According to Sri G L Viswhanath, learned counsel for the appellant-plaintiff, the terms of the compromise are more in the nature of an agreement and the same is binding on the plaintiff and the first defendant-society. According to him, even if the compromise petition is accepted by the court below in the earlier suit and the decree is not drawn on account of non-payment of court fee, still the compromise petition and its terms are binding upon the parties.

45 Even if we accept the contention of Sri Vishwanath, still, the plaintiff has to enforce the terms of the compromise when it styled the document as an agreement. If it is an agreement entered into between the plaintiff and the first defendant, it is nothing but a contract. When it is a contract between the parties, unless and until the contract is got crystallized by executing a sale deed in respect of the immovable property in favour of the plaintiff by the first defendant-society, the plaintiff cannot contend that it has acquired the right, title or interest over the suit schedule property. 41. After arriving at the terms of the compromise petition, both the plaintiff and the first defendant-society were required to perform their parts of contract. According to the first defendant-society, the plaintiff committed breach of terms of the compromise and therefore it has terminated the contract and the plaintiff cannot enforce the same.

46 PW1, who entered in the witness box on behalf of the plaintiff, has spoken about the receipt of notice got issued by the first defendant-society, terminating the agreement. But unfortunately, for the reasons best known to the plaintiff-company, it did not file a suit for specific performance of the contract, even to enforce the terms of the compromise. If the plaintiff had filed a suit to enforce the terms of the compromise, this court could have appreciated the contentions of the learned counsel for the appellant-plaintiff. Unfortunately, the plaintiff did not exercise its right within three years from the date of compromise petition, even though a decree is not drawn in accordance with law due to non-payment of court fee. During the final hearing of this appeal, the plaintiff had filed an application before this court under Order VI Rule 17 CPC, to amend the prayer to incorporate the following additional prayer: a [i] or in the alternative to declare that the terms of compromise dated entered in O.S. No. 5649/1997 are valid

47 47 and binding on the Defendants and consequently to direct them to abide by and comply with the terms, conditions and obligations of the said compromise petition This application was heard and rejected on merits by the order dated , holding that such a relief cannot be considered by this court 15 years after the filing of the compromise petition in the earlier suit. However, it is also to be seen that with regard to the appropriate relief to be claimed by the plaintiff, the plaintiff has admitted to the fact that the relief sought for by him was not proper. The trial court referred to this issue in para-25 of its Judgment which reads as follows:- 25. When the Court questioned the Advocate for the Plaintiff regarding the declaratory relief, he admitted that he should not have sought declaratory relief in this way and that the Plaintiff had been given power to develop even the 3 acres of suit land and as the 2 nd Defendant attempted to interfere with the said 3 acres of land and as the numbers put by the Plaintiff were removed, the Plaintiff was forced to come to the Court. As the Advocate for the Plaintiff directly admitted that the declaratory

48 48 relief sought by him was not proper, the said matter was not discussed in detail. Therefore, it is not a case of any inadvertence in not seeking the relief. But the fact is that even during the pendency of the suit, the plaintiff was aware that the relief sought by him is inappropriate. 43. When the plaintiff has not filed a suit in terms of the compromise petition within three years, contending that the plaintiff is having a right over three acres of land and on the basis of the same, the sale deed executed by the first respondent-society in favour of second defendant is not binding on the plaintiff, the same cannot be countenanced by this court, because, at the first instance the terms of compromise cannot be enforced by the plaintiff by filing a suit based only on ExP55, which agreement permits the plaintiff only to develop the property to an extent of 5100 sqft only. Of course the said assertion has also been denied by the defendants, and that the plaintiff has not even filed a suit to enforce the said agreement. Under these

49 49 circumstances, if the trial court has held that the suit filed by the plaintiff is not maintainable and such an equitable relief cannot be granted, this court cannot interfere with such a decision and cannot grant any relief to the plaintiff, more particularly in view of the law laid down by the Hon ble Supreme Court in the case of SARDESH ORES (P) LTD [supra], wherein it is held as under, in regard to grant of negative relief: 39. We are of the view that the respondents are right in contending that enforcement of the negative covenants presupposes the existence of a subsisting agreement. As noticed earlier, the law is well settled that the renewal of an agreement or lease requires execution of a document in accordance with law evidencing the renewal. The grant of renewal is also a fresh grant. In the instant case, the appellant-plaintiff did exercise their option and claimed renewal. The respondents denied their right to claim renewal in express terms and also unequivocally stated that the agreement did not stand renewed as contended by the appellants. Having regard to these facts it must be held that a cause of action accrued to the appellantplaintiff when their right of renewal was denied by the respondents. This happened in December, 2001 and, therefore, within three years from that date they ought to have taken appropriate proceedings to get their right of

50 50 renewal declared and enforced by a court of law and/or to get a declaration that the agreement stood renewed for a further period of 5 years upon the appellants' exercising their option to claim renewal under the original agreement. The appellants-plaintiffs have failed to do so. However, the plaint proceeds on the assumption that the original agreement stood renewed including the negative covenants contained in clauses 15 and 20 of the original agreement which authorised only the appellants to extract ore from the mine with an obligation cast on the respondents-defendants not to interfere with the enjoyment of their rights under the agreement. In the facts of this case, in the suit prayer for injunction based on negative covenants could not be asked for unless it was first established that the agreement continued to subsist. The use of the words "during the subsistence of this agreement" in clause 15, and "during the pendency of this indenture" in clause 20 of the agreement is significant. In the absence of a document renewing the original agreement for a further period of 5 years and in the absence of any declaration from a court of law that the original agreement stood renewed automatically upon the appellants exercising their option for grant of renewal, as is the case of the appellants, they cannot be granted relief of injunction, as prayed for in the suit, for the simple reason that there is no subsisting agreement evidenced by a written document or declared by a court. If there is no such agreement, there is no question of enforcing clauses 15 and 20 thereof. The appellants ought to have prayed for a declaration that their agreement stood renewed automatically on