Interim Order 1

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IN THE CITY CIVIL COURT FOR GR. BOMBAY AT MUMBAI
SUMMARY JUDGMENT NO. 19 OF 2021
IN
COMMERCIAL SUIT NO. 266 OF 2019
Universal Builders )
Through its proprietor )
Mr. Sultan Ahmed Qureshi )
Having address at 505, )
Sane Guruji Marg Silver Arch )
Ground Floor, Gora Gandhi )
Compound, Tardeo, )
Mumbai 400 034 )......Plaintiff
V/s
1) Renu Subhash Jain )
Age Adult, Occupation : Not Known )
2) Subhash Heeralal Jain )
Age Adult, Occupation: Not Known )
Both Residing at Flat No.803 & 804, )
Silver Arch C.H.S. Ltd., Tardeo )
Division, Bombay 400 034 ).......Defendants
Present address )
R/o. Flat No.1704/1705 )
“C” Wing, Ashoka Garden, Sewri, )
Mumbai 400 015 )
APPEARANCE:
Adv. Mr. S.P.Shinde, for the plaintiff's
Adv. Mr. Manish Malpani for the defendants
CORAM : RAJESH A. SASNE
ADHOC JUDGE
(C.R.No.32)
DATED : 17th February, 2022
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2 Smry Judg. 1921 In C.S No.26619
JUDGMENT
This application for summary judgment is filed by
the plaintiff under Order XIIIA of the Code of Civil Procedure,
1908 to pass judgment on a claim.
In brief, the plaintiff's case is as under :
2. The plaintiff has filed suit for recovery of balance
amount of consideration on the basis of registered agreement for
sale executed between the plaintiff as a builder and the
defendants as a flat purchasers. On 21.11.2009, the plaintiff has
executed said agreement for sale of flat in favour of defendants.
Total amount of consideration was Rs.1,00,00,000/. The
defendants have paid Rs.95,00,000/. It was agreed between the
parties that balance amount of consideration Rs.5,00,000/ shall
be paid by the defendants at the time of taking possession of the
said flats.
3. The plaintiff has completed the construction of the
building and applied for occupancy certificate in year 2012.
During the pendency of said application, the defendant insisted
for possession of the said flat for carrying out the furniture work.
In spite of the fact that the balance amount of consideration is
unpaid, the plaintiff handed over the possession of said flat to
the defendant for limited purpose of carrying out the furniture
work. However, after completion of furniture work, the
defendant has not returned keys of the said flat and since then
the defendant is in occupation of the said flat. As the defendant
has received possession of the flat, he is liable to pay balance
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3 Smry Judg. 1921 In C.S No.26619
amount of consideration of Rs.5,00,000/ to the plaintiff. By
legal notice dated 19.09.2018, the plaintiff called upon the
defendant to pay said amount. In spite of receipt of demand
notice, the defendant has failed to pay said amount. The
defendants have created third party interest in the said flat
without paying the balance amount of consideration. Therefore,
the plaintiff has filed this suit to recover said amount.
4. It is further case of the plaintiff that deemed
conveyance has been allowed in favour of the society and now
everything is under the control of society. Now the defendant
cannot have any grievance against the plaintiff. According to the
plaintiff, the defendants have no real prospect of successfully
defending the claim. The defence raised is sham, bogus and
improbable. There is no other compelling reason as to why the
claim of the plaintiff should not be disposed of by allowing the
present application. There is no need to record evidence. With
these contentions, the plaintiff has prayed to pass the judgment
on a claim.
5. The application is opposed by the defendants by
filing reply at Exhibit13. It is the contention of the defendants
that the plaintiff has not complied with Section 12A of the
Commercial Court Act,2015. The claim amount was never due
and payable and therefore, there is no cause of action. The
defendants have entered into an agreement for sale with the
plaintiff on 21.11.2009 for purchase of flat No.803 and 804 in
the building known as Silver Arch. It was agreed between parties
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4 Smry Judg. 1921 In C.S No.26619
that the defendants shall pay amount of consideration
Rs.1,00,00,000/. In view of clause No.3 of the agreement, it was
agreed that balance amount of Rs.5,00,000/ shall be paid upon
issuance of occupation certificate by concerned authority. It was
specifically agreed that nonpayment of Rs.5,00,000/ shall in no
way affect the title of the purchaser. The agreement was
executed when the plaintiff despite being promoter/builder was
not having occupancy certificate. The amount of Rs.5,00,000/
was kept as a balance as abundant precaution for receiving the
occupation certificate as mentioned in para No.3 of the
agreement. The defendants have never denied nor have any
intention to avoid payment of Rs.5,00,000/ subject to
production of occupancy certificate. The defendants never
insisted for possession of flats, on the contrary the plaintiff
portrayed that the building is completed and therefore, the
defendants should occupy the flats and occupancy certificate will
be received soon. The plaintiff has failed to produce the
occupancy certificate till date. If any breaches are arising for
obtaining occupancy certificate then plaintiff will be liable for
penalty. As there is violation of provision of the FSI, occupancy
certificate is not issued. The defendants have sold their flat in the
year 2019, as there was no occupancy certificate. The defendants
have suffered loss at the time of sale of that flat. The defendants
are legally entitled to keep the balance amount of Rs.5,00,000/
as security till the time of obtaining occupancy certificate. Until
the terms of agreement are fulfilled the plaintiff is not entitled to
claim interest. With these contentions, the defendants have
prayed to dismiss the application.
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5 Smry Judg. 1921 In C.S No.26619
6. Heard the learned advocate for the plaintiff and the
learned advocate for the defendants. Points for determination
alongwith my findings thereon with reasons are as under:
POINTS FINDINGS
1. Whether the plaintiff satisfies that the
defendants have no real prospect of
successfully defending the claim?
No
2. Whether the plaintiff's claim can be disposed of
before recording of oral evidence? No
3. Whether the plaintiff is entitled for judgment
on a claim? No
4. What order ? The Application is
dismissed
REASONS
AS TO POINT NOS.1 to 3:
7. All these points are interlinked with each other and
hence they are taken together for consideration. Following are
the admitted facts:
a) Agreement for sale dated 21.11.2009 has been executed
by the plaintiff as a builder in favour of the defendants as
purchasers in respect of flats.
b) Out of total amount of consideration, balance amount of
consideration Rs.5,00,000/ is agreed to be paid at the
time of possession.
c) In the said agreement there is condition that before
handing over the possession of the flat, the plaintiff shall
obtain occupation certificate from local authority.
d) Possession of the flats is handed over to the defendants.
e) The plaintiff has not obtained occupation certificate of
the building.
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6 Smry Judg. 1921 In C.S No.26619
8. The copy of agreement for sale is annexed with the
plaint at Exhibit'A'. Clause No.3 (ii) of the said agreement reads
as under:
3 (ii) The balance of Rs.5,00,000/ to be paid upon
issuance of occupation certificate by the concerned
authority in respect of the said building and
simultaneously production of the original copy of the
same to the flat purchaser.
It is specifically agreed between the parties
hereto that non payment of the said sum of
Rs.5,00,000/ shall in no way affect the title of the
purchaser and purchaser shall have clear and
marketable title in respect of the said flat as the said
sum of Rs.5,00,000/ is retained by the flat purchaser
only as abundant precaution for receiving the
occupation certificate and once the occupation
certificate is issued by the concerned authority in
respect of the said building and simultaneously
production of the original copy of the same to the flat
purchaser, the flat purchaser shall pay the said
balance sum of Rs.5,00,000/ to the promoter.
9. Clause No.4 of the agreement reads as
follow:
The promoter hereby agrees to observe,
perform and comply with all the terms,
conditions, stipulations and restrictions if any,
which may have been imposed by the concerned
local authority at the time sanctioning the said
plans or thereafter and shall, before handing
over possession of flat to the flat Purchaser,
obtain from the concerned local authority
occupation and / or completion certificates in
respect of the flat.
10. In view of aforesaid clause No.3(ii) and 4 of the said
agreement, it was agreed that balance of amount of
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7 Smry Judg. 1921 In C.S No.26619
consideration shall be paid at the time of giving possession of the
flat and on production of occupation certificate. Reading of both
these clauses together reveals that, the plaintiff has agreed to
obtain occupation certificate before handing over the possession
of the flat to the defendants and said amount of Rs.5,00,000/
retained as security for compliance of obtaining occupation
certificate. Admittedly, the plaintiff has not obtained occupation
certificate from the local authority and the defendants have not
paid the balance amount of consideration.
11. It is the contention of the plaintiff that the society
had applied for deemed conveyance and same has been allowed.
It is further contention of the plaintiff that the chairman
secretary and treasurer of the society submitted an affidavit in
the proceeding of deemed conveyance and taken over the entire
responsibility of the building including responsibility of
occupation certificate. It is further contention of the plaintiff that
as deemed conveyance is granted therefore, there is no merit in
the defence raised by the defendants. The plaintiff has produced
and relied on copy of affidavit of secretary of the society
submitted in the proceedings of deemed conveyance and order
dated 10.08.2020 allowing said deemed conveyance. It shows
that deemed conveyance has been granted in favour of the
society. The learned advocate for the plaintiff by relying on the
observations made in paragraph No.2 of the said order, urged
that the question of occupation certificate does not survive
further. In said paragraph No.2 of the said order, it is observed
that in respect of occupation certificate, as per Government
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8 Smry Judg. 1921 In C.S No.26619
Resolution dated 18.09.2018, society has filed affidavit and
therefore, it has been complied and objections raised by the
plaintiff herein cannot be considered. Copy of said GR is not
produced. However available copy on website shows that
Government of Maharashtra by said GR dated 18.09.18 decided
that occupation certificate is not mandatory document for issuing
deemed conveyance. Said affidavit by the secretary of the society
is submitted in accordance with the said GR. Therefore, holding
that the occupation certificate is not mandatory document,
deemed conveyance has been allowed.
12. In view of Section 11 (read with Rule 9) of the
Maharashtra Ownership of Flats Act, 1963 (MOFA), the
promoter is liable to execute the conveyance within four months
from the date of registration of the cooperative society. As the
plaintiff has not complied with the said obligation to execute the
conveyance in favour of the flat purchasers, the society applied
for deemed conveyance and same has been granted. It does not
mean that occupation certificate is not required now. It has to be
obtained. Hence, issue of occupation certificate is still pending.
At the most, now society can take follow up of the same, but
what about obligation of the plaintiff? Whether he can be
exempted and can be allowed to take benefit of the changed
situation to claim his entitlement for balance amount of
consideration, which was to be paid to him on his performance
of contractual and also a legal obligation.
13. The plaintiff as a builder has agreed to obtain the
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9 Smry Judg. 1921 In C.S No.26619
occupation certificate before handing over possession to the flat
purchasers. He failed to do so, moreover, he handed over the
possession in breach of the terms agreed in the contract. Section
3(2)i of MOFA reads that the promoter shall not allow persons to
enter into possession until a completion certificate where such
certificate is required to be given under any law is duly given by
the local authority. Therefore, the plaintiff also in contravention
of this provision has handed over the possession to the flat
purchasers. It is required to differentiate between the fact of
handing over 'possession' of the flat and fact of handing over
'complete possession' of the flat for deciding whether the plaintiff
has discharged his obligation under contract or exempted
therefrom?
14. The purpose of occupation certificate is to certify the
completion of construction as per rules and regulations. It
authorises the construction and make it entitled to be occupied
by the occupier. In absence of occupation certificate use of such
structure will be unauthorised. Hence, which is not capable of
being occupied and occupancy of which is unauthorised, is
incomplete and possession of such incomplete thing is
'incomplete possession. Therefore, handing over bare physical
possession without occupation certificate is not the complete
possession. By giving such possession there cannot be
compliance of agreed terms of contract. Same is not in
accordance with the provisions of MOFA, as Section 3 of MOFA
requires handing over possession after obtaining occupation
certificate. Handing over possession of a flat after obtaining
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10 Smry Judg. 1921 In C.S No.26619
occupation certificate is the handing over 'complete possession'
of flat to the flat purchasers. Unless the possession coupled with
occupation certificate is handed over, it cannot be considered as
discharge of obligation under the agreement for sale and also
compliance of legal obligation under MOFA. Hence, by handing
over possession of the flat without occupation certificate, the
plaintiff can not be allowed to take disadvantage of the effect of
deemed conveyance and claim performance of defendant's
obligation to pay the balance amount of consideration.
15. If there is no occupation certificate, necessarily such
possession will be unauthorised and thereby the occupiers are
liable for payment of higher municipal taxes. It is due to the
default of the plaintiff. Therefore, putting liability on the flat
purchaser to pay higher taxes, the plaintiff can not be excluded
or exempted from his liability nor can be allowed to take
disadvantage of deemed conveyance to claim his entitlement to
balance amount of consideration. In Recent judgment of the
Hon'ble Supreme Court in Samruddhi Cooperative Housing
Society Ltd. Vs. Mumbai Mahalaxmi Construction Pvt.Ltd.
(2022 SCC OnLine SC 35) it was the fact that owing to the
failure of the builder to obtain occupation certificate, there has
been a direct impact on the flat purchasers in terms of the
payment of higher taxes and water charges to the municipal
authority. It is held that the builder is responsible for transferring
the title of the flats to the society alongwith occupation
certificate. The failure to obtain the occupation certificate is a
deficiency in service and the purchasers are within their rights to
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11 Smry Judg. 1921 In C.S No.26619
demand compensation for higher taxes and water charges arising
from lack of an occupancy certificate. Therefore, while
considering the plaintiff's entitlement, his obligations and
liabilities are also required to be considered.
16. As per the contract between the parties, the balance
amount of consideration is required to be paid on production of
occupation certificate by the plaintiff. The plaintiff in the
contract has undertaken to obtain the occupation certificate
before possession. The plaintiff was required to obtain
occupation certificate before handing over the possession. After
he produces occupation certificate, he is entitled to claim the
balance amount. Said amount is kept as a security for
performance. Hence, defendants' performance is depend on the
plaintiff's performance of obtaining occupation certificate.
Without performance of his own obligation of obtaining
occupation certificate, the plaintiff is demanding performance of
defendants' obligation. What happens in cases of default as to
the promise which should be first performed in contract
consisting of reciprocal promises, is provided in Section 54 of the
Contract Act as follows :
Section 54 : Effect of default as to that promise which
should be first performed, in contract consisting of
reciprocal promises. When a contract consists of reciprocal
promises, such that one of them cannot be performed, or that
its performance cannot be claimed till the other has been
performed, and the promisor of the promise last mentioned
fails to perform it, such promisor cannot claim the
performance of the reciprocal promise, and must make
compensation to the other party to the contract for any loss
which such other party may sustain by the nonperformance
of the contract.
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12 Smry Judg. 1921 In C.S No.26619
17. Therefore, the plaintiff has to perform his promise
first and then only he can claim performance of promise by the
defendants because the defendants' performance is depend on
the performance of plaintiff's promise. Therefore, by application
of Section 54 of the Contract Act, plaintiff's claim suffers from
infirmity and can not be allowed by judgment on claim. Order of
deemed conveyance will not exclude him from liability under
Section 54 of the Contract Act.
18. In the plaint or the application for summary
judgment the plaintiff has not stated any specific date on which
the possession of the flat was handed over to the defendants. If
the plaintiff's claim is to be accepted as it is, then on the date of
possession he became entitle to claim the amount. From such
date he was required to claim said amount within three years.
The plaintiff has not pleaded about specific date of handing over
possession to the defendants. Hence, the plaintiff's claim is
required to be verified for limitation purpose and therefore, it is
also one of the reason for not allowing judgment on claim.
19. So far objection in respect of Section 12A of the
Commercial Court Act, 2015 is concerned, the Hon'ble Bombay
High Court in Deepak Raheja Vs. Ganga Taro Vazirani, (2021
SCC OnLine Bom 3124) held that the provision of Section 12A
of the Commercial Act, 2015 in respect of pre institution
mediation is mandatory. If no urgent interim relief is claimed at
the time of institution, pre institution mediation is mandatory.
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13 Smry Judg. 1921 In C.S No.26619
In present suit at the time of institution of the suit, pre
institution mediation was dispensed with on plaintiff's
submission of seeking urgent interim relief. No such notice of
motion for interim relief is filed and seen in the proceeding.
Hence, on this ground under Section 12A also, the judgment on
claim can not be granted for noncomplaince of Section 12 A.
20. For the aforesaid reasons, unless the plaintiff
establishes that by handing over possession without fulfilling his
obligation of obtaining occupation certificate, he is entitled for
decree, judgment on claim cannot be passed. Circumstances on
record show that there is good defence to the defendants. Hence,
the plaintiff is not entitled for summary judgment on claim.
Accordingly, I answer point Nos.1 to 3 in the negative.
AS TO POINT NO.4:
21. In view of my findings to point Nos.1 to 3, the
application for summary judgment is required to be dismissed. In
the result, in answer to point No.4, I pass the following order.
ORDER
1. The application for Summary Judgment No.19
of 2021 is dismissed.
2. Costs shall follow the event.
(Rajesh A.Sasne)
Judge,
City Civil & Sessions Court,
Date :17.02.2022 Mumbai.
Dictated on : 17.02.2022
Typed on : 25.02.2022
Signed by HHJ on : 25.02.2022
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“CERTIFIED TO BE TRUE AND CORRECT COPY OF THE ORIGINAL
SIGNED JUDGMENT/ORDER”
28.02.2022 at 11.30 a.m.
UPLOAD DATE AND TIME
(Mr. S. V. AMBEKAR)
NAME OF STENOGRAPHER
Name of the Judge HHJ SHRI RAJESH A.SASNE
(COURT ROOM NO.32)
Date of pronouncement of
judgment/order
17.02.2022
Judgment/order signed by P.O. on 25.02.2022
Judgment/order uploaded on 28.02.2022
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