1998 Supreme(SC) 1190

1998(9) Supreme 179
Supreme Court of India
(From Punjab & Haryana High Court)
S.B. Majumdar & K.T. Thomas, JJ.
Indu Kakkar -Petitioner
versus
Haryana State Industrial Development Corporation Ltd. & Anr. -Respond­ents
Special Leave Petition (C) No. 8368 of 1998
Decided on 2-12-1998
Counsel for the Parties :
For the Petitioner : R.F. Nariman, Sr. Advocate, Manoj Swarup, Advo­cate.
For the Respondents : Ravindra Bana, Advocate.

Important Points
1. For a transferee to deal with interest in the property transferred “as if there were no such direction” regarding the particular manner of enjoyment of the property, the instrument of transfer should evidence that an absolute interest in favour of the transferee has been creat­ed.
2. A party to a contract cannot transfer his liabilities under the contract without consent of the other party.

Headnote:(i) Transfer of Property Act, 1882-Sections 11 and 30-Res­trictions repugnant to interest created-Industrial plot allotted to allottee by State Industrial Development Corporation-Condition in conveyance deed that construction of building should be started within 6 months and completed within two years of allotment-Failure to com­ply with condi­tion entitled allotor to resume plot allotted-Plea that condition unenforceable-Not sustainable since deed of conveyance had not creat­ed any absolute interest in favour of allottee.

       Held : For a transferee to deal with interest in the property transferred “as if there were no such direction” regarding the particular manner of enjoyment of the property, the instrument of transfer should evidence that an absolute interest in favour of the transferee has been creat­ed. This is clearly discernible from Section 11 of the TP Act. The Section rests on a principle that any condition which is repugnant to the interest created is void and when property is transferred abso­lutely it must be done with all its legal incidents. That apart, Section 31 of the T.P. Act is enough to meet the aforesaid contention. The Section provides that “on a transfer of property an interest therein may be created with the condition superadded that it shall cease to exist in case a specified uncertain event shall happen, or in case a specified uncertain event shall not happen (Para 16)

       All that Section 32 of the Transfer of Property Act provides is that “in order that a condition that an interest shall cease to exist may be valid; it is necessary, that the event to which it relates be on which could legally constitute the condition of the creation of an interest.” If the condition is invalid it cannot be set up as a condi­tion precedent for crystallization of the interest created. The condi­tion that the industrial unit shall be established within a specified period failing which the interest shall cease, is a valid condition. (Para 17)

       In the instant case the allottee has contended before the trial Court that clause 7 of the Agreement is unenforceable. In view of Section 11 of the TP Act. But that contention was repelled according to us rightly, because the Deed of Conveyance had not created any absolute interest in favour of the allottee in respect of the plot conveyed. Clause 7 of the Agreement between the parties is, therefore, valid and is binding on the parties thereto. (Para 16)

       (ii) Transfer of Property Act, 1882-Section 52-Pendente lite transfer - Extent of transferee’s right-State Industrial Corporation allotted industrial plot to allottee-Plot resumed by allotor for failure on part of allottee to construct building within time permit­ted-Suit by allottee to declare resumption invalid-Petitioner pur­chasing plot from allottee-Impleading herself as plaintiff and ques­tioning validity of resumption-Held petitioner has no locu standi-A party to a contract cannot transfer his liabilities under the contract without consent of other party.

       Held : The real question is whether the assignee has a legal right to claim performance of any part from the allottor. Answer of the said question depends upon the terms of allotment. Assignment by act of parties may cause assignment of rights or of liabilities under a contract. As a rule a party to a contract cannot transfer his liabilities under the contract without consent of the other party. This rule applies both at the Common Law and in Equity (vide para 337 of Holsburys Laws of England, fourth Edition, part 9). Where a contract involves mutual rights and obligations an assignee of a right cannot enforce that right without fulfilling the co-relative obligations. (Para 19)

       The Agreement was entered into between the Corporation and the allottee as a sequel to the request made by the allottee to give him an industrial plot for the purpose of setting up an industry. Corporation reciprocated to the request on being satisfied that the allottee was able to carry out the obligations so as to accomplish the purpose of allotment. The assurance given by of the allottee that he shall start construction of the building for setting up the industry within a period of six months and complete the construction thereof within two years from the date of issue of allotment letter was veri­fied and found acceptable to the Corporation and then only the Corpo­ration has chosen to enter into the agreement with the allottee. It is a matter of confidence which the Corporation acquired in the promise made by the allottee that the latter would perform such obligations. If the allottee evacuates from the scene after inducting someone else into the plot without consent of the Corporation it is not legality permissible for the inductee to compell the Corporation to recognize him as the allottee. The High Court was correct in its conclusion that the petitioner had no locus standi to question the validity of resumption. (Para 20)