Buyers Fully Clear ₹10.73 Crore Mortgage Before Deadline but Sellers Cancel Powai Flat Sale; Bombay High Court Orders Receiver to Deliver Possession Pending Suit
Sellers Claim Bank Credited Mortgage Payment Too Late and Invoke Cancellation Clause; Bombay High Court Finds Timely Tender, Grants Buyers Interim Possession Through Court Receiver
Facts
Four registered Agreements for Sale dated 7 October 2025 concerned Flat No. 902 in Evita Co-operative Housing Society, Hiranandani Gardens, Powai, comprising Units 902/A to 902/D and measuring 4,575 sq. ft. collectively. The sellers’ property was mortgaged to Satara Sahakari Bank. Under the agreements, the purchasers were to discharge the outstanding mortgage by 31 March 2026 and obtain possession. The purchasers had paid ₹1 crore to the first respondent and arranged demand drafts to discharge the bank’s outstanding amount of ₹10,73,30,251. The sellers nevertheless issued a termination notice dated 31 March 2026 and retained possession, asserting that the loan account was credited only on 4 April 2026. The purchasers instituted Suit No. 277 of 2026 and sought interim appointment of the Court Receiver, possession with police assistance if necessary, and delivery of the premises to them as the Receiver’s agents. The dispute at this stage concerned interim possession, not final adjudication of title.
Issues
Whether tendering demand drafts on or before 31 March 2026 constituted timely mortgage repayment despite later bank credit; whether the sellers could invoke Clause 7 to terminate after the purchasers performed; whether the agreements were genuine sale transactions or merely financial assistance; whether interim possession through a Court Receiver could be ordered before trial; whether a separate specific-performance suit was indispensable; and whether the banks and society were necessary parties.
Petitioner’s Arguments
The applicants/plaintiffs submitted that execution of the four registered agreements and receipt of ₹1 crore were undisputed. Correspondence, the HSBC survey on 12 March 2026, draft sale deeds exchanged on 20 March, and steps to secure the society’s NOC showed genuine sale arrangements. They tendered demand drafts dated 26, 30 and 31 March before the deadline. The termination notice itself acknowledged payment of the mortgage dues, and Satara Sahakari Bank later released title documents to HSBC. Relying on Clauses 8, 17, 18, 19 and 28, the applicants argued that the sellers were obliged to give possession after payment; Clause 7 could not be construed as an unfettered exit right. They relied on CIT v. Ogale Glassworks Ltd. for the date-of-tender principle and Rajaram Chauhan Real Estate Pvt. Ltd. for interim possession through a receiver.
Respondent’s Arguments
The first respondent contended that the mortgage was credited only on 4 April 2026, after the 31 March deadline, and that time was of the essence. The respondents read Clause 7 as allowing withdrawal “for any reason”, subject to repayment and a penalty of ₹1 crore per unit (₹4 crore in aggregate). They maintained that the agreements were determinable, and that agreements for sale, without conveyances, could not themselves transfer ownership. They disputed the payment slips, invoked an RBI holiday circular, asserted that the suit effectively sought specific performance without properly seeking it, and objected to non-joinder of the mortgage bank, financing bank and society. They also opposed dispossession at an interlocutory stage, claiming that the sellers would be rendered homeless.
Analysis of the Law
The Court examined the agreements as a whole rather than isolating Clause 7. It treated timely tender of demand drafts as payment for the prima facie interim analysis, distinguishing the later internal crediting of the mortgage account. The Court assessed the usual equitable considerations for a mandatory interlocutory order and appointment of a receiver under Order XL Rule 1 CPC: a strong prima facie case, balance of convenience and the justice of preserving or delivering possession. It did not finally declare title or pronounce a general rule that every agreement for sale transfers ownership. The finding that the contractual arrangements supported the applicants’ claim to possession was expressly provisional, subject to trial.
Precedent Analysis
Commissioner of Income Tax v. Ogale Glassworks Ltd., AIR 1954 SC 429: relied upon to hold that, in the circumstances, payment by demand draft related to its timely tender, rather than subsequent bank processing. Rajaram Chauhan Real Estate Pvt. Ltd. v. Mohammed Anwar Kutubuddin Siddiqui, 2023 SCC OnLine Bom 1931: applied to support interim possession through a Court Receiver where continued possession was prima facie unauthorized. Ramesh Chand v. Suresh Chand, 2025 SCC OnLine SC 1879; Mohammed Raza v. Geeta, (2022) 13 SCC 858; and Ghulam Qadir Mir v. Union Territory of Jammu and Kashmir, 2022 SCC OnLine J&K 270: relied upon by the respondents concerning the distinction between an agreement for sale and conveyance, but held inapplicable on the particular contractual terms and interim facts. The Court did not finally resolve the underlying title question.
Court’s Reasoning
Justice Arif S. Doctor found that the four sale agreements were undisputed and that the sellers’ subsequent characterization of them as financial assistance was not credible at the interlocutory stage. The demand drafts were issued and tendered by the contractual deadline; bankers’ confirmations, release of title documents, and the sellers’ own admission in their 31 March termination notice supported timely discharge. The later 4 April credit entry did not defeat payment, and the backdating allegation was not accepted. Clause 7, construed harmoniously with the agreement, did not authorize arbitrary termination after performance. The contractual provisions supported the applicants’ prima facie right to possession. A separate specific-performance action was not necessarily required for the interim relief sought, and the banks and society were not necessary parties because no substantive relief was claimed against them. The Court acknowledged that dispossession before trial was exceptional but found the circumstances sufficient.
Conclusion
The Interim Application was allowed in terms of prayer clause (a). The Court Receiver, High Court, Bombay was appointed in respect of the suit property with Order XL Rule 1 CPC powers, including taking physical possession, obtaining police assistance if necessary, and appointing the applicants as agents to receive possession. Following pronouncement, the Court stayed operation of the order for two weeks. These are interim findings and directions; the underlying suit remains for final determination.
Case Details
Case: Neelam Kumar Katara & Ors. v. Kalpana Tarak Mehta & Ors.
Court: High Court of Judicature at Bombay, Ordinary Original Civil Jurisdiction
Case Number: Interim Application (L) No. 14629 of 2026 in Suit No. 277 of 2026
Citation: 2026:BHC-OS:22165
Judge: Justice Arif S. Doctor
Date: 8 October 2026 (reserved 7 September 2026)
Result: Interim application allowed; Court Receiver appointed to deliver possession to applicants as agents; operation stayed for two weeks
