2019 Supreme(SC) 147

SUPREME COURT OF INDIA
ASHOK BHUSHAN, K.M. JOSEPH, JJ.
Delhi Development Authority – Appellant
Versus
M/s. Karamdeep Finance & Investment (I) Pvt. Ltd. & Ors. – Respondents
Civil Appeal No. 1533 of 2019
With
M/s. Karamdeep Finance & Investment (I) Pvt. Ltd. – Appellant
Versus
Delhi Development Authority & Ors. – Respondents
Civil Appeal No. 1534 of 2019
Decided On : 12-02-2019

IMPORTANT POINTS
Condition under section 269UD 4(a) of Income Tax Act, 1961 Perpetual lease is to compensate the lesser towards increase in market price of property.
While construing the documents intention of the parties has to be gathered by the words used by the parties themselves.
What once had been granted cannot next be taken away.
When two constructions of a document are admissible, one giving effect to all the clauses therein and the other rendering one or more of them nugatory; the former should be adopted. Maxim “ut res magis valeat quam pereat”.
Sale Deed granting rights by Government cannot be construed divorced of auction notice. At the same time provisions of Section 269UE, Income Tax Act, 1961 must be complied with.
Doctrine of merger under section 111(d), Transfer of Property Act, 1882 is not applicable to Government grants u/s 2, Government Grants Act, 1895.

Headnote:(a) Income Tax Act, 1961 – Section 269UD r/w Clause 4(a) of Perpetual lease – Clause 4(a) imposing condition that lessee can transfer the leasehold rights on payment of half of the unearned increase in the value of the property – To compensate the lesser towards increase in market price of property – Instantly government purchasing the property u/s 269UD(1) and putting it to auction – Writ petitioner not the lessee but auction purchaser – Writ petitioner purchasing the property at market price – Held, no question of further compensating the lesser (DDA) – Demand towards share of unearned increment in value of property quashed. (Para 12)

       (b) Interpretation of documents – While construing the documents intention of the parties have to be ascertained – Intention has to be gathered by the words used by the parties themselves – What once had been granted cannot next be taken away – The clear disposition by an earlier clause will not be allowed to be cut down by a later clause – In case of ambiguity Court should look at all the parts of the document to ascertain what was really intended by the parties – Rule is that the document being the grantor’s document it has to be interpreted strictly against him and in favour of the grantee. (Para 17)

       AIR 1960 SC 953 – Relied upon

       (c) Interpretation of document – Two constructions of a document admissible – One giving effect to all the clauses therein – The other rendering one or more of them nugatory – The former should be adopted – Maxim “ut res magis valeat quam pereat”. (Para 19)

       AIR 1959 SC 24 – Relied upon

       (d) Government Grants Act, 1895 – Section 3 – Government granting rights by Sale Deed to the writ petitioner – Sale deed cannot be construed divorced of Auction notice – Auction notice mentioning the property as lease hold residential plot – Clauses 1 and 2 of sale deed stipulating transfer of all rights, titles, interests and appurtenances – Clause 3, however, limiting the rights to those mentioned in agreement to transfer by original lessee to concerned vendee – Section 269UE, Income Tax Act, 1961 – Words “in terms of the agreement for transfer referred to in sub-section (1) of Section 269UC” – Clause 3 of sale deed being in terms of section 269UE cannot be ignored – Held, reading Clauses 1, 2 and 3 together and the property being leasehold residential plot, all rights, titles and interests were not conveyed to the petitioner. (Para 19, 20, 24, 25)

       (e) Transfer of Property Act, 1882 – Section 111(d) – Doctrine of merger – Not applicable to Government grants u/s 2, Government Grants Act, 1895 – Held, Division Bench rightly set aside direction of Single Judge to refund the amount of conversion. (Para 27, 28)

       (2003) 5 SCC 150; (2005) 5 SCC 492; 76 (1998) DLT 805 – Distinguished

       Facts of the case:

       One Shri Trilochan Singh Rana purchased Plot No.14, Block A-2, Safdarjung Development Area, New Delhi measuring 725 sq. yards in a public auction by DDA. A Perpetual Lease Deed was executed in his favour on 18.03.1970. As per clause 4(a) of the Perpetual Lease Deed, the lessee was not entitled to sell, transfer, assign or otherwise part with the possession of the whole or any part of the plot except with previous consent in writing of the lessor. In the event of the consent being given, the lessor was entitled to impose such terms and conditions as he deems fit and the lessee was under an obligation to pay 50% unearned increase of the market value of the plot (i.e. the difference between the premium paid and the market value) of the residential plot at the time of sale, transfer, assignment, or parting with the possession. On 29.09.1988, Shri Trilochan Singh Rana entered into an agreement to sell the said property to M/s Ocean Construction Industries Pvt. Ltd. The application in Form 37-I for sale of the said property was filed on 06.10.1988 under Section 269UD of Income Tax Act, 1961 seeking NOC from the Appropriate Authority, Income Tax Department. An order under was passed by the Appropriate Authority for compulsory acquisition of the property at Rs.76,00,000/- on 13.12.1988.

       Thereafter, the DDA (Finance Member) vide letter dated 12.01.1989 required the Chief Commissioner (Tech.) Income Tax Department to pay an amount towards unearned increase to the extent of Rs.17,88,114.55. The Chief Commissioner, Income Tax Department remitted a cheque for Rs.17,86,420/-favouring Delhi Development Authority towards payment of unearned increase in respect of said property.

       The said property was put to public auction on 20.03.1989 and M/s. Karamdeep Finance & Investment (I) Pvt. Ltd., the appellant(writ petitioner) was the highest bidder for an amount of Rs.1,08,05,000/-. The said bid was accepted by the Department. The writ petitioner was put in actual physical possession of the said property on 25.04.1989. On 25.09.1997, a registered Sale Deed was executed in favour of the writ petitioner.

       The writ petitioner moved an application with the DDA for conversion of leasehold rights in the plot into free-hold rights and also deposited a sum of Rs.3,45,729/- as conversion charges with the DDA. On receipt of the application for conversion, the DDA calculated the 50% amount of unearned increase of the market value and intimated the same (i.e. Rs.48,16,853/-) to the auction-purchaser i.e. the writ petitioner. Thereupon, the DDA raised a demand of Rs.1,43,90,348/-.

       Thereafter, the writ petitioner filed a Writ Petition before Delhi High Court. The learned Single Judge had allowed the writ petition and the demand of Rs.1,43,90,348/-raised by the DDA was set aside being illegal and also directed the DDA to return the amount of Rs.3,45,729/-, which had been deposited by the writ petitioner towards the conversion charges with interest. The DDA filed a Letters Patent Appeal before the Delhi High Court. The High Court passed the impugned judgment and final order vide which the direction of learned Single Judge to refund the amount of conversion fee paid by the writ petitioner has been set aside and partly allowed the appeal of the appellant-DDA and also held that the unearned increase is not payable by the purchaser to the DDA.

       Finding of the Court:

       Condition under section 269UD 4(a) of Income Tax Act, 1961 Perpetual lease is to compensate the lesser towards increase in market price of property.

       While construing the documents intention of the parties has to be gathered by the words used by the parties themselves.

       What once had been granted cannot next be taken away.

       When two constructions of a document are admissible, one giving effect to all the clauses therein and the other rendering one or more of them nugatory; the former should be adopted. Maxim “ut res magis valeat quam pereat”.

       Sale Deed granting rights by Government cannot be construed divorced of auction notice. At the same time provisions of Section 269UE, Income Tax Act, 1961 must be complied with.

       Doctrine of merger under section 111(d), Transfer of Property Act, 1882 is not applicable to Government grants u/s 2, Government Grants Act, 1895.

       Result: Civil Appeal No.1534 of 2019 filed by M/s. Karamdeep Finance and Investment (I) Pvt. Ltd. disposed of. Civil Appeal No. 1533 of 2019 dismissed