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1. Can the developers move for Specific Performance of the Development Agreement?

Clause 14(3) of the Specific Relief Act provides that a construction contract may be allowed
specific relief upon certain conditions. The relevant provision is quoted below.
14. Contracts not specifically enforceable.(3) Notwithstanding anything contained in clause (a) or clause (c) or clause (d) of sub- section (1),
the court may enforce specific performance in the following cases:(a) where the suit is for the enforcement of a contract,(i) to execute a mortgage or furnish any other security for security for securing the
repayment of any loan which the borrower is not willing to repay at once: Provided
that where only a part of the loan has been advanced the lender is willing to advance
the remaining part of the loan in terms of the contract; or
(ii) to take up and pay for any debentures of a company;
(b) where the suit is for,(i) the execution of a formal deed of partnership, the parties having commenced to
carry on the business of the partnership; or
(ii) the purchase of a share of a partner in a firm,
(c) where the suit is for the enforcement of a contract for the construction of any building or
the execution of any other work on land: Provided that the following conditions are fulfilled,
namely:(i) the building or other work is described in the contract in terms sufficiently precise
to enable the court to determine the exact nature of the building or work;
(ii) the plaintiff has a substantial interest in the performance of the contract and the
interest is of such a nature that compensation in money for non- performance of the
contract is not an adequate relief; and
(iii) the defendant has, in pursuance of the contract, obtained possession of the whole
or any part of the land on which the building is to be constructed or other work is to
be executed.

In Vipin Bhimani v Sunanda Das AIR 2006 Cal 209, the Calcutta High Court clarifies on
subsection 3(c) of the Specific Relief Act, 1963 is only at the instance of Owner and not at the
instance.
From the provisions contained in Section 14(3)(c) of the Act, it is clear that a suit for
specific performance of a development agreement at the instance of a developer is clearly
hit by the provisions contained therein. However, a suit for specific performance of such
agreement at the instance of the owner of the building would be maintainable if possession

is already handed over to developer and Clauses (i) and (ii) of Section 14(3)(c) are
complied with.
The case relied on the observation made in Shah and Jhaveri Developers v. Classic
Developers where the same court observed that:
A suit filed of by a building contractor against the land owner as is the present case will
not be covered by clause (c) of sub-section (3) of section 14 of the said Act. A decree for
specific performance of a contract for construction of a building can be granted only in
case where all the conditions mentioned in the provision to clause (c) of sub-section (3) of
section 14 of the Specific Relief Act are satisfied. All other contracts for construction of
building will be covered by the main provision contained in sub-section (1) of section 14 of
the Specific Relief Act and therefore in view of that provision, a decree of specific
performance in relation to those contracts cannot be granted
In Della Developers v. Noble Organics Private Limited it was observed by the Bombay High
Court that section 14 (3) only comes in to effect when there is actual transfer of possession at the
stage when construction actually begins.
If any one of the condition is not satisfied, the question of granting decree of specific
performance does not arise. Insofar as present case is concerned, out of the three
conditions specified in Section 14(3)(c), prima facie, from the terms of the Agreement as
executed between the parties, there is nothing to indicate that the Petitioners in pursuance
of the contract, was put in possession of the whole or any part of the land on which the
building is to be constructed or other work is to be executed. There is no express clause in
the Development Agreement which puts the Petitioners/Developer in possession of the
property. Sub-clause (e) of Clause 11 of the Agreement would be useful for our purpose.
Clause 11 pertains to the activities to be performed by the Developer and to keep the
Respondents informed about the same. Clause (e) thereof provides that the Developer may
enter upon the land for the purpose of construction/development. This Clause would come
into play only when the construction/development activity was to in fact commence. At that
stage, the Developer would enter upon the land for the purpose of
construction/development. Assuming that the Petitioners were to assert that they have
already taken over possession of the land and/or entered upon the same, that fact has not
been informed to the Respondents as is required by Clause 11 of the Agreement. Suffice it
to observe that since the Petitioners in pursuance of the Contract have not obtained
possession of the land either of the whole or any part thereof, one of the condition
specified in Section 14(3)(c) is not fulfilled.

In Chheda Housing Development Corporation v. Bibijan Shaikh Farid, 2007 (3) MhLJ 402
the court made a distinction between an ordinary construction contract or development
agreement from that where there shall be a future transfer of saleable area.
In our opinion from a conspectus of these judgments, what is relevant would be the facts
of each case and the agreement under consideration. Agreements considering what is
discussed, amongst others, could be:
(a) An Agreement only entrusting construction work to a party for consideration;
(b) An Agreement for entrusting the work of development to a party with added rights to
sell the constructed portion to flat purchasers, who would be forming a Cooperative
Housing Society to which society, the owner of the land, is obliged to convey the
constructed portion as also the land beneath construction on account of statutory
requirements.
(c) A normal agreement for sale of an immovable property.
An Agreement of the first type normally is not enforceable as compensation in money is an
adequate remedy. An Agreement of the third type would normally be specifically
enforceable unless the contrary is proved. A mere agreement for development, which
creates no interest in the land would not be specifically enforced.
We are however dealing with a case of the second type. Courts for construing such a
contract in this State will have to take into consideration, the Maharashtra Ownership
Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act,
1963 (hereinafter referred to as the Act, 1963 apart from the Specific Relief Act. Under
that Act, a local Act, there is an obligation cast on the owners of the land to convey not
only the constructed portion but also his interest in the land beneath the construction.
Under the Act an owner of the land who causes the construction to be put up becomes the
promoter. Such construction can be put up by a developer or builder, who in turn sells the
constructed portions to various persons by entering into Agreements
.. The document on the face of it, cannot be an agreement for security. It can only be
construed as an Agreement to sell or a development agreement. In our opinion in this case,
the finding recorded by the learned Single Judge was a finding eminently possible on the
material on record. We are, therefore, clearly of the opinion that the Agreement prima facie
is an agreement which can be specifically enforced and consequently the Appellants have
made out a prima facie case
This was relied on in the case Sharpoorji Pallonji & Co v. Jignesh Shah (Notice of Motion)
No. 443 of 2012 pronounced on 27.06. 2013. The case discusses the issue of the distinction in
much detail and holds that such an agreement may not be adequately compensated with money
which would have denied specific performance under section 10 of the Specific Relief Act.

The Defendants have, in the alternative, contended that even on the assumption that the
contract creates an interest in land and would therefore be subject to the principle
enunciated in the case of Chheda Housing Development Corporation (supra), in the
instant case, the breach to transfer immovable property, assuming there is any, can be
adequately relieved by compensation in money. Under Section 10 of the Specific Relief Act,
1963, the Court ought to presume that the breach of a contract to transfer immovable
property cannot be adequately relieved by compensation in money unless and until the
contrary is proved. Leave aside the proof, which in any event can only come at the stage of
trial, even prima facie, on the facts placed before the Court, it cannot be said that
compensation in money would be adequate relief to the Plaintiffs. Under the suit
agreement, what comes to the share of the Plaintiffs is FSI to be shared in the proportion
of 55:45 with the Defendants. The Plaintiffs were, under the agreement, free to deal with,
dispose of, retain or sell their portion of the built up area in such manner, at such time and
at such price as they may determine. This, prima facie, amounts to an agreement for
transfer of immovable property and its breach cannot be compensated in terms of
money
In the light of the judgments cited above it can be concluded that the court shall not
dismiss the plea of specific relief prima facie, but shall take the documents on record and
decide only on merits whether specific relief may not be granted as per 14 (1) which says
that.;
[14](1) The following contracts cannot be specifically enforced, namely:-(a) a contract for the non- performance of which compensation in money is an
adequate relief;
(b) a contract which runs into such minute or numerous details or which is so
dependent on the personal qualifications or volition of the parties, or otherwise from
its nature is such, that the court cannot enforce specific performance of its material
terms;
(c) a contract which is in its nature determinable;
(d) a contract the performance of which involves the performance of a continuous duty
which the court cannot supervise.
As the court is already of the opinion in Chheda Housing and Shapoorji cases that
subsection 1(a) cannot be considered in a matter of Development Agreements of the nature
similar to present case, the court must hear the matter and decide at its discretion as to 14 (b)
(c) and (d).

2. Can the Deed of Modification be placed on record?

An alteration or modification of a registered agreement must be done by another registered


agreement. However the section 49 of the Registration Act, 1908 provides that when a suit of
Specific Performance is made then such a document which was to be compulsorily registered
may be put on record as evidence and does not suffer from inadmissibility as it otherwise do
as under section 49.
Section 49 - Effect of non-registration of documents required to be registered
No document required by section 17 or by any provision of the Transfer of Property Act, 1882
(4 of 1882)], to be registered shall-(a) affect any immovable property comprised therein, or
(b) confer any power to adopt, or
(c) be received as evidence of any transaction affecting such property or conferring
such power, unless it has been registered:
Provided that an unregistered document affecting immovable property and required by this
Act or the Transfer of Property Act, 1882 (4 of 1882), to be registered may be received as
evidence of a contract in a suit for specific performance under Chapter II of the Specific
Relief Act, 1877, or as evidence of any collateral transaction not required to be effected by
registered instrument.
The proviso here is generally worded and is not confined to any cases where there has been
delivery or part performance. Before the proviso was inserted several cases have also
discussed the question to hold that the admissibility in favor of unregistered documents in
case of specific performance.
[ Burjoji Curesetji v. Macherji Kooverji ILR 5 Bom 193 , Nasiruddin Mia v. Siddu Mia AIR
1919 Cal 477]
In Brahmnath Singh v. Chandrakali Kuer the Patna High Court observed:
It is important to observe that Section 49 does not say that an unregistered document
which required to be registered shall not be received in evidence. It says, as evidence of
any transaction affecting the property, it may be received in evidence for a collateral
purpose even
if that purpose indirectly does affect the property. Clause (a) of Section 49 refers to the
document which is the transaction itself, while Clause (c) of Section 49 refers to another
document which is not the transaction itself, but which is being used as evidence of the
transaction. The two parts of Section 49 deal with different subjects. The first part
apparently presupposes that the document itself is the transaction or the mode in which it
is carried out. The second part of the section seems to relate to cases where the document

itself is not the transaction but is only a record of transaction or being itself a transaction
contains a reference
to or a recital of another transaction which affects the Immovable property comprised
therein. The distinction, therefore, between Clause (a) and Clause (c) of Section 49 of the
Act is clear. Clause (c), as such, refers to a document which is not the transaction itself,
but which is being used as evidence of the transaction. Clause (c) uses the expression "as
evidence" and not "in evidence". It is, therefore, permissible to use an unregistered
document for a collateral purpose, that is, a purpose other than that of creating, declaring,
assigning, limiting or extinguishing a right to Immovable property. This is now expressly
enacted in the proviso added to Section 49 of the Act by the Amending Act XXI of 1929.
Hence if the developers move for Specific performance of the Development Agreement then
the Deed of Modification may be brought on record as evidence.