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High Court Of Delhi
SANJIV SETHI - Appellant
Versus
UNION OF INDIA - Respondent
Civil 21 of 1991
Decided On : 12/04/1991
Smt. Satyawati Dhawan entered into an agreement with Competent Builders wherein the latter agreed to develop the property of the former into a multi-storeyed building and 35 per cent of the saleable area was to be allotted to the owner. The owner in terms of the agreements executed an irrevocable power of attorney in favor of the builder. The brother of the petitioner, Shri Navneet Sethi applied for an allotment of a flat which was provisionally allotted to him in 1979. Subsequently a tripartite agreement was entered into between the owner, Competent Builders and the Ansals wherein the Ansals stepped into the shoes of Competent Builders and undertook to complete the project.
In June 1990 the Ansals applied for permission under Form 37-I and a no objection was issued to them. Meanwhile a Memorandum of understanding was entered into at the instance of the buyers association between the owner and the Ansals wherein the Ansals undertook to honour all the agreements entered into by Competent Builders. As a result of this aforesaid Memorandum a fresh letter of allotment was issued in 1990. In respect of the petitioners claim at the request of Navneet Sethi, the Ansals substituted the name of the petitioner in place of his brother Navneet Sethi. The petitioner, on advise, applied for permission under Form 37-I. The Appropriate Authority however ordered the purchase of the flat by the Central Government as it exceeded the value of Rs. 10 Lac. Hence this present writ petition.
Allowing the petition, the Court
Held:
1. Looking at the totality of the circumstances and after taking the various clauses of different agreements into consideration the Court is of the firm opinion that this is a case where the earlier agreements of 1979 are being honoured and given effect to.
2. In the allotment letters issued by Competent Builders there is specific reference to the agreement dated 4th September, 1979 between Smt. Satyawati Dhawan and Competent Builders and, in addition thereto, there is also reference to the power of attorney executed by Smt. Satyawati Dhawan in favor of Competent Builders. It is clear, thereforee, that in law, Competent Builders were acting as an agent of a disclosed principal.
The execution of the tripartite agreement clearly shows the taking over of the rights and liabilities of the Competent Builders by Ansals. The rights of Smt. Satyawati Dhawan contained in the earlier agreement with Competent Builders were retained.
3. It appears that in the present case the buyers and the seller have not changed. The buyers are the flat buyers like the petitioner and the seller in law, is Smt. Satyawati Dhawan. The only change which has occurred is that one builder has stepped into the shoes of another. When the builder has changed that does not necessarily mean that the right of the original buyers stood extinguished. The right to allotment of flat continued to exist notwithstanding the walking out of the project by Competent Builders and stepping into their shoes by Ansals. Any tirpartite agreement amongst the owner, Competent Builders and the Ansals could not adversely affect the rights of the flat buyers. It is precisely for this reason that the memorandum of understanding was entered into.
4. thereforee, the provisions of Chapter XX-C were not applicable to the present case and it is only the provisions of Chapter XX-A which were applicable.
5. In the present case it is only on 4th October, 1990 that letter was written by Navneet Sethi to Ansals to the effect that the allotment be transferred to the name of his brother Sanjeev Sethi. This was obviously a transfer on account of natural love and affection and such a transfer would be exempt from the provisions of Chapter XX-C by virtue of the provisions of Section 269 UO.
6. With regard to the applicability of Rule 48L the conclusion is very simple. The said Rule will apply only if Chapter XX-C applies. For the view that we have taken, on the facts of the present case, Chapter XX-C does not apply. thereforee, the question of the said Rule becoming applicable does not arise. In the very nature of things Chapter XX-C was not applicable to the sale of immoveable property of value less than Rs. 10 lakhs. The price was increased to beyond Rs. 10 lakhs only in 1990.
7. For the aforesaid reasons this writ petition is allowed. We issue a writ of mandamus quashing the impugned order dated 20th December, 1990 passed under Section 269 UD (1) and further issue a writ of mandamus directing the respondents to grant permission in Form 37-I to the petitioner and other flat owners, in accordance with law and in the light of the observations made hereinabove.
Head Note:
INCOME TAX
Compulsory purchase of immovable property by Central Government — APPLICABILITY OF PROVISIONS OF CHAPTER XXC — Continuation of earlier agreement — Change of builder — owner same — Chapter XXC not applicable.
HELD : The two builders, apart from being financiers, had powers of attorney executed in their favor and a power of attorney is always regarded as an agent of the principal. The attorney is empowered to have dealings with third parties but such dealings are always for and on behalf of the principal. The principal and the third parties, in the present case, never changed and, thereforee, the letters of allotment issued were merely continuation of the earlier letters. The earlier agreement is being given effect to and merely because there is a change in some of the terms specifically with regard to the rate and the area, would not result in a new agreement coming into existence. thereforee, the provisions of Chapter XX-C are not applicable and it is only the provisions of Chapter XX-A which are applicable.
Income Tax Act 1961 s.269UD
Income Tax Rules 1962 r.48
( 1 ) THE challenge in this writ petition is to the order passed under Section 269 UD (1) by the Appropriate Authority under the Income-tax Act (respondent No. 2), whereby it has decided to purchase the flat which was to be sold pursuant to a letter of allotment which had been issued by M/s Ansal Propel ties and Industries Ltd. (respondent No. 4) in favour of the petitioner.
( 2 ) BRIEFLY stated the facts are that one Smt. Satyawanti Dhawan (respondent No. 5) is the owner of plot No. 6, Jantar Mantar Road, New Delhi. On 4th September, 1979 she entered into an agreement with M/s Competent Builders. As per the terms of the said agreement M/s Competent Builders was to develop this property and construct a multi-storeyed residential building. According to the terms of the agreement the entire building was to be constructed by M/s Competent Builders out of its own resources and 35% of the saleable area on all the floors was to be allotted to the owner. The balance area could be sold by Competent Builders. Both the parties to the agreement were free to sell their respective shares and Clause 24 of the said agreement provided that the owner had to execute an irrevocable power of attorney in favour of the builder to do all necessary acts and things required for approaching the public and all Govt. , and local authorities for sanction of the plans etc. and also "for execution of sale agreements in favour of the purchasers of the flats or their assigns or nominees and to do all necessary acts, and things on behalf of the owners.
( 3 ) ONE Navneet Sethi, brother of the petitioner, applied for allotment of a flat. On 1st December, 1979 a letter of allotment was issued in favour of Navneet Sethi whereby flat No. 308 was allotted to him. The approximate covered area of this was 1050 sq. ft. and in the recital of the letter of allotment it was stated that Competent Builders had entered into an agreement dated 4th September, 1979 with the owner and it was by virtue of this agreement and the general power of attorney executed by the owner which had empowered the Competent Builders to sell space on ownership basis in the proposed multistoreyed building in favour of different persons including Navneet Sethi. The allotment so made was called provisional but this was done because the clause of the allotment letter stated that there could be changes made by the sanctioning authorities or the architects or the builders, and, therefore, there could be variation in the area or even the price. It was further stated that in case of deletion of the flat from the sanctioned plan, no claim would be made in respect of any interest and the amount received would be refunded by Competent Builders.
( 4 ) IT seems that dispute arose between the owner and Competent Builders which was subsequently compromised on 29th August, 1984. By this agreement Competent Builders agreed to construct the building within two years from the date of starting of construction. Ameeting of the flat buyers including Navneet Sethi was called by Competent Builders who sought to increase the price of the flat. The flat buyers agreed to pay further Rs. 4507- per sq. ft. The result of this was that the total rate agreed io bepaid by the buyers was Rs. 700. 00 per sq. ft. An Association called Dhawan Building Association of Buyers/allottees of flats was also formed in the year 1989. M/s Competent Builders was a partnership firm and disputes arose amougst its partners. A suit for dissolution of partnership being Suit No. 80/90 was filed in this Court by one partner against the other. The buyers/allottees association filed an application for intervention and sought appointment of a receiver/administrator so as to carry out the construction of the building at 6, Jantar Mantar Road, New Delhi.
( 5 ) DURING the pendency of this suit a compromise was arrived at. This resulted in a tripartite agreement daied 13th June, 1990. Parties to this agreement were Smt. Satyawati Dha
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