Bombay High Court: In the present interim application, the defendants, Zaphna Properties (P) Ltd. sought rejection of the plaint under Order VII Rule 11(a) and (d) of the Civil Procedure Code, 1908 (‘CPC’), arguing that the suit filed by the plaintiff, Pansn Construction and Developers (P) Ltd. for specific performance of an unexecuted and unregistered Draft Deed lacked a valid cause of action and was barred by limitation under Article 54 of the Limitation Act, 1963 (‘Limitation Act’). A Single Bench of R. I. Chagla, J., while disposing of the interim application, rejected the plaint, holding under Section 54 of the Transfer of Property Act, 1882 (‘Transfer of Property Act’), consensus ad idem was required. The Court concluded that no sale was effected or intended, and the Draft Deed did not create any right, title, interest, or charge in favour of the plaintiff and was wholly unenforceable.
Background:
The defendants were owners of land and buildings situated at Carter Road, Bandra, Mumbai, described as land admeasuring approximately 1129.18 sq.mts., and the front building ‘Shanti Sagar’ consisting of ground and four upper floors, along with a rear structure of 120 sq.ft. In 1999, the property comprised two buildings: a front building with ground plus two floors and a rear building with ground plus three floors.
On 05-03-1999, the defendants granted restricted development rights to the plaintiff through a Development Agreement, which was terminated on 15-10-2002 and accepted by the plaintiff through a Cancellation Agreement dated 14-03-2003. Under this agreement, the plaintiff was retained to complete the third and fourth floors of the front building and obtain an Occupation Certificate by 11-08-2003. The defendants were to pay Rs 61,00,000 for construction, of which Rs 11,00,000 was paid on execution. A Draft Deed of Conveyance was also shared on the same date.
The plaintiff failed to obtain the Occupation Certificate by the extended deadline of 05-10-2003 under a Modification Agreement. The defendants paid Rs 5,00,000 and later deposited Rs 15,00,000 to be appropriated only upon obtaining the certificate. On 20-09-2004, the defendants stated that the plaintiff would not insist on conveyance. In January 2006, the plaintiff assured that the certificate would be obtained by 01-03-2006. The defendants paid Rs 27,95,770 to MCGM based on this assurance. Subsequently, the plaintiff demolished the rear building (except one occupied unit), and the Occupation Certificate was granted on 12-05-2006.
Correspondence resumed in July 2006 regarding the Draft Deed of Conveyance. A meeting was held on 21-06-2006, followed by letters exchanged in July and August 2006. The plaintiff deposited Rs 11,00,000 and claimed it was towards conveyance. However, the defendants clarified that the amount was towards dues, not conveyance. The plaintiff confirmed this understanding and authorised encashment of the cheque. In 2012, the plaintiff sought finalisation of a Development Agreement, but the defendants rejected the incorporation of conveyance terms. The plaintiff reiterated its claim on the Draft Conveyance Deed in 2020 and 2022, which was denied by the defendants.
The defendants submitted that the Draft Deed of Conveyance was ex facie impermissible, contained blanks, lacked annexures, and was never finalised. They submitted that there was no consensus ad idem, and the Draft was not binding. The Draft was neither signed, executed, stamped, nor registered, and thus could not form the basis for specific performance or confer any legal rights. They submitted that the consideration under the Draft was undefined, comprising Rs 11,00,000, transfer of two unspecified apartments, and provision of facilities (left blank). They relied on Section 54 of the Transfer of Property Act and Sections 9 and 10 of the Specific Relief Act, 1963 (‘Specific Relief Act’), submitting that no valid contract existed and specific performance was not maintainable.
The defendants further submitted that the plaintiff failed to identify which rights were infringed and that no conclusive agreement to convey the property was made. They argued that the Rs 11,00,000 paid by the plaintiff was towards dues owed to the defendants and not towards conveyance. They submitted that the plaintiff was put in possession of certain flats in lieu of obligations under earlier agreements, not under the Draft. They alleged that the Draft Deed of Conveyance did not create any right, title, interest, or charge in favour of the plaintiff and was wholly unenforceable in law. They argued that the Suit for declaration and specific performance was not maintainable and must be dismissed. They further alleged that the Suit was barred by limitation under Article 54 of the Limitation Act, and that the plaintiff had notice of refusal of performance by 17-08-2012, making the Suit time-barred by 16-08-2015.
The plaintiff contended that the Draft Deed of Conveyance was prepared and shared by the defendants and accepted by the plaintiff. He submitted that the plaintiff altered its position and paid consideration, and the defendants kept the agreement alive by conduct. He argued that limitation was a mixed question of fact and law and that the cause of action arose only in 2022 when the defendants refused performance. He alleged that the Plaint disclosed a cause of action and should not be rejected under Order VII Rule 11 CPC.
Analysis and Decision
The Court noted that the suit had been filed for specific performance of a Draft Deed of Conveyance and for a declaration that the Draft was valid, seeking conveyance of a 2/5th undivided share in the property. The Court observed that the Draft Deed contained blanks which remained to be filled. The Court highlighted that the plaintiff sought to explain these blanks by stating that the Draft was prepared by the defendants and that all stipulations therein were acceptable to them. The Court further noted the plaintiff’s contention that the defendants intended to convey everything except the portion expressly retained under Clause 12, namely, floors 1, 3, and 4 and that only the ground and second floors were to be conveyed.
The Court emphasised that the plaintiff had overlooked the fact that the consideration under the Draft was in three parts: payment of Rs 11,00,000, transfer of two apartments (areas not filled), and provision of facilities (left blank). The Court observed that the property plan, an essential part of any conveyance, was not annexed. The Court further highlighted that the Draft Deed was neither executed nor finalised, and the material consideration remained undefined.
The Court noted that the plaintiff’s claim to a 2/5th share could not be determined without specifying the apartment areas. Therefore, in the absence of a complete Conveyance Deed, specific performance could not be granted. The Court highlighted that the plaintiff’s assertion of having paid Rs 11,00,000 towards conveyance was contradicted by correspondence. The Court further noted that the defendants had clearly stated in their letter dated 21-08-2006 that the payment was towards dues, not conveyance, which was accepted by the plaintiff in letters dated 25-08-2006 and 08-09-2006.
The Court emphasised that under Section 54 of the Transfer of Property Act, consensus ad idem was required. The Court observed that consideration was never paid under the Draft and essential terms remained undefined. The Court concluded that no sale was affected or intended, and the Draft Deed did not create any right, title, interest, or charge in favour of the plaintiff and was wholly unenforceable. There was no valid or subsisting contract under Section 10 of the Specific Relief Act, 1963, and the Draft was, at best, a tentative document.
The Court held that the plaintiff failed to demonstrate a cause of action. The prayer for specific performance could not be granted, and the declaration was not maintainable on its own. The Court emphasised that no purpose would be served by keeping the Suit alive or sending it for trial, since the finding was based solely on the Plaint and accompanying documents, without conducting a mini trial. Accordingly, the Plaint was rejected under Order VII Rule 11(a) CPC.
The Court further held that even presuming a cause of action existed in the plaint, the suit was barred by limitation under Article 54 of the Limitation Act, since the Deed of Conveyance was to be executed conditional upon obtaining an Occupation Certificate by 11-08-2003, which was never fulfilled. Hence, the right to seek specific performance expired on 10-08-2006. The Court also observed that by the defendants’ letter dated 17-08-2012, there was clear non-acceptance of the Draft Deed of Conveyance, and the plaintiff had notice of refusal, making the suit time-barred by 16-08-2015.
Accordingly, the Court concluded that the plaint failed to disclose a cause of action and was barred by limitation. Consequently, the Plaint was rejected under Order VII Rule 11(a) and (d) CPC, and the interim application was disposed of. All pending interim applications were also disposed of in view of the rejection of the suit.
[Zaphna Properties (P) Ltd. v. Pansn Construction and Developers (P) Ltd., Interim Application No. 2301 of 2025, decided on 04-09-2025]
Advocates who appeared in this case :
For the Defendants: Naresh Thacker a/w Ashishchandra Rao a/w Anuli Mandlik and Vanshika Kainya i/by Economic Laws practice
For the Plaintiff: Vishal Kanade a/w Ms. Janhavee Joshi, Aruna Mehta, Ramesh Gupta i/by S. Pathak & Co.
