Section 1A of the Power of Attorneys Act, 1882 defines "power of attorney" to include any instrument empowered specific person to act for and in the name of the person executing it. The person who executes a power of attorney is generally called as "the donor" and the person who is authorised to act for the donor is generally called as "the donee" or "the attorney". The attorney is authorised to act for and on behalf of and in the name of the donor of the power of attorney. The attorney acts as an agent of the donor of the power of attorney subject to the terms and conditions embodied in the document of power of attorney. It cannot be doubted that an agency can be terminated by the principal by revoking his authority or by the agent by renouncing his authority (vide Section 201 of the Indian Contract Act) unless such revocation is prohibited under Section 202 of the Indian Contract Act or any other law. Just as any contract though termed as irrevocable in the instrument of contract can be rescinded for a breach, a power of attorney which is a contract of agency can also be terminated for a breach unless such termination is prohibited under Section 202 of the Indian Contract Act or any other law. Mere mention in the title or the body of a power of attorney that it is irrevocable, does not make it irrevocable. However, if the agent has himself an interest in the property which forms the subject matter of the agency, the agency cannot in the absence of the express contract be terminated to the prejudice of such interest. (See Section 202 of the Indian Contract Act.)
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Bombay High Court
Barses J.A. D'Douza vs The Municipal Corpn. Of Gr. ... on 27 February, 2003
Equivalent citations: 2003 (6) BomCR 846, 2004 (1) CTLJ 506 Bom, 2003 (4) MhLj 451
1. This appeal came up for hearing on admission on 14th January, 2003 when the learned counsel for the parties agreed that the appeal should be heard finally at the stage of admission itself and was accordingly adjourned for final hearing. Appeal then came up for final hearing on 22nd January, 2003 and after hearing for sometime was adjourned several times for settlement. As the settlement was not possible, hearing was continued and concluded today.
FACTS
2. For the sake of convenience, the parties are referred to by reference to their original status in the suit. The plaintiff is the owner of several properties bearing C.T.S. Nos. 150, 150/1 to 6, 151, 152, 152/1 & 2 together admeasuring about 6,251.30 sq. metres and more particularly described in Clause 1 of Exhibit A to the plaint which are hereafter referred to as the suit properties. The plaintiff is also the owner of some other properties in respect of which separate agreement/s were executed between the parties but, which are not the subject matter of the suit. By an agreement dated 29thSeptember, 1986 executed by the plaintiff on the first part and promoters of defendant No. 3 company on the second part, the plaintiff agreed to entrust the development rights in respect of the suit properties in favour of defendant No. 3 which was then under incorporation. The defendant No. 3 company was subsequently incorporated and it is common ground between the parties that the agreement was thereafter regarded as an agreement entered between the plaintiff and he defendant No. 3 company and was acted as such. Under the said agreement, the defendant No. 3 agreed to pay to the plaintiff the consideration calculated at Rs. 150/- per sq. ft. of the Floor Space Index (for short FSI) permitted for development by the Municipal Corporation of Brihan Mumbai which is the defendant No. 1 in the suit. Clause 6(a) of the agreement shows that a sum of Rs. 1,00,000/- was paid as earnest money and further sum of Rs. 7,00,000/- was to be paid by the developers (defendant No. 3) within a period of 30 days of the obtaining of the Intimation of Development (for short IOD). The entire balance except Rs. 50,000/- was to be paid within 30 days of the obtaining of the Commencement Certificate. The agreement contains usual clauses regarding the rights of defendant No. 3 to carry out the building construction and to sell flats, shops, offices etc in the buildings to be constructed on the suit properties and giving of Power of attorney by the plaintiff to the defendant No. 3 or its nominees. The agreement did not contain a clause of termination. On 19th November, 1986 a supplementary agreement was executed between the plaintiff on one hand and the promoters of defendant No. 3 on the other hand under which all the terms and conditions of the previous agreement dated 29th September 1986 except to the extent modified by the supplemental agreement were to remain in force. Clause 3 of the supplemental agreement dated 19th November, 1986 conferred a right and option to the plaintiff either to terminate the original agreement dated 29th September, 1986 if, the defendant No. 3 did not pay the consideration within 90 days of the due date or to claim interest at 18% p.a. from the expiry of 90 days. In pursuance of the said agreement dated 29th September 1986 the plaintiff has executed a power of attorney in favour of three persons namely Mr. Waynee C. D.'Lima and Mr. Julian A. D.'Souza and Mr. Sunil C. Pereira who were the directors of defendant No. 3 company. The third attorney Mr. Julian A. D'Souza was son of the plaintiff and has since died. The deed of power of attorney authorises the attorneys to do all necessary things in furtherance of the agreement dated 29th September, 1986 and specifically authorises the attorneys to appoint architects, engineers and surveyors. Before granting of the power of attorney on 3rd August, 1990 the plaintiff on the request of defendant No. 3 had submitted plans under his own signature to the defendant No. 1 Municipal Corporation for sanction on 1st January, 1990. In pursuance of the Commencement Certificate granted by the respondent No. 1 Municipal Corporation on 6th May 1994, the defendant No. 3 commenced the development of the property and part of the property has been developed. As per Clause 6 of the agreement dated 29th September 1986, the defendant No. 3 ought to have paid the entire consideration except a sum of Rs. 50,000/- within 30 days of the obtaining of the Commencement Certificate i.e. by 6th June, 1994. Learned counsel for the defendant No. 3 submits that the plans were sanctioned for construction of 71,850 sq. ft. but the defendant No. 3 was to commence the work in stages under different Commencement Certificates issued on 25th November 1994, 23rd December 1995 and 26th April, 2001. The learned counsel for the defendant No. 3 has not given any particulars as to the FSI sanctioned at each stage. He is however submitted that the total F.S.I. sanctioned was 71850 sq. feet and consideration calculated at the rate of Rs. 150/per sq.ft. of FSI would come to Rs. 1,07,77,500/-. According to the defendant No. 3, it has so far paid to the plaintiff a sum of Rs. 62,12,000/- which is disputed by the plaintiff who claims to have received only Rs. 22,00,000/- in respect of the suit properties. According to the plaintiff, he has received some more money in respect of his other properties for which separate agreements were made with the defendant No. 3. Even if T were to assume that the defendant No. 3 has paid a sum of Rs. 62,12,000/- as contended by it, still there is a huge shortfall of more than Rs. 40,00,000/- which had to be paid within 30 days of the obtaining of the Commencement Certificate.
3. According to the plaintiff, despite several requests and demands and writing of letters, the defendant No. 3 did not pay the balance consideration. Therefore, by a notice dated 3rd December, 1999 addressed to the defendant No. 3 and its directors the plaintiff terminated both the agreements (i.e. agreement dated 29th September, 1986 supplemental agreement dated 19th November, 1986) and also revoked and cancelled the power of attorney/s executed in favour of the directors of defendant No. 3. In paragraph B of the notice, the plaintiff has enumerated several breaches of the agreement including non-payment of consideration and non-payment of municipal taxes agreed to be paid by the defendant No. 3. The plaintiff also wrote a letter to the defendant No. 1 Municipal Corporation on 14thDecember, 1999 intimating the termination of the agreements and the revocation of the power of attorney and also informing it that the attorneys whose authority was revoked were no longer entitled to represent the plaintiff. Prior to the termination of the agreement, Mr. G.D. Sambhare was appointed as an architect for supervising the construction by common consent of the plaintiff and defendant No. 3. In view of this termination and disputes between the plaintiff and defendant No. 3, by a letter dated 21st December, 1999 Mr. Sambhare withdrew his supervision memo and resigned as the architect of the project. By a letter dated 3rd January 2000, the defendant No. 1 Municipal Corporation informed the plaintiff about the resignation of Mr. Sambhare and requested him to appoint a new architect for supervising the construction. The plaintiff thereafter appointed one Mr. C.S. Mahajan as the architect of the project and informed the corporation about his appointment. The plaintiff also submitted a letter of "no objection" obtained from Mr. Sambhare for appointment of Mr. C.S. Mahajan, as required under rules of the defendant No. 1 Municipal Corporation.
4. The directors of the defendant No. 3 being the constituted attorneys of the plaintiff under the power of attorney dated 3rd August, 1990 (which was revoked) appointed Mr. H.A. Mehta as the architect of the project and sent intimation of his appointment to the defendant No. 1 requesting it to accept his appointment. By a letter dated 1st January 2001, the defendant No. 1 accepted the appointment of Mr. H.A. Mehta for the purpose of supervision of the construction. The defendant No. 1 did not accept the appointment of Mr. C.S. Mahajan as the architect nor did it inform to the plaintiff any reason for not accepting his supervision memo and the appointment as the architect of the project for supervising the construction. Thereafter, the plaintiff filed the suit bearing suit No. 6586 of 2001 against the Municipal Corporation as defendant No. 1 Mr. H.A. Mehta as defendant No. 2 and the developer as the defendant No. 3. The plaintiff claimed that on account of the termination of the agreement and the power of attorney, the defendant No. 3 or its directors had no right to appoint defendant No. 2 as the Architect for the project. The plaintiff accordingly prayed for a permanent injunction restraining the defendant No. 2 from acting as the architect of the plaintiff and restraining the defendant No. 1 from allowing the defendant No. 2 to act as such. The plaintiff also prayed for a mandatory direction to accept the supervision memo of Mr. C.S. Mehta as the architect of the project. In the said suit, the plaintiff took out the Notice of Motion No. 1708 of 2001 claiming the interim injunction. The City Civil Court after hearing the parties dismissed the Notice of Motion by its judgment and order dated 2nd May 2002 which is impugned in this appeal.
POINTS FOR CONSIDERATION
5. On the basis of the contentions raised by the learned counsel for the parties, following points arise for my consideration:
(1) Whether the mere mention in the power of attorney that it is irrevocable would make it irrevocable?
(2) Whether the suit power of attorney was revocable and could be terminated (for breach of principal agreement) though it was termed as irrevocable?
(3) Whether the agreements dated 29th September, 1986 and 19th November, 1986 and the power of attorney dated 3rdAugust, 1990 were validly terminated on account of the breaches?
(4) Whether the donor of a power of attorney ceases to have an authority to continue to act and exercise the power of an owner merely by reason of giving of the power of attorney?
(5) Whether the plaintiff is entitled to an injunction and if so on what term?
6. Section 1A of the Power of Attorneys Act, 1882 defines "power of attorney" to include any instrument empowered specific person to act for and in the name of the person executing it. The person who executes a power of attorney is generally called as "the donor" and the person who is authorised to act for the donor is generally called as "the donee" or "the attorney". The attorney is authorised to act for and on behalf of and in the name of the donor of the power of attorney. The attorney acts as an agent of the donor of the power of attorney subject to the terms and conditions embodied in the document of power of attorney. It cannot be doubted that an agency can be terminated by the principal by revoking his authority or by the agent by renouncing his authority (vide Section 201 of the Indian Contract Act) unless such revocation is prohibited under Section 202 of the Indian Contract Act or any other law. Just as any contract though termed as irrevocable in the instrument of contract can be rescinded for a breach, a power of attorney which is a contract of agency can also be terminated for a breach unless such termination is prohibited under Section 202 of the Indian Contract Act or any other law. Mere mention in the title or the body of a power of attorney that it is irrevocable, does not make it irrevocable. However, if the agent has himself an interest in the property which forms the subject matter of the agency, the agency cannot in the absence of the express contract be terminated to the prejudice of such interest. (See Section 202 of the Indian Contract Act.)
7. It is necessary to be seen whether any interest was created in the suit property in favour of the attorneys namely Mr. Sunil C. Pereira or Mr. Wayne C. D'Lima. As the third attorney Mr. Julien D'Souza is dead, it is not necessary to consider whether any interest was created in his favour. The agreement dated 29th September 1986 and the supplemental agreement dated 11th November 1986 were signed by Mr. Sunil Pereira and Mr. Wayne D'Lima and others not in their individual capacity but, as the promoters of defendant No. 3 company. It is not their case that they were acting in their personal capacity or that any personal interest or rights were created in their favour. Rights were created in favour of the defendant No. 3 company and not its directors or promoters. No interest was created in the suit property in favour of the attorneys. The power of attorney was not given to the defendant No. 3 which is a company and a person in eye of law. The power could have been given to the defendant No. 3 with a further power to delegate the authority to its directors or officers. This was not done. As no interest qua the suit property which is the subject matter of the power of attorney was created in favour of the attorneys, it could not be made irrevocable under Section 202 of the Indian Contract Act.
8. Even If I were to assume, as contended by the learned counsel for the defendant No. 3 that interest of the attorneys was synonymous with the interest of defendant No. 3 company they being the directors thereof yet it would have to be seen whether defendant No. 3 had any subsisting interest in the suit property under the agreement dated 29th September 1986 or supplemental agreement dated 19th November 1986. Section 54 of the Transfer of Property Act provides that an agreement for sale by itself does not create any interest in or charge on the property. It has also to be noted that the suit property admeasures 6251.30 sq. mtrs. which is far in excess of the ceiling area of 500 sq. meters prescribed under the Urban land (Ceiling and Regulation) Act, 1971, (for short the Urban Ceiling Act). The plaintiff was an excess holder holding land in excess of the ceiling limit and had filed a return under Section 6 and also an application for exemption under Section 20 of the Urban Ceiling Act. Section 5(3) of the Urban Ceiling Act prohibits the transfer of any vacant land or part thereof by way of sale, mortgage, gift, lease or otherwise from the date of commencement of the Act until the excess holder has filed a return under Section 6 and a notification regarding excess vacant land held by him has been published under Section 10 of the Urban Ceiling Act. Sub-section (4) of Section 10 of Urban Ceiling Act prohibits transfer of excess vacant land from the date of publication of the notification under Sub-section (1) of Section 10 till the publication of the Notification under Sub-section (3) of Section 10. Thus, transfer of excess vacant land is completely prohibited between the period commencing from the date of coming into force of the Urban Ceiling Act till the vesting thereof in the state. Sections 20 and 21 of the Urban Land Ceiling Act permit the Government to grant an exemption from the provision of Chapter III of the act and permit the holder to hold the excess vacant land in accordance with a scheme for construction of houses for weaker sections of the society. Though part of the suit land was occupied by unauthorised hutments, the remaining property was vacant. The plaintiff as well as defendant No. 3 and its promoters knew that the scheme under Section 20 or 21 of the Urban Land Ceiling Act would be required to be approved by the Government, and under the existing policy, some tenaments to be constructed on the excess vacant land would be required to be surrendered to the Government at a pre-determined price. It is for this reason that Clause 3 of the Agreement dated 29th September 1986 provided that the FST consumed for construction of the tenements to be given to the government nominees as per the Urban Land Ceiling Act would be excluded while computing the consideration. Clause 4 of the Agreement also specifically stipulated that the defendant No. 3 would be liable to carry out at its own costs and expenses and risks and responsibilities the terms and conditions of the permission that may be granted under the provisions of the Urban Land Ceiling Act. It is thus, clear that there was a prohibition for transfer of the said property under the Urban Land Ceiling Act and the parties were aware of the same. The parties had therefore not described the agreement dated 29th September 1986 as an agreement of sale though there were some conditions similar to those that are generally found in an agreement of sale. The agreement was couched in the language of a Development Agreement and not an agreement of sale because, neither the suit properties nor any interest therein was not intended to be transferred to the defendant No. 3 as such transfer would have been void under the provisions of Urban Land Ceiling Act. The learned counsel for the defendant No. 3 submitted that under the agreement dated 29th September, 1986 the defendant No. 3 was not only entitled to develop the suit properties but also to sell the flats, shops tenements etc in its own right and reimburse himself of the expenses of development by sale proceeds of tenements, flats and shops. Hence, an interest was created in the suit property in favour of the defendant No. 3 and therefore, the power of attorney was irrevocable under Section 202 of the Indian Contract Act. In my opinion, no interest was created in the suit properties but, the agents were authorised to construct buildings and create an interest in the buildings to be constructed by the defendant No. 3. In India, the concept of dual ownership is well recognised. A person may own the land but, the buildings standing thereon may belong to another. The mere fact that the agents were to be reimbursed of the expenses incurred for the development of the land by sale of the shops, and tenements constructed thereon does not create in the agents an interest in the land within the meaning of Section 202 of the Indian Contract Act.
9. In M. John Kotaiah v. A. Divakar and Ors. , relied upon by the learned counsel for the appellant, the Andhra Pradesh High court observed at para No. 17:
"Thus, it will be seen that if the interest created in the agent is in the result or the proceeds arising after the exercise of the power then the agency is revocable and cannot be said to be an irrevocable agency. However, if the interest in the subject matter say a debt payable to the principal, is assigned to the agent as security simultaneously with the creation of the power and thereafter the agency exercises the power to collect the debt for discharge of an obligation owed by the principal in favour of the agency or owed by the principal in favour of a third party, then agency becomes irrevocable."
In paragraph 18, the court further observed:
"This is also not a case where the principal has assigned any interest simultaneously with the execution of the power of attorney. But, it only created an interest in the resultant product or produce arising out of the exercise of the power. Paragraph 10 of the Power of attorney extracted above permits the agent to recover all his dues and remuneration of 5% of the total value of the total properties developed or otherwise and all the amount lying in various banks are to be fully recovered and duly paid to the attorney. Thus, the interest created in favour of the agent for payment of either his dues or his remuneration is in the product arising out of the exercise of the power and therefore it is clear prima facie that Exh. A1 does not create an irrevocable power of attorney."
10. I am in respectful agreement with the aforesaid observations. The interest, if any, created in favour of the agents in the present case for payment of his dues or reimbursement was only in the produce (that is the buildings to be constructed by defendant No. 3) arising out of exercise of the power and therefore, the power is not irrevocable. In my opinion, therefore the mere mention in the power of attorney dated 3rdAugust, 1990 that it was irrevocable would not make it irrevocable as no interest in the land was created in favour of the attorneys.
Re: Point No. 3.
11. Learned counsel for the respondents that the attorneys to whom power was given under the power of attorney dated 3rdAugust, 1990 were nominees of defendant No. 3 Company. Assuming so, the power of attorney is secondary to the agreements dated 29th September 1986 and 19th November 1986 which would be the principal documents. Admittedly, under the agreement dated 29th September 1986, the defendants were liable to pay a total consideration of Rs. 1,07,77,500/- and excluding the sum of Rs. 50,000/- being the sum to be paid in the end, the entire amount of Rs. 1,07,27,500/- was to be paid within a period of six months from the date of issuance of the Commencement Certificate. After giving credit for the sum of Rs. 12,00,000/- which was to be deducted by way of consideration for shops and flats to be given to the plaintiff, atleast sum of Rs. 95,27,500/- was to be paid by the defendant No. 3 within 6 months of the commencement certificate. The defendant No. 3 has paid only Rs. 22,50,000/- to the plaintiff as consideration towards the suit land even if the contention of learned counsel for the defendant No. 3 that the entire sum of Rs. 62,12,000/- was paid towards consideration of the suit land is accepted, still it cannot be denied that several lakhs of rupees are payable by the defendant No. 3 to the plaintiff. The First Commencement Certificate was issued on 6th May, 1994 and even if I were to accept the contention that the Commencement Certificate were issued in parts (copies of which are not produced on record) still it is admitted that by April 2001 last Commencement Certificate was issued covering the entire suit properties. Thus, there is prima facie breach of the agreement dated 29th September 1986 by non-payment of the agreed consideration. Under Clause 14 of the agreement, the defendant No. 3 was to pay all outgoings cess and taxes in respect of the suit properties from the date of agreement. The defendant No. 3 did not initially pay the property taxes and therefore part of the suit properties were attached in July, 1999 for non-payment of Rs. 30,00,000/- of municipal taxes. It was only then that the defendant No. 3 paid Rs. 16,00,000/- as part payment and temporarily put off the auction sale. All these facts have been narrated by the plaintiff in the notice dated 3rdDecember, 1999. This was also a breach. It is true that in case of agreement of sale of immovable property time for performance is generally not the essence of the contract. But, time can be made the essence of the contract even subsequently. The original agreement did not contain any specific clause of termination of the agreement for breach. However, by the supplemental agreement dated 19th November, 1986 specifically conferred on the owner the right to terminate the agreement if the consideration was not paid on the due dates and for further period of 90 days thereafter. Time was thus made the essence. Despite several letters and demands by the plaintiff, the defendant No. 3 did not pay the instalments on due dates. Plaintiffs therefore had to terminate the agreement dated 29thSeptember 1986 and the power of attorney by a notice dated 3rd December, 1999. If the agreement has been lawfully terminated, the power of attorney which is secondary to the Development Agreement cannot survive independently and cannot continue to be irrevocable. In the circumstances, the plaintiff was entitled to terminate the power of attorney dated 3rd August, 1990 and has lawfully terminated the same by the police dated 3rd December, 1999.
Rights and duties of Power of attorneys and Mr. Mehta
12. The power of attorney holder merely acts as an agent of the principal i.e. donor of the power of attorney. The power of attorney only confers an authority on the agent to represent and act on behalf of and often in the name of the principal in the matters covered by the power of attorney. Mere fact that a power has been given to an agent to do a particular thing does not mean that the principal himself cannot do the said thing. It is open to the principal to do all the things which he has authorised his agent or attorney to do. In a given case, it may be possible that by a separate agreement with the attorney the principal may agree that he himself would not do those things and would not exercise those powers which are given to the agent/attorney. But, in the present case, the principal had not agreed with the attorneys either under the power of attorney dated 3rd August, 1990 or by a collateral agreement that he would not do those things or would not exercise the powers for which authority was to the attorneys. Thus assuming that the power of attorney was irrevocable and/or was not legally revoked, still the principal had the authority to act on his own and appoint an architect by himself as every owner could. Accordingly, the plaintiff who was the principal wrote a letter to the defendant No. 1 after resignation of the first Architect Mr. Sambhare, appointing Mr. C.S. Mahajan as his architect. He undoubtedly had the authority to do so. The letter was accompanied by a no objection certificate issued by Mr. Sambhare as required by the rules of the Municipal Corporation. (See Rule 4, 9 of Chapter 31 of the Brihan Mumbai Building Proposal Manual Revised Edition of 1997). The plaintiff while appointing Mr. C.S. Mahajan as his Architect had produced the necessary no objection of Mr. Sambhare. As a matter of fact, respondent No. 1 Municipal Corporation itself by its letter dated 3rd January, 2000 addressed to the plaintiff had informed him about the resignation of Mr. Sambhare and further called upon him to appoint a new architect in his place. The plaintiff complied with the said requisition of the defendant No. 1 by appointing Mr. Mahajan as the architect. In the circumstances, the respondent No. 1 was not right in not accepting the appointing of Mr. C.S. Mahajan as the Architect.
13. Mr. Mehta defendant No. 2 was appointed as the architect for the project by Mr. Sunil Pereira and Mr. Wayne D'Lima in purported exercise of the powers conferred on them under the power of attorney dated 3rd August, 1990. The date which Mr. Mehta was appointed is not record. However, it is certain that the said appointment was made after 3rd January, 2000 when respondent No. 1 informed the plaintiff about the withdrawal of supervision memo by Mr. Sambhare. Admittedly, by that time the power of attorney was terminated by a notice dated 3rd December, 1999. As such, attorneys did not have any power in them to appoint Mr. Mehta. Even if the contention of learned counsel for the defendant No. 3 that termination of the power of attorney was not valid is accepted, still it cannot be doubted that the attorneys were purporting to act on behalf of the principal i.e. the plaintiff in making the appointment of Mr. Mehta. They had appointed Mr. Mehta not in their own right and own name and as their agent but, they had appointed him as the architect for the plaintiff. As such, Mr. Mehta would undoubtedly be agent of the plaintiff. As an agent, Mr. Mehta is bound to follow the instructions of his principal i.e. the plaintiff under Section 201 of the Indian Contract Act.
14. Injunction is a discretionary relief and before the court grants it, the court must be satisfied that the plaintiff has strong a prima facie case and irreparable loss or damage would be caused to the plaintiff if the injunction is not granted during the pendency of the suit and the balance of convenience is in favour of the plaintiff. While considering the balance of convenience, the court is necessarily required to weigh the probability of injury that is likely to be caused to the plaintiff by refusing the injunction against the injury that is likely to be caused to the defendant by grant of the injunction. If the court comes to the conclusion that the injury that is likely to be caused to the plaintiff would be greater, the court would usually grant the injunction but, the court is entitled to impose terms including furnishing of security by the plaintiff to compensate the defendant for the possible loss that would be caused to the defendant if ultimately on trial it was to held that the plaintiff was not entitled to such an injunction. While considering balance of probability, if the court comes to the conclusion that interest of the plaintiff would be sufficiently protected if the defendant is put to terms then the court may refuse injunction subject to putting the defendant on those terms of the court may grant conditional injunction. The plaintiff in this case has made out strong prima facie case. The original agreement dated 29thSeptember, 1986 was modified by the supplemental agreement dated 19th April, 1986 which specifically conferred a power of termination of the agreement if the payment was not made on due dates and default persisted for a period of 90 days thereafter. The plaintiff has accordingly terminated the agreement by notice dated 3rd December, 1999. Despite termination of the agreement and the power of attorney, the defendants have continued with the development. They have created and are continuing to create third party interest by sale of flats. The defendant No. 3 claims that it has already transferred its development rights in favour of Key Stone Reality Private Limited. The said third party M/s Key Stone Realty Private Limited made an application for intervention by filing Civil Application No. 177 of 2003. Though the counsel for third party was present in the court for some time when the matter was being heard, he was absent when his name was called out. As the defendant No. 3 has already created third party interest in favour of M/s Key Stone Realty Private Limited, the defendant No. 3 by itself is not likely to suffer irreparable loss. The third party has not pointed out any loss or injury likely to be caused to it and in any event, it is doubtful whether the loss likely to be caused to third party, who has with eyes wide open entered into an agreement pente lite, can be taken into consideration for considering balance of convenience. Between the plaintiff and defendant No. 3, balance of convenience is in favour of the plaintiff. Without payment of the consideration which already has become due, the defendant No. 3 has created third party interest and is not presently involved in the development. It may only be interested in receiving the balance consideration from the third party. Despite receiving substantial consideration from the third party and also by sale of some flats it has not paid to the plaintiff his dues. The plaintiff who is the owner of the property, neither has his money nor the possession. The architect has been appointed without the consent and against the wish of the plaintiff. The leaned counsel for the architect, who is the same as the counsel for defendant No. 3, when asked stated that the architect would act upon the instructions of the defendant No. 3 and not the plaintiff though bound under Section 211 of the Indian Contract Act. In other words, the architect who is agent wants to act contrary to the directions who is agent wants to act contrary to the directions of his principal i.e. the plaintiff. Thus, if the interim relief is refused, the plaintiff would suffer irreparable loss. The defendant No. 3 would pocket the money and the plaintiff would be left to recover his dues by filing of a suit.
15. The plaintiff is therefore, entitled to a relief of injunction conditionally. Out of the total consideration of Rs. 1,07,77,500/- a sum of Rs. 22,00,000/- has been paid to the plaintiff. Thus, a sum of Rs. 85,00,000/- is due by way of principal amount. The Commencement Certificate was obtained on 6th May, 1994. Payment was therefore, due on 6th June, 1994. Under Clause 3 of the Agreement the plaintiff had option to terminate the agreement or claim interest at the rate of 18% p.a. The interest from June 1994 till February, 2003 (105 months) at 18% would be about Rs. 1,60,65,000/- and the total amount due to the plaintiff would thus be Rs. 2,45,65,000/- approximately.
16. In the circumstances, appeal is allowed. There shall be an injunction in terms of prayers (a) (b) and (c) of the Notice of Motion No. 5408 of 2001. However, if the defendant No. 3 deposits in the trial court a sum of Rs. 2,40,00,000/- within a period of 4 weeks from today, there shall be no injunction and the Notice of Motion shall stand disposed of. The amount, if deposited, shall unless otherwise directed by the trial court be invested in the State Bank of India or any nationalised bank if indicated by the defendant No. 3 at the time of deposit, initially for a period of 13 months to be renewed from time to time for like periods till ordered otherwise by the trial court. The plaintiff shall be at liberty to file any other proceedings for recovery of the money or any moneys due to him and if such proceedings are filed, the amounts so deposited shall be subject to the result of such proceedings. Injunction shall cease to operate only from the date of deposit.
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