Development agreement held not specifically enforceable; suit also failed for statutory non-compliance and no interim protection was granted.

A society development arrangement was held to be a development contract, not an agreement capable of specific performance, because the developer was to construct the property, obtain permissions and recover its remuneration through sale of the balance area; the plaintiffs' remedy, if any, lay in damages. The suit also failed on maintainability because the plaintiffs sued as a partnership concern without the required compliance under section 69(2) of the Partnership Act, and no notice under section 164 of the Maharashtra Co-operative Societies Act had been served for a transaction touching society business. No prima facie case was shown for receiver or injunction, so interlocutory relief was refused.

---

---

Issues: (i) Whether the suit was not maintainable for want of compliance with section 69(2) of the Partnership Act, 1932 and section 164 of the Maharashtra Co-operative Societies Act, 1960. (ii) Whether the agreement dated 18 January 1985 was a development agreement incapable of specific performance and, if so, whether the plaintiffs were confined to damages. (iii) Whether the plaintiffs had made out a prima facie case for receiver and injunction.

Issue (i): Whether the suit was not maintainable for want of compliance with section 69(2) of the Partnership Act, 1932 and section 164 of the Maharashtra Co-operative Societies Act, 1960.

Analysis: The agreement and the pleadings showed that the plaintiffs sued as a partnership concern, but the defendants raised a specific objection that the change in constitution of the firm had not been registered. The Court accepted that the bar under section 69(2) operated on the facts placed before it. The Court also held that the agreement touching development of society property was a transaction touching the business of the society, so a notice under section 164 was mandatory and its absence was fatal to maintainability.

Conclusion: The objection to maintainability succeeded against the plaintiffs.

Issue (ii): Whether the agreement dated 18 January 1985 was a development agreement incapable of specific performance and, if so, whether the plaintiffs were confined to damages.

Analysis: On the terms of the agreement, the plaintiffs were engaged to develop the property, construct the building, obtain permissions, and sell the balance flats and premises for profit, while the society was to receive only specified flats at a concessional rate. The Court treated the arrangement as a pure development contract and followed prior decisions holding that such contracts do not create an enforceable interest in land and are not specifically enforceable. The Court distinguished the later authority relied upon by the plaintiffs on the basis that the earlier binding Division Bench view governed the matter.

Conclusion: The agreement was held to be not specifically enforceable, and the plaintiffs' remedy, if any, lay in damages.

Issue (iii): Whether the plaintiffs had made out a prima facie case for receiver and injunction.

Analysis: The Court found that clause 18 required the plaintiffs to obtain the necessary permissions at their own expense, while clause 22 allowed termination for non-completion within time. On the materials before it, the Court found no merit in the plaintiffs' claim for interlocutory protection.

Conclusion: No prima facie case for receiver or injunction was established.

Final Conclusion: The notice of motion was rejected in its entirety, leaving the defendants free from the interlocutory restraints sought by the plaintiffs.

Ratio Decidendi: A society development arrangement under which the developer is to construct flats, obtain permissions, and earn its remuneration by sale of the balance area is a development contract, not an agreement capable of specific performance; where statutory preconditions to suit are absent, maintainability also fails.

---