REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.  11093  OF 2017 (Arising out of Special Leave Petition (Civil) No.18912 of 2017)

Yusuf Khan @ Dilip Kumar Through Power of Attorney … Appellant

Versus

Prajita Developers Pvt. Ltd. & Another … Respondents

WITH

M.A. NO.629 OF 2017 IN  SLP (CIVIL) NO.7483-7484 OF 2016

J U D G M E N T  

Chelameswar, J.  

1. Leave granted in Special Leave Petition (Civil) No.18912

of 2017.

2. The appellant aged about 95 years is also the applicant

in  Interlocutory  Application  No.75003  of  2017  in

Miscellaneous  Application  No.629  of  20171 filed  in  SLP(C)

1  Prayer: It is, therefore, most respectfully prayed that this Hon’ble Court may be pleased to: a. That  pending  the  special  leave  petition,  the  Respondent  No.1  by  themselves,  their

servants, agents and/or  otherwise howsoever, be ordered and directed to forthwith remove the security guards posted by them on the said property and to permit the petitioner to freely enter upon the said property as and when desired by the Petitioner and Respondent No.2;

Nos.7483-7484/2016 filed by the 1st respondent herein, which

stood dismissed by an order of this court dated 16.03.2016.

For the sake of convenience, he is referred to hereafter as the

appellant.   

3. The appellant owns landed property admeasuring 2412

sq.  yards  in  Plot  No.16  of  Pali  Hill  in  the  village  of  Dand,

Bandra in the city of Bombay, now called Mumbai.   

4. The appellant entered into an agreement dated 23.6.2006

(hereafter  referred  to  as  AGREEMENT)  with  two  companies

namely M/s Sharyans Resources Private Limited (hereinafter

referred to  as  “SHARYANS”)  and the  2nd respondent  herein,

Goldbeam  Construction  Private  Limited,  both  companies

incorporated  under  the  Companies  Act,  1956  (hereafter

collectively referred to as DEVELOPERS).

5. The substance of the AGREEMENT is that the appellant

agreed to “grant  to  the  DEVELOPERS the  right  to  develop the  said b. That  pending  the  special  leave  petition,  the  Respondent  No.1  by  themselves,  their

servants, agents and/or otherwise howsoever, be permanently restrained form entering upon or remaining on or using or occupying the said property.

c. That pending the special leave petition, the Court Receiver, High Court, Bombay or some other fit or proper person be appointed receiver in respect of the said property, with all power under Order XL Rule 1 of the Code of Civil Procedure, 1908, including the power to remove the security guards, agents, servants of the Respondent No.1 from the said property, with the help of police,  if necessary; and

d. Pass such further and other orders and/or directions as may be deemed fit and property by this Hon’ble Court in the facts and circumstances of the case and in the interest of justice.

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property” and the DEVELOPERS agreed to develop the property

on  various  terms  and  conditions  specified  under  the

AGREEMENT. It appears from the record that there is some

single  venture  partnership  agreement  between  the  two

companies (DEVELOPERS). From the huge mass of documents

filed in these appeals, it appears that there are two documents

witnessing  such  partnership  agreement.  They  are  dated

16.6.2006 and 10.12.2008. The language and content of both

the documents is substantially similar and an interesting fact

which is required to be taken note of  is that the 16th June

2006 document refers to the AGREEMENT dated 23.6.2006.

The  complete  details  of  the  terms  and  conditions  of  the

AGREEMENT are not necessary for the purpose of this appeal.

For  the  present,  it  must  be  noted  that  under  the

AGREEMENT,  the  DEVELOPERS  agreed  to  an  amount  of

Rs.10  crores  in  three  installments  as  detailed  in  the

AGREEMENT.  It is agreed under clause 4 of the AGREEMENT

that “the owner shall permit the DEVELOPERS to enter upon

the  said  property  and  to  commence  the  development

thereof….”  It is agreed under clause 6 that all the necessary

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permissions/NOCs/orders which are required to be obtained

shall  be  obtained  by  the  DEVELOPERS.  The  appellant  is

obliged to cooperate by executing appropriate documents for

the said purpose. Under Clause 172 of the AGREEMENT, it is

stipulated that  the “DEVELOPERS shall  have the  license to

enter upon the said property”.  

6. Under Clause 313 of the AGREEMENT, it is provided that

the  DEVELOPERS shall  commence  development  of  the  said

property and the construction of the building thereof within 30

days from the  date  of  the final  amended building plan and

complete the construction within a period of 24 months from

the date of issue of the commencement certificate.  

7. The various legal consequences that would flow from the

failure  on  the  part  of  the  DEVELOPERS  to  discharge  the

obligations under the AGREEMENT are provided under Clause

32 of the AGREEMENT.  The crux of the Clause 324 is that in 2  Clause 17. Upon payment of the balance of monetary consideration by the Developers to the Owners as provided in Clause 3(b) the Owner shall permit and the Developers shall have the license to enter upon the said Property to develop the said Property to carry on construction on the said property and for that purpose to do all acts, deeds, matters and things as may be necessary. 3  Clause  31.  The  Developers  shall  commence  the  development  of  the  said  property  and construction of buildings thereon within thirty days from the date of sanction of the final amended building plans and complete the development and construction of all buildings in all respects as provided herein and make the buildings fit  and ready for  occupation and the Developers  shall  apply for  issue of Building Completion Certificate and pending the issue thereof for issue of Occupancy Certificate of each of the buildings within a period of 24 months from the date of issue of commencement certificate of development. 4  Clause 32(A)(a).  If the Developers failed to complete within the item stipulated hereinabove the construction of the Owner’s lot of premises in any building under construction, the Owner shall be entitled

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the event of the DEVELOPERS not performing their part of the

obligations of  completing the construction within the period

stipulated in the AGREEMENT, the appellant is entitled to get

the construction completed at the cost of the DEVELOPERS.

Parties  also  agreed  that  such  cost  be  determined  by  an

independent architect of the appellant’s choice.  Once the cost

is  determined  the  appellant  is  entitled  to  call  upon  the

DEVELOPERS  to  deposit  such  cost  with  the  appellant’s

advocates and solicitors within a period of three months from

the  date  of  receipt  of  intimation  of  the  cost.  If  the

DEVELOPERS make such a deposit, the appellant is entitled

to  have  the  construction  completed  through  “independent

contractors” “at the risk and cost of the DEVELOPERS”.  In the event

of the DEVELOPERS failing to make such a deposit, the owner

is entitled to terminate the AGREEMENT.

to get the cost of completion of the alliance work of construction of such entire building including the Developer’s  Lot  of  premises  determined  by  an  independent  Architect  and  thereafter  the  owner  shall intimate to the Developers the estimated cost so determined by such independent Architect for completing the construction of such entire building as aforesaid.  

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8. By clause  335 of  the  AGREEMENT,  the  parties  agreed

that any dispute arising out of the breach of any one of the

various clauses enumerated thereunder shall be resolved by

arbitration. It is further provided that any dispute arising out

of the termination of the AGREEMENT invoking Clause 32(A),

shall not be the subject matter of any arbitration.  

9. M/s Prajita Developers Private Limited, the petitioner in

the  disposed  of  SLP(C)  Nos.7483-7484/2016  and  the  1st

respondent in the present appeal (hereafter PRAJITA) claims to

be the assignee of M/s Sharyans Resources Private Limited.

The terms of the assignment are said to be evidenced by the

document “Deed of Assignment” dated 20.4.2010 confirmed by

the appellant and the 2nd respondent.

10. A number of complicated arrangements were entered into

in different combinations at different points of time between

the appellant, the DEVELOPERS and some third parties to the

AGREEMENT,  who  are  otherwise  said  to  be  related  to  the

5  Clause 33.  The provisions contained in Clauses 1A, 2, 7, 8, 12, 13(A), 8c(B), 16, 17, 18, 20, 21, 23, 24(a) to (c) 25, 26, 27, 28, 29, 31, 32(A)(B), 34, 35, 35(B), 8c 37 hereof the basic and essential terms of this Agreement and in case of any breach of the same it shall be referred to Arbitration as provided in Clause No.40 before termination of  this  Agreement  on account  of  such breach.   The termination on account of breach of this Development Agreement as provided under Clause 32(A) above shall not be the subject matter of any arbitration as aforesaid and the parties will be entitled to exercise their respective rights under the said Clause 32(A) above.   

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appellant, the details of which we do not propose to mention in

this order.

11. The first respondent filed an application (No.829 of 2015)

under Section 9 of the Arbitration & Conciliation Act, 1996

(hereafter referred to as ARBITRATION ACT) for an injunction

restraining appellant from dispossessing respondent no.1 and

also an injunction restraining the appellant from creating any

third  party  right,  title  or  interest  in  the  said  property.

Initially  some  ad-interim  orders  were  passed  in  the  said

application, but the application itself was eventually dismissed

on 14.01.2016.

12. PRAJITA  carried  the  matter  in  an  intra-court  appeal

(No.74/2016) which also came to be dismissed by a judgment

dated 04.03.2016. It is recorded therein;

“Para  7  …  Admittedly,  as  per  the  agreement,  the development was supposed to commence within 30 days and should be completed within a time period of 12 months from the  date  of  IOD/Commencement  Certificate.   The  plans were approved on 2 January 2008 and CC was obtained 22  September  2008.   No  steps  to  initiate  even construction were taken.  Admittedly the development of the remaining was not completed before September 2011 – even the foundation was not laid, except some piling work with two columns.  The position remained same till the year 2013-2014.  The said position of 2013 and 2014 still remained same till  this  date.  In the  background,  such

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construction/development  contract  so  entered  into  by Respondent No.1/owner to develop his property as a owner within  his  lifetime  considering  his  age.   The  agreement clause itself shows that time was an essence of the contract to complete the development so that all the parties including the Appellants/Petitioners would get his 25% share after completion  of  the  construction  at  this  costs.  The Appellants/Petitioners entitlement was only after completion of the development.  The remaining 25% was admittedly of Gold  Beam.   In  the  remaining  50% area,  the  Appellants and/or  Gold  Beam  and/or  Sharyans  had  no  right whatsoever.  Their  rights/interest/entitlement  was  also subject  to  the  development  and  construction  for  the development potential area.  The Developers could not even obtain permission, NOC, though obtain re-validation of CC till  the  year  2013.  The  Sharyans  and  his assignee/Petitioner/Prajita,  therefore,  failed to develop the property further as per the agreement.”6  

Aggrieved  thereby,  PRAJITA  carried  the  matter  in  SLP

(No.7483-7484 of 2016) to this Court which was dismissed on

16.03.2016.  

13. During the pendency of the abovementioned proceedings,

on 14.09.2015, PRAJITA filed an application (No.292 of 2015)

under Section 11 of the ARBITRATION ACT praying that the

dispute between the parties be referred to a Sole Arbitrator to

be appointed by the High Court.  

14. The Arbitration Application No.292 of 2015 was disposed

of as withdrawn by an order of the Bombay High Court dated

6  Para 7 of the judgment of the High Court in Arbitration Appeal (L) No.74 of 2016  at page 208 of the Special Leave Petition (Civil) No.18912 of 2017.

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25th July,  2016.   Subsequently,  another  order  dated  5th

August,  2016 came  to  be  passed  in  the  said  matter.   The

relevant portion of the order reads as follows:

“The  learned  Advocate  appearing  for  the  Applicant  on instructions  seeks  to  withdraw  the  above  Arbitration Application as the Applicant is desirous of filing a Suit.  The Arbitration  Application  is  disposed  of  as  withdrawn  with liberty  as  sought.   However,  it  is  clarified  that  if  the Applicant files a  Suit, the same shall be decided on its own merits  and  all  contentions  of  the  Respondents  including their contention that the Suit would not be maintainable, are kept open”.

Aggrieved by the order, the instant Civil Appeal (arising

out of SLP (Civil) No.18912 of 2017) is filed.

 15. On  8.10.2015,  the  appellant  terminated  the

AGREEMENT and informed the same to PRAJITA by issuing a

notice through his lawyer.  Relevant part of the notice is as

follows:

“In view of the above, we hereby terminate the development agreement dated 23rd June 2006.  And we call upon you to remove  yourself  from  the  said  property,  with  immediate effect, otherwise, our client will be taking appropriate action against you.

Our  client  reserves  his  right  to  claim  damages  for  not carrying  out  the  activity  of  the  construction  on  the  said property and/or completing the work of construction within the  stipulated  time  and  causing  severe  hardship  to  our client.”   

We  are  informed  that  subsequently  PRAJITA  filed  a  Suit

bearing  No.295  of  2016  on  28th September  2016  in  the

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Bombay High Court on its Ordinary Original Civil Jurisdiction

praying inter alia:–

“a) That this Hon’ble Court be pleased to declare that the Development Agreement dated 23rd June 2006 (being Exhibit  “C”  hereto)  is  valid  subsisting  and  binding upon the Defendant No.1;

b) That this Hon’ble Court be pleased to declare that the purported termination notice dated 8th October 2015 issued  by  the  Defendant  No.1  (being  Exhibit  “HH” hereto) is bad in law and contrary to and precluded by the specific terms of the Development Agreement dated 23rd June 2006;

c) That this Hon’ble Court be pleased to pass a Decree directing the Defendant No.1 to specifically perform his obligations  under  the  Development  Agreement  dated 23rd June 2006.:  

It is not necessary to mention the various other prayers made

in this Suit except to note that there are some more prayers.

16. It  appears  that  another  two  arbitration  petitions  are

pending before the Bombay High Court.  It is stated in Para 17

of the Interlocutory Application No. 75003/2017:

“As on date, the Petition (under Section 9 of the said Act) filed by the Respondent No.1/Applicant, before the Bombay High Court, being Arbitration Petition No.697 of 2016, and the Application (under Section 11 of the said Act), filed by the  Respondent  No.1/Applicant,  before  the  Bombay  High Court,  being  Arbitration  Application  No.234  of  2016,  are pending hearing and final disposal.”

The  details  of  those  petitions  are  not  readily  available

from the record placed before us.

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17. The following undisputed facts emerge:

1. The  appellant  granted  to  the  DEVELOPERS under  the

AGREMEENT of 23rd June 2006 the “right to develop” the

property in question;

2. Under the AGREEMENT, the appellant is entitled to 50%

of  the  “Development  potential”  and  the  DEVELOPERS

jointly  are  entitled  to  the  balance  50%  of  the

“development potential”.

3. Between the two companies which jointly constituted the

DEVELOPERS, each company is entitled to 50% of that

portion of the “development potential” which falls to the

share of the DEVELOPERS;

In other words, the share of SHARYANS is only 25% of

the “development potential”;

4. It  is  agreed  between  the  parties  that  the  construction

must be completed within 24 months from the date of the

issue  of  the  commencement  certificate  of  development,

subject to some exceptions;

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5.  M/s  PRAJITA  is  not  the  original  party  to  the

AGREEMENT  but  stepped  into  the  shoes  of  M/s

SHARYANS on 20.04.2010 under a deed of assignment.

6. As on date, no construction worth mentioning at all  is

made, not to mention about completing the construction;

18. The  background  of  the  above-mentioned  facts;   When

these matters were initially listed before us on 31st July, 2017

while adjourning the matter to 21st August, 2017, we called

upon the learned senior counsel appearing on either side Shri

Mukul  Rohatgi,  appearing  for  the  appellant  and  Shri  P.

Chidambaram,  appearing  for  PRAJITA  to  explore  the

possibility of an out of court settlement to give a quietus to the

entire litigation.   When the matter was listed on 21st August,

2017, on behalf of the appellant, it is stated by Shri Rohatgi

that the appellant has in fact received so far an amount of Rs.

8.5 crores approximately from PRAJITA and its predecessor in

interest.   The appellant is willing to pay an amount of Rs. 20

crores to PRAJITA in order to have an undisturbed possession

and peaceful enjoyment of the property in question.  According

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to the appellant,  PRAJITA has posted armed guards around

the  property  in  question  preventing  the  appellant  from

entering the property.

19. On  the  other  hand,  Shri  Chidambaram  appearing  for

PRAJITA  submitted  that  PRAJITA  is  not  agreeable  for  the

settlement of the dispute on the terms offered by the appellant

and  since  PRAJITA  has  rights  acquired  by  the  deed  of

assignment etc. referred to earlier in the property in question,

it  posted  guards  to  protect  the  property  in  question  from

encroachment but not to prevent the appellant in any manner

from visiting the property.    

20. Having regard to the totality of the circumstances, we are

of the opinion that the ends of justice would be met in this

case by directing as follows:-

The appellant shall deposit an amount of Rs. 20 crores

by demand draft to the Registry of this Court within a period

of four weeks from today and intimate the same to PRAJITA.

Upon the receipt of such intimation, PRAJITA shall withdraw

all  the  security  personnel  deployed  by  it  and  hand  over

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possession of the property in question within a period of seven

days  from  the  date  of  the  receipt  of  the  above-mentioned

intimation  to  the  appellant  in  the  presence  of  the

Commissioner  of  Police,  Mumbai  or  any other  senior  police

officer subordinate to the Commissioner of Police, Mumbai to

be nominated by the Commissioner of Police.

The Commissioner of Police or his nominee shall draw a

Panchnama of the fact of the handing over of the property by

PRAJITA to the appellant and file the same in the Registry of

this Court within a week from the date of the handing over of

the possession.

Upon the filing of  the Panchnama with the Registry of

this Court, PRAJITA shall be at liberty to withdraw the amount

of Rs. 20 crores deposited by the appellant pursuant to this

order.

21. We do not also see any justification for the demand of the

PRAJITA for the specific performance of the agreement dated

23.6.2006.   In the circumstances of the case, we are of the

opinion that permitting the continuance of the suit for specific

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performance of the AGREEMENT which is more than a decade

old  against  a  person  from  whom  PRAJITA  secured  the

development rights of the property in dispute which ultimately

would enable PRAJITA to 25 per cent of the monetary value of

the development potential as against the right of the appellant

who is entitled for 75 per cent of the monetary value of the

development potential would be unjust.     

22. The background of  the facts  and circumstances of  the

case  whether  PRAJITA  would  be  entitled  for  any  damages

apart from receiving the above-mentioned amount of  Rs. 20

crores  from the  appellant  is  a  matter  which  requires  some

examination.   We therefore, deem it appropriate to refer the

said  question  for  resolution  by  arbitration  between  the

appellant and PRAJITA.  We, therefore, direct that the parties

shall  submit the above-mentioned dispute for arbitration by

Hon’ble Shri Justice P. Venkatarama Reddy, former Judge of

this Court in accordance with law.   Registry is  directed to

communicate  this  Order  to  Hon’ble  Shri  Justice  P.

Venkatarama Reddy.  

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Civil Appeal and Miscellaneous Application are disposed

of accordingly.

….....................................J.                (J. CHELAMESWAR)

……. ………….....................J.            (S. ABDUL NAZEER)

New Delhi August 30, 2017

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