PANKH PROPERTIES PRIVATE LIMITED v. RUSI SORABJI KHAMBATTA
Validity of Unilateral Termination of Registered Deed of Assignment based on Frustrated Unregistered Supplemental Agreements and Statutory Regularizable Irregularities.
Court: Bombay High Court
Citation: 2026:BHC-OS:5548
Decision Date: 04-03-2026
List of Laws
The Transfer of Property Act, 1882; The Indian Contract Act, 1872 (Section 23); The Specific Relief Act, 1963 (Section 31 and Section 34); The Mumbai Municipal Corporation Act, 1888 (Section 92(dddd)); The Code of Civil Procedure, 1908 (Order XXXIX Rules 1 & 2); Doctrine of Lifting the Corporate Veil
- Facts: In 2012, Defendant No. 1 executed a registered Deed of Assignment and an Irrevocable Power of Attorney, transferring leasehold rights of a property to the Plaintiff for a consideration of Rs. 12 crores. Simultaneously, the parties executed an unregistered Supplemental Agreement expressing an intent for the Plaintiff to redevelop the property and provide 7,750 square feet of area to the Defendant. While the Plaintiff took possession and attorned tenancies, the redevelopment did not fructify due to lack of tenant consent. In 2025, after thirteen years, the Defendant issued a notice purporting to terminate the registered Deed of Assignment, alleging that it was conditional upon redevelopment and executed in breach of Section 92(dddd) of the Mumbai Municipal Corporation Act, 1888. The Defendant also alleged fraud, claiming the Plaintiff company was taken over by a hostile tenant. The Plaintiff sought interim injunctions against the termination, while the Defendant filed a counter-claim for damages and termination of the deed.
- Procedural Posture: The matter came before the Bombay High Court through two Interim Applications: one by the Plaintiff seeking to restrain the Defendants from acting on the termination notice, and a second by the Defendant (Counter-claimant) seeking a direction for the Plaintiff to deposit over Rs. 16 crores as security for alleged losses.
- Issue: Whether a registered Deed of Assignment, acted upon for thirteen years, can be unilaterally terminated by an assignor based on the non-fructification of a separate, unregistered supplemental understanding or minor statutory non-compliances.
- Holding: No, the registered Deed of Assignment is absolute and cannot be unilaterally terminated. The Court allowed the Plaintiff's application and rejected the Defendant's application with costs.
- Reasoning: The Court reasoned that the Deed of Assignment was an absolute, unconditional transfer of rights, with no reference to the Supplemental Agreement. The Supplemental Agreement was a separate, unregistered document that stood frustrated due to the non-fulfillment of conditions (tenant consent) and remained dormant for over twelve years. Regarding the Mumbai Municipal Corporation Act, the Court held that any failure to obtain prior permission for assignment does not render the deed void; rather, it is a regularizable irregularity for which the Defendant, as the assignor, was responsible. Furthermore, the Court found the Defendant’s allegations of fraud and the plea to lift the corporate veil to be a "counterblast" to the Plaintiff's suit, especially since the Defendant had enjoyed the consideration of Rs. 12 crores for over a decade without challenge.
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