A.No.228 of 2009 was filed by the plaintiff seeking for an order of injunction restraining the respondents from in any manner alienating or encumbering the 10th floor of property situate at T.S.No.6/1, Block No.7 of Velacherry Road, Venkatapuram Village, Guindy Taluk, Chennai -42 to an extent of 17670 sq.ft along with the proportional undivided share in the land, pending disposal of the suit.
2. A.Nos.1240 and 1241 of 2008 were filed by the second defendant for rejecting the plaint and for referring the matter to arbitration.
3. A.No.1242 of 2009 was filed by the plaintiff to direct the respondents to forthwith remove all improvements made in the suit schedule property.
4. A.No.1243 of 2009 was filed to appoint an Advocate Commissioner to inspect the suit schedule property and note down its physical features.
5. A.Nos.252 and 253 of 2009 were filed by the second defendant for vacating the interim order of status quo passed on 29.08.2008 in O.A.No.944 of 2008 in C.S.No.818 of 2008 and for directing the first respondent/plaintiff to deposit a sum of Rs.6,66,15,000/- in favour of the above suit, pending disposal of the suit.
6. The plaintiff filed a suit in C.S.No.818 of 2008 for passing a judgment and decree directing the first defendant to specifically perform his part of the contract dated 09.03.2006 as revised by executing and registering the sale deed for 9th floor area in favour of the plaintiff, and do all deeds, acts and things necessary to have the schedule property conveyed absolutely in favour of the plaintiff and hand over possession of the schedule property to the plaintiff in accordance with the terms of the said agreement and for various other reliefs.
7. It was the case of the plaintiff that they were engaged in the business of construction and development of property in Bangalore, Mysore, Chikmagalure and recently have also started their operations in Chennai, Hyderabad and Kochi. The plaintiff was a part of Brigade Group established in the year 1986. The said group was also in the Hospitality industry through Brigade Hospitality Services Pvt. Ltd and into the educational field through Brigade Foundation. The average annual turnover of the applicant/plaintiff was more than Rs.3649.88 million. With a view to establish an office at Chennai, they were looking out for a specific place. The first defendant who is a relative of one of the Directors of the plaintiff company represented to the plaintiff that a Software Park with 'A' grade quality building was available and the same property was being developed at TS.No.6/1, Block No.7 of Vellacheri Road, Venkatapuram Village, Guindy Taluk, Chennai 42. The first defendant represented that the development of the building was done by the second defendant, who had entered into a Development Agreement with the third defendant in this regard. On terms of the Development Agreement, the third defendant had conferred on the second defendant the right to a certain portion of the built up area in the proposed development, including the schedule property. The first defendant also represented that he was going to be a partner with the second defendant in the development of the properties and that he was in requirement of funds for this purpose. Therefore, the first defendant offered to sell 17,670 sq.ft. (entire floor) of super built area in one of the top three floors, preferably 9th floor of the proposed development on the aforementioned property, to the plaintiff for a sum of Rs.5,63,69,000/-. Believing the statement of the first defendant, the plaintiff had agreed to buy the same and entered into a Memorandum of Understanding (for short MOU). It was in the nature of an agreement to sell, to come into effect immediately.
8. Pursuant to the said agreement, the plaintiff paid a part of the sale consideration being Rs.2 crores to the first defendant as advance by way of cheque. The cheque was encashed by the first defendant and acknowledged by him. The balance amount of Rs.3,63,69,000/- was to be paid subsequently in 12 equal monthly instalments. The first defendant agreed to provide a set of the title documents within a period of 15 days from the date of execution of the Memorandum of Understanding. He also represented that construction of the building will be commenced within four months from the date of execution of MOU. It was further stated that if the construction did not commence within 12 months from the date of MOU, the plaintiff will have the option of seeking refund of the Rs.2 crores paid with interest or alternatively to condone the delay. The first defendant also assured that he had not entered into any agreement with any third party and that he will not create any encumbrance or enter into agreement with anyone regarding the properties in future. It was also made clear that the first defendant's entitlement will depend upon the fulfilling of the obligation by the first defendant.
9. It was stated that though as per the MOU, the first defendant was required to provide the plaintiff a complete set of title documents, he failed to do so. The first defendant also did not procure the second defendant to execute an agreement in confirmation. The plaintiff, who was in touch with the first defendant repeatedly reminded him of his obligations. Thereafter, he addressed a letter dated 08.01.2007 to the first defendant. The first defendant was requested to forward a draft of the agreement entered into between the second defendant and the plaintiff. It was stated that the MOU itself is a binding contract and the execution of a further formal and detailed agreement with the second defendant was only to be an affirmation of the same. The plaintiff and the first defendant have acted upon the MOU since the plaintiff had already paid Rs.2 crores which was accepted by the first defendant.
10. It was further stated that the first defendant addressed a letter dated 22.03.2007, wherein it was stated that the project had started during October 2006 and the plans were also been sent for sanction in August 2006 and that the sanction was awaited. The first defendant further stated that once the plan was approved, necessary agreement should be executed. He also confirmed the understanding about the balance consideration. On 19.07.2007, the plaintiff addressed a letter to the first defendant referring to the discussions that they had on 17.07.2007. The first defendant stated that the 9th floor area was larger than what was agreed to be conveyed and that he had incurred higher construction cost and therefore, he requested the plaintiff to increase the sale consideration. He also claimed that he had become a partner with the second defendant. With a view to speed up the conclusion of the matter and to show their bonafides of readiness and willingness, the plaintiff agreed to pay the increased consideration.
11. The first defendant claimed that the 9th floor area was 19,034 sq.ft instead of 17,670 sq.ft to be sold and therefore, the consideration was for the payment of extra space of 6,670 sq.ft at the rate of Rs.3000/- per sq.ft. For 11,000 sq.ft, the consideration would be Rs.3,300/- per sq.ft and for the remaining 1,364 sq.ft, the consideration would be Rs.4,000/- per sq.ft. The sale consideration thus stood revised to Rs.6,17,66,000/-. The first defendant agreed to send a draft agreement including the second defendant within a few days as they have become partners in the business. The first defendant also agreed to give car park spaces proportionate to the area agreed to be sold and he promised to intimate the cost of the same.
12. The plaintiff was forced to send a letter dated 27.11.2007 directing the defendant to adhere to the promise. The plaintiff was showing utmost patience because the first defendant's relative was one of the Directors of the plaintiff company. In response to the plaintiff's letter dated 17.07.2008 and 24.07.2008, the second defendant addressed a letter to the first defendant stating that the first defendant had joined and entered into a lease agreement to lease the entire building to the fourth defendant and that the first, second and third defendants have agreed to put the fourth defendant in possession of the schedule properties before 15.10.2008. In that letter, the second defendant advised the first defendant to sell the agreed portion to the plaintiff and request them to lease that floor also to the fourth defendant.
13. It was further stated that the second defendant was willing to register the areas allotted to the first defendant in favour of the first defendant's nominees, indicating that they did not have any objection to the first defendant selling the 9th floor in favour of the plaintiff thereby adhering to the MOU. The plaintiff addressed a letter dated 26.07.2008 to the first defendant stating that they are ready and willing to perform their part of obligation under the MOU by paying the balance sale consideration and the revised rates directly to the second defendant if so required and further, even lease out the 9th floor in favour of the 4th defendant. The plaintiff was not obliged to offer the same. The plaintiff wanted the schedule property for its own use and they are even ready to join in the lease of the property in favour of the fourth defendant upon the conveyance of the schedule property in favour of the plaintiff but the first defendant should adjust the advance or deposit receipt from the 4th defendant against the balance sale consideration. Since the first defendant failed to respond to the letter of the plaintiff, the plaintiff issued a legal notice calling the first defendant to come forward and comply with his obligations.
14. It was submitted that from the very outset, the first respondent having received Rs.2 crores as advance failed to make his commitments. The first defendant was not entitled to create any interest over the suit property in favour of the fourth defendant. The attitude of the defendant is that with a view to capitalizing on an increase in prices or with a view to extorting money, the first defendant is adopting and attempting to wriggle out of the contract with the plaintiff. Since the plaintiff was always ready and willing to perform his part of the contract, it is the who had defendant to adhere to the MOU. The third defendant has conferred the right on the second defendant to construct the buildings and have a portion of the land and built up area allotted to h is share under the development agreement. Therefore, the second and third defendants were also been made as parties. It is in these circumstances, the suit was filed and the applications were taken out, protecting the interest of the plaintiff.
15. Pending the suit, this Court in O.A.No.944 of 2008 on 29.08.2008 granted an order of status quo. This Court also appointed one Advocate Commissioner to visit the suit property after giving notice to both sides and note down the physical features and file a report within 10 days. Subsequently, on 10.02.2009, the matter was referred for mediation. However, the attempt to mediate between the parties had failed and hence, the matter came to be posted before this Court.
16. The second defendant filed an application in A.No.252 of 2009 to vacate the interim order. The second defendant had stated that they are a partnership company and the plaintiff and the first defendant entered into a MOU overlooking the previous agreements with the land owners, developers or others concerned with the project. The 9th floor was registered in favour of the second defendant's nominees on 28.08.2008 prior to the order passed by this Court. Subsequent to the partition of the suit, the second defendant met the plaintiff and that it was agreeable to take the 10th floor in lieu of 9th floor and the payment of suitable consideration was to be determined subsequently. It was also stated that the second defendant has filed their written statement already. Taking advantage of the pendency of the suit, the plaintiff was not making any payment towards the purchase of the 10th floor which was agreed to be allotted and sold to him subsequent to the partition of the suit. The cost of the 10th floor calculated at the rate of Rs.5,000/- per sq.ft worked out to Rs.8,66,15,000/-. After giving credit to the amount of Rs.2 crores already paid, balance of Rs.6,66,15,000/- remains to be paid. The plaintiff must be directed to deposit the entire amount and upon the same, the project will be completed. It was also stated that the fourth defendant has written a letter dated 07.01.2009 threatening to withdraw from the lease agreement and they have asked for refund of the advance together with interest. It was stated that MOU dated 09.03.2006 will reveal that the first defendant has himself misrepresented and lured the plaintiff to part with Rs.2 crores and at the time of MOU, the plan itself was not sanctioned from CMDA. Therefore, the status quo order should be vacated.
17. The first defendant has also filed a counter affidavit stating that on 29.08.2008, the first defendant's counsel has given an undertaking that they will not alienate the 9th floor pending disposal of the suit and he also reitereated that his family will not alienate the 9th floor of the suit property standing in the name of his sons.
18. The Advocate Commissioner had filed a report dated 22.09.2008 and it was noted as follows:
i)The schedule property (9th floor) was under construction and vacant.
ii)There are two stair cases to 9th floor. Both are under construction and incomplete.
iii) There are lifts both in Eastern side (Main passenger lift) and Western Side (service lift). Both side lifts are under construction and incomplete. One side single lift is working for urgency through Diesel Generator Power.
iv) Toilet Area under construction and complete.
v) Most of the glass windows were not fixed.
vi)No current supply given.
vii)Diesel Generator Power is there and it is in the ground floor.
viii) No water connection
ix)No flooring work done
x) Some portions of the inner walls have not been finished and scattered.
xi) Roofs not plastered
xii) No while wash on walls
xiii) Some markings with while colour are done in some places in walls and floors of one portion of the schedule property and other portion was not done.
xiv.Glass panel work outside the southern side of the schedule property were under construction.
xv. No doors are fixed.
19. In the mean time, the second defendant apart from filing the vacate stay application also filed A.No.253 of 2009 for a direction to the first respondent/plaintiff to deposit a sum of Rs.6,66,15,000/-, towards balance consideration of 10th floor.
20. The first defendant has also filed A.Nos.1240 and 1241 of 2009 for rejecting the plaint and referring the issue for arbitration. It was stated that this Court in the light of the allegations made can refer the suit to arbitration and he had also stated that there was no contract between the second,third and fourth defendants and the plaintiff. The first defendant is the only party against whom the plaintiff will have to seek for his eventual remedy. In the application filed under Order 7 Rule 11 it was stated that since there was no cause of action against the second defendant and hence the plaint should be rejected.
21. Considering the facts and circumstances of the case, it must be seen that the MOU is only with the plaintiff and the first defendant. There is no agreement between the other defendant either with the plaintiff or with the second defendant. At the maximum, the plaintiff can only say that he had advanced money pursuant to a MOU and he has to work out his remedy as against the first defendant. Because of that, he cannot stall any work by way of injunction against the defendants acting in a particular manner. The suit for specific performance based upon MOU which did not fructify into a final contract, cannot be the basis for granting an interim injunction. Therefore, even the status quo order is not permissible since the first defendant had stated that the 9th floor will not be alienated either by himself or by his family members.
22. Hence, the order of status quo granted on 29.09.2008 will stand vacated and the application in O.A.No.944 of 2008 will stand dismissed. Consequently, application in A.No.252 of 2009 will stand allowed. However, the undertaking given by the first respondent will continue until the disposal of the suit.
23. With reference to referring the issue for arbitration and rejecting the plaint is concerned, there are no grounds made out to entertain those two applications filed by the second defendant. For rejecting a plaint, only plaint averments will have to be taken note of as held by the Supreme Court in Liverpool & London S.P. & I Association Ltd. Vs. M.V. Sea success I and another reported in (2004) 9 SCC 512. Hence, A.Nos.1240 and 1241 of 2009 will stand dismissed. Similarly, A.Nos.1242 and 1243 will also stand dismissed.
24. In so far as A.No.253 of 2009 is concerned, since the plaintiff had not come forward to purchase the property, the question of directing them to deposit certain amount did not arise. Hence, A.No.253 of 2009 will also stand dismissed. No costs.
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