Sunteck Realtors Private Limited v. Bandra Sea Breeze Apartment Co-operative Housing Society Limited

15. Mr. Janak Dwarkadas, Learned Senior Advocate for the Developer would submit that the Developer had been strung along by the Society, with the evidence indicating that the transaction was still alive, leading to the Developer having put in time, energy and resources in converting the leasehold property into freehold by taking various steps to progress the project. However, he would submit, inexplicably that the Society pulled the plug on September 6, 2025. Execution of the Development Agreement was irrelevant, he would contend, since it was nothing but a further iteration of all that had already been agreed to in the MOAT.

16. Mr. Dwarkadas would rely upon a judgement of a Learned Single Judge of the Court, in Nathani Supariwalla Realty[1] and the case law cited in that decision, to point out that merely because there is a reference to a future Development Agreement, the MOAT could not be ignored. A reference to a future contract would not mean that the parties did not have a binding contractual relationship which is

1 Nathani Supariwala Realty Pvt. Ltd. Vs. Dawoodbhoy Fazalbhoy In Notice of Motion No. 490 of 2014 in Suit (L) No. 212 of 2014 dt. August 31, 2017 amenable to specific performance, and the MOAT explicitly recorded in Clause 22 that specific relief would be available to the Developer.

17. Against this backdrop, Mr. Dwarkadas would submit that that this is a fit case to effect a stay on the Termination Notice, and even if the Society claims to have appointed another Developer in place of this Developer, the Court would have the power to undo the same and restore the parties to status quo ante as existing prior to the purported appointment of the new Developer.

18. In sharp contrast, Mr. Navroz Seervai, Learned Senior Advocate for the Society would point to various terms in the Tender documents and in the bidding conditions that would point to the core and central role that the Development Agreement would play, the execution of which has remained elusive in facts of the case. He would contend that execution of the Development Agreement was not a mere formality – it was always the parties’ understanding that no rights would have accrued to the Developer until the Development Agreement were actually executed. Towards this end, he would rely upon Clause 2 in the Tender, which defines, “time period”; Clause 13, which explicitly provides that no rights would accrue until the Development Agreement is executed; and Clause 67, which provides that it is the Development Agreement that would supersede the Tender.

19. Likewise, Mr. Seervai would also refer to various provisions in the bid document, including Clause 1, which reiterates that no right would be created by the appointment of the Developer; as indeed, Clauses 60(C) and 60(E), which would point to the fact that if the winning bidder does not sign a Development Agreement, the Society can cancel the appointment made pursuant to the tender. Most importantly, Mr. Seervai would point to Clauses 6, 61(B) and 61(C) in the bid document, to contend that it is only after the Society approves the schematic plan and the Development Agreement is positively approved by the members of the Society, that any contract can be said to have come into existence.

20. Mr. Seervai would submit that Clause 22 of the MOAT is a red herring because without an executed Development Agreement, there is no scope for binding rights coming into existence in favour of the Developer. The Society was always free to terminate the relationship, he would submit, and therefore, the Petition is devoid of merit and deserves to be dismissed.

21. Having heard Learned Senior Advocates for the parties, it would become apparent that it is necessary to examine two specific facets of the MOAT – those contained in Clause 22 (Specific Performance) and Clause 24 (Definitive Documents). Clause 24 provides that the parties would execute such Definitive Documents and writings including the Development Agreement, Power of Attorney and such attendant documentation necessary to implement the transactions contemplated in the MOAT. The provision stipulates that the parties shall ensure that the draft Development Agreement and all incidental documents shall be settled and initialled by the Society, its members and the Developer, no later than February 21, 2024. The Developer was expected to provide a 10-days notice to the members of the Society for signing of such documents as envisaged in Clause 24. This, prima facie, would point to the fact the members would need to examine the same and approve their execution in order to supersede the Tender and create firm, final and binding rights as provided in the Development Agreement. This did not transpire before the envisaged deadline. However, the parties indeed executed the MOAT with a firm provision dealing with specific relief in Clause 22.

22. Therefore, it would be appropriate to extract Clause 22 of the MOAT and examine the same: “22 SPECIFIC PERFORMANCE: The parties hereto are conscious of the fact (on tine basis of which and with full knowledge of which this MOAT has been entered into and executed) that the Developer will be making financial commitments and will be undertaking obligations (including those set out in this MOAT) and relying on such commitments of the respective parties. The Parties will take steps in furtherance of and in implementation of this MOAT. Consequently, it is mutually agreed, as vital, integral, and essential terms and conditions of this MOAT that: 22.[1] None of the parties hereto shall be entitled to resile from this MOAT or to decline to fulfil their respective obligations in this MOAT but each shall implement the same within the timeframe for the purpose contained in this MOAT, and 22.[2] The respective parties shall be entitled to enforce specific performance by the other parties to this MOAT” [Emphasis Supplied]

23. As provisions of Clause 22 extracted above evidently records that the parties were conscious of the fact that the Developer would make financial commitments and undertake obligations, including those set out in the MOAT. Relying on such commitments of the respective parties, the parties were expected to take steps in furtherance of and in the implementation of the MOAT. With this opening recital of the context, Clause 22.[1] further provides that none of the parties would be entitled to recite from the MOAT or decline to fulfil their respective obligations in the MOAT. However, in the very same breath, Clause 22 provides that each party shall implement the same within the time frame for the purpose contained in this MOAT. When one examines a contract for specific performance and in particular, the very provision that reduces to writing the terms of contracting specific performance, the inherent requirement cannot be lost sight of. Clause 22.[1] itself reiterates the element of the need for implementing the MOAT within the timeframe contained for the purpose in the MOAT.

24. The timeframe for the purpose of executing the Definitive Documents entailed the deadline of February 21, 2024. This was not implemented within the timeframe. Therefore, the framework for the specific performance envisaged by the parties, of which the timeframe for execution of the Definitive Documents was an integral part, has to be seen as a whole. Merely because the phrase “specific performance” is used in Clause 22, one cannot lose sight of the fact that implementing the MOAT within the timeframe specified in the MOAT for the purpose, is an equally important and integral element involved for specific performance.

25. Prima facie, it is apparent that parties applied their minds and put pen to paper to a specific timeframe, namely execution of the Definitive Documents including the Development Agreement by February 21, 2024. To secure this requirement, the parties also contracted the Developer providing a fixed deposit of a serious amount of money – Rs. 20 crores – and a grace period of just two calendar days for providing the fixed deposit. Clause 22 is part of the package deal with all the attendant obligations and rights forming an integral feature for specific performance to work.

26. It is trite law that a fundamental requirement for specific relief is to prove readiness and willingness to adhere to this package deal in its entirety. Now, when one sees the Developer’s request for release of the fixed deposit of Rs. 20 crores on February 16, 2024 even before the timeframe could run its course, it is apparent that the parties moved away from strict adherence to the MOAT.

27. Seen in this light, the demand for the return of the fixed deposit by the Developer on February 16, 2024 gains significance. It is apparent that contemporaneous with the developments of February 2024, the parties could well have had second thoughts about the timeframe in which the redevelopment would be pursued, in sharp contrast with how it was envisaged. Indeed, on September 24, 2024, despite the return of the fixed deposit by the Society to the Developer at the Developer’s request, the parties as sovereign contracting parties were free to continue to engage with each other in relation to the redevelopment. However, it is not necessary that the terms of such engagement would be hide-bound by the provisions governing specific performance as contracted in Clause 22 of the MOAT.

28. Even Clause 8 of the MOAT, which is relied upon by Mr. Dwarkadas as the only provision envisaging termination, provides that even after the Development Agreement is executed, if the fixed deposit were not provided by the deadline of February 23, 2024, the Development Agreement too could be terminated. What we have on hand is a situation where the fixed deposit was provided and also taken back without the Development Agreement even being approved by the members of the Society much less, being executed. The approval of the Development Agreement by the Society is in itself a firm requirement of the Tender, and evidently, the parties had not been ad idem on the terms of the floor plan – a facet with which members would be most concerned.

29. In other words, the parameters of firm specific performance are self-contained and interlinked to the timelines agreed between the parties. For the protection of specific performance to be available, the timeframe had to be adhered to. Once the timeframe for implementation was not adhered to, the parties were indeed at liberty to continue to engage with each other, but that would not mean that their commitment to proceed to specific performance continued to be an absolute requirement as contracted in Clause 22 of the MOAT – and that too when the Developer is seen to have sought and obtained the return of the fixed deposit meant to secure performance.

30. The aforesaid reasoning resonates with me because the Development Agreement is not meant to be an empty formality, with anything and everything that would have been contained in the Development Agreement already being reduced to writing under the MOAT. There were facets of the transaction that the parties still needed to engage in. These were material facets that needed to be reduced to writing in the Development Agreement.

31. For example, the terms on which the tenants would be settled was something that that could have been incorporated in the Development Agreement in terms of Clause 5.1.[2] – that may need give and take among the members of the Society and the Developer. Indeed, the individual entitlements of the members in terms of carpet area had already been arrived at in the MOAT, but how this would translate into a specific floor plan for the benefit of the members was a matter left in an inchoate state.

32. There was a firm element of time that informed the parties’ bargain in the MOAT including and even specifically, in Clause 22. That timeframe having been missed and contemporaneous actions appearing to have moved away from the bargain package contained in the MOAT, Mr. Seervai’s reliance on the terms of the Tender and the bid documentation gains significance. Indeed, the Tender terms would be overridden only when the Development Agreement is executed. Such execution could only take place when the floor plans are clearly agreed between the parties. The tension of time and speed of conduct that informed the contract in the MOAT had been given up by the parties and therefore, what the parties then had was an optionality of proceeding further without being hidebound by the terms envisaged in the MOAT. The hidebound time commitments, and as a consequence the firm specific performance obligation having been given up, the parties could indeed engage with each other in good faith. This explains the continuation of an option to pursue the redevelopment with each other by the request in September 2024 for the Developer to pay the premium charged by the Collector, Mumbai Suburban.

33. Such a bargain in optionality does not present the strength of a prima facie case whereby third party rights already created can be undone to put the Developer back in the same position as before the Termination Notice, by restoring status quo ante.

34. Nathani Supariwala on which Mr. Dwarkadas relies, can be distinguished inasmuch as it was not a case where a Society was involved. It was a case where signing of a development agreement at the hands of a Charitable Trust remained a pending action and that too awaiting only the approval of the Charity Commissioner. On facts, it was apparent that execution of a development agreement in that case was formal rather than substantive. On the other hand, two decisions by two different Learned Division Benches of this Court appear to be most apt for their application in the facts of this case – decisions in Kalpataru[2] and Pittie Antariksh[3].

35. Needless to say, decisions in Section 9 Petitions are not

2 Kalpataru Properties Pvt. Ltd. Vs. Majithia Nagar CHS Ltd. – 2014 SCC OnLine

3 Kher Nagar Sai Prasad vs. Pittie Antariksh GRL Pvt. Ltd. – Commercial Appeal (L) No. 9061 of 2024 in Commercial Suit (L) No. 27651 of 2023 meant to be read in the manner that binding precedents are to be read particularly because every formulation of interlocutory protective measures is informed by the respective facts and circumstances necessitating that formulation. However, when the analysis in such judgements squarely appear apt for the factual matrix on hand, they would bolster the reasoning that the Section 9 Court may adopt.

36. The commentary in Paragraph 38 of Kalpataru would be apt to cite for purposes of the matter in hand as well:

38. An inference that the requirement of the execution of a formal agreement is a term of bargain is stronger, when one of the parties is an entity such as a Society comprising of several members, whose consent, at least by majority, is essential. The Society would understandably reserve a right to amend or modify the terms, right up to the stage of executing the formal agreement for a variety of reasons. There may be several suggestions and demands from the members which the Managing Committee may wish to consider, even if they otherwise have the power to enter into a concluded contract. Thus, where the plain language suggests the requirement of the execution of a formal agreement to be a term of the contract, an inference to the contrary cannot easily be drawn, when one of the parties is an entity, such as respondent No. 1. The importance of a signed agreement is often greater when many members are involved, all of whom have a stake in the redevelopment of the premises. The respondent No. 1 was entitled to consider all the representations made by its members and to negotiate further in view of the clause ‘Additional terms and Conditions’ in the tender document. We reiterate that a view to the contrary would be to deny respondent No. 1 an express right under the “ADDITIONAL TERMS AND CONDITIONS”.

37. It is seen that even in the MOAT, the parties had agreed that the members ought to receive a draft of the Development Agreement at least 10 days in advance. This was not a mere process formality, but to enable the members of the Society to apply their mind to the contents, in particular, to the floor plans, because it is the design of the respective flats and the floor plan that would inform the consent of the members to the Development Agreement. Such informed consent would lie at the heart of the matter, and it would be necessary to examine whether the floor plans of the respective flats for the respective members had been made available, evidently, from the correspondence between the parties. An ad idem agreement on this front has remained elusive and therefore in the facts of this case, it cannot be contended that execution of a Development Agreement was a mere formality with the MOAT having the capacity to take the character of a Development Agreement in every material aspect.

38. Likewise, the following extract from the decision of the other Learned Division Bench in Pittie Antariksh would also be instructive, inasmuch as it quotes with approval, another judgement in the case of Kalpataru v. Middle Class Friends CHS Ltd.[4] which deals with how a Development Agreement is to be read:

28. Let us analyze the decision in Kalpataru Ltd. Vs. Middle Class Friends Co-operative Housing Society Ltd. (supra) which was distinguished by the learned Single Judge. The relevant paragraphs in Kalpataru Ltd. Vs. Middle Class Friends Co-operative Housing Society Ltd. (supra) read thus:-