IMPORTANT POINT
Agreement to Sell – Unless lease is executed, agreement will not create any right, title or interest in respect of plot in favour of purchaser.

JUDGMENT :

ABHAY S. OKA, J.

FACTUAL ASPECTS

1. The appellant, Delhi Development Authority (formerly known as the Delhi Improvement Trust), executed an agreement of lease (for short, “the lease agreement”) dated 17th July 1957 in respect of plot no.3 (for short “the said Plot”), measuring 2044.4 sq. yards, situated in Industrial Area Scheme, Najafgarh Road, New Delhi in favour of M/s Mehta Constructions and Industrial Corporation Private Limited (for short, “M/s Mehta Constructions”). On 25th November 1972, M/s Mehta Constructions entered into an agreement to sell with M/s Pure Drinks Private Limited, the second respondent. A registered sale deed cum Assignment dated 15th February 1985 was executed by M/s Mehta Constructions in favour of the second respondent. In Execution Proceedings, i.e. Co Ex 8 of 1981, the Company Judge of the Delhi High Court passed an order on 4th February 1985. Pursuant to the said order, the Registrar of the High Court lodged the sale deed for registration in the office of the Sub-Registrar, Delhi.

2. Even the second respondent went into liquidation, and the plot was sold to the first respondent in the auction on 24th August 2000 in liquidation proceedings before the Delhi High Court. The auction was held pursuant to the notice of proclamation of sale issued by the High Court of Punjab and Haryana on 9th June 2000.

3. On 7th December 2000, the first respondent applied for confirmation of the sale made in the auction. The appellant appeared in the said proceedings and filed a reply. The appellant contended that at no point of time had M/s Mehta Constructions acquired any interest in the plot, and therefore, the plot could not have been sold in the auction. By the order 19th October 2001, the learned Single Judge allowed the application filed by the first respondent and confirmed the auction sale. Aggrieved by the said order, the present appellant preferred an appeal before the Division Bench. By the impugned judgment dated 21st January 2010, the appeal was dismissed.

SUBMISSIONS

4. The learned senior counsel appearing for the appellant urged that what was executed on 17th July 1957 in favour of M/s Mehta Constructions was only an agreement to lease. The agreement provided that the lease deed was to be executed only upon certain compliances being made by M/s Mehta Constructions. As no such compliance was made, the lease deed was not executed, and therefore, leasehold rights were never acquired by M/s Mehta Constructions with respect to the said plot. He relied upon Clause 24 of the lease agreement, which clearly provided that unless the lease is executed, the agreement will not create any right, title or interest in respect of the said plot in favour of M/s Mehta Constructions.

5. The learned senior counsel submitted that the plot is Nazul land, which belongs to the Union of India and is in the care and custody of the appellant. He submitted that a Nazul land can be sold only in accordance with Section 22 of the Delhi Development Act, 1957 (for short, “the said Act”) and the Delhi Development Authority (Disposal of Developed Nazul Land) Rules, 1981 (for short, ‘the 1981 Rules’). The learned counsel submitted that though no right, title or interest was created in favour of M/s Mehta Constructions, it purported to execute an agreement for sale in favour of the second respondent. It appears that in Company Application pending before the learned Single Judge, M/s Mehta Constructions was represented by one Shri R.P. Dutt, its Managing Director who stated that an absolute irrevocable authority has been conferred upon Shri S.Daljit Singh and Shri S.Charanjit Singh of the second respondent to take steps to get the title of M/s Mehta Constructions perfected. An order was passed by the learned Company Judge of the High Court on 4th February 1985, directing the Registrar of the High Court to appear before the Sub-Registrar of Assurances and to admit execution of a sale deed in favour of the second respondent. Accordingly,