Mere Absence of Landowners’ Signatures on MOU Not Fatal When They Received Benefits Under Agreement: Bombay High Court Grants Injunction in Specific Performance Suit Involving Pre-Allotment Sale

Justice Milind N. Jadhav of the Bombay High Court reinstating a temporary injunction in a suit for specific performance. The Court reversed the Trial Court’s rejection of the injunction sought by the plaintiffs, observing that a prima facie case, balance of convenience, and threat of irreparable harm clearly favoured the plaintiffs who had paid over ₹3.12 crores over several years based on two pre-allotment agreements.

The Court condemned the Trial Court’s rejection of the injunction as “parochial and unsustainable”, and restrained Defendants No.19 and 20—alleged subsequent purchasers—from dealing with the suit land, pending disposal of the main suit.

“Speculative Agreement” Argument Rejected — Court Holds Rights Not Illusory Simply Because Allotment Was Formalised Later

The dispute centres on CIDCO land allotted under the 12.5% scheme in Ulwe, Navi Mumbai, initially offered to Defendants No.1–16 (original landowners) in 2007. Plaintiffs sought specific performance of an Agreement dated 10.02.2010 executed between landowners and Defendants No.17–18 (intermediaries), and a Memorandum of Understanding (MOU) dated 26.02.2013 executed by those intermediaries in favour of the plaintiffs.

Although formal allotment of the land (ultimately Plot No.37) materialised only in 2022, the Court noted that the transaction “was not speculative merely because physical allotment occurred later”, emphasizing that CIDCO’s Letter of Intent and plot identification dated back to 2007.

Rejecting the contention of subsequent purchasers (Defendants No.19–20) that the agreements were speculative, the Court held:

“The purport of both the agreements dated 10.02.2010 and 26.02.2013 is the same — creating right in respect of the allotted land as per the letter dated 18.12.2007 and LOI dated 19.12.2007 both issued by CIDCO well in advance in favour of Defendant Nos.1 to 16.” [Para 8]

Plaintiffs’ Substantial Payments Established Prima Facie — Denial by Landowners “Cannot Be Accepted”

The High Court was emphatic that the plaintiffs had proven prima facie payment of ₹3.12 crores between 2013 and 2020 to Defendant Nos.1 to 18, primarily by bank transfers. Although only ₹8 lakhs was paid under the initial agreement by Defendants 17–18 to the landowners, the plaintiffs paid the rest directly, often to legal heirs of deceased landowners.

The Court noted with disapproval:

“What is most intriguing and equally shocking is the fact that... there is not a whisper about these payments received by Defendant Nos.1 to 16... The same is prima facie proven and shown to Court as received... through Bank account of Plaintiffs.” [Para 8]

The landowners’ denial of receipt was found prima facie untenable, especially since the intermediaries had admitted to receiving the payments and being authorized under the 2010 agreement to create third-party rights.

MOU Not Invalid Merely Because Landowners Did Not Sign It — Court Looks at Conduct and Consideration

A key argument by Defendants 19–20 was that the MOU dated 26.02.2013 was invalid, as it was not signed by the original landowners. However, the Court ruled:

“The absence of signatures of original landowners on MOU not fatal at interim stage when they accepted benefits under arrangement.” [Paras 11–12]

Justice Jadhav held that Section 54 of the Transfer of Property Act, though limiting mere agreements for sale from transferring title, does not preclude equitable remedies like injunction when significant consideration has been exchanged and conduct indicates acknowledgment.

Bona Fide Purchasers Must Exercise Due Diligence — Failure to Do So Disentitles Interim Protection

The Court observed that Defendants No.19 and 20, who entered into a Tripartite Agreement with CIDCO and landowners in 2023, failed to perform due diligence before entering the transaction.

“Had Defendant Nos.19 and 20 carried out due diligence, they would not have entered into the Tripartite Agreement... they have failed to carry out proper due diligence.” [Para 12, 14]

The Court added that bona fide purchaser status does not override the plaintiffs’ prior equitable rights, particularly when those rights were reflected in long-standing agreements and payments. It emphasised that conduct matters, and Defendant Nos.19–20 cannot benefit from turning a blind eye to pre-existing rights.

Trial Court’s Order Quashed for Ignoring Evidence of Consideration and Rights

The High Court faulted the Trial Court for focusing solely on the lack of signatures on the MOU, and failing to appreciate the larger factual matrix, including CIDCO’s early LOI, long-standing possession of documents, and plaintiffs' payments.

Justice Jadhav wrote:

“Approach of the learned Trial Court is rather parochial... Trial Court has utterly failed to consider this position in law as well as in equity... The finding returned... on balance of convenience is fallacious and erroneous on the face of record.” [Paras 11, 13]

Court Orders Continuation of Status Quo — Bars Subsequent Purchasers from Creating Third-Party Rights

In conclusion, the High Court ruled that all parameters for interim injunction under Order 39 Rules 1 & 2 CPC — prima facie case, balance of convenience, and irreparable harm — were fully satisfied by the plaintiffs.

The Court ordered:

“Defendant Nos.19 and 20 are restrained from dealing with the said land in any manner until the Suit is determined in accordance with law.” [Para 15]

The status quo order granted earlier during pendency of the appeal is now directed to continue until final disposal of the civil suit.

Date of Decision: 03 February 2026