calcutta high court

Calcutta High Court: In an application seeking the rejection of the plaint or, alternatively, dismissal of the suit arising out of a dispute over a joint venture development agreement for a portion of the premises, a single-judge bench comprising of Krishna Rao,* J., held that the defendant failed to prove compliance with the Memorandum of Understanding, and the plaintiffs were entitled to the reliefs sought. The Court dismissed the defendant’s counterclaim for specific performance.

Factual Matrix

The instant matter involves a dispute between the plaintiff and the defendant over a joint venture development agreement for a portion of the premises at 493/C/A, Grand Trunk Road (South), Howrah — 711102. The plaintiff seeks a decree of Rs. 11,58,74,242/- along with interest, while the defendant counter-sues for specific performance, damages of Rs. 130 crores, and other reliefs.

The court vide order dated 22-12-2022 framed several issues, including the admissibility of crucial documents, the Memorandum of Understanding (MOU) dated 27-08-2015, and the Minutes of the Meeting dated 09-05-2017.

During the proceedings, the plaintiff opted not to present witnesses but argued the case based on documentary evidence. The defendant raised objections regarding the admissibility of the documents, primarily questioning the stamping of the MOU and the Minutes of the Meeting.

The court, vide order dated 29-03-2023, referred the MOU to the Collector for proper valuation under the Indian Stamp Act, 1899. The plaintiff voluntarily submitted the Minutes of the Meeting for stamping and the Collector properly stamped the document 21-12-2023. The defendant, however, continued to challenge the admissibility of the Minutes of the Meeting, raising fresh objection that the Minutes of the Meeting created a lien over the property and should be registered to be admissible in evidence, leading to an appeal and a subsequent directive from the Appellate Court to decide the matter afresh. The defendant has filed the present application for rejection of the plaint or in the alternative to dismiss the suit.

Moot Point

  1. Whether the Minutes of the Meeting dated 09-05-2017, creates a charge or lien, requiring registration?

  2. If the document is unregistered, does it violate Section 49 of the Registration Act, making it inadmissible?

Parties’ Contentions

The defendant relying on Sections 59 and 100 of the Transfer of Property Act, contended that the Minutes of the Meeting create a charge over immovable property, requiring registration under Section 59. The plaintiff, on the other hand, maintained that the document, being an undertaking, does not create a charge or lien requiring registration.

Court’s Decision

While Haryana Financial Corpn. v. Gurcharan Singh, (2014) 16 SCC 722, the Court rejected the defendant’s objection and held that a mere undertaking not to alienate property or allow construction without payment does not create a charge over the property, as required by Section 100 read with Section 59 of the Transfer of Property Act. The Court opined that since the document did not create a charge, Section 59 of the Transfer of Property Act did not mandate registration.

“…mere undertaking that no one will be allowed to construct on the said premises without first making payment to the plaintiff, will not create any charge over the property. The defendant has not created any charge by depositing the title deed or any registered documents in favour of the plaintiffs except the undertaking.”

The Court further found in favor of the plaintiff, asserting that the defendant failed to fulfill its obligations under the with the MOU and Minutes of the Meeting, leading to its cancellation, therefore, the plaintiff is entitled to the decreed amount, while the defendant’s counterclaim is liable to be dismissed.

Court’s Decision

The Court held that the Minutes of the Meeting did not create a charge requiring registration. The Court dismissed the defendant’s counterclaim and application and disposed of the main suit with a decree in favor of the plaintiff. The Court refused the defendant’s request for a stay of the order.

[Primarc Srijan Projects LLP v. Howrah Mills Co. Ltd., 2024 SCC OnLine Cal 948, order dated 01-02-2024]

*Judgment by Justice Krishna Rao

Advocates who appeared in this case:

Mr. Ratnanko Banerjee, Sr. Adv., Mr. Sabyasachi Choudhury, Mr. Saubhik Chowdhury, Mr. Paritosh Sinha, Mr. Shounak Mukhopadhyay and Mr. Tithankar Das, Counsel for the Plaintiffs

Mr. Abhrajit Mitra, Sr. Adv., Mr. Sarvapriya Mukherjee, Mr. Satadeep Bhattacharyya, Mr. Bikash Shaw, Mr. Sumanta Biswas and Mr. Yashvardhan Kochar, Counsel for the Defendant

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