When developer is not entitled to get specific performance of development agreement?

 That brings us to sum up the result of the above discussion on the
prima facie case on merits of individual stakeholders. Prima facie, it is clear that
Vaidehi has committed breaches of the Society Development Agreement and that
the termination of the Agreement by the Society was legal and proper. Vaidehi
has not made out any case of its readiness and willingness to perform its
obligations under the Society Development Agreement. Vaidehi is not entitled to
specific performance of the Society Development Agreement or restrain the
development of the suit property by the Society or Rustomjee.
            IN THE HIGH COURT OF JUDICATURE AT BOMBAY
 ORDINARY ORIGINAL CIVIL JURISDICTION
NOTICE OF MOTION NO. 961 OF 2013
IN
SUIT NO. 262 OF 2012
Vaidehi Akash Housing Pvt.Ltd. …Applicant / Plaintiff
vs.
New D.N. Nagar Co-op.Housing Society
Union Ltd. & Ors. ...Defendants

                                                                                                                           

 CORAM : S.C. GUPTE, J.

 PRONOUNCED ON : 01 DECEMBER 2014
Citation;AIR 2015(NOC)722 Bom

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Whether suit for specific performance of development agreement is maintainable?

Section 53A of the said Act would suggest, if a proposed transferee of an immovable property under an agreement for sale is put in possession and continues in possession in part performance of the contract and does some act in furtherance of the contract and is willing to perform the balance part, his possession would be protected and the transferor would be debarred from dispossessing him other than under a right expressly provided by the terms of the contract. The development agreement is also an agreement for sale subject to certain conditions. In short, it is an agreement for conditional sale. 

If we look to Section 202 of the Indian Contract Act 1872, we would find, when the agent had interest in the property under the agency agreement in absence of an express provision the contract could not be terminated to the prejudice of such interest. Section 203 would permit the principal to revoke the authority of his agent subject however; when the agent partly exercised his authority such revocation would not be permissible under Section 204. If we read these three provisions together and try to answer the second query made to us by His Lordship we would find, the Power of Attorney so revoked by the owner should not be looked at in an isolated manner. The Power of Attorney generally issued to the developer, was in continuation of the original agreement for development of the property meaning thereby, the developer who was entrusted to develop the property would be given authority to do further act as per the contract including dealing with the property to the extent permissible under the contract. Hence, the Power of Attorney was nothing but an agency agreement executed in furtherance of the original contract.

If the original contract creates an interest in favour of the developer even if the Power of Attorney is revoked such interest would not evaporate. 

A contract between a developer and an owner would also consist of reciprocal rights and obligations. The developer and the owner would have rights against each other. In my view, it would be preposterous to say that only the owner can maintain a suit against the developer for enforcing his rights and not vice versa. If the developer has a right under the contract he must be having a remedy in the form of approaching a forum for appropriate redressal. This is not to say that th

e developer will necessarily succeed in such a legal action. A question of maintainability of a suit is completely different from the question of whether the suit will succeed or not on the facts of the case and in the light of the applicable law. Section 14 (3)(c) of the Specific Relief Act can in no manner be interpreted as debarring a developer from approaching the legal forum for redressal of his grievance. To that extent, a suit at the instance of a developer is maintainable and not barred by Section 14(3)(c) of the Specific Relief Act.

Kolkata High Court (Appellete Side)

Ashok kumar jaiswal vs Ashim Kumar Kar For The on 13 February, 2014

Citation ;AIR 2014 Calcutta 92

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